File No. 811-07971
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM
N-8B-2
REGISTRATION STATEMENT OF UNIT INVESTMENT TRUSTS
WHICH ARE CURRENTLY ISSUING SECURITIES
PURSUANT TO SECTION 8(B) OF THE
INVESTMENT COMPANY ACT OF 1940
COVA VARIABLE LIFE ACCOUNT ONE
______________________________________________________________________
(NAME OF UNIT INVESTMENT TRUST)
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Furnish name of the trust and the Internal Revenue Service Employer
Identification Number.
Cova Variable Life Account One ("Separate Account").
IRS Employer Identification Number: N/A
(b) Furnish title of each class or series of securities issued by the trust.
Modified Single Premium Variable Life Insurance Policy ("Policy").
2. Furnish name and principal business address and ZIP Code and the
Internal Revenue Service Employer Identification Number of each depositor of
the trust.
Cova Financial Services Life Insurance Company ("Company")
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
800-523-1661
IRS Employer Identification Number: 43-1236042
----------
3. Furnish name and principal business address and ZIP Code and the
Internal Revenue Service Employer Identification Number of each custodian or
trustee of the trust indicating for which class or series of securities each
custodian or trustee is acting.
Not Applicable
4. Furnish name and principal business address and ZIP Code and the
Internal Revenue Service Employer Identification Number of each principal
underwriter currently distributing securities of the trust.
The Policy is not currently being distributed. When such distribution
commences, Cova Life Sales Company will be the "Principal Underwriter."
Cova Life Sales Company ("Life Sales")
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
IRS Employer Identification Number: 36-3324851
----------
5. Furnish name of state or sovereign power, the laws of which govern with
respect to the organization of the trust.
Missouri
6. (a) Furnish the dates of execution and termination of any indenture or
agreement currently in effect under the terms of which the trust was organized
and issued or proposes to issue securities.
The Separate Account was established pursuant to a resolution of the
Board of Directors of the Company on February 24, 1987, and was designated as
an operational Separate Account on 10/23/91. The Separate Account will
continue in existence until its complete liquidation and the distribution of
its assets to the persons entitled to received them.
(b) Furnish the dates of execution and termination of any indenture or
agreement currently in effect pursuant to which the proceeds of payments on
securities issued or to be issued by the trust are held by the custodian or
trustee.
Not Applicable.
7. Furnish in chronological order the following information with respect
to each change of name of the trust since January 1, 1930. If the name has
never been changed, so state.
The Separate Account has never been known by any other name.
8. State the date on which the fiscal year of the trust ends.
The fiscal year of the Separate Account ends on December 31.
9. MATERIAL LITIGATION. Furnish a description of any pending legal
proceedings, material with respect to the security holders of the trust by
reason of the nature of the claim or the amount thereof, to which the trust,
the depositor, or the principal underwriter is a party or of which the assets
of the trust are the subject, including the substance of the claims involved
in such proceeding and the title of the proceeding. Furnish a similar
statement with respect to any pending administrative proceeding commenced by a
governmental authority or any such proceeding or legal proceeding known to be
contemplated by a governmental authority. Include any proceeding which,
altogether immaterial itself, is representative of, or one of, a group which
in the aggregate is material.
There are no legal proceedings to which the Separate Account or the Principal
Underwriter is a party. The Company is engaged in various kinds of routine
litigation, which in its judgement are not of material importance in relation
to the total capital and surplus of the Company.
II. GENERAL DESCRIPTION OF THE TRUST
AND SECURITIES OF THE TRUST
GENERAL INFORMATION CONCERNING THE SECURITIES OF THE TRUST AND THE RIGHTS OF
HOLDERS.
10. Furnish a brief statement with respect to the following matters for
each class or series of securities issued by the trust:
(a) Whether the securities are of the registered or bearer type;
The Policy which is to issued is of the registered type insofar as the Policy
is personal to the Owner, and the records concerning the Owner are maintained
by the Company.
(b) Whether the securities are of the cumulative or distributive type;
The Policy is of the cumulative type.
(c) The rights of security holders with respect to withdrawal or redemption;
The Owner may make withdrawals from the Policy for its Cash Surrender
Value.
(d) The rights of security holders with respect to conversion, transfer,
partial redemption, and similar matters;
The Owner may transfer a Policy's Account Value from one Sub-Account to
another Sub-Account.
(e) If the trust is the issuer of periodic payment plan certificates, the
substance of the provisions of any indenture or agreement with respect to
lapses or defaults by security holders in making principal payments, and with
respect to reinstatement;
Not Applicable
(f) The substance of the provisions of any indenture or agreement with respect
to voting rights, together with the names of any persons other than security
holders given the right to exercise voting rights pertaining to the trust's
securities or the underlying securities and the relationship of such persons
to the trust;
The underlying securities of the Separate Account are shares issued by:
Cova Series Trust, Lord Abbett Series Fund, Inc. and General American Capital
Company, collectively, the Funds.
The Company will vote the shares held in the Separate Account in
accordance with instructions received from persons having a voting interest in
the Separate Account. The Company will vote shares for which it has not
received instructions in the same proportion as it votes shares for which it
has received instructions. The Company will vote shares it owns in the same
proportion as it votes shares for which it has received instructions.
(g) Whether security holders must be given notice of any change in:
(1) the composition of the assets of the trust;
Notice must be given of any such proposed change.
(2) the terms and conditions of the securities issued by the trust;
Notice must be given of any such proposed change.
(3) the provisions of any indenture or agreement of the trust;
Notice must be given of any such proposed change.
(4) the identity of the depositor, trustee or custodian;
There is no provision requiring notice to or consent of Owners with
respect to any change in the identity of the Separate Account's depositor.
The Company's obligations under the Policy, however, cannot be transferred to
any other entity without notice to the Owner.
(h) Whether the consent of the security holders is required in order for
action to be taken concerning any change in:
(1) the composition of the assets of the trust;
Consent of Owners is not required when substituting the underlying
securities of the Separate Account. However, to substitute such securities,
approval of the Securities and Exchange Commission is required in compliance
with Section 26(b) of the Investment Company Act of 1940. The Company may,
however, add additional Sub-Accounts without the consent of Owners. Except as
required by federal or state law or regulation, no action will be taken by the
Company which will adversely affect the rights of Owners without their
consent.
(2) the terms and conditions of the securities issued by the trust;
No change in the terms and conditions of the Policy can be made without
the consent of the Owners except as required by federal or state law or
regulation.
(3) the provisions of any indenture or agreement of the trust;
Not Applicable.
(4) the identity of the depositor, trustee or custodian;
There is no provision requiring notice to or consent of Owners with
respect to any change in the identity of the Separate Account's depositor. The
Company's obligations under the Policy, however, cannot be transferred to any
other entity without compliance with state insurance law, which may under some
circumstances, require the Owner's consent.
(i) Any other principal feature of the securities issued by the trust or any
other principal right, privilege or obligation not covered by subdivisions (a)
to (g) or by any other item in this form.
In return for the payment of premiums, the Policy provides insurance
coverage on the life of the insured.
The Policy provides for the right to borrow from the Company using the
Policy's Cash Value as collateral.
INFORMATION CONCERNING THE SECURITIES UNDERLYING THE TRUST'S SECURITIES.
11. Describe briefly the kind or type of securities comprising the unit of
specified securities in which security holders have an interest.
The securities held in the Separate Account will be shares of Cova Series
Trust, Lord Abbett Series Fund, Inc. and General American Capital Company, all
of which are open-end, management investment companies of the series type.
12. If the trust is the issuer of periodic payment plan certificates and
if any underlying securities were issued by another investment company,
furnish the following information for each such company:
(a) Name of company;
Cova Series Trust
Lord Abbett Series Fund, Inc.
General American Capital Company
(b) Name and principal business address of depositor;
Cova Financial Services Life Insurance Company is the depositor of the Cova
Series Trust. Its address is: One Tower Lane, Suite 3000, Oakbrook Terrace,
IL 60181.
Lord, Abbett & Co. is the depositor of the Lord Abbett Series Fund, Inc. Its
address is: 767 Fifth Avenue, New York, NY 10153.
General American Life Insurance Company is the depositor of the General
American Capital Company. Its address is: 700 Market Street, St. Louis, MO
63101.
(c) Name and principal business address of trustee or custodian;
Investor's Bank & Trust Company is the custodian for the Cova Series Trust.
Its address is: 89 South Street, Boston, MA 02111.
The Bank of New York is the custodian for the Lord Abbett Series Fund, Inc.
Its address is: 40 Wall Street, New York, NY 10286.
The Bank of New York is the custodian for the General American Capital
Company. Its address is: 40 Wall Street, New York, NY 10286.
(d) Name and principal business address of principal underwriter;
Cova Series Trust and Lord Abbett Series Fund, Inc. distribute their own
shares.
Walnut Street Securities Inc, acts as the principal underwriter for General
American Capital Company.
(e) The period during which the securities of such company have been the
underlying securities.
No underlying securities have yet been acquired by the Separate Account.
INFORMATION CONCERNING LOADS, FEES, CHARGES AND EXPENSES.
13. (a)Furnish the following information with respect to each load, fee,
expense or charge to which: (1) principal payments; (2) underlying securities;
(3) distributions; (4) cumulated or reinvested distributions or income; and
(5) redeemed or liquidated assets of the trust's securities are subject; (A)
the nature of such load, fee, expense, or charge; (B) the amount thereof; (C)
the name of the person to whom such amounts are paid and his relationship to
the trust; (D) the nature of the services performed by such person in
consideration for such load, fee, expense or charge.
1. Principal Payments
MORTALITY AND EXPENSE RISK CHARGE. For the first ten years, the Company
deducts a charge equal, on an annual basis, to 0.90% of the Account Value
allocated to the Separate Account. For the eleventh year and after, the
charge is 0.75%. This compensates the Company for assuming the mortality and
expense risks under the Policy.
ADMINISTRATIVE CHARGE. The Company deducts a charge equal, on an annual
basis, to 0.40% of the Account Value. This compensates the Company for
expenses incurred in the operation of the Separate Account and for
administering the Policy.
TAX EXPENSE CHARGE. This deduction is the sum of the Premium Tax Charge and
the Federal Tax Charge. It is deducted monthly for the first ten years. It
is equal, on an annual basis, to .40% (.15% for Federal Tax Charge and .25%
for Premium Tax Charge) of the Account Value. This compensates the Company
for federal and state tax incurred as a result of issuing the Policy.
COST OF INSURANCE CHARGE. Each month the Company deducts a charge for the
cost of insurance which provides the Death Benefit for the following month.
ANNUAL POLICY MAINTENANCE FEE. Every year on the anniversary of the Policy
Date, Cova deducts $30 as a policy maintenance fee. Under some circumstances,
this charge is waived. This, in addition to the Administrative Charge,
compensates the Company for the administrative expenses incurred.
2. Underlying Securities
The Funds are charged management fees by their respective investment adviser
and incur operating expenses.
3. Distributions
Not Applicable.
4. Cumulated or reinvested distributions or income.
All investment income and other distributions are reinvested in Fund shares at
net asset value.
5. Redeemed or liquidated assets.
SURRENDER CHARGE. The surrender charge is taken out of the Account Value
surrendered during the first ten years which is not part of the Annual
Withdrawal Amount. The Surrender Charges, which are equal to a percent of
Premium surrendered are:
<TABLE>
<CAPTION>
<S> <C>
Policy Year Surrender Charge
- ----------- -----------------
1 7.5%
2 7.5%
3 7.5%
4 6.0%
5 5.0%
6 4.0%
7 3.0%
8 2.0%
9 1.0%
10 + 0%
</TABLE>
This compensates the Company for the expenses incurred in distributing the
Policy.
DEFERRED PREMIUM TAX CHARGE. This charge is assessed on premiums surrendered
from the Policy. It is equal to:
<TABLE>
<CAPTION>
<S> <C>
Policy Year Deferred Premium Tax Charge
- ----------- ----------------------------
1 2.25%
2 2.00%
3 1.75%
4 1.50%
5 1.25%
6 1.00%
7 .75%
8 .50%
9 .25%
10 + 0%
</TABLE>
This charge enables the Company to collect that portion of the Premium Tax
Charge it has not collected before the Policy is surrendered.
(b) For each installment payment type of periodic payment plan certificate of
the trust, furnish the following information with respect to sales load and
other deductions from principal payments.
See response to item 13(a)(1).
(c) State the amount of total deductions as a percentage of the net amount
invested for each type of security issued by the trust. State each different
sales charge available as a percentage of the public offering price and as a
percentage of the net amount invested. List any special purchase plans or
methods established by rule or exemptive order that reflect scheduled
variations in, or elimination of, the sales load, and identify each class of
individuals or transactions to which such plans apply.
(1) The amount of sales load as a percentage of the net amount invested is 0%.
(2) There is no charge deducted from premiums.
(d) Explain fully the reasons for any difference in the price at which
securities are offered generally to the public, and the price at which
securities are offered for any class of transactions to any class or group of
individuals, including officers, directors, or employees of the depositor,
trustee, custodian or principal underwriter.
Not Applicable.
(e) Furnish a brief description of any loads, fees, expenses or charges not
covered in Item 13(a) which may be paid by security holders in connection with
the trust or its securities.
None.
(f) State whether the depositor, principal underwriter, custodian or trustee,
or any affiliated person of the foregoing may receive profits or other
benefits not included in answer to Item 13(a) or 13 (d) through the sale or
purchase of the trust's securities or interests in such securities, or
underlying securities or interests in underlying securities, and describe
fully the nature and extent of such profits or benefits.
None.
(g) State the percentage that the aggregate annual charges and deductions for
maintenance and other expenses of the trust bear to the dividend and interest
income from the trust property during the period covered by the financial
statements filed herewith.
Not Applicable
INFORMATION CONCERNING THE OPERATIONS OF THE TRUST.
14. Describe the procedure with respect to applications (if any) and the
issuance and authentication of the trust's securities, and state the substance
of the provisions of any indenture or agreement pertaining thereto.
A person desiring to purchase a Policy must complete an application on a form
provided by the Company. The Company will underwrite the Policy before it is
issued and, if the applicant meets the underwriting standards of the Company,
the Policy will be issued.
15. Describe the procedure with respect to the receipt of payments from
purchasers of the trust's securities and the handling of the proceeds thereof,
and state the substance of the provisions of any indenture or agreement
pertaining thereto.
When a Policy is purchased, the Company will initially invest the premium in
the Money Market Portfolio. After 15 days (or longer in those states where
required) from the Policy Issue Date, the Company will allocate the Account
Value to the Investment Portfolios as requested in the application.
16. Describe the procedure with respect to the acquisition of underlying
securities and the disposition thereof, and state the substance of the
provisions of any indenture or agreement pertaining thereto.
The Company applies premiums to the purchase of Investment Portfolio shares at
their net asset value. Redemption of Investment Portfolio shares may be made
by the Company to permit the payment of benefits or amounts in connection with
requests for surrender or for other purposes contemplated by the Policy.
17. (a) Describe the procedure with respect to withdrawal or redemption by
security holders.
Any surrender by an owner may be made by communication in writing to the
Company at its service office. Upon written receipt of such request, the
Company will cancel accumulation units in the Policy and redeem Investment
Portfolio shares in sufficient amount to meet any requests. See Item 10.
(b) Furnish the names of any persons who may redeem or repurchase, or are
required to redeem or repurchase, the trust's securities or underlying
securities from security holders, and the substance of the provisions of any
indenture or agreement pertaining thereto.
The Company is required to honor surrender requests as described in Items
10(c) and 17(a). With respect to the Separate Account's underlying
securities, the Investment Options are required to redeem their shares at net
asset value and to make payment therefore within 3 business days.
(c) Indicate whether repurchased or redeemed securities will be canceled or
may be resold.
When there is a total withdrawal from a Policy, it is canceled.
18. (a) Describe the procedure with respect to the receipt, custody and
disposition of the income and other distributable funds of the trust and state
the substance of the provisions of any indenture or agreement pertaining
thereto.
All income and other distributable funds of the Separate Account are
reinvested in Investment Option shares and are added to the assets of the
Separate Account.
(b) Describe the procedure, if any, with respect to the reinvestment of
distributions to security holders and state the substance of the provisions of
any indenture or agreement pertaining thereto.
Not Applicable.
(c) If any reserves or special funds are created out of income or principal,
state with respect to each such reserve or fund the purpose and ultimate
disposition thereof, and describe the manner of handling of same.
Not Applicable.
(d) Submit a schedule showing the periodic and special distributions which
have been made to security holders during the three years covered by the
financial statements filed herewith. State for each distribution the
aggregate amount and amount per share. If distributions from sources other
than current income have been made, identify each such other source and
indicate whether such distribution represents the return of principal payments
to security holders. If payments other than cash were made describe the
nature thereof, the account charged and the basis of determining the amount of
such charge.
No distributions have been made.
19. Describe the procedure with respect to the keeping of records and
accounts of the trust, the making of reports and the furnishing of information
to security holders, and the substance of the provisions of any indenture or
agreement pertaining thereto.
The Company provides confirmations with respect to all premiums received, loan
transactions and any surrenders. The Company also provides each Policy owner
with an annual statement which will show the current amount of death benefit
payable under the Policy, the current Account Value, the current Cash
Surrender Value, current Debt and will show all transactions previously
confirmed. The statement will also show all premiums paid and all charges
deducted during the policy year.
20. State the substance of the provisions of any indenture or agreement
concerning the trust with respect to the following:
(a) Amendments to such indenture or agreement;
Not Applicable.
(b) The extension or termination of such indenture or agreement;
Not Applicable.
(c) The removal or resignation of the trustee or custodian, or the failure of
the trustee or custodian to perform its duties, obligations and functions;
Not Applicable.
(d) The appointment of a successor trustee and the procedure if a successor
trustee is not appointed;
The Separate Account has no trustees.
(e) The removal or resignation of the depositor, or the failure of the
depositor to perform its duties, obligations and functions;
There are no provisions relating to the removal or resignation of the
depositor or the failure of the depositor to perform its duties, obligations
and functions.
(f) The appointment of a successor depositor and the procedure if a successor
depositor is not appointed.
There are no provisions relating to the appointment of a successor
depositor or the procedure if a successor depositor is not appointed.
21. (a) State the substance of the provisions of any indenture or
agreement with respect to loans to security holders.
Policy owners may borrow from the Company using the Policy as the sole
security.
(b) Furnish a brief description of any procedure or arrangement by which loans
are made available to security holders by the depositor, principal
underwriter, trustee or custodian, or any affiliated person of the foregoing.
The following items should be covered.
(1) the name of each person who makes such agreements or arrangements with
security holders;
The Company will make a loan to an Owner with the Policy as the sole
security.
(2) the rate of interest payable on such loans;
The interest rate for a Policy loan is 6% per annum.
(3) the period for which loans may be made;
Loans can be made while the Policy is in force.
(4) costs or charges for default in repayment at maturity;
Not applicable.
(5) other material provisions of the agreements or arrangements;
A policy loan will result in accumulation units being redeemed from
the Investment Portfolios and the proceeds being transferred to the Loan
Account. The Company will pay interest on the Loan Account at an annual rate
of 4.0% (unless a Preferred Loan is in effect which earns 6%). An outstanding
loan reduces the amount of death proceeds and the cash surrender value.
(c) If such loans are made, furnish the aggregate amount of loans outstanding
at the end of the last fiscal year, the amount of interest collected during
the last fiscal year allocated to the depositor, principal underwriter,
trustee or custodian or affiliated person of the foregoing and the aggregate
amount of loans in default at the end of the last fiscal year covered by
financial statements filed herewith.
Not Applicable.
22. State the substance of the provisions of any indenture or agreement
with respect to limitations on the liabilities of the depositor, trustee or
custodian, or any other party to such indenture or agreement.
There is no such provision or agreement.
23. Describe any bonding arrangement for officers, directors, partners or
employees of the depositor or principal underwriter of the trust, including
the amount of coverage and the type of bond.
The officers and directors of the Company are covered under a fidelity
bond in the amount of $5,000,000. The officers and directors of Cova Life Sales
Company are covered under a fidelity bond in the amount of $5,000,000 for each
loss, $5,000,000 for aggregate losses with a $25,000 deductible.
24. State the substance of any other material provisions of any indenture
or agreement concerning the trust or its securities and a description of any
other material functions or duties of the depositor, trustee or custodian not
stated in Item 10 or Items 14 to 23 inclusive.
The Owner may assign his rights under the Policy. The Owner may change owners
during the life time of the Insured while the Policy is in force.
III. ORGANIZATION, PERSONNEL AND AFFILIATED
PERSONS OF DEPOSITOR
ORGANIZATION AND OPERATIONS OF DEPOSITOR.
25. State the form of organization of the depositor of the trust, the name
of the state or other sovereign power under the laws of which the depositor
was organized and the date of organization.
The Company was incorporated in Missouri in 1981 as a stock life insurance
company.
26. (a) Furnish the following information with respect to all fees
received by the depositor of the trust in connection with the exercise of any
functions or duties concerning securities of the trust during the period
covered by the financial statements filed herewith.
Not Applicable.
(b) Furnish the following information with respect to any fee or any
participation in fees received by the depositor from any underlying investment
company or any affiliated person or investment adviser of such company.
See Item 13(a).
27. Describe the general character of the business engaged in by the
depositor including a statement as to any business other than that of
depositor of the trust. If the depositor acts or has acted in any capacity
with respect to any investment company or companies other than the trust,
state the name or names of such company or companies, their relationship, if
any, to the trust, and the nature of the depositor's activities therewith. If
the depositor has ceased to act in such named capacity, state the date of and
circumstances surrounding such cessation.
The company conducts a life insurance business in all states except
California, Maine, New Hampshire, New York and Vermont and the District of
Columbia. It acts as the depositor of Cova Variable Annuity Account One and
the Cova Series Trust. The portfolios of Cova Series Trust represent some of
the Investment Portfolios under the Policies.
OFFICIALS AND AFFILIATED PERSONS OF DEPOSITOR.
28. (a) Furnish as at latest practicable date the following information
with respect to the depositor of the trust, with respect to each officer,
director, or partner of the depositor, and with respect to each natural person
directly or indirectly owning, controlling or holding with power to vote five
percent or more of the outstanding voting securities of the depositor.
See Item 29.
(b) Furnish a brief statement of the business experience during the last five
years of each officer, director or partner of the depositor.
The directors and executive officers of the Company are listed below:
<TABLE>
<CAPTION>
<S> <C>
Name Principal Occupation During the Past Five Years
- ------- -----------------------------------------------
William A. Anthony Vice President of Cova - 1989 to present;
Vice President of Cova Financial Life Insurance
Company (CFLIC) - 1989 to present; Vice
President of Cova Life Management Company (CLMC)-
1989 to present
John W. Barber Director of Cova - June, 1995 to present;
Director of First Cova Life Insurance Company
(FCLIC) - June, 1995 to present; Director of
CFLIC - June, 1995 to present; Vice President
and Controller of General American Life Insurance
Company - December, 1984 to present; President
and Director of Equity Intermediary Company -
October, 1988 to present.
Jerome P. Darga Vice President and Assistant Secretary of Cova -
1992 to present; Vice President and Assistant
Secretary of CFLIC - 1992 to present; Vice
President and Assistant Secretary of CLMC - 1992
to present.
Judy M. Drew Vice President of Cova - 1988 to present;
Vice President of CFLIC - 1988 to present;
Vice President of FCLIC - 1992 to present;
Senior Vice President of CLMC - 1996 to
present, prior thereto Vice President from 1989
to 1996; President, COO and Director of Cova
Life Sales Company (CLSC) - 1988 to present.
Patricia E. Gubbe Vice President of Cova - 1989 to present;
Vice President of CFLIC - 1989 to present;
Vice President of FCLIC - 1992 to present;
First Vice President of CLMC - 1996 to
present, prior thereto Vice President from 1989
to 1996; Vice President and Chief Compliance
Officer of CLSC - 1989 to present.
Philip A. Haley Vice President of Cova - 1990 to present;
Vice President of CFLIC - 1990 to present;
Vice President of FCLIC - 1992 to present;
Vice President of CLSC - 1991 to present;
Senior Vice President of CLMC - 1996 to
present; prior thereto Vice President from 1989
to 1996.
Christopher S. Harden Vice President of Cova - 1991 to present;
Vice President of CFLIC - 1991 to present;
First Vice President of CLMC - 1996 to present,
prior thereto Vice President - 1991 to 1996.
Jeffery K. Hoelzel Secretary and Director of Cova - 1993 to
present; Secretary and Director of CFLIC - 1993
to present; Secretary and Director FCLIC - 1993
to present; Secretary and Director of Cova
Investment Advisory Corporation (Advisory) -
1993 to present; Secretary and Director of
Cova Investment Allocation Corp. (Allocation) -
1994 to present; Secretary of CLSC - 1993 to
present; Senior Vice President, General Counsel,
Secretary and Director of CLMC - 1993 to
present; Senior Vice President, Secretary and
Director of Cova Series Trust (Trust) - 1996
to present. Prior to joining the Cova
organization, Mr. Hoelzel was an associate at the
Chicago law firm of Lord, Bissell & Brook.
Robert J. Hopson Vice President, Chief Actuary and Director of
Cova - 1991 to present; Vice President, Chief
Actuary and Director of CFLIC - 1991 to
present; Vice President, Chief Actuary and
Director of FCLIC - 1992 to present;
Senior Vice President, Chief Actuary and Director
of CLMC - 1996 to present, prior thereto Vice
President and Director from 1993 to 1996 and Vice
President from 1991 to 1993.
Thomas E. Hughes, Jr. Treasurer and Director of Cova - June, 1995 to
present; Treasurer and Director of CFLIC - June,
1995 to present; Treasurer of FCLIC - June, 1995
to present; Corporate Actuary and Treasurer of
General American Life Insurance Company -
October, 1994 to present. Formerly, Executive
Vice President - Group Pensions General
American Life Insurance Company - March, 1990 to
October, 1994. In addition to the Cova companies,
Director of the following General American
subsidiary companies: Paragon Life Insurance
Company and RGA Reinsurance Company - October,
1994 to present. Treasurer of the following
General American subsidiary companies: Paragon
Life Insurance Company, General Life Insurance
Company of America, General Life Insurance
Company, General American Holding Company, Red
Oak Realty Company, Gen Mark Incorporated,
Walnut Street Securities, Inc., Walnut Street
Adviser's Inc., White Oak Royalty Company,
Walnut Street Funds, Inc., and RGA Reinsurance
Company - October, 1994 to present.
Douglas E. Jacobs Vice President of Cova - 1985 to present;
Vice President of CFLIC - 1985 to present;
Vice President of CLMC - 1985 to present.
William C. Mair Vice President, Controller and Director of Cova
since 1995 to present, prior thereto Vice
President, Controller, Treasurer and Director.
Vice President, Controller and Director of CFLIC
since 1995 to present, prior thereto Vice
President, Controller, Treasurer and Director;
Vice President, Controller and Director of FCLIC -
from 1992 to present; Vice President, Treasurer,
Controller and Director of Advisory - 1993 to
present; Vice President, Treasurer, Controller
and Director of Allocation - 1994 to present;
Director of CLSC - 1992 to present; Senior Vice
President, Treasurer, Controller and Director of
CLMC - 1989 to present; Vice President,
Treasurer, Controller, Chief Financial Officer,
Chief Accounting Officer and Director of Trust -
1996 to present.
Matthew P. McCauley Assistant Secretary and Director of Cova - June,
1995 to present; Assistant Secretary and Director
of CFLIC - June, 1995 to present; Assistant
Secretary and Director of FCLIC - June, 1995 to
present; Associate General Counsel and Vice
President of General American Life Insurance
Company - 1973 to present; Also, Director, Vice
President, General Counsel and Secretary for
several other General American subsidiaries;
including Equity Intermediary Company, Red Oak
Realty Company, and White Oak Royalty Company;
General American Holding Company and Paragon
Life Insurance Company. General Counsel and
Secretary, Reinsurance Group of America,
Incorporated. Director and Secretary, General
American Capital Company. General Counsel and
Secretary, Conning Corporation. General Counsel,
Conning Asset Management Company. Director of
RGA Reinsurance Company, Walnut Street
Securities, Inc. Secretary to the Walnut Street
Funds, Inc.
Leonard M. Rubenstein Chairman of the Board of Directors of Cova,
CFLIC, FCLIC, and CLMC - January, 1996 to
present; Director of Advisory and Allocation from
1995 to present; Chairman of Board of Advisory
and Allocation - January, 1996 to present;
Executive Vice President and Director of General
American Life Insurance Company - 1992 to
present. Mr. Rubenstein also holds various
positions with the General American subsidiaries
as follows: Director and Treasurer of General
American Capital Company; Senior Vice President -
Investments, Treasurer and Director of
Reinsurance Group of America, Incorporated;
Director of Paragon Life Insurance Company;
Director of General American Holding Company;
Chief Executive Officer, Chairman and Director
for Conning Corporation; Director of the
following: General Life Insurance Company,
Security Equity Life Insurance Company, BHIF
America de Vida Seguros S.A. (Chile), Manatial
Seguros de Vida, S.A. (Argentina), Red Oak
Realty Company, General Life Insurance Company
of America; RGA Reinsurance Company;
Secretary and Director for RGA Sud America S.A.
Myron H. Sandberg Vice President of Cova - 1985 to present; Vice
President of CFLIC - 1985 to present; and CLMC -
1989 to present.
John W. Schaus Vice President of Cova - 1988 to present;
Vice President of CFLIC - 1988 to present; and
CLMC - 1989 to present.
Lorry J. Stensrud President and Director of Cova from June, 1995
to present, prior thereto Executive Vice
President; President and Director of CFLIC from
June, 1995 to present, prior thereto Executive
Vice President; President and Director of FCLIC
from June, 1995 to present, prior thereto
Executive Vice President; President and Director
of CLMC from June, 1995 to present, prior thereto
Executive Vice President only; President and
Director of Advisory from 1993 to present;
President and Director of Allocation from 1994 to
present. Director of CLSC from 1989 to
present; President, Chief Executive Officer and
Director of Trust - 1996 to present.
</TABLE>
COMPANIES OWNING SECURITIES OF DEPOSITOR.
29. Furnish as at latest practicable date the following information with
respect to each company which directly or indirectly owns, controls or holds
with power to vote five percent or more of the outstanding voting securities
of the depositor.
The Company is a wholly owned subsidiary of General American Life Insurance
Company.
CONTROLLING PERSONS.
30. Furnish as at latest practicable date the following information with
respect to any person, other than those covered by Items 28, 29, and 42 who
directly or indirectly controls the depositor.
None.
COMPENSATION OF OFFICERS AND DIRECTORS OF DEPOSITOR:
COMPENSATION OF OFFICERS OF DEPOSITOR.
31. Furnish the following information with respect to the remuneration for
services paid by the depositor during the last fiscal year covered by
financial statements filed herewith:
(a) Directly to each of the officers or partners of the depositor directly
receiving the three highest amounts of remuneration.
Not Applicable. As of the date hereof, the Separate Account had not yet
commenced operations.
(b) Directly to all officers or partners of the depositor as a group exclusive
of persons whose remuneration is included under Item 31(a), stating separately
the aggregate amount paid by the depositor itself and the aggregate amount
paid by all the subsidiaries.
Not Applicable. As of the date hereof, the Separate Account had not yet
commenced operations.
(c) Indirectly or through subsidiaries to each of the officers or partners of
the depositor.
Not Applicable. As of the date hereof, the Separate Account had not yet
commenced operations.
COMPENSATION OF DIRECTORS
32. Furnish the following information with respect to the remuneration for
services, exclusive of remuneration reported under Item 31, paid by the
depositor during the last fiscal year covered by financial statements filed
herewith:
(a) The aggregate direct remuneration to directors;
Not Applicable. See Item 31.
(b) Indirectly through subsidiaries to directors.
Not Applicable. See Item 31.
COMPENSATION TO EMPLOYEES.
33. (a) Furnish the following information with respect to the aggregate
amount of remuneration for services of all employees of the depositor
(exclusive of persons whose remuneration is reported in Items 31 and 32) who
received remuneration in excess of $10,000 during the last fiscal year covered
by financial statements filed herewith from the depositor and any of its
subsidiaries.
Not Applicable. See Item 31.
(b) Furnish the following information with respect to the remuneration for
services paid directly during the last fiscal year covered by financial
statements filed herewith to the following classes of persons (exclusive of
those person covered by Item 33(a)): (1) sales managers, branch managers,
district managers and other persons supervising the sale of registrant's
securities; (2) salesmen, sales agents, canvassers and other persons making
solicitations but not in a supervisory capacity; (3) administrative and
clerical employees; and (4) others (specify). If a person is employed in more
than one capacity, classify according to predominant type of work.
Not Applicable. See Item 31.
COMPENSATION TO OTHER PERSONS.
34. Furnish the following information with respect to the aggregate amount
of compensation for services paid any person (exclusive of persons whose
remuneration is reported in Items 31, 32, and 33), whose aggregate
compensation in connection with services rendered with respect to the trust in
all capacities exceeded $10,000 during the last fiscal year covered by
financial statements filed herewith from the depositor and any of its
subsidiaries:
Not Applicable. See Item 31.
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
DISTRIBUTION OF SECURITIES.
35. Furnish the names of the States in which sales of the trust's
securities: (a) are currently being made, (b) are presently proposed to be
made, and (c) have been discontinued, indicating by appropriate letter the
status with respect to each State.
No sales of the Policy have been made or are currently being made. It is
presently proposed to sell the Policy in the states where the Company is
licensed to do business.
36. If sales of the trust's securities have at any time since January 1,
1936 been suspended for more than a month describe briefly the reasons for
such suspension.
Not Applicable.
37. (a) Furnish the following information with respect to each instance
where subsequent to January 1, 1937, any Federal or State governmental
officer, agency, or regulatory body denied authority to distribute securities
of the trust, excluding a denial which was merely a procedural step prior to
any determination by such officer, etc. and which denial was subsequently
rescinded: (1) name of officer, agency or body; (2) date of denial; (3) brief
statement of reason given for denial.
Not Applicable.
(b) Furnish the following information with regard to each instance where,
subsequent to January 1, 1937, the authority to distribute securities of the
trust has been revoked by any Federal or State governmental officer, agency
or regulatory body: (1) name of officer, agency or body; (2) date of
revocation; (3) brief statement of reason given for revocation.
Not Applicable.
38. (a) Furnish a general description of the method of distribution of
securities of the trust.
The Policy issued by the Separate Account will be sold by licensed
insurance agents in those states where the Policy may be lawfully sold. Such
agents will be registered representatives of a broker-dealer registered under
the Securities Exchange Act of 1934 which is a member of the National
Association of Securities Dealers, Inc.
(b) State the substance of any current selling agreement between each
principal underwriter and the trust or the depositor, including a statement as
to the inception and termination dates of the agreement, any renewal and
termination provisions, and any assignment provisions.
The Company intends to execute an agreement with the Principal
Underwriter whereby it will distribute the Policy by executing selling
agreements with other broker-dealers. The agreement will be effective on the
date executed and will remain effective until terminated by either party upon
sixty (60) days notice, and may not be assigned.
(c) State the substance of any current agreements or arrangements of each
principal underwriter with dealers, agents, salesmen, etc. with respect to
commissions and overriding commissions, territories, franchises,
qualifications and revocations. If the trust is the issuer of periodic
payment plan certificates, furnish schedules of commissions and the bases
thereof. In lieu of a statement concerning schedules of commissions, such
schedules of commissions may be filed as Exhibit A(3)(c).
See Exhibit A(3)(c).
INFORMATION CONCERNING PRINCIPAL UNDERWRITER.
39. (a) State the form of organization of each principal underwriter of
securities of the trust, the name of the State or other sovereign power under
the laws of which each underwriter was organized and the date of the
organization.
Cova Life Sales Company is a corporation organized under the laws of
Illinois on 9/25/84.
(b) State whether any principal underwriter currently distributing securities
of the trust is a member of the National Association of Securities Dealers,
Inc.
Cova Life Sales Company is a member of the National Association of
Securities Dealers, Inc.
40. a) Furnish the following information with respect to all fees received
by each principal underwriter of the trust from the sale of securities of the
trust and any other functions in connection therewith exercised by such
underwriter in such capacity or otherwise during the period covered by the
financial statements filed herewith.
Not Applicable.
(b) Furnish the following information with respect to any fee or any
participation in fees received by each principal underwriter from any
underlying investment company or any affiliated person or investment adviser
of such company: (1) the nature of such fee or participation; (2) the name of
the person making payment; (3) the nature of the services rendered in
consideration for such fee or participation; (4) the aggregate amount received
during the last fiscal year covered by the financial statements filed
herewith.
Not Applicable.
41. (a) Describe the general character of the business engaged in by each
principal underwriter, including a statement as to any business other than the
distribution of securities of the trust. If a principal underwriter acts or
has acted in any capacity with respect to any investment company or companies
other than the trust, state the name or names of such company or companies,
their relationship, if any, to the trust and the nature of such activities.
If a principal underwriter has ceased to act in such named capacity, state the
date of and the circumstances surrounding such cessation.
Cova Life Sales Company also acts as the principal underwriter of
variable annuity contracts issued by the Company and its affiliated insurance
companies.
(b) Furnish as at latest practicable date the address of each branch office of
each principal underwriter currently selling securities of the trust and
furnish the name and residence address of the person in charge of such office.
Not Applicable.
(c) Furnish the number of individual salesmen of each principal underwriter
through whom any of the securities of the trust were distributed for the last
fiscal year of the trust covered by the financial statements filed herewith
and furnish the aggregate amount of compensation received by such salesmen in
such year.
Not Applicable.
42. Furnish as at latest practicable date the following information with
respect to each principal underwriter currently distributing securities of the
trust and with respect to each of the officers, directors, or partners of such
underwriter.
Not Applicable.
43. Furnish, for the last fiscal year covered by the financial statements
filed herewith, the amount of brokerage commissions received by any principal
underwriter who is a member of a national securities exchange and who is
currently distributing the securities of the trust or effecting transactions
for the trust in the portfolio securities of the trust.
None.
OFFERING PRICE OR ACQUISITION VALUATION OF SECURITIES OF THE TRUST.
44. (a) Furnish the following information with respect to the method of
valuation used by the trust for purposes of determining the offering price to
the public of securities issued by the trust or the valuation of shares or
interests in the underlying securities acquired by the holder of a periodic
payment plan certificate.
Account Values allocated to the Separate Account are invested at net
asset value in the Investment Portfolios in accordance with the selection made
by the owner.
Account Values will fluctuate in accordance with investment results of
the Investment Portfolios selected. In order to determine how these
fluctuations affect Account Value, accumulation units are used. Every
business day the Company determines the value of an accumulation unit for each
of the Investment Portfolios. The value of an accumulation unit for any given
business day is determined by multiplying a factor referred to as the net
investment factor times the value of an Accumulation unit for the previous
business day. The net investment factor is a number that reflects the change
(up or down) in an underlying Investment Portfolio share.
(b) Furnish a specimen schedule showing the components of the offering price
of the trust's securities as at the latest practicable date.
Not Applicable.
(c) If there is any variation in the offering price of the trust's securities
to any person or classes of persons other than underwriters, state the nature
and amount of such variation and indicate the person or classes of persons to
whom such offering is made.
Not Applicable.
45. Furnish the following information with respect to any suspension of
the redemption rights of securities issued by the trust during the three
fiscal years covered by the financial statements filed herewith: (a) by whose
action redemption rights were suspended; (b) the number of days' notice given
to security holders prior to suspension of redemption rights; (c) reason for
suspension; (d) period during which suspension was in effect.
Not Applicable.
REDEMPTION VALUATION OF SECURITIES OF THE TRUST.
46. (a) Furnish the following information with respect to the method of
determining the redemption or withdrawal valuation of securities issued by the
trust:
(1) the source of quotations used to determine the value of portfolio
securities;
The Custodians for the underlying series funds.
(2) whether opening, closing bid, asked or any other price is used;
Net asset value is used.
(3) whether price is as of the day of sale or as of any other time;
As of the next compute price.
(4) a brief description of the methods used by registrant for determining
other assets and liabilities including accrual for expenses and taxes
(including taxes on unrealized appreciation);
See item 13(a).
(5) other items which registrant deducts from the net asset value in
computing redemption value of its securities; and
See item 13(a).
(6) whether adjustments are made for fractions.
Not applicable.
(b) Furnish a specimen schedule showing the components of the redemption price
to the holders of the trust's securities as at the latest practicable date.
Not applicable.
PURCHASE AND SALE OF INTERESTS IN UNDERLYING SECURITIES FROM AND TO SECURITY
HOLDERS.
47. Furnish a statement as to the procedure with respect to the
maintenance of a position in the underlying securities or interests in the
underlying securities, the extent and nature thereof and the person who
maintains such a position. Include a description of the procedure with
respect to the purchase of underlying securities or interest in the underlying
securities from security holders who exercise redemption or withdrawal rights
and the sale of such underlying securities and interests in the underlying
securities to other security holders. State whether the method of valuation
of such underlying securities or interests in the underlying securities
differs from that set forth in Items 44 and 46. If any item of expenditure
included in the determination of the valuation is not or may not actually be
incurred or expended, explain the nature of such item and who may benefit from
the transaction.
The Company will maintain a position in Investment Portfolio shares by
purchasing Investment Portfolio shares at net asset value in connection with
premiums allocated to the Separate Account in accordance with instructions
from the Owners and to redeem Investment Portfolio shares at net asset value
for the purposes of making Policy obligations, or making adjustments in the
reserves held in the Separate Account. There are no procedures for the
purchase of underlying securities or interests therein from Owners who
exercise surrender rights in that Owners have no direct interest therein.
V. INFORMATION CONCERNING THE TRUSTEE
OR CUSTODIAN
48. Furnish the following information as to each trustee or custodian of
the trust:
(a) Name and principal business address;
None.
(b) Form of organization;
Not Applicable.
(c) State or other sovereign power under the laws of which the trustee or
custodian was organized;
Not Applicable.
(d) Name of governmental supervising or examining authority.
Not Applicable.
49. State the basis for payment of fees or expenses of the trustee or
custodian for services rendered with respect to the trust and its securities,
and the aggregate amount thereof for the last fiscal year. Indicate the
person paying such fees or expenses. If any fees or expenses are prepaid,
state the unearned amount.
Not Applicable.
50. State whether the trustee or custodian or any other person has or may
create a lien on the assets of the trust, and if so, give full particulars,
outlining the substance of the provisions of any indenture or agreement with
respect thereto.
Not Applicable.
VI. INFORMATION CONCERNING THE INSURANCE OF
HOLDERS OF SECURITIES
51. Furnish the following information with respect to insurance holders of
securities:
(a) The name and address of the insurance company;
Cova Financial Services Life Insurance Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
800-523-1661
(b) The types of policies and whether individual or group policies;
The Policy is an individual modified single premium variable life
insurance policy.
(c) The types of risks insured and excluded;
The Policy provides for a death benefit upon the death of the Insured. Under
some circumstances, a portion of the death benefit will be paid out if the
Insured is terminally ill. The death benefit is the only insurance benefit
offered.
(d) The coverage of the policies;
While the Policy remains in force, it provides for a death benefit on the life
of the Insured.
(e) The beneficiaries of such policies and the uses to which the proceeds of
policies must be put;
The Owner designates one or more persons to be the beneficiaries of the
death benefit. There are no limitations on the use of the proceeds.
(f) The terms and manner of cancellation and of reinstatement;
The Policy will terminate if (1) the owner makes a total surrender of the
Policy, (2) the grace period has ended, or (3) the Insured has died. The
Policy can be reinstated if the owner did not make a total surrender and of
the Insured is still alive within five years after the end of the grace period.
To reinstate the Policy, the Insured must provide evidence of insurability and
either repay any outstanding loan and accrued interest or reinstate the loan
plus interest. A sufficient premium must be paid to (1) cover all deductions
that are due and unpaid and (2) be sufficient to keep the Policy in force for
2 months.
(g) The method of determining the amount of premiums to be paid by holders of
securities;
See Item 13(a) for information on the types of charges and methods of
assessing them.
(h) The amount of aggregate premiums paid to the insurance company during the
last fiscal year;
Not Applicable.
(i) Whether any person other than the insurance company receives any part of
such premiums, the name of each such person and the amounts involved, and the
nature of the services rendered therefor;
The Company may from time to time, enter into reinsurance treaties with
other insurers whereby such insurers may agree to reimburse the Company for
mortality expenses.
(j) The substance of any other material provisions of any indenture or
agreement of the trust relating to insurance.
Not Applicable.
VII. POLICY OF REGISTRANT
52. (a) Furnish the substance of the provisions of any indenture or
agreement with respect to the conditions upon which and the method of
selection by which particular portfolio securities must or may be eliminated
from assets of the trust or must or may be replaced by other portfolio
securities. If an investment adviser or other person is to be employed in
connection with such selection, elimination or substitution, state the name of
such person, the nature of any affiliation to the depositor, trustee or
custodian, any principal underwriter, and the amount of remuneration to be
received for such services. If any particular person is not designated in the
indenture or agreement, describe briefly the method of selection of such
person.
The Company will not substitute another security for the underlying
securities of the trust unless the Securities and Exchange Commission shall
have approved such substitution.
(b) Furnish the following information with respect to each transaction
involving the elimination of any underlying security during the period covered
by the financial statements filed herewith.
Not Applicable.
(c) Describe the policy of the trust with respect to the substitution and
elimination of the underlying securities of the trust with respect to: (1) the
grounds for elimination and substitution; (2) the type of securities which may
be substituted for any underlying security; (3) whether the acquisition of
such substituted security or securities would constitute the concentration of
investment in a particular industry or group of industries or would conform to
a policy of concentration of investment in a particular industry or group of
industries; (4) whether such substituted securities may be the securities of
another investment company; and (5) the substance of the provisions of any
indenture or agreement which authorize or restrict the policy of the
registrant in this regard.
Not Applicable.
(d) Furnish a description of any policy (exclusive of policies covered by
paragraphs (a) and (b) herein) of the trust which is deemed a matter of
fundamental policy and which is elected to be treated as such.
None.
REGULATED INVESTMENT COMPANY.
53. (a) State the taxable status of the trust.
The Company is taxed as a life insurance company under the Internal
Revenue Code. Since the Separate Account is not a separate entity from the
Company and its operations form a part of the company, it will not be taxed
separately as a "regulated investment company" under the Subchapter M of the
Code.
(b) State whether the trust qualified for the last taxable year as a regulated
investment company as defined in Section 851 of the Internal Revenue Code of
1954, and state its present intention with respect to such qualifications
during the current taxable year.
Not Applicable.
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. If the trust is not the issuer of periodic payment plan certificates,
furnish the following information with respect to each class or series of its
securities.
Not Applicable.
55. If the trust is the issuer of periodic payment plan certificates, a
transcript of a hypothetical account shall be filed in approximately the
following form on the basis of the certificate calling for the smallest amount
of payments. The schedule shall cover a certificate of the type currently
being sold assuming that such certificate had been sold at a date
approximately 10 years prior to the date of registration or at the approximate
date of organization of the trust.
Not Applicable.
56. If the trust is the issuer of periodic payment plan certificates,
furnish by years for the period covered by the financial statements filed
herewith in respect of certificates sold during such period, the following
information for each fully paid type and each installment payment type of
periodic payment plan certificate currently being issued by the trust.
Not Applicable.
57. If the trust is the issuer of periodic payment plan certificates,
furnish by years for the period covered by the financial statements filed
herewith the following information for each installment payment type of
periodic payment plan certificate currently being issued by the trust.
Not Applicable.
58. If the trust is the issuer of periodic payment plan certificates,
furnish the following information for each installment payment type of
periodic payment plan certificate outstanding as at the latest practicable
date.
Not Applicable.
59. Financial statements:
Financial Statements of the Trust
The financial statements have not been filed for the Separate Account.
It has not yet commenced operations, has no assets or liabilities and has
received no income nor incurred any expense.
Financial Statements of the Depositor
The financial statements of the Company are included herein.
COVA FINANCIAL SERVICES
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Financial Statements
December 31, 1996, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
Cova Financial Services Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Cova Financial
Services Life Insurance Company and subsidiaries (a wholly owned subsidiary of
Cova Corporation) as of December 31, 1996 and 1995, and the related
consolidated statements of income, shareholders equity and cash flows for the
year ended December 31, 1996 and the period from June 1, 1995 to December 31,
1995 (Successor periods), and from January 1, 1995 to May 31, 1995, and for
the year ended December 31, 1994 (Predecessor periods). These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Cova
Financial Services Life Insurance Company and subsidiaries as of December 31,
1996 and 1995, and the results of their operations and their cash flows for
the Successor periods, in conformity with generally accepted accounting
principles. Also, in our opinion, the aforementioned Predecessor consolidated
financial statements present fairly, in all material respects, the results of
their operations and their cash flows for the Predecessor periods presented,
in conformity with generally accepted accounting principles.
St. Louis, Missouri
March 7, 1997
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Balance Sheets
December 31, 1996 and 1995
(In thousands of dollars)
<TABLE>
<CAPTION>
ASSETS 1996
1995
<S> <C> <C>
Investments:
Debt securities available for sale at market
(cost of $952,817 in 1996 and $583,868 in 1995) $ 949,611 $ 594,556
Mortgage loans (net) 244,103 77,472
Policy loans 22,336 19,125
Short-term investments at cost which approximates
market 4,404 7,859
---------- ----------
Total investments 1,220,454 699,012
---------- ----------
Cash and cash equivalents - interest bearing 38,322 59,312
Cash - non-interest bearing 5,501 2,944
Receivable from sale of securities 1,064 --
Accrued investment income 15,011 9,116
Deferred policy acquisition costs 49,833 14,468
Present value of future profits 46,389 38,155
Goodwill 20,849 23,358
Federal and state income taxes recoverable 1,461 397
Deferred tax benefits (net) 13,537 13,556
Receivable from OakRe 1,973,813 2,391,982
Reinsurance receivables 3,504 8,891
Other assets 2,205 2,425
Separate account assets 641,871 410,449
---------- ----------
Total Assets $4,033,814 $3,674,065
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
(continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Balance Sheets (Continued)
December 31, 1996 and 1995
(In thousands of dollars)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS EQUITY 1996 1995
<S> <C> <C>
Policyholder deposits $3,135,325 $3,033,763
Future policy benefits 32,342 28,071
Payable on purchase of securities 15,978 5,327
Accounts payable and other liabilities 19,764 20,143
Future purchase price payable to OakRe 16,051 23,967
Guaranty fund assessments 12,409 14,259
Separate account liabilities 626,901 410,449
----------- -----------
Total Liabilities 3,858,770 3,535,979
----------- -----------
Shareholders equity:
Common stock, $2 par value. (Authorized
5,000,000 shares; issued and outstanding
2,899,446 shares in 1996 and 1995) 5,799 5,799
Additional paid-in capital 166,491 129,586
Retained earnings 3,538 (63)
Net unrealized appreciation/(depreciation)
on securities, net of tax (784) 2,764
----------- -----------
Total Shareholders Equity 175,044 138,086
----------- -----------
Total Liabilities and Shareholders Equity $4,033,814 $3,674,065
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Income
Years ended December 31, 1996, 1995, and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Revenues:
Premiums $ 3,154 $ 921 $ 1,097 $ 2,787
Net investment income 70,629 24,188 92,486 277,616
Net realized gain (loss) on sale of investments 472 1,324 (12,414) (101,361)
Separate Account charges 7,205 2,957 1,818 3,992
Other income 1,320 725 1,037 2,713
------- -------- ---------- -----------
Total revenues 82,780 30,115 84,024 185,747
------- -------- ---------- -----------
Benefits and expenses:
Interest on policyholder deposits 50,100 17,706 97,867 249,905
Current and future policy benefits 5,130 1,785 1,830 5,259
Operating and other expenses 14,573 7,126 12,777 24,479
Amortization of purchased intangible assets 2,332 3,030 -- --
Amortization of deferred acquisition costs 4,389 100 11,157 125,357
------- -------- ---------- -----------
Total Benefits and Expenses 76,524 29,747 123,631 405,000
------- -------- ---------- -----------
Income/(loss) before income taxes 6,256 368 (39,607) (219,253)
------- -------- ---------- -----------
Income Taxes:
Current 1,740 1,011 (16,404) (46,882)
Deferred 915 (580) 6,340 (30,118)
------- -------- ---------- -----------
Total income tax expense/(benefit) 2,655 431 (10,064) (77,000)
------- -------- ---------- -----------
Net Income/(Loss) $ 3,601 $ (63) $ (29,543) $(142,253))
======= ======== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Shareholders Equity
Years ended December 31, 1996, 1995 and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Common stock ($2 par value common stock;
Authorized 5,000,000 shares; issued and
outstanding 2,899,446 in 1996, 1995 and 1994
Balance at beg. of period) $ 5,799 $ 5,799 $ 5,799 $ 5,632
Par value of additional shares issued -- -- -- 167
--------- --------- ----------
Balance at end of period 5,799 5,799 5,799 5,799
--------- --------- --------- ----------
Additional paid-in capital:
Balance at beginning of period 129,586 137,749 136,534 120,763
Adjustment to reflect purchase acquisition
indicated in note 2 -- (52,163) -- --
Capital contribution 36,905 44,000 1,215 15,771
--------- --------- --------- ----------
Balance at end of period 166,491 129,586 137,749 136,534
--------- --------- --------- ----------
Retained earnings/(deficit):
Balance at beginning of period (63) (36,441) 1,506 143,759
Adjustment to reflect purchase acquisition -- 36,441 -- --
indicated in note 2
Net income/(loss) 3,601 (63) (29,543) (142,253)
Dividends to shareholder -- -- (8,404) --
--------- --------- --------- ----------
Balance at end of period $ 3,538 $ (63) $(36,441) $ 1,506
--------- --------- --------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
(Continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Shareholders Equity (Continued)
Years ended December 31, 1996, 1995 and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Net unrealized appreciation/(depreciation)of securities:
Balance at beginning of period 2,764 $(28,837) $ (65,228) $ (321)
Adjustment to reflect purchase acquisition
indicated in note 2 -- 28,837 -- --
Implementation of change in accounting for
marketable debt and equity securities,
net of effects of deferred taxes
of $18,375 and deferred acquisition
costs of $42,955 -- -- -- 34,125
Change in unrealized appreciation/(depreciation)
of debt and equity securities (13,915) 10,724 178,010 (357,502)
Change in deferred Federal income taxes 1,910 (1,489) (18,458) 53,324
Change in deferred acquisition costs attributable
to unrealized losses/(gains) 1,561 -- (123,161) 205,146
Change in present value of future profits
attributable to unrealized losses/(gains) 6,896 (6,471) -- --
--------- --------- ----------
Balance at end of period (784) 2,764 (28,837) (65,228)
--------- --------- ---------- ----------
Total Shareholders Equity $175,044 $138,086 $ 78,270 $ 78,611
========= ========= ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Interest and dividend receipts $ 68,622 $ 18,744 $ 131,439 $ 309,856
Premiums received 3,154 921 1,097 2,787
Insurance and annuity benefit payments (3,729) (2,799) (1,809) (3,755)
Operating disbursements (17,158) (10,480) (9,689) (26,023)
Taxes on income refunded (paid) (3,016) 60 48,987 17,032
Commissions and acquisition costs paid (36,735) (17,456) (23,872) (26,454)
Other 937 529 1,120 836
---------- ---------- ----------- ------------
Net cash provided by/(used in) operating
activities 12,075 (10,481) 147,273 274,279
---------- ---------- ----------- ------------
Cash flows from investing activities:
Cash used for the purchase of investment
securities (715,274) (875,994) (575,891) (1,935,353)
Proceeds from investment securities sold and
matured 262,083 253,814 2,885,053 3,040,474
Other (14,166) 179 (8,557) (8,185)
---------- ---------- ----------- ------------
Net cash provided by/(used in) investing
activities $(467,357) $(622,003) $2,300,605 $ 1,096,936
---------- ---------- ----------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
(Continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows (Continued)
Years ended December 31, 1996, 1995 and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Cash flows from financing activities:
Policyholder deposits $ 446,784 $ 132,752 $ 130,660 $ 274,960
Transfers from/(to) OakRe 574,010 628,481 (3,048,531) --
Transfer to Separate Accounts (119,592) (37,946) (4,835) (33,548)
Return of policyholder deposits (491,025) (436,271) (290,586) (608,868)
Dividends to Shareholder -- -- (8,404) --
Capital contributions received 20,000 44,000 1,215 15,938
---------- ---------- ------------- -----------
Net cash provided by/(used in) financing
activities 430,177 331,016 (3,220,481) (351,518)
---------- ---------- ------------- -----------
Increase/(decrease) in cash and cash
equivalents (25,105) (301,468) (772,603) 1,019,697
Cash and cash equivalents at beginning of
period 62,256 363,724 1,136,327 116,630
CFLIC contributed cash (Note 9) 6,672 -- -- --
Cash and cash equivalents at end of period $ 43,823 $ 62,256 $ 363,724 $1,136,327
========== ========== ============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
(Continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows, Continued
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Reconciliation of net income/(loss)to net cash
provided by operating activities:
Net income/(loss) $ 3,601 $ (63) $(29,543) $(142,253)
Adjustments to reconcile net income/(loss)
to net cash provided by operating activities:
Increase/(decrease) in future policy
benefits (net of reinsurance) 680 (1,013) 11 1,494
Increase/(decrease) in payables and accrued
liabilities 2,900 (392) (10,645) 3,830
Decrease/(increase) in accrued investment
income (4,778) (7,904) 32,010 21,393
Amortization of intangible assets 6,721 3,831 11,309 125,722
Amortization and accretion of securities
premiums and discounts 2,751 307 2,410 3,635
Recapture commissions paid to OakRe (4,483) (4,777) -- --
Net realized losson sale of
investments (472) (1,324) 12,414 101,361
Interest accumulated on policyholder
deposits 50,100 17,706 97,867 249,905
Investment expenses paid 1,151 642 2,373 7,296
Decrease/(Increase)in guaranty assessments -- (104) 5,070 (935)
Increase/(decrease) in current and deferred
Federal income taxes (351) 491 38,923 (59,263)
Separate account net loss (2,008) 1 1 2
Deferral of acquisition costs (34,803) (14,568) (13,354) (30,024)
Other (8,934) (3,314) (1,573) (7,884)
--------- ----------
Net cash provided by operating activities $ 12,075 $(10,481) $147,273 $ 274,279
========= ========= ========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
(1) NATURE OF BUSINESS AND ORGANIZATION
NATURE OF THE BUSINESS
Cova Financial Services Life Insurance Company (CFSLIC) and subsidiaries (the
Company), formerly Xerox Financial Services Life Insurance Company (the
Predecessor), market and service single premium deferred annuities, immediate
annuities, variable annuities, and single premium whole-life insurance
policies. The Company is licensed to do business in 47 states and the
District of Columbia. Most of the policies issued present no significant
mortality nor longevity risk to the Company, but rather represent investment
deposits by the policyholders. Life insurance policies provide policy
beneficiaries with mortality benefits amounting to a multiple, which declines
with age, of the original premium.
Under the deferred annuity contracts, interest rates credited to policyholder
deposits are guaranteed by the Company for periods from one to ten years, but
in no case may renewal rates be less than 3%. The Company may assess
surrender fees against amounts withdrawn prior to scheduled rate reset and
adjust account values based on current crediting rates. Policyholders also
may incur certain Federal income tax penalties on withdrawals.
Although the Company markets its products through numerous distributors,
including regional brokerage firms, national brokerage firms and banks,
approximately 66%, 59% and 57% of the companies sales have been through two
specific brokerage firms, A.G. Edwards & Sons, Incorporated. and Edward Jones
& Company in 1996, 1995 and 1994, respectively.
ORGANIZATION
Prior to June 1, 1995 Xerox Financial Services, Inc. (XFSI) owned 100% or
2,899,446 shares of the Predecessor. XFSI is a wholly owned subsidiary of
Xerox Corporation.
On June 1, 1995 XFSI sold 100% of the issued and outstanding shares of the
Predecessor to Cova Corporation, a subsidiary of General American Life
Insurance Company (GALIC), a Missouri domiciled life insurance company, in
exchange for approximately $91.4 million in cash and $22.7 million in future
payables. In conjunction with this Agreement, the Predecessor also entered
into a financing reinsurance transaction that caused OakRe Life Insurance
Company(OakRe),a subsidiary of the Predecessor, to assume the economic
benefits and risks of the existing single premium deferred annuity deposits
(SPDAs) of Cova Financial Services Life Insurance Company, which had an
aggregate carrying value at June 1, 1995 of $2,982.0 million. In exchange,
the Predecessor transferred specifically identified assets to OakRe with a
market value at June 1, 1995 of $2,986.0 million. Ownership of OakRe was
retained by XFSI subsequent to the sale of the Predecessor and other
affiliates. The Receivable from OakRe to the Company that was created by this
transaction will be liquidated over the remaining crediting rate guaranty
periods (which will be substantially expired in four years) by the transfer of
cash in the amount of the then current account value, less a recapture
commission fee to OakRe on policies retained beyond their 30-day no-fee
surrender window by the Company, upon the next crediting rate reset date of
each annuity policy. The Company may then reinvest that cash for those
policies that are retained and thereafter assume the benefits and risks of
those deposits.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
In the event that both OakRe and XFSI default on the receivable, the Company
may draw funds from a standby bank irrevocable letter of credit established by
XFSI in the amount of $500 million. No funds were drawn on this letter of
credit during the periods ending December 31, 1996 and 1995.
In substance, terms of the agreement have allowed the seller, XFSI, to retain
substantially all of the existing financial benefits and risks of the existing
business, while the purchaser, GALIC, obtained the corporate operating and
product licenses, marketing and administrative capabilities of the Company,
and access to the retention of the policyholder deposit base that persists
beyond the next crediting rate reset date.
The Company owns 100% of the outstanding shares of First Cova Life Insurance
Company (a New York domiciled insurance company) (FCLIC) and Cova Financial
Life Insurance Company (a California domiciled insurance company) (CFLIC).
Ownership of Cova Financial Life Insurance Company was obtained on December
31, 1996 as the result of a capital contribution by Cova Corporation. The
Company has presented the consolidated financial position and results of
operations for its subsidiaries from the dates of actual ownership (see note
9).
(2) CHANGE IN ACCOUNTING
Upon closing the sale, the Company restated its financial statements in
accordance with "push down purchase accounting", which allocates the net
purchase price for the Company and its then sole subsidiary FCLIC of $91.4
million according to the fair values of the acquired assets and liabilities,
including the estimated present value of future profits. These allocated
values were dependent upon policies in force and market conditions at the time
of closing, however, these allocations were not finalized until 1996. The
table below summarizes the final allocation of purchase price:
<TABLE>
<CAPTION>
(In Millions)
<S> <C> June 1, 1995
--------------
Assets acquired:
Debt securities $ 32.4
Policy loans 18.3
Cash and cash equivalents 363.7
Present value of future profits 47.4
Goodwill 20.5
Deferred tax benefit 24.9
Receivable from OakRe 2,969.0
Other assets 5.9
Separate account assets 332.7
--------------
3,814.8
--------------
Liabilities assumed:
Policyholder deposits 3,299.2
Future policy benefits 27.2
Future purchase price payable 22.7
Deferred Federal income taxes 12.6
Other liabilities 29.0
Separate account liabilities 332.7
--------------
3,723.4
--------------
Adjusted purchase price $ 91.4
==============
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
In addition to revaluing all material tangible assets and liabilities to their
respective estimated market values as of the closing date of the sale, the
Company also recorded in its financial statements the excess of cost over fair
value of net assets acquired (goodwill) as well as the present value of future
profits to be derived from the purchased and reinsured business. These amounts
were determined in accordance with the purchase method of accounting. This new
basis of accounting resulted in an increase in shareholders equity of $13.1
million in 1995 reflecting the application of push down purchase accounting.
The Companys consolidated financial statements subsequent to June 1, 1995
reflect this new basis of accounting.
All amounts for periods ended before June 1, 1995 are labeled Predecessor and
are based on predecessor historical costs. The periods ending on or after
such date are labeled The Company, and are based on the new cost basis of the
Company or fair values at June 1, 1995 and subsequent results of operations.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SECURITIES
Investments in all debt securities and those equity securities with readily
determinable market values are classified into one of three categories:
held-to-maturity, trading, or available-for-sale. Classification of
investments is based on management's current intent. All debt and equity
securities at December 31, 1996 and 1995 were classified as
available-for-sale. Securities available-for-sale are carried at market value,
with unrealized holding gains and losses reported as a separate component of
stockholders equity, net of deferred effects of income tax and related effects
on deferred acquisition costs.
Amortization of the discount or premium from the purchase of mortgage-backed
bonds is recognized using a level-yield method which considers the estimated
timing and amount of prepayments of the underlying mortgage loans. Actual
prepayment experience is periodically reviewed and effective yields are
recalculated when differences arise between the prepayments previously
anticipated and the actual prepayments received and currently anticipated.
When such a difference occurs, the net investment in the mortgage-backed bond
is adjusted to the amount that would have existed had the new effective yield
been applied since the acquisition of the bond, with a corresponding charge or
credit to interest income (the "retrospective method").
A realized loss is recognized and charged against income if the Company's
carrying value in a particular investment in the available-for-sale category
has experienced a significant decline in market value that is deemed to be
other than temporary.
Investment income is recorded when earned. Realized capital gains and losses
on the sale of investments are determined on the basis of specific costs of
investments and are credited or charged to income. Gains or losses on
financial future or option contracts which qualify as hedges of investments
are treated as basis adjustments and are recognized in income over the life of
the hedged investments.
MORTGAGE LOANS AND OTHER INVESTED ASSETS
Mortgage loans and policy loans are carried at their unpaid principal
balances. Real estate is carried at cost less accumulated depreciation.
Other invested assets are carried at lower of cost or market.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
Real estate reserves are established when declines in collateral values,
estimated in light of current economic conditions and calculated in conformity
with Statement of Financial Accounting Standards No. 114, Accounting by
Creditors for Impairment of a Loan (SFAS 114), indicate a likelihood of loss.
Prior to 1995, the Company evaluated its real estate-related assets (including
accrued interest) by estimating the probabilities of loss utilizing various
projections that included several factors relating to the borrower, property,
term of the loan, tenant composition, rental rates, other supply and demand
factors and overall economic conditions. Generally, at that time, the reserve
was based upon the excess of the loan amount over the estimated future cash
flows from the loan.
In 1995, the Company adopted Statement of Financial Accounting Standards No.
118, Accounting by Creditors for Impairment of a Loan -- Income Recognition
and Disclosures (SFAS 118). SFAS 118 amends SFAS 114, providing clarification
of income recognition issues and requiring additional disclosures relating to
impaired loans. The adoption of SFAS 114 and 118 had no effect on the
Companys financial position or results of operations at or for the period
ended December 31, 1995. The Company had no impaired loans, but did establish
a valuation allowance for potential losses on mortgage loans of $88 thousand
at December 31, 1996.
Prior to 1995, when an investment supported by real estate collateral was
deemed "in-substance" foreclosed, the investment was reclassified as real
estate and recorded at its fair value, with any reduction in carrying value
recorded as a realized loss. The change in this valuation was recorded as a
realized capital gain or loss in the statements of income.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include currency and demand deposits in banks, US
Treasury bills, money market accounts, and commercial paper with maturities
under 90 days, which are not otherwise restricted.
SEPARATE ACCOUNT ASSETS
The separate account investments are assigned to the policyholders in the
separate accounts, and are not guaranteed or supported by the other general
investments of the Company. The Company earns mortality and expense risk fees
from the separate accounts and assesses withdrawal charges in the event of
early withdrawals. Separate accounts assets are valued at fair market value.
In order to provide for optimum policyholder returns, and to allow for the
replication of the investment performance of existing cloned mutual funds, the
Company has periodically transferred capital to the separate account to
provide for the initial purchase of investments in new portfolios. As
additional funds have been received through policyholder deposits, the Company
has periodically reduced its capital investment in the separate accounts. As
of December 31, 1996, approximately $15.0 million of capital investments
remained within the separate accounts.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business which vary with and are directly related
to the production of new business, principally commissions, premium taxes,
sales costs, and certain policy issuance and underwriting costs, are deferred.
These deferred costs are amortized in proportion to estimated future gross
profits derived from investment income, realized gains and losses on sales of
securities, unrealized securities gains and losses, interest credited to
accounts, surrender fees, mortality costs, and policy maintenance expenses.
The estimated gross profit streams are periodically reevaluated and the
unamortized balance of deferred acquisition costs is adjusted to the amount
that would have existed had the actual experience and revised estimates been
known and applied from the inception of the policies and contracts. The
amortization and adjustments resulting from unrealized gains and losses is not
recognized currently in income but as an offset to the unrealized gains and
losses reflected as a separate component of equity.
The components of deferred policy acquisition costs are shown below. The
effects on deferred policy acquisition costs of the consolidation of CFLIC
(see note 9) with the Company are presented separately.
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
(In Thousands) 1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Deferred policy acquisition costs,
beginning of period $14,468 $ 92,398 $ 213,362 $ 146,504
Effects of push down purchase
accounting -- (92,398) -- --
Commissions and expenses deferred 34,803 14,568 13,354 30,025
Amortization (4,389) (100) (11,157) (125,357)
Deferred policy acquisition costs
attributable to unrealized gains/(losses) 1,561 -- (123,161) 162,190
Effects on deferred policy acquisition
costs of CFLIC consolidation 3,390 -- -- --
--------
Deferred policy acquistion costs,
end of period $49,833 $ 14,468 $ 92,398 $ 213,362
======== ========= ========== ==========
</TABLE>
PURCHASE RELATED INTANGIBLE ASSETS AND LIABILITIES
In accordance with the purchase method of accounting for business
combinations, two intangible assets and a future payable related to accrued
purchase price consideration were established as of the purchase date:
PRESENT VALUE OF FUTURE PROFITS
As of June 1, 1995 the Company established an intangible asset which
represents the present value of future profits to be derived from both the
purchased and transferred blocks of business. Certain estimates were utilized
in the computation of this asset including estimates of future policy
retention, investment income, interest credited to policyholders, surrender
fees, mortality costs, and policy maintenance costs discounted at a pre-tax
rate of 18% (12% net after tax).
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
In addition, as the Company has the option of retaining its SPDA policies
after they reach their next interest rate reset date and are recaptured from
OakRe, a component of this asset represents estimates of future profits on
recaptured business. This asset will be amortized in proportion to estimated
future gross profits derived from investment income, realized gains and losses
on sales of securities, unrealized securities gains and losses, interest
credited to accounts, surrender fees, mortality costs, and policy maintenance
expenses. The estimated gross profit streams are periodically reevaluated and
the unamortized balance of present value of future profits will be adjusted to
the amount that would have existed had the actual experience and revised
estimates been known and applied from the inception. The amortization and
adjustments resulting from unrealized gains and losses is not recognized
currently in income but as an offset to the unrealized gains and losses
reflected as a separate component of equity. The amortization period is the
remaining life of the policies, which is estimated to be 20 years from the
date of original policy issue.
Based on current assumptions, amortization of the original in-force PVFP
asset, expressed as a percentage of the original in-force asset, are projected
to be 6.8%, 5.8%, 4.6%, 4.5% and 4.7% for the years ended December 31, 1997
through 2001, respectively. Actual amortization incurred during these years
may be more or less as assumptions are modified to incorporate actual results.
During 1996, the Company adjusted its original purchase accounting to include
a revised estimate of the ultimate renewal (recapture) rate. This adjustment
resulted in a re-allocation of the net purchased intangible asset between
present value of future profits, goodwill and the future payable. This final
allocation and the resulting impact on inception to date amortization was
recorded, in its entirety, in 1996. No restatement of the June 1, 1995
opening Balance Sheet was made.
The components of present value of future profits are below. The effects on
present value of future profits of the consolidation of CFLIC (see note 9)
with the Company are presented separately.
<TABLE>
<CAPTION>
The Company
7 Months
Ended
(In Thousands) 1996
12/31/95
<S> <C> <C>
Present value of future profits - beginning of period 38,155 46,709
Interest added 3,274 1,941
Net amortization (3,747) (4,024)
Present value of future profits attributable to unrealized gains 6,896 (6,471)
Adjustment due to revised push down purchase accounting 698 --
Effects on present value of future profits of CFLIC consolidation 1,113 --
Present value of future profits - end of period $46,389 $38,155
</TABLE>
Future payable
Pursuant to the financial reinsurance agreement with OakRe, the receivable
from OakRe becomes due in installments when the SPDA policies reach their next
crediting rate reset date. For any recaptured policies that continue in force
into the next guarantee period, the Company will pay a commission to OakRe of
1.75% up to 40% of policy account values originally reinsured and 3.5%
thereafter. On policies that are recaptured and subsequently exchanged to a
variable annuity policy, the Company will pay a commission to OakRe of 0.50%.
(continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
The Company has recorded a future payable that represents the present value
ofthe anticipated future commission payments payable to OakRe over the
remaining life of the financial reinsurance agreement discounted at an
estimated borrowing rate of 6.5%. This liability represents a contingent
purchase price payable for the policies transferred to OakRe on the purchase
date and has been pushed down to the Company through the financial reinsurance
agreement. The Company expects that this payable will be substantially
extinguished by the year 2000.
The components of this future payable are below. The effects on the future
payable of the consolidation of CFLIC (see note 9) with the Company are
presented separately.
<TABLE>
<CAPTION>
The Company
7 Months
Ended
(In Thousands) 1996 12/31/95
<S> <C> <C>
Future payable - beginning of period $23,967 $27,797
Interest added 943 947
Payments to OakRe (4,483) (4,777)
Adjustment due to revised push down purchase accounting (5,059) --
Effects on future payable of CFLIC consolidation 683 --
--------
Future payable - end of period $16,051 $23,967
======== ========
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
Goodwill
Under the push down method of purchase accounting, the excess of purchase
price over the fair value of tangible and intangible assets and liabilities
acquired is established as an asset and referred to as Goodwill. The Company
has elected to amortize goodwill on the straight line basis over a 20 year
period. The components of goodwill are below. The effects on goodwill of the
consolidation of CFLIC (see note 9) with the Company are presented separately.
<TABLE>
<CAPTION>
<S> <C> <C>
(In Thousands) The Company
--------------------
7 Months Ended
1996 12/31/95
----------------
Goodwill - beginning of period $ 23,358 $ 24,060
Amortization (916) (702)
Adjustment due to revised push down purchase accounting
(3,626) --
Effects on goodwill of CFLIC consolidation 2,033 --
--------------------
Goodwill - end of period $ 20,849 $ 23,358
</TABLE>
Deferred Tax Assets and Liabilities
XFSI and GALIC agreed to file an election to treat the acquisition of the
Company as an asset acquisition under the provisions of Internal Revenue Code
Section 338(h)(10). As a result of that election, the tax basis of the
Companys assets as of the date of acquisition were revalued based upon fair
market values. The principal effect of the election was to establish a tax
asset on the tax-basis balance sheet of approximately $35.3 million for the
value of the business acquired that is amortizable for tax purposes over ten
to fifteen years.
POLICYHOLDER DEPOSITS
The Company recognizes its liability for policy amounts that are not subject
to policyholder mortality nor longevity risk at the stated contract value,
which is the sum of the original deposit and accumulated interest, less any
withdrawals. The average weighted interest crediting rate on the Companys
policyholder deposits as of December 31, 1996 was 5.77%.
FUTURE POLICY BENEFITS
Reserves are held for future annuity benefits that subject the Company to
risks to make payments contingent upon the continued survival of an individual
or couple (longevity risk). These reserves are valued at the present value of
estimated future benefits discounted for interest, expenses, and mortality.
The assumed mortality is the 1983 Individual Annuity Mortality Tables
discounted at 5.50% to 8.50%, depending upon year of issue.
Current mortality benefits payable are recorded for reported claims and
estimates of amounts incurred but not reported.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
PREMIUM REVENUE
The Company recognizes premium revenue at the time of issue on annuity
policies that subject it to longevity risks.
The Company currently assesses no explicit life insurance premium for its
commitment to make payments in excess of its recorded liability that are
contingent upon policyholder mortality. Benefits paid in excess of the
recorded liability are recognized when incurred as the amounts are not
material to the financial statements.
Amounts collected on policies not subject to any mortality or longevity risk
are recorded as increases in the policyholder deposits liability.
FEDERAL INCOME TAXES
Prior to June 1,1995 the revenues and expenses of the Predecessor were
included in a consolidated Federal income tax return with its parent company
and other affiliates. Allocations of Federal income taxes were based upon
separate return calculations.
Subsequent to June 1, 1995, the Company filed its own separate income tax
return, independent from its ultimate parent, GALIC.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income to the period that includes
the enactment date.
RISKS AND UNCERTAINTIES
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of the
date of the balance sheet and revenues and expenses for the period. Actual
results could differ significantly from those estimates.
The following elements of the consolidated financial statements are most
affected by the use of estimates and assumptions:
- Investment market valuation
- Amortization of deferred policy acquisition costs
- Amortization of present value of future profits
- Recoverability of Goodwill
The market value of the Company's investments is subject to the risk that
interest rates will change and cause a temporary increase or decrease in the
liquidation value of debt securities. To the extent that fluctuations in
interest rates cause the cash flows of assets and liabilities to change, the
Company might have to liquidate assets prior to their maturity and recognize a
gain or loss. Interest rate exposure for the investment portfolio is managed
through asset/liability management techniques which attempt to control the
risks presented by differences in the probable cash flows and reinvestment of
assets with the timing of crediting rate changes in the Company's policies and
contracts. Changes in the estimated prepayments of mortgage-backed securities
also may cause retrospective changes in the amortization period of securities
and the related recognition of income.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
The amortization of deferred acquisition costs is based on estimates of
long-term future gross profits from existing policies. These gross profits
are dependent upon policy retention and lapses, the spread between investment
earnings and crediting rates, and the level of maintenance expenses. Changes
in circumstances or estimates may cause retrospective adjustment to the
periodic amortization expense and the carrying value of the deferred expense.
In a similar manner, the amortization of present value of future profits is
based on estimates of long-term future profits from existing and recaptured
policies.
These gross profits are dependent upon policy retention and lapses, the spread
between investment earnings and crediting rates, and the level of maintenance
expenses. Changes in circumstances or estimates may cause retrospective
adjustment to the periodic amortization expense and the carrying value of the
asset.
In accordance with Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long Lived Assets and for Long Lived Assets
to be Disposed of (SFAS 121), which was adopted by the Company in the fourth
quarter of 1995, the Company has considered the recoverability of Goodwill and
has concluded that no circumstances have occurred which would give rise to
impairment of Goodwill for the period ending December 31, 1996.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standard No. 107, "Disclosures About Fair
Value of Financial Instruments" (SFAS #107) applies fair value disclosure
practices with regard to financial instruments, both assets and liabilities,
for which it is practical to estimate fair value. In cases where quoted
market prices are not readily available, fair values are based on estimates
that use present value or other valuation techniques.
These techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. Although fair value
estimates are calculated using assumptions that management believes are
appropriate, changes in assumptions could cause these estimates to vary
materially. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, might
not be realized in the immediate settlement of the instruments. SFAS #107
excludes certain financial instruments and all nonfinancial instruments from
its disclosure requirements. Because of this, and further because a value of
a business is also based upon its anticipated earning power, the aggregate
fair value amounts presented do not represent the underlying value of the
Company.
The Predecessor adopted Statement of Financial Accounting Standard No. 119,
"Disclosure about Derivative Financial Instruments and Fair Value of Financial
Instruments" (SFAS #119), as of December 31, 1994. SFAS #119 requires
increased disclosures about derivative financial instruments including the
amount, nature, and terms of all derivative financial instruments as well as
disclosure of the purposes for which derivative financial instruments are
held, end-of-period fair values and any net gains or losses arising from
trading of derivative financial instruments.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
CASH AND CASH EQUIVALENTS, SHORT-TERM INVESTMENTS
AND ACCRUED INVESTMENT INCOME:
The carrying values amounts reported in the balance sheets for these
instruments approximate their fair values. Short-term debt securities are
considered "available for sale."
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
INVESTMENT SECURITIES (INCLUDING MORTGAGE-BACKED SECURITIES):
Fair values for debt securities are based on quoted market prices, where
available. For debt securities not actively traded, fair value estimates are
obtained from independent pricing services. In some cases, such as private
placements and certain mortgage-backed securities, fair values are estimated
by discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the investments. (See
note 4 for fair value disclosures). Fair values for mortgages are based on
management estimates and incorporate independent appraisals of underlying real
property. As of December 31, 1996, fair value of the Companys mortgage loans
are equivalent to their carrying value.
INTEREST RATE SWAPS AND FINANCIAL FUTURES CONTRACTS:
The fair value of interest rate swaps and financial futures contracts are the
amounts the Company would receive or pay to terminate the contracts at the
reporting date, thereby taking into account the current unrealized gains or
losses of open contracts. Amounts are based on quoted market prices or
pricing models or formulas using current assumptions. (See note 6 for fair
value disclosures).
INVESTMENT CONTRACTS:
The Company's policy contracts require the beneficiaries to commence receipt
of payments by the later of age 85 or 10 years after purchase, and
substantially all permit earlier surrenders, generally subject to fees and
adjustments. Fair values for the Company's liabilities for investment type
contracts (Policyholder Deposits) are estimated as the amount payable on
demand. As of December 31, 1996 and 1995 the cash surrender value of
policyholder funds on deposit were approximately $29.1 million and $2.2
million less than their stated carrying value, respectively. Of the contracts
permitting surrender, 90% provide the option to surrender without fee or
adjustment during the 30 days following reset of guaranteed crediting rates.
The Company has not determined a practical method to determine the present
value of this option.
All of the Company's deposit obligations are fully guaranteed by the acquirer,
GALIC, and the receivable from OakRe equal to the SPDA obligations is
guaranteed by OakRe's parent, XFSI.
REINSURANCE:
The impact of reinsurance on the December 31, 1996 financial statements is not
considered material.
The financing reinsurance agreement entered into with OakRe does not meet the
conditions for reinsurance accounting under Generally Accepted Accounting
Principles (GAAP). The net assets initially transferred to OakRe were
established as a receivable and are subsequently increased as interest is
accrued on the underlying liabilities and decreased as funds are transferred
back to the Company when policies reach their crediting rate reset date or
benefits are claimed.
OTHER
Certain 1994 and 1995 amounts have been reclassified to conform to the 1996
presentation.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
(4) INVESTMENTS
The Company's investments in debt and equity securities are considered
available for sale and carried at estimated fair value, with the aggregate
unrealized appreciation or depreciation being recorded as a separate component
of shareholder equity. The carrying value and amortized cost of investments at
December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
AMORTIZED
VALUE GAINS LOSSES VALUE COST
(in thousands of dollars)
<S> <C> <C> <C> <C> <C>
Debt Securities:
US. Government Treasuries $ 7,175 $ 29 ($50) $ 7,175 $ 7,196
Collateralized mortgage obligations 382,335 985 (2,721) 382,335 384,071
Corporate, state, municipalities, and
political subdivisions 560,101 3,971 (5,427) 560,101 561,557
Total debt securities 949,611 4,985 (8,198) 949,611 952,824
Mortgage loans 244,103 -- -- 244,103 244,103
Policy loans 22,336 -- -- 22,336 22,336
Short term investments 4,404 21 -- 4,404 4,383
Total investments $1,220,454 $5,006 ($8,198) $1,220,454 $1,223,646
Companys beneficial interest in
separate accounts $ 14,970 -- -- $ 14,970 --
</TABLE>
<TABLE>
<CAPTION>
1995
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
AMORTIZED
VALUE GAINS LOSSES VALUE
COST
(in thousands of dollars)
<S> <C> <C> <C> <C> <C>
Debt Securities:
US. Government Treasuries $ 4,307 $ 156 -- $ 4,307 $ 4,151
Collateralized mortgage obligations 252,148 4,344 $ (237) 252,148 248,041
Corporate, state, municipalities, and
political subdivisions 338,101 7,261 (836) 338,101 331,676
-------- ------- --------- -------- --------
Total debt securities 594,556 11,761 (1,073) 594,556 583,868
-------- ------- --------- -------- --------
Mortgage loans 77,472 -- -- 77,472 77,472
Policy loans 19,125 -- -- 19,125 19,125
Short term investments 7,859 36 -- 7,859 7,823
-------- ------- --------- -------- --------
Total investments $699,012 $11,797 $ (1,073) $699,012 $688,288
======== ======= ========= ======== ========
<FN>
As of December 31, 1996, the Company had no impaired investments. The Company did
establish a valuation allowance for potential losses on mortgage loans of $88 thousand as
of December 31, 1996.
</TABLE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
The amortized cost and estimated market value of debt securities at December
31, 1996, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
Maturities of mortgage-backed securities will be substantially shorter than
their contractual maturity because they require monthly principal installments
and mortgagees may prepay principal.
<TABLE>
<CAPTION>
1996
ESTIMATED
AMORTIZED MARKET
COST VALUE
<S> <C> <C>
(in thousands of dollars)
Due after one year through five years $233,232 $234,493
Due after five years through ten years 283,884 281,155
Due after ten years 51,630 51,628
Mortgage-backed securities 384,078 382,335
Total $952,824 $949,611
<FN>
At December 31, 1996, approximately 98.7% of the Company's debt securities are
investment grade or are non-rated but considered to be of investment grade.
Of the 1.3% non-investment grade debt securities, all are rated as BB+.
</TABLE>
Included in debt securities in 1994 and the first five months of 1995 are
investments in interest-only mortgage-backed stripped securities (IOs) and
similar IOettes. Accounting for investments in "high risk" (interest only)
collateralized mortgage obligations (CMOs), is in accordance with the
provisions of EITF Nos. 89-4 and 93-18. An effective yield is calculated for
each high risk CMO based on the current amortized cost of the investment and
the current estimate of future cash flow. The recalculated effective yield is
used to record interest income in subsequent periods (the "prospective
method"). If the anticipated cash flow for any "high risk" CMO discounted at
the comparable risk-free rate is less than the unamortized cost, an impairment
loss is recorded and the unamortized cost adjusted. The write-down is treated
as a realized loss. Write-downs of $3,341,163 were recorded in 1994. No IOs
or IOettes were held by the Company at December 31, 1996 or 1995. The
weighted average of the effective yield that was used to accrue interest
income in 1994 was 11.88%.
The Company participates in a securities lending program whereby certain
securities are loaned to third parties, primarily major brokerage firms. The
agreement with a custodian bank facilitating such lending requires a minimum
of 102% of the initial market value of the domestic loaned securities to be
maintained in a collateral pool. To further minimize the credit risk related
to this lending program, the Company monitors the financial condition of the
counter parties to these agreements. Securities loaned at December 31, 1996
had market values totaling $16,612,411. Cash, letters of credit, and
government securities of $17,251,070 was held by the custodian bank as
collateral to secure this agreement. Income on the Companys security lending
program in 1996 was immaterial.
No debt securities were non-income producing during the years ended December
31, 1996 and 1995.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
Information related to troubled debt restructurings during 1994 is as follows:
<TABLE>
<CAPTION>
THE
PREDECESSOR
DEBT MORTGAGE
SECURITIES LOANS TOTAL
(in thousands of dollars)
<S> <C> <C> <C>
Aggregate carrying value at December 31, 1994 $3,306 -- $3,306
Gross interest income included in net income
during 1994 205 -- 205
Gross interest income that would have been
earned during 1994 if there had been no
restructuring 538 -- 538
</TABLE>
The components of net investment income, realized capital gains/(losses) and
unrealized gains/(losses) were as follows:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
(in thousands of dollars)
<S> <C> <C> <C> <C>
Income on debt securities $53,632 $19,629 $ 63,581 $ 267,958
Income on equity securities -- -- 302 645
Income on short-term investments 2,156 2,778 28,060 11,705
Income on cash on deposit -- -- -- 316
Income on interest rate swaps -- -- 377 (244)
Income on policy loans 1,454 868 624 1,376
Interest on mortgage loans 13,633 1,444 248 1,162
Income on foreign exchange -- -- 184 (433)
Income of real estate -- -- 1,508 3,278
Income on separate account investments 772 -- (1) 2
Miscellaneous interest 133 109 (24) (853)
-------- --------- -----------------
Total investment income 71,780 24,828 94,859 284,912
---------
Investment expenses (1,151) (640) (2,373) (7,296)
-------- -------- ---------
Net investment income $70,629 $24,188 $ 92,486 $ 277,616
======== ======== ========= =================
Realized capital gains/(losses) were as follows:
Debt securities 469 $ 1,344 $(16,749) $ (79,300)
Mortgage loans 4 -- 1,431 (3,452)
Equity securities -- -- (423) (76)
Real estate -- -- (124) --
Short-term investments (1) (20) (1,933) (282)
Other assets -- -- (76) 147
Interest rate swaps -- -- 5,460 -- (18,398)
--------- -----------------
Net realized gains/(losses) on investments $ 472 $ 1,324 $(12,414) $ (101,361)
======== ======== ========= =================
</TABLE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
(In thousands
of dollars)
<S> <C> <C> <C> <C>
Unrealized gains/(losses) were as follows:
Debt securities ($3,213) $10,688 $(85,410) $(261,947)
Short-term investments 21 36 879 (594)
Effects on deferred acquisition costs amortization 1,561 -- 39,030 162,190
Effects on present value of future profits 425 (6,471) -- --
Unrealized gains/(losses) before income tax (1,206) 4,253 (45,501) (100,351)
Unrealized income tax benefit/(expense) 422 (1,489) 16,664 35,123
Net unrealized gains (losses) on investments ($784) $ 2,764 $(28,837) ($65,228)
======== ========= ==========
</TABLE>
Proceeds from sales of investments in debt securities during 1996 were
$223,430,495. Gross gains of $1,158,518 and gross losses of $687,126 were
realized on those sales. Included in these amounts were $28,969 of gross
gains realized on the sale of non-investment grade securities.
Proceeds from sales of investments in debt securities for the Company during
1995 were $214,811,186, and for the Predecessor were $2,786,998,780. Gross
gains of $1,533,501 and gross losses of $190,899 were realized by the Company
on its sales. Included in these amounts for the Company are $373,768 of
gross gains realized on the sale of non-investment grade securities. The
Predecessor realized gross gains of $9,499,191 and gross losses of $26,249,279
on its sales. Included in these amounts are $6,367,297 of gross gains and
$7,607,167 of gross losses realized on the sale of non-investment grade
securities.
Proceeds from sales of investments in debt securities during 1994 were
$3,081,863,341. Gross gains of $59,472,808 and gross losses of $136,394,109
were realized on those sales. Included in these amounts are $6,455,887 of
gross gains and $6,692,683 of gross losses realized on the sale of
non-investment grade securities.
Unrealized appreciation/(depreciation) of debt securities for the Company in
1996 and 1995, and the Predecessor in 1995 and 1994 were $(13,900,000),
$10,688,000, $176,537,000, and $(357,401,000), respectively. Unrealized
appreciation/(depreciation)of debt securities is calculated as the change
between the cost and market values of debt securities for the years then
ended.
Securities with a book value of approximately $7,032,267 at December 31, 1996
were deposited with government authorities as required by law.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
(5) SECURITIES GREATER THAN 10% OF SHAREHOLDERS EQUITY
As of December 31, 1996 the Company held the following individual securities
which exceeded 10% of shareholders equity:
<TABLE>
<CAPTION>
LONG-TERM DEBT CARRYING
SECURITIES VALUE
<S> <C>
Countrywide Mtg. 1993-12 A4 $19,347,536
FNMA Remic Tr 1996-50 A1 19,104,500
</TABLE>
As of December 31, 1995 the Company held the following individual securities
which exceeded 10% of shareholders equity:
<TABLE>
<CAPTION>
LONG-TERM DEBT CARRYING
SECURITIES VALUE
<S> <C>
Countrywide Mtg. 1993-12 A4 $18,726,875
American Airlines 15,080,392
</TABLE>
(6) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
FINANCIAL FUTURES CONTRACTS
Futures contracts are contracts for delayed delivery of securities in which
the seller agrees to make delivery at a specified future date for a specific
price. Gains or losses are realized in daily cash settlements. Risks arise
from the possible inability of counter parties to meet the terms of their
contracts and from movements in securities values and interest rates. When
future contracts are designated as hedges, additional risks arise due to the
possibility that the futures contract will provide an imperfect correlation to
the hedged security.
The Company periodically enters into financial futures contracts in order to
hedge its short term investment spread risks encountered during occasional
periods of unusually large recapture activity. Gains and losses from these
anticipatory hedges are applied to the cost basis of the assets acquired with
recaptured funds. In 1996, $381,105 in net losses were recorded as basis
adjustments to hedged debt securities.
In order to limit its exposure to market fluctuations while it holds temporary
seed money investments within the separate account (see note 3), the Company
has adopted a hedging policy that involves holdings of futures contracts. As
of December 31, 1996, the Company held 35 S&P 500 index futures contracts, 5
5-year T-Note futures contracts and 10 10-year T-Note futures contracts with a
total notional face amount of $14,528,750 and a total fair market value of
$14,652,969. Collateral requirements set by the Chicago Board of Trade
averaged $9,800 per contract at December 31, 1996. At December 31, 1996, the
Company recorded as a component of net investment income, $1,639,717 of gross
losses from terminated contracts and $406,141 of gross gains from open
contracts. In 1996, the Company also recorded, as an offsetting component of
net investment income, a net gain of $2,007,720 from market appreciation on
the underlying hedged securities within the separate account.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
(7) POST-RETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company has no direct employees and no retired employees. All personnel
used to support the operations of the Company are supplied by contract by Cova
Life Management Company (CLMC), a wholly owned subsidiary of Cova Corporation.
The Company is allocated a portion of certain health care and life insurance
benefits for future retired employees of CLMC. In 1996 and 1995, the Company
was allocated a portion of benefit costs including severance pay, accumulated
vacations, and disability benefits. At December 31, 1996 CLMC had no retired
employees nor any employees fully eligible for retirement and had no
disbursements for such benefit commitments. The expense arising from these
obligations is not material.
(8) INCOME TAXES
The Company will file a consolidated Federal Income Tax return with its
wholly-owned subsidiary, FCLIC. Amounts payable or recoverable related to
periods before June 1, 1995 are subject to an indemnification agreement with
XFSI, which has the effect that the Company is not at risk for any income
taxes nor entitled to recoveries related to those periods, except for
approximately $1.4 million of state income tax recoveries.
Income taxes are recorded in the statements of earnings and directly in
certain shareholders equity accounts. Income tax expense (benefit) for the
years ended December 31 was allocated as follows:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95
1994
(In thousands of dollars)
<S> <C> <C> <C> <C>
Statements of income:
Operating income (excluded realized
investment gains and losses) $ 2,493 $ (85) $ (5,038) $ (39,511)
Realized investment gains/(losses) 162 516 (5,026) (37,489)
-------- -------
Income tax expense/(benefit) included
in the statements of income 2,655 431 (10,064) (77,000)
Shareholders equity:
Unrealized gains/(losses) on securities
available for sale and intangible assets (1,910) 1,489 18,458 (53,324)
Total income tax expense/(benefit) $ 745 $1,920 $ 8,394 $(130,324)
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of COVA Corporation)
Notes to Consolidated Financial Statements
The actual Federal income tax expense differed from the expected tax expense
computed by applying the US. Federal statutory rate to income before taxes on
income as follows:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
1996 1995 1995 1994
7 MONTHS 5 MONTHS
(in thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Computed expected tax expense $2,190 35.0% $129 35.0% $(13,862) 35.0% $(76,739) 35.0%
State income taxes, net 77 1.23 11 3.0 (306) 0.8 (1,552) 0.7
Tax-exempt bond interest -- -- (22) (6.0) (332) 0.8 (1,208) 0.6
Amortization of intangible assets 320 5.12 254 69.0 -- -- 111 (0.1)
Permanent difference due to derivative transfer
-- -- -- -- 4,399 (11.1) -- --
Other 68 1.09 59 16.1 37 (.1) 2,388 (1.1)
Total $2,655 42.44% $431 117.1% $(10,064) 25.4% $(77,000) 35.1%
====== ====== ===== ====== ========= ====== ========= =====
</TABLE>
The tax effect of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1996 &
1995 follows:
<TABLE>
<CAPTION>
1996 1995
(In thousands of dollars)
<S> <C> <C>
Deferred tax assets:
PVFP $ 1,639 --
Policy Reserves 19,237 $ 7,601
Liability for commissions on recapture 6,073 8,868
Tax basis of intangible assets purchased 6,230 13,141
DAC Proxy Tax 9,032 4,749
Unrealized losses on investments 422 --
Other deferred tax assets 827 2,860
Total assets $43,460 $37,219
------- -------
Deferred tax liabilities:
PVFP $19,169 $16,774
Unrealized gains on investments -- 1,489
Deferred Acquisition Costs 10,694 5,316
Other deferred tax liabilities 60 84
Total liabilities 29,923 23,663
-------
Net Deferred Tax Asset $13,537 $13,556
======= =======
</TABLE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax assets will not be realized. Management believes
the deferred tax assets will be fully realized in the future based upon
expectation of the reversal of existing temporary differences, anticipated
future earnings, and consideration of all other available evidence.
Accordingly no valuation allowance is established.
(9) RELATED-PARTY TRANSACTIONS
The Company has entered into management, operations and services agreements
with both affiliated and unaffiliated companies. The affiliated companies are
Cova Life Management Company (CLMC), a Delaware corporation, which provides
management services and the employees necessary to conduct the activities of
the Company, and Conning Asset Management, which provides investment advice.
Additionally, a portion of overhead and other corporate expenses are allocated
by the Companys ultimate parent, GALIC. The unaffiliated companies are
Johnson & Higgins, a New Jersey corporation, and Johnson & Higgins/Kirke Van
Orsdel, a Delaware corporation, which provide various services for the Company
including underwriting, claims and administrative functions. The affiliated
and unaffiliated service providers are reimbursed for the cost of their
services and are paid a service fee. Expenses and fees paid to affiliated
companies during 1996 and the 7 months of 1995 for the Company were
$6,618,303, and $7,139,525, respectively, and the five months of 1995 and the
year 1994 for the Predecessor were 6,364,609, and $8,553,028, respectively.
On December 31, 1996 Cova Corporation transferred its ownership of Cova
Financial Life Insurance Company (CFLIC), an affiliated life insurer domiciled
in the state of California, to the Company. The transfer of ownership was
recorded as additional paid in capital and increased Shareholders Equity on
the Companys December 31, 1996 Balance Sheet by approximately $16.9 million.
This change in direct ownership had no effect on the operations of either the
Company or CFLIC as both entities had existed under common management and
control prior to the December 31, 1996 transfer. Although CFLICs Balance
Sheet is fully consolidated with the Companys December 31, 1996 Balance Sheet,
CFLICs 1996 Income Statement and Cash Flow have not been consolidated with the
Companys 1996 Income Statement or Cash Flow Statement. However, CFLICs
year-end cash balance of $6.7 million is included in the Cash Flow Statement.
(10) STATUTORY SURPLUS AND DIVIDEND RESTRICTION
Generally accepted accounting principles (GAAP) differ in certain respects
from the accounting practices prescribed or permitted by insurance regulatory
authorities (statutory accounting principles).
The major differences arise principally from the immediate expense recognition
of policy acquisition costs and intangible assets for statutory reporting,
determination of policy reserves based on different discount rates and
methods, the recognition of deferred taxes under GAAP reporting, the
non-recognition of financial reinsurance for GAAP reporting, the establishment
of an Asset Valuation Reserve as a contingent liability based on the credit
quality of the Company's investment securities, and an Interest Maintenance
Reserve as an unearned liability to defer the realized gains and losses of
fixed income investments presumably resulting from changes to interest rates
and amortize them into income over the remaining life of the investment sold.
In addition, SFAS #115 adjustments to record the carrying values of debt
securities and certain equity securities at market are applied only under GAAP
reporting and capital contributions in the form of notes receivable from an
affiliated company are not recognized under GAAP reporting.
Purchase accounting creates another difference as it requires the restatement
of GAAP assets and liabilities to their estimated fair values and shareholders
equity to the net purchase price. Statutory accounting does not recognize the
purchase method of accounting.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
As of December 31, the differences between statutory capital and surplus and
shareholder's equity determined in conformity with generally accepted
accounting principles (GAAP) were as follows:
<TABLE>
<CAPTION>
1996 1995
(in thousands of dollars)
<S> <C> <C>
Statutory Capital and Surplus $ 75,354 $ 59,682
Reconciling items:
GAAP investment valuation reserves (88) --
Statutory Asset Valuation Reserves 17,599 13,378
Interest Maintenance Reserve 2,301 1,892
GAAP investment adjustments to fair value (3,191) 10,724
Deferred policy acquisition costs 49,833 14,468
GAAP basis policy reserves (30,202) (11,233)
Deferred federal income taxes (net) 13,537 13,556
Modified coinsurance -- --
Goodwill 20,849 23,358
Present value of future profits 46,389 38,155
Future purchase price payable (16,051) (23,967)
Other (1,286) (1,927)
GAAP Shareholders' Equity $175,044 $138,086
========= =========
</TABLE>
Statutory net losses for CFSLIC for the years ended December 31, 1996, 1995
and 1994 were $(13,575,788), $(74,012,650), and $(92,952,989), respectively.
The maximum amount of dividends which can be paid by State of Missouri
insurance companies to shareholders without prior approval of the insurance
commissioner is the greater of 10% of statutory earned surplus or statutory
net gain from operations for the preceding year. Accordingly, the maximum
dividend permissible during 1997 will be $0.
The National Association of Insurance Commissioners has developed certain Risk
Based Capital (RBC) requirements for life insurers. If prescribed levels of
RBC are not maintained, certain actions may be required on the part of the
Company or its regulators. At December 31, 1996 the Company's Total Adjusted
Capital and Authorized Control Level - RBC were, $92,953,237, and $21,058,220
respectively. This level of adjusted capital qualifies under all tests.
(11) GUARANTY FUND ASSESSMENTS
The Company participates with all life insurance companies licensed throughout
the United States, in associations formed to guarantee benefits to
policyholders of insolvent life insurance companies. Under state laws, as a
condition for maintaining the Companys authority to issue new business, the
Company is contingently liable for its share of claims covered by the guaranty
associations for insolvencies incurred through 1996, but for which assessments
have not yet been determined nor assessed, to a maximum in each state
generally of 2% of statutory premiums per annum in the given state. Most
states then permit recovery of assessments as a credit against premium or
other state taxes over, most commonly, five years.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
At December 31, 1996, the National Organization of Life and Health Guaranty
Associations (NOLHGA) distributed a study of the major outstanding industry
insolvencies, with estimates of future assessments by state. Based on this
study, the Company has accrued a liability for approximately $12.4 million in
future assessments on insolvencies that occurred before December 31, 1996.
Under the coinsurance agreement between the Company and OakRe (see note 1),
OakRe is required to reimburse the Company for any future assessments that it
pays which relate to insolvencies occurring prior to June 1, 1995. As such,
the Company has recorded a receivable from Oakre for approximately $12.3
million.
At the same time, the Company is liable to OakRe for 80% of any future premium
tax recoveries that are realized from any such assessments, and may retain the
IX. EXHIBITS
A. (1) Resolution of Board of directors of the Company authorizing the
Separate Account.
(2) None.
(3) (a) Principal Underwriter's Agreement
(b) Selling Agreement
(c) Schedules of sales commissions referred to in Item 38(c)
(4) None
(5) Modified Single Premium Life Insurance Policy
(6) (a) Articles of Incorporation of the Company
(b) Bylaws of the Company
(7) Not Applicable
(8) Not Applicable
(9) None
(10) Form of application
B. Furnish copies of each of the following:
(1) Not Applicable
(2) Not Applicable
C. Not Applicable
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940 the
depositor of the Registrant has caused this registration statement to be duly
signed on behalf of the Registrant in the City of Oakbrook Terrace and State
of Illinois on the 27th day of March, 1997.
[SEAL]
COVA VARIABLE LIFE ACCOUNT ONE
By: COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
__________________________________________
By: /S/ JEFFERY K. HOELZEL
______________________________
Jeffery K. Hoelzel, Secretary
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: /S/ JEFFERY K. HOELZEL
______________________________
Jeffery K. Hoelzel, Secretary
Attest: /S/ DOLORES DELGADO
________________________________
(Name)
Senior Paralegal
_________________________________
(Title)
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
I, JEROME P. DARGA, Assistant Secretary of Cova Financial Services Life
Insurance Company (formerly known as Xerox Financial Services Life Insurance
Company), a corporation existing under the laws of Missouri (the
"Corporation"), do hereby certify that the following is a true and correct
copy of resolutions adopted by Consent of the Board of Directors of the
Corporation in Lieu of Meeting dated as of October 23, 1991, and I do further
certify that said resolutions have not been amended or rescinded:
AUTHORIZATION OF VARIABLE LIFE INSURANCE PROGRAM
WHEREAS, the Corporation is desirous of developing and marketing certain types
of variable life insurance contracts which may be required to be registered
with the Securities and Exchange Commission pursuant to the various securities
laws; and
WHEREAS, it will be necessary to take certain actions including, but not
limited to, establishing separate accounts for the segregation of assets and
seeking approval of regulatory authorities;
NOW THEREFORE BE IT
RESOLVED, that the Corporation is hereby authorized to develop the necessary
program in order to effectuate the issuance and sale of variable life
insurance contracts; and further
RESOLVED, that the Corporation is hereby authorized to establish and to
designate one or more separate accounts of the Corporation in accordance with
the provisions of state insurance law. The purpose of any such separate
account shall be to provide an investment medium for such variable life
insurance contracts issued by the Corporation as may be designated as
participating therein. Any such separate account shall receive, hold, invest
and reinvest only the monies arising from (i) premiums, contributions or
payments made pursuant to the variable life insurance contracts participating
therein (ii) such assets of the Corporation as shall be deemed appropriate to
be invested in the same manner as the assets applicable to the Corporation's
reserve liability under the variable life insurance contracts participating in
such separate accounts or as may be necessary for the establishment of such
separate accounts; and (iii) the dividends, interest and gains produced by the
foregoing; and further
RESOLVED, that the proper officers of the Corporation are hereby authorized:
(i) to register the variable life insurance contracts participating in
any such separate accounts under the provisions of the Securities Act of 1933,
as amended, to the extent that it shall be determined that such registration
is necessary;
(ii) to register any such separate accounts with the Securities and
Exchange Commission under the provisions of the Investment Company Act of 1940
to the extent that it shall be determined that such registration is necessary;
(iii) to prepare, execute and file such amendments to any registration
statements filed under the aforementioned Acts (including post-effective
amendments), supplements and exhibits thereto as shall be deemed necessary or
desirable;
(iv) to apply for exemption from those provisions of the aforementioned
Acts as shall be deemed necessary and to take any and all other actions which
shall be deemed necessary, desirable, or appropriate in connection with such
Acts;
(v) to file the variable life insurance contracts participating in any
such separate accounts with the appropriate state insurance departments and to
obtain approval of the insurance departments;
(vi) to prepare or have prepared and execute all necessary documents to
obtain approval of, or clearance with, or other appropriate actions required,
of any other regulatory authority that may be necessary;
and further
RESOLVED, that for the purposes of facilitating the execution and filing of
any registration statement and of remedying any deficiencies therein by
appropriate amendments (including post-effective amendments) or supplements
thereto, the President of the Corporation and Secretary of the Corporation,
and each of them are hereby designated as attorneys and agents of the
Corporation, and the appropriate officers of the Corporation be, and they
hereby are, authorized and directed to grant the power of attorney of the
Corporation to the President of the Corporation and the Secretary of the
Corporation by executing and delivering to such individuals, on behalf of the
Corporation, a power of attorney; and further
RESOLVED, that in connection with the offering and sale of the variable life
insurance contracts in the various states of the United States, as and to the
extent necessary, the appropriate officers of the Corporation be, and they
hereby are, authorized to take any and all such action, including but not
limited to the preparation, execution and filing with proper State
authorities, on behalf of and in the name of the Corporation, of such
applications, notices, certificates, affidavits, powers of attorney, consents
to service of process, issuer's covenants, certified copies of minutes of
shareholders' and directors' meetings, bonds, escrow and impounding agreements
and other writings and instruments, as may be required in order to render
permissible the offering and sale of the variable life insurance contracts in
such jurisdictions; and further
RESOLVED, that the forms of any resolutions required by any State authority to
be filed in connection with any of the documents or instruments referred to in
any of the preceding resolutions be, and the same hereby are, adopted as if
fully set forth herein if (1) in the opinion of the appropriate officers of
the Corporation, the adoption of the resolutions is advisable and (2) the
Secretary or any Assistant Secretary of the Corporation evidences such
adoption by inserting into these minutes copies of such resolutions; and
further
RESOLVED, that the Standards of Conduct of the Corporation, its officers,
directors, employees and affiliates with respect to the investments of
variable life insurance separate accounts and variable life insurance
operations attached hereto as Exhibit A be, and the same hereby are, adopted
and approved; and further
RESOLVED, that the Standards of Suitability to be used by the Corporation and
applicable to its officers, directors, employees, affiliates and agents with
respect to the suitability of variable life insurance for the applicant
attached as Exhibit B be, and the same hereby are, adopted and approved; and
further
RESOLVED, that the proper officers of the Corporation be, and they hereby are
authorized and directed to prepare and to execute all necessary and
appropriate documents and to take such further actions as they may deem
necessary or appropriate, in their discretion, to implement the purposes of
the foregoing resolutions.
DESIGNATION OF INVESTMENTS FOR SEPARATE ACCOUNT
WHEREAS, the Board of Directors has previously adopted resolutions which
provided for the establishment of one or more separate accounts for the
purpose of issuing variable and fixed annuity contracts; and
WHEREAS, pursuant to said resolutions, the officers of the Corporation have
designated a separate account as Xerox MVA Account Three; and
WHEREAS, the Corporation has caused to be filed with the Securities and
Exchange Commission a Registration Statement on Form S-1 for registration
under the Securities Act of 1933 of annuity contracts and certificates
(collectively "Contracts") issued by Xerox MVA Account Three; and
WHEREAS, the Corporation intends that Xerox MVA Account Three will invest in
the proposed investments, subject to the investment policies and restrictions,
described in said Registration Statement on Form S-1 relating to the Contracts
issued by Xerox MVA Account Three, copies of which are on file with the
records of the Secretary of the Corporation;
NOW THEREFORE BE IT
RESOLVED, that the investment restrictions and policies as described in the
Registration Statement on Form S-1 for the Contracts issued by Xerox MVA
Account Three be, and they hereby are, approved as the investment restrictions
and policies to be utilized in connection with Xerox MVA Account Three; and
further
RESOLVED, that the proper officers of the Corporation be, and they hereby are,
authorized and directed to execute and deliver a Principal Underwriter's
Agreement between Xerox Life Sales company ("Principal Underwriter") and the
Corporation on behalf of Xerox MVA Account Three granting exclusive right to
the Principal Underwriter to be the distributor of the Contracts issued by
Xerox MVA Account Three, substantially in the form attached hereto as Exhibit
C, with such changes therein as of the officer executing the Principal
Underwriter's Agreement, with the advice of counsel, deems necessary or
advisable, such determination to be conclusively evidenced by the officer's
execution thereof; and further
RESOLVED, that the proper officers of the corporation be, and they hereby are,
authorized and directed on behalf of the Corporation or Xerox MVA Account
Three to prepare, acknowledge and deliver all necessary and appropriate
contracts, agreements or other instruments or documents and to take such
further actions as they may deem necessary or appropriate, in their
discretion, to implement the purposes of the foregoing preambles and
resolutions and the resolutions heretofore adopted by the Board of Directors
on February 24, 1987 regarding the development of a fixed and variable annuity
program.
Dated: 12-12-96 /S/ JEROME P. DARGA
_____________ ______________________________
Assistant Secretary
EXHIBIT A
STANDARDS OF CONDUCT
Unless otherwise approved in advance of the transaction by the commissioner of
insurance in the state in which the transaction is contemplated, the
Corporation and its officers, directors, employees and affiliates shall not,
with respect to variable life insurance separate accounts:
1. sell to or purchase from any such separate account established by the
Corporation any security or other property, other than variable life insurance
policies;
2. purchase or allow to be purchased for any such separate account any
securities of which the Corporation or an affiliate is the issuer;
3. accept any compensation, other than a regular salary or wages from
the Corporation or an affiliate, for the sale or purchase of securities to or
from any such separate account, except that the Corporation or an affiliate
may act as a broker or dealer in connection with the sale of securities to or
by such separate account; provided, however, that any commission fee or
remuneration charged therefor shall not exceed the minimum broker's commission
established for any such transaction by any national securities exchange
through which such transaction could be effected, or where such charges are
subject to negotiation or where no minimum charge is applicable, then such
charge shall be consistent with the charges prevailing in the ordinary course
of business in the community where such transaction is effected;
4. engage in any joint transaction, participation or common undertaking
whereby the Corporation or an affiliate participates with such a separate
account in any transaction in which the Corporation or any of its affiliates
obtain an advantage in the price or quality of the item purchased, in the
service received, or in the cost of such service and the Corporation or any of
its other affiliates is disadvantaged in any of these respects by the same
transaction;
5. borrow money or securities from any such separate account other than
under a policy loan provision.
EXHIBIT B
STANDARDS OF SUITABILITY
The following Standards of Suitability shall be used by the Corporation and
shall be applicable to its officers, directors, employees, affiliates, and
agents with respect to the suitability of variable life insurance for the
applicant:
No recommendation shall be made to an applicant to purchase a variable
life insurance policy and no variable life insurance policy shall be issued in
the absence of reasonable grounds to believe that the purchase of such policy
is suitable for such applicant on the basis of information furnished after
reasonable inquiry of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and any other
information known to the Corporation or to the agent making the
recommendation.
XEROX FINANCIAL SERVICES LIFE INSURANCE CORPORATION
CONSENT OF THE BOARD OF DIRECTORS
IN LIEU OF MEETING
The undersigned, being all of the Directors of Xerox Financial Services
Life Insurance Corporation, a Missouri corporation (the "Corporation"), acting
without a meeting pursuant to Section 351.340 of the General and Business
Corporation Law of Missouri hereby waive all notice required by the By-Laws of
the Corporation or by law and adopt the following resolutions in lieu of a
meeting of the Directors.
AUTHORIZATION OF VARIABLE LIFE INSURANCE PROGRAM
WHEREAS, the Corporation is desirous of developing and marketing certain types
of variable life insurance contracts which may be required to be registered
with the Securities and Exchange Commission pursuant to the various securities
laws; and
WHEREAS, it will be necessary to take certain actions including, but not
limited to, establishing separate accounts for the segregation of assets and
seeking approval of regulatory authorities;
NOW THEREFORE BE IT
RESOLVED, that the Corporation is hereby authorized to develop the necessary
program in order to effectuate the issuance and sale of variable life
insurance contracts; and further
RESOLVED, that the Corporation is hereby authorized to establish and to
designate one or more separate accounts of the Corporation in accordance with
the provisions of state insurance law. The purpose of any such separate
account shall be to provide an investment medium for such variable life
insurance contracts issued by the Corporation as may be designated as
participating therein. Any such separate account shall receive, hold, invest
and reinvest only the monies arising from (i) premiums, contributions or
payments made pursuant to the variable life insurance contracts participating
therein (ii) such assets of the Corporation as shall be deemed appropriate to
be invested in the same manner as the assets applicable to the Corporation's
reserve liability under the variable life insurance contracts participating in
such separate accounts or as may be necessary for the establishment of such
separate accounts; and (iii) the dividends, interest and gains produced by the
foregoing; and further
RESOLVED, that the proper officers of the Corporation are hereby authorized:
(i) to register the variable life insurance contracts participating in
any such separate accounts under the provisions of the Securities Act of 1933,
as amended, to the extent that it shall be determined that such registration
is necessary;
(ii) to register any such separate accounts with the Securities and
Exchange Commission under the provisions of the Investment Company Act of 1940
to the extent that it shall be determined that such registration is necessary;
(iii) to prepare, execute and file such amendments to any registration
statements filed under the aforementioned Acts (including post-effective
amendments), supplements and exhibits thereto as shall be deemed necessary or
desirable;
(iv) to apply for exemption from those provisions of the aforementioned
Acts as shall be deemed necessary and to take any and all other actions which
shall be deemed necessary, desirable, or appropriate in connection with such
Acts;
(v) to file the variable life insurance contracts participating in any
such separate accounts with the appropriate state insurance departments and to
obtain approval of the insurance departments;
(vi) to prepare or have prepared and execute all necessary documents to
obtain approval of, or clearance with, or other appropriate actions required,
of any other regulatory authority that may be necessary;
and further
RESOLVED, that for the purposes of facilitating the execution and filing of
any registration statement and of remedying any deficiencies therein by
appropriate amendments (including post-effective amendments) or supplements
thereto, the President of the Corporation and Secretary of the Corporation,
and each of them are hereby designated as attorneys and agents of the
Corporation, and the appropriate officers of the Corporation be, and they
hereby are, authorized and directed to grant the power of attorney of the
Corporation to the President of the Corporation and the Secretary of the
Corporation by executing and delivering to such individuals, on behalf of the
Corporation, a power of attorney; and further
RESOLVED, that in connection with the offering and sale of the variable life
insurance contracts in the various states of the United States, as and to the
extent necessary, the appropriate officers of the Corporation be, and they
hereby are, authorized to take any and all such action, including but not
limited to the preparation, execution and filing with proper State
authorities, on behalf of and in the name of the Corporation, of such
applications, notices, certificates, affidavits, powers of attorney, consents
to service of process, issuer's covenants, certified copies of minutes of
shareholders' and directors' meetings, bonds, escrow and impounding agreements
and other writings and instruments, as may be required in order to render
permissible the offering and sale of the variable life insurance contracts in
such jurisdictions; and further
RESOLVED, that the forms of any resolutions required by any State authority to
be filed in connection with any of the documents or instruments referred to in
any of the preceding resolutions be, and the same hereby are, adopted as if
fully set forth herein if (1) in the opinion of the appropriate officers of
the Corporation, the adoption of the resolutions is advisable and (2) the
Secretary or any Assistant Secretary of the Corporation evidences such
adoption by inserting into these minutes copies of such resolutions; and
further
RESOLVED, that the Standards of Conduct of the Corporation, its officers,
directors, employees and affiliates with respect to the investments of
variable life insurance separate accounts and variable life insurance
operations attached hereto as Exhibit A be, and the same hereby are, adopted
and approved; and further
RESOLVED, that the Standards of Suitability to be used by the Corporation and
applicable to its officers, directors, employees, affiliates and agents with
respect to the suitability of variable life insurance for the applicant
attached as Exhibit B be, and the same hereby are, adopted and approved; and
further
RESOLVED, that the proper officers of the Corporation be, and they hereby are
authorized and directed to prepare and to execute all necessary and
appropriate documents and to take such further actions as they may deem
necessary or appropriate, in their discretion, to implement the purposes of
the foregoing resolutions.
DESIGNATION OF INVESTMENTS FOR SEPARATE ACCOUNT
WHEREAS, the Board of Directors has previously adopted resolutions which
provided for the establishment of one or more separate accounts for the
purpose of issuing variable and fixed annuity contracts; and
WHEREAS, pursuant to said resolutions, the officers of the Corporation have
designated a separate account as Xerox MVA Account Three; and
WHEREAS, the Corporation has caused to be filed with the Securities and
Exchange Commission a Registration Statement on Form S-1 for registration
under the Securities Act of 1933 of annuity contracts and certificates
(collectively "Contracts") issued by Xerox MVA Account Three; and
WHEREAS, the Corporation intends that Xerox MVA Account Three will invest in
the proposed investments, subject to the investment policies and restrictions,
described in said Registration Statement on Form S-1 relating to the Contracts
issued by Xerox MVA Account Three, copies of which are on file with the
records of the Secretary of the Corporation;
NOW THEREFORE BE IT
RESOLVED, that the investment restrictions and policies as described in the
Registration Statement on Form S-1 for the Contracts issued by Xerox MVA
Account Three be, and they hereby are, approved as the investment restrictions
and policies to be utilized in connection with Xerox MVA Account Three; and
further
RESOLVED, that the proper officers of the Corporation be, and they hereby are,
authorized and directed to execute and deliver a Principal Underwriter's
Agreement between Xerox Life Sales company ("Principal Underwriter") and the
Corporation on behalf of Xerox MVA Account Three granting exclusive right to
the Principal Underwriter to be the distributor of the Contracts issued by
Xerox MVA Account Three, substantially in the form attached hereto as Exhibit
C, with such changes therein as of the officer executing the Principal
Underwriter's Agreement, with the advice of counsel, deems necessary or
advisable, such determination to be conclusively evidenced by the officer's
execution thereof; and further
RESOLVED, that the proper officers of the corporation be, and they hereby are,
authorized and directed on behalf of the Corporation or Xerox MVA Account
Three to prepare, acknowledge and deliver all necessary and appropriate
contracts, agreements or other instruments or documents and to take such
further actions as they may deem necessary or appropriate, in their
discretion, to implement the purposes of the foregoing preambles and
resolutions and the resolutions heretofore adopted by the Board of Directors
on February 24, 1987 regarding the development of a fixed and variable annuity
program.
IN WITNESS WHEREOF, we have hereunto set our hands as of the 23rd day of
October, 1991.
<TABLE>
<CAPTION>
<S> <C>
/S/ ANTHONY R. BIELE /S/ JOHN C. MERRITT
- ------------------------ ----------------------
Anthony R. Biele John C. Merritt
/S/ SUSAN M. BOYLE /S/ WILLIAM R. MOLINAN
- ------------------------ ----------------------
Susan M. Boyle William R. Molinan
/S/ STEPHEN P. CLARK /S/ ROBERT B. STACK
- ------------------------ ----------------------
Stephen P. Clark Robert B. Stack
/S/ DONATO A. DENOVELLIS /S/ LORRY J. STENSRUD
- ------------------------ ----------------------
Donato A. DeNovellis Lorry J. Stensrud
/S/ DENNIS J. MCDONNELL /S/ ROBERT J. VAIRO
- ------------------------ ----------------------
Dennis J. McDonnell Robert J. Vairo
</TABLE>
PRINCIPAL UNDERWRITER'S AGREEMENT
IT IS HEREBY AGREED by and between COVA FINANCIAL SERVICES LIFE INSURANCE
COMPANY ("INSURANCE COMPANY") on behalf of COVA VARIABLE LIFE ACCOUNT ONE (the
"VARIABLE ACCOUNT") and COVA LIFE SALES COMPANY (the "PRINCIPAL UNDERWRITER")
as follows:
I
INSURANCE COMPANY proposes to issue and sell Modified Single Premium Variable
Life Insurance Policies (the "Policies") of the Variable Account to the public
through PRINCIPAL UNDERWRITER. The PRINCIPAL UNDERWRITER agrees to provide
sales service subject to the terms and conditions hereof. The Policies to be
sold are more fully described in the registration statement and prospectus
hereinafter mentioned. Such Policies will be issued by INSURANCE COMPANY
through the Variable Account.
II
INSURANCE COMPANY grants PRINCIPAL UNDERWRITER the exclusive right, during the
term of this Agreement, subject to registration requirements of the Securities
Act of 1933 and the Investment Company Act of 1940 and the provisions of the
Securities Exchange Act of 1934, to be the distributor of the Policies issued
through the Variable Account. PRINCIPAL UNDERWRITER will sell the Policies
under such terms as set by INSURANCE COMPANY and will make such sales to
purchasers permitted to buy such Policies as specified in the prospectus.
III
PRINCIPAL UNDERWRITER shall be compensated for its distribution services in
such amount as to meet all of its obligations to selling broker-dealers with
respect to all Purchase Payments accepted by INSURANCE COMPANY on the Policies
covered hereby.
IV
On behalf of the Variable Account, INSURANCE COMPANY shall furnish PRINCIPAL
UNDERWRITER with copies of all prospectuses, financial statements and other
documents which PRINCIPAL UNDERWRITER reasonably requests for use in
connection with the distribution of the Policies. INSURANCE COMPANY shall
provide to PRINCIPAL UNDERWRITER such number of copies of the current
effective prospectuses as PRINCIPAL UNDERWRITER shall request.
V
PRINCIPAL UNDERWRITER is not authorized to give any information, or to make
any representations concerning the Policies or the Variable Account of
INSURANCE COMPANY other than those contained in the current registration
statements or prospectuses relating to the Variable Account filed with the
Securities and Exchange Commission or such sales literature as may be
authorized by INSURANCE COMPANY.
VI
Both parties to this Agreement agree to keep the necessary records as
indicated by applicable state and federal law and to render the necessary
assistance to one another for the accurate and timely preparation of such
records.
VII
This Agreement shall be effective upon the execution hereof and will remain in
effect unless terminated as hereinafter provided. This Agreement shall
automatically be terminated in the event of its assignment by PRINCIPAL
UNDERWRITER.
This Agreement may at any time be terminated by either party hereto upon 60
days' written notice to the other party.
VIII
All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed to have been given on the date of
service if served personally on the party to whom notice is to be given, or on
the date of mailing if sent by First Class Mail, Registered or Certified,
postage prepaid and properly addressed.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their respective officers thereunto duly authorized.
EXECUTED this ____ day of ___________, 199_.
<TABLE>
<CAPTION>
<S> <C>
INSURANCE COMPANY
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
BY:_______________________________
ATTEST:________________________
Secretary
PRINCIPAL UNDERWRITER
COVA LIFE SALES COMPANY
BY:_______________________________
ATTEST:________________________
Secretary
</TABLE>
SELLING AGREEMENT
Agreement dated as of __________________, 19____, by and among Cova
Financial Services Life Insurance Company, a Missouri corporation ("Life
Company"); Cova Life Sales Company, a Delaware corporation ("Distributor");
________________________, ("Broker-Dealer") and ____________________________,
("Insurance Agent").
RECITALS
A. Pursuant to a distribution agreement with Distributor, Life Company has
appointed Distributor as the principal underwriter of the variable annuity
contracts identified in Schedule 1 to this Agreement at the time that this
Agreement is executed, and such other variable annuity contracts or
variable life insurance contracts that may be added to Schedule 1 from
time-to-time in accordance with Section 2(f) of this Agreement. Such
contracts together with any fixed annuity contracts shown on Schedule 1
shall be referred to herein as "Contracts".
B. The parties to this Agreement desire that Broker-Dealer and Insurance Agent
be authorized to solicit applications for the sale of the Contracts to the
general public subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual promises and
covenants hereinafter set forth, the parties agree as follows:
1. ADDITIONAL DEFINITIONS
(a) Affiliate - With respect to a person, any other person controlling,
controlled by, or under common control with, such person.
(b) Agent - An individual associated with Insurance Agent and
Broker-Dealer who is appointed by Life Company as an agent for the
purpose of soliciting applications.
(c) NASD - The National Association of Securities Dealers, Inc.
(d) 1933 Act - The Securities Act of 1933, as amended.
--------
(e) 1934 Act - The Securities and Exchange Act of 1934, as amended.
--------
(f) 1940 Act - The Investment Company Act of 1940, as amended.
--------
(g) Premium - A payment made under a Contract to purchase benefits under
such Contract.
(h) Prospectus - With respect to each Contract, the prospectus for such
Contract included within the Registration Statement for such Contract;
provided, however, that, if the most recently filed prospectus, filed
pursuant to Rule 497 under the 1933 Act subsequent to the date on
which the Registration Statement became effective differs from the
prospectus on file at the time the Registration Statement became
effective, the term "Prospectus" shall refer to the most recently
filed prospectus filed under Rule 497 from and after the date on which
it shall have been filed.
(i) Registration Statement - With respect to each Contract, the most
recent effective registration statement(s) filed with the SEC or the
most recent effective post-effective amendment(s) thereto with respect
to such Contract, including financial statements included therein and
all exhibits thereto. There may be more than one Registration
Statement in effect at the time for a Contract; in such case, any
reference to "the Registration Statement" for a Contract shall refer
to any or all, depending on the context, of the Registration
Statements for such Contract.
(j) SEC - The Securities and Exchange Commission.
(k) Service Center - Policy Service office:
(i) Fixed Products: P.O. Box 295, Des Moines, IA 50301
(ii) Variable Products: P.O. Box 10366, Des Moines, IA 50306
(iii) Express Mail Only: 1776 West Lakes Parkway, West Des Moines,
IA 50266
2. AUTHORIZATION OF BROKER-DEALER AND INSURANCE AGENT
(a) Distributor hereby authorizes Broker-Dealer under the securities laws,
and Life Company hereby authorizes and appoints Insurance Agent under
the insurance laws, each in a non-exclusive capacity, to distribute
the Contracts. Broker-Dealer and Insurance Agent accept such
authorization and appointment and shall use their best efforts to find
purchasers for the Contracts, in each case acceptable to Life Company.
(b) Life Company shall notify Broker-Dealer and Insurance Agent in writing
of all states and jurisdictions in which Life Company is licensed to
sell the Contracts. Broker-Dealer and Insurance Agent acknowledge that
no territory is exclusively assigned hereunder, and Life Company
reserves the right in its sole discretion to establish or appoint one
or more agencies in any jurisdiction in which Insurance Agent
transacts business hereunder.
(c) Insurance Agent is vested under this Agreement with power and
authority to select and recommend individuals associated with
Insurance Agent for appointment as Agents of Life Company, and only
individuals so recommended by Insurance Agent shall become Agents,
provided that Life Company reserves the right in its sole discretion
to refuse to appoint any proposed agent or, once appointed, to
terminate the same at any time with or without cause.
(d) Neither Broker-Dealer nor Insurance Agent shall expend or contract for
the expenditure of the funds of Life Company. Broker-Dealer and
Insurance Agent each shall pay all expenses incurred by each of them
in the performance of this Agreement, unless otherwise specifically
provided for in this Agreement or unless Life Company and Distributor
shall have agreed in advance in writing to share the cost of certain
expenses. Initial and renewal state appointment fees for Insurance
Agent and appointees of Insurance Agent as Agents of Life Company will
be paid by Life Company according to the terms set forth in the rules
and regulations as may be adopted by Life Company from time-to-time.
Neither Broker-Dealer nor Insurance Agent shall possess or exercise
any authority on behalf of Distributor or Life Company other than that
expressly conferred on Broker-Dealer or Insurance Agent by this
Agreement. In particular, and without limiting the foregoing, neither
Broker-Dealer nor Insurance Agent shall have any authority, nor shall
either grant such authority to any Agent, on behalf of Distributor or
Life Company: to make, alter or discharge any Contract or other
contract entered into pursuant to a Contract; to waive any Contract
forfeiture provision; to extend the time of paying any Premiums; or to
receive any monies or Premiums from applicants for or purchasers of
the Contracts (except for the sole purpose of forwarding monies or
Premiums to Life Company).
(e) Broker-Dealer and Insurance Agent acknowledge that Life Company has
the right in its sole discretion to reject any applications or
Premiums received by it and to return or refund to an applicant such
applicant's Premium.
(f) Schedule 1 to this Agreement may be amended by Distributor and Life
Company in their sole discretion from time-to-time to include other
variable annuity contracts, fixed annuity contracts, or variable life
insurance contracts, or to delete contracts from the Schedule.
(g) Distributor and Life Company acknowledge that Broker-Dealer and
Insurance Agent are each an independent contractor. Accordingly,
Broker-Dealer and Insurance Agent are not obliged or expected to give
full time and energies to the performance of their obligations
hereunder, nor are Broker-Dealer and Insurance Agent obliged or
expected to represent Distributor or Life Company exclusively. Nothing
herein contained shall constitute Broker-Dealer, Insurance Agent, the
Agents or any agents or representatives of Broker-Dealer or Insurance
Agent as employees of Distributor or Life Company in connection with
solicitation of applications for the Contracts.
3. LICENSING AND REGISTRATION OF BROKER-DEALER, INSURANCE AGENT AND AGENTS
(a) Broker-Dealer represents and warrants that it is a Broker-Dealer
registered with the SEC under the 1934 Act, and is a member of the
NASD in good standing. Broker-Dealer must, at all times when
performing its functions and fulfilling its obligations under this
Agreement, be duly registered as a Broker-Dealer under the 1934 Act
and as required by applicable law, in each state or other jurisdiction
in which Broker-Dealer intends to perform its functions and fulfill
its obligations hereunder.
(b) Insurance Agent represents and warrants that it is a licensed life
insurance agent where required to solicit applications. Insurance
Agent must, at all times when performing its functions and fulfilling
its obligations under this Agreement, be duly licensed to sell the
Contracts in each state or other jurisdiction in which insurance Agent
intends to perform its functions and fulfill its obligations
hereunder.
(c) Broker-Dealer shall ensure that no individual shall offer or sell the
Contracts on its behalf in any state or other jurisdiction in which
the Contracts may lawfully be sold unless such individual is an
associated person of Broker-Dealer (as that term is defined in Section
3(a)(18) of the 1934 Act) and duly registered with the NASD and any
applicable state securities regulatory authority as a registered
person of Broker-Dealer qualified to distribute the Contracts in such
state or jurisdiction. Broker-Dealer shall be solely responsible for
the background investigations of the Agents to determine their
qualifications and will provide Life Company upon request with copies
of such investigations.
(d) Insurance Agent shall ensure that no individual shall offer or sell
the Contracts on behalf of Insurance Agent in any state or other
jurisdiction unless such individual is duly affiliated as an agent of
Insurance Agent, duly licensed and appointed as an agent of Life
Company, and appropriately licensed, registered or otherwise qualified
to offer and sell the Contracts to be offered and sold by such
individual under the insurance laws of such state or jurisdiction.
Insurance Agent shall be responsible for investigating the character,
work experience and background of any proposed agent prior to
recommending appointment as agent of Life Company. Upon request, Life
Company shall be provided with copies of such investigation. All
matters concerning the licensing of any individuals recommended for
appointment by Insurance Agent under any applicable state insurance
law shall be a matter directly between Insurance Agent and such
individual, and the Insurance Agent shall furnish Life Company with
proof of proper licensing of such individual or other proof,
reasonably acceptable to Life Company. Broker-Dealer and Insurance
Agent shall notify Distributor and Life Company immediately upon
termination of an Agent's association with Broker-Dealer or Insurance
Agent.
(e) Without limiting the foregoing, Broker-Dealer and Insurance Agent
represent that they are in compliance with the terms and conditions of
letters issued by the Staff of the SEC with respect to the
non-registration as a broker-dealer of an insurance agency associated
with a registered broker-dealer. Broker-Dealer and the Insurance Agent
shall notify Distributor immediately in writing if Broker-Dealer
and/or Insurance Agent fail to comply with any such terms and
conditions and shall take such measures as may be necessary to comply
with any such terms and conditions.
4. BROKER-DEALER AND INSURANCE AGENT COMPLIANCE
(a) Broker-Dealer and Insurance Agent hereby represent and warrant that
they are duly in compliance with all applicable federal and state
securities laws and regulations, and all applicable insurance laws and
regulations. Broker-Dealer and Insurance Agent each shall carry out
their respective obligations under this Agreement in continued
compliance with such laws and regulations. Broker-Dealer shall be
responsible for securities training, supervision and control of the
Agents in connection with their solicitation activities with respect
to the Contracts and shall supervise Agents' compliance with
applicable federal and state securities law and NASD requirements in
connection with such solicitation activities. Broker-Dealer and
Insurance Agent shall comply, and shall ensure that Agents comply,
with the rules and procedures established by Life Company from
time-to-time, and the rules set forth below, and Broker-Dealer and
Insurance Agent shall be solely responsible for such compliance.
(b) Broker-Dealer, Insurance Agent and Agents shall not offer or attempt
to offer the Contracts, nor solicit applications for the Contracts,
nor deliver Contracts, in any state or jurisdiction in which the
Contracts may not lawfully be sold or offered for sale.
(c) Broker-Dealer, Insurance Agent and Agents shall not solicit
applications for the Contracts without delivering the Prospectus for
the Contracts, the then-currently effective prospectus(es) for the
underlying fund(s) and, where required by state insurance law, the
then-currently effective statement of additional information for the
Contracts.
(d) Broker-Dealer, Insurance Agent and Agents shall not recommend the
purchase of a Contract to an applicant unless each has reasonable
grounds to believe that such purchase is suitable for the applicant in
accordance with, among other things, applicable regulations of any
state insurance commission, the SEC and the NASD.
(e) Insurance Agent shall return promptly to Life Company all receipts for
delivered Contracts, all undelivered contracts and all receipts for
cancellation, in accordance with the requirements established by Life
Company and/or as required under state insurance law. Upon issuance of
a Contract by Life Company and delivery of such Contract to Insurance
Agent, Insurance Agent shall promptly deliver such Contract to its
purchaser. For purposes of this provision "promptly" shall be deemed
to mean not later than five (5) calendar days. Life Company will
assume that a Contract will be delivered by Insurance Agent to the
purchaser of such Contract within five (5) calendar days for purposes
of determining when to transfer premiums initially allocated to the
Money Market Account available under such Contracts to the particular
investment options specified by such purchaser. As a result, if
purchasers exercise the free-look provisions under such Contracts,
Broker-Dealer shall indemnify Life Company for any loss incurred by
Life Company that results from Insurance Agent's failure to deliver
such Contracts to the purchasers within the contemplated five (5)
calendar day period.
(f) In the event that Premiums are sent to Insurance Agent or
Broker-Dealer, rather than to the Service Center, Insurance Agent and
Broker-Dealer shall promptly (and in any event, not later than two (2)
business days) remit such Premiums to Life Company at the Service
Center. Insurance Agent and Broker-Dealer acknowledge that if any
Premium is held at any time by either of them, such Premium shall be
held on behalf of the customer, and Insurance Agent or Broker-Dealer
shall segregate such premium from their own funds and promptly (and in
any event, within two (2) business days) remit such Premium to Life
Company. All such Premiums, whether by check, money order or wire,
shall at all times be the property of Life Company.
(g) Neither Broker-Dealer nor Insurance Agent, nor any of their directors,
partners, officers, employees, registered persons, associated persons,
agents or affiliated persons, in connection with the offer or sale of
the Contracts, shall give any information or make any representations
or statements, written or oral, concerning the Contracts, the
underlying funds or fund Shares, other than information or
representations contained in the Prospectuses, statements of
additional information and Registration Statements for the Contracts,
or a fund prospectus, or in reports or proxy statements therefore, or
in promotional, sales or advertising material or other information
supplied and approved in writing by Distributor and Life Company.
(h) Broker-Dealer and Insurance Agent shall not use or implement any
promotional, sales or advertising material relating to the Contracts
without the prior written approval of Distributor and Life Company.
(i) Broker-Dealer and Insurance Agent shall be solely responsible under
applicable tax laws for the reporting of compensation paid to Agents.
(j) Broker-Dealer and Insurance Agent each represent that it maintains and
shall maintain such books and records concerning the activities of the
Agents as may be required by the SEC, the NASD and any appropriate
insurance regulatory agencies that have jurisdiction and that may be
reasonably required by Life Company. Broker-Dealer and Insurance Agent
shall make such books and records available to Life Company upon
written request.
(k) Broker-Dealer and Insurance Agent shall promptly furnish to Life
Company or its authorized agent any reports and information that Life
Company may reasonably request for the purpose of meeting Life
Company's reporting and record keeping requirements under the
insurance laws of any state, under any applicable federal and state
securities laws, rules and regulations, and the rules of the NASD.
(l) Broker-Dealer shall secure and maintain a fidelity bond (including
coverage for larceny and embezzlement), issued by a reputable bonding
company, covering all of its directors, officers, agents and employees
who have access to funds of Insurance Company. This bond shall be
maintained at Broker-Dealer's expense in at least the amount
prescribed under the NASD Rules of Fair Practice. Broker-Dealer shall
upon request provide Distributor with a copy of said bond.
Broker-Dealer shall also secure and maintain errors and omissions
insurance acceptable to Distributor and covering Broker-Dealer,
Insurance Agent and Agents. Broker-Dealer hereby assigns any proceeds
received from a fidelity bonding company, errors and omissions or
other liability coverage, to Distributor or Life Company as their
interests may appear, to the extent of their loss due to activities
covered by the bond, policy or other liability coverage. If there is
any deficiency amount, whether due to a deductible or otherwise,
Broker-Dealer shall promptly pay such amount on demand. Broker-Dealer
hereby indemnifies and holds harmless Distributor or Life Company from
any such deficiency and from the costs of collection thereof,
including reasonable attorneys' fees.
5. SALES MATERIALS
(a) During the term of this Agreement, Distributor and Life Company will
provide Broker-Dealer and Insurance Agent, without charge, with as
many copies of Prospectuses (and any supplements thereto), current
fund prospectus(es) (and any supplements thereto), and applications
for the Contracts, as Broker-Dealer or Insurance Agent may reasonably
request. Upon termination of this Agreement, Broker-Dealer and
Insurance Agent will promptly return to Distributor any Prospectuses,
applications, fund prospectuses, and other materials and supplies
furnished by Distributor or Life Company to Broker-Dealer, Insurance
Agent or the Agents.
(b) During the term of this Agreement, Distributor will be responsible for
providing and approving all promotional, sales and advertising
material to be used by Broker-Dealer and Insurance Agent. Distributor
will file such materials or will cause such materials to be filed with
the SEC, the NASD, and/or with any state securities regulatory
authorities, as appropriate.
6. COMMISSION AGREEMENT
(a) During the term of this Agreement, Distributor and Life Company shall
pay to Broker-Dealer or Insurance Agent, as applicable, commissions
and fees set forth in Schedule 1 to this Agreement. The payment of
such commissions and fees shall be subject to the terms and conditions
of this Agreement and those set forth on Schedule 1. Schedule 1,
including the commissions and fees therein, may be amended at any
time, in any manner, and without prior notice, by Distributor or Life
Company. Any amendment to Schedule 1 will be applicable to any Contract
for which any application or Premium is received by the Service Center
on or after the effective date of such amendment. However, Life
Company reserves the right to amend such Schedule with respect to
subsequent premiums and renewal commissions and the right to amend
such Schedule pursuant to this subsection even after termination of
this Agreement. Compensation with respect to any Contract shall be
paid to Insurance Agent only for so long as Insurance Agent is the
agent-of-record and maintains compliance with applicable state
insurance laws and only while this Agreement is in effect.
(b) No compensation shall be payable, and Broker-Dealer and Insurance
Agent agree to reimburse Distributor and Life Company for any
compensation that may have been paid to Broker-Dealer, Insurance Agent
or any Agents in any of the following situations: (i) Insurance
Company, in its sole discretion, determines not to issue the Contract
applied for; (ii) Insurance Company refunds the premiums upon the
applicant's surrender or withdrawal pursuant to any "free-look"
provision; (iii) Insurance Company refunds the premiums paid by
applicant as a result of a complaint by applicant; (iv) Insurance
Company determines that any person soliciting an application who is
required to be licensed or any other person or entity receiving
compensation for soliciting applications or premiums for the Contracts
is not or was not duly licensed as an insurance agent; or (v) any
other situation listed on Schedule 1.
(c) Agents shall have no interest in this Agreement or right to any
commissions to be paid by Distributor or Life Company to Insurance
Agent. Insurance Agent shall be solely responsible for the payment of
any commission or consideration of any kind to Agents. Insurance Agent
shall have no right to withhold or deduct any commission from any
Premiums in respect of the Contract which it may collect unless and
only to the extent that Life Company agrees in writing, to permit
Insurance Agent to net its commissions against Premiums collected.
Insurance Agent shall have no interest in any compensation paid by
Life Company to Distributor or any affiliate, now or hereafter, in
connection with the sale of any Contracts hereunder.
7. TERM AND TERMINATION
This Agreement may not be assigned except by written consent of the
parties hereto and shall continue for an indefinite term, subject to
the termination by any party hereto upon thirty (30) days advance
written notice to the other parties. This Agreement shall
automatically terminate upon its breach by any party hereto, or in the
event the Distributor or Broker-Dealer ceases to be a registered
broker-dealer, a member of the NASD, or Insurance Agent ceases to be
properly licensed or upon the filing by any party hereto for
protection under any state or federal bankruptcy, insolvency or
similar law.
8. COMPLAINTS AND INVESTIGATIONS
(a) Distributor, Life Company, Broker-Dealer and Insurance Agent shall
cooperate fully in any insurance regulatory investigation or
proceeding or judicial proceeding arising in connection with the
Contracts marketed under this Agreement. In addition, Distributor,
Life Company, Broker-Dealer and Insurance Agent shall cooperate fully
in any securities regulatory investigation or proceeding or judicial
proceeding with respect to Distributor, Broker-Dealer, their
Affiliates and their agents, to the extent that such investigation or
proceeding relates to the Contracts marketed under this Agreement.
Without limiting the foregoing:
(i) Broker-Dealer and Insurance Agent will be notified promptly of
any customer complaint or notice of any regulatory investigation
or proceeding or judicial proceeding received by Distributor or
Life Company with respect to Insurance Agent or any Agent which
may affect the issuance of any Contract marketed under this
Agreement.
(ii) Broker-Dealer and Insurance Agent will promptly notify
Distributor and Life Company of any written customer complaint or
notice of any regulatory investigation or proceeding or judicial
proceeding received by Broker-Dealer or Insurance Agent or their
Affiliates with respect to themselves, their Affiliates, or any
Agent in connection with any Contract marketed under this
Agreement or any activity in connection with any such Contract.
(b) In the case of a customer complaint, Distributor, Life Company,
Broker-Dealer and Insurance Agent will cooperate in investigating such
complaint and any response by Broker-Dealer or Insurance Agent to such
complaint will be sent to Distributor and Life Company for approval
not less than five (5) business days prior to its being sent to the
customer or regulatory authority, except that if a more prompt
response is required, the proposed response shall be communicated by
telephone or facsimile.
(c) The provisions of this Section 8 shall remain in full force and effect
regardless of any termination of this Agreement.
9. Modification of Agreement
This Agreement supersedes all prior agreements, either oral or
written, between the parties relating to the Contracts.
10. INDEMNIFICATION
(a) Broker-Dealer and Insurance Agent, jointly and severally, shall
indemnify and hold harmless Distributor and Life Company and each
person who controls or is associated with Distributor or Life Company
within the meaning of such terms under the federal securities laws,
and any officer, director, employee or agent of the foregoing, against
any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any reasonable amounts paid in
settlement of, any action, suit or proceeding or any claim asserted),
to which they or any of them may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any
actual or alleged:
(i) violation(s) by Broker-Dealer, Insurance Agent or an Agent of
federal or state securities law or regulations, insurance law or
regulation(s), or any rule or requirement of the NASD;
(ii) unauthorized use of sales or advertising material, any oral or
written misrepresentations, or any unlawful sales practices
concerning the Contracts, by Broker-Dealer, Insurance Agent or an
Agent;
(iii)claims by the Agents or other agents or representatives of
Insurance Agent or Broker-Dealer for commissions or other
compensation or remuneration of any type;
(iv) any failure on the part of Broker-Dealer, Insurance Agent, or an
Agent to submit Premiums or applications to Life Company, or to
submit the correct amount of a Premium, on a timely basis and in
accordance with this Agreement;
(v) any failure on the part of Broker-Dealer, Insurance Agent, or an
Agent to deliver Contracts to purchasers thereof on a timely
basis as set forth in Section 4(e) of this Agreement; or
(vi) a breach by Broker-Dealer or Insurance Agent of any provision of
this Agreement.
This indemnification will be in addition to any liability which
Broker-Dealer and Insurance Agent may otherwise have.
(b) Distributor and Life Company, jointly and severally, shall
indemnify and hold harmless Broker-Dealer and Insurance Agent and each
person who controls or is associated with Broker-Dealer or Insurance
Agent within the meaning of such terms under the federal securities
laws, and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any reasonable amounts
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they or any of them may become subject under any
statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon
a breach by Distributor or Life Company of any provision of this
Agreement. This indemnification will be in addition to any liability
which Distributor and Life Company may otherwise have.
(c) After receipt by a party entitled to indemnification ("indemnified
party") under this Section 10 of notice of the commencement of any
action, if a claim in respect thereof is to be made against any person
obligated to provide indemnification under this Section 10
("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as
practicable thereafter, provided that the omission to so notify the
indemnifying party will not relieve it from any liability under this
Section 10, except to the extent that the omission results in a
failure of actual notice to the indemnifying party and such
indemnifying party is damaged as a result of the failure to give such
notice. The indemnifying party will be entitled to participate in the
defense of the indemnified party but such participation will not
relieve such indemnifying party of the obligation to reimburse the
indemnified party for reasonable legal and other expenses incurred by
such indemnified party in defending himself or itself. The
indemnification provisions contained in this Section 10 shall remain
operative in full force and effect, regardless of any termination of
this Agreement. A successor by law of Distributor or Life Company, as
the case may be, shall be entitled to the benefits of the
indemnification provisions contained in this Section 10.
11. RIGHTS, REMEDIES, ETC. ARE CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are
entitled to under state and federal laws. Failure of either party to
insist upon strict compliance with any of the conditions of this
Agreement shall not be construed as a waiver of any of the conditions,
but the same shall remain in full force and effect. No waiver of any
of the provisions of this Agreement shall be deemed, nor shall
constitute, a waiver of any other provisions, whether or not similar,
nor shall any waiver constitute a continuing waiver.
12. NOTICES
All notices hereunder are to be made in writing and shall be given:
<TABLE>
<CAPTION>
<S> <C>
IF TO DISTRIBUTOR, TO: IF TO LIFE COMPANY, TO:
Cova Life Sales Company Cova Financial Services Life Insurance Company
Attention: Judy M. Drew, President Attention: Judy M. Drew, Senior Vice President
One Tower Lane One Tower Lane
Suite 3000 Suite 3000
Oakbrook Terrace, Illinois 60181-4644 Oakbrook Terrace, Illinois 60181-4644
IF TO BROKER-DEALER, TO: IF TO INSURANCE AGENT, TO:
XXXXXXXXXXXXXX XXXXXXXXXXXXXXX
XXXXXXXXXXXXXX XXXXXXXXXXXXXXX
XXXXXXXXXXXXXX XXXXXXXXXXXXXXX
XXXXXXXXXXXXXX XXXXXXXXXXXXXXX
</TABLE>
or such other address as such party may hereafter specify in writing.
Each such notice to a party shall be either hand delivered, transmitted
by registered or certified United States mail with return receipt
requested or by express courier, and shall be effective upon delivery.
13. INTERPRETATION, JURISDICTION, ETC.
This Agreement constitutes the whole agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all
prior oral or written understandings, agreements or negotiations
between the parties with respect to the subject matter hereof. No prior
writings by or between the parties hereto with respect to the subject
matter hereof shall be used by either party in connection with the
interpretation of any provision of this Agreement. This Agreement shall
be construed and its provisions interpreted under and in accordance
with the internal laws of the State of Illinois without giving effect
to principles of conflict of laws.
14. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement,
or the breach hereof, shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof.
15. SETOFFS; CHARGEBACKS
Broker-Dealer and Insurance Agent hereby authorize Distributor and Life
Company to set off from all amounts otherwise payable to Broker-Dealer
and Insurance Agent all liabilities of Broker-Dealer, Insurance Agent
or Agent. Broker-Dealer and Insurance Agent shall be jointly and
severally liable for the payment of all monies due to Distributor
and/or Life Company which may arise out of this Agreement or any other
agreement between Broker-Dealer, Insurance Agent and Distributor or
Life Company including, but not limited to, any liability for any
chargebacks or for any amounts advanced by or otherwise due Distributor
or Life Company hereunder. All such amounts shall be paid to the
Distributor and Life Company within thirty (30) days of written request
therefore. Distributor and Life Company do not waive any of its other
rights to pursue collection of any indebtedness owed by Broker-Dealer
or Insurance Agent or its Agents to Distributor or Life Company. In the
event Distributor or Life Company initiates legal action to collect any
indebtedness of Broker-Dealer, Insurance Agent or its Agents,
Broker-Dealer and Insurance Agent shall reimburse Distributor and Life
Company for reasonable attorney fees and expenses in connection
therewith. This provision shall remain in full force and effect
regardless of any termination of this Agreement.
16. HEADINGS
The headings in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
17. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
18. SEVERABILITY
This is a severable Agreement. In the event that any provision of this
Agreement would require a party to take action prohibited by applicable
federal or state law or prohibit a party from taking action required by
applicable federal or state law, then it is the intention of the
parties hereto that such provision shall be enforced to the extent
permitted under the law, and, in any event, that all other provisions
of this Agreement shall remain valid and duly enforceable as if the
provision at issue had never been part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
COVA FINANCIAL SERVICES
LIFE INSURANCE COMPANY
Date:_________________ By:____________________________________
Judy M. Drew, Senior Vice President
COVA LIFE SALES COMPANY
Date:_________________ By:____________________________________
Patricia E. Gubbe, First Vice President
XXXXXXXXXXXX
Broker-Dealer
Date:_________________ By:____________________________________
Signature
______________________________________
Print Name
______________________________________
Title
XXXXXXXXXXXX
Insurance Agent
Date:_________________ By:____________________________________
Signature
____________________________________
Print Name
____________________________________
Title
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE POLICY
SCHEDULE OF COMMISSIONS
This Schedule of Commissions is a part of the Addendum to Selling Agreement for
the Distribution of Registered Contracts. It is subject to the terms and
conditions of the Selling Agreement. In no event shall the Company be liable for
the payment of any commission with respect to any solicitation made, in whole,
or in part, by any person not appropriately licensed and registered prior to the
commencement of such solicitation.
For Contracts issued by the Company, commissions will be paid to the General
Agent on standard variable contracts in the amounts set forth below for purchase
payments accepted by the Company.
POLICY FORM SERIES CL-1020
--------------------------
<TABLE>
<CAPTION>
FOR AGES 0-80
Base Persistency
Commission Bonus Years
---------- ----------- -----
<S> <C> <C> <C>
5.50% Per purchase payment
.25% 2 - 9 On an annual basis, of contract values attributable
to Contracts serviced by the General Agent. The
.40% 10 & after Persistency Bonus is to be calculated and paid at
the contract anniversary.
</TABLE>
<TABLE>
<CAPTION>
FOR AGES 81-85
Base Persistency
Commission Bonus Years
---------- ----------- -----
<S> <C> <C> <C>
3.00% Per purchase payment
.25% 2 - 9 On an annual basis, of contract values attributable
to Contracts serviced by the General Agent. The
.40% 10 & after Persistency Bonus is to be calculated and paid at
the contract anniversary.
</TABLE>
<TABLE>
<CAPTION>
FOR AGES 86-90
Base Persistency
Commission Bonus Years
---------- ----------- -----
<S> <C> <C> <C>
1.50% Per purchase payment
.25% 2 - 9 On an annual basis, of contract values attributable
to Contracts serviced by the General Agent. The
.40% 10 & after Persistency Bonus is to be calculated and paid at
the contract anniversary.
</TABLE>
Recapture of Base Commission: In the event that the Company refunds any purchase
payment for any reason during the year following a purchase payment, the General
Agent agrees to return to the Company or, in the absence of such return, the
Company will charge back to the recipient of the commission, one hundred percent
(100%) of the commission if the refund takes place within the first six (6)
months of receipt of the purchase payment or fifty percent (50%) of the
commission if the refund takes place within the second six (6) months after
receipt of the purchase payment.
(04/01/97)
COVA
Cova Financial Services Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY ("Cova") will pay the Death
Proceeds to the Beneficiary upon receipt at its Policy Service Office of due
proof of the Insured's death while this Policy is in force. This Policy is
issued in return of the Application and payment of the Initial Premium. A copy
of the Application is attached to and made a part of this Policy. This is a
legal contract between the Owner and the Company.
RIGHT TO EXAMINE
You may cancel this Policy during the Right To Examine Period. The Right To
Examine Period begins with the day You receive this Policy and continues for 10
days. During the Right To Examine Period You may return this Policy by
delivering or mailing it to Cova at its Policy Service Office or to the agent
through whom it was purchased. When this Policy is received by Cova, it will be
voided as if it had never been in force. Cova will pay an amount equal to the
greater of: 1. Premiums paid; or 2. the Account Value on the day this Policy is
returned to Cova or the agent through whom it was purchased.
ALLOCATION OF PREMIUM DURING THE RIGHT TO EXAMINE PERIOD
On the Policy Date, the Initial Premium Payment will be allocated to the Money
Market Subaccount shown on the Schedule Page. The Policy Date may be before or
the same as the Issue Date. All Subsequent Premium Payments received by Cova
before the expiration of the Right to Examine Period will be allocated to the
Money Market Subaccount. On the expiration of 15 days from the Issue Date, the
Subaccount Value of the Money Market Subaccount will be allocated to the
Subaccounts, in whole percentages, as elected by You on the Application.
/s/ JEFFERY K. HOELZEL Secretary /s/ LORRY J. STENSRUD President
- ---------------------- ---------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH PROCEEDS PAYABLE AT DEATH
PERIOD OF COVERAGE NOT GUARANTEED
NONPARTICIPATING - NO DIVIDENDS
READ YOUR POLICY CAREFULLY
CASH VALUES PROVIDED BY THIS POLICY ARE BASED ON THE INVESTMENT EXPERIENCE OF
THE SEPARATE ACCOUNT AND MAY INCREASE OR DECREASE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. THE DURATION OR AMOUNT OF THE DEATH BENEFIT MAY VARY BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. SEE PAGE 4 FOR A DESCRIPTION OF
THE DEATH BENEFIT.
THE VARIABLE PROVISIONS OF THIS POLICY CAN BE FOUND ON PAGES 5 AND 9 .
INDEX Page
Schedule Page
Definitions
Death Benefit Provisions
Premium Payment Provisions
Variable Account Provisions
Calculation of Values
Monthly Deduction Provisions
Transfer Provisions
Termination Provisions
Partial Surrenders, Annual Withdrawal Amount, Surrender Charge and Deferred
Premium Tax Charge
Policy Loans
Payment Provision
Taxes Provision
General Provisions
Ownership and Beneficiary
Settlement Options
SCHEDULE PAGE
INSURED: [JOHN DOE] POLICY NUMBER: [123]
ISSUE AGE/SEX: [35/MALE] POLICY DATE: [12/01/1996]
RATE CLASS: [STANDARD] ISSUE DATE: [12/01/1996]
OWNER: [JOHN DOE] PROCESSING DATE: [1ST]
INITIAL PREMIUM: [$10,000]
FACE AMOUNT: [$61,230]
INITIAL MAXIMUM PREMIUM LIMIT PERCENTAGE: [100%]
BENEFICIARY: AS STATED IN THE APPLICATION FOR THIS POLICY UNLESS CHANGED IN
ACCORDANCE WITH THE POLICY PROVISIONS.
FEES AND CHARGES:
POLICY MAINTENANCE FEE: [ANNUAL POLICY MAINTENANCE FEE; $30 ASSESSED ON A
PRORATA BASIS FROM THE SUBACCOUNTS ON EACH POLICY
ANNIVERSARY. WAIVED IF THE ACCOUNT VALUE ON A POLICY
ANNIVERSARY IS AT LEAST $50,000. DEDUCTED FROM A TOTAL
SURRENDER REGARDLESS OF SIZE OF ACCOUNT VALUE.]
TAX EXPENSE CHARGE: [THE FEDERAL TAX CHARGE OF .0015 IN YEARS 1-10 DIVIDED
BY 12; PLUS THE PREMIUM TAX CHARGE OF .0025 IN YEARS
1-10 DIVIDED BY 12; MULTIPLIED BY THE ACCOUNT VALUE]
ADMINISTRATIVE CHARGE: [.0040 DIVIDED BY 12; MULTIPLIED BY THE ACCOUNT VALUE.]
MORTALITY AND EXPENSE [.0090 IN YEARS 1-10 (.0075 IN YEARS 11 AND AFTER) DIVIDED
BY RISK CHARGE: 12; MULTIPLIED BY THE TOTAL OF THE SUBACCOUNT VALUES.]
SURRENDER CHARGE
[ASSESSED AGAINST PREMIUM SURRENDERED. NOT ASSESSED ON THE ANNUAL WITHDRAWAL
AMOUNT.]
POLICY POLICY
YEAR RATE YEAR RATE
-------------------------------
[1] [7.5%] [6] [4.0%]
[2] [7.5%] [7] [3.0%]
[3] [7.5%] [8] [2.0%]
[4] [6.0%] [9] [1.0%]
[5] [5.0%] [10+] [0%]
DEFERRED PREMIUM TAX CHARGE
[ASSESSED AGAINST PREMIUM SURRENDERED]
POLICY POLICY
YEAR RATE YEAR RATE
[1] [2.25%] [6] [1.00%]
[2] [2.00%] [7] [.75%]
[3] [1.75%] [8] [.50%]
[4] [1.50%] [9] [.25%]
[5] [1.25%] [10+] [0%]
SCHEDULE PAGE
(continued)
ANNUAL WITHDRAWAL AMOUNT:
[THE SUM OF:
1. THE EXCESS OF THE ACCOUNT VALUE OVER PREMIUMS PAID WHICH HAVE NOT BEEN
PREVIOUSLY SURRENDERED; PLUS
2. 10% OF PREMIUMS.]
AN ANNUAL WITHDRAWAL AMOUNT WHICH HAS NOT BEEN USED IN ANY POLICY YEAR DOES NOT
CARRY OVER TO FUTURE POLICY YEARS.
ORDER OF PARTIAL SURRENDERS:
[FOR PURPOSES OF DETERMINING THE CHARGES ASSESSED ON A PARTIAL SURRENDER, A
PARTIAL SURRENDER WILL BE CONSIDERED TO BE MADE FIRST FROM EARNINGS, THEN FROM
PREMIUMS.]
TRANSFER FEE:
[FOR A TRANSFER WHICH EXCEEDS 12 TRANSFERS IN A POLICY YEAR, $25 OR, IF SMALLER,
2% OF THE AMOUNT TRANSFERRED PER TRANSACTION.]
MINIMUM TRANSFER AMOUNT:
[$500 OR ENTIRE BALANCE IF LESS.]
MINIMUM PARTIAL SURRENDER AMOUNT: [$500]
REMAINING ACCOUNT VALUE AMOUNT: [$5,000]
MINIMUM LOAN AMOUNT: [$500]
LOAN ACCOUNT INTEREST RATE (CREDITED): [4%]
PREFERRED LOAN INTEREST RATE (CREDITED): [6%]
POLICY LOAN INTEREST RATE (CHARGED): [6%]
PREFERRED LOANS: DETERMINED ON THE [1ST DAY OF EACH POLICY YEAR]
ELIGIBLE INVESTMENTS:
[- COVA SERIES TRUST]
[- J.P. MORGAN INVESTMENT MANAGEMENT]
[- SELECT EQUITY PORTFOLIO]
[- SMALL CAP STOCK PORTFOLIO]
[- LARGE CAP STOCK PORTFOLIO]
[- INTERNATIONAL EQUITY PORTFOLIO]
[- QUALITY BOND PORTFOLIO]
[- LORD ABBETT ]
[- BOND DEBENTURE PORTFOLIO]
[- LORD ABBETT SERIES FUND, INC.]
[- LORD ABBETT]
[- GROWTH AND INCOME PORTFOLIO]
[- GENERAL AMERICAN CAPITAL COMPANY]
[- CONNING ]
[- MONEY MARKET PORTFOLIO]
VARIABLE ACCOUNT: [COVA VARIABLE LIFE ACCOUNT ONE]
POLICY SERVICE OFFICE:
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
[P.O. BOX 10366]
[DES MOINES, IOWA 50306-0366]
FOR USE WITH [COVA VARIABLE LIFE ACCOUNT ONE]
A SEPARATE INVESTMENT ACCOUNT OF
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
SCHEDULE PAGE
(continued)
<TABLE>
<CAPTION>
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES
AND MONTHLY MAXIMUM COST OF INSURANCE CHARGE PER $1,000
MONTHLY MONTHLY MONTHLY
MINIMUM MAXIMUM MINIMUM MAXIMUM MINIMUM MAXIMUM
DEATH COST OF DEATH COST OF DEATH COST OF
BENEFIT INSURANCE BENEFIT INSURANCE BENEFIT INSURANCE
AGE PERCENTAGE CHARGE AGE PERCENTAGE CHARGE AGE PERCENTAGE CHARGE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35 250.0 0.1808 57 142.0 1.0867 79 105.0 7.8967
36 250.0 0.1933 58 138.0 1.1817 80 105.0 8.5783
37 250.0 0.2075 59 134.0 1.2850 81 105.0 9.3408
38 250.0 0.2233 60 130.0 1.4000 82 105.0 10.2008
39 250.0 0.2417 61 128.0 1.5300 83 105.0 11.1533
40 250.0 0.2625 62 126.0 1.6767 84 105.0 12.1767
41 243.0 0.2850 63 124.0 1.8408 85 105.0 13.2483
42 236.0 0.3092 64 122.0 2.0225 86 105.0 14.3508
43 229.0 0.3358 65 120.0 2.2183 87 105.0 15.4775
44 222.0 0.3642 66 119.0 2.4275 88 105.0 16.6275
45 215.0 0.3942 67 118.0 2.6492 89 105.0 17.8075
46 209.0 0.4267 68 117.0 2.8875 90 105.0 19.0358
47 203.0 0.4608 69 116.0 3.1508 91 104.0 20.3425
48 197.0 0.4975 70 115.0 3.4475 92 103.0 21.7858
49 191.0 0.5383 71 113.0 3.7858 93 102.0 23.5108
50 185.0 0.5833 72 111.0 4.1733 94 101.0 25.8308
51 178.0 0.6358 73 109.0 4.6117 95 101.0 29.3217
52 171.0 0.6942 74 107.0 5.0917 96 101.0 35.0825
53 164.0 0.7608 75 105.0 5.6042 97 101.0 45.0833
54 157.0 0.8342 76 105.0 6.1417 98 101.0 62.0958
55 150.0 0.9133 77 105.0 6.6975 99 101.0 83.3333
56 146.0 0.9975 78 105.0 7.2767
</TABLE>
THE MINIMUM DEATH BENEFIT PERCENTAGES ARE DETERMINED TO COMPLY WITH SECTION 7702
OF THE INTERNAL REVENUE CODE.
THE MAXIMUM COST OF INSURANCE CHARGES DO NOT EXCEED THE COST OF INSURANCE
CHARGES BASED ON THE 1980 COMMISSIONERS STANDARD ORDINARY TABLE, AGE LAST
BIRTHDAY.
DEFINITIONS
ACCOUNT -- One or more of the Subaccount(s) of the Variable Account.
ACCOUNT VALUE -- The value of the Subaccount(s) and the Loan Account.
ACCUMULATION UNIT -- An accounting unit used to calculate the value of a
Subaccount.
AGE -- The Insured's Issue Age plus the number of full Policy Years elapsed
since the Policy Date.
ANNUITY UNIT -- An accounting unit used to calculate the amount of Variable
Payments.
BENEFICIARY -- The person(s) or entity(ies) who/which will receive the Death
Proceeds upon the death of the Insured.
CASH SURRENDER VALUE -- The Cash Value less Debt.
CASH VALUE -- The Account Value less any applicable Surrender Charge, Deferred
Premium Tax Charge and Policy Maintenance Fee.
COVA -- Cova Financial Services Life Insurance Company.
COVERAGE AMOUNT -- The Death Benefit less the Account Value.
DEATH PROCEEDS -- The amount Cova will pay upon death of the Insured.
DEBT -- Any outstanding Loans plus accrued Loan Interest.
DUE PROOF OF DEATH -- One of the following:
1 a certified death certificate;
2. a certified decree of a court or competent jurisdiction as to the finding
of death;
3. a written statement by a medical doctor who attended the deceased; or
4. any other proof satisfactory to Cova.
ELIGIBLE INVESTMENT(S) -- An investment entity which comprises the Portfolios of
this Policy.
FACE AMOUNT -- The Face Amount on the Issue Date is shown on the Schedule Page.
The Face Amount may change in accordance with the terms of the Partial Surrender
provision.
INCOME DATE -- The date payments under a Settlement Option begin. INSURED -- The
person whose life is insured under this Policy. ISSUE AGE -- On the Policy Date,
the Insured's age on his/her last birthday.
ISSUE DATE -- The date this Policy is issued. LOAN -- The amount which is
borrowed.
LOAN ACCOUNT -- An account established for any amounts transferred from the
Subaccounts as a result of a loan. The Loan Account is credited with interest
and is not based on the investment experience of any Subaccount. MAXIMUM PREMIUM
LIMIT -- The maximum total premiums that Cova permits to be paid for this
Policy. Cova sets this limit to be less than or equal to the limit required to
qualify this Policy as life insurance under the Internal Revenue Code.
MONTHLY ANNIVERSARY -- An anniversary of the Policy Date which is the same day
each month as the Policy Date or the first day of the next month if that day
occurs on a day beyond the end of any month. If a Monthly Anniversary falls on a
date which is not a Valuation Date, the Monthly Anniversary will be the next
Valuation Date.
OWNER -- You as the person named on the Schedule Page who has all rights under
this Policy.
PAYEE -- The natural person receiving payments under a Settlement Option.
POLICY ANNIVERSARY -- An anniversary of the Policy Date.
POLICY DATE -- The Policy Date is the date from which Policy Anniversaries and
Policy Years are determined. The Policy Date is shown on the Schedule Page.
POLICY LOAN INTEREST RATE -- The interest rate charged on a Loan under this
Policy.
POLICY YEAR -- One year from the Policy Date and from each Policy Anniversary.
PORTFOLIO -- A segment of an Eligible Investment which constitutes a separate
and distinct class of shares.
PREMIUM TAX CHARGE -- The amount of tax charged due to assessment to Cova of
taxes by a state or municipal entity.
PROCESSING DATE -- The monthly date when certain charges are deducted from the
Account Value. The first Processing Date is the Issue Date. Thereafter, it is
the same day each month as the Policy Date or the first day of the next month if
that day occurs on a day beyond the end of any month. If a Processing Date falls
on a date which is not a Valuation Date, the Processing Date will be the next
Valuation Date.
PRORATA BASIS -- An allocation method based on the proportion of the Account
Value in each Subaccount.
SUBACCOUNT -- A segment of the Variable Account. Each Subaccount is invested in
a different Portfolio.
SUBACCOUNT VALUE -- The value of a Subaccount.
VALUATION DATE -- The Variable Account will be valued each day that the New York
Stock Exchange is open for trading.
VALUATION PERIOD -- The period of time beginning at the close of business of the
New York Stock Exchange and ending at the close of business for the next
succeeding Valuation Date. Values are determined at the end of a Valuation
Period.
VARIABLE ACCOUNT -- A separate investment account of Cova designated on the
Schedule Page.
WRITTEN REQUEST -- A request made in writing and received by Cova.
YOU -- The person named in the Application who as Owner has all rights under
this policy.
DEATH BENEFIT PROVISIONS
DEATH BENEFIT -- While this Policy is in force, the Death Benefit is the greater
of:
1. the Face Amount; or
2. the Minimum Death Benefit.
MINIMUM DEATH BENEFIT -- To ensure that this Policy continues to qualify as life
insurance under the Internal Revenue Code, Cova will automatically increase the
Death Benefit so that it will never be less than the Minimum Death Benefit. The
Minimum Death Benefit is the Account Value as of the end of the Valuation Period
multiplied by the applicable percent shown in the Table of Minimum Death Benefit
Percentages.
PAYMENT OF DEATH BENEFIT -- The Death Proceeds equal the Death Benefit on the
date of the Insured's death less any Debt. Cova will pay the Death Proceeds to
the Beneficiary upon receipt at its Policy Service Office of due proof of the
Insured's death while this Policy is in force.
You may choose to have the Death Proceeds paid in a lump sum or under a
Settlement Option. If You have not made a choice before the Insured dies, the
Beneficiary may choose the manner in which the Death Proceeds are to be paid.
Unless chosen otherwise by You or the Beneficiary, if applicable, Cova reserves
the right to pay the Death Proceeds in a lump sum within 90 days of receipt of
due proof of death.
Interest at an annual rate of 3% or as required by law will be payable on the
Death Proceeds from the date of the Insured's death to:
1. if payment is made in a single sum, the date payment is made; or
2. if payment is made under a Settlement Option, the Income Date.
The Death Benefit payable during the Grace Period is equal to the Death Benefit
in effect immediately prior to the start of the Grace Period less any Debt and
any unpaid Monthly Deduction Amounts.
PREMIUM PAYMENT PROVISIONS
INITIAL PREMIUM -- The Initial Premium is due on the Policy Date. No insurance
is effective until Cova receives the Initial Premium. The Initial Maximum
Premium Limit Percentage is shown on the Schedule Page.
SUBSEQUENT PREMIUMS -- Subject to the Maximum Premium Limit, Cova will accept
Subsequent Premium Payments at any time. If the total of all Premium Payments
under this Policy exceed $1,000,000, You must obtain prior approval from Cova to
make a Subsequent Premium Payment. The amount and frequency of any Subsequent
Premium Payment made will affect the Account Value and the amount or duration of
insurance under this Policy.
A Subsequent Premium Payment that results in an increase in the Death Benefit
will be accepted only after Cova approves evidence of insurability.
A Subsequent Premium Payment must be made to Cova's Policy Service Office.
PREMIUM ALLOCATION -- The Allocation of Premium during the Initial Premium
Payment is allocated as stated in the Right to Examine Period Provision.
Upon written request, You may change the premium allocation. A Subsequent
Premium Payment received after the expiration of the Right to Examine Period
will be allocated to the Subaccounts according to Your most recent instructions.
GRACE PERIOD -- The Grace Period is the 61 days after a Processing Date on which
the Cash Surrender Value is not sufficient to cover any overdue Monthly
Deduction Amounts and the Policy Maintenance Fee. If sufficient Premium is not
paid by the end of the Grace Period, this Policy will terminate without value.
At least 61 days before the end of the Grace Period, Cova will mail to You at
your last known address and any assignee of record written notice of the length
of the Grace Period and the amount of Premium required to continue this Policy
in force.
The Premium required is the amount required to continue this Policy in force to
the end of the Grace Period.
VARIABLE ACCOUNT PROVISIONS
VARIABLE ACCOUNT -- The Variable Account is a separate investment account of
Cova. It is shown on the Schedule Page. Cova has allocated a part of its assets
for this and certain other contracts to the Variable Account. The assets of the
Variable Account are the property of Cova. However, assets equal to liabilities
are not chargeable with the liabilities arising out of any other business Cova
may conduct. The investment policy of the Variable Account will not be changed
without approval by the Insurance Commissioner of the state of Missouri. If
required, the approval process is on file with the Commissioner of the state in
which this Policy is issued.
INVESTMENTS OF THE VARIABLE ACCOUNT -- Premium Payments applied to the Variable
Account are allocated to a Subaccount of the Variable Account. The assets of the
Subaccount are allocated to the Eligible Investment(s) and the Portfolio(s), if
any, within an Eligible Investment shown on the Schedule Page. Cova may, from
time to time, add additional Eligible Investments or Portfolios to those shown
on the Schedule Page. You may be permitted to transfer Account Values to the
additional Eligible Investments or Portfolios. However, the right to make any
transfer will be limited by the terms and conditions imposed by Cova. If the
shares of any of the Eligible Investment(s) or any Portfolio(s) within the
Eligible Investments become unavailable for investment by the Variable Account,
or the Board of Directors deems further investment in these shares
inappropriate, Cova may limit further investment in the shares or may substitute
shares of another Eligible Investment for shares already purchased under this
Policy.
VALUATION OF ASSETS -- Assets of the Variable Account are valued at their fair
market value in accordance with procedures of Cova.
ACCUMULATION UNIT -- An amount allocated to the Variable Account is converted
into Accumulation Units for each elected Subaccount. The number of Accumulation
Units credited to a Subaccount under this Policy is determined by dividing the
amount allocated to the Subaccount by the dollar value of one Accumulation Unit
for that Subaccount as of the Valuation Period during which the amount is
allocated to the Subaccount. The number of Accumulation Units will not be
affected by a subsequent change in the value of the units. The Accumulation Unit
Value in a Subaccount may increase or decrease daily. The Account Value
attributable to a Subaccount of the Variable Account is determined by
multiplying the number of Accumulation Units attributable to the Subaccount by
the Accumulation Unit Value for that Subaccount.
ACCUMULATION UNIT VALUE -- The Accumulation Unit Value for each Subaccount will
vary to reflect the investment experience of the applicable Portfolio and will
be determined on each Valuation Date by multiplying the Accumulation Unit Value
of the Subaccount on the preceding Valuation Date by a Net Investment Factor for
that Subaccount for the Valuation Period then ended. The Net Investment Factor
for each Subaccount is equal to the net asset value per share of the applicable
Portfolio at the end of the Valuation Period (plus the per share amount of any
divided or capital gains distribution paid by that Portfolio in the Valuation
Period then ended) divided by the net asset value per share of the corresponding
Portfolio at the beginning of the Valuation Period.
CALCULATION OF VALUES
The Account Value reflects the Premiums Paid, the Monthly Deductions, deduction
of the Policy Maintenance Fee, the investment experience of the Subaccounts, the
value of amounts allocated to the Loan Account and deductions due to a Partial
Surrender in the following manner: Premiums Paid are converted to Accumulation
Units. The Initial Premium Payment is allocated to the Policy on the Policy
Date. On each Processing Date, Accumulation Units are cancelled to reflect the
deduction of the Monthly Deduction Amount. On each Policy Anniversary,
Accumulation Units are cancelled to reflect the deduction of the Policy
Maintenance Fee.
The Accumulation Unit Value for a Subaccount is a result of the investment
experience of the Subaccount. A Subaccount Value is determined by multiplying
the number of Accumulation Units in the Subaccount by the Accumulation Unit
Value of the Subaccount.
Accumulation Units are cancelled to reflect loans and a Loan Account is
established.
Accumulation Units are cancelled to reflect Partial Surrenders and the Surrender
Charge and Deferred Premium Tax Charge, if any.
CASH VALUE -- The Cash Value equals:
1. the Account Value; less
2. the Surrender Charge, if any; less
3. the Deferred Premium Tax Charge if any; less
4. the Policy Maintenance Fee.
CASH SURRENDER VALUE -- The Cash Surrender Value equals:
1. the Cash Value; less
2. Debt, if any.
POLICY MAINTENANCE FEE -- The Policy Maintenance Fee is shown on the Schedule
Page.
SURRENDER CHARGE -- The Surrender Charge is shown on the Schedule Page.
DEFERRED PREMIUM TAX CHARGE -- The Deferred Premium Tax Charge is shown on the
Schedule Page.
MONTHLY DEDUCTION PROVISIONS
MONTHLY DEDUCTION AMOUNT -- The Monthly Deduction Amount equals:
1. the Administrative Charge; plus
2. the Mortality and Expense Risk Charge; plus
3. the Tax Expense Charge; plus
4. the Cost of Insurance Charge.
The Monthly Deduction is determined on the Policy Date and each Monthly
Anniversary of the Policy Date. The Monthly Deduction is deducted Prorata from
the Subaccount Values on each Processing Date.
ADMINISTRATIVE CHARGE -- The Administrative Charge is shown on the Schedule
Page.
MORTALITY AND EXPENSE RISK CHARGE -- The Mortality and Expense Risk Charge is
shown on the Schedule Page.
TAX EXPENSE CHARGE -- The Tax Expense Charge is shown on the Schedule Page.
COST OF INSURANCE CHARGE -- The Monthly Maximum Cost of Insurance Charge is
equal to:
1. the Maximum Cost of Insurance Charge Rate per $1,000 shown on the Schedule
Page; multiplied by
2. the Coverage Amount; divided by
3. $1,000.
The Coverage Amount equals:
1. the Death Benefit; less
2. the Account Value.
The actual Cost of Insurance Charge assessed by Cova may be less than the
Maximum Cost of Insurance Charge shown on the Schedule Page. Cova will determine
the actual Cost of Insurance Charge based on its expectation of future
experience.
Any change Cova makes to the actual Cost of Insurance Charge will be made on a
uniform basis for Insureds of the same age, sex and rate class whose coverage
has been in force for the same length of time. No change in insurance class or
cost will be made due to deterioration of the Insured's health.
TRANSFER PROVISIONS
Upon request while this Policy is in effect after the end of the Right To
Examine Period, You may make transfers between the Subaccounts.
A transfer is subject to the following:
1. The maximum number of transfers which may be made which are not subject to
a Transfer Fee is shown on the Schedule Page.
2. A Transfer Fee is deducted if a transfer exceeds the maximum number of
transfers not subject to a Transfer Fee. The Transfer Fee is shown on the
Schedule Page. The Transfer Fee is deducted from the amount which is
transferred.
3. The minimum amount which may be transferred is shown on the Schedule Page.
4. A transfer will be effected as of the end of the Valuation Period when Cova
receives an acceptable transfer request containing all required information
including the amount which is to be transferred and the Subaccount(s)
affected.
5. Neither Cova nor its Policy Service Office are liable for a transfer made
in accordance with Your instructions.
6. Cova reserves the right to restrict transfers to a maximum of 12 per year
and to restrict transfers from being made on consecutive Valuation Dates.
7. Your right to make transfers between the Subaccounts is subject to
modification if Cova determines, in its sole opinion, that the exercise of
the right by one or more Owners is, or would be, to the disadvantage of
other Owners. Restrictions may be applied in any manner reasonably designed
to prevent any use of the transfer right which is considered by Cova to be
the disadvantage of other Owners. A modification could be applied to
transfers to or from one or more of the Subaccounts and could include, but
not be limited to:
a) the requirement of a minimum time period between each transfer;
b) not accepting transfer requests of an agent acting under a power of
attorney on behalf of more than one Owner; or
c) limiting the dollar amount that may be transferred between the
Subaccounts by an Owner at any one time.
8. Under a Settlement Option, only one transfer may be made per Policy Year. A
transfer may be made from Variable Payments to Fixed Payments. No transfer
may be made from Fixed Payments to the Variable Payments.
TRANSFERS TO OR FROM SUBACCOUNTS -- A transfer from a Subaccount will result in
a reduction of the number of Accumulation Units credited to the Subaccount from
which the transfer is made. The reduction will equal: 1. the amount transferred;
divided by 2. the value of an Accumulation Unit for the Subaccount as of the
Valuation Date on which the transfer is made.
A transfer to a Subaccount will result in an increase in the number of
Accumulation Units credited to the Subaccount to which the transfer is made. The
increase will equal:
1. the amount transferred; divided by
2. the value of an Accumulation Unit for the Subaccount as of the Valuation
Date on which the transfer is made.
TERMINATION PROVISIONS
TERMINATION -- This Policy will terminate on the earliest of the following:
1. Total Surrender of this Policy;
2. the end of the Grace Period; or
3. the death of the Insured.
REINSTATEMENT -- If this Policy is terminated prior to the death of the Insured,
this Policy may be reinstated if:
1. a Total Surrender was not made for cash;
2. Your reinstatement request is made within 5 years of the end of the Grace
Period;
3. satisfactory evidence of insurability is provided to Cova;
4. any Debt is repaid or reinstated;
5. sufficient premium must be paid to:
a) cover all Monthly Deduction Amounts and the Policy Maintenance Fee
that are due and unpaid during the Grace Period; and
b) continue this Policy in force for 2 months after the date of
reinstatement.
The Face Amount of the reinstated policy cannot exceed the Face Amount at the
time of termination. After adjusting for past due charges, the Account Value on
the reinstatement date will equal:
1. the Account Value at the time of termination; plus
2. premium paid at the time of reinstatement.
The Surrender Charge, if any, and the Deferred Premium Tax Charge, if any, are
based on the number of Policy Years from the original Policy Date. The effective
date of the reinstatement is the next Processing Date following approval by Cova
of the application for reinstatement.
TOTAL SURRENDER -- You may terminate this Policy at any time by submitting a
written request to Cova. Cova will pay the Cash Surrender Value to You at the
time of surrender and Cova's liability under this Policy will cease.
PARTIAL SURRENDERS, ANNUAL WITHDRAWAL AMOUNT, SURRENDER CHARGE AND DEFERRED
PREMIUM TAX CHARGE PARTIAL SURRENDERS -- At any time after the Right to Examine
Period expires, You may, upon written request to Cova, make a Partial Surrender
of the Cash Surrender Value subject to the following:
1. A Partial Surrender must be for an amount at least equal to the Minimum
Partial Surrender Amount shown on the Schedule Page or, if smaller, the
remaining Cash Surrender Value.
2. The Account Value remaining after the Partial Surrender is completed must
be at least equal to the Remaining Account Value Amount shown on the
Schedule Page or Cova will terminate this Policy and pay the Cash Surrender
Value.
3. Unless You specify otherwise, the Partial Surrender will be deducted on a
Prorata basis from the Subaccounts.
4. The Face Amount will be reduced proportional to the reduction in the
Account Value resulting from the Partial Surrender.
ANNUAL WITHDRAWAL AMOUNT -- On a non-cumulative basis, You may make one or more
Partial Surrenders during any Policy Year equal to the Annual Withdrawal Amount
shown on the Schedule Page. The Deferred Premium Tax Charge is assessed against
the portion of the Annual Withdrawal Amount attributable to premiums
surrendered.
SURRENDER CHARGE AND DEFERRED PREMIUM TAX CHARGE -- A Total or Partial Surrender
of the Account Value may be subject to the Surrender Charge and Deferred Premium
Tax Charge. The Surrender Charge and the Deferred Premium Tax Charge are shown
on the Schedule Page.
The Policy Maintenance Fee is assessed against a Total Surrender.
No Surrender Charge or Deferred Premium Tax Charge is assessed if this Policy
terminates due to the death of the Insured.
POLICY LOANS
GENERAL -- At any time after the Right to Examine Period expires and while this
Policy is in force and not in the Grace Period, you may borrow against this
Policy by assigning it to Cova as sole security.
LOAN AMOUNTS -- The Maximum Loan Amount is equal to:
1. 90% of the Account Value; less
2. Loan Interest due on the next Policy Anniversary; less
3. the Surrender Charge, if any; less
4. the Policy Maintenance Fee, if any; less
5. the Deferred Premium Tax Charge, if any.
No new loan may be taken which, in combination with existing loans and accrued
interest, is greater than the Maximum Loan Amount. A loan amount will be
transferred from the Subaccounts to the Loan Account on a Prorata basis. The
Minimum Loan Amount for each new loan is shown on the Schedule Page. If total
loans equal or exceed the Cash Value, and sufficient loan repayment is not
received by Cova by the end of the Grace Period, this Policy will terminate
without value.
PREFERRED LOAN -- The amount available for a Preferred Loan is the amount by
which the Account Value exceeds the total Premiums paid which have not been
previously surrendered. The amount of the Loan Account equal to a Preferred Loan
will be credited with interest at the Preferred Loan Interest Rate. The
Preferred Loan Interest Rate is shown on the Schedule Page. The Preferred Loan
Amount will be determined at the intervals shown on the Schedule Page.
INTEREST CREDITED -- The amount of the Loan Account will be in excess of the
Preferred Loan credited daily with interest at the Loan Account Interest Rate.
The Loan Account Interest Rate is shown on the Schedule Page. The Preferred Loan
Amount will be determined at the intervals shown on the Schedule Page.
LOAN REPAYMENTS -- All or part of a Loan may be repaid at any time that:
1. this Policy is in force; and
2. the Insured is alive.
There is no minimum loan repayment amount. To repay a loan in full, the loan
repayment must equal the Debt.
The amount equivalent to a loan repayment will be deducted from the Loan Account
and allocated to the Subaccounts in the same percentage as premiums are
currently allocated to the Subaccounts.
Unless You request otherwise, all funds received while a loan is outstanding
will first be considered as a payment of any loan interest due, then as a loan
repayment, then as Premium paid.
LOAN INTEREST -- Loan Interest due Cova will accrue daily at a rate which does
not exceed the Policy Loan Interest Rate shown on the Schedule Page. Loan
Interest is due on each Policy Anniversary. If Loan Interest is not paid, the
difference between the value of the Loan Account and Debt will be transferred
from the Subaccounts on a Prorata Basis to the Loan Account. PAYMENT PROVISION
PAYMENTS BY COVA -- Cova will pay the Death Proceeds, Total and Partial
Surrenders and Loans attributable to the Subaccounts within 7 days of receipt of
all information needed to process the payment unless:
1. the New York Stock Exchange is closed on other than customary weekend and
holiday closings;
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held in the
Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the net assets of the Variable
Account; or
during any other period when the Securities and Exchange Commission, by order,
so permits for the protection of Owners; provided that applicable rules and
regulations of the Securities and Exchange Commission will govern as to whether
the conditions described in (2) and (3) exist.
TAXES PROVISION
TAXES -- Cova may assess a charge against this Policy for any taxes attributable
to the Variable Account. Cova does not expect to incur such taxes.
GENERAL PROVISIONS
THE CONTRACT -- The entire contract consists of:
1. this Policy;
2. the Application which is attached to this Policy; and
3. any riders or endorsements attached to this Policy.
This Policy may be changed or altered only by the President or Secretary of
Cova. A change or alteration must be in writing.
RELIANCES -- This Policy has been issued based on the answers in the
Application. All statements in the Application will, in the absence of fraud, be
deemed representations and not warranties.
Neither Cova nor its Policy Service Office are liable for a request made in
accordance with Your instructions.
SUICIDE -- If, within 2 years from the Policy Date, the Insured dies by suicide,
while sane or insane, Cova's liability will be limited to Premiums paid less
Debt and less Partial Surrenders.
INCONTESTABILITY -- Cova cannot contest this Policy after it has been in force,
during the Insured's lifetime, for 2 years from the Policy Date except in the
case of fraud. If this Policy is reinstated, Cova may contest this Policy for 2
years after the date of reinstatement or for any statements made in the
Application for reinstatement.
MISSTATEMENT OF AGE AND/OR SEX -- If it is determined that the age and/or sex of
the Insured was misstated, on the date of death of the Insured, the Death
Benefit will be reduced or increased by the difference between the Death Benefit
at the misstated age and/or sex of the Insured and the Death Benefit that would
have been provided by the last Cost of Insurance Charge at the correct age
and/or sex of the Insured.
NON-PARTICIPATING -- This Policy is non-participating. It does not share in
Cova's surplus.
REPORTS -- At least once each calendar year, Cova will provide You with a report
showing:
1. the amount of Death Benefit;
2. the Account Value, Cash Value, Cash Surrender Value and Face Amount;
3. Premiums paid, Monthly Deduction Amounts and Loans since the last report;
4. the amount of any Debt;
5. notifications required by the provisions of this Policy; and
6. any other information required by the state where this Policy was
delivered. Cova will also send You any shareholder reports of the
Portfolios and any other notices, reports or documents as required by law.
Reports will be sent to Your last known address.
POLICY CHANGES -- To receive the tax treatment accorded life insurance under
Federal laws, insurance under this Policy must initially qualify and continue to
qualify as life insurance under the Internal Revenue Code. To maintain
qualification to the maximum extent permitted by law, Cova reserves the right to
return Premiums paid with interest which Cova determines will cause any coverage
under this Policy to fail to qualify as life insurance under applicable tax
laws. Additionally, Cova reserves the right to make changes in this Policy or to
make distributions to the extent Cova determines necessary to continue to
qualify this Policy as life insurance and to comply with applicable laws. Cova
will provide advance written notice of a change.
CLAIMS OF CREDITORS -- Proceeds described in this Policy will be free from
creditors' claims to the extent allowed by law.
ASSIGNMENT -- No assignment of this Policy by You will be binding on Cova until
it is filed with Cova. Cova assumes no responsibility for the validity of any
assignment. Any claim under an assignment will be subject to proof of the extent
of interest. If this Policy is assigned, Your rights and Beneficiary's rights
are subject to the rights of the assignee of record.
BASIS OF VALUES -- All values available under this Policy are at least equal to
those required by law. Where required, a detailed statement of the method of
computations has been filed with the insurance department of the state where
this Policy was delivered. Mortality and expense risks under this Policy are
borne by Cova.
OWNERSHIP AND BENEFICIARY
CHANGE OF OWNER OR BENEFICIARY -- The Owner and Beneficiary are named in the
Application unless changed by You. To change the Owner or Beneficiary, You must
notify Cova in writing while the Insured is alive. After Cova receives written
notice, the change will be effective as of the date You signed the notice,
whether or not the Insured is living when Cova receives it. However, the change
will be subject to any payment Cova made or actions Cova may have taken before
Cova received the request.
You may not change an irrevocable Beneficiary. If there is an irrevocable
Beneficiary, all policy changes except premium allocations and transfers require
the consent of the Beneficiary.
OWNERSHIP -- If the Owner dies while this Policy is in force and the Insured is
living, ownership rights pass to a successor owner, if any, or to the estate of
the Owner.
This Policy can be owned by joint owners. Authorization of the joint owners is
required for all policy changes except for telephone transfers.
NO NAMED BENEFICIARY -- If no named Beneficiary survives the Insured, then,
unless this Policy provides otherwise:
1. You will be the Beneficiary; or
2. if You are the Insured, Your estate will be the Beneficiary.
SETTLEMENT OPTIONS
GENERAL -- The Cash Surrender Value or the Death Proceeds may be paid in a lump
sum or may be applied to one of the following Settlement Options. No Total
Surrender or Partial Surrenders are permitted after payments begin. If the
amount applied under a Settlement Option is less than $5,000, Cova reserves the
right to make one lump sum payment in lieu of payments under the Settlement
Option. If the amount of a Settlement Option Payment would be or become less
than $100, Cova will reduce the frequency of payments to an interval which will
result in each payment being at least $100. The adjusted age of the Payee used
to determine payments under a Settlement Option is the Payee's age less one year
for every eight years elapsed between January 1, 1983 and the Income Date.
Cova may require proof of age of a Payee before making any payments under a life
Settlement Option under this Policy. If the age of the Payee has been misstated,
the amount payable will be the amount that the Cash Surrender Value would have
provided at the correct age.
After the Income Date, any under payments will be made up in one sum with the
next Payment. Any overpayments will be deducted from future Payments until the
total is repaid.
SETTLEMENT OPTIONS -- The following Settlement Options or any other option
acceptable to Cova may be elected.
OPTION 1: LIFE ANNUITY -- A life annuity is an annuity payable during the
lifetime of the Payee and terminating with the last payment preceding the death
of the Payee.
OPTION 2: LIFE ANNUITY WITH 5, 10 OR 20 YEARS GUARANTEED -- A life annuity with
a guaranteed period is an annuity payable monthly during the lifetime of the
Payee with the guarantee that payments will be made for a minimum of 5, 10 or 20
years, as elected. If, at the death of the Payee, payments have been made for
less than the guaranteed period elected, payments will continue to the
Beneficiary for the remainder of the guaranteed period.
OPTION 3: JOINT AND LAST SURVIVOR ANNUITY
- -- A joint and last survivor annuity is an annuity payable monthly during the
joint lifetime of the Payee and a designated second person, and thereafter
during the remaining lifetime of the survivor, ceasing with the last payment
prior to the death of the survivor. Based on the options currently offered Cova,
the Payee may elect that the payment to the survivor be less than the payment
made during the joint lifetime of the Payee and the designated second person.
OPTION 4: PAYMENTS FOR A DESIGNATED PERIOD
-- An amount payable monthly for the number of years elected which may be from
5 to 30 years. If the Payee dies before the end of the designated period,
payments will continue to the Beneficiary for the remainder of the designated
period.
ALLOCATION OF SETTLEMENT OPTION -- If a Settlement Option is elected, unless
otherwise specified, the Cash Surrender Value or Death Proceeds held in the
Subaccounts will be applied to provide Variable Payments based on the Prorata
amount in the applicable Subaccounts. Fixed Payments are also available.
VARIABLE PAYMENTS -- Variable Payments are payments which increase or decrease
in amount in accordance with the investment experience of the Subaccounts. After
the first monthly Variable Payment has been determined by using the appropriate
Annuity Table, the number of Subaccount Annuity Units is determined by dividing
the first monthly payment by the appropriate Subaccount Annuity Unit Value on
the effective date of the payments. The Annuity Unit Value for each Subaccount
will depend on the investment experience of the applicable Portfolio.
The number of Annuity Units remains fixed with respect to a particular
Subaccount. If You make a transfer between Subaccounts, the number of Annuity
Units will change when the transfer is made and will then remain fixed in number
following the election. Only one transfer may be made per Policy Year between
the Subaccounts.
The dollar amount of the second and subsequent Variable Payments is not
predetermined and may increase or decrease from month to month. The actual
amount of each Variable Payment after the first is determined by multiplying the
number of Subaccount Annuity Units by the Subaccount Annuity Unit Value. The
Subaccount Annuity Unit Value will be determined on the date the Variable
Payment is due. The Subaccount Annuity Unit Value is adjusted for an assumed
investment rate of 3%.
ANNUITY UNIT -- The value of an Annuity Unit for each Subaccount of the Variable
Account was arbitrarily set initially at $10. This was done when the first
Eligible Investment shares were purchased.
The Subaccount Annuity Unit Value at the end of any subsequent Valuation Period
is determined by multiplying the Subaccount Annuity Unit Value for the
immediately preceding Valuation Period by the net investment factor for the day
for which the Annuity Unit Value is being calculated.
NET INVESTMENT FACTOR -- The Net Investment Factor for any Subaccount of the
Variable Account for any Valuation Period is determined by dividing:
1. the Accumulation Unit Value as of the close of the current Valuation Period;
by
2. the Accumulation Unit Value as of the close of the immediately preceding
Valuation Period. The Net Investment Factor may be greater or less than
one, as the Annuity Unit Value may increase or decrease.
FIXED PAYMENTS -- Fixed Payments are payments for which the amount is
predetermined on the date the first payment is made. Fixed Payments are
determined by multiplying the amount applied to the Settlement Option by a rate
which is not less than the rate specified in the Settlement Option Tables.
DESCRIPTION OF TABLES -- The Settlement Option Tables show the minimum dollar
amount of the first monthly payment for each $1,000 applied under an option.
Under Option 1 and 2, the amount of each payment will depend upon the Adjusted
Age and sex of the Payee at the time the first payment is due. Under Option 3,
the amount of each payment will depend upon the Adjusted Age and sex of both
Payees at the time the first payment is due.
The Settlement Option Tables are based on the 1983 Individual Annuity Mortality
Tables, Male/Female, with interest at an effective annual rate of 3%.
<TABLE>
<CAPTION>
SETTLEMENT OPTION TABLE FOR OPTION 1
Life Annuity
Monthly Annuity Payment Under Option 1
For Each $1,000 Of Amount Applied
Male Female Male Female Male Female
Monthly Monthly Monthly Monthly Monthly Monthly
Age Payment Payment Age Payment Payment Age Payment Payment
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 2.82 2.76 32 3.35 3.19 59 5.18 4.63
6 2.83 2.77 33 3.38 3.21 60 5.31 4.74
7 2.85 2.78 34 3.42 3.24 61 5.45 4.85
8 2.86 2.79 35 3.46 3.27 62 5.61 4.97
9 2.87 2.80 36 3.50 3.30 63 5.77 5.10
10 2.88 2.81 37 3.54 3.33 64 5.95 5.24
11 2.90 2.82 38 3.58 3.37 65 6.13 5.38
12 2.91 2.83 39 3.62 3.40 66 6.34 5.54
13 2.93 2.84 40 3.67 3.44 67 6.55 5.71
14 2.94 2.85 41 3.72 3.48 68 6.78 5.89
15 2.96 2.87 42 3.77 3.52 69 7.02 6.08
16 2.97 2.88 43 3.83 3.56 70 7.29 6.29
17 2.99 2.90 44 3.88 3.60 71 7.57 6.51
18 3.01 2.91 45 3.94 3.65 72 7.87 6.76
19 3.03 2.93 46 4.01 3.70 73 8.19 7.02
20 3.05 2.94 47 4.07 3.75 74 8.53 7.31
21 3.07 2.96 48 4.14 3.80 75 8.90 7.62
22 3.09 2.97 49 4.21 3.86 76 9.30 7.96
23 3.11 2.99 50 4.29 3.92 77 9.72 8.33
24 3.13 3.01 51 4.36 3.98 78 10.18 8.73
25 3.15 3.03 52 4.45 4.05 79 10.67 9.16
26 3.18 3.05 53 4.53 4.12 80 11.19 9.63
27 3.20 3.07 54 4.63 4.19 81 11.75 10.14
28 3.23 3.09 55 4.72 4.27 82 12.35 10.69
29 3.26 3.11 56 4.83 4.36 83 12.99 11.29
30 3.29 3.14 57 4.94 4.44 84 13.66 11.94
31 3.32 3.16 58 5.05 4.54 85+ 14.37 12.64
</TABLE>
<TABLE>
<CAPTION>
SETTLEMENT OPTION TABLE FOR OPTION 2 Life Annuity With 5, 10 or 20 Years
Guaranteed Monthly Annuity Payment Under Option 2 For Each $1,000 Of Amount
Applied
Male 5 Years 10 Years 20 Years Male 5 Years 10 Years 20 Years
Age Guaranteed Guaranteed Guaranteed Age Guaranteed Guaranteed Guaranteed
<S> <C> <C> <C> <C> <C> <C> <C>
5 2.82 2.82 2.82 46 4.00 3.98 3.88
6 2.83 2.83 2.83 47 4.06 4.04 3.94
7 2.84 2.84 2.84 48 4.13 4.10 3.99
8 2.86 2.86 2.85 49 4.20 4.17 4.04
9 2.87 2.87 2.86 50 4.27 4.27 4.10
10 2.88 2.88 2.88 51 4.35 4.31 4.16
11 2.90 2.89 2.89 52 4.43 4.39 4.22
12 2.91 2.91 2.90 53 4.52 4.47 4.28
13 2.92 2.92 2.92 54 4.61 4.56 4.34
14 2.94 2.94 2.93 55 4.70 4.65 4.40
15 2.96 2.95 2.95 56 4.80 4.74 4.47
16 2.97 2.97 2.96 57 4.91 4.84 4.53
17 2.99 2.99 2.98 58 5.03 4.94 4.60
18 3.01 3.00 3.00 59 5.15 5.05 4.66
19 3.03 3.02 3.02 60 5.28 5.17 4.73
20 3.04 3.04 3.04 61 5.41 5.29 4.79
21 3.06 3.06 3.05 62 5.56 5.42 4.86
22 3.09 3.08 3.07 63 5.72 5.55 4.92
23 3.11 3.10 3.10 64 5.88 5.69 4.98
24 3.13 3.13 3.12 65 6.06 5.84 5.04
25 3.15 3.15 3.14 66 6.25 5.99 5.10
26 3.18 3.17 3.16 67 6.45 6.15 5.15
27 3.20 3.20 3.19 68 6.66 6.31 5.20
28 3.23 3.23 3.21 69 6.88 6.48 5.24
29 3.26 3.25 3.24 70 7.12 6.65 5.29
30 3.29 3.28 3.27 71 7.37 6.82 5.32
31 3.32 3.31 3.30 72 7.63 7.00 5.36
32 3.34 3.34 3.33 73 7.91 7.18 5.39
33 3.38 3.38 3.36 74 8.20 7.36 5.41
34 3.42 3.41 3.39 75 8.51 7.53 5.43
35 3.45 3.45 3.42 76 8.83 7.71 5.45
36 3.49 3.49 3.46 77 9.16 7.88 5.47
37 3.53 3.53 3.49 78 9.51 8.05 5.48
38 3.58 3.57 3.53 79 9.88 8.21 5.49
39 3.62 3.61 3.57 80 10.25 8.37 5.50
40 3.67 3.66 3.61 81 10.64 8.51 5.51
41 3.72 3.71 3.65 82 11.03 8.65 5.51
42 3.77 3.76 3.70 83 11.42 8.78 5.52
43 3.82 3.81 3.74 84 11.82 8.90 5.52
44 3.88 3.86 3.79 85+ 12.21 9.00 5.52
45 3.91 3.92 3.84
</TABLE>
<TABLE>
<CAPTION>
SETTLEMENT OPTION TABLE FOR OPTION 2 Life Annuity With 5, 10 or 20 Years
Guaranteed Monthly Annuity Payment Under Option 2 For Each $1,000 Of Amount
Applied
Female 5 Years 10 Years 20 Years Female 5 Years 10 Years 20 Years
Age Guaranteed Guaranteed Guaranteed Age Guaranteed Guaranteed Guaranteed
<S> <C> <C> <C> <C> <C> <C> <C>
5 2.76 2.76 2.75 46 3.70 3.69 3.65
6 2.77 2.77 2.76 47 3.75 3.74 3.69
7 2.78 2.78 2.77 48 3.80 3.79 3.74
8 2.79 2.79 2.78 49 3.86 3.84 3.79
9 2.80 2.80 2.79 50 3.92 3.90 3.84
10 2.81 2.81 2.80 51 3.98 3.96 3.89
11 2.82 2.82 2.82 52 4.04 4.03 3.94
12 2.83 2.83 2.83 53 4.11 4.09 4.00
13 2.84 2.84 2.84 54 4.19 4.16 4.06
14 2.85 2.85 2.85 55 4.26 4.24 4.12
15 2.87 2.87 2.86 56 4.35 4.32 4.18
16 2.88 2.88 2.88 57 4.43 4.40 4.25
17 2.90 2.90 2.89 58 4.53 4.49 4.31
18 2.91 2.91 2.91 59 4.62 4.58 4.38
19 2.92 2.92 2.92 60 4.73 4.68 4.45
20 2.94 2.94 2.94 61 4.84 4.78 4.52
21 2.96 2.96 2.95 62 4.95 4.89 4.60
22 2.97 2.97 2.97 63 5.08 5.00 4.67
23 2.99 2.99 2.99 64 5.21 5.12 4.74
24 3.01 3.01 3.00 65 5.35 5.25 4.81
25 3.03 3.03 3.02 66 5.50 5.38 4.88
26 3.05 3.05 3.04 67 5.66 5.53 4.95
27 3.07 3.07 3.06 68 5.83 5.68 5.02
28 3.09 3.09 3.08 69 6.02 5.83 5.08
29 3.11 3.11 3.10 70 6.22 6.00 5.14
30 3.14 3.14 3.13 71 6.43 6.17 5.20
31 3.16 3.16 3.15 72 6.66 6.35 5.25
32 3.19 3.19 3.17 73 6.90 6.54 5.29
33 3.21 3.21 3.20 74 7.17 6.73 5.33
34 3.24 3.24 3.23 75 7.45 6.93 5.37
35 3.27 3.27 3.25 76 7.75 7.13 5.40
36 3.30 3.30 3.28 77 8.06 7.33 5.43
37 3.33 3.33 3.31 78 8.40 7.53 5.45
38 3.36 3.36 3.34 79 8.76 7.73 5.47
39 3.40 3.40 3.38 80 9.14 7.93 5.48
40 3.44 3.44 3.41 81 9.54 8.12 5.49
41 3.47 3.47 3.45 82 9.95 8.30 5.50
42 3.51 3.51 3.48 83 10.39 8.47 5.51
43 3.56 3.56 3.52 84 10.83 8.63 5.51
44 3.60 3.60 3.56 85+ 11.29 8.78 5.52
45 3.65 3.65 3.60
</TABLE>
SETTLEMENT OPTION TABLE FOR OPTION 3
Joint and Last Survivor Annuity
Monthly Annuity Payment Under Option 3
For Each $1,000 Of Amount Applied
Joint And 50% Survivor Annuity
Female
Age Male Age
50 55 60 65 70 75
50 4.03 4.21 4.42 4.68 4.98 5.32
55 4.20 4.40 4.63 4.92 5.25 5.62
60 4.41 4.63 4.89 5.21 5.58 6.01
65 4.67 4.91 5.21 5.57 6.00 6.49
70 4.97 5.25 5.59 6.01 6.52 7.10
75 5.34 5.67 6.06 6.56 7.17 7.87
Joint And 662/3% Survivor Annuity
Female
Age Male Age
50 55 60 65 70 75
50 3.86 4.00 4.16 4.33 4.51 4.70
55 4.02 4.19 4.38 4.58 4.79 5.02
60 4.20 4.40 4.63 4.87 5.14 5.41
65 4.40 4.64 4.91 5.22 5.55 5.89
70 4.61 4.90 5.23 5.62 6.04 6.49
75 4.85 5.18 5.58 6.06 6.62 7.22
Joint And 100% Survivor Annuity
Female
Age Male Age
50 55 60 65 70 75
50 3.57 3.65 3.72 3.76 3.80 3.82
55 3.71 3.83 3.94 4.02 4.08 4.13
60 3.83 4.01 4.17 4.31 4.42 4.50
65 3.94 4.17 4.41 4.64 4.83 4.98
70 4.02 4.31 4.63 4.96 5.28 5.54
75 4.09 4.42 4.82 5.27 5.74 6.19
Information about different age combinations will be
furnished upon request.
SETTLEMENT OPTION TABLE FOR OPTION 4
Payments For Designated Period
Monthly Annuity Payment Under Option 4
For Each $1,000 Of Amount Applied
Monthly Monthly Monthly
Years Payment Years Payment Years Payment
5 17.91 14 7.26 23 4.99
6 15.14 15 6.87 24 4.84
7 13.16 16 6.53 25 4.71
8 11.68 17 6.23 26 4.59
9 10.53 18 5.96 27 4.47
10 9.61 19 5.73 28 4.37
11 8.86 20 5.51 29 4.27
12 8.24 21 5.32 30 4.18
13 7.71 22 5.15
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH PROCEEDS PAYABLE AT DEATH
PERIOD OF COVERAGE NOT GUARANTEED
NONPARTICIPATING - NO DIVIDENDS
Cova Financial Services Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
[SEAL OF THE SECRETARY OF STATE MISSOURI] STATE OF MISSOURI
JAMES C. KIRKPATRICK,
Secretary of State
Corporation Division
Certificate of Amendment and Restatement
I, JAMES C. KIRKPATRICK, Secretary of State of the State of Missouri, do
hereby certify that ASSURANCE LIFE COMPANY a corporation organized under the
Laws of Missouri, has delivered to me and that I have filed its Certificate of
Amendment of its Articles of Incorporation; that said Corporation has in all
respects complied with the requirements of law governing the Amendment of
Articles of Incorporation and that said Articles are amended in accordance
therewith.
IN WITNESS WHEREOF, I hereunto set my hand and affixed
the Great Seal of the State of Missouri, at the City of
Jefferson, this 27th day of April, A.D. 1983.
/s/ JAMES C. KIRKPATRICK
---------------------------------
Secretary of State
---------------------------------
Deputy Secretary of State
STATE OF MISSOURI DIVISION OF INSURANCE
Department of Consumer Affairs, Regulation and Licensing
P.O. Box 690, Jefferson City, MO 65102
CERTIFICATE OF AMENDMENT AND RESTATEMENT OF
ARTICLES OF INCORPORATION
I, Mary C. Hall, Deputy Director, Division of Insurance, Department of
Consumer Affairs, Regulation and Licensing, State of Missouri, do hereby
certify that ASSURANCE LIFE COMPANY, a corporation organized and existing
under the insurance laws of the State of Missouri, has delivered to me and I
have filed its Certificate of Amendment and Restatement of Articles of
Incorporation amending Article V of their Articles of Incorporation granting
authority to Assurance Life Company to increase the number of shares of
capital stock from 500,000 to 1,000,000 with a par value of $2.00 per share as
more fully set forth in the Certificate of Amendment and Restatement of the
Articles of Incorporation attached hereto.
I further certify that I have examined the Certificate of Amendment and
Restatement of the Articles of Incorporation and find that they conform to
law; that the proceedings were regular; that the condition and the assets of
the company justify the amendment and that the same will not be prejudicial to
the interests of the policyholders, all as provided by law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 27th day of April, 1983.
/S/ MARY C. HALL
--------------------------
MARY C. HALL, Deputy Director
Division of Insurance
Department of Consumer Affairs,
Regulation and Licensing
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT AND RESTATEMENT
OF THE ARTICLES OF INCORPORATION
OF ASSURANCE LIFE COMPANY
The undersigned, Assurance Life Company, a Missouri insurance corporation
(hereinafter called the "Corporation"), for the purpose of amending and
restating its Articles of Incorporation, does hereby make and execute this
Certificate of Amendment and Restatement of the Articles of Incorporation.
(1) The name of the Corporation is Assurance Life Company.
(2) The shareholders of the Corporation, at a Special Meeting held April
25, 1983, upon notice made as required by law, did, by unanimous vote of the
outstanding shares entitled to vote, adopt a resolution amending and restating
the Articles of Incorporation, as hereinafter set forth.
(3) The amended and restated Articles of Incorporation of said
corporation thus adopted are as follows:
ARTICLES OF INCORPORATION
OF
ASSURANCE LIFE COMPANY
ARTICLE I
The name of this corporation is ASSURANCE LIFE COMPANY.
ARTICLE II
The principal office of the corporation shall be located in Kansas City,
Missouri.
ARTICLE III
The duration of the corporation perpetual.
ARTICLE IV
The corporation is formed for the purpose of making insurance upon the
lives of individuals, and every assurance pertaining thereto or connected
therewith, and to grant, purchase and dispose of annuities and endowments of
every kind and description whatsoever, and to provide an indemnity against
death, and for weekly or other periodic indemnity for disability occasioned by
accident or sickness to the person of the insured, and generally to do all
such other things as shall be permitted a corporation of this kind by law and
not expressly prohibited by applicable provisions of Missouri law. The
accident and health insurance and life insurance shall be made separate
departments of the corporation.
In order to carry out the purposes for which it is organized, the
corporation shall have the following rights and powers to the extent not
inconsistent with or expressly prohibited by applicable provisions of Missouri
law:
A. To enter into any lawful contract or contracts with persons, firms,
corporations, other entities, governments or any agencies or subdivisions
thereof, including guaranteeing the performance of any contract or any
obligation of any person, firm, corporation or other entity.
B. To purchase and acquire, as a going concern or otherwise, and to
carry on, maintain and operate all or any part of the property or business of
any corporation, firm, association, entity, syndicate or person whatsoever,
deemed to be of benefit to the corporation, or of use in any manner in
connection with any of its purposes; and to dispose thereof upon such terms as
may seem advisable to the corporation.
C. To purchase or otherwise acquire, hold, sell, pledge, re-issue,
transfer or otherwise deal in, shares of the corporation's own stock, provided
that it shall not use its funds or property for the purchase of its own shares
of stock when such use would be prohibited by law, by the articles of
incorporation or by the bylaws of the corporation; and, provided further, that
shares of its own stock belonging to it shall not be voted upon directly or
indirectly.
D. To invest, lend and deal with moneys of the corporation in any lawful
manner, and to acquire by purchase, by the exchange of stock or other
securities of the corporation, by subscription or otherwise, and to invest in,
to hold for investment or for any other purpose, and to use, sell, pledge or
otherwise dispose of, and in general to deal in any interest concerning or
enter into any bonds, notes, debentures, certificates, receipts and other
securities and obligations of any government, state, municipality,
corporation, association or other entity, including individuals and
partnerships and, while owner thereof, to exercise all of the rights, powers
and privileges of ownership, including among other things, the right to vote
thereon for any and all purposes and to give consents with respect thereto.
E. To borrow or raise money for any purpose of the corporation and to
secure any loan, indebtedness or obligation of the corporation and the
interest accruing thereon, and for that or any other purpose to mortgage,
pledge, hypothecate or charge all or any part of the present or hereafter
acquired property, rights and franchises of the corporation, real, personal,
mixed or of any character whatever, subject only to limitations specifically
imposed by law.
F. To advise and counsel others and to act for and on behalf of others
concerning the acquisition, organization, promotion, development, financing,
operation, management, disposition and termination of corporations,
associations, partnerships, firms and investments of all kinds and to perform
any and all services relating to the foregoing and otherwise and to enter into
and perform contracts, agreements and undertakings in connection therewith.
G. To buy, lease, rent or otherwise acquire, own, hold, use, divide,
partition, develop, improve, operate and sell, lease, mortgage or otherwise
dispose of, deal in and turn to account real estate, leaseholds, and any and
all interests or estates therein or appertaining thereto; and to construct,
acquire, manage, operate, improve, maintain, own, sell, lease or otherwise
dispose of or deal in buildings, structures and improvements situated or to be
situate on any real estate or leasehold.
H. To do any or all of the things herein above enumerated along for its
own account, or for the account of others, or as the agent for others, or in
association with others or by or through others, and to enter into all lawful
contracts and undertakings in respect thereof.
I. In general, to carry on any other business in connection with each
and all of the foregoing or incidental thereto, and to carry on, transact and
engage in any and every lawful business or other lawful things calculated to
be of gain, profit or benefit to the corporation as fully and freely as a
natural person might do, to the extent and in the manner, and anywhere within
and without the State of Missouri, as it may from time to time determine; and
to have and exercise each and all of the powers and privileges, either direct
or incidental, which are given and provided by or are available under the laws
of the State of Missouri applicable to life insurance companies or applicable
to all insurance companies.
None of the purposes and powers specified in any of the paragraphs of
this Article IV shall be in any way limited or restricted by reference to or
inference from the terms of any other paragraph, and the purposes and powers
specified in each of the paragraphs of this Article IV shall be regarded as
independent purposes and powers. The enumeration of specific purposes and
powers in this Article IV shall not be construed to restrict in any manner the
general purposes and powers of this corporation, nor shall the expression of
one thing be deemed to exclude another, although it be of like nature. The
enumeration of purposes or powers herein shall not be deemed to exclude or in
any way limit by inference any purposes or powers which this corporation has
power to exercise, whether expressly by the laws of the State of Missouri, now
or hereafter in effect, or impliedly by any reasonable construction of such
laws.
ARTICLE V
The aggregate number of shares of capital stock which the corporation
shall have authority to issue is 1,000,000 shares each of a par value of Two
Dollars ($2.00) per share, amounting in the aggregate to Two Million Dollars
($2,000,000.00). Each share of stock shall be entitled to one vote except
that in the annual election of directors each shareholder shall have the right
of cumulative voting.
ARTICLE VI
The number of directors to constitute the present board of directors of
the corporation is nine. Hereafter, the number of directors of the
corporation shall be fixed by, or in the manner provided in, and elected in
the manner provided in, the bylaws of the corporation, the applicable
provisions of which shall be consistent with those provisions of the
General and Business Corporation Law of Missouri relating to election of
directors and not prohibited by applicable insurance law. Vacancies in the
board of directors shall be filled in the manner provided in the bylaws.
Directors need not be shareholders unless bylaws of the corporation require
them to be shareholders.
ARTICLE VII
Except as may be otherwise specifically provided by statute, or the
articles of incorporation or the bylaws of the corporation, as from time to
time amended, all powers of management, direction and control of the
corporation shall be, and hereby are, vested in the board of directors, and
shall be exercised by them and by such officers and agents as they may from
time to time appoint and empower. The board shall have the power to make such
bylaws, rules and regulations for the transaction of the business of the
corporation as are not inconsistent with these Articles or the laws of the
State of Missouri.
The bylaws of the corporation may from time to time be altered, amended,
suspended or repealed, or new bylaws may be adopted, by either of the
following ways: (i) by the affirmative vote, at any annual or special meeting
of the shareholders, of the holders of a majority of the outstanding shares of
stock of the corporation entitled to vote, or (ii) by resolution adopted by a
majority of the full board of directors; provided, however, that the power of
the directors to alter, amend, suspend or repeal the bylaws or any portion
thereof enacted by the shareholders may be denied as to any bylaws or portion
thereof enacted by the shareholders if at the time of such enactment the
shareholders shall so expressly provide.
ARTICLE VIII
The corporation reserves the right at any annual or special meeting of
shareholders to alter, amend or repeal any provision contained in its articles
of incorporation in the manner now or hereafter prescribed by the statutes of
Missouri, and all rights and powers conferred herein are granted subject to
this reservation.
(4) The number of shares outstanding and entitled to vote at the Special
Meeting of Shareholders on April 25, 1983, was 500,000 shares, of which
500,000 shares voted for the resolution amending and restating the Articles of
Incorporation and 0 shares voted against said resolution.
(5) The amended and restated Articles of Incorporation provide that the
corporation shall have authority to issue 1,000,000 shares of capital stock
each of the par value of $2 per share. The Articles of Incorporation
previously authorized 500,000 shares of capital stock, each of the par value
of $2 per share.
IN WITNESS WHEREOF, this Certificate of Amendment and Restatement is
executed in triplicate by the Corporation by its Vice President and Actuary
and Secretary this 25th day of April, 1983.
ASSURANCE LIFE COMPANY
By: /S/ R.C. JOHNSON
__________________________
Vice President and Actuary
Attest: /S/ J.K. BALES
__________________________
Secretary
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
Now on this 25th day of April, 1983, before me personally appeared R.C.
Johnson and J.K. Bales, to me known to be the persons who executed the
foregoing instrument and to me known to be, respectively, Vice President
and Actuary and Secretary of Assurance Life Company, and being first duly
sworn upon their oaths each did say that the statements and matters set forth
therein are true, and that they executed the same as their free act and deed
and as the free act and deed of said corporation for the purposes set forth
therein, and that the seal affixed is the corporate seal of said corporation,
and that said instrument was signed and sealed by authority of the
shareholders and Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ TANYA JO THIERRY
_____________________________
Notary Public
My Commission Expires:
Tanya Jo Thierry
Notary Public
FILED AND CERTIFICATE ISSUED
APR 27, 1983
Corporation Dept., SECRETARY OF STATE
STATE OF MISSOURI
James C. Kirkpatrick, Secretary of State
Corporation Division
Statement of Change of Registered Agent or Registered
Office by Foreign or Domestic Corporations
INSTRUCTIONS
There is a $3.00 fee for filing this statement. It must be filed in
TRIPLICATE (all copies signed and notarized).
The statement should be sealed with the corporate seal. If it does not
have a seal, write "no seal" where the seal would otherwise appear.
The registered office may be, but need not be, the same as the place of
business of the corporation, but the registered office and the business
address of the agent must be the same. The corporation cannot act as its own
registered agent.
Any subsequent change in the registered office or agent must be
immediately reported to the Secretary of State. These forms are available
upon request from the Office of the Secretary of State.
To SECRETARY OF STATE, Charter No. I-233744
P.O. Box 778
Jefferson City, Missouri 65102
The undersigned corporation, organized and existing under the laws of the
State of Missouri for the purpose of changing its registered agent or its
registered office, or both, in Missouri as provided by the provisions of "The
General and Business Corporation Act of Missouri," represents that:
1. The name of the corporation is Assurance Life Company.
2. The name of its PRESENT registered agent (before change) is James P.
Dalton, Esq.
3. The name of the new registered agent is Harold E. Henson, Vice President
and Secretary.
4. The address, including street number, if any, of its PRESENT registered
office (before change) is 314 East High Street, Jefferson City, Missouri
65101.
5. Its registered office (including street number, if any change is to be
made) is hereby CHANGED TO BMA Tower - 700 Karnes Boulevard, Kansas City,
Missouri 64108.
6. The address of its registered office and the address of the business
office of its registered agent, as changed, will be identical.
7. Such change was authorized by resolution duly adopted by the board of
directors.
IN WITNESS WHEREOF, the undersigned corporation has caused this report to
be executed in its name by its PRESIDENT OR VICE-PRESIDENT, attested by its
SECRETARY OR ASSISTANT SECRETARY this 10th day of July, 1984.
Assurance Life Company
________________________________
NAME OF CORPORATION
(Corporate Seal) By /s/ HAROLD E. HENSON
________________________________
VICE PRESIDENT & SECRETARY
If no seal, state "none"
Attest: /s/ DAVID H. REID
______________________
ASSISTANT SECRETARY
STATE OF MISSOURI )
COUNTY OF JACKSON ) ss.
I, Lorna G. Brammell, a Notary Public, do hereby certify that on the 10th
day of July, 1984, personally appeared before me Harold E. Henson who declares
he is Vice President of the corporation, executing the foregoing document, and
being first duly sworn, acknowledged that he signed the foregoing document in
the capacity therein set forth and declared that the statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
(Notarial Seal) /S/ LORNA G. BRAMMELL
__________________________
NOTARY PUBLIC
My term expires January 25, 1985
LORNA G. BRAMMELL
NOTARY PUBLIC STATE OF MISSOURI
JACKSON CO.
MY COMMISSION EXPIRES JAN. 25, 1985
FILED JULY 13, 1984
ROY D. BLUNT
SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
CORRECTED Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (FORMERLY:
ASSURANCE LIFE COMPANY), a corporation organized under the Laws of Missouri,
has delivered to me and that I have filed its Certificate of Amendment of its
Articles of Incorporation; that said Corporation has in all respects complied
with the requirements of law governing the Amendment of Articles of
Incorporation and that said Articles are amended in accordance therewith.
NOW, THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 8th day of July, 1985.
EFFECTIVE DATE OF September 1, 1985.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
FIFTEEN DOLLARS-------------Dollars $15.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
STATE OF MISSOURI DIVISION OF INSURANCE
Department of Economic Development
P.O. Box 690, Jefferson City, MO 65102-0690
DIRECTOR'S CERTIFICATE OF AMENDMENT
I, C. Donald Ainsworth, Director of the Division of Insurance, Department
of Economic Development, State of Missouri, do hereby certify that Assurance
Life Company, a corporation organized and existing under the insurance laws of
the State of Missouri, has delivered to me and I have filed its Certificate of
Amendment to its Articles of Incorporation as fully set forth and attached
hereto.
I further certify that I have examined the Certificate of Amendment to
the Articles of Incorporation and find that it conforms to law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 5th day of July, 1985.
/S/ C. DONALD AINSWORTH
--------------------------
Division of Insurance
Department of Economic
Development
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT AND RESTATEMENT
OF THE ARTICLES OF INCORPORATION
OF ASSURANCE LIFE COMPANY
The undersigned, Assurance Life Company, a Missouri insurance corporation
(hereinafter called the "Corporation"), for the purpose of amending its
Articles of Incorporation, does hereby make and execute this Certificate of
Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Assurance Life Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as of July 1, 1985, did unanimously adopt a resolution amending
the Articles of Incorporation, as hereinafter set forth.
(3) The Amendments to the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article One is hereby amended to be effective on September 1, 1985,
to read as follows:
"The name of this Corporation is Xerox Financial Services Life
Insurance Company."
B. Article Two is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
St. Louis, Missouri, and the Administrative Office of the
Corporation shall be located in Morristown, New Jersey."
(4) The number of shares outstanding and entitled to vote on July 1, 1985
was 550,000 shares, of which 550,000 shares voted for the resolution amending
the Articles of Incorporation and 0 shares voted against said resolution.
IN WITNESS WHEREOF, this Certificate of Amendment is executed in
triplicate by the Corporation by its Vice President and Treasurer and
Secretary this 2nd day of July, 1985.
ASSURANCE LIFE COMPANY
By: /S/ JOHN P. SKAHILL
--------------------------------------
Vice President and Actuary
Attest: /S/ ANTOINETTE C. BENTLEY
--------------------------------------
Secretary
STATE OF NEW JERSEY )
) ss.
COUNTY OF MORRIS )
Now on this 2nd day of July, 1985, before me personally appeared John P.
Skahill and Antoinette C. Bentley, to me known to be the persons who executed
the foregoing instrument and to me known to be, respectively, the Vice
President and Treasurer and Secretary of Assurance Life Company, and being
first duly sworn upon their oaths each did say that the statements and matters
set forth therein are true, and that they executed the same as their free act
and deed and as the free act and deed of said Corporation for the purposes set
forth therein, and that the seal affixed is the corporate seal of said
Corporation, and that said instrument was signed and sealed by authority of
the shareholders and Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ LOUISE STECKI
_____________________________
Notary Public
My Commission Expires:
LOUISE STECKI
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires July 6, 1988
FILED AND ISSUED JULY 8, 1985
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI
Roy D. Blunt, Secretary of State
Corporation Division
Statement of Change of Registered Agent or Registered
Office by Foreign or Domestic Corporations
INSTRUCTIONS
There is a $3.00 fee for filing this statement. It must be filed in
DUPLICATE.
The statement should be sealed with the corporate seal. If it does not
have a seal, write "no seal" where the seal would otherwise appear.
The registered office may be, but need not be, the same as the place of
business of the corporation, but the registered office and the business
address of the agent must be the same. The corporation cannot act as its own
registered agent.
Any subsequent change in the registered office or agent must be
immediately reported to the Secretary of State. These forms are available
upon request from the Office of the Secretary of State.
To SECRETARY OF STATE, Charter No. I-233744
P.O. Box 778
Jefferson City, Missouri 65102
The undersigned corporation, organized and existing under the laws of the
State of Missouri for the purpose of changing its registered agent or its
registered office, or both, in Missouri as provided by the provisions of "The
General and Business Corporation Act of Missouri," represents that:
1. The name of the corporation is Xerox Financial Services Life Insurance
Company.
2. The name of its PRESENT registered agent (before change) is Harold E.
Henson.
3. The name of the new registered agent is Verne Purvines.
4. The address, including street number, if any, of its PRESENT registered
office (before change) is 700 Karnes Boulevard - BMA Tower , Kansas City,
Missouri 64108.
5. Its registered office (including street number, if any change is to be
made) is hereby CHANGED TO 10534 Natural Bridge Road, St. Louis, Missouri 631
6. The address of its registered office and the address of the business
office of its registered agent, as changed, will be identical.
7. Such change was authorized by resolution duly adopted by the board of
directors.
IN WITNESS WHEREOF, the undersigned corporation has caused this report to
executed in its name by its VICE-PRESIDENT & TREASURER, attested by its
ASSISTANT SECRETARY this 31st day of July, 1984.
Xerox Financial Services Life Insurance Company
___________________________________________________
NAME OF CORPORATION
(Corporate Seal) By /s/ JOHN H. SKAHILL
________________________________
VICE PRESIDENT & TREASURER
If no seal, state "none"
Attest: /s/ RICHARD G. MCCARTHY
---------------------------
ASSISTANT SECRETARY
STATE OF NEW JERSEY )
COUNTY OF MORRIS ) ss.
I, Cynthia M. Davatelis, a Notary Public, do hereby certify that on the
31st day of July, 1986, personally appeared before me John P. Skahill who
declares he is Vice President & Treasurer of the corporation, executing the
foregoing document, and being first duly sworn, acknowledged that he signed
the foregoing document in the capacity therein set forth and declared that the
statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
(Notarial Seal) /S/ CYNTHIA M. DAVATELIS
__________________________
NOTARY PUBLIC
CYNTHIA M. DAVATELIS
NOTARY PUBLIC STATE OF NEW JERSEY
MY COMMISSION EXPIRES DEC. 19, 1988
FILED AUG 6, 1986
ROY D. BLUNT
SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment, as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 12th day of August, 1987.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
TWENTY DOLLARS-------------Dollars $20.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
STATE OF MISSOURI DIVISION OF INSURANCE
Department of Economic Development
P.O. Box 690, Jefferson City, MO 65102-0690
DIRECTOR'S CERTIFICATE OF AMENDMENT
I, Lewis R. Crist, Director, Division of Insurance, Department of
Economic Development, State of Missouri, do hereby certify that Xerox
Financial Services Life Insurance Company, a corporation organized and
operating under the insurance laws of the state of Missouri, has delivered to
me and I have filed its Certificate of Amendment of its Articles of
Incorporation as fully set forth and attached hereto.
I further certify that I have examined the Certificate of Amendment of
Articles of Incorporation and find that it conforms to law, that proceedings
were regular, that the condition and the assets of the company justify the
amendment and that same will not be prejudicial to the interests of the
policyholders, all as provided by law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 13th day of July, 1987.
/S/ LEWIS R. CRIST
--------------------------
LEWIS R. CRIST, Director
Division of Insurance
Department of Economic
Development
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
The undersigned, Xerox Financial Services Life Insurance Company, a
Missouri insurance corporation (hereinafter called the "Corporation"), for the
purpose of amending its Articles of Incorporation, does hereby make and
execute this Certificate of Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Xerox Financial Services Life
Insurance Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as of June 18, 1987, did unanimously adopt a resolution amending
the Articles of Incorporation, as hereinafter set forth.
(3) The Amendment to the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in Earth
City, Missouri, and the Administrative Office of the Corporation
shall be located in Morristown, New Jersey."
(4) The number of shares outstanding and entitled to vote on June 18,
1987 was 1,000,000 shares, of which 1,000,000 shares voted for the
resolution amending the Articles of Incorporation and 0 shares voted
against said resolution.
IN WITNESS WHEREOF, this Certificate of Amendment is executed in
triplicate by the Corporation by its Vice President and Counsel and Secretary
this 26th day of June, 1987.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: /S/ RICHARD G. MCCARTHY
__________________________
Vice President and Counsel
Attest: /S/ ANTOINETTE C. BENTLEY
__________________________
Secretary
STATE OF NEW JERSEY )
) SS
COUNTY OF MORRIS )
Now on this 26th day of June, 1987, before me personally appeared Richard
G. McCarthy and Antoinette C. Bentley, to me known to be the persons who
executed the foregoing instrument and to me known to be, respectively, the
Vice President and Counsel and Secretary of Xerox Financial Services Life
Insurance Company, and being first duly sworn upon their oaths each did say
that the statements and matters set forth therein are true, and that they
executed the same as their free act and deed and as the free act and deed of
said Corporation for the purposes set forth therein, and that the seal affixed
is the corporate seal of said Corporation, and that said instrument was signed
and sealed by authority of the shareholders and Board of Directors of said
Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ GENE R. LEHNHARDT
_____________________________
Notary Public
My Commission Expires:
GENE R. LEHNHARDT
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Sept. 29, 1988
FILED AND ISSUED AUG 12, 1987
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
February 3, 1988
XEROX LIFE
ADMINISTRATIVE OFFICE
305 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
ATTN: ANTOINETTE C. BENTLEY
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from nine (9) to
ten (10). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED FEB 3, 1988
ROY D. BLUNT
SECRETARY OF STATE
Xerox Life
A XEROX Financial Services Company
Administrative Office
305 Madison Avenue
Morristown, New Jersey 07960
201-285-7000
February 1, 1988
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company
(the "Corporation")
__________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Meeting dated as of January 18, 1988, it was
resolved that the number of directors of the Corporation be fixed at ten (10).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed envelope provided.
Very truly yours,
/S/ ANTOINETTE C. BENTLEY
_____________________________
Antoinette C. Bentley
Secretary
ACB/grl
Enclosures
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW, THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment, as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 10th day of May 1988.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
FOUR THOUSAND TWENTY DOLLARS-------------Dollars $4,020.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
STATE OF MISSOURI DIVISION OF INSURANCE
Department of Economic Development
P.O. Box 690, Jefferson City, MO 65102-0690
DIRECTOR'S CERTIFICATE OF AMENDMENT
I, Lewis R. Crist, Director, Division of Insurance, Department of
Economic Development, State of Missouri, do hereby certify that Xerox
Financial Services Life Insurance Company, a corporation organized and
operating under the insurance laws of the state of Missouri, has delivered to
me and I have filed its Certificate of Amendment of its Articles of
Incorporation as fully set forth and attached hereto.
I further certify that I have examined the Certificate of Amendment of
Articles of Incorporation and find that it conforms to law, that proceedings
were regular, that the condition and the assets of the company justify the
amendment and that same will not be prejudicial to the interests of the
policyholders, all as provided by law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 5th day of May, 1988.
/S/ LEWIS R. CRIST
--------------------------
LEWIS R. CRIST, Director
Division of Insurance
Department of Economic
Development
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
The undersigned, Xerox Financial Services Life Insurance Company, a
Missouri insurance corporation (hereinafter called the "Corporation"), for the
purpose of amending its Articles of Incorporation, does hereby make and
execute this Certificate of Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Xerox Financial Services Life
Insurance Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as of April 15, 1988, did unanimously adopt a resolution
amending the Articles of Incorporation, as hereinafter set forth.
(3) The Amendment to the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article V is hereby amended to read as follows:
The aggregate number of shares of capital stock which the
corporation shall have authority to issue is 5,000,000 shares,
each of a par value of Two Dollars ($2.00) per share, amounting
the aggregate to Ten Million Dollars ($10,000,000.00). Each
share of stock shall be entitled to one vote except that in the
annual election of directors each shareholder shall have the
right of cumulative voting.
(4) The number of shares outstanding and entitled to vote on April 15,
1988 was 1,000,000 shares, each of a par value of Two Dollars ($2.00) per
share, of which 1,000,000 shares voted for the resolution amending the
Articles of Incorporation and 0 shares voted against said resolution.
IN WITNESS WHEREOF, this Certificate of Amendment is executed in
triplicate by the Corporation by its Vice President and Counsel and Secretary
this 2nd day of May, 1988.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: /S/ RICHARD G. MCCARTHY
__________________________
Vice President and Counsel
Attest: /S/ ANTOINETTE C. BENTLEY
__________________________
Secretary
STATE OF NEW JERSEY )
) SS
COUNTY OF MORRIS )
Now on this 2nd day of May, 1988, before me personally appeared Richard
G. McCarthy and Antoinette C. Bentley, to me known to be the persons who
executed the foregoing instrument and to me known to be, respectively, the
Vice President and Counsel and Secretary of Xerox Financial Services Life
Insurance Company, and being first duly sworn upon their oaths each did say
that the statements and matters set forth therein are true, and that they
executed the same as their free act and deed and as the free act and deed of
said Corporation for the purposes set forth therein, and that the seal affixed
is the corporate seal of said Corporation, and that said instrument was signed
and sealed by authority of the shareholders and Board of Directors of said
Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ GENE R. LEHNHARDT
_____________________________
Notary Public
My Commission Expires:
GENE R. LEHNHARDT
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Sept. 29, 1988
FILED AND ISSUED MAY 10, 1988
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
June 21, 1988
XEROX LIFE
ADMINISTRATIVE OFFICE
305 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
ATTN: VALERIE J. GASPARIK
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from ten (10) to
eleven (11). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED JUN 21, 1988
ROY D. BLUNT
SECRETARY OF STATE
Xerox Life
A XEROX Financial Services Company
Administrative Office
305 Madison Avenue
Morristown, New Jersey 07960
201-285-7000
June 15, 1988
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company
(the "Corporation")
__________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Annual Meeting dated as of May 25, 1988, it
was resolved that the number of directors of the Corporation be fixed at
eleven (11).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed envelope provided.
Very truly yours,
/S/ VALERIE J. GASPARIK
_____________________________
Valerie J. Gasparik
Assistant Secretary
VJG/grl
Enclosures
cc: A.C. Bentley
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
RECEIVED JUN 21, 1988
ROY D. BLUNT
CORPORATION DEPT. SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
September 14, 1988
XEROX LIFE
ADMINISTRATIVE OFFICE
305 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
ATTN: VALERIE J. GASPARIK
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from eleven (11) to
ten (10). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED SEPT 14, 1988
ROY D. BLUNT
SECRETARY OF STATE
Xerox Life
A XEROX Financial Services Company
Administrative Office
305 Madison Avenue
Morristown, New Jersey 07960
201-285-7000
September 9, 1988
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company
(the "Corporation")
__________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Meeting dated as of August 24, 1988, it was
resolved that the number of directors of the Corporation be fixed at ten (10).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed envelope provided.
Very truly yours,
/S/ VALERIE J. GASPARIK
_____________________________
Valerie J. Gasparik
Assistant Secretary
VJG/grl
Enclosures
cc: A.C. Bentley
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
October 23, 1989
CRUM & FOSTER
211 MT. AIRY ROAD
BASKING RIDGE, NEW JERSEY 07920
ATTN: VALERIE J. GASPARIK
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from ten (10) to
eleven (11). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED OCT 23, 1989
ROY D. BLUNT
SECRETARY OF STATE
Crum & Foster Corporation
A XEROX Financial Services Company
211 Mt. Airy Road
Basking Ridge, New Jersey 07920
201-204-3500
October 20, 1989
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company
(the "Corporation")
__________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Meeting dated as of September 29, 1989, it
was resolved that the number of directors of the Corporation be fixed at
eleven (11).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed envelope provided.
Very truly yours,
/S/ VALERIE J. GASPARIK
_____________________________
Valerie J. Gasparik
Assistant Secretary
VJG/grl
Enclosures
cc: A. C. Bentley
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW, THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment, as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 30th day of January, 1990.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
TWENTY DOLLARS-------------Dollars $20.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
STATE OF MISSOURI
DIVISION OF INSURANCE
Department of Economic Development
P.O. Box 690, Jefferson City, MO 65102-0690
DIRECTOR'S CERTIFICATE OF AMENDMENT
I, Lewis E. Melahn, Director, Division of Insurance, Department of
Economic Development, State of Missouri, do hereby certify that Xerox
Financial Services Life Insurance Company, a corporation, organized and
existing under the insurance laws of the State of Missouri, has delivered to
me and I have filed its Certificate of Amendment of Articles of Incorporation
as more fully set forth in the Certificate of Amendment of Articles of
Incorporation as attached hereto.
I further certify that I have examined the Certificate of Amendment of
Articles of Incorporation and find it conforms to law; that the proceedings
were regular; that the condition and the assets of the company justify the
amendment and that same will not be prejudicial to the interests of the
policyholders, all as provided by law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 2nd day of January, 1990.
/S/ LEWIS E. MELAHN
--------------------------
LEWIS E. MELAHN, Director
Division of Insurance
Department of Economic
Development
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION
OF XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
The undersigned, Xerox Financial Services Life Insurance Company, a
Missouri insurance corporation (hereinafter called the "Corporation"), for the
purpose of amending its Articles of Incorporation, does hereby make and
execute this Certificate of Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Xerox Financial Services Life
Insurance Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as December 21, 1989, did unanimously adopt a resolution
amending the Articles of Incorporation, as hereinafter set forth.
(3) The Amendment to the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
Hazelwood, Missouri, and the Administrative Office of the
Corporation shall be located in Lisle, Illinois."
(4) The number of shares outstanding and entitled to vote on December 21,
1989 was 1,765,000 shares, of which 1,765,000 shares voted for the resolution
amending the Articles of Incorporation and 0 shares voted against said
resolution.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: /S/ CHARLES S. ERNST
__________________________
Vice President and Counsel
Attest: /S/ VALERIE J. GASPARIK
__________________________
Assistant Secretary
STATE OF NEW JERSEY )
) SS
COUNTY OF SOMERSET )
Now on this 22nd day of December, 1989, before me personally appeared
Charles S. Ernst and Valerie J. Gasparik, to me known to be the persons who
executed the foregoing instrument and to me known to be, respectively, the
Vice President and Counsel and Assistant Secretary of Xerox Financial Services
Life Insurance Company, and being first duly sworn upon their oaths each did
say that the statements and matters set forth therein are true, and that they
executed the same as their free act and deed and as the free act and deed of
said Corporation for the purposes set forth therein, and that the seal affixed
is the corporate seal of said Corporation, and that said instrument was signed
and sealed by authority of the shareholders of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ JACQUELINE G. SCHMIDT
_____________________________
Notary Public
My Commission Expires:
JACQUELINE G. SCHMIDT
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Oct. 12, 1994
FILED AND CERTIFICATE ISSUED January 30, 1990
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
June 12, 1990
XEROX LIFE
DEAN H. GOOSSEN
1001 WARRENVILLE RD.
LISLE, ILLINOIS 60532
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from eleven (11) to
ten (10). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED JUN 12, 1990
ROY D. BLUNT
SECRETARY OF STATE
Xerox Life
A XEROX Financial Services Company
1001 Warrenville Rd.
Lisle, Illinois 60532
Inside Illinois: call collect
708-719-6207
June 1, 1990
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company (the "Corporation")
___________________________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Annual Meeting dated as of May 4, 1990,
it was resolved that the number of directors of the Corporation be fixed at
ten (10).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed, stamped envelope provided.
Very truly yours,
/S/ DEAN H. GOOSSEN
_____________________________
Dean H. Goossen
Vice President, General Counsel & Secretary
DHG/cv
Enclosures
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 4th day of March, 1991.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
TWENTY DOLLARS-------------Dollars $20.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
CERTIFICATE OF AMENDMENT OF ARTICLES
(to be executed in triplicate)
We, the undersigned president or vice president and secretary or assistant
secretary, on our oaths swear and certify to the truth of the following
statements:
(1) NAME OF THE INSURANCE COMPANY: XEROX FINANCIAL SERVICES LIFE INSURANCE
COMPANY. IF THE NAME OF THE INSURANCE COMPANY CHANGED AS A RESULT OF THIS
AMENDMENT, THE NAME OF THE INSURANCE COMPANY IMMEDIATELY BEFORE THIS AMENDMENT
WAS______________.
(2) THE DATE OF THE ADOPTION OF THE AMENDMENT BY THE SHAREHOLDERS, MEMBERS OR
OTHER GROUP OF PERSON ENTITLED TO VOTE ON THE AMENDMENT: December 19, 1990.
(3) THE AMENDMENT ADOPTED (attach additional pages if necessary):
A. Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
St. Louis, Missouri, and the Administrative Office of the
Corporation shall be located in Lisle, Illinois."
(4) THE NUMBER OF SHARES, MEMBERS, OR OTHER GROUP OF PERSONS ENTITLED TO VOTE,
OR IF A MUTUAL, THE NUMBER OF THE MEMBERS PRESENT EITHER IN PERSON OR BY PROXY
ENTITLED TO VOTE: 2,512,100.
(5) THE NUMBER OF SHARES, MEMBERS, OR OTHER GROUP OF PERSONS THAT VOTED FOR
AND AGAINST SAID AMENDMENT RESPECTIVELY: For: 2,512,100 Against: 0
(6) IF THE AMENDMENT EFFECTS A CHANGE IN THE NUMBER OR PAR VALUE OF AUTHORIZED
SHARES, THEN A STATEMENT SHOWING THE NUMBER OF SHARES AND PAR VALUE THEREOF
PREVIOUSLY AUTHORIZED: __________________________
/s/ STEPHEN P. CLARK
___________________________
Executive Vice President
PLACE CORPORATE SEAL HERE
(If no corporate seal, state "none".)
/s/ DEAN H. GOOSSEN
____________________________
Secretary
State of Illinois
County of Dupage
Subscribed and sworn to before me this 6th day of February 1991.
"OFFICIAL SEAL"
CATHERINE A. VRONA /S/ CATHERINE A. VRONA
NOTARY PUBLIC STATE OF ILLINOIS ________________________________
MY COMMISSION EXPIRES 1/4/92 NOTARY PUBLIC
My Commission expires 1/4/92.
____________________________________________________________________________ _
CERTIFICATE OF AMENDMENT OF THE DIRECTOR OF INSURANCE
(This certificate may be filled out only by the Director of Insurance)
I certify that I have examined the above Certificate of Amendment of Articles
as executed by the insurance company and find that it conforms to law, that
the proceedings were regular, that the condition and the assets of the company
justify the amendment, and that the same will not be prejudicial to the
interests of the policyholders, all as provided by law.
So Certified, Signed, and Official Seal Affixed on this date: 2-13-91.
/s/ LEWIS E. MELAHN
____________________________
LEWIS E. MELAHN
Director of Insurance
State of Missouri
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION
OF XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
The undersigned, Xerox Financial Services Life Insurance Company, a
Missouri insurance corporation (hereinafter called the "Corporation"), for the
purpose of amending its Articles of Incorporation, does hereby make and
execute this Certificate of Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Xerox Financial Services Life
Insurance Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as of December 19, 1990, did unanimously adopt a resolution
amending the Articles of Incorporation, as hereinafter set forth.
(3) The Amendment of the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
St. Louis, Missouri, and the Administrative Office of the
Corporation shall be located in Lisle, Illinois."
(4) The number of shares outstanding and entitled to vote on December 1,
1990 was 2,512,000 shares, of which 2,512,000 shares voted for the resolution
amending the Articles of Incorporation and 0 shares voted against said
resolution.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: /S/ STEPHEN P. CLARK
__________________________
Stephen P. Clark
Executive Vice President
& Chief Financial Officer
Attest: /S/ DEAN H. GOOSSEN
__________________________
Dean H. Goossen
Vice President, General Counsel
& Secretary
STATE OF ILLINOIS )
) SS
COUNTY OF DUPAGE )
Now on this 18th day of January, 1991, before me personally appeared
Stephen P. Clark and Dean H. Goossen, to me known to be the persons who
executed the foregoing instrument and to me known to be, respectively, the
Executive Vice President and Chief Financial Officer and the Vice President,
General Counsel and Secretary of Xerox Financial Services Life Insurance
Company, and being first duly sworn upon their oaths each did say that the
statements and matters set forth therein are true and that they executed the
same as their free act and deed and as the free act and deed of said
Corporation for the purposes set forth therein, and that the seal affixed is
the corporate seal of said Corporation, and that said instrument was signed
and sealed by authority of the shareholders of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ CATHERINE A. VRONA
_____________________________
Notary Public
"OFFICIAL SEAL"
CATHERINE A. VRONA
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 1/4/92
FILED AND CERTIFICATE ISSUED MAR 4, 1991
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI . . . Office of Secretary of State
Roy D. Blunt, Secretary of State
STATEMENT OF CHANGE OF REGISTERED AGENT OR REGISTERED OFFICE
INSTRUCTIONS
The filing fee for this change is $5.00.
Change must be filed in DUPLICATE.
The registered office may be, but need not be, the same as the place of
business of the corporation or limited partnership, but the registered office
and the business address of the agent must be the same. The corporation or
limited partnership cannot act as its own registered agent.
Any subsequent change in the registered office or agent must be
immediately reported to the Secretary of State. Forms are available upon
request.
Charter No. I00233744
The undersigned corporation or limited partnership, organized and
existing under the laws of the State of Missouri for the purpose of changing
its registered agent "The General and Business Corporation Act of Missouri,"
or the "Missouri Uniform Limited Partnership Law," represents that:
1. The name of the corporation/ltd. partnership is: XEROX FINANCIAL SERVICES
LIFE INSURANCE COMPANY.
2. The name of its registered agent before this change is: VERNE E. PURVINES.
3. The name of the new registered agent is: THOMAS R. DRUMMOND.
4. The address, including street number, if any, of its registered office
before this change is: 10534 Natural Bridge Road, St. Louis, Missouri 63134.
5. Its registered office (including street number, if any change is to be
made) is hereby CHANGED TO: 77 Westport Plaza, Suite 351, St. Louis, Missouri
63146.
6. The address of its registered office and the address of the business
office of its registered agent, as changed will be identical.
7. Such change was authorized by resolution duly adopted by the board of
directors of the corporation or by the limited partnership.
IN WITNESS WHEREOF, the undersigned corporation or limited partnership
has caused this report to be executed in its name by its PRESIDENT or VICE
PRESIDENT of the corporation, or GENERAL PARTNER of the limited partnership,
and attested to by the assistant secretary of a corporation on the 31st
day of May, 1991.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
______________________________________________
Name of corporation or limited partnership
(Corporate Seal) By /s/ STEPHEN P. CLARK
________________________________
Executive Vice President of Corporation
or
If no seal, state "none" General Partner of limited partnership
Attest: /s/ DEAN H. GOOSSEN
__________________________
Secretary of Corporation
STATE OF ILLINOIS )
COUNTY OF DUPAGE ) ss.
I, Catherine Vrona, a Notary Public, do hereby certify that on the 31st
day of May, 1991, personally appeared before me Stephen P. Clark who declares
he is the Executive Vice President of the corporation, or a General Partner
of the limited partnership, executing the foregoing document, and being first
duly sworn, acknowledged that he signed the foregoing document in the capacity
therein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
(Notarial Seal) /S/ CATHERINE A. VRONA
__________________________
NOTARY PUBLIC
My Commission expires 1/4/92
"OFFICIAL SEAL"
CATHERINE A. VRONA
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 1/4/92.
FILED JUN 3, 1991
SECRETARY OF STATE
P.O. BOX 778
JEFFERSON CITY, MO 65102
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment, as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 2nd day of December, 1991.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
TWENTY DOLLARS-------------Dollars $20.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
CERTIFICATE OF AMENDMENT OF ARTICLES
(to be executed in triplicate)
We, the undersigned president or vice president and secretary or assistant
secretary, on our oaths swear and certify to the truth of the following
statements:
(1) NAME OF THE CORPORATION: XEROX FINANCIAL SERVICES LIFE INSURANCE
COMPANY. IF THE NAME OF THE INSURANCE COMPANY CHANGED AS A RESULT OF THIS
AMENDMENT, THE NAME OF THE INSURANCE COMPANY IMMEDIATELY BEFORE THIS AMENDMENT
WAS ________________________________________________________________________.
(2) THE DATE OF THE ADOPTION OF THE AMENDMENT BY THE SHAREHOLDERS, MEMBERS OR
OTHER GROUP OF PERSONS ENTITLED TO VOTE ON THE AMENDMENT: October 15, 1991.
(3) The Amendment adopted (attach additional pages if necessary):
Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
Jefferson City, Missouri, and the Administrative Office of the
Corporation shall be located in Oakbrook Terrace, Illinois."
(4) THE NUMBER OF SHARES, MEMBERS, OR OTHER GROUP OF PERSONS ENTITLED TO VOTE,
OR IF A MUTUAL, THE NUMBER OF THE MEMBERS PRESENT EITHER IN PERSON OR BY PROXY
ENTITLED TO VOTE: 2,696,100.
(5) THE NUMBER OF SHARES, MEMBERS OR OTHER GROUP OF PERSONS THAT VOTED FOR AND
AGAINST SAID AMENDMENT RESPECTIVELY: For: 2,696,100 Against: 0
(6) IF THE AMENDMENT EFFECTS A CHANGE IN THE NUMBER OR PAR VALUE OF AUTHORIZED
SHARES, THEN A STATEMENT SHOWING THE NUMBER OF SHARES AND PAR VALUE THEREOF
PREVIOUSLY AUTHORIZED: __________________________________________________.
By: /S/ STEPHEN P. CLARK
__________________________
Executive Vice President
PLACE CORPORATE SEAL HERE
(If no corporate seal, state "none".)
/s/ LINDA S. MACARZEAL
__________________________
Assistant Secretary
State of ILLINOIS
County of DUPAGE
Subscribed and sworn to before me this 31st day of October, 1991.
"OFFICIAL SEAL"
SUSAN MARIE GASKILL
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 5/16/93 /S/ SUSAN MARIE GASKILL
____________________________
NOTARY PUBLIC
My Commission expires 5/16/93.
______________________________________________________________________________
CERTIFICATE OF AMENDMENT OF THE DIRECTOR OF INSURANCE
(This certificate may be filled out only by the Director of Insurance)
I certify that I have examined the above Certificate of Amendment of Articles
as executed by the insurance company and find that it conforms to law, that
the proceedings were regular, that the condition and the assets of the company
justify the amendment, and that the same will not be prejudicial to the
interests of the policyholders, all as provided by law.
So Certified, Signed, and Official Seal Affixed on this date: 11/8/91.
/S/ LEWIS E. MELAHN
_____________________________
LEWIS E. MELAHN
Director of Insurance
State of Missouri
STATE OF MISSOURI
Rebecca McDowell Cook, Secretary of State
P.O. Box 778, Jefferson City, MO 65102
Corporation Division
Statement of Change of Registered Agent or Registered Office
INSTRUCTIONS
1. The filing fee for this change is $10.00. Change must be filed in
DUPLICATE.
2. P.O. Box may only be used in conjunction with Street, Route or Highway.
3. Agent and address must be in the State of Missouri.
4. If a corporation, officers (president or vice president and secretary or
assistant secretary) must sign, and president's or vice president's signature
must be notarized.
5. If limited partnership, general partner must sign and have their signature
notarized.
Charter No. I-233744
The undersigned corporation or limited partnership, organized and existing
under the laws of the State of Missouri for the purpose of changing its
registered agent "The General and Business Corporation Act of Missouri," or
the "Missouri Uniform Limited Partnership Law," represents that:
1. The name of the corporation is Xerox Financial Services Life Insurance
Company.
2. The name of its registered agent before this change is Thomas R. Drummond.
3. The name of the new registered agent is Nick Monaco.
4. The address, including street number, if any, of its registered office
before this change is 77 Westport Plaza, Suite 351, St. Louis Missouri 63146.
5. Its registered office (including street number, if any change is to be
made) is hereby CHANGED TO 237 E. High Street, Jefferson City, Missouri 65101.
6. The address of its registered office and the address of the business
office of its registered agent, as changed, will be identical.
7. Such change was authorized by resolution duly adopted by the board of
directors of the corporation or by the limited partnership.
IN WITNESS WHEREOF, the undersigned corporation has caused this report to
be executed in its name by its President or Vice President of the corporation,
or General Partner of the limited partnership, and attested to by the
assistant secretary of a corporation on the 8th day of May, 1995.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
_______________________________________________
Name of corporation or limited partnership
(Corporate Seal) By /s/ J. ROBERT HOPSON
________________________________
President or Vice President of corporation
If no seal, state "none" or General Partner of limited partnership
Attest: /s/ JEFFERY K. HOELZEL
________________________________
Secretary or Assistant Secretary
of corporation
STATE OF ILLINOIS )
COUNTY OF DUPAGE ) ss.
I, Dolores K. Delgado, a Notary Public, do hereby certify that on the 8th
day of May, 1995, personally appeared before me J. Robert Hopson who declares
he/she is the President or Vice President of the corporation, or a General
Partner of the limited partnership, executing the foregoing document, and
being first duly sworn, acknowledged that he/she signed the foregoing document
in the capacity therein set forth and declared that the statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
(Notarial Seal) /S/ DOLORES K. DELGADO
__________________________
NOTARY PUBLIC
My Commission expires 3/9/96.
"OFFICIAL SEAL"
DOLORES K. DELGADO
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 3/9/96
STATE OF MISSOURI
Rebecca McDowell Cook, Secretary of State
CORPORATION DIVISION
Certificate of Amendment
I, REBECCA MCDOWELL COOK, Secretary of State of the State of Missouri, do
hereby certify that COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY (FORMERLY
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY), a corporation organized
under the Laws of Missouri, has delivered to me and that I have filed its
Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
IN TESTIMONY WHEREOF, I have hereunto set my
hand and imprinted the GREAT SEAL of the State
of Missouri, on this, the 22nd day of June, 1995.
/s/ REBECCA MCDOWELL COOK
[SEAL] ______________________________
Secretary of State
$25.00
CERTIFICATE OF AMENDMENT OF ARTICLES
(to be executed in triplicate)
We, the undersigned, president or vice president and secretary or assistant
secretary, on our oaths swear and certify to the truth of the following
statements:
(1) NAME OF THE CORPORATION: COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY.
IF THE NAME OF THE INSURANCE COMPANY CHANGED AS A RESULT OF THIS AMENDMENT,
THE NAME OF THE INSURANCE COMPANY IMMEDIATELY BEFORE THIS AMENDMENT WAS XEROX
FINANCIAL SERVICES LIFE INSURANCE COMPANY.
(2) THE DATE OF THE ADOPTION OF THE AMENDMENT BY THE SHAREHOLDERS, MEMBERS OR
OTHER GROUP OF PERSONS ENTITLED TO VOTE ON THE AMENDMENT: JUNE 1, 1995.
(3) The Amendment adopted (attache additional pages if necessary): PLEASE SEE
EXHIBIT A ATTACHED HERETO AND INCORPORATED HEREIN.
(4) THE NUMBER OF SHARES, MEMBERS, OR OTHER GROUP OF PERSONS ENTITLED TO VOTE,
OR IF A MUTUAL, THE NUMBER OF THE MEMBERS PRESENT EITHER IN PERSON OR BY PROXY
ENTITLED TO VOTE: 2,899,446 shares of Common Stock.
(5) THE NUMBER OF SHARES, MEMBERS OR OTHER GROUP OF PERSONS THAT VOTED FOR AND
AGAINST SAID AMENDMENT RESPECTIVELY: For: 2,899,446 Against: 0
(6) IF THE AMENDMENT EFFECTS A CHANGE IN THE NUMBER OR PAR VALUE OF AUTHORIZED
SHARES, THEN A STATEMENT SHOWING THE NUMBER OF SHARES AND PAR VALUE THEREOF
PREVIOUSLY AUTHORIZED: N/A.
By: /S/ WILLIAM L. MAXI
__________________________
President or Vice President
PLACE CORPORATE SEAL HERE
(If no corporate seal, state "none".)
/s/ JEFFERY K. HOELZEL
__________________________
Secretary or Assistant Secretary
State of ILLINOIS
County of DUPAGE
Subscribed and sworn to before me this 2nd day of June, 1995.
"OFFICIAL SEAL"
DOLORES K. DELGADO
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 3/9/96. /S/ DOLORES K. DELGADO
____________________________
NOTARY PUBLIC
My Commission expires 3/9/96.
______________________________________________________________________________
CERTIFICATE OF AMENDMENT OF THE DIRECTOR OF INSURANCE
(This certificate may be filled out only by the Director of Insurance)
I certify that I have examined the above Certificate of Amendment of Articles
as executed by the insurance company and find that it conforms to law, that
the proceedings were regular, that the condition and the assets of the company
justify the amendment, and that the same will not be prejudicial to the
interests of the policyholders, all as provided by law.
So Certified, Signed, and Official Seal Affixed on this date: 6/22/95.
/S/ JAY ANGOFF
_____________________________
JAY ANGOFF
Director of Insurance
State of Missouri
EXHIBIT A
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY,
FORMERLY KNOWN AS
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
1. Article I is hereby amended to read in its entirety as follows:
The name of this corporation is Cova Financial Services Life
Insurance Company.
2. Article II is hereby amended to read in its entirety as follows:
The principal office of the Corporation shall be located in
St. Louis, Missouri, and the Administrative Office of the
Corporation shall be located in Oakbrook Terrace, Illinois.
BY-LAWS
OF
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY (Amended 6/1/95) (Formerly
Xerox Financial Services Life Insurance Company - Amended 9/1/85)
(Formerly Assurance Life Company)
a Missouri domiciled life insurance company
Article I
Shareholders
Section 1. Place of Meetings.
All meetings of the shareholders shall be held at the principal business
office of the corporation in Missouri, except such meetings as the board of
directors to the extent permissible by law expressly determines shall be
held elsewhere, in which case such meeting may be held, upon notice thereof
as hereinafter provided, at such other place or places, within or without
the State of Missouri, as the board of directors shall have determined, and
as shall be stated in such notice; and, unless specifically prohibited by
law, any meeting may be held at any place and time, and for any purpose, if
consented to in writing by all of the shareholders entitled to vote thereat.
Section 2. Annual Meetings.
An annual meeting of the shareholders to elect directors and to transact
such other business as may properly be brought before the meeting shall be
held each year at such date, time and place as the board of directors may
determine. (Amended 6/1/95)
Section 3. Special Meetings.
Special meetings of the shareholders may be called by the chairman of the
board, by the president, by the secretary, by the board of directors, or by
the holders of, or by any officer or shareholder upon the written request of
the holders of, not less than four-fifths of all outstanding shares entitled
to vote at any such meeting, and shall be called by an officer directed to
do so by the board of directors. Shareholders' requests for such special
meeting shall be in writing and shall state the nature of the business
desired to be transacted.
The "call" and the "notice" of any such meeting shall be deemed to be
synonymous.
Section 4. Notice of Meeting.
Written or printed notice of each meeting of the shareholders, whether
annual or special, stating the place, day and hour of the meeting, and, in
case of a special meeting, the purpose or purposes thereof, shall be
delivered or given to each shareholder entitled to vote thereat, either
personally or by mail, not less than ten (10) days or more than fifty (50)
days prior to the meeting, unless, as to a particular matter, other or
further notice is required by law, in which case such other or further
notice shall be given. In addition to such written or printed notice,
published notice shall be given if (and in the manner) then required by
law.
Any notice of a shareholders' meeting sent by mail shall be deemed to be
delivered when deposited in the United States mail with postage thereon
prepaid addressed to the shareholder at his address as it appears on the
records of the corporation.
Section 5. Presiding Officials.
Every meeting of the shareholders, for whatever object, shall be convened by
the chairman of the board, by the president, or by the officer or person who
called the meeting by notice as above provided.
Section 6. Business Which May Be Transacted at Annual Meeting.
At each annual meeting of the shareholders, the shareholders shall elect a
board of directors to hold office until the next succeeding annual meeting
or until their successors shall have been elected and qualified and they may
transact such other business as may be desired, whether or not the same was
specified in the notice of the meeting, unless the consideration of such
other business without its having been specified in the notice of the
meeting as one of the purposes thereof, is prohibited by law.
Section 7. Business Which May Be Transacted at Special Meetings.
Business transacted at all special meetings shall be confined to the
purposes stated in the notice of such meeting, unless the transaction of
other business is consented to by the holders of all of the outstanding
shares of stock of the corporation entitled to vote thereat.
Section 8. Quorum of Shareholders.
Except as otherwise provided by law or by the articles of incorporation, a
majority of the outstanding shares entitled to vote at any meeting
represented in person or by proxy shall constitute a quorum at a meeting of
the shareholders, but less than a quorum shall have the right successively
to adjourn the meeting to a specified date not longer than ninety days after
such adjournment, and no notice need be given of such adjournment to
shareholders not present at the meeting.
Section 9. Voting of Shareholders.
Each shareholder shall be entitled to as many votes on any proposition as
he has shares of stock in the corporation, and he may vote them in person
or by proxy. Such proxy shall be in writing and shall state the name of the
person authorized to cast such vote and the date of the meeting at which
such vote shall be cast, and no such proxy shall be valid unless the same
shall have been given within thirty days prior to the meeting at which such
vote is to be cast and shall be filed with the Secretary at or previous to
the time of the meeting and before the votes are cast.
If the board of directors does not close the transfer books or set a record
date for the determination of the shareholders entitled to notice of, and to
vote at, a meeting of shareholders, only the shareholders who are
shareholders of record at the close of business the twentieth day preceding
the date of the meeting shall be entitled to notice of, and to vote at, the
meeting, and any adjournment of the meeting.
Section 10. Registered Shareholders - Exceptions - Stock Ownership Presumed.
The corporation shall be entitled to treat the holders of the shares of
stock of the corporation, as recorded in the stock record or transfer books
of the corporation, as the holders of record and as the holders and owners
in fact thereof and, accordingly, the corporation shall not be required to
recognize any equitable or other claim to or interest in any such shares on
the part of any other person, firm, partnership, corporation or association,
whether or not the corporation shall have express or other notice thereof,
except as is otherwise expressly required by law, and the term "shareholder"
as used in these bylaws means one who is a holder of record of shares of the
corporation.
Article II
Board of Directors
Section 1. Directors - Number and Vacancies.
Unless and until changed by the board of directors as hereinafter provided,
the number of directors to constitute the board of directors of the
corporation shall be nine. (Amended 6/1/95) The board of directors, to the
extent permitted by law, shall have the power to change the number of
directors from time to time provided that any notice required by law of any
such change is duly given. Directors need not be shareholders unless the
Articles of Incorporation at any time so provide.
Vacancies on the board of directors shall be filled for the unexpired term
by a majority of the remaining directors, or, if they are unable to do so,
by vote of a majority of shareholders at an annual or special meeting.
Section 2. Removal of Directors.
Any director may be removed either with or without cause at any time by the
affirmative vote of the shareholders of record holding a majority of the
outstanding shares of the corporation entitled to vote for the election of
directors, given at a meeting of the shareholders called for that purpose,
or by the holders of a majority of the outstanding shares entitled to vote
for the election of directors without holding a meeting or notice but by
merely presenting their majority to the secretary of the corporation in
writing for the removal of a director or directors without cause. Any
director may be removed with cause by a majority of the total number of
directors constituting the entire Board of Directors at a meeting of the
Board of Directors. (Amended 6/1/95)
Section 3. Directors - Employment and Age Qualifications.
"Inside directors" shall be defined as any director who is also an employee
of the corporation, or any affiliate thereof, at the time first elected to
the board. "Outside director" shall be defined as any director who is not an
inside director. Directors shall hold office subject to the employment and
age qualifications contained herein, provided, however, the board of
directors may, by resolution adopted by a majority of the entire board,
waive such qualifications as to any director or candidate for the office of
director.
(1) Inside Directors. The term of office of any person serving as an
"inside director" shall cease upon the first to occur of the following
events:
(a) Termination of employment with the corporation and all affiliates
thereof for any reason, or
(b) Retirement pursuant to any retirement plan or pension plan
adopted by the corporation or any affiliate thereof.
(2) Outside directors. The person shall be eligible for election as an
"outside director" after he has attained age 70.
Section 4. Powers of the Board.
The property and business of the corporation shall be controlled and managed
by the directors, acting as a board. The board shall have and is vested with
all and unlimited powers and authorities, except as may be expressly limited
by law, the articles of incorporation or these bylaws, to do or cause to be
done any and all lawful things for and in behalf of the corporation, to
exercise or cause to be exercised any or all of its powers, privileges, and
franchises, and to seek the effectuation of its objects and purposes.
Section 5. Regular Meetings.
A regular meeting of the board of directors shall be held without notice
other than this By-Law immediately after, and at the same place as, the
annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place, either within or without the State of
Missouri, for the holding of additional regular meetings without notice
other than such resolution. (Amended 6/1/95)
Section 6. Special Meetings.
Special Meetings of the board of directors shall be held at such time and
place as is specified in the notice of such meeting and shall be called by
the chairman of the board, the president, the secretary, any vice president,
or any one or more of the directors. Notice of any such meeting of the board
shall be given personally or by mail or telegram to each member of the board
at least two hours prior to the scheduled time of the meeting, but such
notice may be waived in writing or by telegram either before or after the
meeting, and attendance at the meeting by any director shall be deemed a
waiver of such notice.
Section 7. Quorum.
A majority of the full board of directors shall constitute a quorum for the
transaction of business, but less than a quorum may adjourn from time to
time until a quorum be obtained. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
board of directors.
Section 8. Action Without a Meeting.
If all the directors severally or collectively consent in writing to any
action to be taken by the directors, such consents shall have the same force
and effect as an unanimous vote of the directors at a meeting duly held. The
secretary shall file such consents with the minutes of the meetings of the
board of directors.
Section 9. Advisory Directors.
The board of directors may appoint to the office of advisory director any
person whose abilities and interest in the corporation, in the opinion of
the board, qualify him to render service to the board in an advisory
capacity. Such advisory directors may receive notice of and attend meetings
of the board of directors, shall have no vote in the affairs of the
corporation and shall not be counted for the purposes of determining a
quorum or majority of the board of any purpose. Such advisory directors
shall serve in an advisory capacity to the board of directors only and no
action of the board shall be invalid because of the failure of any such
advisory director to receive notice of or to attend any meeting of the board
or to be informed of or to approve of any action taken by the board of
directors.
Section 10. Executive Committee.
The board of directors may, by resolution or resolutions adopted by a
majority of the whole board of directors, designate an executive committee,
such committee to consist of two or more directors of the corporation,
which committee, to the extent provided in said resolution or resolutions,
shall have and may exercise all of the authority of the board of directors
in the management of the corporation; provided, however, that the
designation of such committee and the delegation thereto of authority shall
not operate to relieve the board of directors, or any member thereof, of
any responsibility imposed upon it or him by law.
The executive committee shall keep regular minutes of its proceedings which
minutes shall be recorded in the minutes of the corporation. The secretary
or an assistant secretary of the corporation may act as secretary for the
committee if the committee so requests.
Section 11. Other Committees.
The board of directors may appoint a finance committee and fix its duties,
and may from time to time appoint such other committees as the board shall
deem advisable, including a committee or committees which shall have
authority to approve payments of salary in excess of $20,000 per annum to
any officer or employee of the corporation and authority to approve payment
of salary, compensation or emolument amounting in any year to more than
$20,000 to any other person, firm or corporation. The board of directors
shall appoint and fix the duties of such additional committees as they in
their discretion shall deem necessary or advisable for proper operation of
the corporation.
Section 12. Compensation of Directors and Committee Members.
Each director, as such, shall be entitled to receive reimbursement for his
reasonable expenses incurred in attending meetings of the board of directors
or any committee thereof or otherwise in connection with his attention to
the affairs of the Corporation. In addition, each director, who is not at
the time a regularly compensated officer or employee of the Corporation or
any of its affiliates, shall be entitled to such fee for his services as a
director (and if a member of any committee of the board of directors, such
fee for his services as such member) as may be fixed from time to time by
the board of directors. Such fees may be fixed both for meetings attended
and on an annual basis, or either thereof, and may be payable currently or
deferred. Nothing herein contained shall be construed to preclude any
director or committee member from serving the corporation or any of its
affiliates in any other capacity and receiving compensation thereof.
Article III
Officers
Section 1. Officers -Who Shall Constitute.
The officers of the corporation shall be a chairman of the board, a
president, one or more vice presidents, a secretary, a treasurer and one or
more assistant secretaries. The board shall elect or appoint a president
and secretary at its annual meeting held after each annual meeting of the
shareholders. The board then, or from time to time, may also elect or
appoint one or more of the other prescribed officers or any other officers
as it shall deem advisable, but need not elect or appoint any officers
other than a president and a secretary. The board may, if it desires,
further identify or describe any one or more of such officers.
The officers of the corporation need not be members of the board of
directors. Any two or more offices may be held by the same person, except
the office of president and secretary.
An officer shall be deemed qualified when he enters upon the duties of the
office to which he has been elected or appointed and furnished any bond
required by the board; but the board may also require of such person his
written acceptance and promise faithfully to discharge the duties of such
office.
Section 2. Term of Office.
Each officer of the corporation shall hold his office at the pleasure of the
board of directors or for such other period as the board may specify at the
time of his election or appointment, or until his death, resignation or
removal of the board, whichever occurs first. In any event, the term of
office of each officer of the corporation holding his office at the pleasure
of the board shall terminate at the annual meeting of the board next
succeeding his election or appointment and at which any officer of the
corporation is elected or appointed, unless the board provides otherwise at
the time of his election or appointment.
Section 3. Removal.
Any officer or agent elected or appointed by the board of directors, and any
employee, may be removed or discharged by the board whenever in its judgment
the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed.
Section 4. Salaries and Compensation.
Salaries and compensation of all elected or appointed officers, and of all
employees of the corporation shall be fixed, increased or decreased by the
board of directors, but this power, except as to the salary or compensation
of the chairman of the board and the president, may, unless prohibited by
law, be delegated by the board to the chairman of the board, the president,
a committee or such other officer or officers as the board may find
convenient to so empower.
Section 5. Delegation of Authority to Hire, Discharge and Designate Duties.
The board may from time to time delegate to the chairman of the board, the
president or other officer or executive employee of the corporation,
authority to hire, discharge and fix and modify the duties, salary or other
compensation of employees of the corporation under their jurisdiction, and
the board may delegate to such officer or executive employee similar
authority with respect to obtaining and retaining for the corporation the
services of attorneys, accountants and other experts.
Section 6. The Chairman of the Board.
The chairman of the board shall be the chief executive officer of the
corporation; he shall preside at all meetings of the shareholders and
directors; he shall have general supervision and active management of the
business and finances of the corporation and he shall see that all orders
and resolutions of the Board of Directors are carried into effect. (Amended
6/28/85)
Section 7. The President.
The president shall be the chief operating officer of the corporation. In
the absence of the chairmen of the board, he shall preside at meetings of
the shareholders and of the Board of Directors. In addition to any other
powers and duties that may be assigned to him by the board of directors, in
the absence of the chairman of the board in the event of his death,
inability or refusal to act, the president shall perform the duties of the
chairman of the board, and when so acting, shall have all powers of and be
subject to all of the restrictions upon the chairman of the board. (Amended
6/28/85)
Section 8. Vice Presidents.
The vice presidents in the order of their seniority, as determined by the
board, shall, in the absence, disability, or inability to act of the
president, perform the duties and exercise the powers of the president, and
shall perform such other duties as the board of directors shall from time to
time prescribe.
Section 9. The Secretary and Assistant Secretaries.
The secretary shall attend all meetings of the shareholders, and shall
record or cause to be recorded all votes taken and the minutes of all
proceedings in a minute book of the corporation to be kept for that purpose.
He shall perform like duties for the executive and other standing committees
when requested by the board or any such committee to do so.
He shall see that all books, records, lists and information, or duplicates
required to be maintained at the principal office for the transaction of the
business of the corporation in Missouri, or elsewhere, are so maintained.
He shall keep in safe custody the seal of the corporation, and when duly
authorized to do so shall affix the same to any instrument requiring it, and
when so affixed, he shall attest the same by his signature.
He shall perform such other duties and have such other authority as may be
prescribed elsewhere in these bylaws or from time to time by the board of
directors or the chief executive officer of the corporation, under whose
direct supervision he shall be.
He shall have the general duties, powers and responsibilities of a secretary
of a corporation.
Any assistant secretary, in the absence, disability or inability to act of
the secretary, may perform the duties and exercise the powers of the
secretary, and shall perform such other duties and have such other authority
as the board of directors may from time to time prescribe.
Section 10. The Treasurer and Assistant Treasurers.
The treasurer shall have responsibility for the safekeeping of the funds and
securities of the corporation, shall keep or cause to be kept full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall keep, or cause to be kept, all other books of account
and accounting records of the corporation. He shall deposit or cause to be
deposited all monies and other valuable effects in the name and to the
credit of the corporation in such depositories as may be designated by the
board of directors or by any officers of the corporation to whom such
authority has been granted by the board of directors.
He shall disburse, or permit to be disbursed, the funds of the corporation
as may be ordered, or authorized generally, by the board, and shall render
to the chief executive officer of the corporation and the directors whenever
they may require it, an account of all his transactions as treasurer and of
those under his jurisdiction, and of the financial conditions of the
corporation.
He shall perform such other duties and shall have such other responsibility
and authority as may be prescribed elsewhere in these bylaws or from time to
time by the board of directors.
He shall have the general duties, powers and responsibility of a treasurer
of a corporation, and shall, unless otherwise provided by the board, be the
chief financial and accounting officer of the corporation.
Any assistant treasurer, in the absence, disability or inability to act of
the treasurer, may perform the duties and exercise the powers of the
treasurer, and shall perform such other duties and have such other authority
as the board of directors may from time to time prescribe.
Section 11. Duties of Officers May Be Delegated.
If any officer of the corporation be absent or unable to act, or for any
other reason that the board may deem sufficient, the board may delegate, for
the time being, some or all of the functions, duties, powers and
responsibilities of any officer to any other officer, or to any other agent
or employee of the corporation or other responsible person, provided a
majority of the whole board of directors concurs therein.
Article IV
Indemnification and Liability of Directors, Officers & Employees
Section 1. Indemnification.
Each person who is or was a director, officer or employee of the corporation
or is or was serving at the request of the corporation as a director,
officer or employee of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executors, administrators or
estate of such person) shall be indemnified by the corporation as of right
to the full extent permitted or authorized by the laws of the State of
Missouri, as now in effect and as hereafter amended, against any liability,
judgment, fine, amount paid in settlement, cost and expenses (including
attorney's fees) asserted or threatened against and incurred by such person
in his capacity as or arising out of his status as a director, officer or
employee of the corporation or if serving at the request of the corporation,
as a director, officer, or employee or another corporation, partnership,
joint venture, trust or other enterprise. The indemnification provided by
this bylaw provision shall not be exclusive of any other rights to which
those indemnified may be entitled under any other bylaw or under any
agreement, vote of shareholders or disinterested directors or otherwise, and
shall not limit in any way any right which the corporation may have to make
different or further indemnifications with respect to the same or different
persons or classes of persons.
Section 2. Insurance.
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer or employee of the corporation, or is or
was serving at the request of the corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of these bylaws.
Section 3. Liability.
No person shall be liable to the corporation for any loss, damage, liability
or expense suffered by it on account of any action taken or omitted to be
taken by him as a director, officer or employee of the corporation or of any
other corporation which he serves as a director, officer or employee at the
request of the corporation, if such person (i) exercised the same degree of
care and skill as a prudent man would have exercised under the circumstances
in the conduct of his own affairs, or (ii) took or omitted to take such
action in reliance upon advice of counsel for the corporation, or for such
other corporation, or upon statements made or information furnished by
directors, officers, employees or agents of the corporation, or of such
other corporation, which he had no reasonable grounds to disbelieve.
Article V
Capital Stock
Section 1. Issuance of Certificate.
Shares of the capital stock of the corporation may be represented by entry
on the stock record or transfer books of the corporation and need not be
represented by certificates. When shares of stock of the corporation are
represented by certificates, such certificates shall be numbered, shall be
in such form as may be prescribed by the board of directors in conformity
with law, and shall be entered in the stock books of the corporation as they
are issued. Such entries shall show the name and address of the person,
firm, partnership, corporation or association to whom each certificate is
issued. Each certificate shall have printed, typed or written thereon the
name of the person, firm, partnership, corporation or association to whom it
is issued and the number of shares represented thereby. It shall be signed
by the president or a vice president and the secretary or any assistant
secretary or the treasurer or an assistant treasurer or the chairman of the
board or the chief executive officer of the corporation, provided each
certificate is signed by two officers who are not the same person and sealed
with the seal of the corporation, which seal may be immediately, engraved or
printed. If the corporation has a transfer agent or a transfer clerk who
signs such certificates, the signatures of any of the other officers above
mentioned may be immediately facsimiled, engraved or printed. In case any
such officer who has signed or whose facsimile signature has been placed
upon any such certificate shall have ceased to be such officer before such
certificate is issued, such certificate may nevertheless be issued by the
corporation with the same effect as if such officer were an officer at the
date of its issue.
Section 2. Transfers of Shares - Transfer Agent - Registrar.
Transfers of shares of stock shall be made on the stock record or transfer
books of the corporation only by the person named in the stock certificate,
or by his attorney lawfully constituted in writing, and upon surrender of
the certificate therefor. The stock record book and other transfer records
shall be in the possession of the secretary or of a transfer agent or
transfer clerk for the corporation. The corporation, by resolution of the
board, may from time to time appoint a transfer agent or transfer clerk, and
if desired, a registrar, under such arrangements and upon such terms and
conditions as the board deems advisable, but until and unless the board
appoints some other person, firm or corporation as its transfer agent or
transfer clerk (and upon the revocation of any such appointment, thereafter
until a new appointment is similarly made) the secretary of the corporation
shall be the transfer agent or transfer clerk of the corporation without the
necessity of any formal action of the board, and the secretary or any person
designated by him, shall perform all the duties thereof.
Section 3. Lost Certificates.
In case of the loss or destruction of any certificate for shares of stock of
the corporation, another may be issued in its place upon proof of such loss
or destruction and upon the giving of a satisfactory bond of indemnity to
the corporation and the transfer agent and registrar of such stock, if any,
in such sum as the board of directors may provide, provided, however, that a
new certificate may be issued without requiring a bond when in the judgment
of the board it is proper to do so.
Section 4. Regulations.
The board of directors shall have power and authority to make all such rules
and regulations as it may deem expedient concerning the issue, transfer,
conversion and registration of and all other rights pertaining to
certificates for shares of stock of the corporation, not inconsistent with
the laws of Missouri, the articles of incorporation or these bylaws.
Article VI
General
Section 1. Fixing of Capital - Transfers of Surplus.
Except as may be specifically otherwise provided in the articles of
incorporation, the board of directors is expressly empowered to exercise all
authority conferred upon it or the corporation by any law or statute, and in
conformity therewith, relative to:
(i) the determination of what part of the consideration received for shares
of the corporation shall be stated capital,
(ii) increasing stated capital,
(iii) transferring surplus to stated capital,
(iv) the consideration to be received by the corporation for its shares, and
(v) all similar or related matters;
provided that any concurrent action or consent by or of the corporation and
its shareholders required to be taken or given pursuant to law, shall be
duly taken or given in connection therewith.
Section 2. Dividends.
Dividends upon the outstanding shares of the corporation, subject to the
provisions of the articles of incorporation and of any applicable law, may
be declared by the board of directors at any meeting. Dividends may be paid
in cash, in property, or in shares of the corporation's stock. Liquidating
dividends or dividends representing a distribution of paid-in surplus or a
return of capital shall be made only when and in the manner permitted by
law.
Section 3. Checks.
All checks and similar instruments for the payment of money shall be signed
by such officer or officers or such other person or persons as the board of
directors may from time to time designate. If no such designation is made,
and unless and until the board otherwise provides, the president and
secretary or the president and treasurer, shall have power to sign all such
instruments for, in behalf and in the name of the corporation which are
executed or made in the ordinary course of the corporation's business.
Section 4. Records.
The corporation shall keep at its principal place of business, in Missouri,
original or duplicate books in which shall be recorded the number of its
shares subscribed, the names of the owners of its shares, the numbers owned
of record by them respectively, the amount of shares paid, and by whom, the
transfer of said shares with the date of transfer, the amount of its assets
and liabilities, and the names and places of residence of its officer, and
from time to time such other or additional records, statements, lists and
information as may be required by law, including shareholders' lists.
Section 5. Inspection of Records.
A shareholder, if he be entitled and demands to inspect the records of the
corporation pursuant to any statutory or other legal right, shall be
privileged to inspect such records only during the usual and customary
hours of business and in such manner as will not unduly interfere with the
regular conduct of the business of the corporation. A shareholder may
delegate his right of inspection to a certified or public accountant on the
condition, to be enforced at the option of the corporation, that the
shareholder and accountant agree with the corporation to furnish to the
corporation promptly a true and correct copy of each report with respect to
such inspection made by such accountant. No shareholder shall use, permit
to be used or acquiesce in the use by others of any information so obtained
to the detriment competitively of the corporation, nor shall he furnish or
permit to be furnished any information so obtained to any competitor or
prospective competitor of the corporation. The corporation as a condition
precedent to any shareholder's inspection of the records of the corporation
may require the shareholder to indemnify the corporation, in such manner
and for such amount as may be determined by the board of directors, against
any loss or damage which may be suffered by it arising out of or resulting
from any unauthorized disclosure made or permitted to be made by such
shareholder of information obtained in the course of such inspection.
Section 6. Corporate Seal.
The corporate seal shall have inscribed thereon the name of the corporation
and the words: Corporate Seal - Missouri. Said seal may be used by causing
it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
Section 7. Amendments.
The bylaws of the corporation may from time to time be suspended, repealed,
amended or altered, or new bylaws may be adopted, in the manner provided in
the articles of incorporation.
Section 8. Execution of Instruments.
Except as the Board of Directors may by resolution generally or in specific
instances otherwise provide, the chairman of the board, the president or any
vice president shall have power on behalf of the corporation:
(a) to execute, affix the corporate seal manually or by facsimile to,
acknowledge, verify and deliver any contracts, obligations instruments
and documents whatsoever in connection with its business, including
without limiting the foregoing, any bonds, guarantees, undertakings,
recognizance, powers of attorney or revocations of any powers of
attorney, stipulations, deeds, leases, mortgages, releases and
satisfactions;
(b) to appoint one or more persons for any or all of the purposes
mentioned in the preceding subsection (a) of this Section 8, including
affixing the seal of the corporation. (Amended 6/28/85)
Send application and check to:
Cova Financial Services Life
Insurance Company
P.O. Box 10366
Des Moines, Iowa 50306-0366
COVA
Cova Financial Services Life Insurance Company
VARIABLE LIFE INSURANCE APPLICATION
1. OWNER (If different than Proposed Insured named in Item 3)
Name [John L. Doe]
_______________________________________
(First) (Middle) (Last)
Address [123 Elm Street]
___________________________________
(Street)
[Anytown IL 60001]
_______________________________________
(City) (State) (Zip)
Soc. Sec. or Tax I.D. Number [123-45-6789]
_____________
Phone Number [708-123-4567]
_____________
______________
2. JOINT OWNER (if applicable)
Name
_______________________________________
(First) (Middle) (Last)
Address
___________________________________
(Street)
_______________________________________
(City) (State) (Zip)
Soc. Sec. or Tax I.D. Number [ ]
_____________
Phone Number [ ]
______________
3. PROPOSED INSURED
Name [John D. Doe]
_______________________________________
(First) (Middle) (last)
Address [123 Elm Street]
____________________________________
(Street)
[Anytown IL 60001]
_______________________________________
(City) (State) (Zip)
Occupation [Sales Manager}
_________________________________
Sex [x] M [ ] F Age 35
Birth date 4 / 12 /61
_____________________________________
Month Day Year
Place of Birth Anytown IL USA
_____________________________
City State Country
Soc. Sec. No. 123-45-6789
___________
Phone Number (708) 123-4567
_______________
4. PROPOSED JOINT INSURED (If applicable. Must be spouse of Proposed Insured
named in Item 3.)
Name
_______________________________________
(First) (Middle) (last)
Address
___________________________________
(Street)
_______________________________________
(City) (State) (Zip)
Occupation _________________________________
Sex [ ] M [ ] F Age
Birth date
_____________________________________
Month Day Year
Place of Birth
_____________________________
City State Country
Soc. Sec. No.
___________
Phone Number
_______________
5. Has the Proposed Insured ever been diagnosed or treated for: cancer, heart
attack, chest pain, stroke or insulin dependent diabetes?
[ ] Yes [ ] No
Proposed Joint Insured? [ ] Yes [ ] No
6. AMOUNT OF INSURANCE/PREMIUM
Initial Premium $ [10,000]
_____________
I (We)(Owner) acknowledge that it is my (our) intention that the policy be
issued at the face amount corresponding to the maximum premium limit
percentage. If not, choose one: [ ] 80% [ ] 90%
Face Amount $ [61,230]
____________
7. PREMIUM ALLOCATION
(Must be whole percentages. Must equal 100%.)
[J.P. Morgan Investment Management] [Lord Abbett]
[40]% [Select Equity Portfolio] [40]% [Growth & Income Portfolio]
[ ]% [Large Cap Stock Portfolio] [ ]% [Bond Debenture Portfolio]
[ ]% [Small Cap Stock Portfolio]
[ ]% [International Equity Portfolio] [Conning]
[ ]% [Quality Bond Portfolio] [20]% [Money Market Portfolio]
8. ALLOCATION DURING RIGHT TO EXAMINE
As described in the accompanying Prospectus, the initial premium will be
allocated to the [Money Market Portfolio] during the Right to Examine Period.
Thereafter, the premiums will be allocated as directed in the Premium
Allocation Section.
9. UNDERWRITING CONTRACT INFORMATION
PROPOSED INSURED
Contact at:[X] Home [708-123-4567]
_________________
(Phone Number)
[ ] Business
_________________
(Phone Number)
Best days and time [After 7PM]
__________________
Special Remarks
_______________________
PROPOSED JOINT INSURED
Contact at:[ ] Home
_________________
(Phone Number)
[ ] Business
_________________
(Phone Number)
Best days and time
__________________
Special Remarks
_______________________
10. If Cova is unable to issue a life insurance policy, do you wish to apply
for an annuity? [ ] Yes [X] No
11. SUITABILITY
<TABLE>
<CAPTION>
<S> <C>
A. Is the policy applied for consistent with your
insurance needs and financial objectives? [X] Yes [ ] No
B. Do you understand that the amount and duration of the
death benefit may vary, depending on the investment
performance of the portfolios? [X] Yes [ ] No
C. Do you understand that the policy values may increase
or decrease, depending on the investment performance of
the portfolios? [X] Yes [ ] No
D. Did you receive the current prospectus for the policy
applied for? [X] Yes [ ] No
E. Do you understand that the initial premium will be
allocated to the [Money Market Portfolio] during the
Right to Examine Period? [X] Yes [ ] No
F. Will the policy applied for replace or change any
existing life insurance or annuity? [X] Yes [ ] No
</TABLE>
12. SPECIAL REQUESTS
13. TRANSFER AUTHORIZATIONS
I (We) acknowledge that neither Cova Financial Services Life Insurance Company
(Cova) nor any person authorized by Cova will be responsible for any claim,
loss, liability or expense in connection with a telephone transfer if Cova or
such other person acted on telephone transfer instructions in good faith in
reliance on this authorization.
Check here if you wish to authorize telephone transfer instructions. [ ]
Check here if you wish to authorize your Registered Representative/Agent to
make transfers. [ ]
14. DOLLAR COST AVERAGING TRANSFERS
I (We) authorize Dollar Cost Averaging Transfers of $_______ to be transferred
each month from the [Conning Money Market Portfolio] ($5,000 minimum or amount
needed to complete all transfers.)
TO
[J.P. Morgan Investment Management]
____% [Select Equity Portfolio]
____% [Large Cap Stock Portfolio]
____% [Small Cap Stock Portfolio]
____% [International Equity Portfolio]
____% [Quality Bond Portfolio]
[Lord Abbett]
____% [Growth & Income Portfolio]
____% [Bond Debenture Portfolio]
____ Total
100%
I (We) authorize transfers to be made for: [ ] 12 months [ ] 24 months
[ ] 36 months [ ] 48 months [ ] 60 months Other __ months
Dollar Cost Averaging Transfers and Rebalancing Transfers are not available
simultaneously.
15. REBALANCING TRANSFERS - I (We) authorize Rebalancing Transfers to be made
in the applicable percentages elected in the Premium Payment Allocation
section.
Transfers are to be made: [ ] quarterly [ ] semi-annually [ ] annually.
Dollar Cost Averaging Transfers and Rebalancing Transfers are not available
simultaneously.
16. ACKNOWLEDGMENT AND AUTHORIZATION - Any person who, with intent to defraud
or knowing that he/she is facilitating a fraud against an insurer, submits an
application or files a claim containing false or deceptive statement is guilty
of insurance fraud.
I (We) have read all questions and answers in this application. All responses
are true and complete to the best of my (our) knowledge and belief. No
coverage will be in effect until: a full application has been signed by the
proposed insured(s); and a policy has been issued; and the full first premium
has been received by Cova. Any coverage will be subject to the terms and
conditions of the policy.
I (We) have received the notification about the Federal Fair Credit Reporting
Act and the Medical Information Bureau.
I (We) hereby authorize: any licensed physician or medical practitioner; any
hospital, clinic or other medical or medically related facility; any insurance
company; the Medical Information Bureau; and any other organization,
institution or person, that has any records or knowledge of me (us) or my
(our) health, to give to Cova Financial Services Life Insurance Company, its
Underwriters, or its reinsurers, or the Medical Information Bureau, any such
information. This authorization is valid for two and one-half years from the
date this form is signed. An exact copy of this authorization is as valid as
the original.
I (We) agree that the information and statements made on this application are
true and correct to the best of my (our) knowledge and belief and are made as
the bases of my (our) application. I (We) acknowledge receipt of the current
prospectus(es) of [Cova Variable Annuity Account One, Cova Series Trust and
Lord Abbett Series Fund, Inc.] PAYMENTS AND VALUES PROVIDED BY THE POLICY FOR
WHICH APPLICATION IS MADE ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR
AMOUNT. Complete Form W-9.
17. SIGNATURES
[ANYTOWN,] [IL] [11/15/96]
_____________________ ______________ ____________________
City State Date
[/s/ JOHN DOE]
_____________________________________
Signature of Proposed Insured
__________________________________________________
Signature of Proposed Joint Insured, if applicable
___________________________________________________
Signature of Owner if other than Proposed Insured
___________________________________________________
Signature of Joint Owner, if applicable
18. AGENT'S REPORT
Will the life insurance replace or change any existing life insurance or
annuity?
[X] No [ ] Yes (Indicate type and cost basis information.)
Type Cost Basis
[ ] Life Pre-TEFRA $__________________ $ ________________
(Cost Basis) (Gain)
[ ] Annuity Post-TEFRA $__________________ $ ________________
(Cost Basis) (Gain)
Agent's Signature [/s/RICHARD ROE]
_______________________
Phone [(708) 456-7890]
___________________
Agent's Name and Number [#123] [Richard Roe]
_____________________________
Name and Address of Firm [ABC Firm]
____________
[856 Main St., Anytown, IL]
Complete any required replacement forms.
NOTICE OF INSURANCE INFORMATION PRACTICES
* This notice must be detached and given to the Proposed Insured.
GENERAL INFORMATION PRACTICES - As authorized by you when you complete the
application, Cova may get information from sources other than the persons
proposed for insurance. In certain circumstances Cova may give information it
has gathered to third parties without your further authorization. Cova shares
only as much information as is needed to accomplish the purpose of the
disclosure. Cova discloses Medical Information Bureau information only to its
reinsurers. Persons who are the subject of information Cova collects may have
the right to access and correction. Cova may be required by law to furnish
you with a detailed description of our information practices upon receipt of a
request from you in writing.
FAIR CREDIT REPORTING ACT NOTICE - As part of its regular procedures, Cova may
get an investigative consumer report. This report may concern each person
proposed for insurance. It may deal with character, general reputation,
personal traits and mode of living. It may involve personal interviews with
friends, neighbors, associates or other persons. You have the right to make,
within a reasonable amount of time, a written request for details on the
nature and scope of this report. You may have the right to ask to be
interviewed in connection with the making of the report and, contact the
consumer reporting agency to review a copy of the report. If you write to
Cova, we will let you know whether Cova has in fact obtained a report, and if
so, the name and address of the agency making the report.
Medical Information Bureau (Bureau) Notice - Information provided to Cova will
be treated as confidential. But Cova or its reinsurers may make a brief
report thereon to the Bureau. This is a non-profit membership organization of
life insurance companies that operates an information exchange for its
members. If you apply to a member company for life or health insurance or
submit a claim for benefits, the Bureau, on request, will supply the member
company with the information it may have in its file.
On request from you, the Bureau will arrange to disclose to you any
information it may have in your file. If you question the accuracy of the
contents of your file, you may contact the Bureau and seek a correction. Your
request will be handled as provided for in the Fair Credit Reporting Act. The
address of the Bureau's information office is: P.O. Box 105, Essex Station,
Boston, Massachusetts 02212; Telephone Number: (617) 426-3680.
Cova or its reinsurers also may release information to those other life
insurance companies to which you may apply for life or health insurance or
submit a claim for benefits.
CONDITIONAL RECEIPT
* A premium check must be payable to the Company.
* Do not make the check payable to the agent.
* Do not leave the payee blank.
A payment of $ [10,000] in the form of a check made payable to Cova Financial
Services Life Insurance Company was received from [John Doe] for the insurance
applied for in the application which bears the same date as this Conditional
Receipt.
[/s/ RICHARD DOE] [11/15/96]
___________________ ______________
Signature of Agent Date
This receipt is not valid unless it is signed by an agent of Cova. This
receipt is not valid unless the required premium has been received by Cova
and, when paid by check, is honored on its first presentation for payment.
* No agent can change the terms of this conditional receipt.
If you do not hear from Cova about the proposed insurance within 60 days after
the date of this Conditional Receipt, please call Cova at its toll free
telephone number: 1-800-343-8496.
Insurance In Force - Insurance under this Conditional Receipt will be in force
starting on the Start Date only. If each person proposed for insurance is a
risk acceptable to Cova for the policy exactly as applied for, Cova will make
its decision according to its current rules and practices.
Start Date - For acceptable risks, any insurance under the terms of this
Conditional Receipt begins on the Start Date, which is the latest of:
a) The date of completion of all parts of the application; or
b) The date of completion of all medical or paramedical exams, tests, x-rays,
and EKGs required by Cova; or
c) The date of Cova's receipt of all of the attending physician's statements
and medical reports required by Cova; or
d) A later date, if any, requested in the application; or
e) The date of Cova's receipt of the initial premium.
Amount - The amount of insurance provided by this Conditional Receipt is the
lesser of:
a) The face amount of insurance applied for in the application; or
b) For a Proposed Insured up to age 65: the initial premium plus $500,000; or
c) For a Proposed Insured over age 65: the initial premium plus $200,000.
This amount includes any life insurance and accidental death benefits applied
for or in force with Cova. The amount of insurance is subject to the
Limitations Section.
Limitations - If a person proposed for insurance dies and insurance is in
force under this Conditional Receipt, the benefits will be limited to a return
of the premium paid for this Conditional Receipt if:
a) The death is a result of suicide while sane or self-destruction while
insane; or
b) All questions in the application have not been answered; or
c) All answers in the application are not true and correct; or
d) The person proposed for insurance is not a risk acceptable to Cova for the
policy as exactly applied.
End of Insurance - Once started, insurance under this Conditional Receipt will
end at the earliest of:
a) 60 days after the date of the application; or
b) When Cova sends notice that the insurance cannot be issued for the policy
exactly as applied for; or
c) The date any policy issued goes into effect.
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH PROCEEDS PAYABLE AT DEATH
PERIOD OF COVERAGE NOT GUARANTEED
NONPARTICIPATING - NO DIVIDENDS
COVA
Cova Financial Services Life Insurance Company
700 Market Street
St. Louis, Missouri 63101
Supplemental Application to
Cova Financial Services Life Insurance Company
Policy Service Center
P.O. Box 10366
Des Moines, Iowa 50306-0366
1. Proposed Insured Birth date Birthplace
Sex Social Security Number
2. Home Address Home Phone
3. Applicant/Owner (if other than Proposed Insured)
4. Plan of Insurance Initial Premium Face Amount
5. Beneficiary % Relationship
Address:
Contingent Beneficiary: % Relationship
Address:
6. Are you a U.S. citizen?
7. Do you plan to travel or reside outside the USA in the next two years?
8. Do you have other life insurance policies in force?
9. Will this policy replace or change any existing life insurance policy(ies)
or annuity(ies)?
10. Have you within the last 90 days applied for life insurance with this or
any other company?
11. Have you ever been refused life or health insurance or been asked to pay
extra premiums?
12. Have you received disability payments?
13. Have you had any motor vehicle accidents or violations, or had your
driver's license suspended or revoked in the past five years?
14. Have you ever flown or do you intend to fly as a pilot or crew member?
15. Have you or do you intend to skin or scuba dive, sky dive, hang glide,
mountain or rock climb, race motor vehicles, motorcycles, or motor boats?
HEALTH STATEMENTS
16. Who is your personal physician?
Date and reason that you last consulted your physician.
17. What is your height? Weight?
Have you lost any weight in the last year?
18. Do you use tobacco in any form?
19. Do you drink alcohol?
20. Are your parents living?
21. Have any brothers or sisters developed heart disease or diabetes before
age 60?
22. In the last five years:
a. have you consulted a physician or other medical practitioner?
b. have you had any electrocardiograms, blood tests or other medical
tests or studies?
23. Have you ever been hospitalized?
24. Have you ever:
a. used narcotics, barbiturates, hallucinogens, heroin, cocaine, or other
habit forming drugs except as prescribed by a physician?
b. received treatment or counseling for alcohol or other drug use?
c. been a member of any self-help group, such as Alcoholics Anonymous or
Narcotics Anonymous?
25. Are you currently taking any medication, or have you been advised to take
any medication?
26. To the best of your knowledge do you have any mental or physical
impairment or disease not already describe in this application?
27. Additional Comments.
Supplemental Application to
Cova Financial Services Life Insurance Company
Policy Service Office
P.O. Box 10366
Des Moines, Iowa, 50306-0366
ACKNOWLEDGE AUTHORIZATION
I have read all the questions and answers in this application and its
amendments (if any). All responses are true and complete to the best of my
knowledge and belief. I promise to give Cova written notice of any change in
my health or habits that occurs after signing this application, but before I
receive the policy.
I agree that:
1. This application and its amendments (if any) will be the basis for and
form of part of the policy; and
2. No agent has authority to alter Cova's rules or requirements, this
agreement or the policy; and
3. The first premium will not be deemed paid unless any check, draft, or
other instrument of payment given as premium is paid in accordance with its
terms; and
4. The insurance applied for does not take effect unless, during my lifetime
a) the required premium has been paid; b) the Policy has been issued,
delivered to, and accepted by me; c) any endorsements issued with the policy
have been and signed; and while my health and habits remain as stated in this
application.
Signature of
City___________________ State of______ Proposed Insured_________
Signature
Date_____________________ of Owner__________________
(if other than Proposed
Insured)
Signature of
Joint Owner_______________
(if applicable)
