As filed with the Securities and Exchange Commission on
October 3, 1996
Registration No. 333-5529
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. 1
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POST-EFFECTIVE AMENDMENT NO. __
REGISTRATION STATEMENT UNDER THE INVESTMENT ACT OF 1940 [X]
PRE-EFFECTIVE AMENDMENT NO. 1
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POST-EFFECTIVE AMENDMENT NO. __
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AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVA
(EXACT NAME OF REGISTRANT)
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AMERITAS LIFE INSURANCE CORP.
Depositor
5900 "O" Street
Lincoln, Nebraska 68510
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NORMAN M. KRIVOSHA
Executive Vice President, Secretary
and Corporate General Counsel
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, Nebraska 68510
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Approximate date of proposed public offering: As soon as
practicable after effective date of the Registration Statement.
Flexible Premium Variable Annuity Policies -- Registrant is
registering an indefinite amount of securities pursuant to Rule
24-f-2 under the Investment Company Act of 1940. The amount of the
filing fee is $500.
The Registrant hereby amends this Registration Statement on such date
or dates may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
OVERTURE
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
PART A
FORM N-4 ITEM HEADING IN PROSPECTUS
Item 1. Cover Page.........................Cover Page
Item 2. Definitions........................Definitions
Item 3. Synopsis or Highlights.............Fee Table; Highlights
Item 4. Condensed Financial Information...Condensed Financial Information
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies
a) Depositor.......................Ameritas Life Insurance Corp.
b) Registrant......................The Separate Account
c) Portfolio Company...............The Funds
d) Prospectus......................The Funds
e) Voting..........................Voting Rights
f) Administrator...................N/A
Item 6. Deductions and Expenses
a) Deductions......................Fee Table; Highlights; Charges
and Deductions
b) Sales load......................N/A
c) Special purchase plans..........N/A
d) Commissions.....................Distribution of the Policies
e) Portfolio company deductions and
expenses........................The Funds; Fund Investment
Advisory Fees and Expenses
f) Registrant's Operating Expenses.N/A
Item 7. General Description of Variable
Annuity Contracts
a) Rights .........................Highlights; Policy Features,
Annuity Period; General
Provisions; Voting Rights
b) Provisions and limitations......Highlights; Allocation of
Premium; Transfers Among the
Portfolios and the Fixed
Account; Systematic Programs
c) Changes in contracts or
operations......................Addition, Deletion, or
Substitution of Investments;
Policy Features; Voting Rights
d) Contractowner inquiries.........Owner Inquiries
Item 8. Annuity Period
a) Level of benefits...............Highlights; Allocation of
Premium; Annuity Income Options
b) Annuity commencement date.......Annuity Date
c) Annuity payments................Highlights; Annuity Income
Options
d) Assumed investment return.......Annuity Income Options
e) Minimums........................Annuity Income Options
f) Rights to change options or
transfer investment base........Annuity Income Options
Item 9. Death Benefit
a) Death benefit calculation.......Highlights; Death of Annuitant;
Death of Owner; Annuity Income
Options
b) Forms of benefits...............Highlights; Death of Annuitant;
Death of Owner; Annuity Income
Options
Item 10. Purchases and Contract Values
a) Procedures for purchases........Cover Page; Highlights; Policy
Purchase and Premium Payment;
Accumulation Value
b) Accumulation unit value.........Accumulation Value
c) Calculation of accumulation unit
value...........................Accumulation Value; Policy
Purchase and Premium Payment
d) Principal underwriter...........Distribution of the Policies
<PAGE>
Item 11. Redemptions
a) Redemption procedures...........Highlights; Withdrawals and
Surrenders
b) Texas Optional Retirement
Program.........................N/A
c) Delay...........................Deferment of Payment
d) Lapse...........................N/A
e) Revocation rights...............Highlights; Free Look Privilege
Item 12. Taxes
a) Tax consequences................Tax Charges; Federal Tax
Matters
b) Qualified plans.................Federal Tax Matters
c) Impact of taxes.................Tax Charges
Item 13. Legal Proceedings .................Legal Proceedings
Item 14. Table of Contents of Statement of
Additional Information.............Table of Contents of Statement
of Additional Information
PART B
FORM N-4 ITEM HEADING IN STATMENT OF
ADDITIONAL INFORMATION
Item 15. Cover page.........................Cover page
Item 16. Table of Contents..................Table of Contents
Item 17. General Information and History....General Information and History
Item 18. Services
a) Fees, expenses and costs paid
by other than depositor or
registrant......................N/A
b) Management-related services.....N/A
c) Custodian and independent public
accountant......................Safekeeping of Account Assets;
Experts
d) Other custodianship.............N/A
e) Administrative servicing agent..N/A
f) Depositor as principal
underwriter.....................N/A
Item 19. Purchase of Securities Being Offered
a) Manner of Offering..............N/A
b) Sales load......................N/A
Item 20. Underwriters
a) Depositor or affiliate as
principal underwriter...........Distribution of the Policy
b) Continuous offering.............Distribution of the Policy
c) Underwriting commissions........N/A
d) Payments of underwriter......N/A
Item 21. Calculation of Performance Data....Calculation of Performance Data
Item 22. Annuity Payments...................N/A
Item 23. Financial Statements
a) Registrant......................Financial Statements
b) Depositor.......................Financial Statements
<PAGE>
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PROSPECTUS AMERITAS LIFE INSURANCE CORP. LOGO
FLEXIBLE PREMIUM 5900 "O" STREET, P.O. BOX 81889
VARIABLE ANNUITY LINCOLN, NE 68501
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This Prospectus describes a no sales load/no surrender charge flexible premium
variable annuity policy contract ("Policy") offered by Ameritas Life Insurance
Corp. ("Ameritas"). The Policy provides a vehicle for investing on a
tax-deferred basis for retirement savings or other long-term purposes.
You may purchase a Policy for $2,000 or more. Minimum additional subsequent
premiums may be $250 or more; smaller amounts may be accepted by automatic bank
draft or at the discretion of Ameritas.
You may direct that premiums accumulate on a variable basis in one or more of
the eleven Subaccounts of the Ameritas Life Insurance Corp. Separate Account
LLVA ("Separate Account") or on a fixed basis in the Fixed Account, or on a
combination variable and fixed basis. Assets of each Subaccount are invested in
a corresponding Portfolio of Strong Variable Insurance Funds, Inc., Strong
Special Fund II, Inc., (collectively "Strong"), Berger Institutional Products
Trust ("Berger IPT") or Neuberger & Berman Advisers Management Trust ("Neuberger
& Berman AMT") (collectively, the "Funds"). In this Separate Account, Strong
offers four Portfolios: Strong International Stock Fund II, Strong Government
Securities Fund II, Strong Growth Fund II, and Strong Special Fund II; Berger
IPT offers two Portfolios: Berger IPT-100 Fund and Berger IPT-Small Company
Growth Fund; Neuberger & Berman AMT offers five Portfolios: Liquid Asset,
Limited Maturity Bond, Growth, Partners, and Balanced.
The Accumulation Value is allocated to the Liquid Asset Portfolio for 13 days
after the Issue Date; the accumulation value is then reallocated as you
direct. There is a free-look period in which you may return the Policy for a
refund.
The Accumulation Value will vary with the performance of the Portfolios you
select. You bear all investment risk. Results for the Portfolios are not
guaranteed. Values in the Fixed Account are guaranteed by Ameritas.
You may select a date on which Annuity Payments are to commence. Prior to that
date, a surrender may be made at any time, and withdrawals are allowed, although
in most instances withdrawals made prior to age 59 1/2 are subject to a 10%
federal penalty tax. The Policy offers a number of ways of withdrawing monies
after the Annuity Date, including a lump sum payment and several Annuity Income
Options.
This prospectus contains information you should know before investing; it must
be accompanied by current prospectuses for Strong, Berger IPT, and Neuberger &
Berman AMT. Read the prospectuses carefully and retain them for future
reference. A Statement of Additional Information, which has the same date as
this prospectus, has been filed with the Securities and Exchange Commission; it
is incorporated herein by reference and is available free by writing Ameritas at
the address above. The table of contents of the Statement of Additional
Information appears at the end of this prospectus.
These securities are not deposits with, or obligations of, or guaranteed or
endorsed by, any financial institution; and the securities are not insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency. These securities involve investment risk, including the possible
loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES REGULATORY AUTHORITY, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES REGULATORY AUTHORITY PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is ___________.
(RED HERRING MATERIAL - PRINTED ON RIGHT SIDE OF PAGE IN RED)
SUBJECT TO COMPLETION OCTOBER 3, 1996
The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
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NLVA 1
<PAGE>
TABLE OF CONTENTS
Page
DEFINITIONS.............................................................. 3
HIGHLIGHTS............................................................... 4
FEE TABLE................................................................ 6
CONDENSED FINANCIAL INFORMATION.......................................... 9
PERFORMANCE DATA......................................................... 9
AMERITAS, THE SEPARATE ACCOUNT AND THE FUNDS............................. 9
Ameritas Life Insurance Corp...................................... 9
The Separate Account.............................................. 10
The Funds......................................................... 10
Investment Objectives and Policies................................ 11
THE FIXED ACCOUNT........................................................ 13
POLICY FEATURES.......................................................... 13
Control of the Policy............................................. 13
Policy Purchase and Premium Payment............................... 14
Allocation of Premium............................................. 14
Accumulation Value................................................ 14
Transfers Among the Portfolios and the Fixed Account.............. 15
Systematic Programs............................................... 15
Withdrawals and Surrenders........................................ 16
Free Look Privilege............................................... 16
CHARGES AND DEDUCTIONS................................................... 16
Administrative Charges............................................ 17
Mortality and Expense Risk Charge................................. 17
Tax Charges....................................................... 17
Fund Investment Advisory Fees and Expenses........................ 18
ANNUITY PERIOD........................................................... 18
Annuity Date...................................................... 18
Annuity Income Options............................................ 18
FEDERAL TAX MATTERS...................................................... 19
Taxation of Annuities in General.................................. 20
Nonqualified Policies............................................. 20
Qualified Policies................................................ 20
GENERAL PROVISIONS....................................................... 21
Annuitant's Beneficiary........................................... 21
Death of Annuitant................................................ 21
Death of Owner.................................................... 21
Addition, Deletion or Substitution of Investments................. 22
Deferment of Payment.............................................. 22
Owner Inquiries................................................... 22
Contestability.................................................... 22
Misstatement of Age or Sex........................................ 23
Reports and Records............................................... 23
DISTRIBUTION OF THE POLICIES............................................. 23
SAFEKEEPING OF THE ACCOUNT'S ASSETS...................................... 23
THIRD PARTY SERVICES..................................................... 23
VOTING RIGHTS ........................................................... 24
LEGAL PROCEEDINGS........................................................ 24
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION................. 24
The Policy, certain provisions, and certain Portfolios are not available in
all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESPERSON, OR OTHER PERSON
MAY MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON.
2 NLVA
<PAGE>
DEFINITIONS
ACCUMULATION UNIT. A unit used to measure the value of the Policy prior to the
Annuity Date. Analogous, though not identical, to a share owned in a mutual
fund account.
ACCUMULATION UNIT PRICE. The value of each Accumulation Unit is calculated each
Valuation Period. Analogous, though not identical, to the share price (net asset
value) of a mutual fund.
ACCUMULATION VALUE. The value of all amounts accumulated under the Policy prior
to the Annuity Date. On the Issue Date, the Accumulation Value is equal to the
initial premium, less any premium tax, plus any interest credited based on the
Liquid Asset Portfolio value as of the Policy Date.
AMERITAS. ("We, Us, Our") Ameritas Life Insurance Corp., a mutual life insurance
company domiciled in Nebraska since 1887.
ANNUITANT. The person upon whose life expectancy the Policy is written. The
Annuitant may also be the Owner of the Policy.
ANNUITANT'S BENEFICIARY. The person to whom any benefits are paid upon the
Annuitant's death.
ANNUITY DATE. The date on which Annuity Payments begin.
ANNUITY INCOME OPTION. A method of receiving Annuity Payments after the Annuity
Date.
ANNUITY PAYMENT. One of a series of payments paid to the Annuitant under an
Annuity Income Option.
EFFECTIVE DATE. The Valuation Date on which premiums are applied to purchase a
Policy.
FIXED ACCOUNT. A part of Ameritas' general account to which all or a portion of
premiums may be allocated for accumulation at fixed rates of interest.
FUNDS. Strong, Berger IPT and Neuberger & Berman AMT are the Funds available for
investment as of the date of this prospectus. The Funds have one or more
Portfolios; each Portfolio corresponds to one of the Subaccounts of the Separate
Account.
ISSUE DATE. The date all financial, contractual and administrative requirements
have been met to issue the Policy. The free look period begins on this date.
NET PREMIUM. The Premium Payment less the premium tax (if imposed by the state
in which the Policy is delivered).
NONQUALIFIED POLICIES. Policies that do not qualify for special federal income
tax treatment.
OWNER. ("You") The person or entity in whose name the Policy is issued (or as
subsequently changed) who has the privileges stated in the Policy, including the
right to make allocations or change beneficiaries. If a Policy has been
absolutely assigned, the assignee is the Owner. A collateral assignee is not
the Owner.
OWNER'S DESIGNATED BENEFICIARY. The person designated by the Owner to whom
Policy ownership passes upon the Owner's death.
POLICY. The no sales load/no surrender charge variable annuity contract offered
by Ameritas and described in this prospectus.
POLICY DATE. The date used to determine Policy anniversary dates and Policy
Years. On the Issue Date, the Policy Date will be the date two days after
Ameritas received the application and initial premium. If the Policy Date would
fall on the 29th, 30th or 31st of a month, the Policy Date will be set at the
28th day of that month.
NLVA 3
<PAGE>
POLICY YEAR. The period from one Policy anniversary date until the next Policy
anniversary date.
PORTFOLIO. One of the separate investment Portfolios of the Funds in which the
Separate Account invests. Each Portfolio is a Subaccount of the Separate
Account. In this Separate Account, Strong offers four Portfolios: Strong
International Stock Fund II, Strong Government Securities Fund II, Strong Growth
Fund II, and Strong Special Fund II; Berger IPT offers two Portfolios: Berger
IPT-100 Fund and Berger IPT-Small Company Growth Fund; Neuberger & Berman AMT
offers five Portfolios: Liquid Asset, Limited Maturity Bond, Growth, Partners,
and Balanced. In this prospectus, Portfolio will also be used to refer to the
Subaccount that invests in the corresponding Portfolio.
PREMIUM PAYMENT. An amount paid to purchase a Policy or to increase the
investment in the Policy.
QUALIFIED POLICIES. Policies owned inside certain qualified plans as defined
under the Internal Revenue Code of 1986, as amended, such as IRA's and Pension
Trusts.
SATISFACTORY PROOF OF DEATH. All of the following must be submitted: (1) A
certified copy of the death certificate; (2) A Claimant Statement; (3) The
Policy; and (4) Any other information that Ameritas may require to establish the
validity of the claim.
SEPARATE ACCOUNT. Ameritas Life Insurance Corp. Separate Account LLVA, an
account established by Ameritas to receive and invest premiums paid under the
Policy. Assets in the Separate Account are segregated from the general assets of
Ameritas.
SUBACCOUNT. A subdivision of the Separate Account which invests in shares of a
specified Portfolio of the Funds.
VALUATION DATE. Each day that the New York Stock Exchange (NYSE) is open for
trading.
VALUATION PERIOD. The period between two successive Valuation Dates, commencing
at the close of trading on the NYSE on one Valuation Date and ending at the
close of trading on the next Valuation Date.
HIGHLIGHTS
For an explanation of capitalized terms, refer to "Definitions", Page 3.
THE POLICY
The purpose of the Policy is to allow you, the Owner, to accumulate funds on a
tax-deferred basis by investing in one or more investment Portfolios managed by
Strong, Berger IPT or Neuberger & Berman AMT for retirement or other purposes.
The tax-deferral feature is most attractive to investors who have exhausted
other avenues for tax-deferred investing.
PURCHASING A POLICY
You may purchase a Policy with a complete application and a minimum initial
premium of $2,000 or more. Subsequent premiums must be at least $250. Smaller
premiums may be accepted on automatic bank draft or at the discretion of
Ameritas. Page 14.
INVESTMENT CHOICES
In this Separate Account, Strong offers four Portfolios: Strong International
Stock Fund II, Strong Government Securities Fund II, Strong Growth Fund II, and
Strong Special Fund II; Berger IPT offers two Portfolios: Berger IPT-100 Fund
and Berger IPT-Small Company Growth Fund; Neuberger & Berman AMT offers five
Portfolios: Liquid Asset, Limited Maturity Bond, Growth, Partners and Balanced.
The assets of each Portfolio are held separately from the other Portfolios; each
has distinct investment objectives and policies which are described in the
accompanying prospectuses for the Funds. The investment performance of the
Portfolios is not guaranteed. Page 10.
Premiums allocated to the Fixed Account are placed in the general account of
Ameritas and receive a guaranteed interest rate. Page 13.
4 NLVA
<PAGE>
ALLOCATION OF PREMIUM
Your Accumulation Value is allocated to the Liquid Asset Portfolio. At the end
of the free look period, the Accumulation Value is allocated among the
Portfolios or Fixed Account according to your instructions on the application.
Allocations may be changed at any time with no charge. Page 14.
CHARGES AND DEDUCTIONS
There are no sales loads or surrender charges. The costs in the Policy include
mortality and expense risk ("M&E") charges; an annual policy fee to cover the
cost to administer the Policy; and investment advisory and other fees imposed by
the Funds. State premium taxes, if any, are deducted upon receipt of premium,
upon annuitization, or upon withdrawal, according to the laws of the state of
jurisdiction. A $10 transfer fee may be charged for each transfer over the 15
free transfers allowed each Policy Year. Page 16.
TRANSFERS AMONG PORTFOLIOS
You may transfer funds among the Portfolios up to 15 times per year free of
charge. Additional transfers may be subject to a transfer charge (maximum $10
per additional transfer). Minimum transfer amount is $250, or if less, the
entire value of the Portfolio from which the transfer is made. The minimum
amount which can remain in a Portfolio as a result of a transfer is $100.
Certain restrictions apply to transfers from the Fixed Account. Systematic
programs, which provide for the automatic transfer of funds, such as Portfolio
Rebalancing, Dollar Cost Averaging, and Earnings Sweep may be offered. Page 15.
WITHDRAWALS
You may withdraw all or part of the Accumulation Value before the earlier of the
Annuity Date or the Annuitant's death. Withdrawals must be at least $250.
Systematic withdrawals may be scheduled at 12 per year. Withdrawals made prior
to age 59 1/2 may be subject to a 10% federal tax penalty. There is no
withdrawal charge. Page 16.
ANNUITY INCOME OPTIONS
Beginning on the Annuity Date, the Policy provides for lump sum payment, or for
periodic annuity payments to be paid to the Annuitant, based on the Accumulation
Value on that date. You may select from a number of Annuity Income Options. You
also have some flexibility in choosing an Annuity Date. Page 18.
DEATH BENEFIT
If the Annuitant dies before the Annuity Date, the death benefit becomes payable
to the Annuitant's Beneficiary upon proof of death. Ameritas guarantees that the
death benefit payable upon death of the Annuitant prior to the Annuity Date will
be the greater of the Accumulation Value or the premium payments made. The death
benefit may be paid in a lump sum or under an Annuity Income Option. Page 21.
If the Owner dies prior to the Annuity Date, the Owner's entire interest in the
Policy must generally be distributed to the Owner's Designated Beneficiary
within five years after the date of death. Under special rules, if the Owner's
interest is payable to the surviving spouse of the Owner, the Polcy may be
continued with the surviving spouse treated as the Owner. Page 21.
FREE LOOK PERIOD
You may cancel the Policy within 10 days after you receive it (except in some
states which may require a longer period). To cancel, you must return the
Policy. When the Policy is received by Ameritas, you will be reimbursed all
premiums paid or the premiums adjusted by investment gains or losses, whichever
is more. Page 16.
NLVA 5
<PAGE>
FEE TABLE
The following illustrates the expenses you will bear as Owner, excluding
possible state premium taxes. For a complete discussion of expenses, see
"Charges and Deductions" and the Funds' prospectuses.
OWNER TRANSACTION EXPENSES
Sales Load Imposed .......................................... None
Surrender Charge ............................................ None
Withdrawal Charge ........................................... None
Transfer Fee (after 15 free transfers per Policy year)....... $10
ANNUAL POLICY FEE (maximum of $40, currently $25)................. $25
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)
Mortality and Expense Risk Fees (M&E)............. 0.75% current
0.95% guaranteed
FUND MANAGEMENT FEES
Fee information relating to the underlying Funds was provided to Ameritas by the
underlying Funds. Ameritas has not independently verified the information
received from the underlying Funds.
STRONG ANNUAL EXPENSES
INVESTMENT ADVISORY
PORTFOLIO & MANAGEMENT OTHER EXPENSE TOTAL
Growth Fund II 1.00% 1.00%* 2.00%
International Stock Fund II 1.00% 1.00%* 2.00%
Government Securities Fund II .60% .24%* .84%
Special Fund II 1.00% .20% 1.20%
*"Other" expenses for International Stock Fund II, Government Securities Fund II
and Growth Fund II are estimated on an annualized basis. Government Securities
Fund II expenses are as of June 30, 1996. Growth Fund II was unfunded as of the
date of this prospectus. Only the Special Fund II and the International Stock
Fund II were funded as of December 31, 1995.
6 NLVA
<PAGE>
BERGER IPT ANNUAL EXPENSES
INVESTMENT ADVISORY
PORTFOLIO & MANAGEMENT OTHER EXPENSE TOTAL
100 Fund .75% .22%** .97%**
Small Company Growth .90% .22%** 1.12%**
** Based on estimated expenses for the Funds' first year of operations.
NEUBERGER & BERMAN AMT ANNUAL EXPENSES***
INVESTMENT MANAGEMENT
PORTFOLIO & ADMINISTRATION FEES OTHER EXPENSES TOTAL
Liquid Asset**** .30% .71% 1.01%
Limited Maturity .65% .10% .75%
Growth .84% .10% .94%
Partners .85% .30% 1.15%
Balanced .85% .19% 1.04%
*** 12/31/95 fiscal year end. Some expenses have been adjusted to reflect
certain increases in operating expenses expected in 1996.
**** Expenses reflect expense reimbursement. (See below). Absent such
reimbursement, the total annual expenses would have been 1.36%.
Strong Capital Management, Inc. is the investment advisor for the Strong Funds.
From time to time, Strong Capital Management, Inc., may voluntarily waive all or
a portion of its management fee and/or absorb certain expenses for the Fund
without further notification of the commencement or termination of any such
waiver or absorption. Any such waiver or absorption will have the effect of
lowering the overall expense ratio of the Fund and increasing the Fund's return
to investors at the time such amounts were waived and/or absorbed.
Berger Associates provides investment advisory services to the Berger IPT Funds
available in the Separate Account. Berger Associates has agreed to waive its
advisory fee to the extent that normal operating expenses in any fiscal year,
including the management fee but excluding brokerage commissions, interest,
taxes and extraordinary expenses, of Berger IPT-100 Fund exceed 1.00%, and the
normal operating expenses in any fiscal year of the Berger IPT-Small Company
Growth Fund exceed 1.15%, of the respective Fund's average daily net assets.
Neuberger & Berman Advisers Management Trust (the "Trust") is divided into
portfolios ("Portfolios"), each of which invests all of its net investable
assets in a corresponding series ("Series") of Advisers Managers Trust. Expenses
in the above table reflect expenses of the Portfolios and include each
Portfolio's pro rata portion of the operating expenses of each Portfolio's
corresponding Series. The Portfolios pay Neuberger & Berman Management, Inc.
("NBMI") an administration fee based on the Portfolio's net asset value. Each
Portfolio's corresponding Series pays NBMI a management fee based on the Series'
average daily net assets. Accordingly, the table above combines management fees
at the Series level and administration fees at the Portfolio level in a unified
fee rate.
NLVA 7
<PAGE>
NBMI provides investment management services to each Series that include, among
other things, making and implementing investment decisions and providing
facilities and personnel necessary to operate the Series. NBMI provides
administrative services to each Portfolio that include furnishing similar
facilities and personnel to the Portfolio. With the Portfolio's consent, NBMI is
authorized to subcontract some of its responsibilities under its administration
agreement with the Portfolio to third parties.
Each Portfolio bears all expenses of its operations other than those borne by
NBMI as administrator of the Portfolio and as distributor of its shares. Each
Series bears all expenses of its operations other than those borne by NBMI as
investment manager of the Series. These expenses include, but are not limited
to, for the Portfolios and the Series, legal and accounting fees and
compensation for trustees who are not affiliated with NBMI; for the Portfolios,
transfer agent fees and the cost of printing and sending reports and proxy
materials to shareholders; and for the Series, custodial fees for securities.
Any expenses which are not directly attributable to a specific Series are
allocated on the basis of the net assets of the respective Series.
NBMI has undertaken to limit the above listed Portfolio's expenses by
reimbursing each Portfolio for its operating expenses and its pro rata share of
its corresponding Series' operating expenses, excluding the compensation of NBMI
(with respect to all Portfolios but the Liquid Asset Portfolio), taxes,
interest, extraordinary expenses, brokerage commissions and transaction costs,
that exceed 1% of the Portfolio's average daily net asset value. This
undertaking is subject to termination on 60 days' prior written notice to the
Portfolio.
The effect of any expense limitation by NBMI is to reduce operating expenses of
a Portfolio and its corresponding Series and thereby increase total return.
EXAMPLE: The following example illustrates expenses you would incur at the end
of a one or three-year period on a hypothetical $1,000 allocation to each
Portfolio assuming a 5% annual return. The example reflects expenses of the
Separate Account and the Portfolio, but does not reflect premium taxes which may
apply. The information presented applies whether or not the Policy is (1)
surrendered; (2) annuitized; or (3) not surrendered or annuitized.
1 Year 3 Years
STRONG
Growth Fund II......................... $28 $87
International Stock Fund II............ $28 $87
Government Securities Fund II.......... $18 $57
Special Fund II........................ $20 $63
1 Year 3 Years
BERGER IPT
100 Fund............................... $18 $56
Small Company Growth................... $20 $60
8 NLVA
<PAGE>
NEUBERGER & BERMAN AMT
Liquid Asset........................... $18 $57
Limited Maturity....................... $16 $48
Growth................................. $17 $54
Partners............................... $21 $66
Balanced............................... $18 $56
The examples assume an average $30,000 annuity investment. These examples should
not be considered a representation of past or future expenses, performance on
return. Actual expenses and/or returns may be greater or less than those shown.
CONDENSED FINANCIAL INFORMATION
The financial statement for Ameritas (as well as auditors' report thereon) is in
the Statement of Additional Information.
No condensed financial information or financial statements are included for the
Separate Account because the Separate Account had not yet commenced operations,
had no assets or liabilities, and had received no income nor incurred any
expenses as of the date of this prospectus.
PERFORMANCE DATA
Separate Account LLVA may advertise certain information regarding the
performance of the Subaccounts. Performance data may be advertised as average
annual total return and/or cumulative total return. The Liquid Asset Subaccount
may advertise yield and/or effective yield. The yield figures are based on
historical earnings and are not intended to indicate future performance. Other
Subaccounts may advertise current yield. Details on how performance measures are
calculated for the Subaccounts are found in the Statement of Additional
Information. Performance advertising will reflect the mortality and expense risk
charge and the annual policy fee.
AMERITAS, THE SEPARATE ACCOUNT AND THE FUNDS
AMERITAS LIFE INSURANCE CORP.
Ameritas Life Insurance Corp. ("Ameritas") is a mutual life insurance company
domiciled in Nebraska since 1887. Ameritas and its subsidiaries are currently
licensed to sell life insurance and annuities in 50 states and the District of
Columbia. The Home Office of Ameritas is at 5900 "O" Street, P.O. Box 81889,
Lincoln, Nebraska 68501.
Ameritas and subsidiaries had total assets at December 31, 1995 of over $2.4
billion. Ameritas enjoys a long standing A+ ("Superior") rating from A.M. Best,
an independent firm that analyzes insurance carriers. Ameritas also has been
rated A ("Excellent") by Weiss Research, Inc., and an AA ("Excellent") rating
from Standard & Poor's for claims-paying ability.
Ameritas Investment Corp., the principal underwriter of the policies, may
publish in advertisements and reports to Policyowners, the ratings and other
information assigned to Ameritas by one or more independent rating services and
charts and other information concerning dollar cost averaging, portfolio
rebalancing, earnings sweep, tax-deference, diversification, asset allocation,
and other investment methods. Ameritas may also publish information about
Veritas, the direct-to-the-consumer Division of Ameritas. The purpose of the
ratings is to reflect the financial strength and/or claims-paying ability of
Ameritas. The ratings do not relate to the performance of the separate account.
NLVA 9
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THE SEPARATE ACCOUNT
Ameritas Life Insurance Corp. Separate Account LLVA ("Separate Account") was
established under Nebraska law on October 26, 1995 to receive and invest
premiums paid under the Policy. Assets of the Separate Account are held
separately from all other assets of Ameritas and are not chargeable with
liabilities from any other business Ameritas may conduct. Income, gains, or
losses of the Separate Account are credited without regard to other income,
gains, or losses of Ameritas.
The Separate Account purchases and redeems shares from the Funds at net asset
value. Shares are redeemed for Ameritas to pay withdrawals and surrenders,
collect charges, and transfer assets from one Portfolio to another, or to the
Fixed Account, as requested by the Owner. Any dividend or capital gain
distribution received from a Portfolio is immediately invested at net asset
value in shares of that Portfolio and held as assets of the corresponding
Subaccount.
All obligations arising under the Policies are liabilities of Ameritas. Ameritas
will always keep assets in the Separate Account of a total market value at least
equal to the reserve and other contract liabilities of the Separate Account. To
the extent that assets in the Separate Account exceed Ameritas' liabilities in
the Separate Account, Ameritas may withdraw excess assets to cover general
account obligations.
The Separate Account is a unit investment trust registered with the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940 ("1940
Act"). Such registration does not signify that the SEC supervises the
management, investment practices or policies of the Separate Account.
THE FUNDS
The Funds currently available are: Strong, Berger IPT and Neuberger & Berman
AMT. Each Fund is registered with the SEC under the 1940 Act as an open-ended
diversified management investment company or a series thereof. There are
currently eleven Subaccounts within the Account, each investing only in a
corresponding Portfolio of the Funds. Four Portfolios of Strong, two Portfolios
of Berger IPT, and five Portfolios of Neuberger & Berman AMT are offered for
investment in the Policy.
The assets of each Portfolio of the Funds are held separate from the assets of
the other Portfolios. Thus, each Portfolio operates as a separate investment,
and the income or losses of one Portfolio generally do not affect the investment
of any other Portfolio.
The investment objectives and policies of each Portfolio are summarized below.
There is no assurance that any Portfolio will achieve stated objectives. More
detailed information, including a description of investment risks, investment
advisory services, total expenses and charges is in the prospectuses of the
Funds, which accompany this Prospectus. These prospectuses should be read in
conjunction with this Prospectus and retained. All underlying Fund information,
including Fund prospectuses, has been provided to Ameritas by the Funds.
Ameritas has not independently verified this information.
You should periodically reconsider your allocation among the Portfolios in light
of current market conditions and the investment risks attendant to investing in
the Portfolios.
Strong, Berger IPT and Neuberger & Berman AMT may be made available for variable
annuity or variable life insurance contracts of various insurance companies.
Though unlikely, there is a possibility that a material conflict could arise
between the interests of the Separate Account and one or more of the separate
accounts of another participating insurance company. In the event of a material
conflict, the affected insurance companies agree to take any necessary steps,
including removing separate accounts from the Funds, to resolve the matter. See
the prospectuses of the Funds for more information.
10 NLVA
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Investment Objectives and Policies of the Funds' Portfolios
There is no assurance that a Portfolio will achieve its stated objective.
NLVA 11
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Strong
STRONG GROWTH FUND II seeks capital growth. It invests primarily in equity
securities that its advisor believes have above-average growth prospects.
STRONG INTERNATIONAL STOCK FUND II seeks capital growth. It invests primarily in
the equity securities of issuers located outside the United States.
STRONG GOVERNMENT SECURITIES FUND II seeks total return by investing for a high
level of current income with a moderate degree of share-price fluctuation.
STRONG SPECIAL FUND II seeks capital growth. It invests primarily in equity
securities and currently emphasizes investments in medium-sized companies that
its advisor believes are under-researched and attractively valued.
Berger IPT
BERGER IPT-100 FUND seeks long-term capital appreciation. Current income is not
an investment objective. The Fund places primary emphasis on established
companies which it believes to have favorable growth prospects, regardless of
the company's size. Common stock usually constitutes all or most of the Fund's
investment portfolio, but the Fund remains free to invest in securities other
than common stocks.
BERGER IPT-SMALL COMPANY GROWTH FUND seeks capital appreciation. It invests
principally in a diversified group of equity securities of small growth
companies with market capitalization of less than $1 billion at the time of
initial purchase.
NEUBERGER & BERMAN ADVISORS MANAGEMENT TRUST
LIQUID ASSET seeks the highest current income consistent with safety and
liquidity. Principal series investments are high-quality Money Market
instruments of government and non-government issuers.
LIMITED MATURITY BOND PORTFOLIO seeks the highest current income consistent with
low risk to principal and liquidity; and secondarily, total return. Principal
series investments are short-to-intermediate term debt securities, primarily
investment grade.
GROWTH PORTFOLIO seeks capital appreciation, without regard to income. Principal
series investments are common stocks.
PARTNERS PORTFOLIO seeks capital growth. Principal series investments are common
stocks and other equity securities of established companies.
12 NLVA
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BALANCED PORTFOLIO seeks long-term capital growth and reasonable current income
without undue risk to principal. Principal series investments are common stocks
and short-to-intermediate term debt securities, primarily investment grade.
THE FIXED ACCOUNT
You may allocate all or a portion of your Premium Payments and make transfers to
the Fixed Account. Amounts in the Fixed Account earn a fixed rate of interest
guaranteed by Ameritas never to be less than 3.0%.
Amounts allocated to the Fixed Account receive an interest rate declared
effective for the month of issue. The declared interest rate is guaranteed for
the remainder of the Policy Year. During subsequent Policy Years, all amounts in
the Fixed Account will earn the interest rate that was declared in the month of
the last Policy anniversary. Declared interest rates may be lower or higher than
the previous period.
Amounts allocated to the Fixed Account or transferred from the Separate Account
to the Fixed Account are placed in the General Account of Ameritas, which
supports insurance and annuity obligations. The General Account includes all of
Ameritas' assets, except those assets segregated in the separate accounts.
Ameritas has the sole discretion to invest the assets of the General Account,
subject to applicable law.
Because of exemptive and exclusionary provisions, interests in the General
Account have not been registered under the Securities Act of 1933 nor is the
General Account registered as an investment company under the Investment Company
Act of 1940. Accordingly neither the General Account nor any interest therein is
generally subject to the provisions of the 1933 or 1940 Act. We understand that
the SEC has not reviewed the disclosures in this Prospectus relating to the
Fixed Account portion of the Contract; however, disclosures regarding the Fixed
Account portion of the Contract may be subject to generally applicable
provisions of the Federal Securities Laws regarding the accuracy and
completeness of statements made.
POLICY FEATURES
The Policy is a variable annuity contract issued by Ameritas. The rights and
benefits of the Policy are described below and in the Policy. The Policy
controls the rights and benefits you have. Ameritas reserves the right to make
any modification to conform the Policy to, or to give you the benefit of, any
changes in the law.
CONTROL OF THE POLICY
The Owner is the person or entity named as such in the application or in
subsequent written changes shown in Ameritas records. While living, the Owner
has the sole right to receive all benefits and exercise all rights granted by
the Policy or Ameritas. The Owner may name both primary and contingent
beneficiaries. Subject to the rights of any irrevocable beneficiary and any
assignee of record, all rights, options, and privileges belong to the Owner, if
living; otherwise to any successor-owner or Owners, if living; otherwise to the
estate of the last Owner to die.
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POLICY PURCHASE AND PREMIUM PAYMENT
Individuals wishing to purchase a Policy should send a complete application and
an initial premium to Ameritas' Home Office (5900 "O" Street, P.O. Box 81889,
Lincoln, NE 68501). Your initial premium must be equal to or greater than the
minimum $2,000 requirement. The named Annuitant must be 85 years of age or less.
Acceptance is subject to Ameritas' underwriting rules and complete application.
Ameritas reserves the right to reject any application.
If the application and initial Premium Payment can be accepted in the form
received, the initial premium will be applied to purchase the Policy within two
business days from the date the premium was received. The date the initial
premium is applied to purchase the Policy is the Effective Date.
If an incomplete application is received, we will request the necessary
information to complete the application. If after five business days from
receipt of the initial premium, the application remains incomplete, we will
return the initial premium unless we obtain your permission to retain the
premium pending completion of the application. Once the application is complete
and we have received the initial premium, the premium will be applied within two
business days.
Additional Premium Payments may be made at any time prior to the Annuity Date,
as long as the Annuitant is living. Additional payments must be made for at
least $250, however, smaller amounts may be accepted if made by automatic bank
draft or at Ameritas' discretion. Any additional premium is credited to the
Accumulation Value as of the date of receipt or the next Valuation Date if
received on a day when the NYSE is not open for trading.
Total premiums may not exceed $1,000,000 for either a single Policy or for
multiple Ameritas annuity Policies having the same Annuitant without prior
approval from Ameritas.
ALLOCATION OF PREMIUM
You may allocate premium to one or more of the Portfolios and to the Fixed
Account. Allocated portions must be a whole number percentage. The allocations
must total 100%.
On the Issue Date, the policy's Accumulation Value will be based on the Liquid
Asset Portfolio value as if the Policy had been issued and the initial Net
Premium invested within two business days of receipt by Ameritas of the
application and initial premium ("the two day date"). This two day date will
determine your Policy Date going forward. On the Effective Date, the
Accumulation Value is allocated to the Liquid Asset Portfolio. Thirteen days
after the Issue Date, the Accumulation Value of the Policy will be allocated
among the Portfolios, or to the Fixed Account as selected by the Owner in the
application.
The Owner bears the entire investment risk for the portion of the Accumulation
Value allocated to the Portfolios. You should periodically review your
allocation in light of market conditions and your financial objectives.
ACCUMULATION VALUE
On the Effective Date, the Accumulation Value of the Policy is equal to the
initial premium received, less any applicable premium taxes, plus any interest
credited based on the Liquid Asset Portfolio value as of the Policy Date.
Thereafter, the Accumulation Value is determined on each Valuation Date by
multiplying the number of Accumulation Units of each Subaccount by the current
Accumulation Unit Price for that Subaccount and by adding each together with the
amount in the Fixed Account. The number of Accumulation Units credited to the
Policy is decreased by any annual policy fee, any withdrawals, and, upon
annuitization, any applicable premium taxes.
When a portion of the Accumulation Value is allocated to a Portfolio, a certain
number of Accumulation Units are credited to your Policy. The number of
Accumulation Units is determined by dividing the dollar amount allocated to the
Portfolio by the Accumulation Unit Price for that Portfolio as of the end of the
Valuation Period in which the allocation is made.
14 NLVA
<PAGE>
The Accumulation Units of each Portfolio are valued separately. The Accumulation
Unit Price may vary each Valuation Period according to the net investment
performance of the Portfolio, the daily charges under the Policy, and, any
applicable tax charges.
Therefore, the Accumulation Value of your Policy will vary from Valuation Period
to Valuation Period, reflecting the investment experience of the selected
Portfolios of the Funds, the interest earned in the Fixed Account, additional
Premium Payments, withdrawals and the deduction of any charges.
TRANSFERS AMONG PORTFOLIOS AND THE FIXED ACCOUNT
You may make transfers among the Portfolios and/or the Fixed Account 15 times
each Policy Year without charge. A transfer charge of $10 may be imposed for
each additional transfer and will be added to the requested transfer amount.
Each transfer must be at least $250, or the balance of the Portfolio, if less.
You may make unlimited transfers from the Portfolios to the Fixed Account. You
may also transfer from the Fixed Account amounts up to the greater of: 25% of
the Accumulation Value of the Fixed Account; the amount of any transfer from the
Fixed Account during the prior thirteen months; or $1,000 to the various
Portfolios during the 30 day period following the Policy anniversary date. The
minimum amount that may remain in a Portfolio or the Fixed Account after a
transfer is $100.
You may initiate transactions by telephone. Ameritas will employ reasonable
procedures to confirm that telephone instructions are genuine. Ameritas
procedures for transactions initiated by telephone include, but are not limited
to, requiring the Owner to provide the policy number at the time of giving
transfer instructions; tape recording of all telephone transfer instructions;
and the provision, by Ameritas, of written confirmation of the telephone
transactions. Ameritas will effect transfers and determine all values in
connection with transfers at the end of the Valuation Period during which the
transfer request is received at the Home Office.
Transfers may be subject to additional limitations by the Funds.
SYSTEMATIC PROGRAMS
Ameritas may offer systematic programs as discussed below. Transfers of
Accumulation Value made within programs will not be counted in determining
whether the transfer fee applies. All other normal transfer restrictions, as
described above, may apply.
PORTFOLIO REBALANCING. Portfolio rebalancing is a method to maintain your
original allocation proportions among Portfolios. Under this program, the Owner
can instruct Ameritas to reallocate Accumulation Value among the Portfolios and
the Fixed Account, on a systematic basis, in accordance with allocation
instructions specified by the Owner.
DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, the Owner can
instruct Ameritas to automatically transfer, on a systematic basis, a
predetermined amount or percentage specified by the Owner from the Liquid Asset
Portfolio to any of the other Portfolios.
EARNINGS SWEEP. Permits systematic redistribution of earnings among Portfolios.
The Owner can request participation in the available systematic programs when
purchasing the Policy or at a later date. The Owner can change the allocation
percentage or discontinue any program by sending written notice or calling the
Home Office. Other scheduled programs may
NLVA 15
<PAGE>
be made available. Ameritas reserves the right to modify, suspend or terminate
such programs at any time. There is no charge for participation in these
programs at this time.
WITHDRAWALS AND SURRENDERS
Any time prior to the Annuity Date and while the Annuitant is still living, you
may make withdrawals or surrender the Policy to receive part or all of the
Accumulation Value. No withdrawal or surrender may be made after the Annuity
Date except as permitted under a particular Annuity Income Option.
The amount available for withdrawal is the Accumulation Value at the end of the
Valuation Period during which the written request for withdrawal is received,
less any applicable premium taxes and in the case of a surrender, also less the
annual policy fee that would be due on the last Valuation Date of the Policy
Year.
In the absence of specific direction from the Owner, amounts will be withdrawn
from the Subaccounts and the Fixed Account on a pro rata basis. The minimum
withdrawal amount is $250. Any withdrawal request that would reduce the
Accumulation Value to less than $1,000 will be considered a request for policy
surrender.
Since the Owner assumes the investment risk with respect to amounts allocated to
the Separate Account, the total amount paid upon withdrawal under the Policy
(taking into account any prior withdrawals) may be more or less than the total
Premium Payments made. The surrender value may be paid in a lump sum to the
Owner, or, if elected, all or any part may be paid out under an Annuity Income
Option. (See "Annuity Income Options".)
Your proceeds will be paid within seven days of receipt of written request for
withdrawal or surrender, subject to postponement in certain circumstances. (See
"Deferment of Payment".) Payments under the Policy of any amounts derived from a
premium paid by check may be delayed until the check has cleared the payor's
bank.
If, at the time the Owner makes a withdrawal request, he or she has not provided
Ameritas with a written election not to have federal income taxes withheld,
Ameritas must by law withhold such taxes from the taxable portion of the
withdrawal and remit that amount to the federal government. Moreover, the
Internal Revenue Code provides that a 10% penalty tax may be imposed on certain
early withdrawals. (See "Federal Tax Matters.")
SYSTEMATIC WITHDRAWALS. A systematic withdrawal option is available. Automatic
withdrawals may be taken on a monthly, quarterly, semi-annual or annual mode.
FREE LOOK PRIVILEGE
A free look period is given to examine a Policy and return it for a refund. The
Owner may cancel the Policy within 10 days after receipt of the Policy, unless
state law requires a longer period of time. The refund is equal to the greater
of the premiums paid or the premiums adjusted by investment gains or losses. To
cancel the Policy, the Owner should return it to Ameritas at the Home Office. A
refund, if the premium was paid by check, may be delayed until the check has
cleared the Owner's bank.
CHARGES AND DEDUCTIONS
There is no sales load, no withdrawal charge, and no surrender charge.
Charges will be deducted periodically from the Accumulation Value of the Policy
to compensate Ameritas for, among other things: (1) issuing and administering
the Policy; and (2) assuming certain risks in connection with the Policy. The
nature and amount of these charges are described more fully below.
16 NLVA
<PAGE>
No deductions are made from the Premium Payments before they are allocated to
the Account or Fixed Account, unless taxes are imposed by state law upon the
receipt of a Premium Payment. In that case Ameritas will deduct the premium tax
due when the premiums are received.
ADMINISTRATIVE CHARGES
ANNUAL POLICY FEE. An annual policy fee of up to $40.00 (currently $25.00) is
deducted from the Accumulation Value on the last Valuation Date of each Policy
Year or upon a surrender. This charge reimburses Ameritas for the administrative
costs of maintaining the Policy on Ameritas' system and the cost of reporting to
Owners.
Ameritas does not expect to make a profit on the charges for the annual policy
fee.
TRANSFER CHARGE. Transfer charges may be levied. (See "Transfers Among
Portfolios and the Fixed Account.")
MORTALITY AND EXPENSE RISK CHARGE
Ameritas imposes a charge as compensation for bearing certain mortality and
expense (M&E) risks under the Policies. The charge is assessed daily and is
equal to an annual rate of .75% of the value of the average daily net assets of
the Account. Ameritas guarantees that this charge will never exceed .95%. If
this charge is insufficient to cover assumed risks, the loss will fall on
Ameritas. Conversely, if the charge proves more than sufficient, any excess will
be added to Ameritas' surplus. No M&E charge is imposed on the Fixed Account.
The mortality risk borne by Ameritas, assuming the selection of one of the forms
of life annuities, is to make monthly Annuity Payments (determined in accordance
with the annuity tables and other provisions contained in the Policies)
regardless of how long all annuitants may live. This undertaking assures that
neither an Annuitant's own longevity, nor an improvement in life expectancy
greater than expected, will have any adverse affect on the monthly annuity
payments the Annuitant will receive. It therefore relieves the Annuitant from
the risk of outliving the funds accumulated for retirement.
In addition, Ameritas bears a mortality risk under the Policies, regardless of
the Annuity Income Option selected, in that it guarantees the purchase rates for
the Annuity Income Options available under the Policy and it guarantees that the
death benefit payable upon death of the Annuitant prior to the Annuity Date will
be the greater of the Accumulation Value or the Premium Payments made.
The expense risk undertaken by Ameritas, with respect to the Account, is that
the deductions for administrative costs under the Policies may be insufficient
to cover the actual future costs incurred by Ameritas for providing
administration services.
If the annual policy fee is insufficient to cover the administration expenses,
the deficiency will be met from Ameritas' General Account funds, including the
amount derived from the charge levied for mortality and expense risks.
TAX CHARGES
The Owner will pay premium taxes that currently range from 0% to 3.5% of the
premium paid, where such taxes are imposed by the state law of the Owner's
residence. States impose premium taxes either upon receipt, by the company, of a
premium payment, or upon annuitization or withdrawals. Ameritas will charge and
deduct premium taxes as required by state law and in accordance with any
applicable company election. Applicable premium tax rates are subject to change.
The Owner will be notified of any applicable premium taxes. You are responsible
for informing Ameritas in writing of changes of residence.
NLVA 17
<PAGE>
Under present laws, Ameritas will incur state or local taxes (in addition to the
premium taxes described above) in several states. At present, these taxes are
not significant; thus, Ameritas does not currently make a charge for these other
taxes. If they increase, however, Ameritas may charge for such taxes. Such
charges would be deducted from the Accumulation Value.
Ameritas does not expect to incur any federal income tax liability attributable
to investment income or capital gains retained as part of the reserves under the
Policies. Based upon these expectations, no charge is being made currently to
the Account for corporate federal income taxes which may be attributable to the
Account. Ameritas will periodically review the question of a charge to the
Account for corporate federal income taxes related to the Account. Such a charge
may be made in future years for any federal income taxes incurred by Ameritas.
This might become necessary if the tax treatment of Ameritas is ultimately
determined to be other than what we currently believe it to be, if there are
changes made in the federal income tax treatment of annuities at the corporate
level, or if there is a change in Ameritas' tax status. In the event that
Ameritas should incur federal income taxes attributable to investment income or
capital gains retained as part of the reserves under the Policy, the
Accumulation Unit Price would be correspondingly adjusted. See "Federal Tax
Matters".
FUND INVESTMENT ADVISORY FEES AND EXPENSES
The value of the assets on the Separate Account will reflect investment advisory
fees and other expenses incurred by the Funds. Fund expenses are found in the
Funds' prospectuses, the Statement of Additional Information, and the Fee Table
of this prospectus.
ANNUITY PERIOD
ANNUITY DATE
The Annuity Date is the date that Annuity Payments are scheduled to begin,
unless the Policy has been surrendered or the Annuitant is deceased and an
amount has been paid as proceeds prior to that date. The Annuity Date will be
the later of the fifth Policy anniversary date or the Policy anniversary which
is nearest the Annuitant's 85th birthday.
However, the Owner may specify an Annuity Date at the time of purchase which may
be extended up to the Policy anniversary nearest the Annuitant's 95th birthday.
The 29th, 30th, or 31st day of any month may not be selected as the Annuity
Date.
An Annuity Date may only be changed by written request during the Annuitant's
lifetime. Written request to change the Annuity Date must be received at the
Ameritas Home Office at least 30 days before the currently scheduled Annuity
Date. The Annuity Date and Annuity Income Options available for Qualified
contracts may also be controlled by endorsements, the plan, or applicable law. .
ANNUITY INCOME OPTIONS
If the Annuitant is living on the Annuity Date and the Policy is in force,
Annuity Payments will be made to the Annuitant according to the terms of the
Policy and the Annuity Income Option selected.
The amounts of any Annuity Payments payable will be based on the Accumulation
Value as of the Annuity Date less any premium taxes, if applicable. Thereafter,
the monthly Annuity Payment will not change, except in the event the Interest
Payment Option is elected, in which case the payment will vary based on the rate
of interest determined by Ameritas. All or part of the Accumulation Value may be
placed under one or more Annuity Income Options. If annuity payments are to be
paid under more than one option, Ameritas must be told what part of the
Accumulation Value is to be paid under each option.
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The Annuity Income Options are shown below. Election of an Annuity Income Option
must be made by written request to Ameritas at least thirty (30) days in advance
of the Annuity Date. If no election is made, payments will be made as a Life
Annuity as shown below. Subject to Ameritas' approval, the Owner (or after the
Annuitant's death, the Annuitant's Beneficiary) may select any other Annuity
Income Option Ameritas then offers. Annuity Income Options are not available to:
(1) an assignee; or (2) any other than a natural person except with Ameritas'
consent.
If an Annuity Income Option selected does not generate monthly payments of at
least $100, Ameritas reserves the right to pay the Accumulation Value as a lump
sum payment or to change the frequency. If an Annuity Income Option is chosen
which depends on the continuation of life of the Annuitant, proof of birth date
may be required before Annuity Payments begin. For Annuity Income Options
involving life income, the actual age of the Annuitant or joint Annuitant will
affect the amount of each payment. Since payments to older Annuitants are
expected to be fewer in number, the amount of each Annuity Payment may be
greater. For Annuity Income Options that do not involve life income, the length
of the payment period may affect the amount of each payment: the shorter the
period, the greater the amount of each Annuity Payment.
The following Annuity Income Options are currently available:
INTEREST PAYMENT. Ameritas will hold any amount applied under this option and
pay or credit interest on the unpaid balance each month at a rate determined by
Ameritas.
DESIGNATED AMOUNT ANNUITY. Monthly annuity payments will be for a fixed amount.
Payments continue until the amount Ameritas holds runs out.
DESIGNATED PERIOD ANNUITY. Monthly annuity payments are paid for a period
certain, as the Owner elects, up to 20 years.
LIFE ANNUITY. Monthly annuity payments are paid for the life of an Annuitant,
ceasing with the last Annuity Payment due prior to his or her death. Variations
provide for guaranteed payments for a period of time.
JOINT AND LAST SURVIVOR ANNUITY. Monthly annuity payments are paid based on the
lives of the two annuitants and thereafter on the life of the survivor, ceasing
with the last Annuity Payment due prior to the survivor's death.
The rate of interest payable under the Interest Payment, Designated Amount
Annuity or Designated Period Annuity Options will be guaranteed to be no less
than 3% compounded yearly. Payments under the Life Annuity and Joint and Last
Survivor Annuity Options will be based on the 1983 Table "a" Individual Annuity
Table, projected for seventeen years, at 3 1/2% interest. Ameritas may, at any
time of election of an Annuity Income Option, offer more favorable rates in lieu
of the guaranteed rates specified in the Annuity Tables. These rates may be
based on Annuity Tables which distinguish between males and females.
Under current administrative practice, Ameritas allows the beneficiary to
transfer amounts applied under the Interest Payment, Designated Amount Annuity,
and Designated Period Annuity Options to either the Life Annuity or Joint and
Last Survivor Annuity Option after the Annuity Date. However, there is no
guarantee that Ameritas will continue this practice which can be changed
at any time at Ameritas' discretion.
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion is general in nature and is not intended as tax advice.
It is not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under a contract. You should consult a competent tax adviser before purchasing a
policy. This discussion is based upon Ameritas' understanding of the
NLVA 19
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present federal income tax laws as they are currently interpreted by the
Internal Revenue Service. No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws, other than premium
taxes. (See "Tax Charges".)
TAXATION OF ANNUITIES IN GENERAL
NONQUALIFIED POLICIES. Section 72 of the Internal Revenue Code (the Code)
governs taxation of annuities. In general, the Owner is not taxed on increases
in the value of a Policy until some form of distribution is made under the
Policy. The exception to this rule is the treatment afforded to Owners that are
not natural persons. Generally, an Owner that is not a natural person must
include in income any increase in excess of the Owner's cash value over the
Owner's "investment in the policy" during the taxable year, even if no
distribution occurs. There are, however, exceptions to this rule which you may
wish to discuss with your tax counsel. The following discussion applies to
Policies owned by natural persons.
The taxable portion of a distribution (in the form of an annuity or lump sum
payment) is taxed as ordinary income, subject to any income averaging rules
applicable to taxpayers generally. For this purpose, the assignment, pledge, or
agreement to assign or pledge any portion of the Accumulation Value generally
will be treated as a distribution. Generally, in the case of a withdrawal under
a Nonqualified Policy, amounts received are first treated as taxable income to
the extent that the Accumulation Value immediately before the withdrawal exceeds
the "investment in the policy" at that time. Any additional amount is not
taxable.
Although the tax consequences may vary depending on the Annuity Income Option
elected under the Policy, in general, only the portion of the Annuity Payment
that represents the amount by which the Accumulation Value exceeds the
"investment in the policy" will be taxed. For fixed annuity payments, in
general, there is no tax on the amount of each payment which represents the same
ratio that the "investment in the policy" bears to the total expected value
of the Annuity Payment for the term of the payment; however, the remainder of
each Annuity Payment is taxable. Any distribution received subsequent to the
investment in the Policy being recovered will be fully taxable.
In the case of a distribution from a Nonqualified Policy, there may be imposed a
federal penalty tax equal to 10% of the amount treated as taxable income. In
general, however, there is no penalty tax on distributions: (1) made on or after
the date on which the Owner is actual age 59 1/2, (2) made as a result of death
or disability of the Owner, or (3) received in substantially equal payments as a
life annuity subject to Internal Revenue Service requirements, including special
"recapture" rules.
QUALIFIED POLICIES. The rules governing the tax treatment of distributions under
qualified plans vary according to the type of plan and the terms and conditions
of the plan itself. Generally, in the case of a distribution to a participant or
beneficiary under a Policy purchased in connection with these plans, only the
portion of the payment in excess of the "investment in the policy" allocated to
that payment is subject to tax. The "investment in the policy" equals the
portion of plan contributions invested in the Policy that was not excluded from
the participant's gross income, and may be zero. In general, for allowed
withdrawals, a ratable portion of the amount received is taxable, based on the
ratio of the investment in the Policy to the total Policy value. The amount
excluded from a taxpayer's income will be limited to an aggregate cap equal to
the investment in the Policy. The taxable portion of annuity payments is
generally determined under the same rules applicable to Nonqualified Policies.
However, special favorable tax treatment may be available for certain
distributions (including lump sum distributions). Adverse tax consequences may
result from distributions prior to age 59 1/2 (subject to certain exceptions),
distributions that do not conform to specified commencement and minimum
distribution rules, aggregate distributions in excess of a specified annual
amount, and in other certain circumstances.
Distributions from qualified plans are subject to specific tax withholding
rules. Eligible rollover distributions from a qualified plan are subject to
income tax withholding at a rate of 20% unless the Policyowner elects to have
the distribution paid directly by Ameritas to an eligible retirement plan in a
direct rollover. If the distribution is not an eligible rollover distribution,
it is generally subject to the same withholding rules as distributions from
Nonqualified Policies.
20 NLVA
<PAGE>
GENERAL PROVISIONS
ANNUITANT'S BENEFICIARY
The Annuitant's Beneficiary(ies) receives the death benefit proceeds upon death
of the Annuitant. The Owner may name both primary and contingent Annuitant's
Beneficiaries. The Annuitant's Beneficiary(ies) is named in the application or
as subsequently changed and recorded in Ameritas' records.
Multiple beneficiaries may be named; however, unless otherwise indicated,
payments are made equally to those primary beneficiaries who are alive upon the
death of the Annuitant. Contingent beneficiaries are only eligible if no primary
beneficiary is alive at the time proceeds are payable. If none survive, the
final beneficiary will be the Owner or the Owner's estate.
The Owner may change the Annuitant's Beneficiary by written request on a Change
of Beneficiary form at any time during the Annuitant's lifetime. Ameritas, at
its option, may require that the Policy be returned to the Home Office for
endorsement of any change, or that other forms be completed. The change will
take effect as of the date the change is recorded at the Home Office. Ameritas
will not be liable for any payment made or action taken before the change is
recorded.
No limit is placed on the number of changes that may be made.
DEATH OF ANNUITANT
If the Annuitant dies prior to the Annuity Date, an amount will be paid as
proceeds to the Annuitant's Beneficiary. The death benefit is payable upon
receipt of Satisfactory Proof of Death of the Annuitant as well as proof that
the Annuitant died prior to the Annuity Date. Ameritas guarantees the Death
Benefit will equal the greater of the Accumulation Value or total premiums paid
less withdrawals, on the date Satisfactory Proof of Death is received by
Ameritas at its Home Office. The death benefit is payable as a lump sum or under
one of the Annuity Income Options.
The Owner may elect an Annuity Income Option for the Annuitant's Beneficiary, or
if no such election was made by the Owner and a cash benefit has not been paid,
the Annuitant's Beneficiary may make this election after the Annuitant's Death.
Since Satisfactory Proof of Death includes a "Claimant's Statement", which
specifies how the beneficiary wishes to receive the benefit (unless the Owner
previously selected an option), the amount of the death benefit will continue to
reflect the investment performance of the Separate Account until that
information is supplied to Ameritas. Upon receipt of this proof, the death
benefit will be paid to the Annuitant's Beneficiary within seven days, or as
soon thereafter as Ameritas has sufficient information about the Annuitant's
Beneficiary to make the payment. In order to take advantage of the favorable tax
treatment accorded to receiving the death benefit as an annuity, the Annuitant's
Beneficiary must elect to receive the benefits under an Annuity Option within 60
days "after the day on which such lump sum became payable," as defined in the
Internal Revenue Code.
DEATH OF OWNER
If the Owner dies on or after the Annuity Date, annuity benefits continue to
be paid to the Annuitant under the Annuity Income Option in effect on the
Owner's date of death.
If the Owner dies before the Annuity Date and before the entire interest in the
Policy is distributed, the Accumulation Value of the Policy must be distributed
to the Owner's Designated Beneficiary so that the Policy qualifies as an annuity
under the Internal Revenue Code. The entire interest must be distributed within
five years of the Owner's death. However, a distribution period exceeding five
years will be allowed if the Owner's Designated Beneficiary purchases an
immediate annuity under which payments will begin within one year of the Owner's
death and will
NLVA 21
<PAGE>
be paid out over the lifetime of the Owner's Designated Beneficiary or over a
period not extending beyond his or her life expectancy.
If the Owner's interest is payable to (or for the benefit of) the surviving
spouse of the Owner, the Policy may be continued with the surviving spouse
treated as the Owner for purposes of applying the rules described above.
Finally, in situations where the Owner is not an individual, these distribution
rules are applicable upon the death or change of the Annuitant.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
Ameritas reserves the right, subject to applicable law, and if necessary, after
notice to and prior approval from the SEC and or state insurance authorities, to
make additional Portfolios available to you. We may also eliminate, combine or
substitute Subaccounts if, in our judgment, marketing needs, tax considerations,
or investment conditions warrant. This may happen due to a change in law or a
change in a Portfolio's investment objectives or restrictions, or for some other
reason. Ameritas may operate the Separate Account as a management company under
the 1940 Act, it may be deregistered under that Act if registration is no longer
required, or it may be combined with other Ameritas separate accounts. Ameritas
may also transfer the assets of the Separate Account to another Separate
Account.
If any of these substitutions or changes are made, Ameritas may by appropriate
endorsement change the policy to reflect the substitution or change. In
addition, Ameritas may, when permitted by law, restrict or eliminate any voting
rights of Owners or other persons who have voting rights as to the Account.
You will be notified of any material change in the investment Policy of any
Portfolio in which you have an interest.
DEFERMENT OF PAYMENT
Payment of any withdrawal, surrender or lump sum death benefit due from the
Separate Account will occur within seven days from the date the amount becomes
payable, except that Ameritas may be permitted to defer such payment if:
a) the New York Stock Exchange is closed other than customary weekends or
holidays or trading on the New York Stock Exchange is otherwise restricted;
or
b) the SEC permits the delay for the protection of Owners; or
c) an emergency exists as determined by the SEC.
In addition, surrenders or withdrawals from the Fixed Account may be deferred by
Ameritas for up to 6 months from the date of written request.
OWNER INQUIRIES
Inquiries should be addressed to Ameritas Life Insurance Corp., 5900 "O" Street,
P.O. Box 81889, Lincoln, Nebraska 68501 or made by calling 1-800-745-6665. All
inquiries should include the Policy number and the Owner's name.
CONTESTABILITY
Ameritas cannot contest the validity of this Policy after the Policy Date,
subject to "Misstatement of Age or Sex" provision.
22 NLVA
<PAGE>
MISSTATEMENT OF AGE OR SEX
Ameritas may require proof of age and sex before making annuity payments. If the
age or sex of the Annuitant has been misstated, we will adjust the benefits and
amounts payable under this Policy.
If Ameritas made any overpayments, interest at the rate of 6% per year
compounded yearly will be charged against future payments. If we made
underpayments, the balance due plus interest at the rate of 6% per year
compounded yearly will be paid in a lump sum.
REPORTS AND RECORDS
Ameritas will maintain all records relating to the Account and will mail the
Owner, at the last known address of record, within 30 days after each Policy
anniversary, an annual report which shows the current Accumulation Value as
allocated among the Subaccounts or the Fixed Account, and charges made during
the Policy Year. Quarterly reports are also currently provided but except for
the annual report, Ameritas reserves the right to charge a report fee. The Owner
will also be sent confirmations of transactions, such as purchase payments,
transfers and withdrawals under the Policy. A periodic report for the Fund and a
list of the securities held in each Portfolio of the Fund and any other
information required by the 1940 Act will also be provided.
DISTRIBUTION OF THE POLICIES
Ameritas Investment Corp. ("AIC"), a wholly-owned subsidiary of AMAL
Corporation, and an affiliate of Ameritas, will act as the principal underwriter
of the Policies. AIC was organized under the laws of the State of Nebraska on
December 29, 1983, and is a broker/dealer registered according to the Securities
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc. There is no premium load to cover sales and distribution expenses.
All compensation or expense reimbursement received by AIC for serving as the
principal underwriter of the Policies will be paid by Ameritas from its other
assets or surplus in its general account, which may include profits derived from
amounts derived from mortality and expense risk charges and other charges made
under the Policies. Policies can be purchased directly from Ameritas through
Veritas, a direct-to-consumer Division of Ameritas, with salaried employees who
are registered representatives of AIC and who will not receive compensation
related to the purchase. The Policies are also sold by individuals who are
registered representatives of AIC, and who are licensed as life insurance agents
for Ameritas. AIC and Ameritas may authorize registered representatives of other
registered broker/dealers to sell the Policies subject to applicable law. In
these situations, AIC or the other broker/dealer may receive compensation. AIC
will be paid by Ameritas at a rate of .05% of all premium received. Other
broker/dealers will receive from Ameritas up to .5% of premium, and an asset
based administrative compensation of .10% (annualized), which fee shall be paid
by Ameritas.
SAFEKEEPING OF THE ACCOUNT'S ASSETS
Ameritas hold the assets of the Account. The assets are held separate and apart
from General Account assets. Ameritas maintains records of all purchases and
redemptions of the Funds' shares by each of the Subaccounts.
THIRD PARTY SERVICES
Ameritas is aware that certain third parties are offering money management
services in connection with the contracts. Ameritas does not endorse, approve or
recommend such services in any way and contract owners should be aware that fees
paid for such services are separate and in addition to fees paid under the
contracts.
NLVA 23
<PAGE>
VOTING RIGHTS
To the extent required by law, Ameritas will vote the Portfolio shares held in
the Account at shareholder meetings in accordance with instructions received
from persons having voting interests in the corresponding Subaccount. The 1940
Act currently requires shareholder voting on matters such as the election of the
Board of Trustees of the Funds, the approval of the investment advisory
contract, changes in the fundamental investment Policies of the Funds, and
approval of the independent accountants. If, however, the 1940 Act or any
regulation thereunder should be amended, or if the present interpretation
thereof should change, and, as a result, Ameritas determines that it is allowed
to vote the Portfolio shares in its own right, Ameritas may elect to do so.
Prior to the Annuity Date, the Owner holds a voting interest in each Subaccount
to which the Accumulation Value is allocated. The number of votes available to
an Owner will be calculated separately for each Subaccount of the Account. That
number will be determined by applying the Owner's percentage interest, if any,
in a particular Subaccount to the total number of votes attributable to the
Subaccount. The number of votes available to an Owner will be determined by
dividing the Accumulation Value attributable to a Subaccount by the net value
per share of the applicable Portfolio. In determining the number of votes,
fractional shares will be recognized.
The number of votes of the Portfolio which are available will be determined as
of the date coincident with the date established by that Portfolio for
determining shareholders eligible to vote at the meeting of the Funds. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the Funds.
Shares of Funds as to which no timely instructions are received, or shares held
by Ameritas as to which Owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
Policies participating in that Subaccount.
Each person having a voting interest in a Subaccount will receive proxy
material, reports and other materials relating to the appropriate Portfolio.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Account is a party or to which the
assets of the Account are subject. Ameritas and AIC are not involved in any
litigation that is of material importance in relation to their total assets or
that relates to the Account.
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available that contains more details
concerning the subjects discussed in this Prospectus. This can be obtained by
writing to the address on the front page or by calling 1-800-745-6665.
The following is a Table of Contents for that Statement:
Page
GENERAL INFORMATION AND HISTORY ...................................... 2
THE POLICY............................................................ 2
GENERAL MATTERS....................................................... 6
FEDERAL TAX MATTERS................................................... 8
DISTRIBUTION OF THE POLICY............................................ 8
SAFEKEEPING OF ACCOUNT ASSETS......................................... 9
STATE REGULATION ..................................................... 9
LEGAL MATTERS......................................................... 9
EXPERTS .............................................................. 9
OTHER INFORMATION..................................................... 10
FINANCIAL STATEMENTS.................................................. 10
24 NLVA
<PAGE>
APPENDIX A
LONG TERM MARKET TRENDS
The information below covering the period of 1926-1995 is an examination of the
basic relationship between risk and return among the different asset classes,
and between nominal and real (inflation adjusted) returns. The information is
provided because the Policyowners have varied investment portfolios available
which have different investment objectives and policies. The chart generally
demonstrates how different classes of investments have performed during the
period. The study of asset returns provides a period long enough to include most
of the major types of events that investors have experienced in the past. This
is a historical record and is not intended as a projection of future
performance.
The graph depicts the growth of a dollar invested in common stocks, small
company stocks, long-term government bonds, Treasury bills, and a hypothetical
asset returning the inflation rate over the period from the end of 1925 to the
end of 1995. All results assume reinvestment of dividends on stocks or coupons
on bonds and no taxes. Transaction costs are not included, except in the small
stock index starting in 1982. Charges associated with a variable insurance
policy are not reflected in the chart.
Each of the cumulative index values is initiated at $1.00 at year-end 1925. The
graph illustrates that common stocks and small stocks gained the most over the
entire 70-year period: investments of one dollar would have grown to $1,113.92
and $3,822.40 respectively, by year-end 1995. This growth, however, was earned
by taking substantial risk. In contrast, long-term government bonds (with an
approximate 20-year maturity), which exposed the holder to less risk, grew to
only $34.04. Note that the return and principal value of an investment in
stocks will fluctuate with changes in market conditions. Prices of small
company stocks are generally more volatile than those of large company stocks.
Government bonds and Treasury Bills are guaranteed by the U.S. Government and,
if held to maturity, offer a fixed rate of return and a fixed principal value.
The lowest risk strategy over the past 70 years was to buy U.S. Treasury bills.
Since Treasury bills tended to track inflation, the resulting real
(inflation-adjusted) returns were near zero for the entire 1926-1995 period.
Omitted graph illustrates long term market trends as described in the narrative
above.
Year End 1925 = $1.00
Source: Stocks, Bonds, Bills, and Inflation 1996 Yearbook
(C)Ibbotson Associates, Chicago. All Rights Reserved.
<PAGE>
APPENDIX B
STANDARD & POOR'S 500
The Standard and Poor's (S & P 500) is a weighted index of 500 widely held
stocks: 400 Industrials, 40 Financial Company Stocks, 40 Public Utilities, and
20 Transportation stocks, most of which are traded on the New York Stock
Exchange. This information is provided because the Policyowners have varied
investment options available. The investment options, except the Fixed Account
and the Liquid Asset Account, involve investments in the stock market. The S & P
500 is generally regarded as an accurate composite of the overall stock market.
<TABLE>
<CAPTION>
PERCENT CHANGE OF TOTAL RETURN
STANDARD & POOR'S 500 INDEX
%
Year Change
- ----------------------------------
<S> <C> <C>
1 1971 14.56 Omitted graph depicts the activity
2 1972 18.90 of the S&P 500 Index for the years
3 1973 -14.77 1970-1995.
4 1974 -26.39
5 1975 37.16
6 1976 23.57
7 1977 -7.42
8 1978 6.38
9 1979 18.20
10 1980 32.27
11 1981 -5.01
12 1982 21.44
13 1983 22.38
14 1984 6.10
15 1985 31.57
16 1986 18.56
17 1987 5.10
18 1988 16.61
19 1989 31.69
20 1990 -3.14
21 1991 30.45
22 1992 7.61
23 1993 10.08
24 1994 1.32
25 1995 37.58
</TABLE>
THE CHART ASSUMES THE RETURN EXPERIENCED BY THE STANDARD & POOR'S 500 INDEX
FOR THE LAST 25 YEARS. FUTURE RATES OF RETURN MAY BE MORE OR LESS THAN THOSE
SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATIONS MADE BY AN OWNER. THE INFORMATION IN THE CHART IS NOT NECESSARILY
INDICATIVE OF FUTURE PERFORMANCE. INDEX PERFORMANCE IS NOT ILLUSTRATIVE OF
POLICY SUBACCOUNT PERFORMANCE, AND INVESTMENTS ARE NOT MADE IN THE INDEX.
<PAGE>
APPENDIX C
QUALIFIED DISCLOSURES
* Information Statement For:
408(b) IRA Plans
408(k) SEP Plans
* Information Statement For:
401(a) Pension/Profit Sharing Plans
Ameritas Life Insurance Corp. Logo
<PAGE>
If this annuity is being purchased as a qualified plan as defined under
specified sections of the Internal Revenue Code, as purchaser (owner) or
fiduciary of an Employee Benefit Plan purchasing the annuity, you should
carefully review the Information Statement for your specific plan.
Depending on the type of plan, we are required to provide this disclosure to you
to meet the requirements of the Internal Revenue Service (IRS) and/or the
Employee Retirement Income Security Act of 1974 (ERISA).
Acknowledgement of your receipt of the required disclosure is included within
the application language above your signature.
Table of Contents
Information Statement
408(b) Individual Retirement Annuity (IRA) Plans
408(k) Simplified Employee Pension (SEP) Plans...................... QD-1
Information Statement
401(a) Pension/Profit Sharing Plans................................. QD-6
<PAGE>
Ameritas Life Insurance INFORMATION STATEMENT
Corp. Logo 408(b) Individual Retirement Annuity (IRA) Plans
408(k) Simplified Employee Pension (SEP) Plans
- --------------------------------------------------------------------------------
For purchasers of a 408(b) Individual Retirement Annuity (IRA) Plan or 408(k)
Simplified Employee Pension (SEP) Plan, please review the following:
PART 1. PROCEDURE FOR REVOKING THE IRA PLAN:
After you establish an IRA Plan with Ameritas Life Insurance Corp. (Ameritas),
you are able to revoke your IRA within a limited time and receive a full refund
of the initial premium paid, if any. The period for revocation will not be less
than the legal minimum of seven (7) days following the date your IRA is
established with Ameritas.
To revoke your IRA, you should send a signed and dated written notice to:
Ameritas Life Insurance Corp., Policyholder Service Department, P.O. Box 81889,
Lincoln, NE 68501.
If your IRA contract was delivered to you, the contract should accompany your
notice of revocation. Your notice of revocation will be considered mailed on the
date of the postmark (or certification or registration, if applicable), if sent
by United States mail, properly addressed and by first class postage prepaid.
To obtain further information about the revocation procedure, contact your
Ameritas Representative or call 1-800-745-6665.
PART II. PROVISIONS OF THE IRA LAW:
Ameritas' No Load Variable Annuity (Form 4080), can be used for a Regular IRA, a
Rollover IRA, a Spousal IRA Arrangement, or for a Simplified Employee Pension
Plan (SEP). A separate policy must be purchased for each individual under each
plan.
While provisions of the IRA law are similar for all such plans, any major
differences are set forth under the appropriate topics below.
ELIGIBILITY:
REGULAR IRA PLAN: Any employee under age 70 1/2 and earning income from
personal services, is eligible to establish an IRA Plan although deductibility
of the contributions is determined by adjusted gross income and whether the
employee participates in a qualified employer-sponsored retirement plan.
ROLLOVER IRA: This is an IRA plan purchased with your distributions from
another IRA, a Section 401(a) Qualified Retirement Plan, or a Section 403(b)
Tax Sheltered Annuity (TSA).
Amounts transferred as Rollover Contributions are not taxable in the year of
distribution provided the rules for Rollover treatment are satisfied and may
or may not be subject to withholding. Rollover Contributions are not
deductible.
SPOUSAL IRA ARRANGEMENT: A Spousal IRA, consisting of a contract for each
spouse, may be set up provided a joint return is filed, the "nonworking
spouse" has no earned income for the taxable year (or elects to be treated as
having no compensation for the year), does not make a contribution to an IRA,
and is under age 70 1/2 at the end of the tax year.
SIMPLIFIED EMPLOYEE PENSION PLAN: An employee is eligible to participate in a
SEP Plan based on eligibility requirements set forth in form 5305-SEP or the
plan document provided by the employer.
Divorced spouses can continue a spousal IRA or start a Regular IRA based on
the standard IRA eligibility rules. All taxable alimony received by the
divorced spouse under a decree of divorce or separate maintenance is treated
as compensation for purposes of the IRA deduction limit.
NONTRANSFERABILITY: You may not transfer, assign or sell your IRA Plan to
anyone (except in the case of transfer incident to divorce).
NONFORFEITABILITY: The value of your IRA Plan belongs to you at all times,
without risk of forfeiture.
PREMIUM: The annual premium (if applicable) of your IRA Plan may not exceed
the lesser of $2,000, or 100% of compensation for the year. Any premium in
excess of or in addition to $2,000 will be permitted only as a "Rollover
Contribution." Your contribution must be made in cash. For IRA's established
under Simplified Employee Pension Plans (SEP's), premiums are limited to the
lesser of $30,000 or 15% of the first $150,000 of compensation (adjusted for
cost of living increases). In addition, if the IRA is under a salary reduction
Simplified Employee Pension (SARSEP), premiums made by salary reduction are
limited to $7,000 (adjusted for cost of living increases).
MAXIMUM CONTRIBUTIONS:
REGULAR IRA PLAN: In any year that your annuity is maintained under the rules
for a Regular IRA Plan, your maximum contribution is limited to 100% of your
earned income or $2,000, whichever is less. The amount of permissible
contributions to your IRA may or may not be deductible. Whether IRA
contributions (other than Rollovers) are deductible depends on whether you (or
your spouse, if married) are an active participant in an employer-sponsored
plan and whether your adjusted gross income is above the "phase-out level."
SEE DEDUCTIBLE CONTRIBUTIONS, PART III.
ROLLOVER IRA: A Plan to Plan Rollover is a method for accomplishing continued
tax deferral on otherwise taxable distributions from certain plans. Rollover
contributions are not subject to the contribution limits on regular IRA
contributions, but are not deductible.
QD-1 IRA/SEP
No Load Variable Annuity; 9/96
<PAGE>
There are two ways to make a rollover to an IRA:
(1) PARTICIPANT ROLLOVERS are available to participants, surviving spouses
or former spouses who receive eligible rollover distributions from
401(a) Qualified Retirement Plans, TSAs or IRAs. Participant Rollovers
are accomplished by contributing part or all of the eligible amounts
(which includes amounts withheld for federal income tax purposes) to
your new IRA within 60 days following receipt of the distribution. IRA
to IRA Rollovers are limited to one per distributing plan per 12 month
period, while direct IRA to IRA transfers are not subject to this
limitation.
(2) DIRECT ROLLOVERS are available to participants, surviving spouses and
former spouses who receive eligible rollover distributions from 401(a)
Qualified Retirement Plans or TSAs. Direct Rollovers are made by
instructing the plan trustee, custodian or issuer to pay the eligible
portion of your distribution directly to the trustee, custodian or
issuer of the receiving IRA. Direct Rollover amounts are not subject
to mandatory federal income tax withholding.
Certain distributions are NOT considered to be eligible for Rollover and
include: (1) distributions which are part of a series of substantially equal
periodic payments for 10 years or more; (2) distributions attributable to
after-tax employee contributions to a 401(a) Qualified Retirement Plan or TSA;
(3) required minimum distributions made during or after the year you reach age
70 1/2; (4) amounts in excess of the cash (except for certain loan offset
amounts) or in excess of the proceeds from the sale of property distributed; and
(5) the portion of a distribution eligible for the death benefit exclusion.
At the time of a Rollover, you must irrevocably designate in writing that the
transfer is to be treated as a Rollover Contribution. Eligible amounts which are
not rolled over are normally taxed as ordinary income in the year of
distribution. If a Rollover Contribution is made to an IRA from a Qualified
Retirement Plan, you may later be able to roll the value of the IRA into a new
employer's plan provided you made no contributions to the IRA from other than
the first employer's plan. This is known as "Conduit IRA," and you should
designate your annuity as such when you complete your application.
SPOUSAL IRA ARRANGEMENT: In any year that your annuity is maintained under the
rules for a Spousal IRA, the combined maximum contribution to both spouses' IRAs
is the lesser of 100% of your compensation or $2,250. The contributions need not
be equally divided, provided no more than $2,000 is contributed to either
spouse's IRA. Whether the contribution is deductible or non-deductible depends
on whether either spouse is an active participant in an employer-sponsored plan
for the year, and whether the adjusted gross income of the couple is above the
phase out level.
The contribution limit for divorced spouses is the lesser of $2,000 or the total
of the taxpayer's earned income and alimony received for the year.
SEP PLAN: In any year that your annuity is maintained under the rules for a
Simplified Employee Pension Plan, the employer's maximum contribution is the
lesser of $30,000 or 15% of your first $150,000 of compensation (adjusted for
cost-of-living increases) or as changed under Section 415 of the Code. You may
also be able to make contributions to your SEP-IRA the same as you do to a
Regular IRA, however, you will be considered an active participant for purposes
of determining your deduction limit. In addition to the above limits, if your
annuity is maintained under the rules for a salary reduction Simplified Employee
Pension Plan (SARSEP), the maximum amount of employee pre-tax contributions
which can be made is $7,000, adjusted for cost of living increases.
DISTRIBUTIONS: Payment to you from your IRA Plan must begin no later than the
April 1 following the close of the calendar year in which you attain age 70 1/2,
the Required Beginning Date (RBD). If you have not withdrawn your entire balance
by this date, you may receive the entire value of your IRA Plan in one lump sum;
arrange for an income to be paid over your lifetime, your expected lifetime, or
over the lifetimes or expected lifetimes of you and your beneficiary.
RATE OF DISTRIBUTION: If you arrange for the value of your IRA Plan to be paid
to you as retirement income rather than as one lump sum, then you must abide by
IRS rules governing how quickly the value of your IRA plan must be paid out to
you. Generally, it is acceptable to have an insurance company annuity pay income
to you as long as you live, or as long as you and your beneficiary live.
MINIMUM DISTRIBUTION REQUIREMENTS: Once you reach your RBD, you must withdraw a
minimum amount each year or be subject to a 50% non-deductible excise tax on the
difference between the minimum required distribution and the amount distributed.
To determine the required minimum distribution, divide your entire interest in
your IRA (as of December 31 of your age 70 1/2 year) by your life expectancy or
the joint life expectancies of you and your beneficiary. Your single or joint
life expectancy is determined by using IRS life expectancy tables. See IRS
Publications 575 and 590.
Your life expectancy (and that of your spousal beneficiary, if applicable) will
be recalculated annually, unless you irrevocably elect otherwise. The life
expectancy of a non-spouse beneficiary cannot be recalculated. Where life
expectancy is not recalculated, it is reduced by one year for each year after
your 70 1/2 year to determine the applicable remaining life expectancy. Also, if
your benefit is payable in the form of a joint and survivor annuity, a larger
minimum distribution amount may be required under IRS regulations, unless your
spouse is the designated beneficiary.
If you die after the RBD, amounts undistributed at your death must be
distributed at least as rapidly as under the method being used at the time of
your death. If you die before the RBD, your entire interest must be distributed
within 5 years of your death if no beneficiary is designated; or if a
beneficiary is designated, over the life expectancy of the beneficiary if the
beneficiary so elects by December 31 of the year following the year of your
death. If the beneficiary fails to make an election, the benefit will be paid in
equal or substantially equal installments over his/her life or life expectancy.
Also, if a designated beneficiary is the spouse, the distribution must begin by
December 31 of the year in which you would have attained age 70 1/2, or if not
your spouse, December 31 of the year following your death.
PART III. RESTRICTIONS AND TAX CONSIDERATIONS:
TIMING OF CONTRIBUTIONS: Once you establish an IRA, contributions (deductible or
non-deductible) must be made by the due date, not including extensions, for
filing your tax return. (Participant Rollovers must be made within 60 days of
your receipt of the distribution.) A contribution made between January 1 and the
filing due date for your return, must be submitted with written direction that
it is being made for the prior plan year or it will be treated as made for the
current year.
IRA/SEP QD-2
No Load Variable Annuity; 9/96
<PAGE>
DEDUCTIBLE CONTRIBUTIONS: The amount of permissible contributions to your IRA
may or may not be deductible. If you or your spouse are an active participant in
an employer-sponsored retirement plan, the size of your deduction if any, will
depend on your combined adjusted gross income (AGI). If your combined AGI is
less than $40,000, you can deduct your entire contribution. If you are single
and your AGI is less than $25,000, you may also take a full deduction. For
married couples filing joint returns, the deduction is phased out between
$40,000 and $50,000. For single individuals, the deduction is phased out between
$25,000 and $35,000. If you are married and covered by an employer plan, but
file separate tax returns, your deduction is phased out between $0 and $10,000
of AGI. If your AGI is not above the applicable phase out level, a minimum
contribution of $200 is permitted regardless of whether the phase out rules
provide for a lesser amount. You can elect to treat deductible contributions as
non-deductible.
NON-DEDUCTIBLE CONTRIBUTIONS: It is possible for you to make non-deductible
contributions to your IRA even if you are not eligible to make deductible
contributions for the year. The amount of non-deductible contributions you can
make depends on the amount of deductible contributions you make. The sum of your
non-deductible and deductible contributions for a year may not exceed the lesser
of (1) $2,000 ($2,250 when a spousal IRA is also involved), or (2) 100% of your
compensation. IF YOU WISH TO MAKE A NON-DEDUCTIBLE CONTRIBUTION, YOU MUST REPORT
THIS ON YOUR TAX RETURN BY FILING FORM 8606 (NON-DEDUCTIBLE IRA CONTRIBUTIONS,
IRA BASIS, AND NONTAXABLE IRA DISTRIBUTIONS). REMEMBER, YOU ARE REQUIRED TO KEEP
TRACK OF YOUR NON-DEDUCTIBLE CONTRIBUTIONS AS AMERITAS DOES NOT KEEP A RECORD OF
THESE FOR YOU. THIS INFORMATION WILL BE NECESSARY TO DOCUMENT THAT THE
CONTRIBUTIONS WERE MADE ON A NON-DEDUCTIBLE BASIS AND THEREFORE, ARE NOT TAXABLE
UPON DISTRIBUTION.
EXCESS CONTRIBUTIONS: There is a 6% IRS penalty tax on IRA contributions in
excess of permissible contributions. However, excess contributions made in one
year may be applied against the contribution limits in a later year if the
contributions in the later year are less than the limit. This penalty tax can be
avoided if the excess amount, together with any earnings on it, is returned to
you before the due date of your tax return for the year for which the excess
amount was contributed. The penalty tax will apply to each year the excess
amount remains in the IRA Plan, until it is removed either by having it returned
to you or by making a reduced contribution in a subsequent year. To the extent
an excess contribution is absorbed in a subsequent year by contributing less
than the maximum deduction allowable for that year, the amount absorbed will be
deductible in the year applied (provided you are eligible to take a deduction).
LOAN AND PROHIBITED TRANSACTIONS: You may not borrow from your IRA Plan or
pledge it as security for a loan. This would disqualify your entire IRA Plan,
and its full value would be includable in your taxable income in the year of
violation. This amount would also be subject to the 10% penalty tax on premature
distributions. Your IRA Plan will similarly be disqualified if you or your
beneficiary engage in any transaction prohibited by Section 4975 of the Internal
Revenue Code.
TAXABILITY OF DISTRIBUTIONS: Any cash distribution from your IRA Plan is
normally taxable as ordinary income. All IRAs of an individual are treated as
one contract. All distributions during a taxable year are treated as one
distribution; and the value of the contract, income on the contract, and
investment on the contract is computed as of the close of the calendar year with
or within which the taxable year ends. If an individual withdraws an amount from
an IRA during a taxable year and the individual has previously made both
deductible and non-deductible IRA contributions, the amount includable in income
for the taxable year is the portion of the amount withdrawn which bears the same
ratio to the amount withdrawn for the taxable year as the individual's aggregate
non-deductible IRA contributions bear to the balance of all IRAs of the
individual, including rollover IRAs and SEPs.
LUMP SUM DISTRIBUTION: If you decide to receive the entire value of your IRA
Plan in one lump sum, the full amount is taxable when received (except as to
non-deductible contributions), and is not eligible for the special tax rules on
lump sum distributions which are used with other types of Qualified Retirement
Plans.
PREMATURE DISTRIBUTION: There is a 10% penalty tax on amounts distributed prior
to the attainment of age 59 1/2, except for distributions made to a beneficiary
on or after the owner's death, distributions attributable to the owner's being
disabled, or distributions that are part of a series of substantially equal
periodic payments for the life of the annuitant or the joint lives of the
annuitant and his beneficiary. The part of a distribution attributable to
non-deductible contributions is not includable in income and is not subject to
the 10% penalty.
MINIMUM REQUIRED DISTRIBUTION: See Part II, Minimum Distribution Requirements.
An IRA Plan which is not totally distributed to you by April 1 of the year
following the year in which you attain age 70 1/2, must be distributed over one
of the following periods: 1) the entire life of the annuitant, 2) the lives of
the annuitant and his beneficiary, 3) a period certain not extending beyond the
life expectancy of the annuitant or the joint life and last survivor expectancy
of the annuitant and his beneficiary. If the minimum distribution is not made,
the excess, in any taxable year, of the amount that should have been distributed
over the amount that was actually distributed is subject to an excise tax of
50%.
MAXIMUM DISTRIBUTION: Generally, an excess distribution is an annual
distribution in excess of the annual ceiling (currently $150,000). If you made a
grandfather election pursuant to IRC 4980A, your annual ceiling is $150,000, as
indexed annually. Excess distributions are subject to a 15% excise tax. The tax
is reduced by any payment of the 10% excise tax on early withdrawals. Excluded
from the excise tax are distributions after the death of the participant,
distributions payable to an alternate payee under a qualified domestic relations
order if taxable to the alternate payee, distributions attributable to after-tax
employee contributions, and distributions not includable in income by reason of
a Rollover Contribution. Also, a 15% excise tax is imposed on your excess
retirement accumulation at the time of your death. This amount is the excess of
the value of all accrued benefits under all your IRAs, Qualified Retirement
Plans, and TSAs, over the present value of a single life annuity with payments
equal to the annual ceiling (currently $150,000), payable over your life
expectancy prior to death.
TAX FILING: You are not required to file a special IRA tax form for any taxable
year (1) for which no penalty tax is imposed with respect to the IRA Plan, and
(2) in which the only activities engaged in, with respect to the IRA Plan, are
making deductible contributions and receiving permissible distributions.
Information regarding such contributions or distributions will be included on
the regular Form 1040. For further information, consult the instructions for
Form 5329 (Return for Individual Retirement Savings Arrangements), Form 8606 and
IRS Publication 590.
TAX ADVICE: Ameritas is providing this general information as required by the
Internal Revenue Code and assumes no responsibility for its application to your
particular tax situation. Please consult your personal tax advisor regarding
specific questions you may have.
QD-3 IRA/SEP
No Load Variable Annuity; 9/96
<PAGE>
ADDITIONAL INFORMATION: You may obtain more information about IRA Plans from any
district office of the IRS and IRS Publication 590.
PART IV. STATUS OF AMERITAS IRA PLAN:
INTERNAL REVENUE SERVICE APPROVAL LETTER: Ameritas will apply for approval from
the Internal Revenue Service as to the form of No Load Variable Annuity (Form
4080), for use in funding IRA plans. Such approval, when received, is a
determination only as to the form of the Annuity Contract, and does not
represent a determination of the merits of the annuity.
PART V. FINANCIAL DISCLOSURE:
The following is a general description and required financial disclosure
information for the variable annuity product, No Load Variable Annuity (Form
4080) offered by Ameritas, hereafter referred to as the policy.
In order for you to achieve your retirement objectives, you should be prepared
to make your IRA Plan a long term savings program. An IRA is not suited to
short-term savings, nor was it intended to be by Congress, as indicated by the
penalties on withdrawal before age 59 1/2 (except for death or disability).
However, you should be aware of the values in your IRA Plan during the early
years as well as at retirement.
Prior to the annuity date, the policy allows you to accumulate funds based on
the investment experience of the assets underlying the policy in the Separate
Account or the Fixed Account. Currently, the assets which underlie the Separate
Account are invested exclusively in shares of mutual funds, the "Funds", managed
or administered by fund managers. Each of the Subaccounts of the Separate
Account invest solely in the corresponding portfolio of the Funds. The assets of
each portfolio are held separately from the other portfolios and each has
distinct investment objectives which are described in the accompanying
prospectus for the Funds which you would have received when making an
application for your annuity. The accumulation value of your IRA Plan allocated
to the Separate Account will vary in accordance with the investment performance
of the Subaccounts you selected. Therefore, for assets in the Separate Account,
you bear the entire investment risk prior to the annuity date.
Premium payments and subsequent allocations to the Fixed Account are placed in
the general account of Ameritas which supports insurance and annuity
obligations. Policyowners are paid interest on the amounts placed in the Fixed
Account at guaranteed rates (3.0%) or at higher rates declared by Ameritas.
ACCUMULATION VALUE: On the effective date, the accumulation value of the policy
is equal to the premium received, reduced by any applicable premium taxes, plus
any interest credited based on the Liquid Asset Portfolio value as of the Policy
Date. Thereafter, the accumulation value of the policy is determined as of the
close of trading on the New York Stock Exchange on each valuation date by
multiplying the number of accumulation units for each Subaccount credited to the
policy by the current value of an accumulation unit for each Subaccount, and by
adding the amount deposited in the Fixed Account, plus interest. The current
value of an accumulation unit reflects the increase or decrease in value due to
investment results of the Subaccount and certain charges, as described below.
The number of accumulation units credited to the policy is decreased by any
annual policy fee, any withdrawals and, upon annuitization, any applicable
premium taxes and charges.
A valuation period is the period between successive valuation dates. It begins
at the close of trading on the New York Stock Exchange on each valuation date
and ends at the close of trading on the next succeeding valuation date. A
valuation date is each day that the New York Stock Exchange is open for
business.
The accumulation value is expected to change from valuation period to valuation
period, reflecting the net investment experience of the selected portfolios of
the Funds, interest earned in the Fixed Account, additional premium payments,
withdrawals, as well as the deduction of any applicable charges under the
policy. GROWTH IN THE ACCUMULATION VALUE BASED ON INVESTMENTS IN THE ACCOUNT IS
NEITHER GUARANTEED NOR PROJECTED.
VALUE OF ACCUMULATION UNITS: The accumulation units of each Subaccount are
valued separately. The value of an accumulation unit may change each valuation
period according to the net investment performance of the shares purchased by
each Subaccount and the daily charge under the policy for mortality and expense
risks, and if applicable, any federal and state income tax charges.
CASH SURRENDER VALUE: The amount available for withdrawal, which is the
accumulation value less any applicable premium taxes, and, in the case of a full
withdrawal, the annual policy fee.
ANNUAL POLICY FEE: An annual policy fee of $25, is deducted from the
accumulation value on the last valuation date of each policy year and on a full
withdrawal if between policy anniversaries. This charge reimburses Ameritas for
the administrative costs of maintaining the policy on Ameritas' system. This
charge may be increased to a maximum of $40.
MORTALITY AND EXPENSE RISK CHARGE: Ameritas imposes a charge to compensate it
for bearing certain mortality and expense risks under the policies. For assuming
these risks, Ameritas makes a daily charge equal to an annual rate of 0.75 %
(current; 0.95% guaranteed) of the value of the average daily net assets of the
Account. This charge is subtracted when determining the daily accumulation unit
value. If this charge is insufficient to cover assumed risks, the loss will fall
on Ameritas. Conversely, if the charge proves more than sufficient, any excess
will be added to Ameritas' surplus. No mortality and expense risk charge is
imposed on the Fixed Account.
TAXES: Ameritas will charge and deduct premium taxes as required by state law
and in accordance with any applicable company election. Applicable premium tax
rates depend upon such factors as the policyowner's current state of residency,
and the insurance laws and the status of Ameritas in states where premium taxes
are incurred. Currently, premium taxes range from 0% to 3.5% of the premium
paid. Applicable premium tax rates are subject to change by legislation,
administrative interpretations, or judicial acts. The owner will be notified of
any applicable premium taxes.
IRA/SEP QD-4
No Load Variable Annuity; 9/96
<PAGE>
WITHDRAWALS: The owner may make a withdrawal of the policy to receive part or
all of the accumulation value (less any applicable charges), at any time before
the annuity date and while the annuitant is living, by sending a written request
to Ameritas. Withdrawals may be either systematic or elective. Systematic
withdrawals provide for an automatic withdrawal, whereas, each elective
withdrawal must be elected by the owner. Systematic withdrawals are available on
a monthly, quarterly, semi-annual or annual mode. This withdrawal right may be
restricted by Section 403(b)(11) of the Internal Revenue Code if the annuity is
used in connection with a Section 403(b) retirement plan. No withdrawals may be
made after the annuity date except as permitted under the particular annuity
option. The amount available for a withdrawal is the accumulation value at the
end of the valuation period during which the written request for withdrawal is
received, less any applicable premium taxes, and in the case of a full
withdrawal, less the annual policy fee that would be due on the last valuation
date of the policy year. The accumulation value may be paid in a lump sum to the
owner, or, if elected, all or any part may be paid out under an annuity income
option.
SALES COMMISSIONS: No deductions are made from the premium payments for sales
charges. Compensation to the sales force is a maximum .5% based on premiums paid
for broker/dealers other than AIC, and an asset-based administrative
compensation of .10% (annualized).
QD-5 IRA/SEP
No Load Variable Annuity; 9/96
<PAGE>
Ameritas Life EMPLOYEE BENEFIT PLAN
Insurance Corp. Logo INFORMATION STATEMENT
401(a) Pension/Profit Sharing Plans
- --------------------------------------------------------------------------------
For purchasers of a 401(a) Pension/Profit Sharing Plan, the purpose of this
statement is to inform you as an independent Fiduciary of the Employee Benefit
Plan, of the Sales Representative's relationship to and compensation from
Ameritas Life Insurance Corp. (Ameritas), as well as to describe certain fees
and charges under the No Load Variable Annuity Policy being purchased from the
Sales Representative.
The Sales Representative is appointed with Ameritas as its Sales Representative
and is a Securities Registered Representative. In this position, the Sales
Representative is employed to procure and submit to Ameritas applications for
contracts, including applications for No Load Variable Annuity.
COMMISSIONS, FEES AND CHARGES
The following commissions, fees and charges apply to No Load Variable Annuity
(policy):
SALES COMMISSION: No deductions are made from the premium payments for sales
charges. Compensation to the Sales Representative's Broker/Dealer is a maximum
of up to .5% based on premiums paid for broker/dealers other than AIC, and an
asset-based administrative compensation of .10 (annualized).
ANNUAL POLICY FEE: An annual policy fee of $25 is deducted from the accumulation
value in the policy on the last valuation date of each policy year or on a full
withdrawal if between policy anniversaries. This charge reimburses Ameritas for
the administrative costs of maintaining the policy on Ameritas system. This
charge may be increased to a maximum of $40.
MORTALITY AND EXPENSE RISK CHARGE: Ameritas imposes a charge to compensate it
for bearing certain mortality and expense risks under the policies. Ameritas
makes a daily charge equal to an annual rate of 0.75% (current; 0.95%
guaranteed) of the value of the average daily net assets of the Account under
the policies. This charge is subtracted when determining the daily accumulation
unit value. If this charge is insufficient to cover assumed risks, the loss will
fall on Ameritas. Conversely, if the charge proves more than sufficient, any
excess will be added to Ameritas' surplus. No mortality and expense risk charge
is imposed on the Fixed Account.
WITHDRAWALS: The policyowner may make a withdrawal of the policy to receive part
or all of the accumulation value (less any applicable charges), at any time
before the annuity date and while the annuitant is living by sending a written
request to Ameritas. Withdrawals may be either systematic or elective.
Systematic withdrawals provide for an automatic withdrawal, whereas, each
elective withdrawal must be elected by the owner. Systematic withdrawals are
available on a monthly, quarterly, semi-annual or annual mode. No withdrawals
may be made after the annuity date except as permitted under the particular
annuity option. The amount available for withdrawal is the accumulation value at
the end of the valuation period during which the written request for withdrawal
is received, less any applicable premium taxes, and in the case of a full
withdrawal, the annual policy fee that would be due on the last valuation date
of the policy year. The accumulation value may be paid in a lump sum to the
owner, or if elected, all or any part may be paid out under an annuity income
option.
TAXES: Ameritas will deduct premium taxes upon receipt of a premium payment or
upon annuitization depending upon the requirements of the law of the state of
the policyowner's residence. Currently, premium taxes range from 0% to 3.5% of
the premium paid, but are subject to change by legislation, administrative
interpretations, or judicial act.
FUND INVESTMENT ADVISORY FEES AND EXPENSES: At the direction of the policyowner,
the Separate Account LLVA purchases shares of Funds which are available for
investment under this policy. The net assets of the Separate Account LLVA will
reflect the value of the Fund shares and therefore, investment advisory fees and
other expenses of the Funds. A complete description of these fees and expenses
is contained in the Funds' Prospectuses.
Pension Trust QD-6
<PAGE>
Part B Registration No. 333-5529
--------
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
STATEMENT OF ADDITIONAL INFORMATION
FOR
FLEXIBLE PREMIUM VARIABLE ANNUITY POLICY
Offered by
Ameritas Life Insurance Corp.
(A Nebraska Mutual Company)
5900 "O" Street
Lincoln, Nebraska 68510
---------------------
This Statement of Additional Information expands upon subjects
discussed in the current Prospectus for the Flexible Premium Variable Annuity
Policy ("Policy") offered by Ameritas Life Insurance Corp. ("Ameritas"). You may
obtain a copy of the Prospectus dated ___________, by writing Ameritas Life
Insurance Corp., 5900 "O" Street, Lincoln, Nebraska 68510, or calling,
1-800-745-6665. Terms used in the current Prospectus for the Policy are
incorporated in this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD
BE READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE POLICY.
Dated: October 3, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION AND HISTORY .......................................... 2
- -------------------------------
THE POLICY ............................................................... 2
- ----------
Accumulation Value.............................................. 2
------------------
Value of Accumulation Units .................................... 2
---------------------------
Calculation of Performance Data ................................ 3
-------------------------------
Total Return.................................................... 3
------------
Yields.......................................................... 6
------
GENERAL MATTERS........................................................... 6
- ---------------
The Policy ..................................................... 6
----------
Non-Participating............................................... 7
-----------------
Assignment...................................................... 7
----------
Annuity Data.................................................... 7
------------
Ownership ...................................................... 7
---------
IRS Required Distributions ..................................... 7
--------------------------
FEDERAL TAX MATTERS....................................................... 8
- -------------------
Taxation of Ameritas............................................ 8
--------------------
Tax Status of the Policies ..................................... 8
--------------------------
Qualified Policies.............................................. 8
------------------
DISTRIBUTION OF THE POLICY ............................................... 8
- --------------------------
SAFEKEEPING OF ACCOUNT ASSETS ............................................ 9
- -----------------------------
STATE REGULATION.......................................................... 9
- ----------------
LEGAL MATTERS............................................................. 9
- -------------
EXPERTS................................................................... 9
- -------
OTHER INFORMATION......................................................... 10
- -----------------
FINANCIAL STATEMENTS...................................................... 10
- --------------------
1
<PAGE>
GENERAL INFORMATION AND HISTORY:
- --------------------------------
In order to supplement the description in the Prospectus, the following
provides additional information concerning the company and its history.
Ameritas Life Insurance Corp. Separate Account LLVA ("the Account") is a
separate investment account of Ameritas Life Insurance Corp. established under
Nebraska Law on October 26, 1995. Ameritas Life Insurance Corp. ("Ameritas") is
a mutual life insurance company domiciled in Nebraska since 1887. The Home
Office of Ameritas is at 5900 "O" Street, Lincoln, Nebraska 68501.
Currently, eleven Subaccounts of the Account are available under the contracts.
Each Subaccount invests in a corresponding investment portfolio of Strong
Variable Insurance Funds, Inc., Strong Special Fund II, Inc., (collectively
"Strong"). Berger Institutional Products Trust ("Berger IPT")or the Neuberger &
Berman Advisers Management Trust ("Neuberger & Berman AMT").
THE POLICY
- ----------
In order to supplement the description in the Prospectus, the following
provides additional information about the Policy which may be of interest to the
owners.
Accumulation Value
- ------------------
The Accumulation Value of a Policy on each valuation date is equal to:
(1) the aggregate of the values attributable to the Policy in each
Subaccount on the valuation date, determined for each Subaccount by
multiplying the Subaccount's accumulation unit price by the number
of the Subaccount accumulation units allocated to the Policy and/or
the net allocation plus interest in the Fixed Account; plus;
(2) the amount deposited in the Fixed Account, plus interest; less
(3) any withdrawal made on the valuation date; less
(4) any annual policy fee deducted on that valuation date. In computing
the accumulation value, the number of Subaccount accumulation units
allocated to the Policy is determined after any transfer among the
Subaccounts.
Value of Accumulation Units
- ----------------------------
The value of each Subaccount's accumulation units reflects the investment
performance of that Subaccount. The accumulation unit price of each Subaccount
shall be calculated by:
(1) multiplying the per share net asset value of the corresponding Fund
portfolio on the valuation date by the number of shares held by the
Subaccount, before the purchase or redemption of any shares on that
date; minus
(2) a daily charge, currently 0.002049% (equivalent to an annual rate of
.75%), not to exceed 0.002595% (equivalent to an annual rate of .95%
of the average daily net assets), for mortality and expense risks;
minus
(3) any applicable charge for federal and state income taxes, if any;
and
2
<PAGE>
(4) dividing the result by the total number of accumulation units held
in the Subaccount on the valuation date, before the purchase or
redemption of any units on that date.
Calculation of Performance Data
- -------------------------------
As disclosed in the prospectus, premium payments will be allocated to the
Separate Account LLVA which has eleven Subaccounts, with the assets of each
invested in corresponding portfolios of Strong, Berger IPT or Neuberger & Berman
AMT ("the Funds"), or to the Fixed Account. From time to time Ameritas will
advertise the performance data of the portfolios of the Funds.
Performance information for any subaccount may be compared, in reports and
advertising to: (1) the Standard & Poor's 500 Stock Index ("S & P 500"), Dow
Jones Industrial Average ("DJIA"), Donahue Money Market Institutional Averages;
(2) other variable annuity separate accounts or other investment products
tracked by Lipper Analytical Services or the Variable Annuity Research and Data
Service, widely used independent research firms which rank mutual funds and
other investment companies by overall performance, investment objectives, and
assets; and (3) the Consumer Price Index (measure for inflation) to assess the
real rate of return from an investment in a contract. Unmanaged indices may
assume the reinvestment of dividends but generally do not reflect deductions for
annuity charges and investment management costs.
Total returns, yields and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Reports and
advertising may also contain other information including (i) the ranking of any
subaccount derived from rankings of variable annuity separate accounts or other
investment products tracked by Lipper Analytical Series or by rating services,
companies, publications or other persons who rank separate accounts or other
investment products on overall performance or other criteria, and (ii) the
effect of tax deferred compounding on a subaccount's investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise,
and which may include a comparison, at various points in time, of the return
from an investment in a contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis.
The tables below are established to demonstrate performance results for
each underlying portfolio with charges deducted at the Separate Account level as
if the policy had been in force from the commencement of the portfolio. The
performance information is based on the historical investment experience of the
underlying portfolios and does not indicate or represent future performance.
Total Return
- ------------
Total returns quoted in advertising reflect all aspects of a subaccount's
return, including the automatic reinvestment by the separate account of all
distributions and any change in the subaccount's value over the period. Average
annual returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in the subaccount over a stated period, and
then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual return of 7.18% which is the steady rate
that would equal 100% grown on a compounded basis in ten years. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that the subaccount's performance is not constant over
time, but changes from year to year, and that average annual returns represent
averaged figures as opposed to the actual year-to-year performance of a
subaccount.
Table 1: The subaccounts, other than the Liquid Asset subaccount, will
quote average annual returns for the period since the underlying portfolios
commenced operation after deducting charges at the Separate Account level. Table
1 shows the average annual total return on a hypothetical investment in the
subaccounts for the last year, five years, and ten years if applicable, and/or
from the date that the portfolios began operations assuming that the
contract was surrendered December 31, 1995. The average annual total returns
3
<PAGE>
to be shown in Table 1 were computed by finding the average annual compounded
rates of return over the periods shown that would equate the initial amount
invested to the withdrawal value, in accordance with the following formula: P(1
+ T)n = ERV where P is a hypothetical investment payment of $25,000, T is the
average annual total return, n is the number of years, and ERV is the withdrawal
value at the end of the periods shown. The returns reflect the mortality and
expense risk charge (guaranteed not to exceed .95% on an annual basis), and the
annual policy fee. Because there is no surrender charge, the average annual
total return would be the same for the relevant time periods if the contract is
continued.
<TABLE>
<CAPTION>
Table 1: Hypothetical Historical Average Annual Total Return for Period Ending
on 12/31/95
Strong 10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Fund II N/A N/A N/A
International Stock Fund II N/A N/A 2.04%
Government Securities Fund II N/A N/A N/A
Special Fund II 23.89% N/A 16.84%
Inception of Funds: Growth Fund II, not funded as of 9/30/96; International
Stock Fund II, 10/20/95; Government Securities Fund II, 1/31/96; Special Fund
II, 5/8/92.
</TABLE>
<TABLE>
<CAPTION>
Berger IPT 10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
100 Fund N/A N/A N/A
Small Company Growth N/A N/A N/A
Inception of Funds: 100 Fund, 5/1/96; Small Company Growth, 5/1/96.
4
<PAGE>
Neuberger &
Berman AMT 10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Limited Maturity Bond 10.01% 5.77% 6.70%*
Growth 30.65% 12.76% 11.12%*
Partners 35.34% N/A 16.61%
Balanced 22.74% 10.12% 9.78%
* 10 Year Figure
Inception of Funds: Limited Maturity Bond, 9/10/84; Growth, 9/10/84; Partners,
3/22/94; Balanced, 2/28/89.
</TABLE>
In addition to average annual returns, the subaccounts, other than the
Liquid Asset subaccount, may quote unaveraged or cumulative total returns
reflecting the simple change in value of an investment over a stated period.
Table 2 shows the cumulative total return on a hypothetical investment in the
subaccounts for the last year, 5 years, 10 years if applicable, and/or from the
date the portfolios began operations and assuming that the contract was
surrendered December 31, 1995. The returns reflect the mortality and expense
risk charge (guaranteed not to exceed .95% on an annual basis), and the policy
fee. Because there is no surrender charge, the cumulative total return would be
the same for the relevant time periods if the contract is continued.
<TABLE>
<CAPTION>
Table 2: Hypothetical Historical Cumulative Total Return for Period Ending on
12/31/95
Strong 10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Fund II N/A N/A N/A
International Stock Fund II N/A N/A 2.04%
Government Securities Fund II N/A N/A N/A
Special Fund II 23.89% N/A 76.42%
</TABLE>
<TABLE>
<CAPTION>
Berger IPT 10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
100 Fund N/A N/A N/A
Small Company Growth N/A N/A N/A
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Neuberger &
Berman AMT 10 Years or
Portfolios One Year Five Year Life of Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Limited Maturity Bond 10.01% 32.35% 91.23%*
Growth 30.65% 82.30% 187.12%*
Partners 35.34% N/A 31.37%
Balanced 22.74% 61.91% 89.29%
* 10 Year Figure
</TABLE>
Yields
- ------
Some subaccounts may also advertise yields. Yields quoted in advertising
reflect the change in value of a hypothetical investment in the subaccount over
a stated period of time, not taking into account capital gains or losses. Yields
are annualized and stated as a percentage.
Current yield for Liquid Asset subaccount reflects the income generated by a
subaccount over a 7-day period. Current yield is calculated by determining the
net change, exclusive of capital changes, in the value of a hypothetical account
having one Accumulation Unit at the beginning of the period adjusting for the
annual policy fee, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and
multiplying the base period return by (365/7). The resulting yield figure is
carried to the nearest hundredth of a percent. Effective yield for the Liquid
Asset subaccount is calculated in a similar manner to current yield except that
investment income is assumed to be reinvested throughout the year at the 7-day
rate. Effective yield is obtained by taking the base period returns as computed
above, and then compounding the base period return by adding 1, raising the sum
to a power equal to (365/7) and subtracting one from the result, according to
the formula:
Effective Yield = [(Base Period Return + 1) 365/7] - 1.
Since the reinvestment of income is assumed in the calculation of effective
yield, it will generally be higher than current yield.
The hypothetical historical net average yield for the 7-day period ended
December 31, 1995 for the Liquid Asset Portfolio was 3.91% and the hypothetical
historical effective yield for the 7-day period ended December 31, 1995 for the
Liquid Asset Portfolio was 3.99%.
Current yield for subaccounts other than the Liquid Asset subaccount
reflects the income generated by a subaccount over a 30-day period. Current
yield is calculated by dividing the net investment income per accumulation unit
earned during the period by the maximum offering price per unit on the last day
of the period, according to the formula:
YIELD =2[( FUNC{a-b}OVER cd; +1) SUP 6 -1]
Where a = net investment income earned during the period by the portfolio
company attributable to shares owned by the subaccount, b = expenses
accrued for the period (net of reimbursements), c = the average daily number of
accumulation units outstanding during the period, and d = the maximum offering
price per accumulation unit on the last day of the period. The yield reflects
the mortality and expense risk charge and the annual policy fee.
GENERAL MATTERS
- ---------------
The Policy
- ----------
The Policy, the application, any supplemental applications, and any
amendments or endorsements make up the entire contract. All statements made in
the application, in the absence of fraud, are considered representations and not
warranties. Only statements in the application that is attached to the Policy
and any
6
<PAGE>
supplemental applications made a part of the Policy when a change went into
effect can be used to contest a claim or the validity of the Policy. Only the
President, Vice President, Secretary or Assistant Secretary of Ameritas can
modify the Policy. Any changes must be made in writing, and approved by
Ameritas. No agent has the authority to alter or modify any of the terms,
conditions or agreements of the Policy or to waive any of its provisions.
Non-Participating
- -----------------
The Policies are non-participating. No dividends are payable and the Policies
will not share in the profits or surplus earnings of Ameritas.
Assignment
- ----------
Any non-qualified policy and any qualified policy, if permitted by the plan
or by law relevant to the plan applicable to the qualified policy, may be
assigned by the owner prior to the annuity date and during the annuitant's
lifetime. Ameritas is not responsible for the validity of any assignment. No
assignment will be recognized until Ameritas receives written notice thereof.
The interest of any beneficiary which the assignor has the right to change shall
be subordinate to the interest of an assignee. Any amount paid to the assignee
shall be paid in one sum, not withstanding any settlement agreement in effect at
the time the assignment was executed. Ameritas shall not be liable as to any
payment or other settlement made by Ameritas before receipt of written notice.
Annuity Data
- ------------
Ameritas will not be liable for obligations which depend on receiving
information from a payee until such information is received in a form
satisfactory to Ameritas.
Ownership
- ---------
The owner of the Policy on the policy date is the annuitant, unless otherwise
specified in the application. During the annuitant's lifetime, all rights and
privileges under this Policy may be exercised solely by the owner. Ownership
passes to the Owner's Designated Beneficiary upon the death of the owner(s). If
there is no Owner's Designated Beneficiary, or if no Owner's Designated
Beneficiary is living, ownership will pass to the owner's estate. From time to
time Ameritas may require proof that the owner is still living.
In order to change the owner of the Policy or assign Policy rights, an
assignment of the Policy must be made in writing and filed with Ameritas at its
Home Office. The change will take effect as of the date the change is recorded
at the Home Office, and Ameritas will not be liable for any payment made or
action taken before the change is recorded. The payment of proceeds is subject
to the rights of any assignee of record. A change in the owner will be valid
only upon absolute and complete assignment of the Policy. A collateral
assignment is not a change of ownership.
IRS Required Distributions
- --------------------------
If the owner dies before the entire interest in the Policy is distributed,
the value of the Policy must be distributed to the Owner's Designated
Beneficiary as described in this section so that the Policy qualifies as an
annuity under the Code. If the owner is not an individual, death of the
annuitant will be treated as death of the owner.
If the death occurs on or after the annuity date, the remaining portion of
such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of death.
If the death occurs before the annuity date, the entire interest in the
Policy will be distributed within five years after date of death or be used to
purchase an immediate annuity under which payments will begin within one year of
the owner's death and will be made for the life of the owner's designated
beneficiary or for a period not extending beyond the life expectancy of that
beneficiary.
The owner's designated beneficiary is the person to whom ownership of the
Policy passes by reason of death of the owner and must be a natural person.
Ameritas reserves the right to require proof of death.
If any portion of the owner's interest is payable to (or for the benefit of)
the surviving spouse of the owner, the Policy may be continued with the
surviving spouse as the new owner.
7
<PAGE>
FEDERAL TAX MATTERS
- -------------------
Taxation of Ameritas
- --------------------
Ameritas is taxed as a life insurance company under Part I of Subchapter L of
the Code. Since the Account is not an entity separate from Ameritas and its
operations form a part of Ameritas, it will not be taxed separately as a
"regulated investment company" under Subchapter M of the Code. Investment income
and realized net capital gains on the assets of the Account are reinvested and
are taken into account in determining the Policy values. As a result, such
investment income and realized net capital gains are automatically retained as
part of the reserves under the Policy. Under existing federal income tax law,
Ameritas believes that Account investment income and realized net capital gains
should not be taxed to the extent that such income and gains are retained as
part of the reserves under the Policy.
Tax Status of the Policies
- --------------------------
Section 817(h) of the Code provides in substance that Section 72 of the Code
will not apply and Ameritas will not be treated as the owner of the assets of
the Account unless the investments made by the Account are "adequately
diversified" in accordance with regulations prescribed by the Secretary of
Treasury (the "Treasury"). If the segregated account is not "adequately
diversified" any increase in the value of a variable annuity contract will be
taxed to the owner currently. The Account, through the fund, intends to comply
with the diversification requirements prescribed by Treasury regulations which
affect how the Fund's assets may be invested. Although Ameritas does not control
the Fund, it has entered into an agreement regarding participation in the Fund,
which requires the Fund to be operated in compliance with the requirements
prescribed by the Treasury.
Qualified Policies
- ------------------
The Policies are designed for use with several types of qualified plans. The
following are brief descriptions of qualified plans with which the policies may
be used:
a. H.R. 10 Plans - Section 401 of the Code permits self-employed
individuals to establish qualified plans for themselves and their
employees. Such plans commonly are referred to as "H.R. 10" or "Keogh"
plans. Taxation of plan participants depends on the specified plan.
The Code governs such plans with respect to maximum contributions,
distribution dates, non- forfeitability of interests, and tax rates
applicable to distributions. In order to establish such a plan, a plan
document, usually in prototype form preapproved by the Internal Revenue
Service, is adopted and implemented by the employer. When issued in
connection with H.R. 10 plans, a Policy may be subject to special
requirements to conform to the requirements under such plans.
b. Individual Retirement Annuities - Section 408 of the Code permits
certain individuals to contribute to an individual retirement program
known as an "Individual Retirement Annuity" or an "IRA." IRA's
are subject to limitations on eligibility, maximum contributions, and
time of distribution. Distributions from certain other types of
qualified plans may be "rolled over" on a tax-deferred basis into an
IRA. Sales of a Policy for use with an IRA may be subject to special
requirements of the Internal Revenue Service. Purchasers of a Policy
for such purposes will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency.
c. Corporation 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 Policies in order to provide benefits under the
plans.
DISTRIBUTION OF THE POLICY
- --------------------------
Ameritas Investment Corp., the principal underwriter of the Policies, is
registered with the Securities and Exchange Commission under the Securities and
Exchange Act of 1934 as a broker-dealer and is a member of
8
<PAGE>
the National Association of Securities Dealers, Inc. Ameritas Investment Corp.
is wholly-owned by AMAL Corporation. Ameritas owns a majority interest in AMAL
Corporation.
The Policies are offered to the public directly from Ameritas through
Veritas, a direct-to-consumer Division of Ameritas, with salaried employees who
are registered representatives of AIC and who will not receive compensation
related to the purchase. The Policies may also be purchased through brokers,
licensed under the federal securities laws and state insurance laws, and
properly licensed banking institions that have entered into agreements with
Ameritas Investment Corp. The offering of the Policies is continuous and
Ameritas Investment Corp. may discontinue the offering of this policy in certain
states and continue to offer it in other states.
SAFEKEEPING OF ACCOUNT ASSETS
- -----------------------------
Title to assets of the Account is held by Ameritas. The assets are kept
physically segregated and held separate and apart from Ameritas' general account
assets. Accumulation values deposited or transferred to the Fixed Account are
held in the General Account of Ameritas. Records are maintained of all purchases
and redemptions of eligible portfolio shares held by each of the Subaccounts.
STATE REGULATION
- ----------------
Ameritas is a mutual life insurance company organized under the laws of
Nebraska, and is subject to regulation by the Nebraska State Department of
Insurance. An annual statement is filed with the Nebraska Commissioner of
Insurance on or before March 1 of each year covering the operations and
reporting on the financial condition of Ameritas as of December 31 of the
preceding calendar year. Periodically, the Nebraska Commissioner of Insurance
examines the financial condition of Ameritas, including the liabilities and
reserves of the Account and certifies their adequacy.
In addition, Ameritas is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain policy
rights and provisions depends on state approval and/or filing and review
process. Where required by state law or regulation, the Policy will be modified
accordingly.
LEGAL MATTERS
- -------------
All matters of Nebraska law pertaining to the validity of the Policy and
Ameritas' right to issue such Policies under Nebraska law have been passed upon
by Norman M. Krivosha, Executive Vice President, Secretary and Corporate General
Counsel of Ameritas.
EXPERTS
- -------
The financial statements of Ameritas as of December 31, 1995 and 1994 and for
each of the three years in the period ended December 31, 1995, included in this
Statement of Additional Information have been audited by Deloitte & Touche LLP,
1040 NBC Center, Lincoln, Nebraska 68508, independent auditors, as stated in
their reports appearing herein, and are included in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.
Ameritas Life Insurance Corp. Separate Account LLVA ("the Account") was
established on October 26, 1995 under Nebraska Law by Ameritas, a mutual life
insurance company, to receive and invest premium payment on variable annuity
policies issued by Ameritas. The account is registered under the Investment
Company Act of 1940, as amended, as a unit investment trust.
There are eleven subaccounts in the Account, each of which invests
only in the corresponding portfolio of the Strong, Berger IPT or the Neuberger
& Berman AMT. The assets of the Account are segregated from the assets and
liabilities of Ameritas.
Prior to ____________, 1996, the account has had no business activities, has
no assets or liabilities and has no financial statement.
9
<PAGE>
OTHER INFORMATION
- -----------------
A registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy discussed in this Statement of Additional Information. Not all of the
information set forth in the Registration Statement, amendments and exhibits
thereto has been included in this Statement of Additional Information or in the
Prospectus. Statements contained in this Statement of Additional Information and
the Prospectus concerning the content of the policies and other legal
instruments are intended to be summaries. For a complete statement of the terms
of these documents, reference should be made to the instruments filed with the
Securities and Exchange Commission.
FINANCIAL STATEMENTS
- --------------------
The financial statements of Ameritas, which are included in this Statement of
Additional Information, should be considered only as bearing on the ability of
Ameritas to meet its obligations under the Policies. They should not be
considered as bearing on the investment performance of the assets held in the
Accounts.
10
<PAGE>
Independent Auditors' Report
Board of Directors
Ameritas Life Insurance Corp.
Lincoln, Nebraska
We have audited the accompanying parent company only balance sheets of
Ameritas Life Insurance Corp., a mutual life insurance company, as of December
31, 1995 and 1994, and the related parent company only statements of operations
and policyowners' contingency reserves, and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Ameritas Life Insurance Corp. as of December
31, 1995 and 1994, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
statutory accounting practices which are considered generally accepted
accounting principles for mutual life insurance companies.
DELOITTE & TOUCHE LLP
Lincoln, Nebraska
February 1, 1996
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
BALANCE SHEETS
(in thousands)
December 31,
-----------------------------------
ASSETS 1995 1994
------------- -------------
Investments:
<S> <C> <C>
Bonds $ 1,087,011 $ 1,063,297
Short-term investments 81,902 35,999
Mortgage loans 199,788 196,070
Real estate 41,480 43,129
Stock - other than affiliates 60,764 46,717
- affiliates 30,932 28,559
Partnerships - real estate 22,950 23,603
- joint venture 20,755 19,929
Other investments 1,626 2,084
------------- ------------
1,547,208 1,459,387
Loans on life insurance policies 66,529 67,883
------------ ------------
Total investments 1,613,737 1,527,270
Cash 361 3,142
Accrued investment income 23,077 24,192
Other current accounts receivable 2,576 1,154
Deferred and uncollected premiums 8,880 8,724
Data processing and other admitted assets 1,219 1,412
Separate Accounts 50,674 30,887
------------- -------------
$ 1,700,524 $ 1,596,781
============ =============
LIABILITIES AND POLICYOWNERS' CONTINGENCY RESERVES
Policy reserves $ 669,610 $ 642,512
Funds left on deposit 633,715 626,877
Reserves for unpaid claims 17,107 17,451
Dividends payable to policyowners in following year 10,557 10,452
Interest maintenance reserve 12,549 12,059
Postretirement benefit obligation 2,542 2,769
Accrued taxes
Federal income - current 15,896 14,280
- deferred 21,673 18,260
Other 474 469
Other liabilities 23,949 19,666
Asset valuation reserve 37,111 30,178
Separate Accounts 50,674 30,887
------------ ------------
1,495,857 1,425,860
------------ ------------
Policyowners' contingency reserves 204,667 170,921
------------ ------------
$ 1,700,524 $ 1,596,781
============ ============
The accompanying notes to financial statements are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
STATEMENTS OF OPERATIONS
AND POLICYOWNERS' CONTINGENCY RESERVES
(in thousands)
Years Ended December 31,
--------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
INCOME:
Premiums from policyowners for life insurance, health
insurance and annuities $ 229,561 $ 216,269 $ 198,585
Deposit administration funds, dividend accumulations
and other funds left on deposit 101,089 46,244 50,160
Other income 8,056 7,008 6,312
Net investment income 121,679 116,581 119,639
------------- ----------- ------------
Total income 460,385 386,102 374,696
------------- ----------- ------------
DEDUCTIONS:
Benefits to policyowners and beneficiaries 287,240 264,364 241,890
Additions to policy reserves and deposit funds 52,008 16,168 37,728
Commissions 14,660 11,549 7,622
Cost of insurance operations 44,678 43,479 38,616
Taxes, licenses and fees 6,668 6,754 6,676
------------- ------------ ------------
Total deductions 405,254 342,314 332,532
------------- ------------ ------------
Income before dividends, income taxes, and realized gains 55,131 43,788 42,164
Dividends appropriated for policyowners 10,676 10,337 11,009
------------- ------------ ------------
Income before income taxes and realized gains 44,455 33,451 31,155
Provision for federal income taxes 16,100 20,500 11,360
------------ ------------ ------------
Net income from operations 28,355 12,951 19,795
Realized gains on investments, net of tax of $1,573, $1,001 and $10,070
and transfers to the interest maintenance reserve of $2,068,
$985 and $6,628 in 1995, 1994 and 1993, respectively 853 1,872 12,077
------------ ------------ ------------
Net income transferred to policyowners' contingency reserves 29,208 14,823 31,872
Change in net unrealized gains on investments 10,465 (8,184) (4,561)
Transfers (to)/from asset valuation reserve (6,933) 3,053 (2,673)
Other - net 1,006 (500) (4,566)
------------- ----------- ------------
Net change in Policyowners' contingency reserves 33,746 9,192 20,072
Policyowners' contingency reserves at beginning 170,921 161,729 141,657
------------- ----------- ------------
Policyowners' contingency reserves at end $ 204,667 $ 170,921 $ 161,729
============= =========== ============
The accompanying notes to financial statements are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
-------------------------------------------
1995 1994 1993
------------ -------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premium and deposit income $ 330,450 $ 253,795 $ 247,156
Investment income received, net 122,032 114,686 115,440
Benefits to policyowners and beneficiaries (181,174) (178,101) (170,788)
Transfer to Separate Accounts (11,738) (4,416) --
Withdrawals of deposit administration funds (108,621) (78,394) (68,597)
Expenses and taxes, other than federal income tax (65,306) (60,705) (52,489)
Dividends paid to policyowners (10,548) (10,976) (12,229)
Federal income tax paid (13,619) (17,569) (6,388)
Net decrease in loans on life insurance policies 1,350 3,093 1,462
Other operating income and disbursements, net 6,738 6,276 6,719
------------- ------------ ------------
Net cash flow from operating activities 69,564 27,689 60,286
------------- ------------ ------------
INVESTING ACTIVITIES
Proceeds from long-term investments sold, matured or repaid 166,594 174,903 342,266
Cost of long-term investments acquired (193,036) (264,648) (384,347)
------------ ------------ ------------
Net cash flow used in investing activities (26,442) (89,745) (42,081)
------------ ------------ ------------
Net cash flow 43,122 (62,056) 18,205
Cash and short-term investments at beginning period 39,141 101,197 82,992
------------ ------------ ------------
Cash and short-term investments at end of period $ 82,263 $ 39,141 $ 101,197
============ ============ ============
The accompanying notes to financial statements are an integral part of these statements.
</TABLE>
<PAGE>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
ORGANIZATION
Ameritas Life Insurance Corp. is a mutual life insurance company chartered by
the State of Nebraska. Its operations consist of life and health insurance and
annuity and pension contracts. Wholly-owned insurance subsidiaries include
Ameritas Variable Life Insurance Company, First Ameritas Life Insurance Corp. of
New York, Pathmark Assurance Company, and Bankers Life Nebraska Company, a
holding company, which owns 100% of Ameritas Bankers Assurance Company. In
addition to the insurance subsidiaries the Company conducts other diversified
financial service-related operations through the following wholly-owned
subsidiaries: Veritas Corp. (a marketing organization for low-load insurance
products); BLN Financial Services, Inc., which owns 100% of Ameritas Investment
Corp. (a broker/dealer), Ameritas Investment Advisors, Inc. (an advisor
providing investment management services to the Company and other insurance
companies); FMA Realty Inc. (a real estate management firm); and Ameritas
Managed Dental Plan, Inc. (a prepaid dental organization).
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
life insurance accounting practices prescribed or permitted by the Insurance
Department of the State of Nebraska. While appropriate for mutual life insurance
companies, such accounting practices differ in certain respects from generally
accepted accounting principles followed by other business enterprises. The
Financial Accounting Standards Board (FASB) has undertaken consideration of
changing those methods constituting generally accepted accounting principles
applicable to mutual life insurance companies. In accordance with pronouncements
issued by the FASB in 1993 and1994, financial statements prepared on the basis
of statutory accounting practices can no longer be described as prepared in
conformity with generally accepted accounting principles for fiscal years
beginning after December 15, 1995.
The Company is permitted by the Insurance Department of the State of Nebraska
to establish a deferred income tax liability to account for future taxes
expected to be paid although such a liability is not required (see Note 5,
Federal Income Taxes).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The principal prescribed accounting and reporting practices followed are:
INVESTMENTS
Investments are reported according to valuation procedures prescribed by the
National Association of Insurance Commissioners (NAIC), and generally: bonds and
mortgage loans are valued at amortized cost; real estate at cost less
accumulated depreciation when an operating investment, on the equity method when
operated as a partnership, or at amortized cost when a purchase lease; preferred
stock at cost; common stock of unaffiliated companies at market value; and
investments in subsidiaries and investments in limited partnerships are valued
on the equity basis.
Realized capital gains and losses, including valuation allowances on specific
investments, are recorded in the Statements of Operations and unrealized gains
and losses are credited or charged to policyowners' contingency reserves.
AFFILIATES
Investments in subsidiaries are reported in the balance sheets at equity in
net assets. Dividends from these subsidiaries are included in investment income.
The equity in undistributed net earnings or loss is credited or charged to
policyowners' contingency reserves.
<PAGE>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
-------------------------------------------------------
The following amounts report totals for subsidiaries at December 31 and for
the years then ended:
<TABLE>
<CAPTION>
1995 1994
------------- -------------
(000's omitted)
<S> <C> <C>
Total assets $ 749,917 $ 526,280
Equity in net assets 30,932 28,559
Dividends received 150 500
Equity in undistributed net income/(loss) 464 (3,055)
</TABLE>
Services are provided and received by and between the Company and its
subsidiaries under administrative service agreements. The costs/recoveries
associated with these agreements are reflected in operations.
The Company has entered into guarantee agreements with two of its life
insurance subsidiaries, Ameritas Variable Life Insurance and Ameritas Bankers
Assurance Company. Under the agreements the Company guarantees the full,
complete and absolute performance of all duties and obligations of these
affiliates. Most of the affiliate amounts shown above relate to these
subsidiaries.
The Company has entered into a guarantee agreement with its subsidiary,
Ameritas Managed Dental Plan, Inc. Under the agreement, the Company guarantees
to maintain surplus of the affiliate at the required minimum level.
NON-ADMITTED ASSETS
Certain assets (primarily furniture and equipment and software) are designated
as "non- admitted" under Insurance Department accounting requirements. These
assets are excluded from the balance sheets by adjustments to policyowners'
contingency reserves. Total "non-admitted assets" were $11.7 million in both
1995 and 1994.
SEPARATE ACCOUNT BUSINESS
Separate account assets and liabilities are segregated and are exclusively for
the benefit of certain pension contract holders. Assets in separate accounts are
held at market value.
RESERVES
Policy reserves for life and annuity policies are established and maintained
on the basis of published mortality tables using assumed interest rates and
valuation methods established by the Insurance Department of the State of
Nebraska.
The liability for funds left on deposit with the Company includes deposit
administration funds deposited on behalf of employer-employee or trustee groups
to provide immediate and future retirement benefits. These funds are part of the
general funds of the Company. The Company is not responsible for the adequacy of
these funds to meet specified fund benefits.
Reserves for unpaid claims include claims reported and unpaid and claims not
yet reported, the latter estimated on the basis of historical experience. As
such amounts are necessarily estimates, the ultimate liability will differ from
the amount recorded and will be reflected in operations when additional
information becomes known.
The interest maintenance reserve is calculated based on the prescribed method
developed by the NAIC. Realized gains and losses, net of tax, resulting from
interest rate changes on fixed income investments are deferred and credited to
this reserve. These gains and losses are then amortized into investment income
over what would have been the remaining years to maturity of the underlying
investment. Amortization included in investment income, was $1.6 million, $1.2
million and $.6 million for 1995, 1994 and 1993.
The asset valuation reserve is a required appropriation of surplus to provide
for possible losses that may occur on certain investments held by the Company.
The reserve is computed based on holdings of bonds, stocks, mortgages, real
estate and short-term investments and realized and unrealized gains and losses,
other than those resulting from interest rate changes. Changes in the reserve
are charged or credited to policyowners' contingency reserves.
<PAGE>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
-------------------------------------------------------
RECOGNITION OF PREMIUM INCOME AND RELATED EXPENSES
Premiums are credited to revenue over the premium paying periods of the
related policy. Annuity and pension fund deposits are recognized as income when
received. Policy acquisition costs, such as commissions and other marketing and
issuance expenses incurred in connection with acquiring new business, are
charged to operations as incurred.
Premium income for the years ended December 31 consists of the following:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ------------ ------------
(000's omitted)
<S> <C> <C> <C>
Individual life and annuity $ 72,090 $ 64,716 $ 61,582
Group life and health 154,167 150,301 136,761
Group annuity 3,304 1,252 242
----------- ------------ ------------
Total $ 229,561 $ 216,269 $ 198,585
=========== ============ ============
</TABLE>
DIVIDENDS TO POLICYOWNERS
A portion of the Company's business has been issued on a participating basis.
The amount of policyowners dividends to be paid is determined annually by the
Board of Directors.
INCOME TAXES
The Company files a consolidated life/non-life return with its subsidiaries.
An agreement among the members of the consolidated group provides for
distribution of consolidated tax results as if filed on a separate return basis.
The current income tax expense or benefit (including effects of capital gains
and losses and net operating losses) is apportioned generally on a sub-group
(life/non-life) basis.
2. FINANCIAL INSTRUMENTS:
----------------------
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it is practicable to estimate a
value:
Bonds
For publicly traded securities, fair value is determined using an independent
pricing source. For securities without a readily ascertainable fair value, the
value has been determined using an interest rate spread matrix based upon
quality, weighted average maturity and Treasury yields.
Short-term investments
The carrying amount approximates fair value because of the short maturity of
these instruments.
Mortgage loans
Mortgage loans in good standing are valued on the basis of discounted cash
flow. The interest rate that is assumed is based upon the weighted average term
of the mortgage and appropriate spread over Treasuries. Mortgage loans in
default totaling $1.0 million and $3.9 million at December 31, 1995 and 1994 are
not included in the fair value calculation or carrying amount.
Real estate
Because real estate purchase leases include renewal options and residual
interests in real estate, a fair value was not practicably determinable. All
other real estate is excluded from the fair value calculation.
Stocks
For publicly traded securities, fair value is determined using prices provided
by the NAIC. Stocks in affiliates are carried on the equity method and therefore
not included as part of the fair value disclosure.
<PAGE>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. FINANCIAL INSTRUMENTS (continued):
----------------------------------
Partnerships
Fair values for venture capital partnerships are estimated based on values as
last reported by the partnership and discounted for their lack of marketability.
Real estate partnerships are carried on the equity method and are excluded from
the fair value disclosure.
Other assets
The fair value of these assets approximates book value.
Loans on life insurance policies
Fair values for policy loans are estimated using a discounted cash flow
analysis at interest rates currently offered for similar loans. Policy loans
with similar characteristics are aggregated for purposes of the calculations.
Cash
The carrying amounts reported in the balance sheet equals fair value.
Accrued investment income
Fair value of accrued investment income equals stated value.
Funds left on deposit
Funds left on deposit with a fixed maturity are valued at discounted present
value using market interest rates. Funds on deposit which do not have fixed
maturities are carried at the amount payable on demand at the reporting date.
Estimated fair values presented below, as of December 31, do not necessarily
represent the value for which the financial instrument could have been sold:
<TABLE>
<CAPTION>
1995 1994
---------------------------- ----------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------- ------------ ------------- -------------
(000's omitted)
<S> <C> <C> <C> <C>
Financial Assets:
Bonds $ 1,087,011 $ 1,158,742 $ 1,063,297 $ 1,023,489
Short-term investments 81,902 81,902 35,999 35,999
Mortgage loans 198,788 215,806 192,179 192,294
Stocks - other than affiliates 60,764 60,761 46,717 46,462
Partnerships - joint ventures 20,755 26,523 19,929 26,971
Other assets 1,626 1,626 2,084 2,084
Loans on life insurance policies 66,529 59,027 67,883 51,035
Cash 361 361 3,142 3,142
Accrued investment income 23,077 23,077 24,192 24,192
Financial Liabilities:
Funds left on deposit 633,715 636,681 626,877 599,413
</TABLE>
<PAGE>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. INVESTMENTS IN BONDS AND STOCKS-OTHER THAN AFFILIATES:
------------------------------------------------------
The table below provides additional information relating to bonds and
stocks-other than affiliates held by the general account at December 31, 1995:
<TABLE>
<CAPTION>
Gross Gross
Amortized Fair Unrealized Unrealized Carrying
Cost Value Gains Losses Value
------------- -------------- ------------ -------------- ------------
(000's omitted)
<S> <C> <C> <C> <C> <C>
Bonds:
U.S. Corporate $ 684,376 $ 732,622 $ 50,202 $ 1,956 $ 684,376
Mortgage-backed 244,042 254,727 10,920 235 244,042
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies 142,014 153,608 11,685 91 142,014
Foreign 16,579 17,785 1,206 -- 16,579
------------- ------------- ------------ -------------- ------------
Total Bonds $ 1,087,011 $ 1,158,742 $ 74,013 $ 2,282 $ 1,087,011
============= ============= ============ ============== ============
Stocks-other than affiliates $ 30,580 $ 60,761 $ 30,633 $ 452 $ 60,764
============= ============= ============ ============== ============
</TABLE>
The comparative data as of December 31, 1994 was as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Fair Unrealized Unrealized Carrying
Cost Value Gains Losses Value
------------- -------------- ------------ -------------- ------------
(000's omitted)
<S> <C> <C> <C> <C> <C>
Bonds:
U.S. Corporate $ 605,096 $ 584,873 $ 9,827 $ 30,050 $ 605,096
Mortgage-backed 249,851 235,935 3,029 16,945 249,851
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies 146,610 144,592 4,979 6,997 146,610
States and political subdivisions 80 79 -- 1 80
Foreign 61,660 58,010 302 3,952 61,660
------------- ------------- ----------- -------------- ------------
Total Bonds $ 1,063,297 $ 1,023,489 $ 18,137 $ 57,945 $ 1,063,297
============= ============= =========== ============== ============
Stocks-other than affiliates $ 29,599 $ 46,462 $ 18,924 $ 2,061 $ 46,717
============= ============= =========== ============== ============
</TABLE>
The carrying value and fair value of bonds at December 31, 1995 by contractual
maturity are shown below. Maturity is determined based on call date, if any.
Expected maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Fair Carrying
Value Value
-------------- -------------
(000's omitted)
<S> <C> <C>
Due in one year or less $ 72,906 $ 71,107
Due after one year through five years 260,469 244,025
Due after five years through ten years 492,052 460,048
Due after ten years 78,588 67,789
Mortgage-backed securities 254,727 244,042
-------------- -------------
Total Bonds $ 1,158,742 $ 1,087,011
============== =============
</TABLE>
<PAGE>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. INVESTMENTS IN BONDS AND STOCKS-OTHER THAN AFFILIATES(continued):
-----------------------------------------------------------------
Bonds not due at a single maturity date have been included in the above table
in the year of final maturity.
Sales of bond investments in 1995 and 1993 resulted in proceeds of $2.9
million and $7.4 million. There were no sales of investments in bonds in 1994.
Gross gains/(losses) of ($.1) million and $.6 million were realized on those
sales in 1995 and 1993.
4. RESERVE FOR UNPAID CLAIMS:
--------------------------
Activity in the accident and health reserve for unpaid claims and claim
adjustment expense is summarized as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------
1995 1994 1993
------------ ------------ ------------
(000's omitted)
<S> <C> <C> <C>
Balance January 1, $ 14,250 $ 14,510 $ 13,128
Reinsurance reserves (net) (86) (10) 10
Incurred related to:
Current year 113,896 114,292 109,888
Prior year (1,725) (805) (1,213)
------------ ----------- ------------
Total incurred 112,171 113,487 108,675
------------ ----------- ------------
Paid related to:
Current year 100,378 100,474 95,822
Prior year 12,017 13,349 11,491
------------ ----------- ------------
Total paid 112,395 113,823 107,313
------------ ----------- ------------
Balance December 31, 13,940 14,164 14,500
Reinsurance reserves (net) (40) 86 10
Life and Annuity reserves 3,207 3,201 2,822
------------ ----------- ------------
Total Reserves for Unpaid Claims $ 17,107 $ 17,451 $ 17,332
============ =========== ============
</TABLE>
5. FEDERAL INCOME TAXES:
---------------------
The provision for federal income taxes is based on the current law which
requires companies to defer policy acquisition costs and amortize those costs in
future periods. A second requirement effectively taxes surplus as defined under
the law. As a result of the deferred acquisition costs and "surplus tax"
requirements the provision for federal income taxes exceeds the statutory
corporate rate.
The tax returns for the years through 1990 have been examined and settled.
The Company provides deferred taxes for temporary differences resulting from
certain transactions, including those related to investments in tax benefit
leases, unrealized gains and losses and other investment transactions.
6. REINSURANCE:
------------
In the ordinary course of business, the Company assumes and cedes reinsurance
with other insurers and reinsurers. These arrangements provide greater
diversification of business and limit the maximum net loss potential on large
risks.
<PAGE>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. REINSURANCE(continued):
-----------------------
Following is a summary of the transactions through reinsurance operations:
<TABLE>
<CAPTION>
1995 1994 1993
------------- -------------- --------------
(000's omitted)
<S> <C> <C> <C>
Premiums:
Assumed $ 7,514 $ 2,790 $ 1,823
Ceded 8,804 5,834 5,157
Claims:
Assumed 3,279 2,174 784
Ceded 9,890 2,516 15,859
Reserves:
Assumed 1,455 1,028 698
Ceded 6,461 7,345 6,609
</TABLE>
The Company remains contingently liable in the event that a reinsurer is
unable to meet the obligations ceded under the reinsurance agreement. The
amounts related to reinsurance assumed are primarily with a related party.
7. EMPLOYEE AND AGENT BENEFIT PLANS:
---------------------------------
The Company's non-contributory defined benefit pension plan covers
substantially all full-time employees. Pension costs include current service
costs, which are accrued and funded on a current basis, and past service costs,
which are amortized over the average remaining service life of all employees on
the adoption date. The assets of this plan are not segregated.
Following is a summary of plan benefit and asset information using a December
31st valuation date:
<TABLE>
<CAPTION>
1995 1994
---------- -----------
(000's omitted)
<S> <C> <C>
Actuarial present value of
accumulated plan benefits:
Vested $ 18,371 $ 18,208
Non-Vested 320 366
---------- -----------
$ 18,691 $ 18,574
========= ==========
Net assets available for benefits $ 25,462 $ 23,173
========= ==========
</TABLE>
The Company has generally funded annually the maximum allowed under IRS
regulations. The Company made contributions totaling $ 1.5 million in both 1995
and 1994 and $1.6 million in 1993.
The Company's employees and agents also participate in defined contribution
plans that cover substantially all full-time employees and agents. Total Company
contributions were $.8 million in 1995, 1994 and 1993.
In addition to pension benefits the Company provides certain health care
benefits ("postretirement benefits") to retired employees. These benefits are a
specified percentage of premium until age 65 and a flat dollar amount
thereafter. Employees become eligible for these benefits upon the attainment of
age 55, 15 years of service and participation in the Company medical plan for
the immediately preceding 5 years.
The Company accounts for the costs of its postretirement benefits as required by
the National Association of Insurance Commissioners (NAIC). The Company has
adopted a 401(h) plan to fund its postretirement benefit obligation. Funding of
$.3 million, $.4 million and $.1 million was made in 1995, 1994 and 1993.
<PAGE>
AMERITAS LIFE INSURANCE CORP.
PARENT COMPANY ONLY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. EMPLOYEE AND AGENT BENEFIT PLANS (continued):
---------------------------------------------
The status of the plan is as follows:
Accumulated postretirement benefit obligation:
<TABLE>
<CAPTION>
1995 1994
----------- ------------
(000's omitted)
<S> <C> <C>
Retirees $ 2,634 $ 3,012
Fully eligible active plan participants 312 259
Unrecognized net gain/(loss) 351 (60)
----------- ------------
3,297 3,211
Fair value of plan assets 755 442
----------- ------------
$ 2,542 $ 2,769
========== ============
</TABLE>
The estimated accumulated postretirement benefit for non-eligible active plan
participants are $1.7 million, $1.6 million and $1.5 million as of December 31,
1995, 1994 and 1993, respectively.
Postretirement benefit cost for the year ended December 31, consisted of the
following components:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ------------ ----------
(000's omitted)
<S> <C> <C> <C>
Service costs $ 33 $ 62 $ 66
Interest cost on accumulated postretirement
benefit obligation 202 220 253
Expected return on assets (38) (3) --
---------- ------------ ----------
$ 197 $ 279 $ 319
========== ============ ==========
</TABLE>
The assumed health care cost trend line rate used in measuring the accumulated
postretirement benefit obligation, for pre-65 employees, was 9.5% in 1995
decreasing linearly each successive year until it reaches 5.5% in 1999, after
which it remains constant. A one-percentage point increase in the assumed health
care cost trend rate for each year would increase the accumulated postretirement
health care cost by approximately 0.6%. The assumed discount rate used in
determing the accumulated postretirement benefit obligation was 7.5%.
8. COMMITMENTS:
------------
Investment: As of December 31, 1995, commitments were outstanding for
investments to be made in 1996 and after, totaling approximately $11 million.
Securities commitments represented $1 million, and mortgage loan and real estate
commitments approximated $10 million. These commitments have been made in the
normal course of investment operations.
State life and health guaranty funds: As a condition of doing business, all
states and jurisdictions have adopted laws requiring membership in life and
health insurance guaranty funds. Member companies are subject to assessments
each year based on life, health or annuity premiums collected in the state. In
some states these assessments may be applied against premium taxes. The Company
has estimated its costs related to past insolvencies and has provided a reserve
included in other liabilities of $2.0 million and $1.6 million as of December
31, 1995 and 1994, respectively.
9. SUBSEQUENT EVENTS - UNAUDITED:
------------------------------
On April 1, 1996 Ameritas Life Insurance Corp. consummated an agreement with
American Mutual Life Insurance Company whereby Ameritas Variable Life Insurance
Company (AVLIC) became a wholly-owned subsidiary of a newly formed holding
company, AMAL Corporation. The agreement was announced March 11, 1996. The
holding company will contribute approximately $18 million of additional paid-in
capital to AVLIC. Under terms of the agreement the AMAL Corporation will
initially be 66% owned by Ameritas Life and 34% owned by American Mutual.
American Mutual has options to purchase an additional 15% interest over the next
five years if certain production requirements are met. Ameritas Life, American
Mutual and AMAL Corporation guarantee the obligations of AVLIC. This guarantee
will continue until AVLIC is recognized by a National Rating Agency as having a
financial rating equal to or greater than Ameritas Life, or until AVLIC is
acquired by another insurance company who has a financial rating by a National
Rating Agency equal to or greater than Ameritas Life and who agrees to assume
the guarantee; provided that if AML sells its interest in AMAL Corporation to
another insurance company who has a financial rating by a National Rating Agency
equal to or greater than that of AML, and the purchaser assumes the guarantee,
AML will be relieved of its obligations under the Guarantee.
Effective January 1, 1996, with the approval of the State of Nebraska
Insurance Department, AVLIC changed reserving methods used for most existing
products resulting in an increase in statutory surplus of approximately $23.4
million.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a) Financial Statements:
The financial statements of Ameritas Life Insurance Corp. are filed in Part
B. No financial statements will be included for Ameritas Life Insurance
Corp. Separate Account LLVA, as it had no assets or liabilities and had not
commenced operations as of the date of this registration statement.
Ameritas Life Insurance Corp.:
- Report of Deloitte & Touche LLP, independent auditors.
- Balance Sheets as of December 31, 1995 and 1994.
- Statements of Operations and Policyowners' Contingency Reserves for each
of the three years in the period ended December 31, 1995.
- Statements of Cash Flows for each of the three years in the period ended
December 31, 1995.
- Notes to Financial Statements for the three years in the period ended
December 31, 1995.
All schedules of the Company for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions, are inapplicable or have been disclosed
in the Notes to the Financial Statements and therefore have been omitted.
There are no financial statements included in Part A.
1
<PAGE>
b) Exhibits
Exhibit Number Description of Exhibit
-------------- ----------------------
(1) Resolution of Board of Directors of Ameritas Life
Insurance Corp. establishing Ameritas Life
Insurance Corp. Separate Account LLVA.*
(2) Not applicable.
(3)(a) Principal Underwriting Agreement.
(3)(b) Form of Selling Agreement.*
(4) Form of Variable Annuity Contract.*
(5) Form of Application for Variable Annuity Contract.*
(6)(a) Certificate of Incorporation of Ameritas Life
Insurance Corp.*
(6)(b) Bylaws of Ameritas Life Insurance Corp.*
(7) Not applicable.
(8)(a) Participation Agreement.*
(8)(b) Proposed Participation Agreement.*
(8)(c) Proposed Participation Agreement.
(8)(d) Proposed Participation Agreement.
(9) Opinion and consent of Norman M. Krivosha.
(10)(a) Independent Auditors' Consent.
(11) No financial statements are omitted from Item 23.
(12) Not applicable.
(13) Not applicable.
* Incorporated by reference to the initial registration statement for Ameritas
Life Insurance Corp. Separate Account LLVA (File No. 333-5529), filed on
June 7, 1996.
2
<PAGE>
Item 25. Directors and Officers of the Depositor.
Name and Principal Position and Offices
Business Address with Depositor
------------------ ---------------------
Lawrence J. Arth* Director, Chairman of the Board
and Chief Executive Officer
Kenneth C. Louis* Director, President and Chief
Operating Officer
Norman M. Krivosha* Executive Vice President, Secretary
and Corporate General Counsel
Jon C. Headrick* Executive Vice President-Investments
and Treasurer
James P. Abel** Director
Duane W. Acklie** Director
Robert C. Barth* Second Vice President and Assistant
Controller
Roxann Brennfoerder* Vice President - Pensions
Wayne E. Brewster* Vice President - Variable Sales
Robert W. Bush* Executive Vice President-Individual
Insurance
Jan M. Connolly* Vice President-Corporate Operations,
Planning and Quality
William W. Cook, Jr.** Director
Gerald B. Dimon* Vice President - Human Resources
Bert A. Getz** Director
William R. Giovanni* Senior Vice President and Chief
Executive Officer-Ameritas Investment
Corp.
James R. Haire* Vice President - Corporate Actuary
Thomas D. Higley* Vice President - Individual Financial
Operations and Actuary
Leslie D. Inman* Vice President - Group Marketing
and Planning
Steven K. Isaacs* Vice President - Group Field Sales
Michael Jaskolka* Second Vice President - Information
Services
Marty L. Johnson* Second Vice President - Individual
Underwriting
Kenneth R. Jones* Vice President-Corporate Compliance
and Assistant Secretary
James R. Knapp** Director
Robert F. Krohn** Director
3
<PAGE>
William W. Lester* Vice President-Securities
Wilfred J. Maddux** Director
JoAnn M. Martin* Senior Vice President-Controller and
Chief Financial Officer
Anthony Mazzarelli, Jr.* Vice President-Individual Field Sales
Bruce R. McMullen, M.D.* Vice President and Medical Director
David C. Moore* Executive Vice President - Group and
Pensions
William W. Nelson* Vice President - Group Administration
Dale Niebuhr* Second Vice President-Internal Audit
Gary R. Raymond* Vice President - Group Actuary
Barry C. Ritter* Senior Vice President - Information
Services
Paul C. Schorr, III** Director
William C. Smith** Director
Donald R. Stading* Vice President and General Counsel -
Insurance and Assistant Secretary
Neal E. Tyner** Director
Kenneth L. VanCleave* Vice President - Group Managed Care
and Partnering
Richard W. Vautravers* Vice President - Ameritas Low-Load
Winston J. Wade** Director
Jon B. Weinberg** Vice President-Mortgage Loans and
Real Estate
Steven L. Welton* Vice President-Individual Marketing
* Principal business address: Ameritas Life Insurance Corp., 5900 "O" Street,
Lincoln, Nebraska 68510
** Principal address for: James P. Abel, NEBCO, Inc., P.O. Box 80268, Lincoln,
Nebraska 68501; Duane W. Acklie, Crete Carrier Corporation, P.O. Box 81228,
Lincoln, Nebraska 68501; William W. Cook, Jr., The Beatrice National Bank
and Trust Company, P.O. Box 100, Beatrice, Nebraska 68310; Bert A. Getz,
Globe Corporation, 3634 Civic Center Blvd., Scottsdale, Arizona 85251;
James R. Knapp, The Brookhollow Group, 535 Anton Boulevard, Suite 100,
Costa Mesa, California 92626; Robert F. Krohn, Krohn Corporation, 1427
South 85th Ave., Omaha, Nebraska 68124; Wilfred Maddux, Maddux Cattle
Company, P.O. Box 217, Wauneta, Nebraska 69045; Paul C. Schorr, III, ComCor
Holding, Inc., 6940 "O" Street, Suite 336, P.O. Box 57310, Lincoln,
Nebraska 68505, William C. Smith, William C. Smith & Co., Cornhusker Plaza,
Suite 401, 301 So. 13th Street, Lincoln, Nebraska 68508; Neal E. Tyner,
NET Consultants, 6940 O Street, Suite 324, Lincoln, Nebraska 68510;
Winston J. Wade, c/o PMI, Jockey Hollow Professional Park, P.O. Box 311,
Mendham, New Jersey 07945.
4
<PAGE>
Item 26
The depositor, Ameritas Life Insurance Corp., is a mutual life insurance company
domiciled in Nebraska. The Registrant is a segregated asset account of Ameritas
Life Insurance Corp.
The following chart indicates the persons controlled by or under common control
with Ameritas Life Insurance Corp.:
[GRAPHIC OMITTED]
Omitted chart shows Ameritas organization. ALIC with its separate accounts is at
the uppermost tier; second tier companies are: Ameritas Investment Advisors,
Inc., Ameritas Managed Dental Plan, Inc. Bankers Life Nebraska Company, First
Ameritas Life Insurance Corp. of New York, Pathmark Assurance Company, Veritas
Corp., AMAL Corporation*, third tier companies are Ameritas Bankers Assurance
Company which is owned by Bankers Life Nebraska Co., Ameritas Investment Corp.
and AVLIC with its separate accounts which are owned by AMAL Corporation
(* AMAL Corporation is jointly owned by Ameritas and AmerUs Life Insurance
Company).
All entities are Nebraska entities, except Ameritas Bankers Assurance Company
and First Ameritas Life Insurance Corp. of New York, which are New York
entities, and Ameritas Managed Dental Plan, Inc., which is a California entity.
All entities are wholly-owned by the person immediately controlling it, except
AMAL Corporation, a holding company, which is jointly owned by Ameritas Life
Insurance Corp., which owns a majority interest in AMAL Corporation, and AmerUs
Life Insurance Company, which owns a minority interest in AMAL Corporation.
Bankers Life Nebraska Company and AMAL Corporation are holding companies.
Veritas is a marketing agency. Ameritas Bankers Assurance Company and Pathmark
Assurance Company are insurance companies.
Item 27. Number of Contractowners
As of September 30, 1996 there were 0 contractowners.
Item 28. Indemnification
Ameritas Life Insurance Corp.'s By-laws provide as follows:
"The Company shall indemnify any person who was, or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that such person is or was a director, officer or employee of
the Company or is or was serving at the request of the Company as a director,
officer or employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses including attorney's fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such action, suit or proceeding to the full extent authorized
by the laws of Nebraska."
Section 21-2004 of the Nebraska Business Corporation Act, in general, allows
a corporation to indemnify any director, officer, employee or agent of the
corporation for amounts paid in settlement actually and reasonably incurred by
him or her in connection with an action, suit or proceeding, if he or she acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
In a case of a derivative action, no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable for negligence or misconduct in the performance of his or her duty
to the corporation, unless a court in which the action was brought shall
determine that such person is fairly and reasonably entitled to indemnify for
such expenses which the Court shall deem proper.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise,
5
<PAGE>
the registrant 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
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 29. Principal Underwriters
a) Ameritas Investment Corp. which will serve as the principal underwriter
for the variable annuity contracts issued through Ameritas Life Insurance
Corp. Separate Account LLVA, also serves as the principal underwriter for
variable life insurance contracts issued through Ameritas Life Insurance
Corp. Separate Account LLVL. Ameritas Investment Corp. also serves as
the principal underwriter for variable life insurance contracts issued
through Ameritas Variable Life Insurance Company Separate Account V, and
variable annuity contracts issued through Ameritas Variable Life
Insurance Company Separate Account VA-2.
b) The following table sets forth certain information regarding the officers
and directors of the principal underwriter, Ameritas Investment Corp.
Name and Principal Positions and Offices
Business Address with Underwriter
---------------- ----------------
Lawrence J. Arth* Director and Chairman of the Board
Kenneth C. Louis* Director, Senior Vice President
Norman M. Krivosha* Secretary and General Counsel
William R. Giovanni* Director, President and Chief
Executive Officer
Jon C. Headrick* Treasurer
D T Doan** Director and Senior Vice President
Thomas C. Godlasky** Director
Michael E. Sproule** Director
Kenneth R. Jones* Vice President-Corporate Compliance
and Assistant Secretary
Thomas C. Bittner* Vice President-Marketing and
Administration
Janell D. Winsor* Vice President-Retail Sales Manager
Alan R. Eveland* Vice President-Public Finance
* Principal business address: Ameritas Investment Corp., 5900 "O" Street,
Lincoln, Nebraska 68510.
** Principal business address: AmerUs Life Insurance Company, 611 Fifth
Avenue, Des Moines, Iowa 50309
6
<PAGE>
Item 30. Location of Account and Records
The Books, records and other documents required to be maintained by Section
31(a) of the 1940 Act and Rules 31a-1 to 31a-3 thereunder are maintained at
Ameritas Life Insurance Corp., 5900 "O" Street, Lincoln, Nebraska 68510
Item 31. Management Services
Not applicable.
Item 32. Undertakings
a) Registrant undertakes to file a post-effective amendment to this
registration statement as frequently as 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 and send for a Statement of
Additional Information.
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.
d) The Registrant is relying upon the Division of Investment Management
(Division) no-action letter of November 28, 1988 concerning annuities
sold in 403(b) plans and represents that the requirements of the
no-action letter have been, are and/or will be complied with.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ameritas Life Insurance Corp. Separate Account LLVA, certifies that it has duly
caused this Pre-Effective Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized in the City of
Lincoln, County of Lancaster, State of Nebraska on this 27th day of September,
1996.
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA, Registrant
AMERITAS LIFE INSURANCE CORP., Depositor
Attest: Norman M. Krivosha By: Lawrence J. Arth
-------------------- -----------------------
Secretary Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the Directors and Officers of Ameritas Life
Insurance Corp. of Nebraska on the dates indicated.
SIGNATURE TITLE DATE
/s/ Lawrence J. Arth Director, Chairman of the Board September 27, 1996
--------------------- and Chief Executive Officer
Lawrence J. Arth
/s/ Kenneth C. Louis Director, President and September 27, 1996
--------------------- Chief Operating Officer
Kenneth C. Louis
/s/ Norman M. Krivosha Executive Vice President, September 27, 1996
--------------------- Secretary and Corporate
Norman M. Krivosha General Counsel
/s/ Jon C. Headrick Executive Vice President- September 27, 1996
--------------------- Investments and Treasurer
Jon C. Headrick
/s/ James P. Abel Director September 27, 1996
-------------------
James P. Abel
/s/ Duane W. Acklie Director September 27, 1996
-------------------
Duane W. Acklie
/s/ Robert C. Barth Second Vice President and September 27, 1996
------------------- Assistant Controller
Robert C. Barth
/s/ Roxann Brennfoerder Vice President - Pensions September 27, 1996
---------------------
Roxann Brennfoerder
/s/ Wayne E. Brewster Vice President - Varible Sales September 27, 1996
---------------------
Wayne E. Brewster
/s/ Robert W. Bush Executive Vice President - September 27, 1996
--------------------- Individual Insurance
Robert W. Bush
<PAGE>
SIGNATURE TITLE DATE
/s/ Jan M. Connolly Vice President - Corporate September 27, 1996
--------------------- Operations, Planning and Quality
Jan M. Connolly
/s/ William W. Cook, Jr. Director September 27, 1996
---------------------
William W. Cook, Jr.
/s/ Gerald B. Dimon Vice President - Human Resources September 27, 1996
---------------------
Gerald B. Dimon
/s/ Director September 27, 1996
---------------------
Bert A. Getz
/s/ William R. Giovanni Senior Vice President and Chief September 27, 1996
--------------------- Executive Officer - Ameritas
Investment Corp.
/s/ James R. Haire Senior Vice President - Corporate September 27, 1996
--------------------- Actuary and Strategic Development
James R. Haire
/s/ Thomas D. Higley Vice President and Individual September 27, 1996
--------------------- Financial Operations and Actuary
Thomas D. Higley
/s/ Leslie D. Inman Vice President - Group Marketing September 27, 1996
--------------------- and Planning
Leslie D. Inman
/s/ Steven K. Isaacs Vice President - Group September 27, 1996
--------------------- Field Sales
Steven K. Isaacs
/s/ Michael Jaskolka Second Vice President - September 27, 1996
--------------------- Information Services
Michael Jaskolka
/s/ Marty L. Johnson Second Vice President - September 27, 1996
--------------------- Individual Underwriting
Marty L. Johnson
/s/ Kenneth R. Jones Vice President - Corporate September 27, 1996
--------------------- Compliance and Assistant Secretary
Kenneth R. Jones
/s/ James R. Knapp Director September 27, 1996
---------------------
James R. Knapp
/s/ Robert F. Krohn Director September 27, 1996
---------------------
Robert F. Krohn
/s/ William W. Lester Vice President - Securities September 27, 1996
---------------------
William W. Lester
/s/ Wilfred J. Maddux Director September 27, 1996
---------------------
Wilfred J. Maddux
/s/ JoAnn M. Martin Senior Vice President - Controller September 27, 1996
--------------------- and Chief Financial Officer
JoAnn M. Martin
<PAGE>
SIGNATURE TITLE DATE
/s/ Anthony Mazzarelli, Jr. Vice President - September 27, 1996
------------------------ Individual Sales
Anthony Mazzarelli, Jr.
/s/ Bruce R. McMullen, M.D. Vice President - September 27, 1996
------------------------ Medical Director
Bruce R. McMullen, M.D.
/s/ David C. Moore Executive Vice President - September 27, 1996
--------------------- Group and Pensions
David C. Moore
/s/ William W. Nelson Vice President - Group September 27, 1996
--------------------- Administration
William W. Nelson
/s/ Dale Niebuhr Second Vice President - September 27, 1996
--------------------- Internal Audit
Dale Niebuhr
/s/ Gary R. Raymond Vice President - Group Actuary September 27, 1996
---------------------
Gary R. Raymond
/s/ Barry C. Ritter Senior Vice President - September 27, 1996
--------------------- Information Services
Barry C. Ritter
/s/ Paul C. Schorr, III Director September 27, 1996
---------------------
Paul C. Schorr, III
/s/ William C. Smith Director September 27, 1996
---------------------
William C. Smith
/s/ Donald R. Stading Vice President and General September 27, 1996
--------------------- Counsel - Insurance and Assistant
Donald R. Stading Secretary
/s/ Neal E. Tyner Director September 27, 1996
---------------------
Neal E. Tyner
/s/ Kenneth L. VanCleave Vice President - Group Managed September 27, 1996
--------------------- Care and Partnering
Kenneth L. VanCleave
/s/ Richard W. Vautravers Vice President - Ameritas September 27, 1996
---------------------- Low-Load
Richard W. Vautravers
/s/ Winton J. Wade Director September 27, 1996
---------------------
Winston J. Wade
/s/ Jon B. Weinberg Vice President-Mortgage Loans September 27, 1996
-------------------- and Real Estate
Jon B. Weinberg
/s/ Steven L. Welton Vice President - Individual September 27, 1996
--------------------- Marketing
Steven L. Welton
<PAGE>
As filed with the Securities and Exchange Commission on October 3, 1996.
Registration No. 333-5529
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
EXHIBITS
TO
FORM N-4
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT LLVA
<PAGE>
Exhibit Index
-------------
Exhibit Page
------- ----
99.B3a Principal Underwriting Agreement.
99.B8c Proposed Participation Agreement
99.B8d Proposed Participation Agreement
99.B9 Opinion and Consent of Norman M. Krivosha
99.10a Independent Auditors' Consent
EX-99.B3a
Principal Underwriting Agreement.
<PAGE>
PRINCIPAL UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT made this 27th day of September, 1996, by and
between Ameritas Investment Corp., (hereinafter the "Underwriter") and Ameritas
Life Insurance Corp. hereinafter the "Insurance Company"), on its own behalf and
on behalf of Ameritas Life Insurance Corp. Separate Account LLVA (hereinafter
the "Account"), separate account of the Insurance Company, as follows:
WHEREAS, the Account was established under authority of resolution of
the Insurance Company's Board of Directors on October 26, 1995, in order to set
aside and invest assets attributable to certain variable annuity contracts
(hereinafter "Contracts") issued by the Insurance Company;
WHEREAS, the Insurance Company has registered or will register the
Account as a unit investment trust under the Investment Company Act of 1940 (the
"Investment Company Act") and has registered or will register the Contracts
under the Securities Act of 1933 (the "1933 Act").
WHEREAS, the Insurance Company has filed or will file the Contract for
approval by the state insurance departments in those jurisdictions where it is
authorized to transact business.
WHEREAS, the Underwriter is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and is a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Insurance Company and the Account desire to have Contracts
sold and distributed through the Underwriter and the Underwriter is willing to
sell and distribute such Contracts under the terms stated herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Insurance Company grants to the Underwriter the right to
be, and the Underwriter agrees to serve as distributor and
principal underwriter of the Contracts during the term of this
Agreement. The Underwriter agrees to use its best efforts to
solicit applications for the Contracts at its own expense, and
otherwise to perform all duties and functions which are
necessary and proper for the distribution of the Policies.
2. All premiums for Contracts shall be remitted promptly in full
together with such application, forms, and any other documents
required by the Insurance Company. Checks or money orders in
payment of premiums shall be drawn to the order of "Ameritas
Life Insurance Corp.".
3. The Underwriter agrees to offer the Contracts for sale in
accordance with the prospectuses in effect. The Underwriter is
not authorized to give any information or to make any
representations concerning the Contracts other than those
contained in the current prospectuses filed with the SEC or in
such sales literature as may be developed and authorized by
the Insurance Company in conjunction with the Underwriter.
4. The Underwriter shall be responsible for any filings of
advertisements or sales literature required to be made with
the NASD.
5. The Underwriter agrees to join Insurance Company, upon
Insurance Company's request and after independent review of
such matters, in any joint applications required to be filed
with the SEC under the "1934 Act," the "1933 Act" and the
Investment Company Act.
1
<PAGE>
6. The Insurance Company shall be responsible for any filings of
advertising and sales literature required to be made with
state insurance regulators.
7. On behalf of the Account, the Insurance Company shall furnish
the Underwriter with copies of all prospectuses, financial
statements and other documents which the Underwriter
reasonably requests for use in connection with the
distribution of the Contracts.
8. Insurance Company represents to Underwriter that the
prospectus included in Insurance Company's Registration
Statement, post-effective amendments thereto and any
supplements thereto, as filed or to be filed with the SEC, as
of their effective dates, contain or will contain, all
statements and information which are required to be stated
therein by the 1933 Act and in all respects conform or will
conform to the requirements thereof. Neither any prospectus,
nor any supplement thereof, includes or will include, any
untrue statement of a material fact, or omits or will omit to
state any material fact required to be stated therein or
necessary to make the statement therein not misleading,
provided, however, that the foregoing representations shall
not apply to information contained in or omitted from any
prospectus or supplement in reliance upon, and in conformity
with, written information furnished to Insurance Company by
Underwriter specifically for use in the preparation thereof.
The foregoing representation also shall not apply to
information contained in or omitted from any prospectus or
supplement of any underlying mutual fund.
9. The Underwriter represents that it is duly registered as a
broker-dealer under the 1934 Act and is a member in good
standing of the NASD and, to the extent necessary to offer the
Contracts, shall be duly registered or otherwise qualified
under the securities laws and insurance laws of any state or
other jurisdiction. The Underwriter shall be responsible
itself, or through contracts with others, including Insurance
Company, for carrying out its sales and underwriting
obligations hereunder in continued compliance with the NASD
Rules of Fair Practice and federal and state securities laws
and regulations. Without limiting the generality of the
foregoing, the Underwriter agrees that it shall be fully
responsible for:
(a) ensuring that no person shall offer or sell the Contracts
on its behalf until such person is duly registered as a
representative of the Underwriter, duly licensed and
appointed by the Insurance Company, and appropriately
licensed, registered or otherwise qualified to offer and
sell such Contracts under the federal securities laws
and any applicable securities laws and insurance laws of
each state or other jurisdiction in which such Contracts
may be lawfully sold, in which the Insurance Company
is licensed to sell the Contracts and in which such
persons shall offer or sell the Contracts; and
(b) training, supervising, and controlling all such persons
for purposes of complying on a continuous basis with the
NASD Rules of Fair Practice and with federal and state
securities law requirements applicable in connection with
the offer and sale of the Contracts. Underwriter is
responsible for all costs associated with this
undertaking. In connection with this undertaking, the
Underwriter shall:
(1) conduct such training (including the preparation and
utilization of training materials) as in the opinion
of the Underwriter is necessary to accomplish the
purposes of this Agreement;
(2) establish and implement reasonable written procedures
for supervision of sales practices of agents,
representatives or brokers selling the Contracts; and
2
<PAGE>
(3) take reasonable steps to ensure that its associated
persons shall not make recommendations to an
applicant to purchase a Contract and shall not sell a
Contract in the absence of reasonable grounds to
believe that the purchase of the Contract is suitable
for such applicant.
10. The Underwriter is hereby authorized to enter into sales
agreements with other independent broker-dealers for the sale
of the Contracts. All such sales agreements entered into by
the Underwriter shall provide that each independent broker-
dealer will assume full responsibility for continued
compliance by itself and its associated persons with the NASD
Rules of Fair Practice and applicable federal and state
securities laws. All associated persons of such independent
broker-dealers soliciting applications for the Contracts shall
be duly and appropriately licensed or appointed for the sale
of the Contracts under the Federal and state securities laws
and the insurance laws of the applicable states or
jurisdictions in which such Contracts may be lawfully sold.
11. The Insurance Company shall apply for the proper insurance
licenses in the appropriate states or jurisdictions for the
designated persons associated with the Underwriter or with
other independent broker-dealers which have entered into
agreements with the Underwriter for the sale of the Contracts,
provided that the Insurance Company reserves the right to
refuse to appoint any proposed registered representative as an
agent or broker, and to terminate an agent or broker once
appointed. The cost of licensing for a designated person will
be paid by the party designating such person for licensing.
The Insurance Company will pay the cost of appointing all
designated persons.
12. The Insurance Company and the Underwriter shall cause to be
maintained and preserved for the periods prescribed such
accounts, books, and other documents as are required of them
by the Investment Company Act of 1940, the 1934 Act, and any
other applicable laws and regulations. The books, accounts and
records of the Insurance Company, the Account, and the
Underwriter as to all transactions hereunder shall be
maintained so as to disclose clearly and accurately the nature
and details of the transactions. The Insurance Company shall
maintain such books and records of the Underwriter pertaining
to the sale of the Contracts and required by the 1934 Act as
may be mutually agreed upon from time to time by the Insurance
Company and the Underwriter; provided that such books and
records shall be the property of the Underwriter, and shall at
all times be subject to such reasonable periodic, special or
other examination by the SEC and all other regulatory bodies
having jurisdiction. The Insurance Company shall be
responsible for sending all required confirmations on customer
transactions in compliance with applicable regulations, as
modified by any exemption or other relief obtained by the
Insurance Company. The Underwriter shall cause the Insurance
Company to be furnished with such reports as the Insurance
Company may reasonably request for the purpose of meeting its
reporting and recordkeeping requirements under the insurance
laws of the State of Nebraska and any other applicable states
or jurisdictions.
13. The Insurance Company shall have the responsibility for paying
(i) all commissions or other fees to associated persons of the
Underwriter which are due for the sale of the Contracts and
(ii) any compensation to other independent broker-dealers and
their associated persons due under the terms of any sales
agreements between the Underwriter, Insurance Company, and
such broker-dealers. Notwithstanding the preceding sentence,
no associated person or broker-dealer shall have an interest
in any deductions or other fees payable to the Underwriter
pursuant to the terms of this Agreement.
14. If Insurance Company is required to refund premiums or return
accumulation values and waive surrender charges on any Policy
for any reason; then no commission will be
3
<PAGE>
payable on such payments, and previously paid commissions, to
the extent they are refunded by the Insurance Company, must be
refunded by the Underwriter.
15. The Insurance Company shall reimburse the Underwriter for all
reasonable and necessary costs and expenses incurred by the
Underwriter in furnishing the services, materials, and
supplies required by the terms of this Agreement and may pay
Underwriter a concession for sales of the policies as may be
agreed by the parties in writing from time to time. The
Underwriter agrees to obtain the prior written approval by
Insurance Company of any agreements it may pursue with third
party providers of such services, materials and supplies.
16. Insurance Company shall indemnify Underwriter for any losses
to which Underwriter may become subject, insofar as such
losses result from negligent, fraudulent or unauthorized acts
or omissions by Insurance Company or its employees.
17. Underwriter agrees to indemnify the Insurance Company for any
losses to which Insurance Company may be subject if the losses
arise out of or result from negligent, improper, fraudulent or
unauthorized acts or omissions by Underwriter, its employees,
sales personnel, agents or principals, including but not
limited to improper solicitations of applications for
Policies, unauthorized use of sales materials or
advertisements, or any oral or written misrepresentations or
unlawful sales practices.
18. (a) Except as provided by paragraph 18(b) through (e), this
Agreement may be terminated by either party hereto upon
180 days' written notice to the other party.
(b) This Agreement may be terminated immediately upon written
notice of one party to the other party hereto in the event
of bankruptcy or insolvency of the party to which notice
is given.
(c) This Agreement may be terminated immediately, at the
option of Insurance Company, in the event that formal
administrative proceedings are instituted against the
Underwriter by the NASD, SEC, any state Insurance
Commissioner or any other regulatory body regarding
Underwriter's duties under this Agreement or related to
the sale of Policies, and that Insurance Company
determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of the
Underwriter to perform its obligations under this
Agreement.
(d) This Agreement may be terminated immediately, at the
option of Underwriter, in the event that any of the
underlying funds are not registered, issued or sold
in accordance with applicable state and/or federal
law or such law precludes the use of such shares as
the underlying investment media of the Policies issued
or to be issued by Insurance Company.
(e) This Agreement may be terminated immediately, at the
option of Underwriter, if the underlying fund(s)ceases to
qualify as a Regulated Investment Company under Subchapter
M of the Internal Revenue Code of 1954, as amended.
(f) This Agreement may be terminated, at the option of
Insurance Company, if (a) Insurance Company shall
determine in its sole judgment exercised in good faith
that Underwriter has suffered a material adverse change in
its business or financial condition or is subject to
material adverse publicity and such material adverse
change or material adverse publicity will have a material
adverse impact upon the business and operations of
Insurance Company, (b) Insurance Company shall notify
Underwriter in writing of such determination and its
intent to terminate this Agreement and (c) after
considering the actions taken by Underwriter and any other
changes in circumstances since the giving of such
4
<PAGE>
notice, such determination of Insurance Company shall
continue to apply on the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the
effective day of termination.
(g) This Agreement may be terminated at any time upon the
mutual written consent of the parties thereto.
(h) The Underwriter shall not assign or delegate its
responsibilities under this Agreement without the written
consent of the Insurance Company.
(i) Upon termination of this Agreement, all authorizations,
right and obligations shall cease except the obligations
to settle accounts hereunder, including payments of
premiums or contributions subsequently received for
Contracts in effect at the time of termination or issued
pursuant to applications received by the Insurance Company
prior to termination.
19. This Agreement is subject to and its terms are to be
interpreted and construed in accordance with the provisions of
the Investment Company Act and the 1934 Act, and the rules,
regulations, and rulings thereunder and is subject to the
provisions of the NASD Rules of Fair Practice. Without
limiting the generality of the foregoing, the term "assigned"
shall not include any transaction exempted from section
15(b)(2) of the Investment Company Act.
The Underwriter shall submit to all regulatory and
administrative entities having jurisdiction over the
operations of the Accounts, present or future; and will
provide any information, reports or other material which any
such entity by reason of this Agreement may request or require
pursuant to applicable laws or regulations.
20. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
21. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Nebraska.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed, and seals to be affixed, as of the day and year first above written.
AMERITAS INVESTMENT CORP.
Attest:
/s/ Ann D. Diers By: /s/ William R. Giovanni
- -------------------------- ------------------------------------------
Ann D. Diers William R. Giovanni,
President & Chief Executive Officer
AMERITAS LIFE INSURANCE CORP.
Attest:
/s/ Katherine Sieckmeyer By: /s/ Kenneth C. Louis
- -------------------------- -------------------------------------------
Katherine Sieckmeyer Kenneth C. Louis,
President & Chief Operating Officer
5
EX-99.B8c
Proposed Participation Agreement
<PAGE>
PARTICIPATION AGREEMENT
Among
BERGER INSTITUTIONAL PRODUCTS TRUST
BERGER ASSOCIATES, INC.
and
____________________________________
THIS AGREEMENT, made and entered into this day of , 19__ by and among
COMPANY, (hereinafter the "Insurance Company"), a Nebraska corporation, on its
own behalf and on behalf of each segregated asset account of the Insurance
Company set forth on Schedule A hereto as may be amended from time to time (each
such account hereinafter referred to as the "Account"), BERGER INSTITUTIONAL
PRODUCTS TRUST, a Delaware business trust (the "Trust") and BERGER ASSOCIATES,
INC., a Delaware corporation ("Berger Associates").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle for
variable annuity and life insurance contracts to be offered by separate accounts
of insurance companies which have entered into participation agreements
substantially identical to this Agreement ("Participating Insurance Companies")
and for qualified retirement and pension plans ("Qualified Plans"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission (the "Commission"), dated _________________________, 19__
(File No. 812- ), granting Participating Insurance Companies and their separate
accounts exemptions from the provisions
1
<PAGE>
of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940,
as amended, (the "1940 Act") and Rules 6e-2(b)(15) and 6e-(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Trust to be sold to and held by
Qualified Plans and by variable annuity and variable life insurance separate
accounts of life insurance companies that may or may not be affiliated with one
another (the "Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and the offering of its shares is registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Berger Associates is duly registered as an investment adviser
under the Investment Advisers Act of 1940 and any applicable state securities
law; and
WHEREAS, the Insurance Company has registered under the 1933 Act, or
will register under the 1933 Act, certain variable annuity or variable life
insurance contracts identified by the form number(s) listed on Schedule B to
this Agreement, as amended from time to time hereafter by mutual written
agreement of all the parties hereto (the "Contracts"); and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the board of directors of the
Insurance Company on the date shown for that Account on Schedule A hereto, to
set aside and invest assets attributable to the Contracts; and
WHEREAS, the Insurance Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
2
<PAGE>
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurance Company intends to purchase shares in the Funds at
net asset value on behalf of each Account to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the
Insurance Company, the Trust and Berger Associates agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Insurance Company those shares of
the Trust which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Trust or its designee of
the order for the shares of the Trust. For purposes of this Section 1.1, the
Insurance Company shall be the designee of the Trust for receipt of such orders
from the Accounts and receipt by such designee shall constitute receipt by the
Trust; provided that the Trust receives notice of such order by 7:00 a.m.,
Mountain Time, on the next following Business Day. In this Agreement, "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Trust calculates its net asset value pursuant to the rules of
the Commission.
1.2. The Trust agrees to make its shares available for purchase at the
applicable net asset value per share by the Insurance Company and its Accounts
on those days on which the Trust calculates its Funds' net asset values pursuant
to rules of the Commission and the Trust shall use reasonable efforts to
calculate its Funds' net asset values on each day on which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the trustees of the
Trust may refuse to sell shares of any Fund to any person, or suspend or
terminate the offering of shares of any Fund if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole discretion
of the trustees of the Trust acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of that Fund.
1.3. The Trust agrees that shares of the Trust will be sold only to
Accounts of Participating Insurance Companies and to Qualified Plans. No shares
of any Fund will be sold to the general public.
3
<PAGE>
1.4. The Trust will not sell its shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Sections 2.4, 3.4, 3.5, and Sections 7.1 - 7.7 of this Agreement is in
effect to govern such sales.
1.5. The Trust agrees to redeem, on the Insurance Company's request,
any full or fractional shares of the Trust held by the Account, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the request for redemption. However, if one or more
Funds has determined to settle redemption transactions for all of its
shareholders on a delayed basis (more than one business day, but in no event
more than three Business Days, after the date on which the redemption order is
received, unless otherwise permitted by an order of the Commission under Section
22(e) of the 1940 Act), the Trust shall be permitted to delay sending redemption
proceeds to the Insurance Company by the same number of days that the Trust is
delaying sending redemption proceeds to the other shareholders of the Fund. For
purposes of this Section 1.5, the Insurance Company shall be the designee of the
Trust for receipt of the requests for redemption from each Account and receipt
by that designee shall constitute receipt by the Trust; provided that the Trust
receives notice of the request for redemption by 7:00 a.m., Mountain Time, on
the next following Business Day.
1.6. The Insurance Company agrees to purchase and redeem the shares of
each Fund offered by the then-current prospectus of the Trust in accordance with
the provisions of that prospectus. The Insurance Company agrees that all net
amounts available under the Contracts shall be invested in the Trust, or in the
Insurance Company' general account, provided that such amounts may also be
invested in an investment company other than the Trust if (a) the other
investment company, or series thereof, has investment objectives or policies
that are substantially different from the investment objectives and policies of
any Fund of the Trust in which the Account may invest; or (b) the other
investment company was available as a funding vehicle for the Contracts prior to
the date of this Agreement and the Insurance Company so informs the Trust and
Berger Associates prior to their signing this Agreement; or (c) the Trust and
Berger Associates consent in advance in writing to the use of the other
investment company.
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1.7. The Insurance Company shall pay for Trust shares by 1:00 p.m.,
Mountain Time, on the next Business Day after an order to purchase Trust shares
is made in accordance with the provisions of Section 1.1 hereof. Payment shall
be in federal funds transmitted by wire. For the purpose of Sections 2.9 and
2.10, upon receipt by the Trust of the federal funds so wired, such funds shall
cease to be the responsibility of the Trust. Payment of net redemption proceeds
(aggregate redemptions of a Fund's shares by an Account minus aggregate
purchases of that Fund's shares by that Account) of less than $1 million for a
given Business Day will be made by wiring federal funds to the Insurance Company
on the next Business Day after receipt of the redemption request. Payment of net
redemption proceeds of $1 million or more will be by wiring federal funds within
three Business Days after receipt of the redemption request.
1.8. Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Insurance Company or any
Account. Shares ordered from the Trust will be recorded in an appropriate title
for each Account or the appropriate subaccount of each Account.
1.9. The Trust shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Insurance Company of any income,
dividends or capital gain distributions payable on the Funds' shares. The
Insurance Company hereby elects to receive all income, dividends and capital
gain distributions payable on a Fund's shares in additional shares of that Fund.
The Insurance Company reserves the right to revoke this election and to receive
all such income, dividends and capital gain distributions in cash. The Trust
shall notify the Insurance Company of the number of shares issued as payment of
dividends and distributions.
1.10. The Trust shall make the net asset value per share for each Fund
available to the Insurance Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make those per-share net asset values available by 5:00 p.m.,
Mountain Time.
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ARTICLE II. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1. The Insurance Company represents, warrants and agrees that the
offerings of the Contracts are, or will be, registered under the 1933 Act; that
the Contracts will be issued and sold in compliance in all material respects
with all applicable federal and state laws and that the sale of the Contracts
shall comply in all material respects with applicable state insurance
suitability requirements. The Insurance Company further represents that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established the Account prior to any issuance or
sale thereof as a segregated asset account under Section _______of the Insurance
Code and has registered, or warrants and agrees that prior to any issuance or
sale of the Contracts it will register, the Account as a unit investment trust
in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Trust warrants and agrees that Trust shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sale in compliance with the laws of the State of Delaware and all
applicable federal securities laws and that the Trust is and shall remain
registered under the 1940 Act. The Trust warrants and agrees that it shall amend
the registration statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Trust or Berger Associates.
2.3. The Trust represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and warrants and agrees that it will make all
reasonable efforts to maintain its qualification (under Subchapter M or any
successor or similar provision) and that it will notify the Insurance Company
immediately upon having a reasonable basis for believing that it has ceased to
so qualify or that it might not so qualify in the future.
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2.4. The Insurance Company represents that the Contracts are currently
treated as annuity or life insurance contracts under applicable provisions of
the Code and warrants and agrees that it will make every effort to maintain such
treatment and that it will notify the Trust and Berger Associates immediately
upon having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
2.5. The Trust may elect to make payments to finance distribution
expenses pursuant to Rule 12b-1 under the 1940 Act. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, the Trust
undertakes to have a board of trustees, a majority of whom are not interested
persons of the Trust, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Trust makes no representation warranties as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) complies or will comply with the insurance laws or
regulations of the various states.
2.7. The Trust represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and represents, warrants and
agrees that it does and will comply in all material respects with the 1940 Act.
2.8. Berger Associates represents that it is and warrants that it
shall remain duly registered as an investment adviser under all applicable
federal and state securities laws and agrees that it shall perform its
obligations for the Trust in compliance in all material respects with the laws
of the State of Colorado and any applicable state and federal securities laws.
2.9. The Trust and Berger Associates represent and warrant that all of
their officers, employees, investment advisers, investment sub-advisers, and
other individuals or entities described in Rule 17g-1 under the 1940 Act dealing
with the money and/or securities of the Trust are, and shall continue to be at
all times, covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the minimum coverage required
currently by Rule 17g-1 under the 1940 Act
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or related provisions as may be promulgated from time to time. That fidelity
bond shall include coverage for larceny and embezzlement and shall be issued by
a reputable bonding company.
2.10. The Insurance Company represents and warrants that all of its
officers, employees, investment advisers, and other individuals or entities
described in Rule 17g-1 under the 1940 Act are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Trust, in an amount not less than the minimum coverage required currently
for entities subject to the requirements of Rule 17g-1 of the 1940 Act or
related provisions or may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
ARTICLE III. DISCLOSURE DOCUMENTS AND VOTING
3.1. Berger Associates shall provide the Insurance Company (at the
Insurance Company's expense) with as many copies of the Trust's current
prospectus as the Insurance Company may reasonably request. If requested by the
Insurance Company in lieu thereof, the Trust shall provide such documentation
(including a final copy of the new prospectus as set in type at the Trust's
expense) and other assistance as is reasonably necessary in order for the
Insurance Company once each year (or more frequently if the prospectus for the
Trust is amended) to have the prospectus for the Contracts and the Trust's
prospectus printed together in one document (at the Insurance Company's
expense).
3.2. The Trust's prospectus shall state that the Statement of
Additional Information for the Trust (the "SAI") is available from the Trust,
and Berger Associates (or the Trust), at its expense, shall print and provide
the SAI free of charge to the Insurance Company and to any owner of a Contract
or prospective owner who requests the SAI.
3.3. The Trust, at its expense, shall provide the Insurance Company
with copies of its proxy material, reports to shareholders and other
communications to shareholders in such quantity as the Insurance Company shall
reasonably require for distributing to Contract owners.
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3.4. If and to the extent required by law, the Insurance Company
shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Trust shares in accordance with instructions
received from Contract owners; and
(iii) vote Trust shares for which no instructions have
been received in the same proportion as Trust shares
of that Fund for which instructions have been
received;
so long as and to the extent that the Commission continues to interpret the 1940
Act to require pass-through voting privileges for variable contract owners. The
Insurance Company reserves the right to vote Trust shares held in any segregated
asset account in its own right, to the extent permitted by law. Participating
Insurance Companies shall be responsible for assuring that each of their
separate accounts participating in the Trust calculates voting privileges in a
manner consistent with the standards set forth in Schedule C attached hereto and
incorporated herein by this reference, which standards will also be provided to
the other Participating Insurance Companies. The Insurance Company shall fulfill
its obligation under, and abide by the terms and conditions of, the Mixed and
Shared Funding Exemptive Order.
3.5. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings (except insofar as the Commission may interpret
Section 16 of the 1940 Act not to require such meetings) or, as the Trust
currently intends, comply with Section 16(c) of the 1940 Act (although the Trust
is not one of the trust described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Trust will act
in accordance with the Commission's interpretation of the requirements of
Section 16(a) with respect to periodic elections of trustees and with whatever
rules the Commission may promulgate with respect thereto.
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ARTICLE IV. SALES MATERIALS AND INFORMATION
4.1. The Insurance Company shall furnish, or shall cause to be
furnished, to the Trust or its designee, each piece of sales literature or other
promotional material in which the Trust, a sub-adviser of one of the Funds, or
Berger Associates is named, at least fifteen calendar days prior to its use. No
such material shall be used if the Trust or its designee objects to such use
within ten calendar days after receipt of such material.
4.2. The Insurance Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the Trust's registration statement, prospectus or
SAI, as that registration statement, prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the Trust,
or in sales literature or other promotional material approved by the Trust or
its designee or by Berger Associates, except with the permission of the Trust or
Berger Associates.
4.3. The Trust, Berger Associates, or its designee shall furnish, or
shall cause to be furnished, to the Insurance Company or its designee, each
piece of sales literature or other promotional material in which the Insurance
Company or the Account is named at least fifteen calendar days prior to its use.
No such material shall be used if the Insurance Company or its designee objects
to such use within ten calendar days after receipt of that material.
4.4. The Trust and Berger Associates shall not give any information or
make any representations on behalf of the Insurance Company or concerning the
Insurance Company, any Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or statement
of additional information for the Contracts, as that registration statement,
prospectus or statement of additional information may be amended or supplemented
from time to time, or in published reports for any Account which are in the
public domain or approved by the Insurance Company for distribution to Contract
owners, or in sales literature or other promotional material approved by the
Insurance Company or its designee, except with the permission of the Insurance
Company.
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4.5. The Trust will provide to the Insurance Company at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, proxy statement, piece of sales literature or
other promotional material, application for exemption, request for no-action
letter, and any amendment to any of the above, that relate to the Trust or its
shares, contemporaneously with the filing of the document with the Commission,
the National Association of Securities Dealers, Inc. ("NASD"), or other
regulatory authorities.
4.6. The Insurance Company will provide to the Trust at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, solicitation for voting instructions, piece of
sales literature and other promotional material, application for exemption,
request for no-action letter, and any amendment to any of the above, that
relates to the Contracts or the Account, contemporaneously with the filing of
the document with the Commission, the NASD, or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements,
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media, sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, shareholder
newsletters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested.
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ARTICLE V. FEES AND EXPENSES
5.1. The Trust and Berger Associates shall pay no fee or other
compensation to the Insurance Company under this agreement, except as set forth
in Section 5.4 and except that if the Trust or any Fund adopts and implements a
plan pursuant to Rule 12b-1 to finance distribution expenses, Berger Associates
or the Trust may make payments to the Insurance Company in amounts consistent
with that 12b-1 plan, subject to review by the trustees of the Trust.
5.2. All expenses incident to performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall see to it that any
offering of its shares is registered and that all of its shares are authorized
for issuance in accordance with applicable federal law and, if and to the extent
deemed advisable by the Trust or Berger Associates, in accordance with
applicable state laws prior to their sale. The Trust shall bear the cost of
registration and qualification of the Trust's shares, preparation and filing of
the Trust's prospectus and registration statement, proxy materials and reports,
setting the prospectus in type, setting in type and printing the proxy materials
and reports to shareholders, the preparation of all statements and notices
required by any federal or state law, and all taxes on the issuance or transfer
of the Trust's shares.
5.3. The Insurance Company shall bear the expenses of printing and
distributing to Contract owners the Contract prospectuses and of distributing to
Contract owners the Trust's prospectus, proxy materials and reports.
5.4. The Insurance Company bears the responsibility and correlative
expense for administrative and support services for Contract owners. Berger
Associates recognizes the Insurance Company as the sole shareholder of shares of
the Trust issued under this Agreement. From time to time, Berger Associates may
pay amounts from its past profits to the Insurance Company for providing certain
administrative services for the Trust or for providing other services that
relate to the Trust. In consideration of the savings resulting from such
arrangement, and to compensate the Insurance Company for its costs, Berger
Associates agrees to pay to the Insurance Company an amount equal to
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basis points (0. %) per annum of the average aggregate amount invested by the
Insurance Company in the Trust under this Agreement. The parties agree that such
payments are for administrative services and investor support services, and do
not constitute payment for investment advisory, distribution or other services.
Payment of such amounts by Berger Associates shall not increase the fees paid by
the Trust or its shareholders.
ARTICLE VI. DIVERSIFICATION
6.1. The Trust will comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5 relating to the diversification requirements for
variable annuity, endowment, modified endowment or life insurance contracts and
any amendments or other modifications to that Section or Regulation at all times
necessary to satisfy those requirements.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The trustees of the Trust will monitor the Trust for the
existence of any material irreconcilable conflict between the interests of the
variable Contract owners of all separate accounts investing in the Trust and the
participants of all Qualified Plans investing in the Trust. An irreconcilable
material conflict may arise for a variety of reasons, including: (a) an action
by any state insurance regulatory authority; (b) a change in applicable federal
or state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretive letter, or any similar action
by insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Fund are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of variable contract owners. The trustees of
the Trust shall promptly inform the Insurance Company if they determine that an
irreconcilable material conflict exists and the implications thereof. The
trustees of the Trust shall have sole authority to determine whether an
irreconcilable material conflict exists and their determination shall be binding
upon the Insurance Company.
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7.2. The Insurance Company and Berger Associates each will report
promptly any potential or existing conflicts of which it is aware to the
trustees of the Trust. The Insurance Company and Berger Associates each will
assist the trustees of the Trust in carrying out their responsibilities under
the Mixed and Shared Funding Exemptive Order, by providing the trustees of the
Trust with all information reasonably necessary for them to consider any issues
raised. This includes, but is not limited to, an obligation by the Insurance
Company to inform the trustees of the Trust whenever Contract owner voting
instructions are to be disregarded. These responsibilities shall be carried out
by the Insurance Company with a view only to the interests of the Contract
owners and by Berger Associates with a view only to the interests of Contract
holders and Qualified Plan participants.
7.3. If it is determined by a majority of the trustees of the Trust,
or a majority of the trustees who are not interested persons of the Trust, any
of its Funds, or Berger Associates (the "Independent Trustees"), that a material
irreconcilable conflict exists, the Insurance Company and/or other Participating
Insurance Companies or Qualified Plans that have executed participation
agreements shall, at their expense and to the extent reasonably practicable (as
determined by a majority of the Independent Trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to and
including: (1) withdrawing the assets allocable to some or all of the separate
accounts from the Trust or any Fund and reinvesting those assets in a different
investment medium, including (but not limited to) another Fund of the Trust, or
submitting the question whether such segregation should be implemented to a vote
of all affected variable contract owners and, as appropriate, segregating the
assets of any appropriate group (e.g., annuity contract owners, life insurance
contract owners, or variable contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected variable contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed separate
account and obtaining any necessary approvals or orders of the Commission in
connection therewith.
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7.4. If a material irreconcilable conflict arises because of a
decision by the Insurance Company to disregard Contract owner voting
instructions and that decision represents a minority position or would preclude
a majority vote, the Insurance Company may be required, at the Trust's election,
to withdraw the affected Account's investment in the Trust and terminate this
Agreement with respect to that Account; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the Independent
Trustees. Any such withdrawal and termination must take place within six (6)
months after the Trust gives written notice that this provision is being
implemented, and, until the end of that six month period, the Trust shall
continue to accept and implement orders by the Insurance Company for the
purchase (and redemption) of shares of the Trust.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Insurance Company
conflicts with the majority of other state regulators, then the Insurance
Company will withdraw the affected Account's investment in the Trust and
terminate this Agreement with respect to that Account within six months after
the trustees of the Trust inform the Insurance Company in writing that they have
determined that the state insurance regulator's decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent Trustees.
Until the end of the foregoing six month period, the Trust shall continue to
accept and implement orders by the Insurance Company for the purchase (and
redemption) of shares of the Trust.
7.6. For purposes of Sections 7.3 and 7.6 of this Agreement, a
majority of the Independent Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Trust be required to establish a new funding medium for the Contracts. The
Insurance Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the trustees of the Trust
determine that any
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proposed action does not adequately remedy any irreconcilable material conflict,
then the Insurance Company will withdraw the Account's investment in the Trust
and terminate this Agreement within six (6) months after the trustees of the
Trust inform the Insurance Company in writing of the foregoing determination,
provided, however, that the withdrawal and termination shall be limited to the
extent required by the material irreconcilable conflict, as determined by a
majority of the Independent Trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent those rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to those Sections are contained in
the Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE INSURANCE COMPANY
8.1(A). The Insurance Company agrees to indemnify and hold harmless
the Trust and each trustee, officer, employee or agent of the Trust, and each
person, if any, who controls the Trust within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Insurance Company) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale, acquisition,
or redemption of the Trust's shares or the Contracts and:
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(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the registration statement or prospectus
for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished in writing
to the Insurance Company by or on behalf of the Trust
for use in the registration statement or prospectus
for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or shares of the Trust;
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature of the
Trust not supplied by the Insurance Company, or
persons under its control) or wrongful conduct of
the Insurance Company or persons under its control,
with respect to the sale or distribution of the
Contracts or Trust Shares;
(iii) arise out of any untrue statements or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, or sales
literature of the Trust or any amendment thereof or
supplement thereto
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or the omission or alleged omission to state therein
a material fact required to be stated therein or
necessary to make the statements therein not
misleading if such a statement or omission was made
in reliance upon information furnished in writing to
the Trust by or on behalf of the Insurance Company;
(iv) arise as a result of any failure by the Insurance
Company to provide the services and furnish the
materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of
any representation, warranty or agreement made by
the Insurance Company in this Agreement or arise out
of or result from any other material breach of this
Agreement by the Insurance Company.
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(B). The Insurance Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party that
may arise from that Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of that Indemnified Party's duties or by reason of
that Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Trust, whichever is applicable.
8.1(C). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless that Indemnified Party shall have notified the Insurance Company in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon that
Indemnified Party (or after the Indemnified Party shall have received notice of
such service on any designated agent). Notwithstanding the foregoing, the
failure of any Indemnified
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Party to give notice as provided herein shall not relieve the Insurance Company
of its obligations hereunder except to the extent that the Insurance Company has
been prejudiced by such failure to give notice. In addition, any failure by the
Indemnified Party to notify the Insurance Company of any such claim shall not
relieve the Insurance Company from any liability which it may have to the
Indemnified Party against whom the action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Insurance Company shall be entitled to participate,
at its own expense, in the defense of the action. The Insurance Company also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action; provided, however, that if the Indemnified Party
shall have reasonably concluded that there may be defenses available to it which
are different from or additional to those available to the Insurance Company,
the Insurance Company shall not have the right to assume said defense, but shall
pay the costs and expenses thereof (except that in no event shall the Insurance
Company be liable for the fees and expenses of more than one counsel for
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Insurance Company to the
Indemnified Party of the Insurance Company's election to assume the defense
thereof, and in the absence of such a reasonable conclusion that there may be
different or additional defenses available to the Indemnified Party, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Insurance Company will not be liable to that party under
this Agreement for any legal or other expenses subsequently incurred by the
party independently in connection with the defense thereof other than reasonable
costs of investigation.
8.1(D). The Indemnified Parties will promptly notify the Insurance
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust's shares or the Contracts or
the operation of the Trust.
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8.2 INDEMNIFICATION BY BERGER ASSOCIATES
8.2(A). Berger Associates agrees to indemnify and hold harmless the
Insurance Company and each of its directors, officers, employees or agents, and
each person, if any, who controls the Insurance Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Section 8.2) against any and all losses, claims, damages, liabilities,
(including amounts paid in settlement with the written consent of Berger
Associates) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale, acquisition
or redemption of the Trust's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement or prospectus
or sales literature of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if the statement or omission or alleged
statement or omission was made in reliance upon and
in conformity with information furnished in writing
to Berger Associates or the Trust by or on behalf of
the Insurance Company for use in the registration
statement or prospectus for the Trust or in sales
literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Trust shares;
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(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature for the
Contracts not supplied by Berger Associates or
persons under its control) or wrongful conduct of
the Trust, Berger Associates or persons under their
control, with respect to the sale or distribution of
the Contracts or shares of the Trust;
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished in writing to the
Insurance Company by or on behalf of the Trust;
(iv) arise as a result of any failure by the Trust to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation, warranty or agreement made by
Berger Associates in this Agreement or arise out of
our result from any other material breach of this
Agreement by Berger Associates;
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as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(B). Berger Associates shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party that
may arise from the Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of the Indemnified Party's duties or by reason of
the Indemnified Party's reckless disregard of obligations and duties under this
Agreement or the Insurance Company or the Account, whichever is applicable.
8.2(C). Berger Associates shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless the Indemnified Party shall have notified Berger Associates in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon the
Indemnified Party (or after the Indemnified Party shall have received notice of
such service on any designated agent). Notwithstanding the foregoing, the
failure of any Indemnified Party to give notice as provided herein shall not
relieve Berger Associates of its obligations hereunder except to the extent that
Berger Associates has been prejudiced by such failure to give notice. In
addition, any failure by the Indemnified Party to notify Berger Associates of
any such claim shall not relieve Berger Associates from any liability which it
may have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, Berger Associates will be entitled to
participate, at its own expense, in the defense thereof. Berger Associates also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action; provided, however, that if the Indemnified Party
shall have reasonably concluded that there may be defenses available to it which
are different from or additional to those available to Berger Associates, Berger
Associates shall not have the right to assume said defense, but shall pay the
costs and expenses thereof (except that in no event shall Berger Associates be
liable for the fees and expenses of more than one counsel for Indemnified
Parties in connection with any one action or separate
22
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but similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances). After notice from Berger Associates to
the Indemnified Party of Berger Associate's election to assume the defense
thereof, and in the absence of such a reasonable conclusion that there may be
different or additional defenses available to the Indemnified Party, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and Berger Associates will not be liable to that party under
this Agreement for any legal or other expenses subsequently incurred by that
party independently in connection with the defense thereof other than reasonable
costs of investigation.
8.2(D). The Insurance Company agrees to notify Berger Associates
promptly of the commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.3 INDEMNIFICATION BY THE TRUST
8.3(A). The Trust agrees to indemnify and hold harmless the Insurance
Company, and each of its directors, officers, employees and agents, and each
person, if any, who controls the Insurance Company within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.3) against any and all losses, claims, damages, liabilities (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as those losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
result from the gross negligence, bad faith or willful misconduct of any
trustee(s) of the Trust, are related to the operations of the Trust and:
(i) arise as a result of any failure by the Trust to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement); or
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(ii) arise out of or result from any material breach of
any representation, warranty or agreement made by
the Trust in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Trust;
as limited by, and in accordance with the provisions of, Sections 8.3(b) and
8.3(c) hereof.
8.3(B). The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party that may arise from the
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of the Indemnified Party's duties or by reason of the Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Insurance Company, the Trust, Berger Associates or the Account, whichever is
applicable.
8.3(C). The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless the
Indemnified Party shall have notified the Trust in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Indemnified Party (or after
the Indemnified Party shall have received notice of such service on any
designated agent). Notwithstanding the foregoing, the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Trust of its
obligations hereunder except to the extent that the Trust has been prejudiced by
such failure to give notice. In addition, any failure by the Indemnified Party
to notify the Trust of any such claim shall not relieve the Trust from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Trust will be
entitled to participate, at its own expense, in the defense thereof. The Trust
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action; provided, however, that if the Indemnified
Party shall have reasonably concluded that there may be defenses available to
24
<PAGE>
it which are different from or additional to those available to the Trust, the
Trust shall not have the right to assume said defense, but shall pay the costs
and expenses thereof (except that in no event shall the Trust be liable for the
fees and expenses of more than one counsel for Indemnified Parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances).
After notice from the Trust to the Indemnified Party of the Trust's election to
assume the defense thereof, and in the absence of such a reasonable conclusion
that there may be different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Trust will not be liable to that party under
this Agreement for any legal or other expenses subsequently incurred by that
party independently in connection with the defense thereof other than reasonable
costs of investigation.
8.3(D). The Insurance Company and Berger Associates agree promptly to
notify the Trust of the commencement of any litigation or proceedings against it
or any of its respective officers or directors in connection with this
Agreement, the issuance or sale of the Contracts, the operation of the Account,
or the sale or acquisition of shares of the Trust.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and provisions hereof
interpreted under and in accordance with the laws of the State of Delaware.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934, and 1940 Acts, and the rules and regulations and rulings thereunder,
including any exemptions from those statutes, rules and regulations the
Commission may grant (including, but not limited to, the Mixed and Shared
Funding Exemptive Order) and the terms hereof shall be interpreted and construed
in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
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(a) at the option of any party upon one year advance
written notice to the other parties; provided,
however, such notice shall not be given earlier than
one year following the date of this Agreement; or
(b) at the option of the Insurance Company to the extent
that shares of the Funds are not reasonably
available to meet the requirements of the Contracts
as determined by the Insurance Company, provided,
however, that such termination shall apply only to
the Fund(s) not reasonably available. Prompt written
notice of the election to terminate for such cause
shall be furnished by the Insurance Company to the
Trust and Berger; or
(c) at the option of the Trust or Berger Associates, in
the event that formal administrative proceedings are
instituted against the Insurance Company by the
NASD, the Commission, an insurance commissioner or
any other regulatory body regarding the Insurance
Company's duties under this Agreement or related to
the sale of the Contracts, the operation of any
Account, or the purchase of the Trust's shares,
provided, however, that the Trust determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material
adverse effect upon the ability of the Insurance
Company to perform its obligations under this
Agreement; or
(d) at the option of the Insurance Company in the event
that formal administrative proceedings are
instituted against the Trust or Berger Associates by
the NASD, the Commission, or any state securities or
insurance department or any other regulatory body,
provided, however, that the Insurance Company
determines in its sole judgment exercised in good
faith, that any such administrative proceedings will
have a material adverse effect upon the ability of
the Trust or Berger Associates to perform its
obligations under this Agreement; or
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(e) with respect to any Account, upon requisite vote of
the Contract owners having an interest in that
Account (or any subaccount) to substitute the shares
of another investment company for the corresponding
Fund shares in accordance with the terms of the
Contracts for which those Fund shares had been
selected to serve as the underlying investment
media. The Insurance Company will give at least 30
days' prior written notice to the Trust of the date
of any proposed vote to replace the Trust's shares;
or
(f) at the option of the Insurance Company, in the event
any of the Trust's shares are not registered, issued
or sold in accordance with applicable state and/or
federal law or exemptions therefrom, or such law
precludes the use of those shares as the underlying
investment media of the Contracts issued or to be
issued by the Insurance Company; or
(g) at the option of the Insurance Company, if the Trust
ceases to qualify as a regulated investment company
under Subchapter M of the Code or under any
successor or similar provision, of if the Insurance
Company reasonably believes that the Trust may fail
to so qualify; or
(h) at the option of the Insurance Company, if the Trust
fails to meet the diversification requirements
specified in Article VI hereof; or
(i) at the option of either the Trust or Berger
Associates, if (1) the Trust or Berger Associates,
respectively, shall determine, in their sole
judgment reasonably exercised in good faith, that
the Insurance Company has suffered a material
adverse change in its business or financial
condition or is the subject of material adverse
publicity and that material adverse change or
material adverse publicity will have a material
adverse impact upon the business and operations of
either the Trust or Berger Associates, (2) the Trust
or Berger Associates shall notify the Insurance
Company in writing of that determination and its
intent to terminate this Agreement, and (3) after
considering the actions taken by the Insurance
Company
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and any other changes in circumstances since the
giving of such a notice, the determination of the
Trust or Berger Associates shall continue to apply
on the sixtieth (60th) day following the giving of
that notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Insurance Company, if (1) the
Insurance Company shall determine, in its sole
judgment reasonably exercised in good faith, that
either the Trust or Berger Associates has suffered a
material adverse change in its business or financial
condition or is the subject of material adverse
publicity and that material adverse change or
material adverse publicity will have a material
adverse impact upon the business and operations of
the Insurance Company, (2) the Insurance Company
shall notify the Trust and Berger Associates in
writing of the determination and its intent to
terminate this Agreement, (3) after considering the
actions taken by the Trust and/or Berger Associates
and any other changes in circumstances since the
giving of such a notice, the determination shall
continue to apply on the sixtieth (60th) day
following the giving of the notice, which sixtieth
day shall be the effective date of termination; or
(k) at the option of either the Trust or Berger
Associates, if the Insurance Company gives the Trust
and Berger Associates the written notice specified
in Section 1.6(b) hereof and at the time that notice
was given there was no notice of termination
outstanding under any other provision of this
Agreement, provided, however, any termination under
this Section 10.1(k) shall be effective forty-five
(45) days after the notice specified in Section
1.6(b) was given.
10.2. It is understood and agreed that the right of any party hereto
to terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
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10.3. No termination of this Agreement shall be effective unless
and until the party terminating this Agreement gives prior written notice to all
other parties to this Agreement of its intent to terminate, which notice shall
set forth the basis for the termination. Furthermore,
(a) In the event that any termination is based upon the
provisions of Article VII, or the provision of
Section 10.1(a), 10.1(i), 10.1(j), or 10.1(k) of
this Agreement, the prior written notice shall be
given in advance of the effective date of
termination as required by those provisions; and
(b) In the event that any termination is based upon the
provisions of Section 10.1(c) or 10.1(d) of this
Agreement, the prior written notice shall be given
at least ninety (90) days before the effective date
of termination.
10.4. Notwithstanding any termination of this Agreement, subject to
Section 1.2 of this Agreement and for so long as the Trust continues to exist,
the Trust and Berger Associates shall at the option of the Insurance Company,
continue to make available additional shares of the Trust pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement ("Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust and/or
invest in the Trust upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.4 shall not apply to
any terminations under Article VII and the effect of Article VII terminations
shall be governed by Article VII of this Agreement.
10.5. The Insurance Company shall not redeem Trust shares attributable
to the Contracts (as opposed to Trust shares attributable to the Insurance
Company's assets held in the Account) except (i) as necessary to implement
Contract-owner-initiated transactions; or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (a "Legally Required Redemption"). Upon request, the Insurance
Company will promptly furnish to the Trust and Berger Associates the opinion of
counsel for the Insurance
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Company (which counsel shall be reasonably satisfactory to the Trust and Berger
Associates) to the effect that any redemption pursuant to clause (ii) above is a
Legally Required Redemption. Furthermore, the Insurance Company shall not
prevent new Contract owners from allocating payments to a Fund that formerly was
available under the Contracts without first giving the Trust or Berger
Associates 90 days notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of that other party set forth
below or at such other address as the other party may from time to time specify
in writing.
If to the Trust:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay, Vice President
If to the Insurance Company:
Attention:
If to Berger Associates:
210 University Boulevard, Suite 900
Denver, Colorado 80206
Attention: Kevin R. Fay, Vice President
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<PAGE>
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party unless and until that information may come into the public
domain.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their contraction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and shall permit those
authorities reasonable access to its books and records in connection with any
lawful investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.6. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.7. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors and
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assigns; provided, that no party may assign this Agreement without the prior
written consent of the others.
32
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Insurance Company:
_________________________COMPANY
By its authorized officer,
SEAL By: _______________________
Title: ____________________
Date: _____________________
Trust:
BERGER INSTITUTIONAL PRODUCTS TRUST
By its authorized officer,
SEAL By: ______________________
Title: ___________________
Date: ____________________
Berger Associates:
BERGER ASSOCIATES, INC.
By its authorized officer,
SEAL By: ______________________
Title: ___________________
Date: ____________________
33
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Schedule A
Accounts
Name of Account Date of Resolution of Insurance Company's Board
which Established the Account
34
<PAGE>
Schedule B
Contracts
1. Contract Form
35
<PAGE>
Schedule C
Proxy Voting Procedure
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Trust by Berger Associates, the Trust and
the Insurance Company. The defined terms herein shall have the meanings assigned
in the Participation Agreement except that the term "Insurance Company" shall
also include the department or third party assigned by the Insurance Company to
perform the steps delineated below.
1. The number of proxy proposals is given to the Insurance Company by
Berger Associates as early as possible before the date set by the Trust
for the shareholder meeting to facilitate the establishment of
tabulation procedures. At this time Berger Associates will inform the
Insurance Company of the Record, Mailing and Meeting dates. This will
be done verbally approximately two months before meeting.
2. Promptly after the Record Date, the Insurance Company will perform a
"tape run", or other activity, which will generate the names, addresses
and number of units which are attributed to each
contractowner/policyholder (the "Customer") as of the Record Date.
Allowance should be made for account adjustments made after this date
that could affect the status of the Customers' accounts of the Record
Date.
NOTE: The number of proxy statements is determined by the activities
described in Step #2. The Insurance Company will use its best efforts
to call in the number of Customers to Berger Associates, as soon as
possible, but no later than one week after the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Insurance Company by the Trust. The
Insurance Company, at its expense, shall produce and personalize the
Voting Instruction cards. Berger Associates must approve the Card
before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the
Cards includes:
a. name (legal name as found on account registration)
b. address
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<PAGE>
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed by
the Trust).
(This and related steps may occur later in the chronological process
due to possible uncertainties relating to the proposals.)
4. During this time, Berger Associates will develop, produce, and the
Trust will pay for the Notice of Proxy and the Proxy Statement (one
document). Printed and folded notices and statements will be sent to
Insurance Company for insertion into envelopes (envelopes and return
envelopes are provided and paid for by the Insurance Company). Contents
of envelope sent to customers by Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance
Company) addressed to the Insurance Company or its
tabulation agent
d. "Urge buckslip" - optional, but recommended.
(This is a small, single sheet of paper that requests
Customers to vote as quickly as possible and that
their vote is important. One copy will be supplied by
the Trust.)
e. Cover letter - optional, supplied by Insurance
Company and reviewed and approved in advance by
Berger Associates.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in charge
at Insurance Company reviews and approves the contents of the mailing
package to ensure correctness and completeness. Copy of this approval
sent to Berger Associates.
6. Package mailed by the Insurance Company.
* The Trust must allow at least a 15-day solicitation time to
the Insurance Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as calendar days
from (but not including) the meeting, counting backwards.
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7. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
NOTE: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure.
8. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to the Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Such mutilated or illegible Cards are "hand verified,"
i.e., examined as to why they did not complete the system. Any
questions on those Cards are usually remedied individually.
9. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
10. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Trust receives the
tabulations stated in terms of a percentage and the number of shares.)
Berger Associates must review and approve tabulation format.
11. Final tabulation in shares is verbally given by the Insurance Company
to Berger Associates on the morning of the meeting not later than 10:00
a.m. Denver time. Berger Associates may request an earlier deadline if
required to calculate the vote in time for the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will be
required from the Insurance Company as well as an original
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<PAGE>
copy of the final vote. Berger Associates will provide a standard form
for each Certification.
13. The Insurance Company will be required to box and archive the Cards
received from the Customers. In the event that any vote is challenged
or if otherwise necessary for legal, regulatory, or accounting
purposes, Berger Associates will be permitted reasonable access to such
Cards.
14. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
39
EX-99.B8d
Proposed Participation Agreement
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, is made as of ___________________ __, 199_, by
and among ___________________________ ("Company"), on its own behalf and on
behalf of _______________________________ Separate Account ____, a segregated
asset account of the Company ("Account"), Strong Variable Insurance Funds, Inc.
(the "Insurance Funds") and Strong Special Fund II, Inc. ("Special Fund") (the
Insurance Funds and Special Fund shall individually be referred to as a "Fund"
and collectively as the "Funds"), the Funds' investment adviser and transfer
agent, Strong Capital Management, Inc. ("Adviser") and Strong Funds
Distributors, Inc. ("Distributors") (each, a "Party" and collectively, the
"Parties").
WHEREAS, beneficial interests in the Strong Variable Insurance Funds,
Inc. are divided into several series of shares, each representing the interest
in a particular managed portfolio of securities and other assets (the
"Portfolios", reference herein to a "Fund" or the "Funds" includes reference to
each Portfolio to the extent the context requires);
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Strong Special Fund
II, Inc., and the Portfolios named in Exhibit A, hereto (said series the
"Designated Portfolios"), as such Exhibit may be amended from time to time, on
behalf of the Account to fund the variable annuity contracts that use the
Designated Portfolios as an underlying investment medium (the "Contracts");
WHEREAS, the Company, Adviser and Distributors desire to facilitate the
purchase and redemption of shares of the Special Fund and the Designated
Portfolios by the Company for the Account through one account in the Special
Fund and in each Designated Portfolio (each an "Omnibus Account") to be
maintained of record by the Company, subject to the terms and conditions of this
Agreement; and
WHEREAS, the Company desires to provide administrative services and
functions (the "Services") for purchasers of contracts ("Owners") who are
beneficial owners of shares of the Special Fund or Designated Portfolios on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the Company, Fund, Adviser and Distributors agree as follows:
1. Performance of Services.
Company agrees to perform the administrative functions and services specified in
Exhibit B attached hereto with respect to the shares of the Designated
Portfolios beneficially owned by the Owners and included in the Account.
2. The Omnibus Accounts.
2.1 Each Omnibus Account will be opened based upon the information
contained in Exhibit C hereto. In connection with each Omnibus Account, Company
represents and warrants that it is authorized to act on behalf of each purchaser
of Contracts ("Owner") effecting transactions in the Omnibus Account and that
the information specified on Exhibit C hereto is correct.
2.2 The Fund shall designate each Omnibus Account with an account
number. Account numbers will be the means of identification when the parties are
transacting in the Omnibus Accounts. The assets in the Accounts are segregated
from the Company's own assets. The Adviser agrees to cause the Omnibus Accounts
to be kept open on the Designated Portfolio's or Special Fund's books, as
applicable, regardless of a lack of activity or small position size except to
the extent the Company takes specific action to close an Omnibus Account or to
the extent
1
<PAGE>
the Fund's prospectus reserves the right to close accounts which are inactive or
of a small position size. In the latter two cases, the Adviser will give prior
notice to the Company before closing an Omnibus Account.
2.3 The Company agrees to provide Adviser such information as Adviser
or Distributors may reasonably request concerning Owners as may be necessary or
advisable to enable Company and Distributors to comply with applicable laws,
including state "Blue Sky" laws relating to the sales of Fund shares to the
Accounts.
3. Transactions in Fund Shares. Designated Portfolio and Fund shares shall be
sold on behalf of the Fund by Distributors and purchased by Company for the
Account and, indirectly for the appropriate subaccount thereof at the net asset
value next computed after receipt by Distributors of each order of the Account
or its designee, in accordance with the provisions of this Agreement, the then
current prospectuses of the Designated Portfolio, and the Contracts. Company may
purchase Designated Portfolio and Fund shares for its own account subject to (a)
receipt of prior written approval by Distributors; and (b) such purchases being
in accordance with the then current prospectuses of the Portfolio and the
Contracts. The Board of Directors of each Fund ("Directors") may refuse to sell
shares of Fund to any person, or suspend or terminate the offering of shares of
the Fund if such action is required by law or by regulatory authorities having
jurisdiction. Company agrees to purchase and redeem the shares of the Fund in
accordance with the provisions of this Agreement, of the Contracts and of the
then current prospectuses for the Contracts and Designated Portfolio. Except as
necessary to implement transactions initiated by Owners, or as otherwise
permitted by state and/or federal laws or regulations, Company shall not redeem
Fund shares attributable to the Contracts.
3.1 Purchase and Redemption Orders. On each day that the Funds are open
for business (a "Business Day"), the Company shall aggregate and calculate the
net purchase or redemption order it receives for the Account from the Owners for
shares of the Fund that it received prior to the close of trading on the New
York Stock Exchange (the "NYSE") (i.e. 3:00 p.m., Central time, unless the NYSE
closes at an earlier time in which case such earlier time shall apply) and
communicate to Distributors, by telephone or facsimile (or by such other means
as the parties hereto may agree to in writing), the net aggregate purchase or
redemption order (if any) for the Omnibus Account for such Business Day (such
Business Day is sometimes referred to herein as the "Trade Date"). The Company
will communicate such orders to Distributors prior to 8:00 a.m., Central time,
on the next Business Day following the Trade Date. All trades communicated to
Distributors by the foregoing deadline shall be treated by Distributors as if
they were received by Distributors prior to the close of trading on the Trade
Date.
3.2 Settlement of Transactions.
(a) Purchases. Company will wire, or arrange for the wire of,
the purchase price of each purchase order to the custodian for the Fund in
accordance with written instructions provided by Distributors to the Company so
that either (1) such funds are received by the custodian for the Fund prior to
12:00 (noon), Central time, on the next Business Day following the Trade Date,
or (2) Distributors is provided with a Federal Funds wire system reference
number prior to such 12:00 noon deadline evidencing the entry of the wire
transfer of the purchase price to the applicable custodian into the Federal
Funds wire system prior to such time. Company agrees that if it fails to provide
funds to the Fund's custodian by the close of business on the next Business Day
following the Trade Date, then, at the option of Distributors, (i) the
transaction may be canceled, or (ii) the transaction may be processed at the
next-determined net asset value for the applicable Fund after purchase order
funds are received. In such event, the Company shall indemnify and hold harmless
Distributors, Adviser and/or the Fund from any liabilities, costs and damages
either may suffer as a result of such failure.
(b) Redemptions. The Adviser will use its best efforts to
cause to be transmitted to such custodial account as Company shall direct in
writing, the proceeds of all redemption orders placed by Company by 8:00 a.m.,
Central time, on the Business Day immediately following the Trade Date, by wire
transfer on that Business Day. Should Company need to extend the settlement on a
trade, it will contact Adviser to discuss the extension. For purposes of
determining the length of settlement, Adviser agrees to treat the Account no
less
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favorably than other shareholders of the designated Portfolio. Each wire
transfer of redemption proceeds shall indicate, on the Federal Funds wire
system, the amount thereof attributable to each Portfolio; provided, however,
that if the number of entries would be too great to be transmitted through the
Federal Funds wire system, the Adviser shall, on the day the wire is sent, fax
such entries to Company or if possible, send via direct or indirect systems
access until otherwise directed by the Company in writing.
(c) Authorized Persons. The following persons are each duly
authorized to act on behalf of the Company under this Agreement. The Funds,
Adviser and Distributors are entitled to conclusively rely on verbal or written
instructions that Adviser or Distributors reasonably believes were originated by
any one of said persons. The Company shall inform Adviser and Distributors of
additions to or subtractions from this list of authorized persons pursuant to
Section 13, hereof:
-------------------------------
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3.3 Book Entry Only. Issuance and transfer of Fund shares will be
by book entry only. Stock certificates will not be issued to the Company or the
Account. Shares of the Fund ordered from Distributors will be recorded in the
appropriate book entry title for the Account.
3.4 Distribution Information. The Adviser or Distributors shall provide
the Company with all distribution announcement information as soon as it is
announced by the Fund. The distribution information shall set forth, as
applicable, ex-dates, record date, payable date, distribution rate per share,
record date share balances, cash and reinvested payment amounts and all other
information reasonably requested by the Company. Where possible, the Adviser or
Distributors shall provide the Company with direct or indirect systems access to
the Adviser's systems for obtaining such distribution information.
3.5 Reinvestment. All dividends and capital gains distributions will be
automatically reinvested on the payable date in additional shares of the
Designated Portfolio or Special Fund, as applicable, at net asset value in
accordance with each Portfolio's or the Special Fund's then current prospectus.
3.6 Pricing Information. Distributors shall use its best efforts to
furnish to the Company prior to 6:00 p.m., Central time, on each Business Day
the Designated Portfolio's and Special Fund's closing net asset value for that
day, and for those Funds for which such information is calculated, the daily
accrual for interest rate factor (mil rate). Such information shall be
communicated via fax, or indirect or direct systems access acceptable to the
Company.
3.7 Price Errors.
(a) In the event adjustments are required to correct any error
in the computation of the net asset value of Fund shares, Fund or
Adviser shall promptly notify Company after discovering the need for
those adjustments which result in a reimbursement to an Account in
accordance with such Fund's or Designated Portfolio's then current
policies on reimbursement. Notification may be made orally or via
direct or indirect systems access. Any such notification shall be
promptly followed by a letter shall be written on Fund or Adviser
letterhead and must state for each day for which an error occurred the
incorrect price, the correct price, and, to the extent communicated to
the Fund's shareholder, the reason for the price change. Fund and
Adviser agree that Company may send this writing, or derivation thereof
(so long as such derivation is approved in advance by Fund or Adviser,
which approval shall not be unreasonably withheld) to Owners that are
affected by the price change.
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(b) If the Account received amounts in excess of the amounts
to which it otherwise would have been entitled prior to an adjustment
for an error, Company, when requested by Fund or Adviser, will use its
best efforts to collect such excess amounts from the accounts of the
Owners. In no event, however, shall Company be liable to Fund or
Adviser for any such amounts.
(c) If an adjustment is to be made in accordance with
subsection (a) above to correct an error which has caused the Account
to receive an amount less than that to which it is entitled, Fund
and/or Adviser shall make all necessary adjustments (within the
parameters specified in subsection (a)) to the number of shares owned
in the Account and distribute to the Company the amount of such
underpayment for credit to the accounts of the Owners.
3.8 Agency. Distributors hereby appoints the Company as its agent for
the limited purpose of accepting purchase and redemption instructions from the
Owners for the purchase and redemption of shares of the Fund by the Company on
behalf of Account.
3.9 Quarterly Reports. Adviser agrees to provide Company a statement of
Special Fund and Designated Portfolio assets as soon as practicable and in any
event within 30 days after the end of each calendar quarter, and a statement
certifying the compliance by the Special Fund and the Designated Portfolios
during that fiscal quarter with the diversification requirements and
qualification as a regulated investment company. In the event of a breach of
Section 6.4(a), Adviser will take all reasonable steps (a) to notify Company of
such breach and (b) to adequately diversify the Portfolio so as to achieve
compliance within the grace period afforded by Treasury Regulation 1.817-5.
4. Proxy Solicitations and Voting. The Company shall, at its expense, distribute
or arrange for the distribution of all proxy materials furnished by the Fund to
the Account and shall: (i) solicit voting instructions from Owners; (ii) vote
the Fund shares in accordance with instructions received from Owners; and (iii)
vote the Fund shares for which no instructions have been received, as well as
shares attributable to it, in the same proportion as Fund shares for which
instructions have been received from Owners, so long as and to the extent that
the Securities and Exchange Commission (the "SEC") continues to interpret the
Investment Company Act of 1940, as amended (the "1940 Act"), to require
pass-through voting privileges for various contract owners. The Company and its
agents will not recommend action in connection with, or oppose or interfere
with, the solicitation of proxies for the Fund shares held for Owners.
5. Customer Communications.
5.1 Prospectuses. The Adviser or Distributors, at its expense, will
provide the Company with as many copies of the current prospectus for the
Special Fund and Designated Portfolios as the Company may reasonably request for
distribution, at the Company's expense, to existing or prospective Owners.
5.2 Shareholder Materials. The Adviser and Distributors shall, as
applicable, provide in bulk to the Company or its authorized representative, at
a single address and at no expense to the Company, the following shareholder
communications materials prepared for circulation to Owners in quantities
requested by the Company which are sufficient to allow mailing thereof by the
Company and, to the extent required by applicable law, to all Owners: proxy
or information statements, annual reports, semi-annual reports, and all initial
and updated prospectuses, supplements and amendments thereof. Neither the Funds,
the Adviser nor Distributors shall be responsible for the cost of distributing
such materials to Owners.
6. Representations and Warranties.
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6.1 The Company represents and warrants that:
(a) It is an insurance company duly organized and in good
standing under the laws of the State of [Connecticut] and that it has
legally and validly established the Account prior to any issuance or
sale thereof as a segregated asset account and that the Company has and
will maintain the capacity to issue all Contracts that may be sold; and
that it is and will remain duly registered, licensed, qualified and in
good standing to sell the Contracts in all the jurisdictions in which
such Contracts are to be offered or sold;
(b) It is and will remain duly registered and licensed in all
material respects under all applicable federal and state securities and
insurance laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and
federal laws;
(c) The Contracts are and will be registered under the
Securities Act of 1933, as amended (the "1933 Act"), and are and will
be registered and qualified for sale in the states where so required;
and the Account is and will be registered as a unit investment trust in
accordance with the 1940 Act and shall be a segregated investment
account for the Contracts;
(d) The Contracts are currently treated as annuity contracts,
under applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Company will maintain such treatment and
will notify Adviser, Distributors and Fund promptly upon having a
reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future;
(e) It is registered as a transfer agent pursuant to Section
17A of the Securities Exchange Act of 1934, as amended (the "1934
Act"), or is not required to be registered as such;
(f) The arrangements provided for in this Agreement will be
disclosed to the Owners; and
(g) It is registered as a broker-dealer under the 1934 Act and
any applicable state securities laws, including as a result of entering
into and performing the Services set forth in this Agreement, or is not
required to be registered as such.
6.2 The Funds each represent and warrant that Fund shares sold pursuant to this
Agreement are and will be registered under the 1933 Act and the Fund is and will
be registered as a registered investment company under the Investment Company
Act of 1940, in each case, except to the extent the Company is so notified in
writing;
6.3 Distributors represents and warrants that:
(a) It is and will be a member in good standing of the NASD and is
and will be registered as a broker-dealer with the SEC;
(b) It will sell and distribute Fund shares in accordance with all
applicable state and federal laws and regulations; and
6.4 Adviser represents and warrants that:
(a) It will cause each Fund to invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable annuity
contracts under the Code and the regulations issued thereunder, and that each
Fund will comply with Section 817(h) of the Code as amended from time to time
and with all applicable regulations promulgated thereunder;
(b) It is and will remain duly registered and licensed in all material
respects under all applicable federal and state securities and insurance laws
and shall perform its obligations hereunder in compliance in all material
respects with any applicable state and federal laws; and
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6.5 Each of the parties hereto represents and warrants to the others that:
(a) It has full power and authority under applicable law, and has taken
all action necessary, to enter into and perform this Agreement and the person
executing this Agreement on its behalf is duly authorized and empowered to
execute and deliver this Agreement;
(b) This Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms and it shall comply in all
material respects with all laws, rules and regulations applicable to it by
virtue of entering into this Agreement;
(c) No consent or authorization of, filing with, or other act by or in
respect of any governmental authority, is required in connection with the
execution, delivery, performance, validity or enforceability of this Agreement;
(d) The execution, performance and delivery of this Agreement will not
result in it violating any applicable law or breaching or otherwise impairing
any of its contractual obligations;
(e) Each Party hereto is entitled to rely on any written records or
instructions provided to it by another Party; and
(f) Its directors, officers, employees, and investment advisers, and
other individuals/entities dealing with the money and/or securities of a Fund
are and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
amount required by the applicable rules of the National Association of
Securities Dealers, Inc. ("NASD") and the federal securities laws, which bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company;
7. Sales Material and Information.
7.1 NASD Filings. The Company shall promptly inform Distributors as to
the status of all sales literature filings pertaining to the Special Fund or
Designated Portfolios and shall promptly notify Distributors of all approvals or
disapprovals of sales literature filings with the NASD. For purposes of this
Section 7, the phrase "sales literature or other promotional material" shall be
construed in accordance with all applicable securities laws and regulations.
7.2 Company Representations. The Company shall not make any material
representations concerning the Adviser, the Distributors, or a Fund other than
the information or representations contained in: (a) a registration statement of
the Fund or prospectus of a Designated Portfolio or Special Fund, as amended or
supplemented from time to time; (b) published reports or statements of the Funds
which are in the public domain or are approved by Distributors and/or the Funds;
or (c) sales literature or other promotional material of the Funds.
7.3 Adviser, Distributors and Fund Representations. Neither Adviser,
Distributors nor a Fund shall make any material representations concerning the
Company other than the information or representations contained in: (a) a
registration statement or prospectus for the Contracts, as amended or
supplemented from time to time; (b) published reports or statements of the
Contracts or the Account which are in the public domain or are approved by the
Company; or (c) sales literature or other promotional material of the Company.
7.4 Trademarks, etc. Except to the extent required by applicable law,
no Party shall use any other Party's names, logos, trademarks or service marks,
whether registered or unregistered, without the prior consent of such Party.
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7.5 Information From Distributors and Adviser. Upon request,
Distributors and/or Adviser will provide to Company at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, solicitations for voting instructions,
applications for exemptions, requests for no action letters, and all amendments
to any of the above, that relate to the Designated Portfolios or the Special
Fund, in final form as filed with the SEC, NASD and other regulatory
authorities.
7.6 Information from Company. Company will provide to Distributors at
least one complete copy of all registration statements, prospectuses, Statements
of Additional Information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters and all amendments to any of the above, that
relate to a Fund and the Contracts, in final form as filed with the SEC, NASD
and other regulatory authorities.
7.7 Review of Marketing Materials. If so requested by Company, the
Adviser or Distributors will use its best efforts to review sales literature and
other marketing materials prepared by Company which relate to the Funds, the
Adviser or Distributors for factual accuracy as to such entities, provided that
the Adviser or Distributors is provided at least five (5) Business Days to
review such materials. Neither the Adviser nor Distributors will review such
materials for compliance with applicable laws. Company shall provide the Adviser
with copies of all sales literature and other marketing materials which refer to
the Funds, the Company or Distributors within five (5) Business Days after their
first use, regardless of whether the Adviser or Distributors has previously
reviewed such materials. If so requested by the Adviser or Distributors, Company
shall cease to use any sales literature or marketing materials which refer to
the Funds, the Adviser or Distributors that the Adviser or Distributors
determines to be inaccurate, misleading or otherwise unacceptable.
8. Fees and Expenses.
8.1 Fund Registration Expenses. Fund or Distributors shall bear the
cost of registration and qualification of Fund shares; preparation and filing of
Fund prospectuses and registration statements, proxy materials and reports;
preparation of all other statements and notices relating to Fund or Distributors
required by any federal or state law; payment of all applicable fees, including,
without limitation, all fees due under Rule 24f-2 of the 1940 Act, relating to
Fund; and all taxes on the issuance or transfer of Fund's shares on the Fund's
records.
8.2 Contract Registration Expenses. The Company shall bear the expenses
for the costs of preparation and filing of the Company's prospectus and
registration statement with respect to the Contracts; preparation of all other
statements and notices relating to the Account or Contracts required by any
federal or state law; expenses for the solicitation and sale of the Contracts
including all costs of printing and distributing all copies of advertisements,
prospectuses, Statements of Additional Information, proxy materials, and reports
to Owners or potential purchasers of the Contracts as required by applicable
state and federal law; payment of all applicable fees relating to the Contracts;
all costs of drafting, filing and obtaining approvals of the Contracts in the
various states under applicable insurance laws; filing of annual reports on form
N-SAR, and all other costs associated with ongoing compliance with all such laws
and its obligations hereunder.
9. Indemnification.
9.1 Indemnification By Company.
(a) Company agrees to indemnify and hold harmless the Funds, Adviser
and Distributors and each of their directors, officers, employees and agents,
and each person, if any, who controls any of them within the meaning of Section
15 of the 1933 Act (each, an "Indemnified Party" and collectively, the
"Indemnified Parties" for the purposes of this Section 9.1) from and against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of Company), and expenses (including
reasonable legal fees
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and expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise (collectively, hereinafter
"Losses"), insofar as such Losses:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement, prospectus or sales literature for the
Contracts or contained in the Contracts (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this paragraph 9.1(a) shall not
apply as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with written information furnished to Company by or on
behalf of a Fund, Distributors or Adviser for use in the registration
statement or prospectus for the Contracts or in the Contracts (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of Company or its agents, with
respect to the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering a Fund or any amendment
thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, if such a
statement or omission was made in reliance upon written information
furnished to a Fund, Adviser or Distributors by or on behalf of
Company; or
(iv) arise out of, or as a result of, any failure by Company
or persons under its control to provide the Services and furnish the
materials contemplated under the terms of this Agreement; or
(v) arise out of, or result from, any material breach of any
representation and/or warranty made by Company or persons under its
control in this Agreement or arise out of or result from any other
material breach of this Agreement by Company or persons under its
control; as limited by and in accordance with the provisions of
Sections 9.1(b) and (.1(c) hereof; or
(vi) arise out of, or as a result of, adherence by Adviser or
Distributors to instructions that it reasonably believes were
originated by persons specified in Section 3.2(c), hereof.
This indemnification provision is in addition to any liability which
the Company may otherwise have.
(b) Company shall not be liable under this indemnification provision
with respect to any Losses to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or duties
under this Agreement.
(c) Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify Company of any such claim shall not
relieve Company from any liability which it may have to the Indemnified Party
otherwise than on account of this indemnification provision. In case any such
action is brought against any Indemnified Party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such Indemnified Party. After
notice from the
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(d) The Indemnified Parties will promptly notify Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of Designated Portfolio shares or the Contracts or the
operation of Fund.
9.2 Indemnification by Adviser and Distributors.
(a) Adviser and Distributors agrees to indemnify and hold harmless
Company and each of its directors, officers, employees and agents and each
person, if any, who controls Company within the meaning of Section 15 of the
1933 Act (each, and "Indemnified Party" and collectively, the "Indemnified
Parties" for purposes of this Section 9.2) against any and all Losses to which
the Indemnified Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such Losses:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of a Fund (or
any amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this Section 9.2(a)
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with written information furnished to a Fund,
Adviser or Distributors by or on behalf of Company for use in the
registration statement or prospectus for a Fund or in sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of, or as a result of, statements or
representations or wrongful conduct of Adviser or Distributors or
persons under its control, with respect to the sale or distribution of
Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon written
information furnished to Company by or on behalf of Adviser or
Distributors; or
(iv) arise out of, or as a result of, any failure by Adviser
or Distributors or persons under its control to provide the services
and furnish the materials contemplated under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Adviser or Distributors or
persons under its control in this Agreement or arise out of or result
from any other material breach of this Agreement by Adviser or
Distributors or persons under its control; as limited by and in
accordance with the provisions of Sections 9.2(b) and 9.2(c) hereof.
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This indemnification provision is in addition to any liability which
Adviser and Distributors may otherwise have.
(b) Distributors shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to Company.
(c) Adviser and Distributors shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified Adviser and Distributors
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify Adviser
and Distributors of any such claim shall not relieve Adviser and Distributors
from any liability which it may have to the Indemnified Party otherwise than on
account of this indemnification provision. In case any such action is brought
against any Indemnified Party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, assume the defense thereof, with
counsel satisfactory to such Indemnified Party. After notice from the
indemnifying party of its intention to assume the defense of an action, the
Indemnified Party shall bear the expenses of any additional counsel obtained by
it, and the indemnifying party shall not be liable to such Indemnified Party
under this Section for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation. The Indemnified Party may not settle any action without
the written consent of the indemnifying party. The indemnifying party may not
settle any action without the written consent of the Indemnified Party unless
such settlement completely and finally releases the Indemnified Party from any
and all liability. In either event, consent shall not be unreasonably withheld.
(d) The Indemnified Parties will promptly notify Adviser and
Distributors of the commencement of any litigation or proceedings against them
in connection with the issuance or sale of the Contracts or the operation of the
Account.
10. Potential Conflicts.
10.1 Monitoring by Directors for Conflicts of Interest. The Directors
of each Fund will monitor the Fund for any potential or existing material
irreconcilable conflict of interest between the interests of the contract owners
of all separate accounts investing in the Fund, including such conflict of
interest with any other separate account of any other insurance company
investing in the Fund. An irreconcilable material conflict may arise for a
variety of reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretive letter, or any similar action by insurance, tax or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of the Fund are
being managed; (e) a difference in voting instructions given by variable annuity
contract owners and variable life insurance contract owners or by contract
owners of different life insurance companies utilizing the Fund; or (f) a
decision by Company to disregard the voting instructions of Owners. The
Directors shall promptly inform the Company, in writing, if they determine that
an irreconcilable material conflict exists and the implications thereof.
10.2 Monitoring by Company for Conflicts of Interest. The Company will
promptly notify the Directors, in writing, of any potential or existing material
irreconcilable conflicts of interest, as described in Section 10.1 above, of
which it is aware. The Company will assist the Directors in carrying out their
responsibilities under any applicable provisions of the federal securities laws
and/or any exemptive orders granted by the SEC ("Exemptive Order"), by providing
the Directors, in a timely manner, with all information reasonably necessary
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for the Directors to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Directors whenever Owner
voting instructions are disregarded.
10.3 Remedies. If it is determined by a majority of the Directors, or a
majority of disinterested Directors, that a material irreconcilable conflict
exists, as described in Section 10.1 above, the Company shall, at its own
expense take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including, but not limited to: (a),
withdrawing the assets allocable to some or all of the separate accounts from
the applicable Fund and reinvesting such assets in a different investment
medium, including (but not limited to) another fund managed by the Adviser, or
submitting the question whether such segregation should be implemented to a vote
of all affected Owners and, as appropriate, segregating the assets of any
particular group that votes in favor of such segregation, or offering to the
affected owners the option of making such a change; and (b), establishing a new
registered management investment company or managed separate account.
10.4 Causes of Conflicts of Interest.
(a) State Insurance Regulators. If a material irreconcilable
conflict arises because a particular state insurance regulator's
decision applicable to the Company conflicts with the majority of other
state regulators, then the Company will withdraw the affected Account's
investment in the applicable Fund and terminate this Agreement with
respect to such Account within the period of time permitted by such
decision, but in no event later than six months after the Directors
inform the Company in writing that it has determined that such decision
has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Directors. Until the end
of the foregoing period, the Distributors and Fund shall continue to
accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund to the extent such actions do not
violate applicable law.
(b) Disregard of Owner Voting. If a material irreconcilable
conflict arises because of Company's decision to disregard Owner voting
instructions and that decision represents a minority position or would
preclude a majority vote, Company may be required, at the applicable
Fund's election, to withdraw the Account's investment in said Fund. No
charge or penalty will be imposed against the Account as a result of
such withdrawal.
10.5 Limitations on Consequences. For purposes of Sections 10.3 through
10.5 of this Agreement, a majority of the disinterested Directors shall
determine whether any proposed action adequately remedies any irreconcilable
material conflict. In no event will a Fund, the Adviser or the Distributors be
required to establish a new funding medium for any of the Contracts. The Company
shall not be required by Section 10.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of owners
affected by the irreconcilable material conflict. In the event that the
Directors determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the Account's
investment in the applicable Fund and terminate this Agreement as quickly as may
be required to comply with applicable law, but in no event later than six (6)
months after the Directors inform the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict.
10.6 Changes in Laws. If and to the extent that Rule 6e-2 and Rule
6e3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from
any provision of the Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Fund's Exemptive Order) on terms and
conditions materially different from those contained in the Fund's Exemptive
Order, then (a) the Fund and/or the Company, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
10.1, 10.2, 10.3 and 10.4 of this
11
<PAGE>
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
11. Maintenance of Records.
(a) Recordkeeping and other administrative services to Owners
shall be the responsibility of the Company and shall not be the
responsibility of the Fund, Adviser orDistributors. Neither the Funds,
the Adviser nor Distributors shall maintain separate accounts or
records for Owners. Company shall maintain and preserve all records
as required by law to be maintained and preserved in connection with
providing the Services and in making shares of the Funds available to
the Account.
(b) Upon the request of the Adviser or Distributors, the
Company shall provide copies of all the historical records relating to
transactions between the Funds and the Account, written communications
regarding the Funds to or from the Account and other materials, in each
case (1) as are maintained by the Company in the ordinary course of its
business, and (2) as may reasonably be requested to enable the Adviser
and Distributors, or its representatives, including without limitation
its auditors or legal counsel, to (A) monitor and review the Services,
(B) comply with any request of a governmental body or self-regulatory
organization or the Owners, (C) verify compliance by the Company with
the terms of this Agreement, (D) make required regulatory reports, or
(E) perform general customer supervision. The Company agrees that it
will permit the Adviser and Distributors or such representatives of
either to have reasonable access to its personnel and records in order
to facilitate the monitoring of the quality of the Services.
(c) Upon the request of the Company, the Adviser and
Distributors shall provide copies of all the historical records
relating to transactions between the Funds and the Account, written
communications regarding the Funds to or from the Account and other
materials, in each case (1) as are maintained by the Adviser and
Distributors, as the case may be, in the ordinary course of its
business and in compliance with applicable law, and (2) as may
reasonably be requested to enable the Company, or its representatives,
including without limitation its auditors or legal counsel, to (A)
comply with any request of a governmental body or self-regulatory
organization or the Owners, (B) verify compliance by the Adviser and
Distributors with the terms of this Agreement, (C) make required
regulatory reports, or (D) perform general customer supervision.
(d) The parties agree to cooperate in good faith in providing
records to one another pursuant to this Section 11.
12. Term and Termination.
12.1 Term and Termination Without Cause. The initial term of this
Agreement shall be for a period of one year from the date hereof. Unless
terminated upon not less than thirty (30) days prior written notice to the other
Party, this Agreement shall thereafter automatically renew from year to year,
subject to termination at the next applicable renewal date upon not less than 30
days prior written notice. Either Party may terminate this Agreement following
the initial term upon six (6) months advance written notice to the other.
12.2 Termination by Fund, Distributors or Adviser for Cause.
Adviser, Fund or Distributors may terminate this Agreement by written notice to
the Company, if any of them shall determine, in its sole judgment exercised in
good faith, that (a) the Company has suffered a material adverse change in its
business, operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity; or (b) any of the
Contracts are not registered, issued or sold in accordance with applicable state
and/or federal law or
12
<PAGE>
such law precludes the use of Fund shares as the underlying investment media of
the Contracts issued or to be issued by the Company.
12.3 Termination by Company for Cause. Company may terminate this
Agreement by written notice to the Funds and the Distributors in the event that
(a) any of the Fund's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; (b) the Funds cease to qualify as a Regulated Investment
Companies under Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Funds may fail to so
qualify; or (c) a Fund fails to meet the diversification requirements specified
in Section 6.4(a).
12.4 Termination by any Party. This Agreement may be terminated by any
party at any time (A) by giving 30 days' written notice to the other parties in
the event of a material breach of this Agreement by the other party or parties
that is not cured during such 30-day period, and (B) (i) upon institution of
formal proceedings relating to the legality of the terms and conditions of this
Agreement against the Account, Company, Funds, Adviser or Distributors by the
NASD, the SEC or any other regulatory body provided that the terminating party
has a reasonable belief that the institution of formal proceedings is not
without foundation and will have a material adverse impact on the terminating
party, (ii) by the non-assigning party upon the assignment of this Agreement in
contravention of the terms hereof, or (iii) as is required by law, order or
instruction by a court of competent jurisdiction or a regulatory body or
self-regulatory organization with jurisdiction over the terminating party.
12.5 Limit on Termination. Notwithstanding the termination of this
Agreement, for so long as any Contracts remain outstanding and invested in a
Designated Portfolio or in the Special Fund each Party hereto shall continue to
perform such of its duties hereunder as are necessary to ensure the continued
tax deferred status thereof and the payment of benefits thereunder, except to
the extent proscribed by law, the SEC or other regulatory body.
13. Notices.
All notices hereunder shall be given in writing (and shall be deemed to
have been duly given upon receipt) by delivery in person, by facsimile, by
registered or certified mail or by overnight delivery (postage prepaid, return
receipt requested) to the respective parties as follows:
If to Insurance Fund:
Strong Variable Insurance Funds, Inc.
100 Heritage Reserve
Milwaukee, Wisconsin 53051
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Special Fund:
Strong Special Fund II, Inc.
100 Heritage Reserve
Milwaukee, Wisconsin 53051
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Adviser:
Strong Capital Management, Inc.
13
<PAGE>
100 Heritage Reserve
Milwaukee, Wisconsin 53051
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Distributors:
Strong Fund Distributors, Inc.
100 Heritage Reserve
Milwaukee, Wisconsin 53051
Attention: General Counsel
Facsimile No.: 414/359-3948
If to Company:
--------------------------------
--------------------------------
Attention:----------------------
Facsimile No.: -----------------
14. Miscellaneous.
14.1 Captions. The captions in this Agreement are included for
convenience of reference only and in no way affect the construction or effect of
any provisions hereof.
14.2 Enforceability. If any portion of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
the Agreement shall not be affected thereby.
14.3 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which taken together shall constitute one
and the same instrument.
14.4 Remedies not Exclusive. The rights, remedies and obligations
contained in this Agreement are cumulative and are in addition to any and all
rights, remedies and obligations, at law or in equity, which the parties hereto
are entitled to under state and federal laws.
14.5 Confidentiality. Subject to the requirements of legal process and
regulatory authority, the Fund and Distributors shall treat as confidential the
names and addresses of the owners of the Contracts and all information
reasonably identified as confidential in writing by the Company hereto and,
except as permitted by this Agreement, shall not disclose, disseminate or
utilize such names and addresses and other confidential information without the
express written consent of the Company until such time as it may come into the
public domain.
14.6 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of Wisconsin
applicable to agreements fully executed and to be performed therein; exclusive
of conflicts of laws;
14.7 Survivability. Sections 6, 7.2, 7.3, 7.4, 9, 11 and 12.5 hereof
shall survive termination of this Agreement. In addition, Sections 7.1, 7.6 and
10 shall survive termination of this Agreement in the event that any Contracts
are invested in Special Fund or a Designated Portfolio at the time the
termination becomes effective and shall survive for so long as such Contracts
remain so invested.
14
<PAGE>
14.8 Amendment and Waiver. No modification of any provision of this
Agreement will be binding unless in writing and executed by the party to be
bound thereby. No waiver of any provision of this Agreement will be binding
unless in writing and executed by the party granting such waiver.
Notwithstanding anything in this Agreement to the contrary, the Company may
unilaterally amend Exhibit A hereto to add additional series of Insurance Funds
("New Funds") as Funds by sending to the Company a written notice of the New
Funds. Any valid waiver of a provision set forth herein shall not constitute a
waiver of any other provision of this Agreement. In addition, any such waiver
shall constitute a present waiver of such provision and shall not constitute a
permanent future waiver of such provision.
14.9 Assignment. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective successors and assigns;
provided, however, that neither this Agreement nor any rights, privileges,
duties or obligations of the parties may be assigned by either party without the
written consent of the other party or as expressly contemplated by this
Agreement.
14.10 Entire Agreement. This Agreement contains the full and
complete understanding between the parties with respect to the transactions
covered and contemplated hereunder, and supersedes all prior agreements and
understandings between the parties relating to the subject matter hereof,
whether oral or written, express or implied.
14.11 Relationship of Parties; No Joint Venture, Etc. Except for the
limited purpose provided in Section 2.9, it is understood and agreed that the
Company shall be acting as an independent contractor and not as an employee or
agent of the Adviser, Distributors or the Funds, and none of the parties shall
hold itself out as an agent of any other party with the authority to bind such
party. Neither the execution nor performance of this Agreement shall be deemed
to create a partnership or joint venture by and among any of the Company, Fund,
Adviser, or Distributors.
14.12 Expenses. All expenses incident to the performance by each party
of its respective duties under this Agreement shall be paid by that party.
14.13 Time of Essence. Time shall be of the essence in this Agreement.
14.14 Non-Exclusivity. Each of the parties acknowledges and agrees that
this Agreement and the arrangements described herein are intended to be
non-exclusive and that each of the parties is free to enter into similar
agreements and arrangements with other entities.
14.15 Operations of Fund. In no way shall the provisions of this
Agreement limit the authority of the Funds, the Company or Distributors to take
such action as it may deem appropriate or advisable in connection with all
matters relating to the operation of such Fund and the sale of its shares. In no
way shall the provisions of this Agreement limit the authority of the Company to
take such action as it may deem appropriate or advisable in connection with all
matters relating to the provision of Services or the shares of funds other than
the Funds offered to the Account.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first above written.
[COMPANY]
-----------------------------------------------
By:
Name:
15
<PAGE>
Title:
STRONG CAPITAL MANAGEMENT, INC.
-----------------------------------------------
By:
Name: Rochelle Lamm Wallach
Title: President of Strong Advisory Services,
a division of Strong Capital Management,
Inc.
STRONG FUNDS DISTRIBUTORS, INC.
-----------------------------------------------
By:
Name: Stephen J. Shenkenberg
Title: Vice President
STRONG VARIABLE INSURANCE FUNDS,
INC.
-----------------------------------------------
By:
Name:
Title:
STRONG VARIABLE INSURANCE FUNDS,
INC.
-----------------------------------------------
By:
Name:
Title:
16
<PAGE>
EXHIBIT A
The following is a list of all series of the Insurance Fund which are to be made
available for investment by the Contracts pursuant to this Agreement:
Strong Advantage Fund II
Strong Asset Allocation Fund II
Strong Discovery Fund II
Strong Government Securities Fund II
Strong Growth Fund II
Strong International Stock Fund II
Strong Short-Term bond Fund II
17
<PAGE>
EXHIBIT B
THE SERVICES
Company shall perform the following services. Such services
shall be the responsibility of the Company and shall not be the responsibility
of the Funds, Adviser or Distributors.
1. Maintain separate records for each Account, which records shall
reflect Fund shares ("Shares") purchased and redeemed, including the date and
price for all transactions, Share balances, and the name and address of each
Owner, including zip codes and tax identification numbers.
2. Credit contributions to individual Owner accounts and invest such
contributions in shares of the Special Fund or Designated Portfolios to the
extent so designated by the Owner.
3. Disburse or credit to the Owners, and maintain records of, all
proceeds of redemptions of Special Fund or Designated Portfolio shares and all
other distributions not reinvested in shares.
4. Prepare and transmit to the Owners, periodic account statements
showing, among other things, the total number of Special Fund or Designated
Portfolio shares owned as of the statement closing date, purchases and
redemptions of shares during the period covered by the statement, the net asset
value of the Special Fund and Designated Portfolios as of a recent date, and the
dividends and other distributions paid during the statement period (whether paid
in cash or reinvested in shares).
5. Transmit to the Owners, as required by applicable law, prospectuses,
proxy materials, shareholder reports, and other information provided by the
Adviser, Distributors or Funds and required to be sent to shareholders under the
Federal securities laws.
6. Transmit to Distributors purchase orders and redemption requests
placed by the Account and arrange for the transmission of funds to and from the
Funds.
7. Transmit to Distributors such periodic reports as Distributors shall
reasonably conclude is necessary to enable the Funds to comply with applicable
Federal securities and state Blue Sky requirements.
8. Transmit to the each Account confirmations of purchase orders and
redemption requests placed by each Account.
9. Maintain all account balance information for the Account and daily
and monthly purchase summaries expressed in shares and dollar amounts.
10. Prepare, transmit and file any Federal, state and local government
reports and returns as required by law with respect to each account maintained
on behalf of the Account.
11. Respond to Owners' inquiries regarding, among other things, share
prices, account balances, dividend options, dividend amounts, and dividend
payment dates.
18
<PAGE>
EXHIBIT C
ACCOUNT INFORMATION
1. Entity in whose name each Account will be opened:_________________________
Mailing address: _________________________
_________________________
_________________________
2. Employer ID number (For internal usage only): _________________________
3. Authorized contact persons: The following persons are authorized on behalf
of the Company to effect transactions in each Account:
Name:_____________________________ Name:____________________________________
Phone:____________________________ Phone:___________________________________
4. Will the Accounts have telephone exchange? ____ Yes ____ No
(This option lets Company redeem shares by telephone and apply the proceeds
for purchase in another identically registered Strong Funds account.)
5. Will the Accounts have telephone redemption? ____ Yes ____ No
(This option lets Company sell shares by telephone. The proceeds will be
wired to the bank account specified below.)
6. All dividends and capital gains will be reinvested automatically.
7. Instructions for all outgoing wire transfers______________________________
______________________________
______________________________
8. If this Account Information Form contains changed information, the
undersigned authorized officer has executed this amended Account Information
Form as of the date set forth below and acknowledges the agreements and
representations set forth in the Participation Agreement between the
Company, the Funds, Adviser and Distributors:
------------------------------------- ----------------------------
(Signature of Authorized Officer) (Date)
9. Company represents under penalty of perjury that:
(i) The employer ID number on this form is correct; and
(ii) Company is not subject to backup withholding because (a) Company
is exempt from backup withholding, (b) Company has not been notified by the IRS
that it is subject to backup withholding as a result of failure to report all
interest or dividends, or (c) the IRS has notified the Company that it is no
longer subject to
19
<PAGE>
backup withholding. (Cross out (ii) if Company has been notified by the IRS
that it is subject to backup withholding because of underreporting interest
or dividends on its tax return.)
Please Note: Distributors employs reasonable procedures to confirm that
instructions communicated by telephone are genuine and may not be liable for
losses due to unauthorized or fraudulent instructions. Please see the prospectus
for the Special Fund or applicable Designated Portfolio for more information on
the telephone exchange and redemption privileges.
For Strong Internal Use: This Account Information Form may be a copy. The
original Account Information Form is attached to the Participation Agreement
with the Adviser and retained in the legal department.
PRTAGMT1.DOC
20
<PAGE>
Re: Fee Letter Relating to the [Company] Participation Agreement.
Dear _________________________:
Pursuant to the Participation Agreement by and among Strong Capital
Management, Inc. ("Strong"),___________________________ (the "Company"), Strong
Variable Insurance Funds, Inc., Strong Special Fund II, Inc. and Strong Funds
Distributors, Inc. ("Distributors") dated _____________________, 1996 (the
"Participation Agreement"), the Company will provide certain administrative
services on behalf of the registered investment companies or series thereof
specified in Exhibit A (each a "Fund" and collectively the "Funds").
In recognition of the reduction in administrative expenses that derives
from the performance of said administrative services, Strong agrees to pay the
Company the fee specified below for each Fund specified in Exhibit A hereto.
(a) For average aggregate amounts (as calculated in paragraph
(b), below) invested through variable insurance products issued by the
Company and invested with the Funds, as such may be amended from time
to time, the annual fee shall equal the percentage of such aggregate
amount of the applicable fund specified in Exhibit A.
(b) For purposes of computing the fee contemplated in
paragraph (a) above, Strong shall pay the Company an amount with
respect to each Fund equal to the product of: (a) one-twelfth of the
applicable percentage specified in Exhibit A, hereto, multiplied by (b)
the average daily market value of the investments held in the
applicable Fund pursuant to the Participation Agreement computed by
totaling the aggregate investment (share net asset value multiplied by
the total number of shares held) on each business day during the
calendar month in the Fund and dividing by the total number of business
days during such month.
(c) Strong shall calculate the amount of the payment to be
made pursuant to this Letter Agreement at the end of each calendar
month and will make such payment to the Company within 30 days
thereafter. Fees will be paid, at Strong's election, by wire transfer
or by check. All payments hereunder shall be considered final unless
disputed by the Company in writing within 60 days of receipt.
(d) The parties agree that the fees contemplated herein are
solely for shareholder servicing and other administrative services
provided by the Company and do not constitute payment in any manner for
investment advisory, distribution, trustee, or custodial services.
(e) The Company agrees to provide Strong by the 15th day of
each month with a report which indicates the number of Owners that hold
through a Contract interests in each Account as of the last day of the
prior month.
(f) If requested in writing by Strong, and at Strong's
expense, the Company shall provide to Strong, by February 14th of each
year, a "Special Report" from a nationally recognized accounting firm
reasonably acceptable to Strong which substantiates for each month of
the prior calendar year: (a) the number of Owners that hold, through an
Account, interests in each Account maintained by the Company on the
last day of each month which held shares for which the fee provided for
in this Letter Agreement was received by the Company, (b) that any fees
billed to Strong for such month were accurately determined in
accordance with this Letter Agreement, and (c) such other information
in connection with this Agreement and the Participation Agreement as
may be reasonably requested by Strong.
21
<PAGE>
(g) The parties hereto agree that Strong may unilaterally
amend Schedule A hereto to add additional investment companies or
series thereof ("New Funds") as Funds subject to the provisions of this
Letter Agreement by sending to the Company a written notice of the New
Funds and indicating therein the fees to be paid to the Company with
respect to the administrative services provided pursuant to the
Participation Agreement in connection with such New Funds.
(h) This Letter Agreement shall terminate upon termination of
the Participation Agreement. Accordingly, all payments pursuant to this
Letter Agreement shall cease upon termination of the Participation
Agreement.
(i) Capitalized terms not otherwise defined herein shall have
the meaning assigned to them in the Participation Agreement.
If you are in agreement with the foregoing, please sign and date below
where indicated and return one copy of this signed letter agreement to me.
Very truly yours,
Rochelle Lamm Wallach
President, Strong Advisory Services, a division
of Strong Capital Management, Inc.
Accepted and agreed to this ____ day of
__________________, 1996.
[COMPANY]
- ------------------------------------------
By:
Name:
Title:
22
<PAGE>
EXHIBIT A
The Funds subject to this Agreement and applicable annual fees are as follows:
Fund Annual Fee
---- ----------
Strong Special Fund II, Inc. .20%
Strong Variable Insurance Funds, Inc.
Strong Discovery Fund II .20%
Strong International Stock Fund II .20%
Strong Growth Fund II .20%
Strong Asset Allocation Fund II .15%
Strong Government Securities Fund II .10%
Strong Short-Term Bond Fund II .10%
Strong Advantage Fund II .10%
23
<PAGE>
STRONG CAPITAL MANAGEMENT, INC.
-ADVISORY SERVICE FEE SCHEDULE-
- --------------------------------------------------------------------------------
FUNDS TYPE MANAGEMENT FEE
The Strong Special Fund II Equity 100 Basis Points
The Strong Discovery Fund II Equity 100 Basis Points
The Strong International Stock Fund II Equity 100 Basis Points
The Strong Growth Fund II Equity 100 Basis Points
The Strong Asset Allocation Fund II Balanced 80 Basis Points
The Strong Advantage Fund II Fixed 60 Basis Points
The Strong Government Securities Fund II Equity 60 Basis Points
- --------------------------------------------------------------------------------
24
<PAGE>
STRONG CAPITAL MANAGEMENT, INC.
-ADMINISTRATIVE SERVICES FEE SCHEDULE-
--------------------------------------------------------
FUND FEE SCHEDULE
---- -------------
Equity 20 Basis Points
Balanced 15 Basis Points
Fixed 10 Basis Points
Money Market 5 Basis Points
---------------------------------------------------------
25
EX-99.B9
Opinion and Consent of Norman M. Krivosha
<PAGE>
September 25, 1996
Ameritas Life Insurance Corp.
5900 "O" Street
Lincoln, Nebraska 68501
Gentlemen:
With reference to Pre-Effective Amendment No. 1 to Registration Statement on
Form N-4 filed by Ameritas Life Insurance Corp. and Ameritas Life Insurance
Corp. Separate Account LLVA with the Securities & Exchange Commission covering
flexible premium variable annuity policies, I have examined such documents and
such laws as I considered necessary and appropriate, and on the basis of such
examination, it is my opinion that:
1. Ameritas Life Insurance Corp. is duly organized and validly existing
under the laws of the State of Nebraska and has been duly authorized
by the Insurance Department of the State of Nebraska to issue variable
annuity policies.
2. Ameritas Life Insurance Corp. Separate Account LLVA is a duly
authorized and existing separate account established pursuant to the
provisions of Sections 44-310.06 (subsequently repealed) and/or
44-402.01 of the Statutes of the State of Nebraska.
3. The flexible premium variable annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute
legal, validly issued and binding obligations of Ameritas Life
Insurance Corp.
I hereby consent to the filing of this opinion as an exhibit to said
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4 and to
the use of my name under the caption "Legal Matters" in the Prospectus contained
in the Registration Statement.
Sincerely,
/s/ Norman M. Krivosha
Norman Krivosha
Executive Vice President, Secretary
and Corporate General Counsel
EX-99.10a
Independent Auditors' Consent
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 1 to Registration
Statement No. 333-5529 of Ameritas Life Insurance Corp. Separate Account LLVA on
Form N-4 of our report dated February 1, 1996 on the financial statements of
Ameritas Life Insurance Corp. appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to the related
reference to us under the heading "Experts."
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Lincoln, Nebraska
September 27, 1996
