As filed with the Securities and Exchange Commission on February 14, 1997
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
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THE GUARDIAN SEPARATE ACCOUNT E
(Exact Name of Trust)
------------
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
(Name of Depositor)
201 Park Avenue South, New York, New York 10003
(Complete address of depositor's principal executive offices)
Depositor's Telephone Number, including Area Code: (212) 598-8259
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RICHARD T. POTTER, JR., ESQ.
The Guardian Insurance & Annuity Company, Inc.
201 Park Avenue South
New York, New York 10003
(Name and address of agent for service)
Copy to:
STEPHEN E. ROTH, ESQ.
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
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Individual Variable Annuity Contracts--The Registrant has registered an
indefinite amount of securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
------------
Approximate date of proposed public offering
As soon as practicable after the effective date of this Registration Statement
------------
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
THE GUARDIAN SEPARATE ACCOUNT E
Cross Reference Sheet to Items In
Registration Statement on Form N-4
<TABLE>
<CAPTION>
Form N-4 Item No. Location
<S> <C> <C>
Part A
Item 1. Cover Page............................................................. Cover
Item 2. Definitions............................................................ Glossary of Special Terms Used in This
Prospectus
Item 3. Synopsis............................................................... Summary of the Contracts; Expense Table
Item 4. Condensed Financial Information........................................ Condensed Financial Information;
Performance Results
Item 5. General Description of Registrant, Depositor and Portfolio
Companies ........................................................... Descriptions of GIAC and the Separate
Account; Descriptions of the Variable
Investment Options; Description of the
Fixed-Rate Option; Voting Rights
Item 6. Deductions............................................................. Charges and Deductions; Distribution of
the Contracts
Item 7. General Description of Variable Annuity Contracts...................... Description of the Contracts
Item 8. Annuity Period......................................................... Annuity Period
Item 9. Death Benefit.......................................................... Death Benefits Prior to the Annuity
Commencement Date; Accumulation Period;
Annuity Period
Item 10. Purchases and Contract Value........................................... Description of the Contracts
Item 11. Redemptions............................................................ Surrenders and Partial Withdrawals
Item 12. Taxes.................................................................. Federal Tax Matters
Item 13. Legal Proceedings...................................................... Legal Proceedings
Item 14. Table of Contents of the Statement of Additional Information........... Additional Information
Part B
Item 15. Cover Page............................................................. Cover Page
Item 16. Table of Contents...................................................... Table of Contents
Item 17. General Information and History........................................ Not Applicable
Item 18. Services............................................................... Services to the Separate Account
Item 19. Purchase of Securities Being Offered................................... Valuation of Assets of the Separate
Account; Transferability Restrictions
Item 20. Underwriters........................................................... Services to the Separate Account
Item 21. Calculation of Performance Data........................................ Performance Data
Item 22. Annuity Payments....................................................... Annuity Payments
Item 23. Financial Statements................................................... Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
June 1, 1997
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
CONTRACT
Issued Through Separate Account E of
The Guardian Insurance & Annuity Company, Inc.
The Individual Flexible Premium Deferred Variable Annuity Contract
("Contract") described in this Prospectus is issued by The Guardian Insurance &
Annuity Company, Inc. ("GIAC"), and is designed to provide annuity benefits
under retirement programs entitled to Federal income tax benefits for individual
purchasers and other retirement plans which do not qualify for Federal tax
benefits under the Internal Revenue Code of 1986, as amended (the "Code").
The Contract described in this Prospectus is a Flexible Premium Payment
Contract. There is a minimum initial premium payment of $500. Annuity payments
will commence under one of the Annuity Payout Options provided in the Contract
on the Annuity Commencement Date selected by the Contractowner. The Contract
provides for a minimum pre-annuitization death benefit. Additionally,
Contractowners have the option of choosing an enhanced minimum pre-annuitization
death benefit.
Net premium payments for the Contracts may be allocated in up to six of the
allocation options underlying the Contract. Contract values will accumulate on
either a variable or fixed basis, depending on the options selected. These
options currently consist of the following: (1) shares of The Guardian Stock
Fund, The Guardian Bond Fund, The Guardian Cash Fund, The Guardian Small Cap
Stock Fund, Baillie Gifford International Fund, Baillie Gifford Emerging Markets
Fund, Value Line Strategic Asset Management Trust, Value Line Centurion Fund and
Gabelli Capital Asset Fund (collectively referred to as the "Funds" or the
"Variable Investment Options") and (2) the Fixed-Rate Option. Net premium
payments and Contract values allocated to any of the Variable Investment Options
will vary in accordance with the investment performance of such Variable
Investment Options. Net premium payments and Contract values allocated to the
Fixed-Rate Option will accumulate on a fixed basis. The Contractowner bears the
investment risk of growth or loss under the Contract, except to the extent that
amounts are allocated to the Fixed-Rate Option.
This Prospectus sets forth the information that a prospective Contractowner
should know before investing. A Statement of Additional Information concerning
the Contracts and The Guardian Separate Account E (the "Separate Account") is
available for free by writing to GIAC at its Customer Service Office, P.O. Box
26210, Lehigh Valley, Pennsylvania 18002 or by calling 1-800-221-3253. The
Statement of Additional Information, which is also dated June 1, 1997, has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. The table of contents for the Statement of Additional Information
appears at the end of this Prospectus.
- ------------
* The minimum initial premium payment for Contracts sold in New York State is
$1,000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS FOR
EACH OF THE FOLLOWING VARIABLE INVESTMENT OPTIONS: THE GUARDIAN STOCK FUND, THE
GUARDIAN BOND FUND, THE GUARDIAN CASH FUND, THE GUARDIAN SMALL CAP STOCK FUND,
BAILLIE GIFFORD INTERNATIONAL FUND, BAILLIE GIFFORD EMERGING MARKETS FUND, VALUE
LINE STRATEGIC ASSET MANAGEMENT TRUST, VALUE LINE CENTURION FUND AND GABELLI
CAPITAL ASSET FUND.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.
<PAGE>
TABLE OF CONTENTS OF PROSPECTUS
Page
Glossary of Special Terms Used in this Prospectus 3
Summary of the Contract 4
Expense Table 5
Descriptions of GIAC and the Separate Account 7
Descriptions of the Variable Investment Options 8
Description of the Fixed-Rate Option 10
Description of the Contract 11
General Information 11
Death Benefits Prior to the Annuity Commencement Date 11
Purchasing a Contract 13
Charges and Deductions 14
Accumulation Period 16
Annuity Period 17
Transfers of Contract Values 19
Surrenders and Partial Withdrawals 20
Other Important Contract Information 21
Performance Results 22
Federal Tax Matters 24
Voting Rights 29
Distribution of the Contract 30
Right to Cancel the Contract 30
Legal Proceedings 30
Additional Information 31
The Contract may not be available in all states.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUSES
FOR THE VARIABLE INVESTMENT OPTIONS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
2
<PAGE>
GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS
Accumulation Period: The period between the issue date of the Contract and the
Annuity Commencement Date.
Accumulation Unit: A unit of measure used to determine the value of a
Contractowner's interest under the Contract before the Annuity Commencement
Date. The Contract has two types of Accumulation Units: Variable Accumulation
Units and Fixed Accumulation Units.
Accumulation Value: The value of all the Accumulation Units in the Separate
Account and/or the Fixed-Rate Option which are credited to a Contract.
Annuitant: The person upon whose life the Annuity Payments are based and upon
whose death, prior to the Annuity Commencement Date, benefits under the Contract
are paid.
Annuity: A series of periodic payments made for the lifetime of the Annuitant,
with or without payments certain for a fixed period, or for the joint lifetimes
of the Annuitant and another person and thereafter during the lifetime of the
survivor.
Annuity Commencement Date: The date on which Annuity Payments under the Contract
commence.
Annuity Payments: Periodic payments, either variable or fixed in nature, made by
GIAC to the Contractowner at regular intervals after the Annuity Commencement
Date.
Annuity Unit: A unit of measure used to determine the amount of any variable
Annuity Payment.
Beneficiary: The person to whom benefits may be paid upon the Contractowner's or
the Annuitant's death. In the event a Beneficiary is not designated, the
Contractowner or the estate of the Contractowner is the Beneficiary.
Contract Anniversary Date: The annual anniversary measured from the issue date
of the Contract.
Contractowner: The person(s) or entity designated as the owner in the Contract.
Fixed-Rate Option: A deposit option to which Contractowners may allocate Net
Premium Payments and Accumulation Values for investment in the general account
of GIAC. GIAC guarantees that the amount deposited will not decline in value and
that interest will be added at a guaranteed rate declared periodically in
advance.
Funds: The nine diversified open-end management investment companies or series
thereof underlying the Contracts. Contractowners may allocate Net Premium
Payments and Accumulation Values to the Funds through the corresponding
Investment Divisions of the Separate Account. The Funds are: The Guardian Stock
Fund, The Guardian Bond Fund, The Guardian Cash Fund, The Guardian Small Cap
Stock Fund, Baillie Gifford International Fund, Baillie Gifford Emerging Markets
Fund, Value Line Strategic Asset Management Trust, Value Line Centurion Fund and
Gabelli Capital Asset Fund.
Good Order: Notice from any party authorized to initiate a^ transaction under
this Contract, received in a format satisfactory to GIAC at its Customer Service
Office, that contains all information required by GIAC to process that
transaction.
Investment Division: A division of the Separate Account, the assets of which
consist solely of shares of the corresponding Fund. Each Investment Division is
further divided into two subdivisions: one for funding Contracts with the
standard death benefit and the other for funding Contracts that have elected the
Enhanced Death Benefit Rider.
Net Premium Payment: A purchase payment or premium paid by the Contractowner to
GIAC in accordance with the Contract, less any applicable annuity taxes. The Net
Premium Payment is credited to the Investment Divisions of the Separate Account
and/or the Fixed-Rate Option, as selected by the Contractowner.
Surrender Value: The amount payable to the Contractowner or other payee upon
termination of the Contract, other than by the Annuitant's or Contractowner's
death.
Valuation Period: The period of time from one determination of Accumulation Unit
and Annuity Unit values to the next subsequent determination of these values.
Variable Annuity: An Annuity providing for payments that vary in amount to
reflect the investment experience of the Variable Investment Options selected by
the Contractowner.
Variable Investment Options: The Funds constitute the Variable Investment
Options (as distinguished from the Fixed-Rate Option) available under the
Contract for allocations of Net Premium Payments and Accumulation Values.
3
<PAGE>
SUMMARY OF THE CONTRACT
The Contract described in this Prospectus is designed to provide annuity
benefits pursuant to the Annuity Payout Option selected and the retirement plan,
if any, under which a Contract has been issued. The Contract provides several
underlying allocation options among which the Contractowner may select to pursue
his or her investment objectives. If the Contractowner selects an Annuity Payout
Option that provides for monthly payments during the lifetime of the Annuitant,
GIAC promises to make Annuity Payments continuously for the life of the
Annuitant under the Contract even if such Annuitant outlives the life expectancy
used in computing the Annuity. While GIAC is obligated to make Annuity Payments
regardless of the longevity of the Annuitant, the amount of variable Annuity
Payments is not guaranteed. With respect to amounts attributable to the Variable
Investment Options, no assurance can be given that the value of the Contract
during the Accumulation Period, or the aggregate amount of Annuity Payments made
under the Contract, will equal or exceed the Net Premium Payments allocated to
the Variable Investment Options.
GIAC provides for variable and fixed accumulations and benefits under the
Contract by crediting the Net Premium Payments to as many as six of the Variable
Investment Options or five Variable Investment Options and the Fixed-Rate
Option, as selected by the Contractowner. (See "Descriptions of the Variable
Investment Options," page 8, and "Description of the Fixed-Rate Option," page
10.) To the extent the Contractowner has allocated values to one or more of the
Variable Investment Options, the Contract value prior to the Annuity
Commencement Date and the amount accumulated to provide Annuity Payments will
depend upon the investment performance of the Variable Investment Options.
Amounts allocated to the Fixed-Rate Option will accrue interest at a rate not
less than the guaranteed minimum interest rate specified in the Contract. (See
"Accumulation Period," page 14, and "Annuity Period," page 15.) The investment
risk of gain or loss under the Contract is borne by the Contractowner except to
the extent that Accumulation Values are allocated to the Fixed-Rate Option where
the investment risk is borne by GIAC.
Contract values may be transferred among the Investment Divisions of the
Separate Account before and after the Annuity Commencement Date, subject to
certain conditions and in accordance with any applicable retirement plan.
Certain restrictions apply to transfers out of the Fixed-Rate Option. (See
"Transfers of Contract Values," page 16.)
The Contract contains the following additional features which are described
in more detail in this Prospectus:
(1) No sales charges are deducted from premium payments. However, if
part or all of the Accumulation Value of the Contract is withdrawn during
certain periods of time following the payment of premiums, GIAC will deduct
from such Accumulation Value a contingent deferred sales charge ranging
from 7.0% to 1.0%. A federal income tax, including a penalty tax may be
imposed on such withdrawals. (See "Expense Table," page 5, "Charges and
Deductions," page 11, "Surrenders and Partial Withdrawals," page 18, and
"Federal Tax Matters," page 20.)
(2) Charges for the assumption by GIAC of the mortality and expense
risks, the administrative expenses incurred by GIAC and annuity taxes, if
any, are deducted from the Accumulation Value of the Contract. (See
"Charges and Deductions," page 11.) In addition, the Funds impose certain
charges against their respective assets. (See the applicable Fund
prospectus for information about these charges.)
(3) The Contractowner may cancel a Contract no later than ten (10)
days after receiving it by returning the Contract along with written notice
of cancellation to GIAC. Longer periods may apply in some states. (See
"Right to Cancel the Contract," page 25.)
The Contract offered under this prospectus is available: to retirement plans
which qualify either under Sections 401 or 403(b) of the Code; to individual
retirement account plans established under Section 408 of the Code; in
connection with state and municipal deferred compensation plans under Section
457 of the Code; and; other deferred compensation arrangements and under other
retirement plans which may not qualify for similar tax advantages. (See "Federal
Tax Matters," page 20.) As required by the Code, GIAC restricts withdrawals from
Contracts issued in connection with Section 403(b) qualified plans. (See
"Federal Tax Matters -- Qualified Contracts -- Section 403(b) Plans," page 23).
4
<PAGE>
CONTRACTOWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases: None
Exchange Fee: None
Contingent Deferred Sales Charge:
The following charges will be assessed upon amounts withdrawn that have been in
the Contract for less than seven Contract years
Number of Contract Years Contingent
Completed from Date of Deferred Sales Charge
the Premium Payment Percentage*
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
and thereafter
The maximum contingent sales charge will be equal to 7% of the lesser of (1) the
total of all premium payments made within 7 contract years (84 months) prior to
the date of request for withdrawal or surrender; or (2) the amount withdrawn or
surrendered.
Annual Contract Administration Fee: $35.00
<TABLE>
<CAPTION>
Separate Account Level Annual Expenses: For Contracts Without For Contracts With
(as a percentage of daily net asset value) Enhanced Death Benefit Enhanced Death Benefit
---------------------- ----------------------
<S> <C> <C>
Mortality and Expense Risk Charge 1.05% 1.05%
Contract Charges and Expenses .20% .20%
Enhanced Death Benefit Charge 0% .20%
---- ----
Total Separate Account Annual Expenses 1.25% 1.45%
</TABLE>
Investment Division Level Annual Expenses:**
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Total Fund
Management Other Operating
Fees Expenses Expenses
<S> <C> <C> <C>
The Guardian Cash Fund .50% .03% .53%
The Guardian Bond Fund .50% .04% .54%
The Guardian Stock Fund .50% .03% .53%
The Guardian Small Cap Stock Fund .75% . % . %
Baillie Gifford International Fund .80% .19% .99%
Baillie Gifford Emerging Markets Fund 1.00% .67% 1.67%
Value Line Centurion Fund .50% .12% .62%
Value Line Strategic Asset Management Trust .50% .10% .60%
Gabelli Capital Asset Fund 1.00% .78% 1.78%
</TABLE>
* After the first Contract year, the greater of (i) excess of the Accumulation
Value on the date of withdrawal over the aggregate premium payments that have
not been previously withdrawn or 10% of the total premium payments made, minus
the aggregate amount of all prior partial withdrawals made in such Contract
year, can be withdrawn annually without charge. For Contracts issued in Section
1035 exchanges, trustee to trustee transfers, or in certain IRA transfers or
rollovers, this no-charge withdrawal privilege may also be exercised in the
first Contract year.
** These percentages reflect the actual fees and expenses incurred by each Fund
during the year ended December 31, 1996, except that the percentages for The
Guardian Small Cap Stock Fund are estimated, since the Fund has not yet
commenced operations. The percentages for Value Line Centurion Fund and Value
Line Strategic Asset Management Trust reflect (as part of "Other Expenses" and
"Total Fund Operating Expenses") the effects of expense reimbursement
arrangements pursuant to which each of these Funds reimburses GIAC for certain
administrative and shareholder servicing expenses incurred by GIAC on their
behalf.
5
<PAGE>
- --------------------------------------------------------------------------------
The table on the preceding page is designed to assist the Contractowner in
understanding the various costs and expenses of the Separate Account and its
underlying Funds. (See "Charges and Deductions" and see the accompanying Fund
prospectuses for a more complete description of the various costs and expenses.)
Comparison of Contract Expenses Among Underlying Funds
<TABLE>
<CAPTION>
If you surrender your contract at If you do not surrender or you
the end of the applicable time annuitize at the end of the
period: applicable time period:
You would pay the following You would pay the following
expenses on a $1,000 investment, expenses on a $1,000 investment,
assuming a 5% annual return on assuming a 5% annual return on
assets: assets:
1 Yr. 3 Yrs. 1 Yr. 3 Yrs.
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE GUARDIAN CASH FUND
- ----------------------------------------------------------------------------------------------------------
THE GUARDIAN BOND FUND
- ----------------------------------------------------------------------------------------------------------
THE GUARDIAN STOCK FUND
- ----------------------------------------------------------------------------------------------------------
THE GUARDIAN SMALL CAP STOCK
FUND
- ----------------------------------------------------------------------------------------------------------
BAILLIE GIFFORD INTERNATIONAL
FUND
- ----------------------------------------------------------------------------------------------------------
BAILLIE GIFFORD EMERGING
MARKETS FUND
- ----------------------------------------------------------------------------------------------------------
VALUE LINE CENTURION FUND
- ----------------------------------------------------------------------------------------------------------
VALUE LINE STRATEGIC ASSET
MANAGEMENT TRUST
- ----------------------------------------------------------------------------------------------------------
GABELLI CAPITAL ASSET FUND
</TABLE>
This expense comparison assumes that the expenses reported in the table on
the foregoing page will be the expenses incurred during the periods shown above.
This comparison is not a representation of past or future expenses. Actual
expenses may be higher or lower than those shown. The effect of the annual
contract administration fee was calculated by: (1) dividing the estimated total
amount of such fees by the total average net assets; (2) adding this percentage
to annual expenses; and (3) calculating the dollar amounts. Annuity taxes
ranging from approximately 0.50% to 3.5% are currently imposed by certain states
and municipalities on premium payments made under the Contract. Where
applicable, such taxes reduce the amount of each premium payment available for
allocation under the Contract. See "Charges and Deductions -- Annuity Taxes."
6
<PAGE>
DESCRIPTIONS OF GIAC AND THE SEPARATE ACCOUNT
GIAC
The Guardian Insurance & Annuity Company, Inc. ("GIAC") is a stock life
insurance company incorporated in the state of Delaware in 1970. GIAC is the
issuer of the Contracts offered under this Prospectus. GIAC is licensed to
conduct an insurance business in all 50 states of the United States and the
District of Columbia and had total assets of over $___ billion as of December
31, 1996. GIAC's Executive Office is located at 201 Park Avenue South, New York,
New York 10003. The address of GIAC's Customer Service Office for these
Contracts is P.O. Box 26210, Lehigh Valley, Pennsylvania 18002.
GIAC is wholly owned by The Guardian Life Insurance Company of America
("Guardian Life"), a mutual life insurance company organized in the State of New
York in 1860. As of December 31, 1996, Guardian Life had total assets in excess
of $____ billion. Guardian Life is not the issuer of the Contracts offered under
this Prospectus and does not guarantee the benefits provided therein.
GIAC's financial statements appear in the Statement of Additional
Information.
The Separate Account
GIAC established the Separate Account on September 26, 1996. The Separate
Account is registered as a unit investment trust under the Investment Company
Act of 1940, as amended (the "1940 Act"), and meets the definition of "separate
account" under the Federal securities laws. The Separate Account receives and
invests payments from Contractowners and owners of certain group deferred
variable annuity contracts issued by GIAC. In addition, the Separate Account may
receive and invest payments for other variable annuity contracts offered by
GIAC.
There are nine Investment Divisions (which correspond to the nine Funds)
available for allocations of Net Premium Payments and Accumulation Values. Each
Investment Division invests in a specific underlying Fund, and thus reflects
that Fund's investment performance. GIAC is the record owner of all of the Fund
shares held by each Investment Division but passes through to the Contractowners
the voting rights in such shares. (See "Voting Rights.")
Each Investment Division is administered and accounted for as part of the
general business of GIAC. Under Delaware law, the income and capital gains or
capital losses of each Investment Division, realized or unrealized, are credited
to or charged against the assets held in that Division in accordance with the
terms of each Contract, without regard to other income, capital gains or capital
losses of the other Investment Divisions or GIAC. The obligations arising under
the Contracts are obligations of GIAC. Delaware insurance law provides that the
assets of the Separate Account are not chargeable with liabilities arising out
of any other business GIAC may conduct. (See "Federal Tax Matters.")
The Contractowner may allocate Net Premium Payments and Accumulation Values
among up to six of the Contract's allocation options at any one time. Selecting
the Fixed-Rate Option reduces the number of Funds which may be selected for
allocation. No sales charges are assessed against premium payments invested in
the Funds under the Contracts. Transfers among the Investment Divisions may
currently be effected without fee, penalty or other charge by notifying GIAC's
Customer Service Office in writing or by telephone. (See "Transfers of Contract
Values.")
All dividends and capital gains distributions received from a Fund are
reinvested in such Fund's shares at net asset value and retained as assets of
the Separate Account through allocation to the applicable Investment Division.
Fund shares will be redeemed by GIAC at their net asset value to the extent
necessary to make annuity or other payments under the Contract.
GIAC retains the right, when permitted by applicable law, and with any
notice or approval required by any applicable law or regulatory authority, to
(1) deregister the Separate Account under the 1940 Act; (2) operate the Separate
Account as a management investment company or any other form permitted by law;
(3) combine any two or more separate accounts or Investment Divisions; (4)
transfer the assets in an Investment Division into another separate account,
another Investment Division or into GIAC's general account; and (5) modify the
Contracts as necessary to preserve the favorable tax treatment accorded to them
under the Code, including modifications designed to prevent the Contractowner
from being considered the owner of the assets of the Separate Account or the
Fixed Rate Option and, consequently, to be subject to taxation. GIAC will
exercise such rights (i) when necessary to serve the best interests of the
Contractowner and the beneficiary and (ii) when appropriate to carry out the
purposes of the Contract.
7
<PAGE>
DESCRIPTIONS OF THE VARIABLE INVESTMENT OPTIONS
The Funds
Each Fund has a different investment objective which it tries to achieve by
following specified investment policies. The objectives and policies of each
Fund will affect its potential returns and its risks. There is no guarantee that
a Fund will achieve its investment objective. The following chart states the
investment objectives and lists typical portfolio investments of each Fund
currently available through the Separate Account.
Each of the Funds is an open-end diversified management investment company
or a series thereof, and is registered with the SEC under the 1940 Act. Such
registration does not involve any supervision by the SEC of the investment
management or policies of the Funds. The Funds do not impose a sales charge or
"load" for buying and selling their shares, so GIAC buys and sells shares at net
asset value in response to Contractowner-requested and other Contract
transactions.
Certain of the Funds are available under other separate accounts supporting
certain GIAC variable annuity contracts and variable life insurance policies.
Although GIAC does not anticipate any inherent difficulties in offering these
Funds to more than one separate account, it is possible that certain conflicts
of interest may arise in connection with the use of the same Funds under both
variable life insurance policies and variable annuity contracts. While each
Fund's Board of Directors intends to monitor events in order to identify and, if
deemed necessary, act upon any material irreconcilable conflicts that may
possibly arise, GIAC may also take action to protect Contractowners. See the
accompanying prospectuses for the Funds for more information regarding such
possible conflicts of interest.
<TABLE>
<CAPTION>
FUND INVESTMENT OBJECTIVE(S) TYPICAL INVESTMENTS
<S> <C> <C>
The Guardian Stock Fund Long-term growth of capital U.S. common stocks and convertible securities
- ------------------------------------------------------------------------------------------------------------------------------------
The Guardian Small Cap Long-term growth of capital Common stocks and convertible securities issued by
Stock Fund companies with small market capitalization
- ------------------------------------------------------------------------------------------------------------------------------------
The Guardian Bond Fund Maximum income without undue risk of principal Investment grade debt obligations and U.S.
capital appreciation as a secondary objective government securities, including mortgage-backed
and asset-backed securities
- ------------------------------------------------------------------------------------------------------------------------------------
The Guardian Cash Fund High level of current income consistent with Money market instruments
liquidity and preservation of capital
- ------------------------------------------------------------------------------------------------------------------------------------
Baillie Gifford Long-term capital appreciation Common stocks and convertible securities issued by
International Fund foreign companies
- ------------------------------------------------------------------------------------------------------------------------------------
Baillie Gifford Emerging Long-term capital appreciation Common stocks and convertible securities issued by
Markets Fund companies that are organized in, generally operate
in, or which principally sell their securities in
emerging market countries
- ------------------------------------------------------------------------------------------------------------------------------------
Value Line Centurion Fund Long-term growth of capital U.S. common stocks ranked 1 or 2 by the Value Line
Ranking System*
- ------------------------------------------------------------------------------------------------------------------------------------
Value Line Strategic Asset High total investment return (current income and U.S. common stocks ranked 1 or 2 by the Value
Management Trust capital appreciation) consistent with reasonable Line Ranking System,* bonds and money market
risk instruments
- ------------------------------------------------------------------------------------------------------------------------------------
Gabelli Capital Asset Fund Growth of capital; current income as a secondary U.S. common stocks and convertible securities
objective
</TABLE>
Certain of the Funds may not be available in all States.
- -------------
* The Value Line Ranking System has been used substantially in its present
form since 1965. The System ranks stocks on a scale of 1 (highest) to 5
(lowest) for year-ahead relative performance (timeliness).
8
<PAGE>
GIAC retains the right, when permitted by applicable law and with any
notice or approval required by applicable law or any regulatory authority, to
make additions to, deletions from, or substitutions for, the Investment Divsions
in the Separate Account or the Fund shares held by any Investment Division. GIAC
reserves the right to eliminate the shares of any of the Funds and to substitute
shares of another Fund, or of another registered open-end management investment
company or series thereof or other appropriate investment vehicle. GIAC reserves
the right to add to or to suspend the Contractowner's ability to make
allocations or transfers into any Variable Investment Option or the Fixed-Rate
Option. GIAC will exercise such rights (i) when necessary to serve the best
interests of the Contractowner and the beneficiary and (ii) when appropriate to
carry out the purposes of the Contract.
A more detailed description of the investment objectives, policies,
charges, and expenses of the Funds may be found in the accompanying prospectuses
for the Funds. Read the prospectuses carefully before investing.
THE FUNDS' INVESTMENT ADVISERS
The Guardian Stock Fund, The Guardian Bond Fund, The Guardian Cash Fund and
The Guardian SmallCap Stock Fund (the "Small-Cap Fund") are advised by Guardian
Investor Services Corporation ("GISC"), 201 Park Avenue South, New York, New
York 10003. GISC is registered as an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act"). GISC is wholly owned by GIAC. Each of
these Funds, except The Guardian Small Cap Stock Fund, pays GISC an investment
advisory fee at an annual rate of 0.50% of the Fund's average daily net assets
for the services and facilities GISC provides to the fund. The Small Cap Fund
pays GISC an investment advisory fee at an annual rate of 0.75% of the Small Cap
Fund's average daily net assets. GISC also serves as the manager of Gabelli
Capital Asset Fund and as the investment adviser of six of the eight series
comprising The Park Avenue Portfolio (a family of mutual funds).
Baillie Gifford International Fund (the "International Fund") and Baillie
Gifford Emerging Markets Fund (the "Emerging Markets Fund") are advised by
Guardian Baillie Gifford Limited ("GBG"), 1 Rutland Court, Edinburgh, EH3 8EY,
Scotland. GBG is registered as an investment adviser under the Advisers Act and
is a member of Great Britain's Investment Management Regulatory Organization
Limited ("IMRO"). GBG was incorporated in Scotland in November 1990 and is
wholly owned by GIAC (51%) and Baillie Gifford Overseas Limited ("BG Overseas")
(49%). GBG also serves as the investment adviser of two of the eight series
comprising The Park Avenue Portfolio. GBG receives an investment advisory fee at
an annual rate of 0.80% of the average daily net assets of the International
Fund and 1.00% of the average daily net assets of the Emerging Markets Fund for
the services and facilities GBG provides to the Funds.
GBG has appointed BG Overseas to serve as sub-investment adviser to the
International Fund and the Emerging Markets Fund. Like GBG, BG Overseas is
located at 1 Rutland Court, Edinburgh, EH3 8EY, Scotland. BG Overseas is also
registered under the Advisers Act and is a member of IMRO. BG Overseas is wholly
owned by Baillie Gifford & Co., which is currently one of the largest investment
management partnerships in the United Kingdom. BG Overseas advises several
institutional clients situated outside of the United Kingdom, and is also the
sub-investment adviser to the series of The Park Avenue Portfolio that are
advised by GBG. One half of the investment advisory fee paid by the Funds to GBG
is payable by GBG to BG Overseas for its services as these Funds' sub-investment
adviser. No separate or additional fee is paid by these Funds to BG Overseas.
Value Line Strategic Asset Management Trust and Value Line Centurion Fund
are advised by Value Line, Inc. ("Value Line"), 220 East 42nd Street, New York,
New York 10017. Value Line is registered as an investment adviser under the
Advisers Act. Each of the Value Line Funds pays Value Line an investment
advisory fee at an annual rate of 0.50% of the Fund's average daily net assets
for the services and facilities Value Line provides to these Funds. Each of the
Value Line Funds reimburses GIAC for certain administrative and shareholder
servicing expenses incurred by GIAC on their behalf. Value Line also serves as
the investment adviser to its own family of mutual funds and publishes The Value
Line Investment Survey and The Value Line Mutual Fund Survey.
Gabelli Capital Asset Fund is managed by GISC, which has appointed Gabelli
Funds, Inc. ("GFI") as the investment adviser to the Fund. GFI is located at One
Corporate Center, Rye, New York 10580, and is registered as an investment
adviser under the Advisers Act. The Fund pays GISC a management fee at an annual
rate of 1.00% of its average daily net assets for services and facilities which
GISC provides to the Fund. For its services as investment adviser, GISC pays GFI
.75% of the management fee which GISC receives from the Fund. No separate or
additional fee is paid by the Fund to GFI. GFI also serves as investment adviser
to other open-end mutual funds and closed-end mutual funds.
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DESCRIPTION OF THE FIXED-RATE OPTION
That portion of each Contract relating to the Fixed-Rate Option is not
registered under the Securities Act of 1933 ("1933 Act") and the Fixed-Rate
Option is not registered as an investment company under the 1940 Act.
Accordingly, neither the Fixed-Rate Option nor any interests therein are subject
to the provisions or restrictions of the 1933 Act or the 1940 Act. However, the
following disclosure about the Fixed-Rate Option may be subject to certain
generally applicable provisions of the federal securities laws regarding the
accuracy and completeness of statements not in prospectuses. The Fixed-Rate
Option may not be available for allocation in all states in which the Contracts
are available.
General Information
The Contract permits the owner to allocate all or a portion of any Net
Premium Payment and to transfer all or a portion of his or her Accumulation
Value under the Contract to the Fixed-Rate Option. GIAC guarantees that amounts
invested under the Fixed-Rate Option will accrue interest daily at an effective
annual rate of at least 3% (the "guaranteed minimum interest rate"). GIAC may
also credit interest at a rate in excess of 3% (the "excess interest rate"), but
is under no obligation to do so. Any excess interest rate will be determined at
the sole discretion of GIAC and may be changed by GIAC from time to time and
without notice. The Contractowner assumes the risk that interest credited on any
portion of the Accumulation Value in the Fixed-Rate Option may not exceed the
guaranteed minimum interest rate (3%) for any given year.
There is no specific formula for the determination of whether to credit
excess interest or the rate thereof. However, some of the factors that GIAC may
consider are general economic trends, rates of return currently available and
anticipated on GIAC's general account investments, regulatory and tax
requirements and competitive factors. GIAC is aware of no statutory limitations
on the maximum amount of interest it may credit, and the Board of Directors of
GIAC has set no limitations.
The amounts credited to the Fixed-Rate Option become part of the general
assets of GIAC and are segregated from those assets allocated to any separate
account of GIAC. GIAC invests the assets of the Fixed-Rate Option in those
assets chosen by GIAC and allowed by applicable law. The allocation of any
amounts to the Fixed-Rate Option does not entitle a Contractowner to share in
the investment experience of those assets.
The interest rate initially credited to Net Premium Payments or transfers
of Accumulation Value allocated to the Fixed-Rate Option will be the rate in
effect on the date such amounts are so allocated. Each such payment or transfer
will continue to receive the rate of interest initially credited until the next
Contract Anniversary Date. On the Contract Anniversary Date, all payments and
transfers allocated to the Fixed-Rate Option during the prior Contract year,
together with all interest earnings and amounts previously allocated by the
Contractowner to the Fixed-Rate Option, will be credited with the rate of
interest in effect on that date (the "renewal rate"). Such renewal rate will be
guaranteed with respect to these amounts until the next Contract Anniversary
Date.
For a description of certain restrictions which apply to transfers to and
from the Fixed-Rate Option, see "Description of the Contracts -- Transfers of
Contract Values."
Renewal Rate and Bailout Provision
If the renewal rate set by GIAC on any Contract Anniverary Date falls below
the minimum bailout rate specified in the Contract (where approved by the
applicable state insurance departments), a Contractowner may withdraw all or a
portion of the amount which has been held in the Fixed-Rate Option for one year
or more without imposition of a contingent deferred sales charge. Such
withdrawal request must be in writing and received by GIAC at its Customer
Service Office within 60 days of the Contract Anniversary Date. (See "Surrenders
and Partial Withdrawals.")
DESCRIPTION OF THE CONTRACT
This section of the Prospectus highlights the more significant provisions
of the Contract. The information included in this section generally describes,
among other things, the benefits, charges, rights and privileges under the
Contract. These descriptions are qualified by reference to a specimen of the
Contract which has been filed as an exhibit to the registration statement for
the Separate Account. The provisions of the Contract may vary slightly from
state to state due to variations in state regulatory requirements.
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General Information
The Contract is a Flexible Premium Payment Contract that is only offered on
the lives of individual Annuitants. The Contract is available to retirement
plans which qualify for special Federal income tax treatment ("qualified
Contracts") and those which do not qualify for such treatment ("non-qualified
Contracts"). (See "Federal Tax Matters.")
A minimum initial premium payment of $500 is required (except in New York
state where the required minimum is $1,000). Thereafter, the minimum additional
payment is $100. However, if a Contract is purchased by, or in connection with,
an employer payroll deduction plan, GIAC will accept purchase payments below
$100. GIAC will not accept an initial premium payment in excess of $2,000,000
without prior permission. The aggregate of flexible premium payments made in any
Contract year after the first may not exceed $1,000,000, without GIAC's written
consent.
The variable annuity payments provided by the Contract are funded through
investments in the Separate Account . Information regarding the Separate Account
is contained in the sections entitled "Descriptions of GIAC and the Separate
Account" and "Descriptions of the Variable Investment Options."
Purchasing a Contract
To purchase a Contract, a completed and signed application and initial
premium payment must be sent to: The Guardian Insurance & Annuity Company, Inc.,
Customer Service Office, P.O. Box 26210, Lehigh Valley, Pennsylvania 18002-6210.
Certified, registered or express mail deliveries must be addressed to: The
Guardian Insurance & Annuity Company, Inc., Customer Service Office, 3900
Burgess Place, Bethlehem, Pennsylvania 18017.
If the application is acceptable to GIAC in the form received, the initial
Net Premium Payment will be credited within two (2) business days after receipt.
Acceptance is subject to GIAC's rules and GIAC reserves the right to reject any
application or initial premium payment. If the initial Net Premium Payment
cannot be credited within five (5) business days after receipt by GIAC because
the application is incomplete, GIAC will promptly return the premium payment and
application to the applicant.
After issuance of the Contract, Net Premium Payments received by GIAC at
its Customer Service Office prior to the close of GIAC's business day will
normally be credited to the Contract on that day. Net Premium Payments received
on a non-business day or following the close of GIAC's business day will be
credited at the next Accumulation Unit Value calculated on the first business
day following receipt.
Charges and Deductions
Charges and deductions under the Contract are made for GIAC's assumption of
mortality and expense risks, administrative expenses, any supplemental benefits
and any applicable state annuity taxes. The Separate Account does not incur any
operating expenses or account fees and expenses. Although no sales charges are
deducted from premium payments when made, a contingent deferred sales charge
will be assessed upon certain Contract surrenders or withdrawals. The amount of
this latter charge is based on the type of Contract involved. Each charge and
deduction under the Contract is described below:
Mortality and Expense Risk Charge: GIAC makes a daily charge against the
net assets of each Variable Investment Option in an amount equal to 1.05% on an
annual basis to compensate it for the assumption of mortality and expense risks.
The mortality risk assumed by GIAC arises from its promise to pay death benefit
proceeds and from its contractual obligation to continue to make Annuity
Payments (determined in accordance with the annuity tables and other provisions
of the Contract) to each Annuitant regardless of how long he or she lives and
regardless of how long all Annuitants as a group live. ^ The expense risk
assumed by GIAC arises from the possibility that the amounts deducted for sales
and administrative expenses may be insufficient to cover the actual cost of such
items.
Variable Annuity Payments reflect the investment performance of the
Variable Investment Options, but are not affected by changes in actual mortality
experience or by expenses incurred by GIAC in excess of the expense deductions
provided for in each Contract.
Administrative Expenses: On each Contract Anniversary Date on or before the
Annuity Commencement Date, GIAC deducts a contract administration fee of $35
from the Accumulation Value of each Contract by cancelling the number of
Accumulation Units equal in value to the fee. This administrative fee is
deducted from the Variable Investment Options and the Fixed-Rate Option on a
pro-rata basis in the same proportion as the percentage of the Contract's
Accumulation Value attributable to each Variable Investment Option and the
Fixed-Rate Option. GIAC will deduct the contract administration
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fee upon any surrender of a Contract which occurs before the Contract
Anniversary Date. GIAC will waive the contract administration fee if the
Accumulation Value on the Contract Anniversary Date or upon total surrender is
$100,000 or more. GIAC will also make a daily charge against the net assets of
each Variable Investment Option in an amount equal to .20% on an annual basis
for administrative expenses.
Supplemental Benefit Expenses: If the Enhanced Death Benefit is chosen and
is in effect, GIAC will assess a daily charge at an annual rate of .20% of the
net asssets of each Variable Investment Option.
Annuity Taxes: Certain states and municipalities may impose Annuity taxes
when premium payments are made or when annuity payments begin. These taxes range
from approximately 0.5% to 3.5% of premium payments made for the Contract. For
those Contracts subject to annuity tax, GIAC deducts Annuity tax either from the
premium payment when made or on the Annuity Commencement Date, as determined in
accordance with applicable law. However, in those jurisdictions where the
annuity tax is required to be deducted at the time of premium payment, GIAC
reserves the right, if permitted by applicable law and with the consent of the
Contractowner, to pay the annuity tax on behalf of the Contractowner and deduct
the amount paid from the contract value at the first to occur of surrender,
death or the Annuity Commencement Date.
Contingent Deferred Sales Charge: GIAC does not deduct a separate sales
charge from premium payments when made. However, a contingent deferred sales
charge ("CDSC") is imposed by GIAC on certain surrenders or partial withdrawals
to cover certain expenses incurred in the sale of the Contracts, including
commissions to registered representatives and various promotional expenses.
For the purpose of calculating the CDSC, and in order to minimize the
applicable CDSC, all amounts withdrawn or surrendered are deemed to be taken out
on a first-in-first-out basis; that is, all amounts taken out are deemed to come
from the oldest premium paid first. If the owner makes a partial withdrawal or
surrenders the Contract, a CDSC will be incurred against amounts withdrawn or
surrendered that have been in the Contract less than seven (7) Contract years. A
CDSC will not apply to amounts withdrawn or surrenderred that have been in the
Contract for seven (7) or more Contract years.
If the Contract is surrendered, GIAC will deduct, if applicable, a CDSC and
the contract administration fee from the amount otherwise payable. The amount of
the CDSC, if any, will be a percentage, as shown in the table below, of the
amount withdrawn or surrendered:
Number of Contract Years
Completed from the Date of CDSC
Premium Payment Charge
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 and thereafter 0%
The maximum CDSC will be equal to 7% of the lesser of: (1) the total of all
premium payments made within seven (7) Contract years (84 months) prior to the
date of the request for withdrawal or surrender; or (2) the amount withdrawn or
surrendered.
After the first Contract year, a Contractowner can withdraw annually
without charge, an amount equal to the greater of the excess of the Accumulation
Value on the date of withdrawal over the aggregate Net Premium Payments that
have not been previously withdrawn or 10% of the total premium payments made,
minus the aggregate amount of all prior partial withdrawals made in such
Contract year. For Contracts issued in trustee to trustee transfers, Section
1035 exchanges or in IRA transfers or rollovers from annuity contracts, this
no-charge withdrawal privilege may also be exercised in the first Contract year.
Such withdrawals may, however, be subject to penalty taxes and/or mandatory
federal income tax withholding. (See "Federal Tax Matters.")
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To minimize the amount of the CDSC charged in any particular situation,
withdrawals from any Variable Investment Option or the Fixed Rate Option will be
made in the same order in which amounts were allocated to that Option, subject
to the cancellation ordering rules set forth in "Surrenders and Partial
Withdrawals."
No CDSC will be imposed on any contract purchased by: (1) Guardian Life,
its subsidiaries or any separate account thereof; (2) present or retired
directors, officers, employees, general agents, or field representatives of
Guardian Life or its subsidiaries; (3) present or retired directors or officers
of any Variable Investment Option offered under this Contract; (4) present and
retired directors, trustees, officers, partners, registered representatives and
employees of broker-dealer firms that have written sales agreements with GISC;
(5) the spouses, parents, siblings, children and grandchildren of the
individuals in (2), (3) or (4) above (based upon their status at the time the
Contract was purchased); (6) trustees or custodians of any employee benefit
plan, IRA, Keogh plan or trust established for the benefit of persons in (2) and
(3) above; and (7) broker-dealers, financial institutions and registered
investment advisors which have entered into an agreement with GIAC providing for
the sale of the Contract to clients of such entities participating in a "wrap
account" or similar program under which clients pay an account management fee or
transaction fee to such entity.
Other Charges Applicable to the Funds : The net asset value per share of
each of the Funds reflects investment management fees and certain general
operating expenses paid by the Funds. The investment management fees and other
expenses incurred by the Funds are more fully described in "Descriptions of the
Variable Investment Options-The Funds' Investment Advisers", and the
accompanying prospectuses for the Funds.
Death Benefits Prior to the Annuity Commencement Date
The following is a description of the death benefits provided under the
Contract when the Annuitant or Contractowner dies prior to the Annuity
Commencement Date. In addition to the death benefits provided under the basic
Contract, Contractowners may elect to purchase an Enhanced Death Benefit Rider,
which may provide greater death benefit proceeds than the proceeds payable under
the basic Contract. A more detailed description of the Enhanced Death Benefit
Rider follows the discussion of the basic Contract's death benefits. The
Enhanced Death Benefit Rider is available at the time of the issuance of the
Contract and an additional annual charge is imposed while the benefit is in
force. Although not currently anticipated, GIAC reserves the right to offer the
Enhanced Death Benefit to existing Contractowners during limited periods of time
in the future.
Death of the Annuitant When Annuitant is Not a Contractowner:If the
Annuitant dies on or before the Annuity Commencement Date and the Annuitant is
not also the Contractowner, a death benefit becomes payable to the Beneficiary.
If the Beneficiary predeceases the Annuitant, the death benefit will be paid to
any contingent Beneficiary. If no contingent Beneficiary is designated, then the
death benefit will be paid to the Contractowner or, if the Contractowner is no
longer living, to the Contractowner's estate. GIAC will make such payment upon
receipt at its Customer Service Office of proof of death in Good Order.
The death benefit payable is the greater of (1) the Accumulation Value of
the Contract as of the end of the Valuation Period during which GIAC received
proof of death, less any applicable annuity taxes; or (2) the total amount of
premiums paid, less any partial withdrawals and any contingent deferred sales
charges paid thereon, and any applicable annuity taxes. For Contracts issued for
the benefit of Annuitants who are age 75 or older on the Contract's issue date,
the death benefit will be the Accumulation Value as of the end of the Valuation
Period during which GIAC received proof of death in Good Order less any
applicable annuity taxes.
The death benefit will be paid in one lump sum unless (1) the Contractowner
has elected an annuity payout option for the death benefit which is received by
GIAC in Good Order at least three business days prior to the date the proceeds
are paid, or (2) the Contractowner has not otherwise elected an annuity payout
option and the Beneficiary has elected an annuity payout option for the death
benefit that it is received by GIAC in Good Order at least three business days
prior to the date the proceeds are paid and within one year of the Annuitant's
death.
Death of a Contractowner: If a Contractowner and the Annuitant are the same
person, and such person dies on or before the Annuity Commencement Date, then
the death benefit becomes payable to the beneficiary as described above, except
that the Contract's entire interest must be distributed in accordance with the
rules set forth in the "Special Requirements" section below. The Beneficiary
becomes the new Contractowner in these circumstances. If the
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Contractowner and the Annuitant are not the same person and the Contractowner
dies, then the joint Contractowners, if any, become the new Contractowner. If no
joint Contractowner has been named, then the Beneficiary becomes the new
Contractowner of the Contract. In the event of any Contractowner's death, the
Contract's entire interest must be distributed in accordance with the rules set
forth in the "Special Requirements" section below.
Special Requirements: If the Beneficiary (or sole surviving joint
Contractowner) is not the Contractowner's spouse and the Contractowner dies
before the Annuity Commencement Date, then distribution of the Contractowner's
entire interest in the Contract must be made within five years of the
Contractowner's death. These distribution requirements shall be deemed satisfied
as to any portion of the deceased Contractowner's interest which (1) is payable
to or for the benefit of any new Contractowner; and (2) will be distributed over
the life of any such new Contractowner, or over a period not extending beyond
the life expectancy of any new Contractowner; provided that such distributions
begin within one year of the death of the deceased Contractowner. If the
Beneficiary (or sole surviving joint Contractowner) is the deceased
Contractowner's spouse, the spouse may continue the contract as the new
Contractowner. If the Contractowner is not an individual, the primary Annuitant,
as determined in accordance with Section 72(s) of the Internal Revenue Code
(i.e., the person the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the contract), will be
treated as the Contractowner for purposes of these distribution requirements,
and any change in the Annuitant will be treated as the death of the
Contractowner.
The death benefit will ordinarily be paid within seven (7) days of GIAC's
receipt of proof of death in Good Order. However, GIAC reserves the right to
defer payment of any Contract benefits, other than guaranteed death benefits,
under certain circumstances. (See "Surrenders and Partial Withdrawals").
Enhanced Death Benefit: At the time of purchase of the Contract, a
Contractowner may elect to purchase the Enhanced Death Benefit Rider. If the
Annuitant dies before the Annuity Commencement Date and the Rider is in force,
upon receipt of proof of death in Good Order, GIAC will pay the beneficiary a
death benefit equal to the greater of (1) the death benefit described above or
(2) the Enhanced Death Benefit. The Enhanced Death Benefit is equal to the
Accumulation Value of the Contract as of the end of the Reset Date immediately
preceding the annuitant's date of death, less any partial withdrawals subsequent
to such date, any contingent deferred sales charges paid thereon, and any
applicable annuity taxes.
The first Reset Date occurs on the seventh Contract Anniversary Date of the
Contract. Thereafter, each Reset Date occurs on each subsequent seventh Contract
Anniversary Date. For so long as the Enhanced Death Benefit Rider remains in
effect, GIAC will assess an additional daily charge against the net assets of
each Variable Investment Option in an amount equal to .20% on an annual basis
for expenses related to the Enhanced Death Benefit. (See "Charges and
Deductions".)
The Enhanced Death Benefit Rider terminates on the earliest of (1) the date
the Enhanced Death Benefit is paid; (2) the date the Contract terminates; (3)
the date of the Annuitant's 85th birthday; (4) the Annuity Commencement Date; or
(5) the date GIAC receives the Contractowner's proper written request for
termination in Good Order. Once the Enhanced Death Benefit Rider is terminated,
it may not be reinstated.
Accumulation Period
Allocation of Net Premium Payment: The initial Net Premium Payment will be
used to purchase Accumulation Units in the Investment Divisions or the
Fixed-Rate Option as selected by the Contractowner at the unit values next
computed following receipt and acceptance of the payment by GIAC. Subsequent Net
Premium Payments will be allocated among the underlying Contract options as
initially selected for allocation or pursuant to new allocation instructions
requested by the Contractowner in writing. New allocation instructions will be
implemented by GIAC following their receipt at its Customer Service Office.
However, the Contractowner may not be invested in more than six allocation
options at any given time.
Crediting Accumulation Units under the Contract: Variable Accumulation
Units represent the interests in the Variable Investment Options and Fixed
Accumulation Units represent the interests in the Fixed-Rate Option. The total
number of Accumulation Units to be credited to a Contractowner's account is the
sum of the portion of the Net Premium Payment allocated to each option divided
by the Accumulation Unit value of each such option as next computed following
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receipt and acceptance of the payment by GIAC. The number of Accumulation Units
will not change because of a subsequent change in the value of the unit, but the
dollar value of Accumulation Units will vary based upon the investment
experience of the Variable Investment Options and interest credited to the
Fixed-Rate Option.
Accumulation Value: The value of the Contractowner's account within any
particular Variable Investment Option or the Fixed-Rate Option is determined by
multiplying the number of Accumulation Units of that particular option credited
to the account by the applicable current Accumulation Unit value.
Value of an Accumulation Unit: With respect to a Variable Investment
Option, the value of a Variable Accumulation Unit is determined by multiplying
the value of such Variable Accumulation Unit as of the end of the immediately
preceding Valuation Period by the net investment factor (described below) for
the current Valuation Period. With respect to the Fixed-Rate Option, the value
of a Fixed Accumulation Unit is determined by adding the interest credited on
such Fixed Accumulation Unit since the end of the immediately preceding
Valuation Period to the value of such unit as of the end of such Valuation
Period.
Net Investment Factor: The net investment factor is a measure of the
investment experience of each Variable Investment Option. For any particular
Valuation Period, the net investment factor is determined by:
(1) Adding the net asset value of a Fund share as determined at the
end of such Valuation Period to the per share or per interest amount of any
dividends and other distribution made by the Fund during the period, and
(2) Dividing by the net asset value of the particular Fund share
calculated as of the end of the immediately preceding Valuation Period, and
(3) Subtracting from the above result the sum of the daily charges for
(a) mortality and expense risks (b) administrative expenses and (c) if
applicable, the Enhanced Death Benefit Rider, plus any applicable annuity
taxes.
Annuity Period
Annuity Commencement Date: Annuity Payments under the Contract will begin
on the Annuity Commencement Date, which is the first day of the calendar month
and year selected by the Contractowner. This date cannot be later than the
Annuitant's 90th birthday, except when otherwise agreed by GIAC. The Annuity
Commencement Date may also be determined by the retirement plan under which the
Contract is issued.
Annuity Payments: Annuity Payments are available on a fixed or variable
basis or a combination of both. Such payments will be determined on the basis
of: (1) the table specified in the Contract which reflects the nearest age of
the Annuitant; (2) the annuity payout option selected; and (3) the investment
experience of any Variable Investment Options selected. The number and amount of
Annuity Payments will not be affected by the longevity of Annuitants generally
or any increase in the expenses of GIAC in excess of the charges specified in
the Contract. The Annuitant receives the value of a fixed number of Variable
Units and a fixed dollar amount each month. For the Variable Investment Options,
the value of an Annuity Unit will reflect the investment experience of the
amounts allocated to the Variable Investment Options, and the amount of each
Annuity Payment will vary accordingly.
While the Annuitant is living, the Contractowner may name or change one or
more Beneficiaries who will be the payee or payees of an annuity payout
following the death of the Annuitant. Only individuals who are to receive
payments in his or her own behalf may be named as payees, unless GIAC agrees
otherwise.
The 1983 decision of the U.S. Supreme Court in Arizona Governing Committee
v. Norris can be interpreted to require all "employer-related plans" to use rate
tables that are gender-neutral in calculating annuity purchase rates. In order
to accommodate employer-related plans funded by the Contract, revised annuity
rate tables providing benefits on a gender-neutral basis have been developed and
filed in the states where GIAC is admitted to do business. Contracts that are
not purchased in connection with employer-related plans will continue to be
offered on the customary basis with gender-distinct annuity purchase rates,
unless prohibited by state law. The Contract offered by this Prospectus to
residents of such states will have Contract benefits which are based on
gender-neutral annuity rate tables.
Annuity Payout Options: The Contractowner may elect to have Annuity
Payments made under any one (or a combination) of the variable or fixed Annuity
Payout Options specified in the Contract and described below. A change of
Annuity Payout Option is permitted only prior to the Annuity Commencement Date.
In the absence of an election, Annuity Payments will be made in accordance with
the Annuity Payout Option known as "Option V-2 -- Life Annuity with 10-Year
Guaranteed Period" (see below). Annuity Payments will be made monthly except
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that: (1) proceeds of less than $2,000 will be paid in a single sum; and (2)
GIAC may change the schedule of installment payments to avoid payments of less
than $20. The Annuity Payout Options currently available for both variable and
fixed Annuity Payments under the Contract are as follows (options designated
with the letter "V" are variable options, those designated with the letter "F"
are fixed options):
Variable Annuity Payout Options
The amount of any variable annuity payments after the first will increase
or decrease according to the value of the variable Annuity Units, which reflect
the investment experience of the Variable Investment Option(s) chosen.
Option V-1 -- Life Annuity without Guaranteed Period: Under this
option, a Variable Annuity Payment will be made monthly during the lifetime
of the Annuitant ending with the payment preceding the Annuitant's death.
Option V-1 offers the maximum level of variable monthly payments, since
there is no guarantee of a minimum number of variable payments or provision
for a death benefit for Beneficiaries. It would be possible under Option
V-1 for the Annuitant to receive only one Variable Annuity Payment if he or
she died before the due date of the second Variable Annuity Payment, two
such payments if he or she died before the third Variable Annuity Payment
date, and so on.
Option V-2 -- Life Annuity with 10-Year Guaranteed Period: Under this
option, a Variable Annuity Payment will be made monthly during the lifetime
of the Annuitant with the provision that if, at the Annuitant's death, such
payments have been made for less than 10 years (120 months), Variable
Annuity Payments will be continued during the remainder of such period to
the Beneficiary. The Beneficiary at any time may elect to redeem in whole
or in part the commuted value of the current dollar amount of the then
remaining number of Variable Annuity Payments. If the Beneficiary dies
while receiving Variable Annuity Payments, the commuted value of the
current dollar amount of the remaining number of Variable Annuity Payments
shall be paid in one sum to the estate of the Beneficiary.
Option V-3 -- Joint and Survivor Annuity: Under this option, a
Variable Annuity Payment will be made monthly during the joint lifetimes of
the Annuitant and a designated second person (joint annuitant) and will
continue during the lifetime of the survivor in a reduced amount which
reflects two-thirds of the number of Variable Annuity Units in effect while
both persons were living. It would be possible under Option V-3 for the
joint Annuitants to receive only one Variable Annuity Payment if both died
before the date of the second Variable Annuity Payment, two such payments
if both died before the third Variable Annuity Payment date, and so on.
Fixed Annuity Payout Options
Option F-1 -- Life Annuity without Guaranteed Period: Under this
option, a Fixed Annuity Payment will be made monthly during the lifetime of
the Annuitant ending with the payment preceding the Annuitant's death.
Option F-1 offers the maximum level of fixed monthly payments, since there
is no guarantee of a minimum number of fixed monthly payments or provision
for a death benefit for Beneficiaries. It would be possible under Option
F-1 for the Annuitant to receive only one Fixed Annuity Payment if he or
she died before the due date of the second Fixed Annuity Payment, two such
payments if he or she died before the third Fixed Annuity Payment date, and
so on.
Option F-2 -- Life Annuity with 10-Year Guaranteed Period: Under this
option, a Fixed Annuity Payment will be made monthly during the lifetime of
the Annuitant with the provision that if, at the Annuitant's death, such
payments have been made for less than 10 years (120 months), Fixed Annuity
Payments will be continued during the remainder of such period to the
Beneficiary. The Beneficiary at any time may elect to redeem in whole or in
part the commuted value of the current dollar amount of the then remaining
number of Fixed Annuity Payments. If the Beneficiary dies while receiving
Fixed Annuity Payments, the commuted value of the current dollar amount of
the remaining number of Fixed Annuity Payments shall be paid in one sum to
the estate of the Beneficiary.
Option F-3 -- Joint and Survivor Annuity: Under this option, a Fixed
Annuity Payment will be made monthly during the joint lifetimes of the
Annuitant and a designated second person (joint annuitant) and will
continue during the lifetime of the survivor in a reduced amount which
reflects two-thirds of the number of Fixed Annuity Units in effect while
both persons were living. It would be possible under Option F-3 for the
joint Annuitants to receive only one Fixed Annuity Payment if both died
before the date of the second Fixed Annuity Payment, two such payments if
both died before the third Fixed Annuity Payment date, and so on.
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Transfers of Contract Values
General Information: Subject to the conditions described below and to the
terms of any applicable retirement plan, transfers among the Contract's Variable
Investment Options are permitted both before and after the Annuity Commencement
Date. Transfers to and from the Fixed-Rate Option are only permitted before the
Annuity Commencement Date. Contractowners may be invested in a maximum of six
Variable Investment Options or in the Fixed-Rate Option and five Variable
Investment Options under the Contract at any given time. Annuitants receiving
payments pursuant to a variable Annuity Payout Option may be invested in a
maximum of six Variable Investment Options at any given time. Contractowners and
Annuitants who contemplate requesting a transfer should carefully consider their
own objectives and the investment objectives, risks and restrictions pertaining
to each Variable Investment Option and the Fixed-Rate Option involved in the
proposed transfer before making the request. Frequent transfers may be
inconsistent with the long-term objectives of the Contract.
GIAC will implement transfers pursuant to written or telephone instructions
received in Good Order at its Customer Service Office. Requests received by GIAC
at its Customer Service Office prior to 3:30 p.m. (Eastern time) on a given
business day will normally be implemented as of the end of that day. GIAC
reserves the right to limit the frequency of transfers to not more than once
every 30 days. Currently, no charge is made by GIAC for effecting any transfer.
GIAC reserves the right, however, to impose such a charge in the future (up to a
maximum charge of $25 per transfer). GIAC will deduct any transfer charge on a
pro rata basis from the options from which the amounts are transferred.
Telephone Transfers: GIAC will not honor telephone transfer instructions
unless proper authorization has been provided either in the completed
application for the Contract or in GIAC's telephone transfer authorization form.
If the proper authorization is on file at GIAC's Customer Service Office,
telephone transfer instructions may be given by calling 1-800-533-0099 between
9:00 a.m. and 3:30 p.m. (Eastern time) on days when GIAC is open for business.
Each telephone transfer instruction must include a precise identification of the
owner's Contract and the Contractowner's Personal Security Code. GIAC may accept
telephone transfer instructions from any caller who properly identifies the
correct Contract number and Personal Security Code. GIAC, GISC and the Funds
shall not be liable for any loss, damage, cost or expense resulting from
following telephone transfer instructions which any of them reasonably believed
to be genuine. Thus, Contractowners risk possible loss of interest, capital
appreciation and principal in the event of an unauthorized or fraudulent
telephone transfer. All or part of any telephone conversation relating to
transfer instructions may be recorded by GIAC without prior disclosure to the
caller.
Telephone transfer instructions apply only to allocations of previously
invested monies. Such instructions may not be used to change the allocation
instructions for any future premiums paid under the Contract. See "Allocation of
Net Premium Payment" for information about changing allocation instructions for
future premiums.
During periods of drastic economic or market changes, it may be difficult
to contact GIAC to request a telephone transfer. At such times, transfer
requests may be made by regular or express mail and will be processed at the
next Accumulation Unit Value calculated after their receipt pursuant to the
terms and restrictions described in this "Transfers of Contract Values" section.
GIAC reserves the right to modify, suspend or discontinue the telephone transfer
privilege at any time and without prior notice.
Transfer Rules During the Accumulation Period: During the Accumulation
Period up until 30 days prior to the Annuity Commencement Date, the
Contractowner may transfer all or part of the Accumulation Value among the
Contract options, subject to the following:
(1) Transfers from the Fixed-Rate Option to any Variable Investment
Option are permitted only once per Contract year during the 30-day period
beginning on the Contract Anniversary Date, except as permitted pursuant to
the Dollar Cost Averaging feature described below. Amounts will be
transferred from the Fixed-Rate Option to any Variable Investment Option in
the same order such amounts were allocated to the Fixed-Rate Option. This
means that amounts on deposit in the Fixed-Rate Option for the longest
period of time will be the first amounts so transferred. The maximum amount
which may currently be transferred out of the Fixed-Rate Option each year
is the greater of: (1) 331/3% of the amount in the Fixed-Rate Option as of
the applicable Contract Anniversary Date, or (2) $10,000 or (3) the product
of the total dollar amount transferred from the Fixed-Rate Option in the
previous Contract year, multiplied by a factor of 1.15.
(2) Each transfer involving the Contract's Variable Investment Options
will be based upon the next Accumulation Unit value calculated after proper
transfer instructions are received by GIAC at its Customer Service Office.
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Transfers Rules After the Annuity Commencement Date: After the Annuity
Commencement Date, a Contractowner may also transfer all or part of the Annuity
Value among the Variable Investment Options. However, such transfers may be made
only once each calendar year. No transfers into or out of the Fixed-Rate Option
are currently permitted after the Annuity Commencement Date.
Surrenders and Partial Withdrawals
During the Accumulation Period and while the Annuitant and all
Contractowners are living, the Contractowner may redeem the Contract in whole
(known as a "surrender") or in part (known as a "partial withdrawal").
Surrenders and partial withdrawals must be requested in writing in Good Order. A
surrender request must be accompanied by the Contract (or an acceptable
affidavit of loss) to be deemed in Good Order. GIAC will not process a surrender
request prior to receipt of the Contract (or an acceptable affidavit of loss) at
its Customer Service Office. GIAC will not honor a request for a surrender or
partial withdrawal after the Annuity Commencement Date.
If a surrender or partial withdrawal is made, a contingent deferred sales
charge will be imposed, if applicable. (See "Charges and Deductions --
Contingent Deferred Sales Charge.")
A surrender or partial withdrawal is effected by cancelling Accumulation
Units which have an aggregate value equal to the dollar amount of the requested
surrender or partial withdrawal as next calculated following receipt by GIAC at
its Customer Service Office of a proper written request for the surrender or
partial withdrawal. If applicable, any Contract charges and any contingent
deferred sales charges will be deducted from the surrender proceeds or, in the
case of a partial withdrawal, from the remaining Accumulation Value by the
cancellation of additional Accumulation Units. If the Accumulation Value
remaining after a partial withdrawal is less than $ 500, GIAC reserves the right
to redeem the total Accumulation Value and pay it to the Contractowner in
cancellation of the Contract. Such an involuntary surrender is subject to any
then applicable Contract administrative charge or contingent deferred sales
charge. (See "Charges and Deductions -- Contingent Deferred Sales Charge".)
Except as noted below, Accumulation Units will be cancelled in the
following order: First, GIAC will cancel all the Variable Accumulation Units
attributable to the Investment Divisions. Cancellation of the Variable
Accumulation Units attributable to the Investment Divisions will be on a pro
rata basis, reflecting the existing distribution of the Variable Accumulation
Units unless the Contractowner instructs otherwise. Second, GIAC will cancel all
Fixed Accumulation Units attributable to the Fixed-Rate Option.
No contingent deferred sales charge will be imposed and the above ordering
rules will not apply if amounts are withdrawn directly from the Fixed-Rate
Option in accordance with the bailout provision described in the section
entitled "Description of the Fixed-Rate Option."
Payment of a surrender or partial withdrawal will ordinarily be made within
seven (7) days after the date GIAC receives the written request in Good Order at
its Customer Service Office. GIAC can delay the payment if the Contract is being
contested and may postpone the calculation or payment of any partial withdrawals
or surrender proceeds or transfer of amounts based on investment performance of
the Investment Divisions if: (1) the New York Stock Exchange is closed for
trading or trading has been suspended; or (2) the Securities and Exchange
Commission restricts trading or determines that a state of emergency exists
which may make payment or transfer impracticable.
NOTE: Withdrawals from Contracts issued in connection with Section 403(b)
qualified plans are restricted under the Code. See "Federal Tax Matters --
Qualified Contracts -- Section 403(b) Plans" for information about the
circumstances under which withdrawals may be made from such Contracts.
Questions regarding GIAC's surrender or withdrawal procedures should be
directed to a customer service representative by calling toll-free
1-800-221-3253.
Other Important Contract Information
Dollar Cost Averaging: Contractowners may elect to systematically transfer
specified level dollar amounts from the Cash Fund Investment Division or the
Fixed-Rate Option to other Variable Investment Options and/or the Fixed-Rate
Option at regular intervals. By transferring specific amounts on a regularly
scheduled basis, as opposed to allocating the total amount at one particular
time, a Contractowner may be less susceptible to the impact of market
fluctuations. There is no guarantee, however, that such an investment method
will result in profits or prevent losses.
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To take advantage of this program, a Contractowner predesignates a dollar
amount to be automatically transferred from either the Cash Fund Investment
Division or the Fixed-Rate Option to one or more of the other Variable
Investment Options and/or the Fixed-Rate Option, provided that Accumulation
Values may only be allocated among a maximum of six Contract options, including
the Cash Fund Investment Division or the Fixed-Rate Option, at any given time. A
Contractowner may elect this program at the time the Contract is purchased or
anytime thereafter by properly completing a Dollar Cost Averaging election form
and returning it to GIAC at its Customer Service Office at least three (3)
business days prior to the Monthly Anniversary Date (the monthly anniversary
measured from the issue date of the Contract or the last day of that calendar
month, if earlier) on which the first transfer will be made. Transfers will then
be made monthly for the period elected by the Contractowner. Contractowners
participating in this program may not elect to Dollar Cost Average from both the
Cash Fund Investment Division and the Fixed Rate Option concurrently.
Dollar Cost Averaging from the Cash Fund Investment Division may be
selected for 12, 24 or 36 month periods. Dollar Cost Averaging from the Fixed
Rate Option may only be selected for a 36 month period. The total Accumulation
Value at the time it is elected must be at least $10,000 for transfers over a 12
month period and $20,000 for transfers over a 24 or 36 month period. Transfers
will be made in the amounts designated by the Contractowner and must be at least
$100 per receiving Contract Option. When a Contractowner elects to participate
in this program, the Accumulation Value attributable to the Cash Fund Investment
Division or the Fixed Rate Option must be at least equal to the amount
designated to be transferred on each Monthly Anniversary Date multiplied by the
applicable monthly duration.
Dollar Cost Averaging will terminate when any one of the following events
occurs: (1) the number of designated monthly transfers has been completed; (2)
the Accumulation Value attributable to the Cash Fund Investment Division or the
Fixed Rate Option is insufficient to complete the next transfer; (3) the
Contractowner requests termination in a writing received by GIAC at its Customer
Service Office at least three (3) business days prior to the next Monthly
Anniversary Date; (4) the Contract is surrendered; or (5) the Annuity
Commencement Date occurs. Upon termination of Dollar Cost Averaging from the
Fixed Rate Option, any further transfers from the Fixed Rate Option will be
subject to the restrictions otherwise applicable to Fixed Rate Option. See
"Description of the Contracts- Transfers of Contract Values".
A Contractowner may reinstate Dollar Cost Averaging or change existing
Dollar Cost Averaging terms by properly completing a new election form. Such
requests received by GIAC at its Customer Service Office at least three (3)
business days prior to the next Monthly Anniversary Date will be effective for
such Monthly Anniversary Date.
When utilizing Dollar Cost Averaging, a Contractowner must be invested in
the Cash Fund Investment Division or the Fixed Rate Option, as applicable.
Including these Contract options, the Contractowner may not be invested in more
than a maximum of six Contract allocation options. The Dollar Cost Averaging
program may not be elected after the Annuity Commencement Date.
Asset Rebalancing: Under an Asset Rebalancing program, the Contractowner
may maintain a specific percentage allocation of the Accumulation Value among
the Variable Investment Options at a pre-designated level. The performance of
the underlying options may cause the holdings in the applicable underlying
options to shift beyond their designated allocation percentages. If the
Contractowner participates in this program, GIAC will automatically transfer
amounts among Variable Investment Options in order to return to the designated
percentages. GAIC will process these transfers quarterly. The minimum
Accumulation Value required to elect this program is $ . Modifications to
percentage allocations or termination of participation in the program by the
Contractowner must be made in writing. Any portion of the Contractowner's
Accumulation Value allocated to the Fixed Rate Option will not be subject to
asset rebalancing.
GIAC reserves the right to modify or discontinue the Asset Rebalancing
program upon written notice. Currently, no charge is made by GIAC for this
service. GIAC reserves the right, however, to impose a fee for this program in
the future.
Assignment: Assignment of the Contractowner's interest in the Contract is
prohibited when the Contract is used in connection with any retirement plan
contemplated by Sections 401(a), 403(b) or 408 of the Code and any corporate
retirement plan unless the Contractowner is not the Annuitant or the Annuitant's
employer. An assignment of the Contract may be treated as a taxable distribution
to the Contractowner. (See "Federal Tax Matters".)
Reports: GIAC will send to each Contractowner, at least semi-annually, a
report containing such financial information pertaining to the Separate Account
as may be required by applicable laws, rules and regulations. In addition, a
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statement will be provided to each Contractowner at least annually which reports
the number of Contract Accumulation Units and the value of such Accumulation
Units under the Contract.
Contractowner Inquiries: A Contractowner may direct inquiries to the
individual who sold him or her the Contract or may call GIAC at 1-800-221-3253
or write directly to: The Guardian Insurance & Annuity Company, Inc., Customer
Service Office, P.O. Box 26210, Lehigh Valley, Pennsylvania 18002.
PERFORMANCE RESULTS
From time to time, performance information for the Account's Investment
Divisions may be provided in advertisements, sales literature or materials
furnished to existing or prospective Contractowners. All such information is
based upon historical information and is not necessarily representative of
future performance. More detailed information about the calculation of such
historical performance information appears in the Statement of Additional
Information.
Total Returns: "Average annual total return," "total return" and "change in
Accumulation Unit value" all reflect the change in the value of an investment in
an Investment Division over a specified period, assuming the reinvestment of all
income dividends and capital gains distributions. Average annual total returns
show the average annual percentage change in value over a specified period.
Total returns and changes in Accumulation Unit values, which are not annualized,
show the total percentage change in value over a specified period.
Promotional materials relating to an Investment Division's investment
performance will always at least provide the average annual total returns for
one, five and ten years, or the life of the Division's corresponding Fund, if
shorter. Such required average annual total returns will reflect the effects of
all charges, both recurring and non-recurring, incurred by the Fund, as well as
all charges deducted under the terms of the Contract . However, promotional
materials may also show average annual total returns which assume that a
Contract continues in force after the end of the specified period. Such returns
will not reflect the effects of the Contract's contingent deferred sales charge.
Total returns and changes in Accumulation Unit values may not reflect certain
specified charges deducted under the terms of the Contract .
Yields: "Yield" figures may be quoted for the Investment Divisions which
invest in shares of the Cash Fund and the Bond Fund. Current yield is a measure
of the net investment income earned on a hypothetical investment over a
specified base period of seven days for the Cash Fund Investment Division and 30
days (or one month) for the Bond Fund Investment Division. Yield is expressed as
a percentage of the value of an Accumulation Unit at the beginning of the base
period. Yields are annualized, which means that they assume that an Investment
Division will generate the same level of net investment income over a one-year
period. However, yields actually fluctuate daily.
The Cash Fund Investment Division may also quote its "effective yield,"
which assumes that the net investment income earned during a base period will be
earned and reinvested for a year. The effective yield will be slightly higher
than the Cash Fund Investment Division's current yield due to the compounding
effect created by assuming reinvestment of the Division's net investment income.
Distribution Rates: On occasion, the Bond Fund Investment Division may
quote historical or annualized distribution rates. A distribution rate is simply
a measure of the level of income dividends and short-term capital gains
distributed for a specified period. A distribution rate is not a complete
measure of performance and may be higher than yield for certain periods.
Comparative and Other Information: Advertisements and sales literature for
the Separate Account's Investment Divisions may compare a Fund's performance to
that of other investment vehicles or other mutual funds having similar
investment objectives or programs which are offered through the separate
accounts of other insurance companies. Promotional materials may also compare a
Fund's performance to one or more indices of the types of securities which the
Fund buys and sells for its portfolio, and be illustrated by tables, graphs or
charts. Promotional materials may additionally contain references to types and
characteristics of certain securities; features of a Fund's portfolio; financial
markets; or historical, current or perceived economic trends within the United
States or overseas. Topics of general investor interest, such as personal
financial planning, may also be discussed.
In addition, advertisements and sales literature may refer to or reprint
all or portions of articles, reports, or independent rankings or ratings which
relate to the Investment Division specifically, or to other comparable mutual
funds or investment vehicles. None of the contents of such materials will be
used to indicate future performance.
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Further information about each Investment Division's performance is
contained in their respective Annual Report, which may be obtained from GISC
free of charge.
Advertisements and sales literature about the Contract and the Separate
Account may also refer to ratings given to GIAC by insurance company rating
organizations, such as Moody's Investors Service, Inc., Standard & Poor's
Ratings Group, A.M. Best & Co. and Duff & Phelps. Such ratings relate only to
GIAC's ability to meet its obligations under the Contract's Fixed-Rate Option
and to pay the death benefits provided under the Contract.
FEDERAL TAX MATTERS
General Information
The operations of the Separate Account form a part of, and are taxed with
GIAC's operations under the Code. Investment income and realized net capital
gains on the assets of the Separate Account are reinvested and taken into
account in determining the Accumulation and Annuity Unit values. Thus,
investment income and realized net capital gains are automatically applied to
increase reserves under the Contract. GIAC believes that investment income and
capital gains attributable to the Separate Account are not taxed under existing
Federal income tax law to the extent they are applied to increase reserves under
a Contract. Accordingly, GIAC does not anticipate that it will incur any Federal
income tax liability attributable to the Separate Account and, therefore, GIAC
does not currently make provisions for any such taxes. However, if changes in
the Federal tax laws, or interpretations thereof, result in GIAC being taxed on
income or gains attributable to the Separate Account or certain types of
variable annuity contracts, then GIAC may impose a charge against the Separate
Account (with respect to some or all Contracts) to pay such taxes.
Non-Qualified Contracts
Diversification: Section 817(h) of the Code provides that variable annuity
contracts will not be treated as annuities unless the underlying investments are
"adequately diversified" in accordance with regulations prescribed by the
Secretary of the Treasury. Such regulations require, among other things, that
the Funds invest no more than 55% of the value of their respective assets in one
investment; 70% in two investments; 80% in three investments; and 90% in four
investments. GIAC intends that the Funds underlying the Contracts will be
managed by the applicable investment managers so as to comply with these
diversification requirements. If the diversification requirements are not met by
each and every Variable Investment Option, the Contract could lose its overall
tax status as an annuity, resulting in current taxation of the excess of
Contract value over the "investment in the Contract." A Contractowner's
"investment in the Contract" generally equals: (1) the aggregate amount of
premium payments or other consideration paid for the Contract minus (2) the
aggregate amount received under the Contract, to the extent such amount was not
excluded from gross income.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contractowner's gross income. The IRS has stated that a variable
contractowner will be considered the owner of separate account assets if the
contractowner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. To date, no regulations
or rulings have been issued regarding the circumstances under which a
contractowner's ability to control investments through premium allocation and
transfer privileges would cause him or her to be treated as the owner of the
assets in an insurance company's separate account. GIAC does not know what
standards will be set forth, if any, in the regulations or rulings which the
Treasury Department has stated it expects to issue to provide guidance in this
area. Accordingly, GIAC reserves the right to modify the Contract as necessary
to attempt to prevent the Contractowner from being considered the owner of the
assets of the Separate Account or otherwise to maintain favorable tax treatment
of the Contracts.
Distribution of Benefits: Non-qualified Contracts will not be treated as
annuity contracts for purposes of Section 72 of the Code unless the Contract
provides that: (1) if any Contractowner dies on or after the Annuity
Commencement Date, but prior to the time the entire interest in the Contract has
been distributed, the remaining portion of such interest will be distributed at
least as rapidly as under the method of distribution in effect when the
Contractowner died; and (2) if any Contractowner dies prior to the Annuity
Commencement Date, the entire interest will be distributed within five years of
the Contractowner's death. These requirements will be considered satisfied if
that portion of the Contractowner's interest which is payable to or for the
benefit of a "designated beneficiary," will be distributed over the life or life
expectancy of any new owner and such distributions begin within one year of the
Contractowner's death. The Contract's "new owner" is the person designated by
the Contractowner as Beneficiary and to whom ownership of the Contract passes by
reason of death. For this purpose, the Beneficiary must be a natural person. If
the Beneficiary is the Contractowner's surviving spouse, the Contract may be
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continued with the surviving spouse as the new Contractowner. Non-qualified
Contracts contain provisions intended to comply with Section 72(s) of the Code.
However, regulations interpreting these requirements of the Code have not yet
been issued. Accordingly, the provisions contained in such Contracts will be
reviewed and may be modified to assure compliance with the Code's requirements
when clarified by regulations or otherwise.
Note: The remaining discussion concerning non-qualified Contracts assumes
that the Contracts will be treated as annuities under Section 72 of the Code,
that the underlying investments of the Contracts are "adequately diversified"
under Section 817(h) of the Code, and that the Contract is not issued in
connection with a retirement plan qualifying for favorable tax treatment under
the Code.
A Contractowner who is a natural person is generally not taxed on increases
in the value of a Contract until distribution, either as a lump sum payment
received by surrender or partial withdrawal, or as annuity payments. The
assignment or pledge of any portion of the Contract value may be treated as a
distribution. The taxed portion of a distribution (whether in the form of a lump
sum payment or an annuity) is taxed as ordinary income.
Contractowners who are not natural persons generally must include in income
any increase in the excess of the Contract's Accumulation Value over the
"investment in the Contract" during the taxable year, whether or not such
increase is distributed. There are some exceptions to this rule and a
prospective owner that is not a natural person may wish to discuss these with a
competent tax adviser.
The following discussion applies to Contracts owned by natural persons.
Generally, amounts received by surrender or partial withdrawal are first
treated as taxable income to the extent that the Contract's Accumulation Value
immediately before the surrender/withdrawal exceeds the "investment in the
contract." Any additional amount withdrawn is not taxable.
Although the tax consequences may vary depending on the form of Annuity
Payout Option selected, the recipient of an Annuity Payment generally is taxed
on the portion of such payment that exceeds the "investment in the contract."
For variable annuity payments, the taxable portion is determined by a formula
that establishes a specific dollar amount of each payment that is not taxed. The
dollar amount is determined by dividing the "investment in the contract" by the
total number of expected periodic payments. The entire distribution will be
fully taxable once the recipient has recovered the dollar amount of the
"investment in the contract."
A penalty tax on surrenders or withdrawals equal to 10% of the amount
treated as taxable income may be imposed unless such surrender or withdrawal is:
(1) made on or after age 591/2; (2) made as a result of death or disability; or
(3) received in substantially equal installments as a life annuity (subject to
special "recapture" rules if the series of payments is subsequently modified).
Annuity distributions are generally subject to withholding for the
recipient's income tax liability. The withholding rates vary according to the
type of the distribution and the recipient's tax status. Recipients generally
may elect not to have tax withheld from distributions. Redemption requests that
do not indicate a preference regarding withholding will be delayed in processing
until a preference form has been properly completed and received at GIAC's
Customer Service Office. Withholding on taxable distributions is generally
required if the recipient fails to provide GIAC with his or her correct Social
Security number or if the recipient is a U.S. citizen or expatriate living
abroad.
Amounts may be distributed from a Contract because of the death of a
Contractowner or the Annuitant. Generally, such amounts are includable in the
income of the recipient as follows: (1) if distributed in a lump sum they are
taxed in the same manner as a full surrender of the Contract as described above;
or (2) if distributed under an annuity option, they are taxed in the same manner
as annuity payments as described above. For these purposes, the investment in
the contract is not affected by the Contractowner's or Annuitant's death. That
is, the investment in the contract remains the amount of any purchase payments
paid which were not excluded from gross income.
All non-qualified deferred annuity contracts that are issued by GIAC or its
affiliates to the same Contractowner during any calendar year are to be
aggregated for purposes of determining the amount includable in the
Contractowner's gross income under Section 72(e) of the Code. Thus, the proceeds
of a partial withdrawal, surrender or assignment of one or more non-qualified
deferred annuity contracts entered into during the same calendar year will be
includable in the Contractowner's income to the extent of the aggregate excess
of the accumulation values over the investment in all such contracts
("investment in the contract" is defined above). Potential purchasers of more
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than one non-qualified annuity contract should seek advice from legal or tax
counsel as to the possible implications of these rules on the contracts they
intend to purchase.
Transferring the ownership of a Contract, or designating an Annuitant,
payee or other Beneficiary who is not also the Contractowner, the selection of
certain Annuity Commencement Dates, or the assignment or exchange of a Contract,
may result in certain income or gift tax consequences to the Contractowner that
are beyond the scope of this discussion. A Contractowner contemplating any
transfer or assignment of a Contract should contact a competent tax adviser
about the potential tax effects of such a transaction.
Possible Tax Changes: In recent years, legislation has been proposed that
would have adversely modified the federal taxation of certain annuities. For
example, one such proposal would have changed the tax treatment of non-qualified
annuities that did not have "substantial life contingencies" by taxing income as
it is credited to the annuity. Although as of the date of this Prospectus
Congress is not considering any legislation regarding the taxation of annuities,
there is always the possibility that the tax treatment of annuities could change
by legislation or other means (such as IRS regulations, revenue rulings, and
judicial decisions). Moreover, it is also possible that any legislative change
could be retroactive (that is, effective prior to the date of such change).
Qualified Contracts
Generally, increases in the value of amounts under a Contract purchased in
connection with a retirement plan qualifying for favorable tax treatment under
the Code are not taxable until benefits are received. However, the rules
governing the tax treatment of contributions and distributions under qualified
plans, as set forth in the Code and applicable rulings and regulations, are
complex and subject to change. These rules also vary according to the type of
plan and the terms and conditions of the plan itself. Therefore, this Prospectus
does not attempt to provide more than general information about the use of the
Contracts with these various types of plans. Contractowners, Annuitants, and
Beneficiaries under qualified plans should be aware that the rights of any
person to any benefits under such plans may be subject to the terms and
conditions of the plans, regardless of the terms and conditions of the Contracts
issued in connection with such plans. Some retirement plans are subject to
distribution and other requirements that are not incorporated into GIAC's
Contract administration procedures. Contractowners, participants and
beneficiaries are responsible for determining that contributions, distributions
and other transactions with respect to the Contracts comply with applicable law.
Adverse tax consequences may result from contributions in excess of specified
limits; distributions prior to age 59 1/2 (subject to certain exceptions);
distributions that do not conform to specified commencement and minimum
distribution rules; aggregate distributions in excess of a specified annual
amount; and in other specified circumstances. Purchasers of Contracts for use
with any retirement plan should consult their legal counsel and tax adviser
regarding the suitability of the Contract.
Following are brief descriptions of the various types of plans with which
the Contracts described in this Prospectus may be used:
Section 403(b) Plans: Section 403(b) of the Code permits public
schools and employers specified in Section 501(c)(3) of the Code to
purchase annuity contracts and mutual fund shares through a Section
403(b)(7) custodial account on behalf of their employees. Subject to
certain limitations, the purchase payments for such contracts or mutual
fund shares are excluded from the employees' gross income for tax purposes.
However, these payments may be subject to FICA (Social Security) taxes.
These annuity contracts are commonly referred to as "tax-sheltered
annuities."
Distributions from tax-sheltered annuities are restricted unless the
employee is age 59 1/2, separates from service, dies, becomes disabled, or
incurs a hardship. The employee may not surrender amounts attributable to
either: (1) salary reduction contributions made in years beginning after
December 31, 1988; (2) income attributable to salary reduction
contributions made in years beginning after December 31, 1988; or (3)
income in years beginning after December 31, 1988 on salary reduction
accumulations held as of December 31, 1988. Hardship withdrawals are
further limited to salary reduction contributions only, and may not include
income earned thereon. Hardship withdrawals are generally subject to tax
penalties and contingent deferred sales charges.
If a Contract is purchased as a tax-sheltered annuity under Section
403(b) of the Code, it is subject to the restrictions on redemption
described above. These restrictions on redemption are imposed by the
Separate Account and GIAC in full compliance with and in reliance upon the
terms and conditions of a no-action letter on this subject issued by the
staff of the Securities and Exchange Commission.
23
<PAGE>
Prospective purchasers of the Contracts as tax-sheltered annuities
should seek advice from legal or tax counsel about their eligibility to
purchase a tax-sheltered annuity, limitations on permissible amounts of
purchase payments, distribution restrictions, and tax consequences of
distribution.
Individual Retirement Accounts: Sections 219 and 408 of the Code
permit individuals to contribute to an individual Retirement program known
as an "Individual Retirement Account" or "IRA." IRAs are subject to
limitations on the amount which may be contributed and deducted, and the
time when distributions may commence. In addition, distributions from
certain other types of qualified plans may be placed into an IRA on a
tax-deferred basis. Individuals who purchase Contracts for use with an IRA
will receive, in addition to this Prospectus and a copy of the Contract, a
brochure containing information about eligibility, contribution limits, tax
consequences and other particulars concerning IRAs. The Internal Revenue
Service has not reviewed the Contract for qualification as an IRA, and has
not addressed in a ruling of general applicability whether a death benefit
provision such as the provision in the Contract comports with IRA
qualification requirements.
Corporate Pension and Profit-Sharing Plans: Section 401(a) of the Code
permits corporate employers to establish various types of retirement plans
for employees, and self-employed individuals to establish qualified plans
for themselves and their employees. These retirement plans may permit the
purchase of the Contracts to accumulate retirement savings under the plans.
Adverse tax or other legal consequences to the plan, to the participant or
to both may result if this Contract is assigned or transferred to any
individual as a means to provide benefit payments, unless the plan complies
with all legal requirements applicable to such benefits prior to transfer
of the Contract.
Deferred Compensation Plans: Section 457 of the Code, while not
actually providing for a qualified plan as that term is normally used,
provides for certain deferred compensation plans with respect to service
for state governments, local governments, rural electric cooperatives,
political subdivisions, agencies, instrumentalities, certain affiliates of
such entities which enjoy special treatment, and, effective January 1,
1987, other tax-exempt employers. Amounts contributed by employers through
such plans are taxed to employees when paid or made available for
withdrawal. The Contract can be used with such plans. Under such plans, a
participant may specify the form of investment in which his or her
contributions will be made. All such investments, however, are owned by,
and are subject to, the claims of the general creditors of the sponsoring
employer. For Contracts issued in connection with qualified plans, the
investment in the contract can be zero.
The following rules generally apply to distributions from Contracts
purchased in connection with the plans (other than Section 457 plans) discussed
above:
That portion of any contribution under a Contract made by or on behalf of
an individual (typically an employee) which is not excluded from his or her
gross income (generally, the individual's own nondeductible contribution)
constitutes his or her "investment in the contract." If a distribution is made
in the form of annuity payments, the investment in the contract (adjusted for
certain refund provisions) divided by the Annuitant's life expectancy (or other
period for which annuity payments are expected to be made) constitutes a
tax-free return of capital each year. The entire distribution will be fully
taxable once the Annuitant (or other appropriate payee) is deemed to have
recovered the dollar amount of the investment in the Contract. The dollar amount
of annuity payments received in any year in excess of such return is taxable as
ordinary income. [Depending on the terms of the particular plan, the employer
may be entitled to draw on deferred amounts for purposes unrelated to its
section 457 plan obligations.]
If a surrender of or partial withdrawal from a Contract held in connection
with a Section 401(a) plan is effected and a distribution is made in a single
payment, the proceeds may qualify for special "lump-sum distribution" treatment.
Otherwise, the amount by which the payment exceeds the "investment in the
contract" (adjusted for any prior partial withdrawal) will generally be taxed as
ordinary income in the year of receipt, unless it is validly "rolled over" into
an IRA or another qualified plan.
A penalty tax of 10% will be imposed on the taxable portion of surrenders
or partial withdrawals from all qualified Contracts, except under circumstances
similar to those relating to non-qualified Contracts (see above). Other adverse
tax consequences may result if distributions do not conform to specified
commencement and minimum distribution rules, or if aggregate distributions
exceed a specified annual amount, and in other circumstances.
The taxation of benefits payable upon an employee's death to his or her
Beneficiary generally follows these same principles, subject to a variety of
special rules. In particular, the tax on death benefits to be paid as a lump sum
may be deferred if, within 60 days after the lump sum becomes payable, the
Beneficiary instead elects to receive annuity payments.
24
<PAGE>
Distributions from qualified plans are generally subject to the same
withholding rules as distributions from non-qualified Contracts. Certain
distributions from qualified plans are subject to mandatory federal income tax
withholding.
Restrictions under Qualified Contracts: Other restrictions with respect to
the election, commencement, or distribution of benefits may apply under
Qualified Contracts or under the terms of the plans in respect of which
Qualified Contracts are issued.
Other Considerations
Presently, GIAC makes no charge to the Separate Account for any Federal,
state or local taxes (other than state premium taxes) that it incurs which may
be attributable to the Separate Account or to the Contracts. GIAC, however,
reserves the right to make a charge for any such taxes or other economic burden
which may result from the application of the tax laws and that GIAC determines
to be attributable to the Separate Account or to the Contracts. If any tax
charges are made in the future, they will be accumulated daily and transferred
from the Separate Account to GIAC's general account.
Because of the complexity of the Federal tax law, and the fact that tax
results will vary according to the factual status of the entity or individual
involved, tax advice may be needed by anyone contemplating the purchase of a
Contract or the exercise of the various elections under the Contract. It should
be understood that this Prospectus' discussion of the Federal income tax
consequences of owning a Contract is not an exhaustive discussion of all tax
questions that might arise under the Contracts and that special rules exist in
the Code with respect to situations not discussed here. No representation is
made regarding the likelihood of the continuation of current Federal tax laws or
interpretations thereof by the Internal Revenue Service. No attempt has been
made to consider any applicable state, local or other tax laws, except with
respect to the imposition of any premium taxes.
GIAC does not make any guarantee regarding the tax status of any Contract
and the above tax discussion is not intended as tax advice.
VOTING RIGHTS
To the extent required by applicable law, GIAC will vote the Fund shares
that it owns through the Separate Account according to instructions received
from Contractowners having an interest in such Fund's shares. GIAC will vote
shares for which no instructions are received in the same proportion as it votes
shares for which it has received instructions.GIAC will typically vote any Fund
shares that it is entitled to vote directly due to amounts it has contributed or
accumulated in the applicable Investment Division FOR proposals presented by
Fund Management. If the applicable law or interpretations thereof change so as
to permit GIAC to vote a Fund's shares in GIAC's own right or to restrict
Contractowner voting, GIAC reserves the right to do so.
GIAC will seek voting instructions from Contractowners for the number of
shares attributable to their Contracts. Contractowners are entitled to provide
instructions if, on the applicable record date, they have allocated values to
the Investment Division which corresponds to the Fund for which a shareholder
meeting is called.
Prior to the Annuity Commencement Date, the Contractowner has the voting
interest under a Contract. The number of shares held in an Investment Division
which are attributable to a Contract is determined by dividing the
Contractowner's Accumulation Value in that Investment Division by the net asset
value per share of the applicable Fund.
After the Annuity Commencement Date, the person then entitled to receive
Annuity Payments has the voting interest. This voting interest will generally
decrease with the gradual reduction of the Contract value during the annuity
payout period. The number of shares held in an Investment Division which are
attributable to an annuitized Contract is determined by dividing the reserve for
such Contract by the net asset value per share of the applicable Fund.
There are no voting rights with respect to the Fixed-Rate Option.
DISTRIBUTION OF THE CONTRACT
The Contract is sold by insurance agents who are licensed by GIAC and who
are either registered representatives of GISC or of broker-dealer firms which
have entered into sales agreements with GISC and GIAC. GISC and such other
broker-dealers are members of the National Association of Securities Dealers,
Inc. In connection with the sale of the Contracts, GIAC will generally pay sales
commissions to these individuals or entities which may vary but, in the
aggregate,
25
<PAGE>
are not anticipated to exceed an amount equal to 6%_of each Contract premium
payment. Where permitted by state law, GIAC reserves the right to pay additional
sales or service compensation while a contract is in force based on the value of
a Contract. Additional amounts may also be paid in connection with special
promotional incentives. The principal underwriter of the Contracts is GISC,
located at 201 Park Avenue South, New York, New York 10003.
RIGHT TO CANCEL THE CONTRACT
The Contractowner has the right to examine the Contract and return it for
cancellation by returning the Contract to GIAC's Customer Services Office, or to
the registered representative through whom it was purchased, within 10 days of
receipt of the Contract. Longer periods may apply in some states. The Contract
and a cancellation notice must be delivered or mailed to cancel this Contract.
Any notice given by mail is effective upon being postmarked, properly addressed
and postage paid. The Contractowner will then receive from GIAC an amount equal
to the sum of (i) the difference between the premiums paid (including any
Contract fees, annuity taxes or other charges) and the amounts allocated to any
Variable Investment Options and the Fixed-Rate Option under the Contract, and
(ii) the Accumulation Value of the Contract on the date GIAC receives the
surrendered Contract at its Customer Service Office. In the event that state law
so requires, the Contractowner will instead receive the total premium paid for
the Contract.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate
Account or GIAC is a party.
ADDITIONAL INFORMATION
The Statement of Additional Information contains more details about the
Contract described by this Prospectus and is available in accordance with the
directions on page one of this Prospectus. The contents of that document are
detailed below:
Statement of Additional Information
Table of Contents
Page
Services to the Separate Account B-2
Annuity Payments B-2
Performance Data B-7
Valuation of Assets of the Separate Account B-7
Transferability Restrictions B-7
Experts B-7
Financial Statements B-7
26
<PAGE>
B-1
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT^
Issued Through
THE GUARDIAN SEPARATE ACCOUNT E
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
- --------------------------------------------------------------------------------
Statement of Additional Information dated June 1, 1997
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the current Prospectus for The Guardian Separate
Account E (marketed under the name "The Guardian Investor______") dated June 1,
1997
A free Prospectus is available upon request by writing or calling:
The Guardian Insurance & Annuity Company, Inc.
Customer Service Office
P.O. Box 26210 Lehigh Valley, Pennsylvania 18002
1-800-221-3253
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the Prospectus.
TABLE OF CONTENTS
Page
Services to the Separate Account B-2
Annuity Payments B-2
Performance Data B-3
Valuation of Assets of the Separate Account B-7
Transferability Restrictions B-7
Experts B-7
Financial Statements B-7
B-1
<PAGE>
B-2
SERVICES TO THE SEPARATE ACCOUNT
The Guardian Insurance & Annuity Company, Inc. ("GIAC") maintains the books
and records of The Guardian Separate Account E (the "Separate Account"). GIAC, a
wholly owned subsidiary of The Guardian Life Insurance Company of America, acts
as custodian of the assets of the Separate Account. GIAC bears all expenses
incurred in the operations of the Separate Account, except the mortality and
expense risk charge and the administrative charge (as described in the
Prospectus), which are borne by the Contractowner.
The firm of Price Waterhouse LLP, 1177 Avenue of the Americas, New York,
New York 10036 currently serves as independent accountants for GIAC and the
Separate Account.
Guardian Investor Services Corporation ("GISC"), a wholly owned subsidiary
of GIAC, serves as principal underwriter for the Separate Account pursuant to a
distribution and service agreement between GIAC and GISC. The Contracts are
offered continuously and are sold by GIAC insurance agents who are registered
representatives of either GISC or of other broker-dealers which have selling
agreements with GISC and GIAC.^
ANNUITY PAYMENTS
The objective of the Contracts is to provide benefit payments which will
increase at a rate sufficient to maintain purchasing power at a constant level.
For this to occur, the actual net investment rate must exceed the assumed
investment rate of 4% by an amount equal to the rate of inflation. Of course, no
assurance can be made that this objective will be met. If the assumed interest
rate were to be increased, benefit payments would start at a higher level but
would increase more slowly or decrease more rapidly. Likewise, a lower assumed
interest rate would provide a lower initial payment with greater increases or
lesser decreases in subsequent Annuity Payments.
Value of an Annuity Unit: The value of an Annuity Unit is determined
independently for each of the Variable Investment Options. For any Valuation
Period, the value of an Annuity Unit is equal to the value for the immediately
preceding Valuation Period multiplied by the annuity change factor for the
current Valuation Period. The Annuity Unit value for a Valuation Period is the
value determined as of the end of such period. The annuity change factor is
equal to the net investment factor for the same Valuation Period adjusted to
neutralize the assumed investment return used in determining the Annuity
Payments. The net investment factor is reduced by (a) the mortality and expense
risk charges, (b) administrative expenses and (c) if applicable, the Enhanced
Death Benefit Rider charge on an annual basis during the life of the Contract.
The dollar amount of any monthly payment due after the first monthly payment
under a Variable Investment Option will be determined by multiplying the number
of Annuity Units by the value of an Annuity Unit for the Valuation Period ending
ten (10) days prior to the Valuation Period in which the monthly payment is due.
Determination of the First Monthly Annuity Payment: At the time Annuity
Payments begin, the value of the Contractowner's account is determined by
multiplying the appropriate Variable or Fixed Accumulation Unit Value on the
Valuation Period ten (10) days before the date the first variable or fixed
Annuity Payment is due by the corresponding number of Variable or Fixed
Accumulation Units credited to the Contractowner's account as of the date the
first Annuity Payment is due, less any applicable premium taxes not previously
deducted.
The Contracts contain tables reflecting the dollar amount of the first
monthly payment which can be purchased with each $1,000 of value accumulated
under the Contract. The amounts depend on the variable or fixed Annuity Payout
Option selected, the mortality table used under the Contract (the 1983
Individual Mortality Table a projected using Scale G) and the nearest age of the
Annuitant. The first Annuity Payment is determined by multiplying the benefit
per $1,000 of value shown in the Contract tables by the number of thousands of
dollars of value accumulated under the Contract.
Determination of the Second and Subsequent Monthly Variable Annuity
Payments: The amount of the second and subsequent variable Annuity Payments is
determined by multiplying the number of Annuity Units by the appropriate Annuity
Unit Value as of the valuation period ten (10) days prior to the day such
payment is due. The number of Annuity Units under a Contract is determined by
dividing the first monthly variable Annuity Payment by the value of the
appropriate Annuity Unit on the date of such payment. This number of Annuity
Units remains fixed during the variable Annuity Payment period, provided no
B-2
<PAGE>
transfers among the Variable Investment Options are made. If a transfer among
the Variable Investment Options is made, the number of Annuity Units will be
adjusted accordingly.
The assumed investment return of 4% under the Contract is the measuring
point for subsequent variable Annuity Payments. If the actual net investment
rate (on an annual basis) remains constant at 4%, the variable Annuity Payments
will remain constant. If the actual net investment rate exceeds 4%, the variable
Annuity Payment will increase at a rate equal to the amount of such excess.
Conversely, if the actual rate is less than 4%, variable Annuity Payments will
decrease.
The second and subsequent monthly payments made under a Fixed Annuity
Payout Option will be equal to the amount of the first monthly fixed Annuity
Payment (described above).
PERFORMANCE DATA
The tables below provide performance results for each of the Separate
Account's Investment Divisions (except for The Guardian Small Cap Stock Fund
which commenced the public offering of its shares on June 1, 1997.) through
December 31, 1996. The results shown in this section are not an estimate or
guarantee of future investment performance, and do not represent the actual
experience of amounts invested by a particular Contractowner. Moreover, the
performance information for each Investment Division reflects the investment
experience of its underlying Funds for periods prior to the commencement of
operations of the Separate Account (June 1, 1997) if the Funds existed prior to
such date. Such results were calculated by applying all Contract and Separate
Account level charges to the historical Fund performance results for such prior
periods. During such prior periods, the Funds were utilized as the underlying
Funds for other separate accounts of GIAC which were established in connection
with the issuance of other variable contracts.
Average Annual Total Return Calculations
The first section of the following table was calculated using the
standardized method prescribed by the Securities and Exchange Commission. It
illustrates each Investment Division's average annual total return over the
periods shown. The average annual total return for an Investment Division for a
specified period is determined by reference to a hypothetical $1,000 investment
that includes capital appreciation and depreciation for the stated period,
according to the following formula:
P(1 + T)n = ERV
Where: P = A hypothetical purchase of $1,000 from which no sales
load is deducted.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of the hypothetical $1,000
purchase at the end of the period.
Each calculation assumes that all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the period, that
no transfers or additional purchase payments were made and the surrender of the
Contract at the end of each period. The Investment Division's average annual
total return is the annual rate that would be necessary to achieve the ending
value of an investment kept in the Investment Division for the period specified.
The rate of return reflects all charges assessed against a Contract and at the
Separate Account level except for any annuity taxes that may be payable. The
charges reflected include any applicable contingent deferred sales charge; the
mortality and expense risk charge; and a pro-rated portion of the contract
administration fee. See the Prospectus for a detailed description of such
charges.
The second section of the table was calculated in the same manner as the
first except that no contingent deferred sales charge was deducted since it is
assumed that the Contract continues through the end of each period.
B-3
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return for a
Contract Surrendered on 12/31/96 Average Annual Total Return on 12/31/96
(EDB= Enhanced Death Benfit/ BC- Basic Contract) Assuming Contract Continues
------------------------------------------------ --------------------------------------
Length of Investment Period Length of Investment Period
------------------------------------------------ --------------------------------------
Ten Years (or Ten Years (or
Since Fund Since Fund
Investment Division Date of Fund Inception, Inception,
Corresponding To Inception One Year Five Years If Less) One Year Five Years If Less)
<S> <C> <C>
The Guardian Cash %EDB
Fund 1/7/82 %BC
The Guardian Bond
Fund 5/1/83
The Guardian Stock
Fund 4/13/83
The Guardian Small
Cap Stock Fund 5/1/97
Gabelli Capital
Asset Fund 5/1/95
Baillie Gifford
International Fund 2/8/91
Baillie Gifford
Emerging Markets
Fund 10/17/94
Value Line Centurion
Fund ("VLCF") 11/15/83
Value Line Strategic
Asset Management
Trust ("VLSAM") 10/1/87
</TABLE>
Change in Accumulation Unit Value
The following performance information illustrates the cumulative change and
the actual annual change in Accumulation Unit values for the periods specified
for each Investment Division and is computed differently than the standardized
average annual total return information.
An Investment Division's cumulative change in Accumulation Unit values is
the rate at which the value of an Accumulation Unit changed over the time period
illustrated. The actual annual change in Accumulation Unit values is the rate at
which the value of an Accumulation Unit changed over each 12-month period
illustrated. The rates of change in Accumulation Unit values quoted in the
tables reflect a deduction for the mortality and expense risk charge,
administrative charge, and when applicable, the Enhanced Death Benefit charge.
They do not reflect deductions for any contingent deferred sales charge,
contract administration fee or annuity taxes. The rates of change would be lower
if these charges were included.
<TABLE>
<CAPTION>
Cumulative Change in Accumulation Unit Value
for Period Ended December 31, 1996
-----------------------------------------------------------------
Ten Years (or
Since Fund
Investment Division Inception, Date of Fund
Corresponding To One Year Five Years If Less) Inception
<S> <C> <C> <C> <C>
The Guardian Cash Fund 1/7/82
The Guardian Bond Fund 5/1/83
The Guardian Stock Fund 4/13/83
The Guardian Small Cap Stock Fund 5/1/97
Gabelli Capital Asset Fund 5/1/95
Baillie Gifford International Fund 2/8/91
Baillie Gifford Emerging Markets Fund 10/17/94
Value Line Centurion Fund 11/15/83
Value Line Strategic Asset Management Trust 10/1/87
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
Change in Accumulation Unit Value for 12-Month Period ended December 31,
(For Contracts without Enhanced Death Benefit)
Investment Division
Corresponding To 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Guardian Cash Fund
The Guardian Bond Fund
The Guardian Stock Fund
The Guardian Small Cap
Stock Fund
Gabelli Capital Asset Fund
Baillie Gifford International
Fund
Baillie Gifford Emerging
Markets Fund
Value Line Centurion Fund
("VLCF")
Value Line Strategic Asset
Management Trust
("VLSAM")
Change in Accumulation Unit Value for 12-Month Period ended December 31,
(For Contracts with Enhanced Death Benefit)
Investment Division
Corresponding To 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
The Guardian Cash Fund
The Guardian Bond Fund
The Guardian Stock Fund
The Guardian Small Cap
Stock Fund
Gabelli Capital Asset Fund
Baillie Gifford International
Fund
Baillie Gifford Emerging
Markets Fund
Value Line Centurion Fund
("VLCF")
Value Line Strategic Asset
Management Trust
("VLSAM")
</TABLE>
* From date of commencement of public offering of Fund's shares through
December 31.
Calculation of Yield Quotations for the Cash Fund Investment Division
The yield of the Investment Division of the Separate Account investing in
the Cash Fund represents the net change, exclusive of gains and losses realized
by the Investment Division or the Cash Fund and unrealized appreciation and
depreciation with respect to the Cash Fund's portfolio of securities, in the
value of a hypothetical pre- existing Contract that is credited with one
Accumulation Unit at the beginning of the period for which yield is determined
(the "base period"). The base period generally will be a seven-day period. The
current yield for a base period is calculated by dividing (1) the net change in
the value of the Contract for the base period (see "Accumulation Period" in the
Prospectus) by (2) the value of the Contract at the beginning of the base period
and multiplying the result by 365/7. Deductions from purchase payments (for
example, any applicable premium taxes) and any applicable contingent deferred
sales charge assessed at the time of withdrawal or annuitization are not
reflected in the computation of current yield of the Investment Division. The
determination of net change in Contract value reflects all deductions that are
charged to a Contractowner, in proportion to the length of the base period and
the Investment Division's average Contract size. The current annualized yield of
the Cash Fund Investment Division for the 7-day period ended December 31, 1996
was ____ %.
Yield also may be calculated on an effective or compound basis, which
assumes continual reinvestment by the Investment Division throughout an entire
year of net income earned by the Investment Division at the same rate as net
B-5
<PAGE>
income is earned in the base period. The effective or compound yield for a base
period is calculated by (1) dividing (i) the net change in the value of the
Contract for the base period by (ii) the value of the Contract as of the
beginning of the base period, (2) adding 1 to the result, (3) raising the sum to
a power equal to 365 divided by the number of days in the base period, and (4)
subtracting 1 from the result. The effective annualized yield of the Cash Fund
Investment Division for the 7-day period ended December 31, 1996 was ______%.
The current and effective yields of the Cash Fund Investment Division will
vary depending on prevailing interest rates, the operating expenses and the
quality, maturity and type of instruments held in the Cash Fund's portfolio.
Consequently, no yield quotation should be considered as representative of what
the yield of the Investment Division may be for any specified period in the
future. The yield is subject to fluctuation and is not guaranteed.
Performance Comparisons
Advertisements and sales literature for the Separate Account's Investment
Divisions and their underlying Funds may compare their performance to other
investment vehicles and the separate accounts of other insurance companies as
reflected in independent performance data furnished by sources such as Lipper
Analytical Services, Inc., Morningstar, and Variable Annuity Research & Data
Service, all of which are independent services which monitor and rank the
performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis. The performance analyses
prepared by such services rank issuers on the basis of total return, assuming
reinvestment of distributions, but may not take sales charges, redemption fees,
or certain expense deductions into consideration.
B-6
<PAGE>
VALUATION OF ASSETS OF THE SEPARATE ACCOUNT
The value of Fund shares held in each Investment Division at the time of
each valuation is the redemption value of such shares at such time. If the right
to redeem shares of a Fund has been suspended, or payment of redemption value
has been postponed for the sole purpose of computing Annuity Payments, the
shares held in the Separate Account (and corresponding Annuity Units) may be
valued at fair value as determined in good faith by GIAC's Board of Directors.
TRANSFERABILITY RESTRICTIONS
Where a Contract is owned in conjunction with a retirement plan qualified
under the Internal Revenue Code of 1986, as amended ("Code"), a tax-sheltered
annuity program or individual retirement account, and notwithstanding any other
provisions ofthe Contract, the Contractowner may not change the ownership of the
Contract nor may the Contract be sold, assigned or pledged as collateral for a
loan or as security for the performance of an obligation or for any other
purpose to any person other than GIAC unless the Contractowner is the trustee of
an employee trust qualified under the Code, the custodian of a custodial account
treated as such, or the employer under a qualified non-trusteed pension plan.
EXPERTS
The financial statements of GIAC as of December 31, 1996 and 1995 and for
each of the three years in the period ended December 31, 1996 appearing in this
Statement of Additional Information have been so included in reliance on the
report of Price Waterhouse LLP, independent accountants. Such financial
statements have been included herein or incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
FINANCIAL STATEMENTS
The financial statements of GIAC which are set forth herein beginning on
page B-8 should be considered only as bearing upon the ability of GIAC to meet
its obligations under the Contracts.
The Separate Account has not yet commenced operations and so no financial
statements for the Separate Account are available.
B-7
<PAGE>
The Guardian Separate Account E
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements Will be Filed by Pre-Effective Amendment
(b) Exhibits
Number Description
------ -----------
1 Resolutions of the Board of Directors of The
Guardian Insurance & Annuity Company, Inc.
establishing Separate Account E
2 Not Applicable
3 Underwriting and Distribution Contracts:
(a) Distribution and Service Agreement
between The Guardian Insurance &
Annuity Company, Inc. and Guardian
Investor Services Corporation, as
amended
(b) Form of Broker-Dealer Supervisory and
Service Agreement*
4 Specimen of Variable Annuity Contract
5 Form of Application for Variable Annuity
Contract*
6 (a) Certificate of Incorporation of The
Guardian Insurance & Annuity Company,
Inc.
(b) By-laws of The Guardian Insurance &
Annuity Company, Inc
7 Not Applicable
8 Amended and Restated Agreement for Services
and Reimbursement Therefor, between The
Guardian Life Insurance Company of America
and The Guardian Insurance & Annuity
Company, Inc.*
9 Opinion and Consent of Counsel*
10 (a) Consent of Price Waterhouse LLP*
11 Not Applicable
12 Not Applicable
13 (a) Powers of Attorney executed by a
majority of the Board of Directors and
certain principal officers of The
Guardian Insurance & Annuity Company,
Inc.
(c) Schedule for Computation of Performance
Quotations*
27 Not Applicable
* To be filed by Pre-Effective Amendment
C-1
<PAGE>
Item 25. Directors and Officers of the Depositor
The following is a list of each director and officer of The Guardian
Insurance & Annuity Company, Inc. ("GIAC"), the depositor of the Registrant. The
principal business address of each director and officer is 201 Park Avenue
South, New York, New York 10003.
Name Positions with GIAC
---- -------------------
Joseph D. Sargent President & Chief Executive Officer
John M. Smith Executive Vice President & Director
Edward K. Kane Senior Vice President, General Counsel
& Director
Frank J. Jones Executive Vice President, Chief
Investment Officer & Director
Philip H. Dutter Director
Arthur V. Ferrara Director
Leo R. Futia Director
Peter L. Hutchings Director
William C. Warren Director
Charles E. Albers Vice President, Equity Securities
Michele S. Babakian Vice President
John M. Fagan Vice President
Charles G. Fisher Vice President & Actuary
William C. Frentz Vice President, Real Estate
Thomas R. Hickey, Jr. Vice President, Operations
Ryan W. Johnson Vice President, Equity Sales
Gary B. Lenderink Vice President, Group Pensions
Frank L. Pepe Vice President & Controller
Richard T. Potter, Jr. Vice President and Counsel
Donald P. Sullivan, Jr. Vice President
Joseph A. Caruso Secretary
Karen Dickinson Assistant Secretary
Earl Harry Treasurer
Ann T. Kearney Second Vice President
Alexander M. Grant, Jr. Second Vice President
Raymond J. Henry Second Vice President
Theresa Kaminski Second Vice President, Group
Pensions Administration
Paul Iannelli Assistant Vice President
Peggy L. Coppola Assistant Vice President
Richard A. Cumiskey Assistant Vice President &
Compliance Officer
Mary Dowling Director, Group Pensions Administration
Michael Brandle Director, Variable Conrracts
Administration
C-2
<PAGE>
Item 26. Persons Controlled by or under Common Control with Registrant
The following list sets forth the persons directly controlled by The
Guardian Life Insurance Company of America ("Guardian Life"), the parent company
of GIAC, the Registrant's depositor, as of January 31, 1997:
State of Percent of
Incorporation Voting Securities
Name or Organization Owned
---- --------------- -----------------
The Guardian Insurance & Delaware 100%
Annuity Company, Inc.
Guardian Asset Management Delaware 100%
Corporation
Guardian Reinsurance Services, Inc. Connecticut 100%
Managed Dental Care, Inc. California 100%
Physicians Health Services Inc. Delaware 14%
Private Healthcare Systems, Inc. Delaware 14%
The Guardian Tax-Exempt Fund Massachusetts 83%
The Guardian Baillie Gifford Massachusetts 32%
International Fund (A)
The Guardian Investment Quality Massachusetts 34%
Bond Fund (A)
The Guardian Asset Allocation Fund Massachusetts 18%
Baillie Gifford Emerging Markets Fund Maryland 30%
Baillie Gifford International Fund Maryland 12%
The following list sets forth the persons directly controlled by GIAC
or other affiliates of Guardian Life and, thus, indirectly controlled by
Guardian Life, as of January 31, 1997:
Approximate
Percentage of Voting
Place of Securities Owned
Incorporation by Guardian Life
Name or Organization Affiliates
---- --------------- -------------------
Guardian Investor Services
Corporation New York 100%
Guardian Baillie Gifford Ltd. Scotland 51%
First International Life
Insurance Company Delaware 100%
The Guardian Cash Fund, Inc. Maryland 100%
The Guardian Bond Fund, Inc. Maryland 100%
The Guardian Stock Fund, Inc. Maryland 100%
GBG Funds, Inc. Maryland 100%
Item 27. Number of Contractowners
Type of Contract As of January 31, 1997
---------------- ----------------------
Non-Qualified .............. 0
Qualified .................. 0
--
Total .............. 0
C-3
<PAGE>
Item 28. Indemnification
Reference is made to Article VIII of GIAC's By-Laws, as
supplemented by Section 3.2 of the Certificate of Incorporation of GIAC, filed
as Exhibits 6(b) and 6(a), respectively, to this Registration Statement and
incorporated herein by reference.
Item 29. Principal Underwriters
(a) Guardian Investor Services Corporation ("GISC") is the
principal underwriter of the Registrant's variable annuity contracts and it is
also the principal underwriter of shares of The Guardian Bond Fund, Inc.; The
Guardian Stock Fund, Inc.; The Guardian Cash Fund, Inc.; The Park Avenue
Portfolio, a series trust consisting of the following eight series: The Guardian
Cash Management Fund, The Guardian Park Avenue Fund, The Guardian Investment
Quality Bond Fund, The Guardian Tax-Exempt Fund, The Guardian Asset Allocation
Fund, The Guardian Park Avenue Small Cap Fund, The Guardian Baillie Gifford
International Fund and The Guardian Baillie Gifford Emerging Markets Fund and
GBG Funds, Inc. a series fund consisting of Baillie Gifford International Fund,
Baillie Gifford Emerging Markets Fund and The Small Cap Stock Fund. All of the
aforementioned funds and the series trust are registered with the SEC as
open-end management investment companies under the Investment Company Act of
1940, as amended ("1940 Act"). In addition, GISC is the distributor of variable
annuity and variable life insurance contracts currently offered by GIAC through
its separate accounts, The Guardian/Value Line Separate Account, The Guardian
Separate Account A, The Guardian Separate Account B, The Guardian Separate
Account C, The Guardian Separate Account D, The Guardian Separate Account E and
The Guardian Separate Account K, which are all registered as unit investment
trusts under the 1940 Act.
(b) The following is a list of each director and officer of
GISC. The principal business address of each person is 201 Park Avenue South,
New York, New York 10003.
Name Position(s) with GISC
---- ---------------------
John M. Smith President & Director
Arthur V. Ferrara Director
Leo R. Futia Director
Peter L. Hutchings Director
Edward K. Kane Senior Vice President,
General Counsel & Director
Philip H. Dutter Director
Joseph D. Sargent Director
William C. Warren Director
Frank J. Jones Director
Charles E. Albers Executive Vice President
Michele S. Babakian Vice President
Nikolaos D. Monoyios Vice President
John M. Fagan Vice President
Ryan W. Johnson Vice President & National
Sales Director
Thomas R. Hickey, Jr. Vice President, Operations
Frank L. Pepe Vice President & Controller
Richard T. Potter, Jr. Vice President and Counsel
Donald P. Sullivan, Jr. Vice President
C-4
<PAGE>
Name Position(s) with GISC
---- ---------------------
Kevin S. Alter Second Vice President
Alexander M. Grant, Jr. Second Vice President
Ann T. Kearney Second Vice President
Peggy L. Coppola Assistant Vice President
Richard A. Cumiskey Assistant Vice President, &
Compliance Officer
Earl Harry Treasurer
Joseph A. Caruso Secretary
Karen Dickinson Assistant Secretary
Paul Iannelli Assistant Controller
Carol M. Cramer Director, Administrative
Support
Scott E. Horowitz Director, Systems Support
Georgia Gaidula Director, Broker-Dealer
Operations
Grace Nunez Director, Agency Sales Support
Rose Belza Director, Fund & Broker-
Dealer Accounting
Item 30. Location of Accounts and Records
Most of the Registrant's accounts, books and other documents
required to be maintained by Section 31(a) of the 1940 Act and the rules
promulgated thereunder are maintained by GIAC, the depositor, at its Customer
Service Office, 3900 Burgess Place, Bethlehem, Pennsylvania 18017. Documents
constituting the Registrant's corporate records are also maintained by GIAC but
are located at its Executive Office, 201 Park Avenue South, New York, New York
10003.
Item 31. Management Services
None.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure
that the audited financial statements in the registration statement are
never more than 16 months old for so long as payment under the variable
annuity contracts may be accepted.
(b) The Registrant hereby undertakes to include, as part of any application
to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
(d) The Depositor, GIAC, hereby undertakes and represents that the fees and
charges deducted under the contract, in the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by GIAC.
C-5
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant, The Guardian Separate Account E certifies that it
meets all of the requirements for effectiveness of this Post-Effective Amendment
to the Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and the State of New York on the 14th day of
February, 1997.
The Guardian Separate Account E
(Registrant)
By: THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
(Depositor)
By: /s/ Richard T. Potter, Jr.
--------------------------------
Richard T. Potter, Jr.
Vice President and Counsel
C-6
<PAGE>
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following directors and principal officers of The
Guardian Insurance & Annuity Company, Inc. in the capacities and on the date
indicated.
/s/ Joseph D. Sargent* President, Chief Executive
- ----------------------------------- Officer and Director
Joseph D. Sargent
(Principal Executive Officer)
/s/ Frank J. Jones* Executive Vice President, Chief
- ----------------------------------- Investment Officer and Director
Frank J. Jones
(Principal Financial Officer)
/s/ Frank L. Pepe Vice President and Controller
- -----------------------------------
Frank L. Pepe
(Principal Accounting Officer)
/s/ John M. Smith* Executive Vice President
- ----------------------------------- and Director
John M. Smith
/s/ Arthur V. Ferrara* Director
- -----------------------------------
Arthur V. Ferrara
/s/ William C. Warren* Director
- -----------------------------------
William C. Warren
/s/ Edward K. Kane* Senior Vice President,
- ----------------------------------- General Counsel and Director
Edward K. Kane
/s/ Leo R. Futia* Director
- -----------------------------------
Leo R. Futia
/s/ Philip H. Dutter* Director
- -----------------------------------
Philip H. Dutter
/s/ Peter L. Hutchings* Director
- -----------------------------------
Peter L. Hutchings
By /s/ Richard T. Potter, Jr. Date: February 14, 1997
--------------------------------
Richard T. Potter, Jr.
Vice President and Counsel
* Pursuant to a Power of Attorney
C-7
<PAGE>
Exhibit Index
Number Description
1 Resolutions of the Board of Directors of The Guardian
Insurance & Annuity Company, Inc. establishing Separate
Account E
3(a) Distribution and Service Agreement between The Guardian
Insurance & Annuity Company, Inc. and Guardian Investor
Services Corporation, as amended
4 Specimen of Variable Annuity Contract
6(a) Certificate of Incorporation of The Guardian Insurance &
Annuity Company, Inc.
6(b) By-Laws of The Guardian Insurance & Annuity Company, Inc
13(a) Powers of Attorney executed by a majority of the Board of
Directors and certain principal officers of TheGuardian
Insurance & Annuity Company, Inc.
C-8
Proposed GIAC Board Resolutions Relating to
New Variable Annuity Product
RESOLVED, that the Board of Directors of The Guardian Insurance & Annuity
Company, Inc. (the "Company") establishes, pursuant to Section 2932 of the
Delaware Insurance Code, a separate account to be designated THE GUARDIAN
SEPARATE ACCOUNT E (hereinafter in these resolutions referred to as the
"Account") to serve as a segregated asset account to receive, hold and invest
amounts arising from (a) premiums paid for the individual and group variable
annuity contracts issued by the Company through the Account (the "Contracts");
and (b) such assets of the Company as the proper officers of the Company may
deem prudent and appropriate to have invested in the same manner as the assets
applicable to its reserve liability under the Contracts and lodged in the
Account, and such amounts, together with the dividends, interest and gains
produced thereby shall be invested and reinvested, subject to the rights of the
holders of such Contracts, in units of the Account at the value of such units at
the time of acquisition; and it is further
RESOLVED, that the Board of Directors hereby approves the offering through
the Account, as investment options for Contractowner allocations, of such
open-end management investment companies registered with the Securities and
Exchange Commission ("SEC") under the Investment Company Act of 1940 (the "1940
Act") and such other investment options as the officers of the Company deem
appropriate; and it is further
RESOLVED, the Account shall be registered as a unit investment trust under
the 1940 Act and the Securities Act of 1933 (the 1933 Act"), and that the
officers of the Company be and they hereby are authorized to sign and file with
the SEC, or cause to be signed and filed with the SEC, a registration statement
on behalf of the Account, as registrant, under the 1933 Act ("1933 Act
Registration") together with any exemptive applications, no-action requests or
other documents as they may deem necessary to effectuate registration of the
units of the Account; and it is further
RESOLVED, that the officers of the Company are authorized and directed to
sign and file with the SEC, or cause to be signed and filed with the SEC,
amendments of such 1933 Act Registration or other documents as they may deem
necessary or advisable from time to time respecting the Account; and it is
further
RESOLVED, that the signature of any director or officer of the Company
required by law to affix his signature to such 1933 Act Registration, or to any
amendment thereof, may be affixed by said director or officer personally, or by
an attorney-in-fact duly constituted in writing by said director or officer to
sign his name thereto in the form of power of attorney; and it is further
<PAGE>
RESOLVED, that the officers of the Company are authorized and directed to
employ Guardian Investor Services Corporation to serve as distributor of the
Contracts and to prepare any and all agreements as they may deem necessary or
desirable for the provision of such services to the Account with the advice of
counsel, subject to final approval by the Board of Directors of or by the
Executive Committee of the Board; and it is further
RESOLVED, that the officers the Company are authorized and directed to sign
and file with the SEC, or cause to be signed and filed with the SEC, such
periodic reports under the 1940 Act respecting the Account as they may deem
necessary or advisable from time to time; and it is further
RESOLVED, that the Board of Directors of the Company authorizes $100,000 in
the aggregate be deposited into the Account as "seed capital" to commence its
operations and that the officers of GIAC are given discretion as to the timing
of such deposit of seed capital; and it is further
RESOLVED, that the Company shall abide by the conditions imposed by the SEC
and set forth in Investment Company Act Release Number 14685 (August 20, 1985)
regarding the offer of shares of registered open-end management investment
companies to multiple Company separate accounts in connection with the operation
of the Account; and it is further
RESOLVED, that the officers of the Company be and they hereby are
authorized to take whatever steps may be necessary or desirable, with the advice
of counsel, to comply with such laws and regulations of the several states as
may be applicable to the establishment of the Account and the sale of the
Contracts; and it is further
RESOLVED, that the officers of the Company be and they hereby are
authorized, in the name and on behalf of the Company, to execute and deliver
such corporate documents and certificates and to take such further action as may
be necessary or desirable, with the advice of counsel, in order to effectuate
the purposes of the foregoing resolutions.
DISTRIBUTION AND SERVICE AGREEMENT
BETWEEN
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
AND
GUARDIAN INVESTOR SERVICES CORPORATION
AGREEMENT, made this 23rd day of August, 1985 by and between The Guardian
Insurance & Annuity Company, Inc. ("GIAC"), a Delaware corporation, and Guardian
Investor Services Corporation (the "Distributor"), a New York corporation, both
corporations being wholly-owned subsidiaries of The Guardian Life Insurance
Company of America and each corporation having its principal office located at
201 Park Avenue South, New York, New York 10003.
WHEREAS, GIAC is engaged in, among other things, the issuance and sale of
variable contracts (the "Contracts") which are funded by separate accounts
organized by GIAC and registered with the Securities and Exchange Commission
("SEC") under the Securities Act of 1933 and the Investment Company Act of 1940;
WHEREAS, Distributor is duly registered with the SEC as a broker-dealer
under the Securities Exchange Act of 1934 and is a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, the Contracts may be sold to the public only by persons who are
insurance agents duly licensed by GIAC and one or more states of the United
States and the District of Columbia and who are also registered representatives
of the Distributor or of certain designated persons, as more fully described
herein;
<PAGE>
WHEREAS, GIAC and the Distributor desire to enter into an agreement,
pursuant to which the Distributor will distribute and act as the principal
underwriter for the sale of the Contracts and will select, train, license and
supervise the activities of all persons associated with it, all as more
particularly described herein.
NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. GIAC hereby appoints the Distributor and the Distributor agrees to act
as the distributor and as the principal underwriter for the sale of the
Contracts which may be sold to the public only by persons who are licensed
insurance agents of GIAC and registered representatives of the Distributor or
certain designated persons as set forth in paragraph 5 herein.
2. Applications for the Contracts shall be solicited only by
representatives duly and appropriately licensed or otherwise qualified for the
sale of such Contracts in each state or other jurisdiction. GIAC shall undertake
to appoint Distributor's qualified representatives as life insurance agents of
GIAC. Completed applications for Contracts shall be transmitted directly to GIAC
for acceptance or rejection in accordance with underwriting rules established by
GIAC. Initial premium payments under the Contracts shall be made by check
payable to GIAC and shall be held at all times by Distributor or its
representatives in a fiduciary capacity and remitted promptly to GIAC. Anything
in this Agreement to the
-2-
<PAGE>
contrary notwithstanding, GIAC retains the ultimate right to control the sale of
the Contracts and to appoint and discharge life insurance agents of GIAC. The
Distributor shall be held to the exercise of reasonable care in carrying out the
provisions of this Agreement.
3. Upon request, Distributor will furnish GIAC, in writing, a list of those
agents who have become so qualified and the dates of such qualifications as well
as a list of those agents who are not selected or who have failed to qualify.
Notwithstanding the ultimate right of GIAC to appoint and discharge agents, in
the event an agent who has qualified fails or refuses to submit to the
supervision of the Distributor in accordance with this Agreement, or otherwise
fails to comply with the rules and standards imposed by the Distributor on its
registered representatives, the Distributor will certify such fact to GIAC and
will immediately notify the agent that such agent is no longer authorized to
sell the Contracts and the Distributor and GIAC will take whatever additional
action may be necessary to terminate the sales activities of the agent relating
to the Contracts.
4. Prior to permitting any agent to sell the Contracts, GIAC, the
Distributor and the agent will enter into an agreement pursuant to which the
agent will acknowledge that he will be a registered representative of the
Distributor in connection with the agent's securities activities with respect to
the Contracts, that such activities would be under the supervision of the
Distributor
-3-
<PAGE>
and any supervisor designated by the Distributor, and that the agent's right to
continue to sell the Contracts is subject to his continued compliance with such
agreement and the rules and procedures established by the Distributor for
compliance with applicable federal, state and NASD requirements.
5. Distributor is authorized to enter into separate written agreements, on
such terms and conditions not inconsistent with this Agreement, with one or more
organizations which agree to participate in the distribution of the Contracts.
Such organization (hereafter "Broker") shall be both registered as a
broker-dealer under the Securities Exchange Act of 1934 and a member of the
NASD. Broker and its agents or representatives soliciting applications for
Contracts shall be duly and appropriately licensed, registered or otherwise
qualified for the sale of such Contracts under the insurance laws and any
applicable blue-sky laws of each state or other jurisdiction in which GIAC is
licensed to sell the Contracts.
6. Applications for Contracts solicited by such Broker through its agents
or representatives shall be transmitted directly to GIAC, and if received by
Distributor, shall be forwarded to GIAC. All payments under the Contracts shall
be made by check to GIAC and, if received by Distributor, shall be held at all
times in a fiduciary capacity and remitted promptly to GIAC. All such payments
will be the property of GIAC.
-4-
<PAGE>
7. GIAC wishes to ensure that Contracts sold by Distributor will be issued
to purchasers for whom the Contracts will be suitable. Distributor shall take
reasonable steps to ensure that the various representatives appointed by it
shall not make recommendations to an applicant to purchase a Contract in the
absence of reasonable grounds to believe that the purchase of the Contract is
suitable for such applicant. While not limited to the following, a determination
of suitability shall be based on information furnished to a representative after
reasonable inquiry of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and the likelihood that
the applicant will continue to make any premium payments contemplated by the
Contracts.
8. GIAC shall have the responsibility for furnishing to Distributor and its
representatives sales promotion materials and individual sales proposals related
to the sale of the Contracts. Distributor shall not use any such materials that
have not been approved by GIAC.
9. GIAC shall arrange for the payment of commissions directly to those
registered representatives of Distributor who are entitled thereto in connection
with the sale of the Contracts on behalf of Distributor, in the amounts and on
such terms and conditions as GIAC and Distributor shall determine; provided that
such terms, conditions and commissions shall be as are set forth in or
-5-
<PAGE>
as are not inconsistent with the Prospectus included as part of the Registration
Statement for the Contracts and effective under the Securities Act of 1933.
10. GIAC shall arrange for the payment of commissions directly to those
Brokers who sell Contracts under agreements entered into pursuant to paragraph 5
hereof, in amounts as may be agreed to by GIAC and specified in such written
agreements.
11. GIAC shall pay to Distributor underwriting income amounting to 0.35% of
variable annuity sales and 1.00% of single premium variable life sales made by
registered representatives of the Distributor as reimbursement for the costs and
expenses incurred by Distributor in furnishing or obtaining the services,
materials and supplies required by the terms of this Agreement in the initial
sales efforts and the continuing obligations hereunder.
12. Distributor assumes full responsibility for the securities activities
of all persons associated with it relating to the offer and sale of the
Contracts.
13. Distributor shall have the responsibility for maintaining the records
of its representatives licensed, registered and otherwise qualified to sell the
Contracts. Distributor shall maintain such other records as are required of it
by applicable laws and regulations. The books, accounts and records of GIAC, the
Account and
-6-
<PAGE>
Distributor shall be maintained so as to clearly and accurately disclose the
nature and details of the transactions. All records maintained by GIAC in
connection with this Agreement shall be maintained and held by GIAC on behalf
of, and as agent for, the Distributor and such books and records will at all
times be subject to inspection by authorized representatives of the SEC and
NASD. The Distributor shall keep confidential any information obtained pursuant
to this Agreement and shall disclose such information only if GIAC has
authorized such disclosure or if such disclosure is expressly required by
applicable federal or state regulatory authorities.
14. This Agreement may not be assigned by GIAC or the Distributor except by
prior written consent of the parties and shall continue from year to year,
subject to termination by either party on 60 days' written notice to the other
party, except that in the event Distributor shall cease to be a registered
broker-dealer under the Securities Exchange Act of 1934, this Agreement shall
terminate immediately.
15. This Agreement shall be subject to the provisions of the Investment
Company Act of 1940 and the Securities Exchange Act of 1934 and to the rules and
regulations promulgated thereunder and to the applicable rules and regulations
of the NASD, and the terms hereof shall be interpreted and construed in
accordance therewith.
16. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or
-7-
<PAGE>
otherwise, the remainder of this Agreement shall not be affected thereby.
17. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York.
18. This Agreement supersedes in all respects any other agreements between
the parties hereto relating to the distribution and service of the Contracts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
THE GUARDIAN INSURANCE &
ANNUITY COMPANY, INC.
Attest /s/ Thomas R. Hickey, Jr. By /s/ John C. Angle
-------------------------- -------------------------
GUARDIAN INVESTOR SERVICES
CORPORATION
Attest /s/ Thomas R. Hickey, Jr. By /s/ John M. Smith
-------------------------- -------------------------
-8-
<PAGE>
AMENDMENT NO. 1
Dated as of January 11, 1989
to the
Distribution and Service Agreement
between
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
and
GUARDIAN INVESTOR SERVICES CORPORATION
* * * * *
The Guardian Insurance & Annuity Company, Inc. ("GIAC") and Guardian Investor
Services Corporation ("Distributor") hereby mutually agree to amend the
Distribution and Service Agreement ("Agreement"), dated August 23, 1985, between
GIAC and the Distributor, in the manner herein set forth:
Paragraph 11 of the Agreement is deleted, and new Paragraph 11 is
substituted therefor, in the form set forth immediately hereunder, with the
same force and effect as if such paragraph had appeared in the Agreement as
originally executed:
"11. GIAC shall pay to Distributor underwriting income amounting to
(a) 0.35% of gross premiums paid on sales of GIAC's variable annuity
contracts, (b) 1.00% of gross premiums paid on sales of GIAC's single
premium variable life contracts, and (c) (i) 0.50% of the first $10
million of gross first year premiums and (ii) 0.25% of gross first
year premiums in excess of $10 million paid on sales of GIAC's annual
premium variable life contracts and which are attributable to sales of
such contracts made by registered representatives of the Distributor
as reimbursement for the costs and expenses incurred by Distributor in
furnishing or obtaining the services, materials and supplies required
by the terms of this Agreement in the initial sales efforts and the
continuing obligations hereunder."
Except to the extent specifically provided herein, the Agreement shall remain in
full force and effect in accordance with its terms. This amendment shall become
effective as of the date hereof.
Attest: THE GUARDIAN INSURANCE & ANNUITY
COMPANY, INC.
/s/ Thomas R. Hickey, Jr. By /s/ John M. Smith
- -------------------------- ---------------------------
John M. Smith
Executive Vice President
Attest: GUARDIAN INVESTOR SERVICES
CORPORATION
/s/ Thomas R. Hickey, Jr. By /s/ John M. Fagan
- -------------------------- ---------------------------
John M. Fagan
Vice President
Annuitant JOHN DOE 35-MALE Age and Sex
Contract Number SPECIMEN MAR. 1, 1997 Issue Date
[The Guardian Logo]
Read this contract carefully. This contract is a legal contract between the
owner and The Guardian Insurance & Annuity Company, Inc. (GIAC).
GIAC will pay the benefits provided by this contract in accordance with its
provisions. The entire contract consists of the Basic Contract and any attached
endorsements, additional benefit riders, and application(s). This contract is
issued by GIAC at its Customer Service Office on the Issue Date.
/s/ Joseph A. Caruso /s/ Joseph D. Sargent
Secretary President
Checked by
Under this contract, flexible premium payments may be made before the Annuity
Commencement Date. On the Annuity Commencement Date, GIAC will begin to make
monthly annuity payments. Benefits depend, among other things, on the number and
value of Accumulation Units and the annuity payout option elected. Death benefit
proceeds are payable on or before the Annuity Commencement Date.
ALL VALUES PROVIDED BY THIS CONTRACT WHICH ARE BASED ON THE INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE, MAY INCREASE OR DECREASE DAILY,
AND ARE NOT GUARANTEED. SEE "ACCUMULATION VALUE" ON PAGE 10 AND "PAYMENT OF
CONTRACT PROCEEDS" ON PAGE 12 FOR A DESCRIPTION OF THE VARIABLE VALUES AND
PAYMENTS PROVIDED UNDER THIS CONTRACT.
RIGHT TO CANCEL:
The owner has the right to examine this contract and return it for cancellation
to GIAC's Customer Service Office or to the agent from whom it was purchased
within 10 days after receiving it. The contract and a cancellation notice must
be delivered or mailed to cancel this contract. Any notice given by mail is
effective upon being postmarked, properly addressed, and postage prepaid. If
this contract is returned during this period, GIAC will pay to the owner an
amount equal to the sum of:
o the difference between any premium(s) paid, including any contract fee or
contingent deferred sales charge, and the amounts allocated to the
contract's Allocation Options; and
o the Accumulation Value of the contract on the date GIAC receives the
returned contract and cancellation notice at its Customer Service Office.
The contract will be void from the beginning.
Individual Flexible Premium Deferred Variable Annuity Contract
o Premiums payable during annuitant's lifetime before the Annuity
Commencement Date
o Monthly annuity payments begin on the Annuity Commencement Date
o Benefits based on the investment experience of a Separate Account are
variable and are not guaranteed
o Provides for a Fixed-Rate Option with a bailout
o Non-participating - No dividends payable
<PAGE>
GUIDE TO CONTRACT PROVISIONS
1. Definitions
2. Owner and Beneficiary
3. Annuity Benefit
4. Death Benefits
5. Premiums
6. The Separate Account
7. The Fixed-Rate Option
8. Transfers
9. Accumulation Value
10. Surrenders and Withdrawals
11. Payment of Contract Proceeds
12. General Provisions
Any endorsements, additional benefit riders, and applications which are attached
to this contract follow.
An Index appears on the inside of the back cover.
Page 2
<PAGE>
CONTRACT DATA
(CONTINUED ON PAGE 3.1)
ANNUITANT [JOHN DOE] [35-MALE] AGE AND SEX
CONTRACT NUMBER [SPECIMEN] [MAR. 1, 1997] ISSUE DATE
ANNUITY COMMENCEMENT DATE [MAR. 1, 2027]
OWNER [JOHN DOE]
BENEFICIARY THE BENEFICIARY(IES) NAMED IN THE APPLICATION ATTACHED TO THIS
CONTRACT, UNLESS SUBSEQUENTLY CHANGED.
BAILOUT RATE [4.25%]
** PREMIUMS **
INITIAL CONTRACT PREMIUM [$25,000.00]
ADDITIONAL CONTRACT PREMIUMS MAY BE PAID TO GIAC BEFORE THE ANNUITY COMMENCEMENT
DATE IN ACCORDANCE WITH "PREMIUMS" ON PAGE 7.
** INITIAL NET PREMIUM ALLOCATION INFORMATION **
THE INITIAL NET PREMIUM IS THE INITIAL CONTRACT PREMIUM, LESS ANY APPLICABLE
ANNUITY TAXES. THE INITIAL NET PREMIUM IS ALLOCATED AS FOLLOWS:
[THE GUARDIAN STOCK FUND XX%]
[THE GUARDIAN BOND FUND XX%]
[THE GUARDIAN CASH FUND XX%]
[THE GUARDIAN SMALL CAP FUND XX%]
[BAILLIE GIFFORD INTERNATIONAL FUND XX%]
[BAILLIE GIFFORD EMERGING MARKETS FUND XX%]
[VALUE LINE CENTURION FUND XX%]
[VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST XX%]
[GABELLI CAPITAL ASSET FUND XX%]
[FIXED RATE OPTION XX%]
The following appears only if the Enhanced Death Benefit rider is attached to a
contract:
[** ADDITIONAL BENEFIT RIDERS **
THIS CONTRACT INCLUDES AN ENHANCED DEATH BENEFIT RIDER. SEE "CHARGES AND
EXPENSES" BELOW FOR ADDITIONAL INFORMATION.]
** CONTRACT CHARGES AND EXPENSES **
CONTINGENT DEFERRED SALES CHARGES: IF THE OWNER MAKES A PARTIAL WITHDRAWAL OR
SURRENDERS THE CONTRACT, A CONTINGENT DEFERRED SALES CHARGE MAY BE INCURRED
AGAINST AMOUNTS WITHDRAWN OR SURRENDERED THAT HAVE BEEN IN THE CONTRACT FOR LESS
THAN SEVEN (7) CONTRACT YEARS. A CONTINGENT DEFERRED SALES CHARGE WILL NOT APPLY
TO AMOUNTS WITHDRAWN OR SURRENDERED THAT HAVE BEEN IN THE CONTRACT FOR SEVEN (7)
OR MORE CONTRACT YEARS.
THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE WHICH GIAC MAY IMPOSE IS 7% OF THE
LESSER OF: 1) THE TOTAL OF ALL PREMIUM PAYMENTS MADE WITHIN 7 CONTRACT YEARS (84
MONTHS) PRIOR TO THE DATE OF THE OWNER'S REQUEST FOR SURRENDER OR WITHDRAWAL; OR
2) THE AMOUNT SURRENDERED OR WITHDRAWN. SEE "CONTINGENT DEFERRED SALES CHARGES"
ON PAGE 11 FOR ADDITIONAL INFORMATION.
PAGE 3
<PAGE>
CONTRACT DATA
** CONTRACT CHARGES AND EXPENSES (CONTINUED) **
DAILY CHARGES: GIAC WILL ASSESS A DAILY CHARGE OF .000034462 OF THE VALUE OF THE
ASSETS ALLOCATED TO EACH VARIABLE INVESTMENT OPTION. ON AN ANNUAL BASIS, THIS
CHARGE IS EQUAL TO 1.25% OF THE VALUE OF THE ASSETS ALLOCATED TO THE VARIABLE
INVESTMENT OPTIONS. SEE "NET INVESTMENT FACTOR" ON PAGE 10 FOR ADDITIONAL
INFORMATION.
The following appears only if the Enhanced Death Benefit rider is attached to a
contract:
[GIAC WILL ASSESS A DAILY CHARGE OF .000005485 OF THE VALUE OF THE ASSETS
ALLOCATED TO EACH VARIABLE INVESTMENT OPTION FOR EXPENSES RELATED TO THE
PROVISION OF THE ENHANCED DEATH BENEFIT. ON AN ANNUAL BASIS, THE ENHANCED DEATH
BENEFIT CHARGE IS EQUAL TO .20% OF THE VALUE OF THE ASSETS ALLOCATED TO THE
VARIABLE INVESTMENT OPTIONS. SEE THE ENHANCED DEATH BENEFIT RIDER FOR ADDITIONAL
INFORMATION.]
CONTRACT FEE: GIAC WILL DEDUCT AN ANNUAL CONTRACT FEE OF $35 ON EACH CONTRACT
ANNIVERSARY ON OR BEFORE THE ANNUITY COMMENCEMENT DATE. IF A CONTRACT IS
SURRENDERED ON A DATE OTHER THAN ON A CONTRACT ANNIVERSARY, GIAC WILL DEDUCT THE
CONTRACT FEE ON THE DATE OF SURRENDER. SEE "CONTRACT FEE" ON PAGE 10 FOR
ADDITIONAL INFORMATION.
TRANSFER CHARGE: GIAC RESERVES THE RIGHT TO CHARGE A MAXIMUM OF $25 FOR ANY
TRANSFER TRANSACTION.
***
ALL COMMUNICATIONS WITH GIAC SHOULD BE DIRECTED TO THE CUSTOMER SERVICE OFFICE
ADDRESS SHOWN ON THE FRONT COVER.
TO OBTAIN INFORMATION ABOUT YOUR COVERAGE YOU MAY CALL YOUR AGENT, OR GIAC AT:
[1-800-221-3253]
PAGE 3.1
<PAGE>
1. DEFINITIONS
Certain important terms used in this contract are defined below. Additional
terms, not explained here, are defined in other parts of this contract.
Accumulation Unit: A unit of measure used to determine the value of the owner's
interest under this contract before the Annuity Commencement Date. This contract
provides for both variable Accumulation Units and fixed Accumulation Units.
Accumulation Value: The value attributable to this contract. The Accumulation
Value is the sum of the values attributable to the Variable Investment Options
and the Fixed-Rate Option.
Allocation Options: This contract's Allocation Options consist of the Variable
Investment Options and the Fixed-Rate Option.
Annuity Commencement Date: The date on which monthly annuity payments under this
contract begin. The Annuity Commencement Date is shown on page 3.
Annuity Unit: A unit of measure used to determine the amount of any variable
annuity payment.
Basic Contract: This contract excluding any additional benefit riders.
Contract Anniversary: The annual anniversary measured from this contract's Issue
Date.
Good Order: Notice from any party authorized to initiate a contract transaction
under this contract, received at the Customer Service Office in a format
satisfactory to GIAC, that includes all information required by GIAC to process
a transaction under this contract.
Internal Revenue Code: The Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder, and successor provisions thereto.
Issue Date: The date this contract is issued by GIAC at its Customer Service
Office. The Issue Date is shown on page 3. Contract years are measured from the
Issue Date.
Monthly Anniversary: The same date of each calendar month as the Issue Date, or
the last date of a calendar month, if earlier.
Net Premium: A premium paid by the owner to GIAC in accordance with this
contract's provisions, less any applicable annuity taxes.
Unliquidated Net Premiums: The total amount of all Net Premiums paid under this
contract that have not been withdrawn.
Valuation Date: A date on which Accumulation Unit values are determined.
Accumulation Unit values are determined on each date on which the New York Stock
Exchange or its successor is open for trading and GIAC is open for business.
Valuations for any date other than a Valuation Date will be determined on the
next Valuation Date.
Valuation Period: The period between two successive Valuation Dates, beginning
after 4:00 P.M. New York City time on each Valuation Date and ending at 4:00
P.M. New York City time on the next succeeding Valuation Date.
Variable Investment Options: The investment divisions of The Guardian Separate
Account E.
2. OWNER AND BENEFICIARY
Owner
The owner is named in the application or in any later change shown in GIAC's
records. While the annuitant is living, prior to the Annuity Commencement Date,
and subject to any assignment on file with GIAC, the owner alone has the right
to receive all benefits and exercise all rights this contract grants or GIAC
allows. After the death of the annuitant, the beneficiary is the owner.
Joint Owners
If more than one person is named as owner in the application or in any later
change shown in GIAC's records, GIAC considers them to be joint owners. Each
joint owner will possess an undivided interest in the contract. Any written
request for a contract transaction must be signed by each joint owner named in
GIAC's records. Unless otherwise provided, if a joint owner dies, ownership
passes to the surviving joint owner(s). When the last joint owner dies,
ownership passes to the beneficiary. If no beneficiary is named, ownership
passes to the estate of the last surviving joint owner. If there are joint
owners, all references to "owner" are deemed to include all joint owners, unless
otherwise specified.
Page 4
<PAGE>
OWNER AND BENEFICIARY - cont'd
Beneficiary
The beneficiary is named by the owner(s) in the application or in any later
change shown in GIAC's records. If the annuitant dies before the Annuity
Commencement Date, GIAC will pay the death benefit to the beneficiary, as
described in "Death Benefits" on page 6. If the annuitant dies after the Annuity
Commencement Date, any remaining benefit payable under Option V-2 of "Variable
Annuity Payout Options" on page 12 or Option F-2 of "Fixed Annuity Payout
Options" on page 12 that falls due after the annuitant's death will be paid to
the beneficiary. Unless otherwise provided, in order to receive the death
benefit at the annuitant's death, a beneficiary must be living on the earlier
of:
o the date proof of the annuitant's death is received in Good Order at
GIAC's Customer Service Office; or
o the 15th day after the death of the annuitant.
Unless otherwise provided, if no named beneficiary is living on such earlier
date, the owner is the beneficiary.
Contingent Beneficiary
A numbered sequence may be used to name contingent beneficiaries. The
beneficiary is the living person(s) designated by the lowest number in the
sequence.
Concurrent Beneficiary
If more than one person is named with no number or the same number, GIAC
considers them to be concurrent beneficiaries. Shares are equal, unless
otherwise specified. If shares are equal, the share of a concurrent beneficiary
who predeceases both the owner and the annuitant will be shared equally by the
surviving concurrent beneficiaries. If unequal shares are specified and a
concurrent beneficiary predeceases both the owner and the annuitant, the
beneficiary of that share will be the owner. Change of Owner or Beneficiary
Before the Annuity Commencement Date, the owner may change the ownership of this
contract by a written request in Good Order. Such change may be subject to state
and federal gift taxes and federal income taxes. Subject to any existing
assignment, the owner may change the beneficiary during the lifetime of the
annuitant. The change will take effect as of the date the request is signed,
whether or not the owner or annuitant is living when GIAC receives the request
in Good Order at its Customer Service Office. However, the change will not apply
to any payments made or actions taken by GIAC before the request is received.
Assignment
No assignment will bind GIAC unless it is received at GIAC's Customer Service
Office in Good Order and is accepted by GIAC. An assignment must be signed and
dated by both the assignor and the assignee and, as applicable, by the
beneficiary. The rights of any owner or beneficiary and the entire contract, as
defined in "The Contract" on page 17, will be subject to the assignment. GIAC
will rely solely on the assignee's statement as to the amount of the assignee's
interest. GIAC will not be responsible for any tax consequences arising from or
the validity of any assignment, or for any actions taken in reliance on the
validity of the assignment.
Unless otherwise provided, the assignee may exercise all rights this contract
grants except:
o the right to change the owner or beneficiary; and
o the right to elect an annuity payout option.
Assignments are subject to all payments made or actions taken by GIAC on or
before the date GIAC accepts the assignment at its Customer Service Office.
3. ANNUITY BENEFIT
Annuity Benefit
GIAC will make monthly annuity payments to the owner starting on the Annuity
Commencement Date shown on page 3 if:
o the annuitant is then living; and o this contract is in force on that
date.
The Annuity Commencement Date cannot be later than the annuitant's 90th
birthday. On the Annuity Commencement Date, the amount of the first monthly
annuity payment will be calculated by applying the contract's Accumulation
Value, less any applicable annuity taxes, under Option V-2 of "Variable Annuity
Payout Options" on page 12, unless another option is elected. The payment
amounts will vary according to the annuitant's age and sex. Under Option V-2,
payments are guaranteed for a period of 10 years. If the annuitant dies before
the end of the guaranteed period, GIAC will pay the balance of the payments to
the beneficiary for the remainder of that period, unless the beneficiary elects
to be paid the present value of the then current dollar amount of the remaining
annuity payments in a lump sum. GIAC will begin making such payment(s) to the
beneficiary upon GIAC's receipt at its Customer Service Office of proof of the
annuitant's death in Good Order. See "Payment of Contract Proceeds" on page 12
for an explanation of how monthly annuity payments are determined.
Page 5
<PAGE>
ANNUITY BENEFIT - cont'd
Change of Annuity Commencement Date or Annuity Payout Option -- If GIAC
consents, the owner may change the Annuity Commencement Date to a date not later
than the annuitant's 90th birthday. The owner may also change any elected
annuity payout option before the Annuity Commencement Date. In order to effect
either of these changes, GIAC must receive the owner's request in Good Order at
its Customer Service Office at least 60 days before the Annuity Commencement
Date.
4. DEATH BENEFITS
Notwithstanding any provision of this contract to the contrary, no payment of
benefits provided under the contract will be allowed that does not satisfy the
requirements of section 72(s) of the Internal Revenue Code, as amended from time
to time, for contracts issued with a non-qualified status.
Death of Annuitant Before Annuity Commencement Date When the Annuitant is Not an
Owner
If the annuitant dies before the Annuity Commencement Date and the annuitant is
not an owner, a death benefit becomes payable to the beneficiary. If the
beneficiary predeceases the annuitant, then the death benefit will be paid to
the contingent beneficiary, if any. If no contingent beneficiary(ies) is named,
then the death benefit will be paid to the owner or, if the owner is no longer
living, to the owner's estate. GIAC will make such payment upon receipt at its
Customer Service Office of proof in Good Order that the death occurred before
the Annuity Commencement Date.
The death benefit payable is the greater of:
o the Accumulation Value of the contract as of the end of the Valuation
Period during which GIAC received proof of death in Good Order, less
any applicable annuity taxes; or
o the total amount of premiums paid, less any partial withdrawals and
any contingent deferred sales charges paid thereon, and any applicable
annuity taxes.
If the annuitant is age 75 or older on the Issue Date, then the death benefit
payable will be the Accumulation Value as of the end of the Valuation Period
during which GIAC received proof of death in Good Order, less any applicable
annuity taxes.
The death benefit will be paid in one sum unless:
o the owner has elected an annuity payout option for the death benefit
that is received at GIAC's Customer Service Office in Good Order at
least three business days prior to the date the proceeds are paid; or
o the owner has not otherwise elected an annuity payout option and the
beneficiary has elected an annuity payout option for the death benefit
that is:
o received at GIAC's Customer Service Office in Good Order at least
three business days prior to the date the proceeds are paid; and
o received at GIAC's Customer Service Office in Good Order within
one year of the annuitant's death.
Death of an Owner
If an owner and the annuitant are the same person, and such person dies before
the Annuity Commencement Date, then the death benefit becomes payable to the
beneficiary, as described in "Death of Annuitant Before Annuity Commencement
Date" above, except that the death benefit must be distributed in accordance
with the "Special Rules" described below. If an owner and the annuitant are the
same person and such person dies on or after the Annuity Commencement Date, then
any remaining benefit under Option V-2 of "Variable Annuity Payout Options" on
page 12 or Option F-2 of "Fixed Annuity Payout Options" on page 12, will be paid
to the beneficiary.
If an owner and the annuitant are not the same person and that owner dies, then
the joint owner(s), if any, becomes the new owner(s). If no joint owner(s) is
named, then the beneficiary becomes the new owner.
Special Rules
If any owner dies before the Annuity Commencement Date, this contract's entire
interest must be distributed within five years of that owner's date of death. If
any owner dies on or after the Annuity Commencement Date but before the entire
interest in this contract has been distributed, the remaining portion must be
distributed at least as rapidly as under the method of distribution in effect as
of the date of such owner's death.
Page 6
<PAGE>
DEATH BENEFITS - cont'd
The distribution requirements set forth in the above paragraph will be
considered satisfied as to any portion of the deceased owner's interest which:
o is payable to or for the benefit of any new owner; and
o will be distributed over the life of any such new owner, or over a
period not extending beyond the life expectancy of any new owner;
provided such distributions begin within one year of the deceased owner's death.
In addition, if any new owner is the surviving spouse of the deceased owner:
o this contract may be continued in the name of the spouse as owner; and
o these distribution rules will be applied by treating the spouse as the
owner.
If the owner is not an individual, the annuitant will be treated as owner for
purposes of these distribution requirements, and any change in the annuitant
will be treated as the death of the owner.
5. PREMIUMS
GIAC will accept premiums under this contract at any time before the Annuity
Commencement Date while the annuitant and all owners are living. All premiums
are payable at GIAC's Customer Service Office. Upon request, GIAC will give the
owner a receipt signed by one of its officers. The initial contract premium
shown on page 3 is due on the Issue Date and is payable in advance.
The minimum amount of any additional premium payment is $100, unless this
contract is purchased by or in connection with an employer-sponsored plan or
through employee payroll deductions. In such cases, there is no minimum
additional premium payment amount. The maximum amount of total premiums paid in
any contract year after the first is $1,000,000. This maximum may only be
exceeded with GIAC's written consent. Allocation of Net Premiums The owner may
allocate all or part of a Net Premium to this contract's Allocation Options.
GIAC reserves the right to limit the number of Allocation Options into which the
value of this contract and any Net Premiums paid may be invested at a given
time.
Allocation will be based on the percentages designated in the application, or as
subsequently changed by the owner. GIAC will change the allocation percentages
applicable to future payments of Net Premiums upon receipt of the owner's
request in Good Order at its Customer Service Office.
Net Premiums will be applied to purchase Accumulation Units as described on page
10.
6. THE SEPARATE ACCOUNT
The Guardian Separate Account E -- The Variable Investment Options under this
contract are funded by The Guardian Separate Account E (Account E). Account E is
a separate investment account established by GIAC under the laws of the state of
Delaware. Account E is subject to the laws of the jurisdiction in which this
contract is delivered.
Account E is registered as a unit investment trust with the Securities and
Exchange Commission (SEC) under the Investment Company Act of 1940 (the 1940
Act).
Account E is treated as a division of GIAC and is used to provide values and
benefits for variable annuity contracts only. GIAC owns the assets in Account E.
The assets in Account E are kept separate from:
o GIAC's general account; and
o GIAC's other separate accounts.
Assets equal to the reserves and contract liabilities of Account E will not be
charged with liabilities that arise from any other business GIAC may conduct.
GIAC may transfer assets in excess of the reserves and contract liabilities of
Account E to its general account. Income and realized and unrealized gains and
losses from assets in each Variable Investment Option in Account E are credited
to or charged against such Variable Investment Option without regard to income
and realized and unrealized gains or losses in Account E's other Variable
Investment Options or GIAC's general account or other separate accounts. The
valuation of all assets in Account E will be determined in accordance with all
applicable laws and regulations.
Page 7
<PAGE>
THE SEPARATE ACCOUNT - cont'd
Investment Divisions
Account E consists of several investment divisions or Variable Investment
Options. Each investment division of Account E invests in shares of a registered
investment company. Such a company may include a mutual fund or a separate
investment portfolio of a mutual fund, each of which is managed by an investment
adviser registered under the Investment Advisers Act of 1940.
The investment divisions available on the Issue Date are listed in the then
current prospectus for Account E as it relates to this contract. Each underlying
investment company is more fully described in a separate prospectus. Any
investment adviser's fee, if applicable, is described in the appropriate
prospectus.
Rights Reserved
GIAC reserves the right to take certain actions which it deems:
o necessary to serve the best interests of the owner and any
beneficiary; and
o appropriate to carry out the purposes of this contract.
GIAC will exercise its reserved rights only when permitted by applicable law.
When required by law, GIAC will obtain approval by the owner, the SEC, or any
appropriate regulatory authority. Examples of actions GIAC may take include:
o deregistering Account E under the 1940 Act;
o operating Account E in any form permitted under the 1940 Act, or in
any other form permitted by law;
o taking any action necessary to comply with or obtain and continue any
exemptions from the 1940 Act;
o transferring any assets in an investment division:
o into another investment division; or
o into one or more separate accounts; or
o into GIAC's general account;
o adding, combining, or removing investment divisions in Account E;
o substituting, for the contract values held in any investment division,
the shares of another class issued by a mutual fund in which such
values are invested or the shares of another investment company or any
other investment permitted by law;
o making any other necessary technical changes in this contract in order
to conform with any action this provision permits GIAC to take;
o adding to, eliminating, or suspending the owner's ability to allocate
Net Premiums or transfer Accumulation Value amounts into any Variable
Investment Option or into the Fixed- Rate Option;
o to modify this contract as necessary in order to preserve the
favorable tax treatment currently accorded this contract, including to
prevent the owner from being considered the owner of the assets in
Account E.
GIAC will notify the owner if any of these actions result in a material change
in the underlying investments of any investment division to which part of this
contract's Accumulation Value is allocated. Details of any such change in the
underlying investments of an investment division of Account E will be filed with
any regulatory authority where required and will be subject to any required
approval.
7. THE FIXED-RATE OPTION
The Fixed-Rate Option is funded by GIAC's general account. The owner may:
o allocate all or part of any Net Premiums to the Fixed-Rate Option; or
o transfer all or part of the Accumulation Value attributable to the
Variable Investment Options into the Fixed-Rate Option (for
restrictions on transfers from the Fixed-Rate Option, see page 9).
GIAC will credit interest on any amounts allocated or transferred to the
Fixed-Rate Option. Interest will accrue daily at a minimum guaranteed effective
annual rate of 3%. GIAC may credit an interest rate greater than 3% at its
discretion. Any portion of a Net Premium allocated to the Fixed- Rate Option on
the Issue Date will earn interest at the then current rate as set by GIAC. This
interest rate will be guaranteed until the next Contract Anniversary.
After the Issue Date, GIAC will credit interest on any amounts allocated or
transferred to the Fixed-Rate Option at the interest rate then in effect on the
date of allocation or transfer. This rate will be guaranteed for the remainder
of the contract year, until the next Contract Anniversary.
Page 8
<PAGE>
THE FIXED-RATE OPTION - cont'd
On each Contract Anniversary, GIAC will credit interest on any portion of the
Accumulation Value attributable to the Fixed-Rate Option at the interest rate
then in effect. Such rate will be guaranteed for such portion of the
Accumulation Value until the next Contract Anniversary.
Bailout
If on any Contract Anniversary the interest rate GIAC sets for the Fixed-Rate
Option is less than the bailout rate shown on page 3, then the owner may
withdraw all or part of the Accumulation Value that has been held in the
Fixed-Rate Option for at least one contract year without that amount being
subject to a contingent deferred sales charge. In order to be eligible for
waiver of the contingent deferred sales charge under this provision, GIAC must
receive the owner's request in Good Order for such withdrawal at its Customer
Service Office within 60 days of the Contract Anniversary.
8. TRANSFERS
The owner may transfer all or a portion of this contract's value among the
Variable Investment Options and the Fixed-Rate Option, subject to the
restrictions described below. GIAC must receive the owner's written request for
transfer at its Customer Service Office in Good Order. GIAC reserves the right:
o to limit transfers among the Variable Investment Options or to the
Fixed-Rate Option to once every 30 days; and
o to charge for each transfer. The maximum amount of any transfer charge
is $25. GIAC will deduct any transfer charge on a pro rata basis from
the Allocation Options from which the amounts are transferred.
Transfers Before the Annuity Commencement Date -- During the period up to 30
days before the Annuity Commencement Date, the owner may transfer all or a
portion of the Accumulation Units credited under this contract among the
Variable Investment Options and the Fixed-Rate Option, subject to any
restrictions set forth below and to the limit set by GIAC on the number of
Allocation Options into which the Accumulation Value of the contract may be
invested, if any.
GIAC permits transfers of Accumulation Units from the Fixed-Rate Option to one
or more of the Variable Investment Options only once each year on or within 30
days after a Contract Anniversary. Transfers from the Fixed-Rate Option will be
made in the same order as such amounts were allocated or transferred to the
Fixed-Rate Option. The maximum amount that may be transferred from the
Fixed-Rate Option each contract year is the greater of:
o 33 1/3% of the portion of the Accumulation Value attributable to the
Fixed-Rate Option as of the Contract Anniversary; or
o $10,000; or
o (a) multiplied by (b), where:
o (a) is the total dollar amount transferred from the Fixed-Rate Option
in the previous contract year; and
o (b) is 1.15.
Transfers After the Annuity Commencement Date -- After the Annuity Commencement
Date, if the owner has elected a variable annuity payout option, the owner may
transfer all or a portion of the Annuity Units credited under such option among
the Variable Investment Options. Transfers may be made only once each calendar
year. GIAC must receive transfer instructions in Good Order at least 30 days
before the due date of the first variable annuity payment to which the transfer
will apply.
The number of additional Annuity Units credited to a newly elected Variable
Investment Option will be equal to (a) divided by (b), where:
o (a) is the dollar amount of the monthly variable annuity payment that
is to be transferred as of the transfer date; and
o (b) is the value of an Annuity Unit in the newly elected Variable
Investment Option as of the transfer date.
After the Annuity Commencement Date, the owner who has elected a fixed annuity
payout may not transfer into or out of such option.
Page 9
<PAGE>
9. ACCUMULATION VALUE
Accumulation Value
The portion of the Accumulation Value attributable to a particular Variable
Investment Option or to the Fixed- Rate Option is determined by multiplying (a)
by (b), where:
o (a) is the number of Accumulation Units credited to this contract for
that particular Allocation Option; and
o (b) is the then current Accumulation Unit value for that Allocation
Option.
This contract does not have any Accumulation Value on or after the Annuity
Commencement Date.
Accumulation Units
Amounts allocated or transferred to a Variable Investment Option or the
Fixed-Rate Option before the Annuity Commencement Date are used to purchase
either variable or fixed Accumulation Units, as applicable. Accumulation Units
are redeemed and cancelled when amounts are deducted, withdrawn, or transferred
from a Variable Investment Option or the Fixed-Rate Option. The number of
Accumulation Units purchased or redeemed in a Variable Investment Option or the
Fixed-Rate Option equals (a) divided by (b), where:
o (a) is the dollar value of the transaction; and
o (b) is the value of an Accumulation Unit for the applicable Variable
Investment Option or the Fixed-Rate Option as of the Valuation Date on
which the transaction is processed.
Accumulation Unit Value for a Variable Investment Option The Accumulation Unit
value for a Variable Investment Option depends on the investment experience of
that option and therefore may increase or decrease daily.
GIAC determines the Accumulation Unit value for each Variable Investment Option
for every Valuation Period. The Accumulation Unit value for a Variable
Investment Option for any Valuation Period is (a) multiplied by (b), where:
o (a) is the Accumulation Unit value for that Variable Investment Option
for the immediately preceding Valuation Period; and
o (b) is the net investment factor, as described below, for the current
Valuation Period.
Accumulation Unit Value for the Fixed-Rate Option The value of an Accumulation
Unit for the Fixed-Rate Option was established at $10.00 as of the date
operations began for that Option. Thereafter, it will increase daily at a rate
of interest to be determined from time to time by GIAC, but which is guaranteed
to be no less than 3.0% annually. Net Investment Factor GIAC will assess a daily
charge of .000034462 of the value of the assets allocated to each Variable
Investment Option. This charge is used in determining the net investment factor
for each Variable Investment Option. On an annual basis, the charge is equal to
1.25% of the value of the assets allocated to these Variable Investment Options.
Mortality and expense risks account for 1.05% of this charge and administrative
expenses incurred by GIAC account for 0.20% of this charge.
The net investment factor is used to calculate the value of an Accumulation Unit
in any Variable Investment Option for a Valuation Period. The net investment
factor is determined by dividing the sum of (a) and (b) by (c), and subtracting
(d) from the result, where:
o (a) is the net asset value per share of the investments held by the
Variable Investment Option for the current Valuation Period;
o (b) is the per share amount of any dividends or other distributions
made by the investments held by the Variable Investment Option during
the current Valuation Period;
o (c) is the net asset value per share of such investment held by the
Variable Investment Option for the immediately preceding Valuation
Period;
o (d) is the sum of the daily charges GIAC deducts from the Variable
Investment Options for:
o the mortality and expense risks and administrative expenses assumed by
GIAC; and
o any applicable annuity taxes.
The net investment factor may be less than 1.00 since it is based on the
investment experience of Account E.
Contract Fee
On each Contract Anniversary on or before the Annuity Commencement Date, GIAC
will deduct a contract fee of $35 from the Accumulation Value of this contract.
This fee will be deducted from each Variable Investment Option and from the
Fixed-Rate Option in proportion to the portion of the Accumulation Value
attributable to each particular Allocation Option on that Contract Anniversary.
However, if this contract is surrendered on a date other than a Contract
Anniversary, GIAC will deduct the contract fee on the date of surrender. GIAC
will waive the contract fee if the Accumulation Value on the Contract
Anniversary or upon total surrender is $100,000 or more.
Page 10
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10. SURRENDERS AND WITHDRAWALS
Surrender of Contract
Before the Annuity Commencement Date and while the annuitant is living, the
owner may surrender this contract for its surrender value as defined below. The
contract will then terminate. The owner's request for such surrender must be
received in Good Order by GIAC at its Customer Service Office. This contract
must be sent to GIAC's Customer Service Office for cancellation.
The surrender value is determined by deducting (b), (c) and (d) from (a), where:
o (a) is the Accumulation Value as of the Valuation Date on which GIAC
receives the owner's written request for surrender in Good Order;
o (b) is any applicable contingent deferred sales charge, as described
below;
o (c) is any applicable contract fee; and
o (d) is any applicable annuity taxes.
Partial Withdrawals
Before the Annuity Commencement Date and while the annuitant is living, the
owner may withdraw part of this contract's Accumulation Value, subject to the
conditions described below. The owner's request for any partial withdrawal must
be received in Good Order by GIAC at its Customer Service Office.
Any partial withdrawal payment will be reduced by any contingent deferred sales
charges (described below) and any applicable annuity taxes. The amount of any
partial withdrawal and any applicable contingent deferred sales charge and
annuity taxes first will be deducted from the Variable Investment Options in
proportion to the amount of the Accumulation Value attributable to each Variable
Investment Option as of the Valuation Date on the date GIAC receives the owner's
written request for withdrawal in Good Order. The portion of a partial
withdrawal that exceeds the Accumulation Value attributable to the Variable
Investment Options then will be deducted from the Fixed-Rate Option.
The total Accumulation Value remaining after a partial withdrawal must be at
least $500. If a partial withdrawal results in the Accumulation Value falling
below $500, then GIAC reserves the right to cancel the contract and pay the
surrender value to the owner.
Contingent Deferred Sales Charges
For the purpose of calculating the contingent deferred sales charge, and in
order to minimize the applicable contingent deferred sales charge, all amounts
withdrawn or surrendered are deemed to be taken out on a first-in-first-out
basis, that is, all amounts taken out are deemed to come from the oldest premium
paid first. If the owner makes a partial withdrawal or surrenders the contract,
a contingent deferred sales charge may be incurred against amounts withdrawn or
surrendered that have been in the contract for less than seven (7) contract
years. A contingent deferred sales charge will not apply to amounts withdrawn or
surrendered that have been in the contract for seven (7) or more contract years.
If this contract is surrendered, GIAC will deduct, if applicable, a contingent
deferred sales charge and the contract fee from the amount otherwise payable
(See "Surrender of Contract" provision above). The amount of the contingent
deferred sales charge, if any, will be a percentage, as shown in the table
below, of the amount withdrawn or surrendered:
Number of Contact Years Contingent
Completed from the Date Deferred Sales Charge
of the Premium Payment Percentage
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
and later.
The maximum contingent deferred sales charge will be equal to 7% of the lesser
of:
o the total of all premium payments made within 7 contract years (84
months) prior to the date of the request for withdrawal or surrender;
or
o the amount withdrawn or surrendered.
However, in any contract year after the first, the owner may make a partial
withdrawal, without incurring a contingent deferred sales charge, of an amount
equal to the greater of:
o the excess of the Accumulation Value on the date of withdrawal over
the Unliquidated Net Premiums; or
o 10% of the total premium payments made, minus the aggregate amount of
all prior partial withdrawals made during the current contract year.
Page 11
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11. PAYMENT OF CONTRACT PROCEEDS
Annuity Payments
If the annuitant is living and this contract is in force on the Annuity
Commencement Date, GIAC will make monthly variable annuity payments to the owner
under Variable Annuity Payout Option V-2, as stated in "Annuity Benefit" on page
5, or, if elected, one of the other annuity payout options. Payment of any
annuity benefit or death benefit may be made under either a fixed or variable
annuity payout option or a combination of both. If annuity payout option F-3 or
V-3 is chosen, the owner must also select a joint annuitant during the
annuitant's lifetime.
All monthly annuity payments are based on:
o the sex and age of the annuitant at the birthday nearest the date
payments are to begin; and
o the annuity payout option elected.
The Annuity Payout Option Tables are based on the 1983 Individual Annuity
Mortality Table a projected under Scale G factors.
Payees
While the annuitant is living, the owner may name or change one or more
beneficiaries who will be the payee or payees under an annuity payout option
after the death of the annuitant.
Only individuals who are to receive payments in their own behalf may be named as
payees, unless GIAC agrees otherwise.
Variable Annuity Payout Options
The amount of any variable annuity payments after the first will increase or
decrease according to the value of the variable Annuity Units, which reflect the
investment experience of the Variable Investment Option(s) elected. Any such
payments will be based on an assumed investment return of 4% per year.
Option V-1 - Life Annuity without Guaranteed Period GIAC will make monthly
variable annuity payments for the lifetime of the annuitant. GIAC does not
guarantee a minimum number of annuity payments under this option. This option
does not provide a death benefit to any beneficiaries upon the annuitant's
death. The amount of the first monthly payment will be based on the Option V-1
table on page 15.
Option V-2 - Life Annuity with 10 Year Guaranteed Period GIAC will make monthly
variable annuity payments during the lifetime of the annuitant. The amount of
the first monthly payment will be based on the Option V-2 table on page 15.
Payments are guaranteed for a period of 10 years. If the annuitant dies before
the end of the guaranteed period, GIAC will pay the balance of the payments to
the beneficiary for the remainder of that period, unless the beneficiary elects
to be paid the present value of the current dollar amount of the then remaining
annuity payments in a lump sum. If the beneficiary dies while receiving such
payments, the present value of the remaining number of variable annuity payments
will be paid in one sum to the beneficiary's estate.
Option V-3 - Joint and Survivor Annuity GIAC will make monthly variable annuity
payments while the annuitant and the joint annuitant are living and during the
survivor's remaining lifetime. When an annuitant dies, payments based on
two-thirds of the number of Annuity Units in effect while both were living will
continue for the lifetime of the survivor. The amount of the first monthly
payment will be based on the Option V-3 table on page 15.
Fixed Annuity Payout Options
Option F-1 - Life Annuity without Guaranteed Period GIAC will make monthly fixed
annuity payments for the lifetime of the annuitant. GIAC does not guarantee a
minimum number of annuity payments under this option. This option does not
provide a death benefit to any beneficiaries upon the annuitant's death. The
amount of the monthly payment will be based on the Option F-1 table on page 16.
The guaranteed monthly payments shown in the Option F-1 table include interest
at a rate of 3% a year.
Option F-2 - Life Annuity with 10 Year Guaranteed Period GIAC will make monthly
fixed annuity payments during the lifetime of the annuitant. The amount of the
monthly payment will be based on the Option F-2 table on page 16. The guaranteed
monthly payments shown in the Option F-2 table include interest at a rate of 3%
a year.
Payments are guaranteed for a period of 10 years. If the annuitant dies before
the end of the guaranteed period, GIAC will pay the balance of the payments to
the beneficiary for the remainder of that period, unless the beneficiary elects
to be paid the present value of the then remaining annuity payments in a lump
sum. If the beneficiary dies while receiving such payments, the present value of
the remaining number of annuity payments will be paid in one sum to the
beneficiary's estate.
Page 12
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PAYMENT OF CONTRACT PROCEEDS - cont'd
Option F-3 - Joint and Survivor Annuity GIAC will make monthly fixed payments
while the annuitant and the joint annuitant are living and during the survivor's
remaining lifetime. When an annuitant dies, GIAC will continue to pay, for the
lifetime of the survivor, payments based on two-thirds of the amount of the
payment in effect while both were living. The amount of the monthly payment will
be based on the Option F-3 table on page 16. The guaranteed monthly payments
shown in the Option F-3 table include interest at a rate of 3% a year.
Determination of Annuity Payments On the Annuity Commencement Date, GIAC will
determine the Accumulation Value. The portion of the Accumulation Value
attributable to each Allocation Option is determined by multiplying (a) by (b),
and deducting (c) from the result, where:
o (a) is the Accumulation Unit value on the Valuation Date 10 days
before the date the first annuity payment is due;
o (b) is the number of Accumulation Units credited to the owner's
account as of the date the first annuity payment is due; and
o (c) is any applicable annuity taxes not previously deducted.
The Variable Annuity Payment Option Tables on page 15 indicate the dollar amount
of the first monthly annuity payment for each Variable Annuity Payout Option
which can be purchased with each $1,000 of Accumulation Value. The Fixed Annuity
Payout Option Tables on page 16 indicate the dollar amount of the guaranteed
monthly annuity payment for each Fixed Annuity Payout Option which can be
purchased with each $1,000 of Accumulation Value. The first variable annuity
payment and guaranteed fixed annuity payments are determined by multiplying (a)
by (b), where:
o (a) is the amount shown in the applicable table for the annuitant's
sex and age on the Annuity Commencement Date; and
o (b) is the number of thousands of dollars of Accumulation Value.
Annuity Unit Values
If a Variable Annuity Payout Option has been elected, the Accumulation Value of
this contract will be applied to purchase Annuity Units. Annuity Units are used
to determine the amount of each variable annuity payment after the first.
The value of an Annuity Unit is determined independently for each Variable
Investment Option. The dollar value of Annuity Units may increase or decrease
depending upon the investment experience of the Variable Investment Option(s)
elected.
The value of an Annuity Unit in each Variable Investment Option was established
at $1.00 on the date operations began for each such Variable Investment Option.
The value of an Annuity Unit at the end of any subsequent Valuation Period is
equal to (a) multiplied by (b), where:
o (a) is the Annuity Unit value for the immediately preceding Valuation
Period; and
o (b) is the annuity change factor for the current Valuation Period.
The annuity change factor is equal to the net investment factor (as described in
"Net Investment Factor" on page 10) for the same Valuation Period, adjusted to
recognize the assumed investment return of 4% per year used in determining the
amounts of variable annuity payments. The valuation of all assets in Account E
will be determined in accordance with all applicable laws and regulations.
Determination of Variable Annuity Payments After the First The amount of each
variable annuity payment made after the first is determined by multiplying (a)
by (b), where:
o (a) is the number of Annuity Units in each Variable Investment Option;
and
o (b) is the appropriate Annuity Unit value as of the Valuation Date 10
days prior to the date the variable annuity payment is due.
The number of Annuity Units in each option is determined by dividing (a) by (b),
where:
o (a) is the amount of the first monthly variable annuity payment for
each Variable Investment Option; and
o (b) is the value of the Annuity Unit on the date the first variable
annuity payment is made.
The number of Annuity Units remains fixed during the annuity payment period,
provided no transfers among Variable Investment Options are made.
GIAC guarantees that the dollar amount of each variable annuity payment after
the first will not be adversely affected by:
o the actual administrative expenses it incurs; or
o variations in mortality experience from the mortality assumptions upon
which the first payment is based.
Page 13
<PAGE>
PAYMENT OF CONTRACT PROCEEDS - cont'd
Annuity Payout Options: General Provisions
o At least $2,000 must be applied under an Annuity Payout Option.
Proceeds of a smaller amount will be paid in one sum.
o GIAC reserves the right to change the frequency of payment if monthly
annuity payments are or become $20 or less.
o GIAC requires satisfactory proof of the age and sex of the annuitant
prior to the date annuity payments begin.
o The annuity payout options will not be available with respect to any
part of the proceeds payable to an assignee or to other than a natural
person entitled to receive proceeds, except with the consent of GIAC.
o The owner or any payee does not have the right to advance or assign
payments made under an annuity payout option.
o To the extent permitted by law, the death benefit and the payments
made under an annuity payout option will not be subject to
encumbrance, or to the claims of creditors or legal process.
Page 14
<PAGE>
VARIABLE ANNUITY PAYOUT OPTION TABLES
DOLLAR AMOUNT OF THE FIRST MONTHLY VARIABLE ANNUITY PAYMENT PURCHASED
WITH EACH $1,000 OF PROCEEDS APPLIED
Options V-1, V-2 - Life Annuity
Options Options
Nearest Age V-1 V-2
of Annuitant No Period 10 Years
at Date of Certain Certain
First Payment
Male Female Male Female
45 4.24 4.02 4.23 4.02
46 4.29 4.06 4.27 4.05
47 4.34 4.09 4.32 4.09
48 4.39 4.13 4.37 4.13
49 4.44 4.17 4.42 4.17
50 4.50 4.22 4.47 4.21
51 4.56 4.26 4.53 4.25
52 4.62 4.31 4.59 4.30
53 4.68 4.36 4.65 4.35
54 4.75 4.42 4.71 4.40
55 4.83 4.48 4.78 4.46
56 4.90 4.54 4.86 4.52
57 4.99 4.60 4.93 4.58
58 5.07 4.67 5.01 4.65
59 5.17 4.74 5.10 4.71
60 5.27 4.82 5.19 4.79
61 5.37 4.90 5.29 4.87
62 5.49 4.99 5.39 4.95
63 5.61 5.08 5.49 5.03
64 5.74 5.18 5.61 5.13
65 5.88 5.29 5.72 5.22
66 6.02 5.40 5.84 5.33
67 6.18 5.52 5.97 5.44
68 6.35 5.65 6.11 5.56
69 6.53 5.79 6.25 5.68
70 6.73 5.94 6.39 5.81
71 6.93 6.11 6.54 5.95
72 7.15 6.28 6.69 6.10
73 7.38 6.48 6.85 6.25
74 7.62 6.68 7.01 6.41
75 7.88 6.91 7.18 6.58
76 8.16 7.14 7.35 6.76
77 8.47 7.40 7.53 6.94
78 8.79 7.68 7.70 7.13
79 9.14 7.98 7.88 7.32
80 9.51 8.31 8.06 7.53
81 9.91 8.66 8.24 7.73
82 10.34 9.05 8.41 7.94
83 10.80 9.47 8.59 8.14
84 11.30 9.93 8.76 8.35
85 11.83 10.43 8.92 8.55
86 12.41 10.98 9.08 8.75
87 13.05 11.58 9.24 8.95
88 13.75 12.25 9.39 9.14
89 14.51 12.98 9.53 9.32
90 15.34 13.77 9.65 9.48
Option V-3 - Joint and Survivor Annuity
Nearest Nearest Age of Female Annuitant
Age of at Date of First Payment
Male Annuitant
at Date of Age Age Age
First Payment 10 Years 5 Years Same 5 Years
Less Less Age Older
45 3.88 3.95 4.03 4.12
46 3.91 3.98 4.06 4.16
47 3.93 4.01 4.10 4.21
48 3.96 4.05 4.14 4.25
49 4.00 4.08 4.18 4.30
50 4.03 4.12 4.23 4.35
51 4.06 4.16 4.27 4.40
52 4.10 4.20 4.32 4.46
53 4.14 4.25 4.37 4.52
54 4.18 4.29 4.43 4.58
55 4.22 4.34 4.48 4.65
56 4.27 4.40 4.54 4.72
57 4.32 4.45 4.61 4.79
58 4.37 4.51 4.68 4.87
59 4.42 4.57 4.75 4.96
60 4.47 4.64 4.83 5.05
61 4.53 4.70 4.91 5.14
62 4.60 4.78 4.99 5.25
63 4.66 4.86 5.09 5.36
64 4.73 4.94 5.19 5.47
65 4.81 5.03 5.29 5.60
66 4.89 5.12 5.40 5.74
67 4.97 5.22 5.52 5.88
68 5.06 5.33 5.65 6.04
69 5.15 5.44 5.79 6.21
70 5.25 5.56 5.94 6.39
71 5.36 5.69 6.10 6.58
72 5.47 5.83 6.27 6.78
73 5.59 5.97 6.45 7.00
74 5.72 6.13 6.64 7.24
75 5.85 6.30 6.85 7.49
76 5.99 6.48 7.08 7.77
77 6.15 6.67 7.32 8.06
78 6.31 6.88 7.58 8.38
79 6.49 7.11 7.86 8.73
80 6.67 7.35 8.16 9.10
81 6.88 7.61 8.49 9.51
82 7.09 7.89 8.84 9.95
83 7.33 8.19 9.22 10.43
84 7.58 8.51 9.64 10.94
85 7.85 8.86 10.09 11.51
86 8.14 9.24 10.59 12.12
87 8.46 9.66 11.13 12.79
88 8.80 10.11 11.72 13.53
89 9.17 10.61 12.37 14.35
90 9.58 11.15 13.08 15.29
* The dollar amount of the monthly annuity payment purchased for ages
not shown in the tables are available upon request.
Page 15
<PAGE>
FIXED ANNUITY PAYOUT OPTION TABLES
DOLLAR AMOUNT OF THE MONTHLY FIXED ANNUITY PAYMENT PURCHASED
WITH EACH $1,000 OF PROCEEDS APPLIED
Options F-1, F-2 - Life Annuity
Option Option
Nearest Age F-1 F-2
of Annuitant No Period 10 Years
at Date of Certain Certain
First Payment
Male Female Male Female
45 3.63 3.41 3.62 3.41
46 3.68 3.45 3.67 3.44
47 3.73 3.49 3.72 3.48
48 3.79 3.53 3.77 3.52
49 3.84 3.57 3.82 3.57
50 3.90 3.62 3.88 3.61
51 3.96 3.67 3.94 3.66
52 4.02 3.72 4.00 3.71
53 4.09 3.77 4.06 3.76
54 4.16 3.83 4.13 3.82
55 4.24 3.89 4.20 3.88
56 4.32 3.95 4.28 3.94
57 4.40 4.04 4.36 4.00
58 4.49 4.09 4.44 4.07
59 4.59 4.16 4.53 4.14
60 4.69 4.24 4.62 4.22
61 4.79 4.33 4.72 4.30
62 4.91 4.42 4.82 4.38
63 5.03 4.51 4.93 4.47
64 5.16 4.61 5.05 4.57
65 5.30 4.72 5.16 4.67
66 5.45 4.84 5.29 4.77
67 5.61 4.96 5.42 4.89
68 5.78 5.09 5.56 5.01
69 5.96 5.23 5.70 5.13
70 6.15 5.38 5.85 5.27
71 6.35 5.55 6.00 5.41
72 6.57 5.72 6.16 5.56
73 6.79 5.92 6.32 5.71
74 7.04 6.12 6.49 5.88
75 7.30 6.34 6.66 6.05
76 7.58 6.58 6.83 6.23
77 7.88 7.84 7.01 6.42
78 8.20 7.12 7.19 6.61
79 8.55 7.42 7.38 6.81
80 8.92 7.74 7.56 7.02
81 9.32 8.10 7.74 7.23
82 9.74 8.48 7.92 7.44
83 10.21 8.90 8.10 7.65
84 10.70 9.36 8.28 7.86
85 11.24 9.86 8.45 8.07
86 11.82 10.40 8.61 8.28
87 12.45 11.01 8.78 8.48
88 13.15 11.67 8.93 8.68
89 13.91 12.40 9.08 8.86
90 14.74 13.19 9.20 9.02
Option F-3 - Joint and Survivor Annuity
Nearest Nearest Age of Female Annuitant
Age of at Date of First Payment
Male Annuitant
at Date of Age Age Age
First Payment 10 Years 5 Years Same 5 Years
Less Less Age Older
45 3.25 3.33 3.42 3.52
46 3.28 3.36 3.46 3.56
47 3.31 3.40 3.50 3.61
48 3.34 3.43 3.54 3.65
49 3.37 3.47 3.58 3.70
50 3.41 3.51 3.63 3.76
51 3.45 3.55 3.68 3.81
52 3.49 3.60 3.73 3.87
53 3.53 3.65 3.78 3.93
54 3.57 3.69 3.84 4.00
55 3.61 3.75 3.90 4.07
56 3.66 3.80 3.96 4.14
57 3.71 3.86 4.03 4.22
58 3.76 3.92 4.10 4.30
59 3.82 3.98 4.17 4.38
60 3.87 4.05 4.25 4.48
61 3.94 4.12 4.33 4.57
62 4.00 4.20 4.42 4.68
63 4.07 4.28 4.52 4.79
64 4.14 4.36 4.62 4.91
65 4.22 4.45 4.72 5.04
66 4.30 4.55 4.84 5.17
67 4.38 4.65 4.96 5.32
68 4.47 4.76 5.09 5.48
69 4.57 4.87 5.23 5.65
70 4.67 4.99 5.38 5.83
71 4.77 5.12 5.54 6.02
72 4.89 5.26 5.71 6.22
73 5.01 5.41 5.89 6.44
74 5.13 5.56 6.08 6.68
75 5.27 5.73 6.29 6.93
76 5.41 5.91 6.52 7.21
77 5.56 6.11 6.76 7.50
78 5.73 6.31 7.02 7.82
79 5.90 6.54 7.30 8.16
80 6.09 6.78 7.60 8.54
81 6.29 7.04 7.93 8.94
82 6.51 7.32 8.28 9.38
83 6.74 7.62 8.66 9.86
84 6.99 7.94 9.08 10.37
85 7.26 8.29 9.53 10.94
86 7.56 8.67 10.02 11.55
87 7.87 9.09 10.56 12.21
88 8.21 9.54 11.16 12.95
89 8.58 10.03 11.81 13.78
90 8.98 10.57 12.52 14.71
* The dollar amount of the monthly annuity payment purchased for ages not
shown in the tables are available upon request.
Page 16
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12. GENERAL PROVISIONS
The Contract
The entire contract consists of the basic contract and any attached
endorsements, additional benefit riders, and application(s). GIAC relied upon
the application(s) in issuing this contract. All statements in the
application(s) are assumed to be true to the best knowledge and belief of the
person(s) making them. These statements are representations and not warranties.
Only the President, a Vice President, or the Secretary of GIAC may make or
modify this contract, and then only in writing. No agent is authorized to:
o change this contract;
o waive any of GIAC's requirements; or
o waive an answer to any question in the application(s).
GIAC will not be bound by any promise or statement made by any agent or other
person except as stated above.
GIAC may at any time make any change in this contract to the extent that such
change is required in order to make this contract conform with any law or any
regulation issued by any governmental authority to which it is subject.
Any paid-up annuity benefit, surrender value, or death benefit payable under
this contract is not less than the minimum required by the jurisdiction in which
this contract is delivered.
Age and Sex
If the age or sex of the annuitant has been misstated, GIAC will adjust any
benefit payable under this contract, based on the correct age and sex.
Overpayments made by GIAC because of such misstatement, with interest at 6% a
year, compounded annually, will be charged against benefits falling due after
the adjustment. If underpayments are made by GIAC because of such misstatement,
GIAC will pay the balance immediately, with 6% interest, compounded annually.
Proof of Age and Survival
GIAC has the right to require satisfactory proof:
o of the age of the payee or payees; and
o that a payee is living when a payment is contingent upon the payee's
survival.
Communications with GIAC GIAC receives all communications only at its Customer
Service Office. Please include the contract number, full names of any owner(s)
and annuitant, and each owner's current address in all correspondence with GIAC.
Payments by GIAC
Any payment by GIAC under this contract is payable at its Customer Service
Office. GIAC reserves the right to require surrender of this contract prior to
payment of the death benefit.
Nonparticipating
This contract is not eligible for dividends and will not share in the surplus
earnings of GIAC.
Ownership of the Assets
GIAC shall have ownership and control of its assets, including all assets
allocated to Account E and the Fixed-Rate Option.
Deferment
GIAC will ordinarily pay any partial withdrawals or surrender proceeds within
seven (7) days after the date the owner's request for withdrawal or surrender is
received in Good Order by GIAC at its Customer Service Office. However, when
permitted by law, GIAC may defer payment of any partial withdrawals or surrender
proceeds for up to 6 months after written request for such withdrawal or
surrender is received in Good Order by GIAC at its Customer Service Office.
The amount payable will be determined as of the date written request is received
by GIAC in Good Order at its Customer Service Office. Interest will accrue
daily, starting on the date deferment begins, at the rate of 3% on any amount
deferred 30 days or more.
GIAC may defer calculation or payment of any partial withdrawals or surrender
proceeds or the transfer of amounts based on separate account performance if:
o the New York Stock Exchange is closed for trading or trading has been
suspended; or
o the Securities and Exchange Commission restricts trading or determines
that a state of emergency exists which may make such calculation,
payment, or transfer impracticable.
Page 17
<PAGE>
GENERAL PROVISIONS - cont'd
Reports to the Owner
GIAC will provide a written report to the owner once each contract year while
this contract has an Accumulation Value. No reports will be sent after monthly
annuity payments begin.
The annual report will include the following information as of the most recent
Contract Anniversary:
o the Accumulation Value;
o the surrender value; and
o the annual interest rate credited on amounts held in the Fixed-Rate
Option on the Contract Anniversary during the current contract year,
if applicable.
The report will also include any other information required by the jurisdiction
in which this contract is delivered.
Page 18
<PAGE>
ENDORSEMENTS
Page 19
<PAGE>
ALPHABETICAL INDEX
Subject Page
Accumulation Units........................................................4, 10
Accumulation Unit Value for a Variable Investment Option.....................10
Accumulation Unit Value for the Fixed-Rate Option............................10
Accumulation Value........................................................4, 10
Age and Sex...............................................................3, 17
Allocation of Net Premiums....................................................7
Annuity Benefit...............................................................5
Annuity Commencement Date..................................................3, 4
Annuity Payments.............................................................12
Annuity Unit Values..........................................................13
Assignment....................................................................5
Bailout.......................................................................9
Bailout Rate..................................................................3
Beneficiary...................................................................5
Change of Owner or Beneficiary................................................5
Change of Annuity Commencement Date or Annuity Payout Option..................6
Communications with GIAC.....................................................17
Contingent Deferred Sales Charges............................................11
Contract Anniversary..........................................................4
Contract Data.................................................................3
Contract Fee.................................................................10
Contract, The................................................................17
Death Benefits................................................................6
Death of Annuitant Before Annuity Commencement Date
When the Annuitant is Not an Owner..........................................6
Death of an Owner.............................................................6
Deferment....................................................................17
Definitions...................................................................4
Determination of Annuity Payments............................................13
Determination of Variable Annuity Payments After the First...................13
Fixed Annuity Payout Options ................................................12
Fixed Annuity Payout Option Tables ..........................................12
Fixed-Rate Option.............................................................8
Guardian Separate Account E ...........................................7
Investment Divisions..........................................................8
Issue Date.................................................................3, 4
Joint Owners..................................................................4
Monthly Anniversary...........................................................4
Net Investment Factor........................................................10
Nonparticipating.............................................................17
Owner......................................................................3, 4
Ownership of the Assets......................................................17
Partial Withdrawals..........................................................11
Payees.......................................................................12
Payments by GIAC ............................................................17
Payment of Contract Proceeds.................................................12
Premiums .....................................................................7
Proof of Age and Survival....................................................17
Reports to the Owner.........................................................18
Rights Reserved...............................................................8
Special Rules.................................................................6
Surrender of Contract........................................................11
Transfers After the Annuity Commencement Date.................................9
Transfers Before the Annuity Commencement Date................................9
Valuation Date................................................................4
Valuation Period..............................................................4
Variable Annuity Payout Options..............................................12
Variable Annuity Payout Option Tables........................................15
Page 20
<PAGE>
Individual Flexible Premium Deferred Variable Annuity Contract
o Premiums payable during annuitant's lifetime before the Annuity
Commencement Date
o Monthly annuity payments begin on the Annuity Commencement Date
o Benefits based on the investment experience of a Separate Account are
variable and are not guaranteed
o Provides for a Fixed-Rate Option with a bailout
o Non-participating - No dividends payable
The Guardian A Stock Company
Insurance & Annuity Incorporated in the
Company, Inc. State of Delaware
[Logo] The Guardian(R)
Customer Service Office:
P.O. Box 26210
Lehigh Valley, PA 18002-6210
<PAGE>
Enhanced Death Benefit Rider
This rider provides for an Enhanced Death Benefit which may be greater than the
standard death benefit provided under the basic contract to which this rider is
attached.
Definitions
Terms used in this rider which are not described below have the meaning ascribed
in the Basic Contract to which this rider is attached.
Basic Contract: The variable annuity contract excluding any additional benefit
riders.
Reset Date: The first reset date occurs on the seventh Contract Anniversary of
the Basic Contract. Thereafter, each reset date occurs on each subsequent
seventh Contract Anniversary.
Death Benefit Upon Annuitant's Death If this rider is in force and the annuitant
dies on or before the Annuity Commencement Date, then GIAC will pay the death
benefit described below.
Death Benefit: The amount payable to the beneficiary upon receipt by GIAC of due
proof of death in Good Order at its Customer Service Office. This amount is
equal to the greater of:
o the death benefit described in the Basic Contract; or
o the Enhanced Death Benefit. The Enhanced Death Benefit equals the
Accumulation Value of the Basic Contract as of the Reset Date
immediately preceding the annuitant's date of death, less the amount
of all partial withdrawals subsequent to such Reset Date, any
contingent deferred sales charges applicable under the Basic Contract
and any applicable annuity taxes.
Annual Charge
GIAC will assess a daily charge of .000005485 of the value of the assets
allocated to each Variable Investment Option for expenses related to the
provision of the Enhanced Death Benefit. On an annual basis, the Enhanced Death
Benefit charge is equal to 0.20% of the value of the assets allocated to the
Variable Investment Options.
The Contract
This rider is:
o issued in consideration of the application; and
o attached to and made part of the contract; and
o subject to all of the applicable provisions of the contract.
Issue Date
The issue date of this rider is the issue date of the Basic Contract. The
effective date of this rider is its issue date.
Termination
This rider terminates on the earliest of the following:
o the date the Enhanced Death Benefit is paid; or
o the date the Basic Contract terminates; or
o the date of the annuitant's 85th birthday; or
o the Annuity Commencement Date; or
o the date GIAC receives the owner's proper written request for
termination in Good Order at its Customer Service Office. The rider
must be sent to the Customer Service Office for cancellation.
The owner may not reinstate this rider once it terminates.
The Guardian Insurance & Annuity Company, Inc.
/s/ Joseph A. Caruso
Secretary
The Guardian Insurance & Annuity Company, Inc.
<PAGE>
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
This endorsement is attached to and made part of the contract. The contract as
amended is intended to qualify as an individual retirement annuity under Section
408(b) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder, and successor provisions thereto (the "Code"). The
following provisions apply and replace any contrary provisions of the contract.
This endorsement is subject to all the exclusions, definitions and provisions of
the contract which are not inconsistent herewith.
Owner of Contract
The annuitant shall be the owner of the contract. Any provision of the contract
that would allow joint ownership is deleted.
Non-Transferability Restrictions
The contract is not transferable or assignable (other than pursuant to a divorce
decree in accordance with applicable law) and is established for the exclusive
benefit of the owner and beneficiaries. It may not be sold, assigned, alienated,
or pledged as collateral for a loan or as security.
Interest in the Contract
The owner's entire interest in the contract, which shall be nonforfeitable, is
the total amount available for distribution from the contract at any given time.
A distribution from the contract occurs:
o on the Annuity Commencement Date;
o as annuity payments are made;
o when the contract is surrendered;
o when a partial withdrawal is made; or
o upon payment of the death benefit.
Premium Payment(s)
Premium payments shall be paid in cash. The total premium which can be accepted
for each tax year is limited to $2,000 unless the premium payment is a rollover
contribution described in Code Sections 402(c), 403(a)(4), 403(b)(8) or
408(d)(3), or an employer contribution to a simplified employee pension plan as
described in Code Section 408(k) or to a Simple Retirement plan described in
section 408(p) of the Code.
The owner shall have the sole responsibility for determining whether any premium
payment meets applicable income tax requirements. Except for any premium paid by
an employer pursuant to a simplified employee pension plan, no premium may be
paid for the calendar year in which the owner attains age 70 1/2 or any year
thereafter.
This contract does not require fixed premium payments. Any refund of premiums
(other than those attributable to excess contributions) will be applied toward
the payment of additional premiums before the close of the calendar year
following the year of the refund.
If the owner dies before the entire interest has been distributed, no additional
premium payments will be accepted under this contract after the owner's death
unless the beneficiary is the owner's surviving spouse. Annuity Commencement
Date The Annuity Commencement Date shall be no later than April 1 of the
calendar year following the calendar year in which the owner attains age 70 1/2.
Distributions During the Owner's Lifetime With respect to any amount which
becomes payable under the contract during the owner's lifetime, such payment
shall begin on or before the Annuity Commencement Date and shall be payable in
substantially equal amounts, no less frequently than annually. Payments shall be
made as follows:
o in a lump sum; or
o over the owner's life; or
o over the lives of the owner and his or her designated beneficiary; or
o over a period certain not exceeding the life expectancy of the owner.
If the owner dies after distribution of the interest in the contract has begun,
the remaining portion of such interest will continue to be distributed at least
as rapidly as under the method of distribution being used before the owner's
death.
Distribution by Payment of the Death Benefit If the owner dies before
distribution has begun, the entire interest in the contract must be distributed
no later than December 31 of the calendar year in which the fifth anniversary of
the owner's death occurs. However, proceeds which are payable to a named
beneficiary who is a natural person may be distributed in substantially equal
installments over the lifetime of the beneficiary or a period certain not
exceeding the life expectancy of the beneficiary provided such distribution
begins not later than December 31 of the calendar year following the calendar
year in which the owner's death occurred.
If the beneficiary is the owner's surviving spouse, he/she may elect, not later
than December 31 of the calendar year in which the fifth anniversary of the
owner's death occurs, to receive equal or substantially equal payments over
his/her life or life expectancy, beginning at any date before the date on which
the owner would have attained age 70 1/2. Minimum payments will be calculated in
accordance with Code Section 408(b)(3) and the regulations thereunder.
The Guardian Insurance & Annuity Company, Inc.
<PAGE>
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT - cont'd
For the purposes of this requirement, any amount paid to any of the owner's
children will be treated as if it had been paid to the owner's surviving spouse
if the remainder of the interest becomes payable to the owner's surviving spouse
when the child reaches the age of majority.
If the owner's spouse is not the named beneficiary, the method of distribution
selected will assure that:
o at least 50% of the present value of the amount available for
distribution is paid within the owner's life expectancy; and
o such method of distribution complies with the requirements of Code
Section 408(b)(3) and the regulations thereunder.
Determination of Life Expectancy For the purposes of the foregoing provisions,
life expectancy and joint and last survivor expectancy shall be determined by
use of the expected return multiples in Tables V and VI of Treasury Regulation
1.72-9 in accordance with Code Section 408(b)(3) and the regulations thereunder.
In the case of distributions during the owner's lifetime, the life expectancy of
the owner and his or her beneficiary will be initially determined on the basis
of attained ages in the calendar year the owner reaches age 70 1/2. For
distributions after the owner's death and after distributions have begun, life
expectancy will be initially determined on the basis of the beneficiary's
attained age in the year distributions are required to begin.
Unless the owner (or the owner's spouse) elect otherwise before distributions
are required to begin, the owner's life expectancy and, if applicable, the
owner's spouse's life expectancy, will be recalculated annually based on
attained ages in the year for which the required distribution is being
determined. An election not to recalculate shall be irrevocable and shall apply
to all subsequent years. The life expectancy of a non- spouse beneficiary will
not be recalculated.
Minimum Distribution Requirements
If the entire interest is to be distributed in other than a lump sum, then the
minimum amount to be distributed each year (beginning with the calendar year
following the calendar year in which the owner attains age 70 1/2 and each year
thereafter) shall be determined in accordance with the minimum distribution
requirements of Section 408(b)(3) of the Code and the regulations thereunder,
including the incidental death benefit provisions of Section 1.401(a)(9)-2 of
the proposed regulations (or any final regulations which may become effective
after the issue date of this endorsement), all of which are herein incorporated
by reference. The annual distribution required to be made by the Annuity
Commencement Date is for the calendar year in which the owner reached age 70
1/2. Annual payments for subsequent years, including the calendar year in which
the Annuity Commencement Date occurs, must be made by December 31 of that year.
The amount distributed for each year shall equal or exceed the entire interest
in the contract as of the close of business on December 31 of the preceding
year, divided by the applicable life expectancy or joint and last survivor
expectancy.
If the owner owns two or more individual retirement accounts or annuities
("IRAs"), the owner may satisfy the minimum distribution requirements under
Sections 408(a)(6) and 408(b)(3) of the Code by receiving a distribution from
one IRA that is equal to the total amount required to satisfy the minimum
distribution requirements for all IRAs owned by the owner. For this purpose, the
owner may use the alternative method described in IRS Notice 88-38, 1988-1 C.B.
524.
The owner or his or her beneficiary, as applicable, shall have the sole
responsibility for requesting a distribution that complies with this endorsement
and applicable law.
Issue Date
The issue date of this endorsement is the issue date of the contract. This
endorsement is effective as of the issue date shown on page 3 of the contract.
Amendment of Contract
GIAC reserves the right to amend the contract or this endorsement to the extent
necessary to qualify the contract as an individual retirement annuity for
federal income tax purposes.
The Guardian Insurance & Annuity Company
/s/ Joseph A. Caruso
Secretary
<PAGE>
QUALIFIED PLAN ENDORSEMENT
This endorsement is attached to and made part of the contract. The contract is
issued to or purchased by the trustee(s) of a pension or profit-sharing plan
intended to qualify under Section 401(a) of the Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder, and successor provisions
thereto ("the Code"). The following provisions apply and replace any contrary
contract provisions. This endorsement is subject to all the exclusions,
definitions and provisions of the contract which are not inconsistent herewith.
Owner and Annuitant
The owner of the contract will be the trustee(s) of the qualified pension or
profit-sharing plan to which the contract relates and the annuitant must be a
participant under such plan.
Non-Transferability Restrictions
Except as allowed by the qualified pension or profit-sharing plan to which the
contract relates, the contract may not be transferred, sold, assigned,
discounted or pledged, either as collateral for a loan or as security for the
performance of an obligation or for any other purpose, to any person other than
GIAC.
Coordination
The contract shall be subject to the provisions, terms and conditions of the
qualified pension or profit-sharing plan to which the contract relates and with
the terms and conditions of the Code, the regulations thereunder and other
applicable law (including, without limitation, the Employee Retirement Income
Security Act of 1974, as amended). Any premium payment, withdrawal, transfer or
distribution under the contract shall comply with the provisions, terms and
conditions of such plan and the applicable law as determined or interpreted by
the plan administrator, trustee or other designated plan fiduciary. GIAC is not
a party to or bound by such qualified pension or profit-sharing plan or any
other document or agreement issued in connection with such plan.
GIAC shall be under no obligation either:
o to determine whether any premium payment, withdrawal, transfer or
distribution complies with the provisions, terms and conditions of the
qualified pension or profit-sharing plan to which the contract relates
or with applicable law; or
o to administer such plan, including, without limitation, any provisions
required by the Retirement Equity Act of 1984.
Issue Date
The issue date of this endorsement is the issue date of the contract. This
endorsement is effective as of the issue date shown on page 3 of the contract.
Amendment
Notwithstanding any provision to the contrary in the qualified pension or
profit-sharing plan to which the contract relates, GIAC reserves the right to
amend or modify the contract or this endorsement to the extent necessary to
comply with any law, regulation, ruling or other requirement deemed by GIAC to
be necessary to establish or maintain the qualified status of such pension or
profit-sharing plan.
The Guardian Insurance & Annuity Company, Inc.
/s/ Joseph A. Caruso
Secretary
The Guardian Insurance & Annuity Company, Inc.
<PAGE>
TAX-SHELTERED ANNUITY ENDORSEMENT
This endorsement is attached to and made part of the contract. The contract is
issued in connection with a tax-sheltered annuity plan described in section
403(b) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder, and successor provisions thereto (the "Code"). The
following provisions apply and replace any contrary contract provisions. A plan
fiduciary or, if none, the owner shall be responsible for determining whether
contributions, withdrawals, transfers or distributions under the contract comply
with the following provisions, applicable law, or the terms of any tax-sheltered
annuity plan to which the contract relates. This endorsement is subject to all
the exclusions, definitions and provisions of the contract which are not
inconsistent herewith.
Owner
The annuitant shall be the sole owner of the contract. Any provision of the
contract that would allow joint ownership is deleted. The owner must be an
employee of an employer described in Code Section 403(b)(1)(A).
Non-Transferability Restrictions
The contract may not be transferred, sold, assigned, discounted or pledged
either as collateral for a loan or as security for the performance of an
obligation or for any other purpose, to any person other than GIAC.
Contributions (Premium Payments)
Contributions made pursuant to a salary reduction agreement (as defined in Code
Section 403(b)(11)) in connection with any tax-sheltered annuity plan to which
the contract relates may not in any taxable year exceed the amount specified in
Code Section 402(g)(4). Amounts transferred to the contract or rollover
contributions are not subject to the foregoing limit.
Limitations on Distributions
Distributions, including partial withdrawals, of amounts attributable to
contributions made pursuant to a salary reduction agreement, as defined in Code
Section 403(b)(11), may be made only:
o when the owner attains age 59 1/2, separates from service, dies or
becomes disabled (within the meaning of Code Section 72(m)(7)), or in
the case of hardship; and
o as determined in accordance with Code Section 403(b)(11), including
with respect to the existence of hardship circumstances.
A hardship-related distribution may not include any income attributable to
salary reduction contributions.
The foregoing limitations on distribution apply only to:
o salary reduction contributions made after December 31, 1988 and the
income attributable to such contributions; and
o the income attributable to amounts held as of December 31, 1988.
Amounts transferred or rolled over to the contract shall also be subject to the
foregoing limitations to the extent that such limitations applied to such
amounts prior to the transfer or rollover.
Eligible Rollover Distributions As applicable, the owner, or the owner's
surviving spouse as beneficiary, or the owner's former spouse as alternate payee
under a "qualified domestic relations order" within the meaning of Code Section
414(q) may be a distributee under the contract. A distributee may elect, at the
time and in the manner prescribed by GIAC, to have any portion of an eligible
rollover distribution of the distributee's interest in the contract paid
directly by GIAC as a direct rollover to:
o an individual retirement account described in Code Section 408(a);
o an individual retirement annuity described in Code Section 408(b); or
o another annuity described in Code Section 403(b);
that has been specified by the distributee and which accepts direct rollovers.
A surviving spouse distributee may not elect a direct rollover to another
annuity described in Code Section 403(b).
An eligible rollover distribution is any distribution of any portion of the
distributee's interest in the contract other than:
o any one of a series of substantially equal periodic payments made at
least annually over the life or life expectancy of the distributee, or
the joint lives or life expectancies of the distributee and his or her
beneficiary, or for a specified period of ten years or more;
o any required minimum distribution under Code Section 403(b)(10); or
o the portion of any distribution that is not includible in gross
income.
This provision shall be interpreted in accordance with Code Section 403(b)(10)
and the regulations thereunder.
The Guardian Insurance & Annuity Company, Inc.
<PAGE>
TAX-SHELTERED ANNUITY ENDORSEMENT - cont'd
Required Commencement of Distributions The Annuity Commencement Date is the date
the entire interest (i.e., the total amount available for distribution from the
contract at any given time) of the owner will be distributed or begin to be
distributed. The Annuity Commencement Date shall not be later than the "required
beginning date." The required beginning date is April 1 of the calendar year
following the later of the calendar year in which the owner retires or attains
age 70 1/2; provided, however, that if the owner is a 5-percent owner (as
defined in Section 416 of the Code), the required beginning date shall be April
1 of the calendar year following the calendar year in which the owner attains
age 70 1/2.
Distributions During the Owner's Lifetime With respect to any amount which
becomes payable under the contract during the lifetime of the owner, such
payment shall be paid or begin to be distributed on or before the required
beginning date. Distributions over time shall be payable in substantially equal
amounts, no less frequently than annually. The entire interest in the contract
shall be paid or distributed as follows:
o in one lump sum;
o over the life of the owner;
o over the lives of the owner and his or her designated beneficiary; or
o over a period certain not exceeding the life expectancy of the owner.
If the owner's entire interest is to be distributed in other than one lump sum,
then the amount to be distributed each year (commencing with the required
beginning date and each year thereafter) shall be determined in accordance with
Code Section 403(b)(10) and the regulations thereunder. If the owner's spouse is
not the named beneficiary, the method of distribution selected will assure that
at least 50% of the present value of the amount available for distribution is
paid within the life expectancy of the owner.
If the owner dies after distribution of his or her interest has begun, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used immediately preceding the
owner's death.
Distributions by Payment of the Death Benefit
If the owner dies before distribution has begun, the entire interest shall be
distributed no later than December 31 of the calendar year in which the fifth
anniversary of the owner's death occurs. However, proceeds which are payable to
a named beneficiary who is a natural person may be distributed in substantially
equal installments over the lifetime of the beneficiary or a period certain not
exceeding the life expectancy of the beneficiary provided such distribution
begins not later than December 31 of the calendar year following the calendar
year in which the owner's death occurred. If the beneficiary is the surviving
spouse of the owner, the beneficiary may elect not later than December 31 of the
calendar year in which the fifth anniversary of the owner's death occurs to
receive equal or substantially equal payments over the life or life expectancy
of the surviving spouse commencing at any date prior to the date on which the
owner would have attained age 70 1/2. Payments shall be calculated in accordance
with Code Section 403(b)(10) and the regulations thereunder.
Any amount paid to a child of an owner shall be treated as if it had been paid
to the surviving spouse if the remainder of the interest becomes payable to the
surviving spouse when the child reaches the age of majority.
Determination of Life Expectancy
For purposes of the foregoing provisions, life expectancy and joint and last
survivor expectancy shall be determined by use of the expected return multiples
in Tables V and VI of Treasury Regulation 1.72-9 in accordance with Code Section
403(b)(10) and the regulations thereunder.
In the case of distributions during the owner's lifetime, the owner's life
expectancy or, if applicable, the joint and last survivor expectancy of the
owner and his or her beneficiary, will be initially determined on the basis of
attained ages in the year the owner reaches age 70 1/2. In the case of
distribution after the owner's death, life expectancy shall be initially
determined on the basis of the beneficiary's attained age in the year
distributions are required to begin.
Unless the owner (or the owner's spouse) elects otherwise prior to the date
distributions are required to begin, the owner's life expectancy and, if
applicable, the owner's spouse's life expectancy shall be recalculated annually
based on attained ages in the year for which the required distribution is being
determined. The life expectancy of a non-spouse beneficiary shall not be
recalculated.
<PAGE>
TAX-SHELTERED ANNUITY ENDORSEMENT - cont'd
In case of a distribution other than in the form of life income or joint life
income, the annual distribution required to be made by the required beginning
date is for the calendar year in which the owner reaches age 70 1/2. Annual
payments for subsequent years, including the year in which the required
beginning date occurs, must be made by December 31 of each year. The amount
distributed for each year shall equal or exceed the entire interest in the
contract as of the close of business on December 31 of the preceding year,
divided by the applicable life expectancy or joint and last survivor expectancy.
Coordination
The interests, rights and options under the contract shall be subject to the
provisions, terms and conditions of any tax-sheltered annuity plan to which the
contract relates and with the terms and conditions of the Code, the regulations
thereunder, and other applicable law (including, without limitation, the
Employee Retirement Income Security Act of 1974, as amended). GIAC is not a
party to or bound by any such tax-sheltered annuity plan or any other document
or agreement issued in connection with any such plan.
GIAC shall be under no obligation either:
o to determine whether any contribution, withdrawal, transfer or
distribution under the contract complies with the provisions, terms
and conditions of any tax-sheltered annuity plan to which the contract
relates or with applicable law; or
o to administer any such plan, including, without limitation, any
provisions required by the Retirement Equity Act of 1984.
Issue Date
The issue date of this endorsement is the issue date of the contract. This
endorsement is effective as of the issue date shown on page 3 of the contract.
Amendment
Notwithstanding any provision to the contrary in any tax-sheltered annuity plan
to which the contract relates, GIAC reserves the right to amend or modify the
contract or this endorsement to the extent necessary to comply with any law,
regulations, ruling or other requirement necessary to establish or maintain the
tax advantages, protections or benefits available to a tax-sheltered annuity
under Code Section 403(b) and any other applicable law.
The Guardian Insurance & Annuity Company
/s/ Joseph A. Caruso
Secretary
CERTIFICATE OF INCORPORATION
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
---ooOoo---
ARTICLE I
Section 1.1 Name. The name or the corporation (hereinafter called the
Corporation) is:
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
ARTICLE II
Section 2.1 Registered Office and Registered Agent. The address of the
Corporation's registered office in the State of Delaware is 100 West lOth
Street, City of Wilmington. The name of its registered agent at such address is
The Corporation Trust Company.
ARTICLE III
Section 3.1 Corporate Purposes. A primary purpose of the Corporation is to
engage in and carry on the business of insurance as permitted under the laws of
Delaware. In addition, and without limitation by the foregoing, the purpose of
the Corporation is to engage in any lawful act
<PAGE>
2.
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
Section 3.2 Management and Other Contracts. The Corporation may enter into
a management, supervisory or investment advisory contract and other contracts
with, and may otherwise do business with, any firm or organization
notwithstanding that the directors or officers of the Corporation may be
employees, directors or officers of such firms or organizations, and in the
absence of fraud the Corporation and such firms or organizations may deal freely
with each other, and such contracts or any other contract or transaction between
the Corporation and such firms or organizations shall not be invalidated or in
any wise affected thereby, nor shall any director or officer of the Corporation
be liable to the Corporation or to any stockholder or creditor thereof or to any
other person for any loss incurred by it or him under or by reason of any such
contracts or transactions; provided that nothing herein shall protect any
director or officer of the Corporation against any liability to the Corporation
or to its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office; and provided always that such
contracts or transactions shall have been
<PAGE>
3.
fair as to the Corporation as of the time it was authorized, approved or
ratified by the Board of Directors, a committee thereof, or the stockholders.
ARTICLE IV
Section 4.1 Capital Stock. The total number of shares of stock which the
Corporation shall have authority to issue is twenty thousand (20,000) shares,
all of which shall be one class of common stock of the par value of One Hundred
Dollars ($100.00) each.
ARTICLE V
Section 5.1 Power of Board to Make By-Laws. The Board may make, alter or
repeal from time to time any of the By-Laws of the Corporation, except any
particular By-Law which is specified as not subject to alteration or repeal by
the Board. Any such particular By-Law may be altered or repealed only by the
affirmative vote at a meeting of the holders of a majority of the shares of
capital stock outstanding or by the written consent of the holders of a majority
of such shares.
Section 5.2 Elections of Directors Need Not Be By Written Ballot. The
elections of directors need not be by written ballot unless the By-Laws of the
Corporation shall so provide.
<PAGE>
4.
ARTICLE VI
Section 6.1 Incorporators. The names and mailing addresses of the
incorporators of the Corporation are:
NAME MAILING ADDRESS
---- ---------------
B. J. CONSONO 100 West Tenth Street
Wilmington, Delaware 19899
F. J. OBARA, Jr. 100 West Tenth Street
Wilmington, Delaware 19899
J. L. RIVERA 100 West Tenth Street
Wilmington, Delaware 19899
ARTICLE VII
Section 7.1 Reservation of Right to Amend Certificate. The Corporation
reserves the right to amend, alter, change or repeal any provision contained in
this Certificate in the manner now or hereafter prescribed by law, and all
rights and powers conferred in this Certificate on stockholders, directors and
officers are subject to this reserved power.
Section 7.2 Right to Amend By-Laws. The Board of Directors is expressly
authorized to make, alter or repeal the By-Laws of the Corporation, except as
otherwise provided in any By-Law adopted by the stockholders.
WITNESS the signatures of the undersigned this 2nd day of March, 1970.
B. J. CONSONO
F. J. OBARA, Jr.
J. L. RIVERA
<PAGE>
5.
STATE OF DELAWARE )
) ss:
COUNTY OF NEW CASTLE )
BE IT REMEMBERED that on this 2nd day of March, 1970, personally came
before me, a Notary Public for the State of Delaware, B. J. CONSONO, F. J.
OBARA, Jr., and J. L. RIVERA all of the parties to the foregoing certificate of
incorporation, known to me personally to be such, and severally acknowledged the
said certificate to be the act and deed of the signers respectively and that the
facts stated therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
A. DANA ATWELL
---------------------------------------
Notary Public
*************************************
A. DANA ATWELL
NOTARY PUBLIC
APPOINTED OCT. 27, 1969
STATE OF DELAWARE
TERM TWO YEARS
*************************************
<PAGE>
6.
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, EUGENE BUNTING, Secretary of State of the State of Delaware, DO HEREBY
CERTIFY that the above and foregoing is a true and correct copy of Certificate
of Incorporation of "THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.", as
received and filed in this office the second day of March, A. D. 1970, at 10
o'clock A. M.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Dover this second day of March in the year of our Lord one thousand nine
hundred and seventy.
EUGENE BUNTING
Secretary of State
R. H. CALIMELL
Ass't. Secretary of State
*************************************
Secretary's Office
1855 Delaware 1793
*************************************
<PAGE>
7.
Received for Record
March 2nd, A. D. 1970.
Leo J. Dugan, Jr., Recorder.
STATE OF DELAWARE :
: SS.:
NEW CASTLE COUNTY :
Recorded in the Recorder's Office at Wilmington, in Incorporation
Record Vol. Page &c., the 2nd day of March, A. D. 1970.
Witness my hand and official seal.
Leo J. Dugan, Jr.
Recorder.
*************************************
Recorders Office
New Castle Co. Del.
Mercy Justice
*************************************
<PAGE>
PAGE 1
State of Delaware
[State Seal]
Office of Secretary of State
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC. FILED IN THIS OFFICE ON THE
FOURTH DAY OF SEPTEMBER, A.D. 1986, AT 10 O'CLOCK A.M.
----------
[Department of State Seal] /s/ Michael Harkins
-----------------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 0933991
726247055 DATE: 09/04/1986
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
****
The Guardian Insurance & Annuity Company, Inc. a corporation organized and
existing under and by virtue of the General Corporation Law or the State or
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting or the Board or Directors or The Guardian
Insurance & Annuity Company, Inc. (the "Corporation") resolutions were duly
adopted setting forth a proposed amendment of the certificate of Incorporation
of the Corporation, declaring said amendment to be advisable and calling a
meeting of the stockholders of the Corporation for consideration thereof. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the certificate of Incorporation of the Corporation be
amended by changing the Article thereof numbered "III" and Section thereof
numbered "3.2" so that, as amended, said Article and Section shall be and
read as follows:
"Management and other Contracts. The Corporation may enter into a
management, supervisory or investment advisory contract and other contracts
with, and may otherwise do business with, any firm or organization
notwithstanding that the directors or officers of the Corporation may be
employees, directors or officers of such firms or organizations, and in the
absence of fraud the Corporation and such firms or organizations may deal
freely with each other, and such contracts or any other contract or
transaction between the Corporation and such firms or organizations shall
not be invalidated or in any wise affected thereby, nor shall any director
or officer of the Corporation be liable to the Corporation or to any
stockholder or creditor thereof or to any other person for any loss
incurred by it or him under or by reason of any such contracts or
transactions; provided that nothing herein shall protect any director or
officer of the Corporation against any liability to the Corporation or to
its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office; and provided always that
such contracts or transactions shall have been fair as to the Corporation
as of
<PAGE>
the time it was authorized, approved or ratified by the Board of Directors,
a committee thereof, or the stockholders. No director of the Corporation
shall be liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit."
SECOND: that thereafter, pursuant to resolution of its Board of Directors,
a special meeting of the stockholders of the Corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of the Corporation shall not be reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, The Guardian Insurance & Annuity Company, Inc. has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by Arthur V. Ferrara, its President, and Herbert N. Grolnick,
its Secretary, this 29th day of August, 1986.
By /s/ Arthur V. Ferrara
-----------------------------------
Arthur V. Ferrara, President
Attest:
By /s/ Herbert N. Grolnick
-----------------------------------
(CORPORATE SEAL) Herbert N. Grolnick, Secretary
BY-LAWS
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
---ooOoo---
ARTICLE I
OFFICES
Section 1. The registered office shall be in Wilmington, Delaware.
Section 2. The corporation may have offices also at such other places
within and without the State of Delaware as the board of directors may from time
to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of the stockholders for the election of directors shall
be held in New York, New York at such place as may be fixed from time to time by
the board of directors. Meetings of stockholders for any other purpose may be
held at such time and place,
<PAGE>
2.
within or without the State of Delaware, as shall be stated in the notice of the
meeting.*
Section 3. In order that the corporation may determine the stockholders
entitled to notice of or to, vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than fifty nor less than ten days before the date of
such meeting, nor more than fifty days prior to any other action. A
determination of stockholders shall apply to any adjournment
- ----------
* Section 2 amended on 11-30-89 to read as follows: "Unless otherwise
provided by the board of directors, the annual meeting of stockholders
shall be held not less than thirty (30) and not more than one hundred
twenty (120) days after the end of the corporation's last preceding fiscal
year, and at such meeting the stockholders shall elect, by a plurality
vote, a board of directors, and shall transact such other business as may
properly be brought before the meeting.
<PAGE>
3.
of the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.
Section 4. Written notice of the annual meeting, and any special meeting
stating the place, date and hour thereof, shall be given to each stockholder
entitled to vote thereat not less than ten nor more than fifty days before the
date of the meeting.
Section 5. The officer who has charge of the stock ledger of the
corporation shall prepare, and produce a complete list of the stockholders
entitled to vote at said meeting in accordance with Section 219(a) Title 8 of
the Delaware Code.
Section 6. Special meetings of the stockholders may be called by the
president and shall be called by the president or secretary by resolution of the
board of directors or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such resolution or request shall state the
purpose or purposes of the proposed meeting.
<PAGE>
4.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, so long as the adjournment is not for more than thirty days and a new
record date is not fixed for the adjourned meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the original meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the
<PAGE>
5.
stock having voting power present in person or represented by proxy shall decide
any question brought before such meeting, unless the question is one upon which
by express provision of the statutes or of the certificate of incorporation a
different vote is required in which case such express provision shall govern and
control the decision of such question.
Section 10. Each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
No proxy or power of attorney to vote shall be used to vote at a meeting of the
stockholders unless it shall have been filed with the secretary of the meeting
when required by the inspectors of election. All questions regarding the
qualification of voters, the validity of proxies and the acceptance or rejection
of votes shall be decided by two inspectors of election who shall be appointed
by the board of directors, or if not so appointed, then by the presiding officer
of the meeting.
<PAGE>
6.
Section 11. Whenever stockholders are required or permitted to take any
action by vote, such action may be taken without a meeting on written consent,
setting forth the action so taken, signed by the holders of all outstanding
stock entitled to vote thereon, all in accordance with Section 228, Title 8 of
the Delaware Code.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be five.* By amendment of this by-law the number may be increased or
decreased from time to time by the board of directors within the limits
permitted by law, but no decrease in the number of directors shall change the
term of any director in office at the time thereof. The directors shall be
elected at the annual meeting of the stockholders, except as provided in Section
2 of this article, and each director shall hold office until his successor is
elected and qualified or until his earlier resignation or removal. Directors
need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number
- ----------
* Amended by board of directors on 11/20/86 to delete the number "five" and
insert in its place "at least seven."
<PAGE>
7.
of directors may be filled by a majority of the directors then in office, though
less than a quorum, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected, unless sooner
displaced.
Section 3. The business of the corporation shall be managed by its board of
directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors shall
be held immediately following the adjournment of the meeting of stockholders and
at the place thereof. No notice of such meeting shall be necessary to the
directors in order legally to constitute the meeting, provided a quorum be
present. In the event such meeting is not so held, the meeting may be held at
such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors.
<PAGE>
8.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board of directors.
Section 7. Special meetings of the board of directors may be called by the
president and shall be called by the secretary on the written request of two
directors. Notice of special meetings of the board of directors shall be given
to each director at least three days before the meeting if by mail or at least
24 hours before the meeting if given in person or by telephone or by telegraph.
The notice need not specify the business to be transacted.
Section 8. At meetings of the board of directors, one-third of the
directors at the time in office but in no event less than two* directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors. If a quorum shall not be present at any meeting of
the board of directors the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
- ----------
* Amended by board of directors on 11/20/86 to delete the phrase "one-third
of the directors at the time in office but in no event less than two" and
insert in its place the word "five."
<PAGE>
9.
Section 9. The board of directors may, by resolution adopted by a majority
of the whole board, designate one or more committees, each committee to consist
of two or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the board of
directors. The board may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
or in any written consent of the committee. The member or members of any such
committee present at any meeting and not disqualified from voting may, whether
or not he or they constitute a quorum, unanimously appoint another member of the
board of directors to act at the meeting in the place of any absent or
disqualified member.
Section 10. The committees shall keep regular minutes of their proceedings
and report the same to the board of directors.
<PAGE>
10.
Section 11. Any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting if a written consent thereto is signed by all members of the board or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the board or committee.
Section 12. The directors may be paid their expenses of attendance at each
meeting of the board of directors and may be paid a fixed sum for attendance at
each meeting of the board of directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like reimbursement and compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders mailed to them at their
addresses appearing on the books of the corporation shall be deemed to be given
at the time when deposited in the United States mail.
<PAGE>
11.
Section 2. Whenever any notice is required to be given a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent of notice.
Attendance of a person at a meeting of stockholders or of directors shall
constitute a waiver of notice of such meeting except when the stockholder or
director attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors at its first meeting after each annual meeting of stockholders and
shall be a president, who shall be a director, and a vice president, a
secretary, a treasurer and such other officers and agents as the board desires
who shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the board or as
set forth in these by-laws. Any number of offices may be held by the same
person.
<PAGE>
12.
Section 2. The salaries of all officers of the corporation shall be fixed
by the board of directors.
Section 3. Any officer may be removed at any time by the board of directors
with or without cause. Any vacancy occurring in any office of the corporation by
death, resignation, removal or otherwise shall be filled by the board of
directors if the office is not discontinued.
*Section 4. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are carried into
effect. He shall execute on behalf of the corporation and may affix or cause the
seal to be affixed to all instruments requiring such execution except to the
extent the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation or as
provided herein.
Section 5. The vice presidents shall act under the direction of the
president and in the absence or disability of the president, in the order of
seniority spe-
- ----------
* Amended by board of directors 6/3/82 to read: "Unless the board of
directors shall elect a chairman as chief executive officer, the president
shall be the chief executive officer of the corporation...."
<PAGE>
13.
cified by the board, they shall perform the duties and exercise the powers of
the president. They shall perform such other duties and have such other powers
as the president or the board of directors may from time to time prescribe.
Section 6. The secretary shall act under the direction of the president.
Subject to the direction of the president he shall attend all meetings of the
board of directors and all meetings of the stockholders and record the
proceedings. He shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the president or the board of
directors. He shall keep in safe custody the seal of the corporation and cause
it to be affixed to any instrument requiring it.
Section 7. The treasurer shall act under the direction of the president.
Subject to the direction of the president he shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging
<PAGE>
14.
to the corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the corporation in such depositories as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the president or the board of directors, taking
proper vouchers for such disbursements, and shall render to the president and
the board of directors, at its regular meetings, or when the board of directors
so requires, an account of all his transactions as treasurer and of the
financial condition of the corporation. He may affix or cause to be affixed the
seal of the corporation to any instrument requiring it.
Section 8. On behalf of the corporation any officer may execute and affix
the corporate seal to documents necessary in the management of the affairs of
the corporation. Where two signatures are required, any two officers may execute
such documents.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
president or a
<PAGE>
15.
vice president and the treasurer or the secretary of the corporation, certifying
the number of shares owned by him in the corporation.
Section 2. The board of directors may direct a new certificate of stock to
be issued in place of any certificate theretofore issued by the corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the board of directors may, in its discretion as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 3. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it
<PAGE>
16.
shall be the duty of the corporation, if it is satisfied that all provisions of
the certificate of the incorporation and these by-laws regarding transfer of
shares and restrictions on such transfers have been complied with, to issue a
new certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 4. The corporation shall be entitled to recognize the person
registered on its books as the owner of shares to be the exclusive owner for all
purposes including voting and dividends, and the corporation shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
MISCELLANEOUS
Section 1. Dividends upon the shares of the capital stock of the
corporation may be declared and paid by the board of directors from the funds
legally available. Dividends may be paid in cash, in property,
<PAGE>
17.
or in shares of the capital stock of the corporation.
Section 2. Before the payment of any dividends there may be set aside, out
of any funds of the corporation available for dividends, such sum or sums as the
board of directors from time to time in its absolute discretion may think
proper, as a reserve or reserves to meet contingencies or for any other purpose
the directors shall think conducive to the interest of the corporation. The
board of directors may modify or abolish any such reserve.
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
Section 4. The fiscal year of the corporation shall be the calendar year
unless changed by the board of directors.
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a
<PAGE>
facsimile thereof to be impressed or affixed or in any other manner reproduced.
ARTICLE VIII
INDEMNIFICATION
Every person who was or is a party or is threatened to be made a party to
or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a director or officer of the
corporation or is or was serving at the request of the corporation or for its
benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest extent legally permissible under
and pursuant to any procedure specified in the General Corporation Law of the
State of Delaware from time to time against all expenses, liability and loss
(including attorneys' fees, judgments, fines and amounts paid or to be paid in
settlement) reasonably incurred or suffered by him in connection therewith. Such
right of indemnification
<PAGE>
19.
shall not be exclusive of any other right which such directors, officers or
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any by-law, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.
The board of directors may cause the corporation to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.
The board of directors may from time to time adopt further by-laws with
respect to indemnification and may amend these and such by-laws to provide at
all times the fullest indemnification permitted by the General Corporation Law
of the State of Delaware.
<PAGE>
20.
ARTICLE IX
AMENDMENTS
Section 1. The by-laws may be amended by a majority vote of all the stock
issued and outstanding and entitled to vote at any annual or special meeting of
the stockholders, provided notice of intention to amend shall have been
contained in the notice of the meeting.
Section 2. The board of directors by a majority vote of the whole board at
any meeting may amend these by-laws, including by-laws adopted by the
stockholders, but the stockholders may from time to time specify particular
provisions of the by-laws which shall not be amended by the board of directors.
Exhibit 99.13(a)
Powers of Attorney
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Joseph D. Sargent, whose
signature appears below, constitutes and appoints John M. Smith, Thomas R.
Hickey, Jr., Richard T. Potter, Jr. and Vickie Riccardo and each of them, his
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any registration statements and amendments to registration
statements for any and all separate accounts established by The Guardian
Insurance & Annuity Company, Inc. which are currently in existance or which may
be established in the future and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue hereof.
Dated July 29, 1994
/s/ Joseph D. Sargent
----------------------------
Joseph D. Sargent
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Arthur V. Ferrara, whose
signature appears below, constitutes and appoints John M. Smith, Thomas R.
Hickey, Jr., Richard T. Potter, Jr. and Vickie Riccardo and each of them, his
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any registration statements and amendments to registration
statements for any and all separate accounts established by The Guardian
Insurance & Annuity Company, Inc. which are currently in existance or which may
be established in the future and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue hereof.
Dated July 29, 1994
/s/ Arthur V. Ferrara
----------------------------
Arthur V. Ferrara
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Frank J. Jones, whose
signature appears below, constitutes and appoints John M. Smith, Thomas R.
Hickey, Jr., Richard T. Potter, Jr. and Vickie Riccardo and each of them, his
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any registration statements and amendments to registration
statements for any and all separate accounts established by The Guardian
Insurance & Annuity Company, Inc. which are currently in existance or which may
be established in the future and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue hereof.
Dated July 29, 1994
/s/ Frank J. Jones
----------------------------
Frank J. Jones
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Edward K. Kane, whose
signature appears below, constitutes and appoints John M. Smith, Thomas R.
Hickey, Jr., Richard T. Potter, Jr. and Vickie Riccardo and each of them, his
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any registration statements and amendments to registration
statements for any and all separate accounts established by The Guardian
Insurance & Annuity Company, Inc. which are currently in existance or which may
be established in the future and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue hereof.
Dated July 29, 1994
/s/ Edward K. Kane
----------------------------
Edward K. Kane
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John M. Smith, whose
signature appears below, constitutes and appoints John M. Smith, Thomas R.
Hickey, Jr., Richard T. Potter, Jr. and Vickie Riccardo and each of them, his
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any registration statements and amendments to registration
statements for any and all separate accounts established by The Guardian
Insurance & Annuity Company, Inc. which are currently in existance or which may
be established in the future and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue hereof.
Dated July 29, 1994
/s/ John M. Smith
----------------------------
John M. Smith
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Philip H. Dutter, whose
signature appears below, constitutes and appoints John M. Smith, Thomas R.
Hickey, Jr., Richard T. Potter, Jr. and Vickie Riccardo and each of them, his
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any registration statements and amendments to registration
statements for any and all separate accounts established by The Guardian
Insurance & Annuity Company, Inc. which are currently in existance or which may
be established in the future and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue hereof.
Dated July 29, 1994
/s/ Philip H. Dutter
----------------------------
Philip H. Dutter
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Leo R. Futia, whose
signature appears below, constitutes and appoints John M. Smith, Thomas R.
Hickey, Jr., Richard T. Potter, Jr. and Vickie Riccardo and each of them, his
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any registration statements and amendments to registration
statements for any and all separate accounts established by The Guardian
Insurance & Annuity Company, Inc. which are currently in existance or which may
be established in the future and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue hereof.
Dated July 29, 1994
/s/ Leo R. Futia
----------------------------
Leo R. Futia
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Peter L. Hutchings, whose
signature appears below, constitutes and appoints John M. Smith, Thomas R.
Hickey, Jr., Richard T. Potter, Jr. and Vickie Riccardo and each of them, his
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any registration statements and amendments to registration
statements for any and all separate accounts established by The Guardian
Insurance & Annuity Company, Inc. which are currently in existance or which may
be established in the future and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue hereof.
Dated July 29, 1994
/s/ Peter L. Hutchings
----------------------------
Peter L. Hutchings
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that William C. Warren, whose
signature appears below, constitutes and appoints John M. Smith, Thomas R.
Hickey, Jr., Richard T. Potter, Jr. and Vickie Riccardo and each of them, his
attorney-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any registration statements and amendments to registration
statements for any and all separate accounts established by The Guardian
Insurance & Annuity Company, Inc. which are currently in existance or which may
be established in the future and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue hereof.
Dated July 29, 1994
/s/ William C. Warren
----------------------------
William C. Warren
