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SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM N-8B-2
REGISTRATION STATEMENT OF UNIT INVESTMENT TRUST
WHICH ARE CURRENTLY ISSUING SECURITIES
Dated June 30, 1998
Pursuant to Section 8(b) of the Investment Company Act of 1940
VEL Account III of Allmerica Financial Life Insurance and Annuity Company
(Name of Unit Investment Trust)
440 Lincoln Street
Worcester MA 01653
(Address of Principal Office of Registrant)
Issuer of periodic payment plan certificates only for purposes of information
provided herein.
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I I. ORGANIZATION AND GENERAL INFORMATION
1. (a) FURNISH NAME OF THE TRUST AND THE INTERNAL REVENUE SERVICE
EMPLOYER IDENTIFICATION NUMBER.
The trust is the VEL Account III ("Separate Account") of
Allmerica Financial Life Insurance and Annuity Company. The
Separate Account is a separate investment account of Allmerica
Financial Life Insurance and Annuity Company (the "Company") and
has no employer identification number.
(b) FURNISH TITLE OF EACH CLASS OR SERIES OF SECURITIES ISSUED BY THE
TRUST.
The securities are single payment individual variable life
insurance Contracts (the "Contracts").
2. FURNISH NAME AND PRINCIPAL BUSINESS ADDRESS AND ZIP CODE AND THE
INTERNAL REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER OF EACH
DEPOSITOR OF THE TRUST.
Allmerica Financial Life Insurance and Annuity Company
440 Lincoln Street
Worcester, Massachusetts 01653
FEIN: 04-6145677.
3. FURNISH NAME AND PRINCIPAL BUSINESS ADDRESS AND ZIP CODE AND THE
INTERNAL REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER OF EACH
CUSTODIAN OR TRUSTEE OF THE TRUST INDICATING FOR WHICH CLASS OR SERIES
OF SECURITIES EACH CUSTODIAN OR TRUSTEE IS ACTING.
The Company will hold in its own custody all of the securities.
4. FURNISH NAME AND PRINCIPAL BUSINESS ADDRESS AND ZIP CODE AND THE
INTERNAL REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER OF EACH
PRINCIPAL UNDERWRITER CURRENTLY DISTRIBUTING SECURITIES OF THE TRUST.
Distribution of the Contracts has not yet commenced. When
distribution commences, the principal underwriter will be:
Allmerica Investments, Inc.
440 Lincoln Street
Worcester MA 01653
FEIN: 04-2448927.
5. FURNISH NAME OF STATE OR OTHER SOVEREIGN POWER, THE LAWS OF WHICH
GOVERN WITH RESPECT TO THE ORGANIZATION OF THE TRUST.
Delaware.
6. (a) FURNISH THE DATES OF EXECUTION AND TERMINATION OF
AGREEMENT CURRENTLY IN EFFECT UNDER THE TERMS OF WHICH THE TRUST
WAS ORGANIZED AND ISSUED OR PROPOSES TO ISSUE SECURITIES.
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The Separate Account was established under Delaware law pursuant
to a resolution of the Board of Directors of the Company on June
13, 1996. The resolution establishing the Separate Account will
continue until amended by the Board of Directors of the Company.
The Contracts will be issued pursuant to this resolution.
(b) FURNISH THE DATES OF EXECUTION AND TERMINATION OF ANY INDENTURE
OR AGREEMENT CURRENTLY IN EFFECT PURSUANT TO WHICH THE PROCEEDS
OF PAYMENTS ON SECURITIES ISSUED OR TO BE ISSUED BY THE TRUST ARE
HELD BY THE CUSTODIAN OR TRUSTEE.
None.
7. FURNISH IN CHRONOLOGICAL ORDER THE FOLLOWING INFORMATION WITH
RESPECT TO EACH CHANGE OF NAME OF THE TRUST SINCE JANUARY 1, 1930.
IF THE NAME HAS NEVER BEEN CHANGED, SO STATE.
The name of the Separate Account has never been changed.
8. STATE THE DATE ON WHICH THE FISCAL YEAR OF THE TRUST ENDS.
December 31.
MATERIAL LITIGATION
9. FURNISH A DESCRIPTION OF ANY PENDING LEGAL PROCEEDINGS, MATERIAL WITH
RESPECT TO THE SECURITY HOLDERS OF THE TRUST BY REASON OF THE NATURE
OF THE CLAIM OR THE AMOUNT THEREOF, TO WHICH THE TRUST, THE DEPOSITOR,
OR THE PRINCIPAL UNDERWRITER IS A PARTY OR OF WHICH THE ASSETS OF THE
TRUST ARE THE SUBJECT, INCLUDING THE SUBSTANCE OF THE CLAIMS INVOLVED
IN SUCH PROCEEDING AND THE TITLE OF THE PROCEEDING. FURNISH A SIMILAR
STATEMENT WITH RESPECT TO ANY PENDING ADMINISTRATIVE PROCEEDING
COMMENCED BY A GOVERNMENTAL AUTHORITY OR ANY SUCH PROCEEDING OR LEGAL
PROCEEDING KNOWN TO BE CONTEMPLATED BY A GOVERNMENTAL AUTHORITY.
INCLUDE ANY PROCEEDINGS WHICH, ALTHOUGH IMMATERIAL ITSELF, IS
REPRESENTATIVE OF, OR ONE OF, A GROUP WHICH IN THE AGGREGATE IS
MATERIAL.
There are no current or pending legal or administrative proceedings to
which the Separate Account, the Company, or Allmerica Investments Inc.
is a party and which are material with respect to the security holders
of the Separate Account.
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
GENERAL INFORMATION CONCERNING THE SECURITIES OF THE TRUST AND THE RIGHTS
OF HOLDERS.
10. FURNISH A BRIEF STATEMENT WITH RESPECT TO THE FOLLOWING MATTERS FOR
EACH CLASS OR SERIES OF SECURITIES ISSUED BY THE TRUST.
(a) WHETHER THE SECURITIES ARE OF THE REGISTERED OR BEARER TYPE.
The Contracts are variable life insurance policies, and as such
are "registered" in the name of the Contract Owner. Records
concerning the Contract Owner are maintained by or on behalf of
the Company.
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(b) WHETHER THE SECURITIES ARE OF THE CUMULATIVE OR DISTRIBUTIVE
TYPE.
The Contracts are of the cumulative type, providing for no
distribution of income, dividends or capital gains except in
connection with a voluntary surrender or partial withdrawal of
Contract value by a Contract Owner, or in connection with the
payment of death benefits.
(c) THE RIGHTS OF SECURITY HOLDERS WITH RESPECT TO WITHDRAWAL OR
REDEMPTION.
A Contract may be surrendered at any time, subject to the
possible imposition of a contingent deferred sales charge. See
Item 13(a) "Surrender Charge" and Item 17(a) "Surrender."
After the first Contract year, partial withdrawals in a minimum
amount of $1000 may be made from the Contract value at any time
upon written request filed at the Company's Principal Office. A
partial withdrawal will not be permitted if it would reduce the
Contract Value below $10,000. A transaction charge, which is the
smaller of 2% of the amount withdrawn or $25, will be assessed in
all cases. A partial withdrawal charge may also be deducted.
The partial withdrawal charge will not exceed the surrender
charge, and the outstanding surrender charge will be reduced by
the amount of the partial withdrawal charges. See Item 13(a)
"Charges on Partial Withdrawal" and Item 17(a) "Partial
Withdrawal."
(d) THE RIGHTS OF SECURITY HOLDERS WITH RESPECT TO CONVERSION,
TRANSFER, PARTIAL-REDEMPTION, AND SIMILAR MATTERS.
TRANSFER - The Contracts permit net premiums to be allocated
either to the Company's General Account or to the Sub-Accounts of
the Separate Account. Each Sub-Account invests exclusively in a
corresponding investment portfolio ("Underlying Fund") of the
Allmerica Investment Trust ("AIT"), managed by AFIMS; of the
Variable Insurance Products Fund ("VIP") or Variable Insurance
Products Fund II (VIP II), managed by Fidelity Management and
Research Company ("Fidelity Management"); of the T. Rowe Price
International Series, Inc. ("T. Rowe Price"), managed by Rowe
Price-Fleming International, Inc.; or of the Delaware group
Premium Fund, Inc. ("DGPF).
Subject to the consent of the Company, the Contract Owner may
transfer amounts among all of the Sub-Accounts and between the
Sub-Accounts and the General Account, subject to certain
restrictions.
The Contract Owner may apply for automatic transfers from the
Government Bond Sub-Account, or the Money Market Sub-Account to
one or more of the other Sub-Accounts. Automatic transfers may
be made at intervals of one, three, six or twelve months. Each
automatic transfer must be at least $100. If the Sub-Account
from which the automatic transfer is to be made is reduced to $0
(zero), the automatic transfer will cease. The Contract Owner
must then reapply for any future automatic transfers. The
Contract Owner may also apply for automatic account rebalancing,
in order to reallocate Contract Value among the Sub-Accounts at
intervals of one, three, six or twelve months.
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The first 12 transfers in a Contract year are free. Thereafter,
the Company may deduct a transfer charge (not to exceed $25)
from amounts transferred in that Contract year. The first
automatic transfer counts as one transfer toward the 12 free
transfers allowed in each Contract year. Each subsequent
automatic transfer is free and does not reduce the remaining
number of transfers that are free in a Contract year. Any
transfers made for a conversion privilege, Contract loan or
material change in investment policy will not count toward the
12 free transfers.
The transfer privilege is subject to the Company's consent. The
Company reserves the right to impose limits on transfers
including, but not limited to, the:
- Minimum amount that may be transferred;
- Minimum amount that may remain in a Sub-Account following a
transfer from that Sub-Account;
- Minimum period between transfers involving the Fixed
Account; and
- Maximum amounts that may be transferred from the Fixed
Account.
Transfers involving the Fixed Account are currently permitted
only if:
- There has been at least a ninety (90) day period since the
last transfer from the Fixed Account; and
- The amount transferred from the Fixed Account in each
transfer does not exceed the lesser of $100,000 or 25% of
the Contract Value.
These rules are subject to change by the Company.
CONVERSION PRIVILEGE - During the first 24 Contract months after
the date of issue, subject to certain restrictions, the Contract
Owner may convert the Contract to a flexible premium fixed
Contract by transferring all Contract Value in the Sub-Accounts
to the General Account and by simultaneously changing the
allocation of future premiums to the General Account. A similar
conversion privilege is in effect for 24 Contract months after
the date of an increase in face amount, under which the Contract
Owner may convert by transferring all or part of Contract value
in the Sub-Accounts to the General Account and by simultaneously
changing the allocation of all or part of future premiums to the
General Account.
FREE LOOK PRIVILEGE - The Contract provides for a free look
period under the Right to Cancel provision. The Contract Owner
has the right to examine and cancel the Contract by returning it
to the Company or one of its representatives on or before the
tenth day (or such later date as may be required by state law)
after the Contract owner receives the Contract.
If the Contract provides for a full refund under its "Right to
Cancel" provision (as may be required by state law), the
refund will be the entire Payment. If the Contract does not
provide for a full refund (as provided by state law), the
Contract Owner will receive:
- Amounts allocated to the Fixed Account; PLUS
- The Contract Value in the Variable Account: PLUS
- All fees, charges and taxes which have been imposed.
The Contract Owner may make surrenders and partial withdrawals as
described in
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Items 10(c), 13(a) and 17(a).
(e) IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES
THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR AGREEMENTS
WITH RESPECT TO LAPSES OR DEFAULTS BY SECURITY HOLDERS IN MAKING
PRINCIPAL PAYMENTS, AND WITH RESPECT TO REINSTATEMENT.
CONTRACT TERMINATION AND REINSTATEMENT - The Contract will
terminate if on a Monthly Processing Date the Surrender Value is
less than $0 (zero.) If this situation occurs, the Contract will
be in default. The Contract Owner will then have a grace period
of 62 days, measured from the date of default, to make a Payment
sufficient to prevent termination. On the date of default, the
Company will send a notice to the Contract owner and to any
assignee of record. The notice will state the Payment due and the
date by which it must be paid. Failure to make a sufficient
Payment within the grace period will result in the Contract
terminating without value.
A terminated Contract may be reinstated within three years of the
date of default and before the Final Payment Date. The
reinstatement takes effect on the Monthly Processing Date
following the date the Contract Owner submits to the Company:
- Written application for reinstatement;
- Evidence of Insurability showing that the Insured is
insurable according to the Company's current underwriting
rules;
- A Payment that is large enough to cover the cost of all
Contract charges that were due and unpaid during the grace
period and that is large enough to keep the Contract in
force for three months; and
- A Payment or reinstatement of any loan against the Contract
that existed at the end of the grace period.
CONTRACT VALUE ON REINSTATEMENT - The Contract Value on the date
of reinstatement is:
- The Payment made to reinstate the Contract and interest
earned from the date the Payment was received at our
Principal Office; PLUS
- The Contract Value less any Outstanding Loan on the date of
default (not to exceed the surrender charge on the date of
reinstatement); MINUS
- The Monthly Deductions due on the date of reinstatement.
(f) THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR AGREEMENTS
WITH RESPECT TO VOTING RIGHTS, TOGETHER WITH THE NAMES OF ANY
PERSONS OTHER THAN SECURITY HOLDERS GIVEN THE RIGHT TO EXERCISE
VOTING RIGHTS PERTAINING TO THE TRUST'S SECURITIES OR THE
UNDERLYING SECURITIES AND THE RELATIONSHIP OF SUCH PERSONS TO THE
TRUST.
To the extent required by law, the Company will vote shares held
by each Sub-Account in accordance with instructions received from
the Contract Owners with Contract value in such Sub-Account.
Each person having a voting interest will be provided with proxy
materials together with an appropriate form with which to give
voting instructions to the
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Company. Shares held in each Sub-Account for which no timely
instructions are received will be voted in proportion to the
instructions received from all persons with an interest in the
Sub-Account furnishing instructions to the Company with respect
to the Underlying Funds. The Company will also vote shares held
in the Separate Account that it owns and which are not
attributable to the Contracts in the same proportion.
The number of votes which a Contract Owner may cast will be
determined by the Company as of the record date established for
the Underlying Fund. The number of shares held in each
Sub-Account deemed attributable to each Contract Owner is
determined by dividing Contract value in the Sub-Account, if any,
by the net asset value of one share in the corresponding
Underlying Fund in which the assets of the Sub-Account are
invested. Fractional votes will be counted.
If the 1940 Act or any rules thereunder should be amended or if
the present interpretation of the 1940 Act or such rules should
change, and as a result the Company determines that it is
permitted to vote shares of the Fund in its own right, whether or
not such shares are attributable to the Contracts, the Company
reserves the right to do so. The Company may, when required by
state insurance regulatory authorities, disregard voting
instructions if the instructions require that the shares be
voted so as (1) to cause a change in the subclassification or
investment objective of one or more of the Underlying Funds
or (2) to approve or disapprove an investment advisory contract
for the Underlying Funds. In addition the Company may
disregard voting instructions calling for a change in the
investment Contracts, any investment adviser or principal
underwriter of any Underlying Fund which may be initiated by
Contract Owners or its respective Trustees, provided the
Company's disapproval of the change is reasonable and, in the
case of a change in investment Contracts or investment adviser,
based on a good faith determination that such change would be
contrary to state law or otherwise inappropriate in light of the
Underlying Fund's objectives and purposes. In the event the
Company does disregard voting instructions, a summary of that
action and the reasons for that action will be included in the
next periodic report to Contract Owners.
(g) WHETHER SECURITY HOLDERS MUST BE GIVEN NOTICE OF ANY CHANGES IN:
(1) THE COMPOSITION OF THE ASSETS OF THE TRUST.
The Company reserves the right, subject to applicable law, to
make additions to, deletions from, or substitutions for the
shares that are held in the Sub-Accounts of the Separate Account
or that the Sub-Accounts of the Separate Account may purchase.
If the shares of an Underlying Fund are no longer available for
investment or if in the Company's judgment further investment in
any Underlying Fund should become inappropriate in view of the
purposes of the Separate Account or the affected Sub-Account, the
Company may redeem the shares of that Underlying Fund and
substitute shares of another registered open-end management
company. The Company will not substitute any shares attributable
to a Contract interest in a Sub-Account without notice and prior
approval of the SEC and state insurance authorities, to the
extent required by the 1940 Act or other applicable law.
The Company also reserves the right to establish additional
Sub-Accounts of the Separate Account, each of which would invest
in shares corresponding to a new Portfolio or Fund or in shares
of another investment company having a specified
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investment objective. Subject to applicable law and any required
Commission approval, the Company may, in its sole discretion,
establish new Sub-Accounts or eliminate one or more Sub-Accounts
if marketing needs, tax considerations or investment conditions
warrant. Any new Sub-Accounts may be made available to existing
Contract Owners on a basis to be determined by the Company.
If any of these substitutions or changes are made, the Company
may by appropriate endorsement change the Contract to reflect the
substitution or change and will notify Contract Owners of all
such changes. If the Company deems it to be in the best interest
of Contract Owners, and subject to any approvals that may be
required under applicable law, the Separate Account or any
Sub-Account(s) may be operated as a management company under the
1940 Act, may be deregistered under that Act if registration is
no longer required, or may be combined with other Sub-Accounts or
other separate accounts of the Company.
(2) THE TERMS AND CONDITIONS OF THE SECURITIES ISSUED BY THE
TRUST.
No change in the terms and conditions of the Contracts that
affect the Contract Owner's rights will be made without
notice to Contract Owner to the extent required by law.
(3) THE PROVISIONS OF ANY INDENTURE OR AGREEMENT OF THE TRUST.
No notice to or consent from Contract Owners is required for
any change in the Company's resolution establishing the
Separate Account.
(4) THE IDENTITY OF THE DEPOSITOR, TRUSTEE OR CUSTODIAN.
The depositor of the Separate Account cannot be changed.
The Separate Account has no Trustees.
Notice to Contract Owners need not be given for the
custodian to be changed.
(h) WHETHER THE CONSENT OF SECURITY HOLDERS IS REQUIRED IN ORDER
FOR ACTION TO BE TAKEN CONCERNING ANY CHANGE IN:
(1) THE COMPOSITION OF THE ASSETS OF THE TRUST.
The Contracts do not require consent of the Contract Owners
when changing the underlying securities of the Separate
Account, except as may be required by currently applicable
law or regulation.
(2) THE TERMS AND CONDITIONS OF THE SECURITIES ISSUED BY THE
TRUST.
Except as appropriate to comply with federal or state law or
regulation the terms and conditions of a Contract cannot be
changed without the consent of the Contract Owner.
(3) THE PROVISIONS OF ANY INDENTURE OR AGREEMENT OF THE TRUST.
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No consent is required.
(4) THE IDENTITY OF THE DEPOSITOR, TRUSTEE OR CUSTODIAN.
The depositor of the Separate Account cannot be changed.
The Separate Account has no Trustees.
The consent of Contract Owners holders is not required to
change the custodian.
(I) ANY OTHER PRINCIPAL FEATURE OF THE SECURITIES ISSUED BY THE TRUST
OR ANY OTHER PRINCIPAL RIGHT, PRIVILEGE OR OBLIGATION NOT COVERED
BY SUBDIVISIONS (a) TO (g) OR BY ANY OTHER ITEM IN THIS FORM.
(1) PREMIUM PAYMENTS - SEE Items 14 and 15.
(2) NET DEATH BENEFIT - As long as the Contract remains in
force, the Company will, upon due proof of the Insured's
death, pay the Net Death Benefit of the Contract to the
named beneficiary. The Company will normally pay the Net
Death Benefit within seven days of receiving due proof of
the Insured's death, but the Company may delay payments
under certain circumstances. The Net Death Benefit may be
received by the beneficiary in cash or under one or more of
the payment options set forth in the Contract.
Before the Final Payment Date, the Net Death Benefit is:
- The Death Benefit: minus
- Any outstanding loan, rider charges and Monthly
Deductions due and unpaid through the Contract month in
which the Insured dies, as well as any partial
withdrawals and surrender charges.
After the Final Payment Date, the Net Death benefit is:
- The Contract Value; minus
- Any outstanding loan.
In most states, the Company will compute the Net Death
Benefit on the date the Company receive due proof of the
Insured's death.
The Death Benefit is the greater of the:
- Face Amount; or
- Guideline Minimum Sum Insured, which is computed based
on federal tax regulations to ensure that the Contact
qualifies as a life insurance contract and that the
insurance proceeds will be excluded from the gross
income of the beneficiary.
GUARANTEED DEATH BENEFIT ENDORSEMENT - If at the time of
issue the Contract Owner has made purchase payments equal to
100% of the Guideline Single Premium, a Guaranteed Death
Benefit Endorsement will
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be added to the Contract at no additional charge. If the
Guaranteed Death Benefit Endorsement is in effect on the
Final Payment Date, a guaranteed Net Death Benefit will be
provided thereafter unless the Guaranteed Death Benefit
Endorsement is terminated, as described below. The
guaranteed Net Death Benefit will be:
- the greater of (a) the Face Amount as of the Final
Payment Date or (b) the Contract Value as of the date
due proof of death is received by the Company,
- reduced by the Outstanding Loan, if any, through the
contract month in which the Insured dies.
The Guaranteed Death Benefit Rider will terminate and may
not be reinstated on the first to occur of the following:
- Foreclosure of the Outstanding Loan, if any; or
- A request for a partial withdrawal or preferred loan
after the Final Payment Date; or
- Upon the Contract Owner's written request.
(3) CALCULATION OF CASH VALUE - SEE Items 44(a), 44(c), and
46(a).
(4) LOAN PROVISIONS. SEE Item 21.
(5) PAYMENT OPTIONS - Upon written request, the surrender value
or part of the Net Death Benefit may be placed under one or
more of the payment options offered by the Company. If the
Contract Owner does not make an election, the Company will
pay the benefits in a single sum. A certificate will be
provided to the payee describing the payment option
selected.
(6) OPTIONAL INSURANCE BENEFIT - Subject to certain
requirements, one or more of the following additional
insurance benefits may be added by rider: Living Benefits
Rider and Exchange Rider. The cost of these optional
insurance benefits will be deducted from Contract value as
part of the monthly deduction.
INFORMATION CONCERNING THE SECURITIES UNDERLYING THE TRUST'S SECURITIES
11. DESCRIBE BRIEFLY THE KIND OR TYPE OF SECURITIES COMPRISING THE UNIT OF
SPECIFIED SECURITIES IN WHICH SECURITY HOLDERS HAVE AN INTEREST.
The Contract permits payments to be allocated either to the Company's
General Account or to the Separate Account. The Separate Account is
currently comprised of eighteen investment divisions
("Sub-Accounts"). Each Sub-Account invests exclusively in a
corresponding portfolio of AIT, Fidelity VIP, Fidelity VIP II, DGPF,
or T. Rowe Price.
AIT. AIT is an open-end, diversified management investment company
registered with the SEC under the 1940 Act. Fourteen different
investment portfolios of the Trust are available under the Policies,
each issuing a series of shares: the Select Aggressive Growth Fund,
Select Capital Appreciation Fund, Select Value Opportunity Fund,
Select
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Emerging Markets Fund, Select Strategic Growth Fund, Select
International Equity Fund, Select Growth Fund, Growth Fund, Equity
Index Fund, Select Growth and Income Fund, Investment Grade Income
Fund, Select Income Fund, Government Bond Fund and Money Market Fund.
AFIMS serves as investment manager of the Trust. AFIMS has
entered into agreements with other investment managers
("Sub-Advisers"), who manage the investments of the funds.
FIDELITY VIP AND VIP II. Fidelity VIP and VIP II, managed by FMR &
Research Company ("FMR"), are open-end, diversified, management
investment companies organized as Massachusetts business trusts and
registered with the Commission under the 1940 Act. Four of the
investment portfolios of VIP are available under the Policies:
Fidelity VIP Growth Portfolio, Fidelity VIP Equity-Income Portfolio,
Fidelity VIP Overseas, and Fidelity VIP High Income Portfolio.
T. ROWE PRICE. T. Rowe Price, managed by Rowe Price-Fleming
International, Inc. ("Price-Fleming"), is an open-end, diversified,
management investment company organized as a Maryland corporation in
1994 and registered with the Commission under the 1940 Act. One of
its investment portfolios is available under the Policies: the T. Rowe
Price International Stock Portfolio.
DGPF. DGPF is an open-end, diversified management investment company
registered with the SEC under the 1940 Act. DGPF was established to
provide a vehicle for the investment of assets of various separate
accounts supporting variable insurance policies. One investment
portfolio ("Series") is available under the Contract: the
International Equity Series. The investment adviser for the
International Equity Series is Delaware International Advisers Ltd.
("Delaware International").
A summary of investment objectives of the funds is set forth below.
SELECT AGGRESSIVE GROWTH FUND -- The Select Aggressive Growth Fund of
the Trust seeks above-average capital appreciation by investing
primarily in common stocks of companies which are believed to have
significant potential for capital appreciation.
SELECT CAPITAL APPRECIATION FUND -- The Select Capital Appreciation
Fund of the Trust seeks long-term growth of capital in a manner
consistent with the preservation of capital. Realization of income is
not a significant investment consideration and any income realized on
the Fund's investments will be incidental to its primary objective.
The Fund invests primarily in common stock of industries and companies
which are believed to be experiencing favorable demand for their
products and services, and which operate in a favorable competitive
environment and regulatory climate.
SELECT VALUE OPPORTUNITY FUND -- The Select Value Opportunity Fund
of the Trust seeks long-term growth by investing primarily in a
diversified portfolio of common stocks of small and mid-size companies
whose securities at the time of purchase are considered by the
Sub-Adviser to be undervalued.
SELECT EMERGING MARKETS FUND - The Select Emerging Markets fund of the
Trust seeks long-term growth of capital by investing in the world's
emerging markets. The Fund may invest in high yielding, lower-rated
fixed-income securities (commonly referred to as "Junk bonds") which
are subject to greater risk than investments in higher-rated
securities.
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T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO -- The T. Rowe Price
International Stock Portfolio seeks long-term growth of capital
through investments primarily in common stocks of established,
non-U.S. companies.
FIDELITY VIP OVERSEAS PORTFOLIO -- The Overseas Portfolio of Fidelity
VIP seeks long-term growth of capital primarily through investments in
foreign securities and provides a means for aggressive investors to
diversify their own portfolios by participating in companies and
economies outside of the United States.
SELECT INTERNATIONAL EQUITY FUND -- The Select International Equity
Fund of the Trust seeks maximum long-term total return (capital
appreciation and income) primarily by investing in common stocks of
established non-U.S. companies.
DGPF INTERNATIONAL EQUITY SERIES -- The International Equity Series
of DGPF seeks long-term growth without undue risk to principal by
investing primarily in equity securities of foreign issuers providing
the potential for capital appreciation and income.
FIDELITY VIP GROWTH PORTFOLIO -- The Growth Portfolio of Fidelity VIP
seeks to achieve capital appreciation. The Portfolio normally
purchases common stocks, although its investments are not restricted
to any one type of security. Capital appreciation also may be found
in other types of securities, including bonds and preferred stocks.
SELECT GROWTH FUND -- The Select Growth Fund of the Trust seeks to
achieve long-term growth of capital by investing in a diversified
portfolio consisting primarily of common stocks selected on the basis
of their long-term growth potential.
SELECT STRATEGIC GROWTH FUND -- seeks long-term growth of capital by
investing primarily in common stocks of established companies.
GROWTH FUND -- The Growth Fund of the Trust is invested in common
stocks and securities convertible into common stocks that are believed
to represent significant underlying value in relation to current
market prices. The objective of the Growth Fund is to achieve
long-term growth of capital. Realization of current investment
income, if any, is incidental to this objective.
EQUITY INDEX FUND -- The Equity Index Fund of the Trust seeks to
provide investment results that correspond to the aggregate price and
yield performance of a representative selection of United States
publicly traded common stocks. The Equity Index Fund seeks to achieve
its objective by attempting to replicate the aggregate price and yield
performance of the Standard & Poor's Composite Index of 500 Stocks.
FIDELITY VIP EQUITY-INCOME PORTFOLIO -- The Equity-Income Portfolio
of Fidelity VIP seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities, the
Portfolio also will consider the potential for capital appreciation.
The Portfolio's goal is to achieve a yield which exceeds the composite
yield on the securities comprising the S & P 500. The Portfolio may
invest in high yielding, lower-rated fixed-income securities (commonly
referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. See "Risks of Lower-Rated
Debt Securities" in the Fidelity VIP prospectus.
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SELECT GROWTH AND INCOME FUND -- The Select Growth and Income Fund
seeks a combination of long-term growth of capital and current income.
The Fund will invest primarily in dividend-paying common stocks and
securities convertible into common stocks.
FIDELITY VIP II ASSET MANAGER PORTFOLIO -- The Asset Manager Portfolio
of Fidelity VIP II seeks high total return with reduced risk over the
long term by allocating its assets among domestic and foreign stocks,
bonds and short-term fixed-income instruments.
FIDELITY VIP HIGH INCOME PORTFOLIO -- The High Income Portfolio of
Fidelity VIP seeks to obtain a high level of current income by
investing primarily in high-yielding, lower-rated fixed-income
securities (commonly referred to as "junk bonds"), while also
considering growth of capital. These securities often are considered
to be speculative, and involve greater risk of default or price
changes than securities assigned a high quality rating.
INVESTMENT GRADE INCOME FUND -- The Investment Grade Income Fund of
the Trust is invested in a diversified portfolio of fixed income
securities with the objective of seeking as high a level of total
return (including both income and capital appreciation) as is
consistent with prudent investment management.
SELECT INCOME FUND - The Select Income Fund of the Trust seeks a high
level of current income. The Fund will invest primarily in investment
grade, fixed-income securities.
GOVERNMENT BOND FUND -- The Government Bond Fund of the Trust has
the investment objectives of seeking high income, preservation of
capital and maintenance of liquidity, primarily through investments in
debt instruments issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, and in related options, futures and
repurchase agreements.
MONEY MARKET FUND -- The Money Market Fund of the Trust is invested in
a diversified portfolio of high-quality, short-term money market
instruments with the objective of obtaining maximum current income
consistent with the preservation of capital and liquidity.
12. IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES AND
IF ANY UNDERLYING SECURITIES WERE ISSUED BY ANOTHER INVESTMENT
COMPANY, FURNISH INFORMATION FOR EACH SUCH COMPANY:
(a) NAME OF COMPANY.
The Sub-Accounts of the Separate Account invest in corresponding
Underlying Funds of AIT (managed by Allmerica Financial
Investment Management Services, Inc.); VIP (managed by Fidelity
Management); VIP II (managed by Fidelity Management); T. Rowe
Price (managed by Price-Fleming) and DGPF (managed by Delaware
Management).
(b) NAME AND PRINCIPAL ADDRESS OF DEPOSITOR.
First Allmerica Financial Life Insurance Company (formerly State
Mutual Life Assurance Company of America, until October 16,
1995), 440 Lincoln Street, Worcester, MA 01653 is the depositor
of AIT.
Fidelity Investments, 82 Devonshire Street, Boston, MA is the
depositor of VIP and
- 13 -
<PAGE>
VIP II.
T. Rowe Price Associates, Inc. 100 East Pratt Street, Baltimore,
Maryland, 21202, is the depositor of T. Rowe Price.
Delaware Management Company, Inc., One Commerce Square,
Philadelphia, PA 19103 is the depositor of DGPF.
(c) NAME AND PRINCIPAL BUSINESS ADDRESS OF TRUSTEE OR CUSTODIAN:
Chase Manhattan Bank, N.A., Avenue of the Americas, 39th Floor,
New York, New York is the Custodian of the assets of AIT.
Shawmut Bank of Boston, N.A., One Federal Street, Boston, MA is
the Custodian of the assets of VIP and VIP II.
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY
11245 is the custodian of the assets of DGPF.
(d) NAME AND PRINCIPAL BUSINESS ADDRESS OF PRINCIPAL-UNDERWRITER
The principal underwriter of AIT is Allmerica Investments, Inc.,
440 Lincoln Street, Worcester, Massachusetts, 01653.
The principal underwriter of VIP and VIP II is Fidelity
Distributors Corporation, 82 Devonshire Street, Boston, MA.
The principal underwriter of T. Rowe Price is T. Rowe Price
Investment Services, Inc. 100 East Pratt Street, Baltimore,
Maryland, 21202.
The principal underwriter of DGPF is Delaware Distributors, L.
P., 818 Market Street, Philadelphia, PA 19103.
(e) THE PERIOD DURING WHICH THE SECURITIES OF SUCH COMPANY HAVE BEEN
THE UNDERLYING SECURITIES.
Shares of the Underlying Funds will be purchased by the Separate
Account only after the effective date of the Separate Account's
registration statement under the Securities Act of 1933.
INFORMATION CONCERNING LOADS, FEES, CHARGES AND EXPENSES
13. (a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO EACH LOAD, FEE,
EXPENSE OR CHARGE TO WHICH (1) PRINCIPAL PAYMENTS; (2) UNDERLYING
SECURITIES; (3) DISTRIBUTIONS; (4) CUMULATED OR REINVESTED
DISTRIBUTIONS OR INCOME; AND (5) REDEEMED OR LIQUIDATED ASSETS OF
THE TRUST'S SECURITIES ARE SUBJECT:
(A) THE NATURE OF SUCH LOAD, FEE, EXPENSE OR CHARGE;
(B) THE AMOUNT THEREOF:
(C) THE NAME OF THE PERSON TO WHOM SUCH AMOUNTS ARE PAID AND HIS
- 14 -
<PAGE>
RELATIONSHIP TO THE TRUST:
(D) THE NATURE OF THE SERVICES PERFORMED BY SUCH PERSON IN
CONSIDERATION FOR SUCH LOAD, FEE, EXPENSE OR CHARGE.
(1) UNDER THE CONTRACTS
The following charges will apply to the Contracts under the
circumstances described. Some of these charges apply
throughout the Contract's duration.
MONTHLY DEDUCTIONS - On the Monthly Processing Date, the
Company will deduct an amount to cover charges and expenses
incurred in connection with the Contract. This Monthly
Deduction will be deducted by subtracting values from the
Fixed Account accumulation and/or canceling Units from each
applicable Sub-Account, in the ratio that the Contract
Value in the Account or Sub-Account bears to the Contract
Value. The amount of the Monthly Deduction will vary from
month to month. The Monthly Deduction is comprised of the
following charges:
- Maintenance Fee: The Company will make a deduction
of $2.50 from any Contract with less than $100 in
Contract Value. This charge is to reimburse the
Company for expenses related to issuance and
maintenance of the Contract. The Company does not
intend to profit from this charge.
- Administration Charge: The Company imposes a
monthly charge at an annual rate of 0.20% of the
Contract Value. This charge is to reimburse the
Company for administrative expenses incurred in the
administration of the Contract. It is not expected
to be a source of profit.
- Monthly Insurance Protection Charge: Immediately
after the Contract is issued, the Death Benefit will
be greater than the initial Payment. While the
Contract is in force, the Death Benefit will
generally be greater than the Contract Value. To
enable the Company to pay this excess of the Death
Benefit over the Contract Value, a monthly cost of
insurance charge is deducted. This charge varies
depending on the type of Contract and the
Underwriting Class. In no event will the current
deduction for the cost of insurance exceed the
guaranteed maximum insurance protection rates set
forth in the Contract. These guaranteed rates
are based on the Commissioners 1980 Standard
Ordinary Mortality Tables, Tobacco user or
Non-Tobacco user (Mortality Table B for unisex
Contracts and Mortality Table D for second-to-die
Contracts) and the Insured's sex and age. The Tables
the Company uses for this purpose set forth
different mortality estimates for males and females
and for tobacco users and non-tobacco users. Any
change in the insurance protection rates will apply
to all Insured of the same age, sex and Underwriting
Class whose Contracts have been in force for the
same period.
- 15 -
<PAGE>
The Underwriting Class of an Insured will affect the
insurance protection rate. The Company currently place
Insureds into standard Underwriting Classes and
non-standard Underwriting Classes. The Underwriting
Classes are also divided into two categories: tobacco
user and non-tobacco user. The Company will place
Insureds under the age of 18 at the Date of Issue in a
standard or non-standard Underwriting Class. The
Company will then classify the Insured as a non-tobacco
user.
- Distribution Expense: During the first ten Contract
years, the Company make a monthly deduction to
compensate for a portion of the sales expense which are
incurred by the Company with respect to the Contracts.
This charge is equal to 0.90% of the Contract Value.
- Federal & State Payment Tax Charge: During the first
Contract year, the Company make a monthly deduction
equal to an annual rate of 1.50% of Contract Value to
partially compensate the Company for the increase in
federal tax liability from the application of
Section 848 of the Internal Revenue Code and to offset
a portion of the average premium tax the Company is
expected to pay to various state and local
jurisdictions. The Company does not intend to profit
from the premium tax portion of this charge.
DAILY DEDUCTIONS - The Company assess each Sub-Account with
a charge for mortality and expense risks the Company
assumes. Fund expenses are also reflected in the Variable
Account.
- Mortality and Expense Risk Charge: The Company imposes
a daily charge at a current annual rate of 0.90% of the
average daily net asset value of each Sub-Account.
This charge compensates the Company for assuming
mortality and expense risks for variable interests in
the Contracts.
The mortality risk the Company assumes is that Insureds
may live for a shorter time than anticipated. If this
happens, the Company will pay more Net Death Benefits
than anticipated. The expense risk the Company assumes
is that the expenses incurred in issuing and
administering the Contracts will exceed the revenue
generated by the administration charges in the
Contracts. If the charge for mortality and expense
risks is not sufficient to cover mortality experience
and expenses, the Company will absorb the losses. If
the charge turns out to be higher than mortality and
expense risk experience, the difference will be a
profit to the Company.
- Fund Expenses - The value of the Units of the
Sub-Accounts will reflect the investment advisory fee
and other expenses of the Funds whose shares the
Sub-Accounts purchase.
No charges are currently made against the Sub-Accounts for
federal or
- 16 -
<PAGE>
state income taxes. Should income taxes be imposed, the
Company may make deductions from the Sub-Accounts to pay the
taxes.
SURRENDER CHARGE - The Contract's contingent surrender
charge is a deferred sales charge and an unrecovered payment
tax charge. The deferred sales charge compensates the
Company for distribution expenses, including commissions to
the Company's representatives, advertising and the printing
of prospectuses and sales literature. The unrecovered
payment tax charge is designed to reimburse the Company for
the unrecovered federal and state taxes the Company has
paid.
<TABLE>
<CAPTION>
Contract 1 2 3 4 5 6 7 8 9 10+
Year*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Surrender 10.00% 9.25% 8.50% 7.75% 7.00% 6.25% 4.75% 3.25% 1.50% 0%
Charge
- ----------------------------------------------------------------------------
</TABLE>
The surrender charge applies for ten Contract years. The
Company impose the surrender charge only if, during its
duration, the Contract Owner requests a full surrender or a
partial withdrawal in excess of the free withdrawal amount.
CHARGES ON PARTIAL WITHDRAWAL - Partial withdrawals in a
minimum amount of $500 may be made from the Contract value.
A transaction charge which is the smaller of 2% of the
amount withdrawn or $25 will be assessed in all cases.
A partial withdrawal charge may also be imposed upon a
partial withdrawal. For each partial withdrawal the
Contract Owner may withdraw an amount equal to 10% of the
Contract value on the date the written withdrawal request is
received by the Company less the total of any prior
withdrawals in that Contract year which were not subject to
the partial withdrawal charge, without incurring a partial
withdrawal charge. Any partial withdrawal in excess of this
amount ("excess withdrawal") will be subject to the partial
withdrawal charge. The partial withdrawal charge is equal
to 5% of the excess withdrawal up to the amount of the
surrender charge(s) on the date of withdrawal. There will
be no partial withdrawal charge if there is no applicable
surrender charge on the date of withdrawal.
The Contract's outstanding surrender charge will be reduced
by the amount of the partial withdrawal charge deducted.
The partial withdrawal charge deducted will decrease
existing surrender charges in the following order:
- first, the surrender charge for the most recent
increase in face amount;
- second, the surrender charges for the next most recent
increases successively; and
- last, the surrender charge for the initial face amount.
- 17 -
<PAGE>
(2) UNDERLYING SECURITIES.
INVESTMENT ADVISORY SERVICES TO AIT:
The overall responsibility for the supervision of the
affairs of the Trust vests in the Trustees. The Trustees
have entered into a Management Agreement with Allmerica
Financial Investment Management Services, Inc. ("AFIMS"), an
indirect wholly-owned subsidiary of First Allmerica, to
handle the day-to-day affairs of the Trust. AFIMS, subject
to review by the Trustees, is responsible for the general
management of the Funds. AFIMS also performs certain
administrative and management services for the Trust,
furnishes to the Trust all necessary office space,
facilities, and equipment, and pays the compensation, if
any, of officers and Trustees who are affiliated with AFIMS.
Other than the expenses specifically assumed by AFIMS under
the Management Agreement, all expenses incurred in the
operation of the Trust are borne by it, including fees and
expenses associated with the registration and qualification
of the Trust's shares under the Securities Act of 1933,
other fees payable to the Commission, independent public
accountant, legal and custodian fees, association membership
dues, taxes, interest, insurance premiums, brokerage
commission, fees and expenses of the Trustees who are not
affiliated with AFIMS, expenses for proxies, prospectuses,
and reports to shareholders, and other expenses.
Pursuant to the Management Agreement with the Trust, AFIMS
has entered into agreements ("Sub-Adviser Agreements") with
other investment advisers ("Sub-Advisers") under which each
Sub-Adviser manages the investments of one or more of the
Funds. Under the Sub-Adviser Agreement, the Sub-Adviser is
authorized to engage in portfolio transactions on behalf of
the applicable Fund, subject to such general or specific
instructions as may be given by the Trustees. The terms of
a Sub-Adviser Agreement cannot be materially changed without
the approval of a majority in interest of the shareholders
of the affected Fund.
Allmerica Asset Management, Inc., an indirect wholly owned
subsidiary of First Allmerica, is the Sub-Adviser for the
Equity Index Fund, the Investment Grade Income Fund, the
Government Bond Fund, and the Money Market Fund. The
Sub-Advisers for the other funds are independent. The
Manager selects the Sub-Advisers in consultation with
RogersCasey Consulting, Inc., a leading pension consulting
firm. The Manager selected each independent Sub-Adviser
using strict objective and qualitative criteria, with
special emphasis on the Sub-Adviser's record in managing
similar portfolios. A committee that includes members
affiliated with Allmerica Financial monitors and evaluates
on-going performance of the independent Sub-Advisers.
AFIMS's fee, computed for each Fund, will be paid from the
assets of such Fund. Pursuant to the Management Agreement
with the Trust, AFIMS has
- 18 -
<PAGE>
entered into agreements "Sub-Adviser Agreements") with other
investment advisers ("Sub-Advisers") under which each
Sub-Adviser manages the investments of one or more of the
Funds. Under the Sub-Adviser Agreement, the Sub-Adviser is
authorized to engage in portfolio transactions on behalf of
the applicable Fund, subject to such general or specific
instructions as may be given by the Trustees. The terms of
a Sub-Adviser Agreement cannot be materially changed without
the approval of a majority in interest of the shareholders
of the affected Fund. AFIMS is solely responsible for
the payment of all fees for investment management services
to the Sub-Advisers.
For providing its services under the Management Agreement,
AFIMS will receive a fee, computed daily at an annual rate
based on the average daily net asset value of each Fund as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Select Aggressive Growth Fund First $100 million 1.00%
Next $150 million 0.90%
Next $250 million 0.85%
Over $500 million 0.85%
Select Capital Appreciation Fund First $100 million 1.00%
Next $150 million 0.90%
Next $250 million 0.85%
Over $500 million 0.85%
Select Value Opportunity Fund First $100 million 1.00%
Next $150 million 0.85%
Next $250 million 0.80%
Next $250 million 0.75%
Over $750 million 0.70%
Select Emerging Markets Fund * 1.35%
Select International Equity Fund First $100 million 1.00%
Next $150 million 0.90%
Next $250 million 0.85%
Over $500 million 0.85%
Select Growth Fund First $250 million 0.85%
Next $250 million 0.80%
Next $250 million 0.75%
Over $750 million 0.70%
Select Strategic Growth Fund * 0.85%
Growth Fund First $100 million 0.60%
Next $150 million 0.60%
Next $250 million 0.40%
Over $500 million 0.35%
Equity Index Fund First $50 million 0.35%
Next $200 million 0.30%
Over $250 million 0.25%
Select Growth and Income Fund First $100 million 0.75%
Next $150 million 0.70%
Next $250 million 0.65%
Over $500 million 0.65%
- 19 -
<PAGE>
<CAPTION>
Investment Grade Income Fund First $50 million 0.50%
Next $50 million 0.45%
Over $100 million 0.40%
Select Income Fund First $50 million 0.60%
Next $50 million 0.55%
Over $100 million 0.45%
Government Bond Fund * 0.50%
Money Market Fund First $50 million 0.35%
Next $200 million 0.25%
Over $250 million 0.20%
</TABLE>
* Fee does not vary with level of Funds
* The Manager voluntarily has agreed until further notice to waive its
management fee in the event that expenses of the Select Emerging Markets Fund
exceed 2.00% of the Fund's average daily net assets. The amount of such
waiver will be limited to the net amount of management fees earned by the
Manager from the Fund after subtracting the fees paid by the Manager to
Schroder Capital Management International Inc. for sub-advisory services.
INVESTMENT ADVISORY SERVICES TO FIDELITY VIP AND VIP II.
For managing investments and business affairs, each
Portfolio pays a monthly fee to Fidelity Management. The
prospectuses of Fidelity VIP and Fidelity VIP II contain
additional information concerning the Portfolios, including
information about additional expenses paid by the
Portfolios, and should be read in conjunction with this
Prospectus.
The Fidelity VIP High Income Portfolio pays a monthly fee
to Fidelity Management at an annual fee rate made up of
the sum of two components:
1. A group fee rate based on the monthly average net
assets of all the mutual funds advised by Fidelity
Management. On an annual basis this rate cannot rise
above 0.37%, and drops as total assets in all these
funds rise.
2. An individual fund fee rate of 0.45% of the Fidelity
VIP High Income Portfolio's average net assets
throughout the month. One-twelfth of the annual
management fee rate is applied to net assets averaged
over the most recent month, resulting in a dollar
amount which is the management fee for that month.
The fee rates of the Fidelity VIP Equity-Income, Fidelity
VIP Growth, Fidelity VIP II Asset Manager and Fidelity VIP
Overseas Portfolios each are made of two components:
1. A group fee rate based on the monthly average net
assets of all of the mutual funds advised by Fidelity
Management. On an annual basis, this rate cannot rise
above 0.52%, and drops as total assets in all these
mutual funds rise.
2. An individual Portfolio fee rate of 0.20% for the
Equity-Income Portfolio, 0.30% for the Growth
Portfolio, 0.25% for the Asset Manager Portfolio and
0.45% for the Overseas Portfolio.
- 20 -
<PAGE>
One-twelfth of the sum of these two rates is applied to the
respective Portfolio's net assets averaged over the most
recent month, giving a dollar amount which is the fee for
that month. Thus, the Fidelity VIP High Income Portfolio
may have a fee as high as 0.82% of its average net assets.
The Fidelity VIP Equity-Income Portfolio may have a fee as
high as 0.72% of its average net assets. The Fidelity VIP
Growth Portfolio may have a fee as high as 0.82% of its
average net assets. The Asset Manager Portfolio may have
a fee as high as 0.77% of its average net assets. The
Overseas Portfolio may have a fee as high as 0.97% of its
average net assets. The actual fee rate may be less
depending on the total assets in the funds advised by
Fidelity Management.
INVESTMENT ADVISORY SERVICES TO T. ROWE PRICE
The Investment Adviser for the International Stock Portfolio
is Rowe Price-Fleming International, Inc. ("Price-Fleming").
To cover investment management and operating expenses, the
T. Rowe Price International Stock Portfolio pays
Price-Fleming a single, all-inclusive fee of 1.05% of its
average daily net assets.
INVESTMENT ADVISORY SERVICES TO DGPF
Each Series of DGPF pays an investment adviser an annual fee
for managing the portfolios and making the investment
decisions for the Series. The investment adviser for the
International Equity Series is Delaware International
Advisers Ltd. ("Delaware International"). The annual fee
paid by the International Equity Series to Delaware
International is equal to 0.75% of the average daily net
assets of the Series.
(3) DISTRIBUTIONS
No distributions are made to Certificate Owners except
voluntary surrenders or partial withdrawals, and upon
payment of death proceeds. Surrenders and partial
withdrawals may be subject to the surrender and partial
withdrawal charges described in 13(a)(1), above. Also SEE
Item 21.
(4) CUMULATED OR REINVESTED DISTRIBUTIONS OR INCOME
Distributions from the Underlying Funds are reinvested by
Sub-Accounts of the VEL III Account in additional shares
of the respective Underlying Fund, without charge, at net
asset value.
(5) REDEEMED OR LIQUIDATED ASSETS OF THE TRUST'S SECURITIES
See "Surrender Charge" and "Charges on Partial Withdrawals"
under Item 13(a)(1) above.
(b) FOR EACH INSTALLMENT PAYMENT TYPE OF PERIODIC PAYMENT PLAN
CERTIFICATE OF THE TRUST, FURNISH INFORMATION WITH RESPECT TO
SALES LOAD AND OTHER DEDUCTIONS FROM PRINCIPAL PAYMENTS.
None. No deductions are made from payments prior to allocation
to the Company's General Account or the Separate Account. All
charges and
- 21 -
<PAGE>
deductions are made from Contract value, net assets of the
Separate Account, or upon certain surrenders, partial
withdrawals, and decreases in face amount.
(c) STATE (1) THE AMOUNT OF SALES LOAD AS A PERCENTAGE OF THE NET
AMOUNT INVESTED, AND (2) THE AMOUNT OF TOTAL DEDUCTIONS AS A
PERCENTAGE OF THE NET AMOUNT INVESTED FOR EACH TYPE OF SECURITY
ISSUED BY THE TRUST.
A contingent deferred sales load is calculated at issuance of the
Contract and for increases in face amounts, but is deducted if at
all, only upon surrender or decreases in face amount within 10
Contract years or less, depending upon issue age. Also, a
transaction charge and partial withdrawal charge may be deducted
on partial withdrawals.
(d) EXPLAIN FULLY THE REASONS FOR ANY DIFFERENCE IN THE PRICE AT
WHICH SECURITIES ARE OFFERED FOR ANY CLASS OF TRANSACTIONS TO ANY
CLASS OR GROUP OF OFFICERS, INCLUDING OFFICERS, DIRECTORS OR
EMPLOYEES OF THE DEPOSITION TRUSTEE, CUSTODIAN OR PRINCIPAL
UNDERWRITER.
Not Applicable.
(e) FURNISH A BRIEF DESCRIPTION OF ANY LOADS, FEES, EXPENSES OR
CHARGES NOT COVERED IN ITEM 13(a) WHICH MAY BE PAID BY SECURITY
HOLDERS IN CONNECTION WITH THE TRUST OR ITS SECURITIES.
The Company reserves the right to impose a charge for changing
the allocation of any monthly deductions, or for a projection of
values. No such charges are currently imposed and any such
charge is guaranteed not to exceed $25.00.
(f) STATE WHETHER THE DEPOSITOR, PRINCIPAL UNDERWRITER, CUSTODIAN OR
TRUSTEE, OR ANY AFFILIATED PERSON OF THE FOREGOING, MAY RECEIVE
PROFITS OR OTHER BENEFITS NOT INCLUDED IN ANSWER TO ITEM 13(a) OR
13(d) THROUGH THE SALE OR PURCHASE OF THE TRUST SECURITIES OR
INTERESTS IN SUCH SECURITIES, OR UNDERLYING SECURITIES OR
INTERESTS IN UNDERLYING SECURITIES, AND DESCRIBE FULLY THE NATURE
AND EXTENT OF SUCH PROFITS OR BENEFITS.
The Company receives fees from the investment advisers or other
service providers of certain Underlying Funds in return for
providing certain services to Policyowners. Currently, the
Company receives service fees with respect to the Fidelity VIP
Overseas Portfolio, Fidelity VIP Equity-Income Portfolio,
Fidelity VIP Growth Portfolio, Fidelity VIP High Income
Portfolio, and Fidelity VIP II Asset Manager Portfolio, at an
annual rate of 0.10% of the aggregate net asset value,
respectively, of the shares of such Underlying Funds held by the
Separate Account. With respect to the T. Rowe Price International
Stock Portfolio, the Company receives service fees at an annual
rate of 0.15% per annum of the aggregate net asset value of
shares held by the Separate Account. The Company may in the
future render services for which it will receive compensation
from the investment advisers or other service providers of other
Underlying Funds.
Neither the Company, AFIMS, nor any affiliated person of the
foregoing may receive any profit or any other benefit from
payments under the Contract or the investments held in the
Separate Account not included in the answer to Item 13(a) or (d)
through the sale of purchase of the Contract or shares of the
Underlying
- 22 -
<PAGE>
Funds, except that (1) the Company may receive a profit to the
extent that the cost of insurance built into the Contract exceeds
the actual cost of insurance needed to pay benefits; (2)
favorable mortality or expense experience may cause the insurance
provided to be profitable to the Company; (3) the Company will
compensate certain others, including the Company's agents, for
services rendered in connection with the distribution of the
Contract, as described in Item 38, but such payments will be made
from the Company's General Account; and (4) the investment
advisers of the respective Underlying Funds will receive an
advisory fee, as described in Item 13(a)(2).
(g) STATE THE PERCENTAGE THAT THE AGGREGATE ANNUAL CHARGES AND
DEDUCTIONS FOR MAINTENANCE AND OTHER EXPENSES OF THE TRUST BEAR
TO THE DIVIDEND AND INTEREST INCOME FROM THE TRUST PROPERTY
DURING THE PERIOD COVERED BY THE FINANCIAL STATEMENTS FILED
HEREWITH.
Not Applicable. The Separate Account has no assets as of the
date of this filing.
(h) OTHER
The Company will recoup commission and other sales expense
through a combination of surrender and partial withdrawal
charges, and the investment earnings in excess of the interest
credited on amounts allocated to the General Account.
The deduction of the charge for mortality and expense risks
assumed by the Company under the Contracts is within the range of
industry practice for comparable single premium variable life
insurance contracts. If the charge for mortality and expense
risks is not sufficient to cover actual mortality experience and
expenses, the Company will absorb the losses. If expenses are
less than the amounts provided, the difference will be a profit
to the Company. To the extent this charge results in a profit to
the Company, such profit will be available for the payment of the
Company's general expenses, including distribution and sales
expense.
INFORMATION CONCERNING THE OPERATIONS OF THE TRUST
14. DESCRIBE THE PROCEDURE WITH RESPECT TO THE APPLICATIONS (IF ANY) AND
THE ISSUANCE AND AUTHENTICATION OF THE TRUST'S SECURITIES, AND STATE
THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR AGREEMENT
PERTAINING THERETO.
Individuals wishing to purchase a Contract must submit a completed
application to an authorized registered agent or to the Company's
Principal Office. The Company generally will issue a Contract only on
the lives of Insureds age 89 and under, who supply evidence of
insurability satisfactory to the Company. Acceptance is subject to
the Company's underwriting rules, and the Company reserves the right
to reject an application for any reason.
Within limits, applicants may choose the amount of the initial premium
desired. Currently, the minimum initial premium for which a Contract
may be issued is $25,000.
The Contract will be effective on the date of issue only after all
outstanding delivery requirements are satisfied and the Company has
received the initial premium. The date of
- 23 -
<PAGE>
issue is the date used to determine all future periodic transactions
under the Contract, e.g., Contract months and Contract years. Within
limits, the Company may establish an earlier date of issue.
If the Contract Owner makes the initial payment with the application,
and there has been no material misrepresentation on the application,
fixed, conditional insurance of up to the amount applied for but not
to exceed $500,000, will start as of the date of the application and
will generally continue for a maximum of 90 days. If a medical
examination of a person to be Insured is required by the Company's
underwriting rules, coverage on that person will not start until
completion of the examination. In no event will a death benefit be
provided under the conditional insurance agreement if death is by
suicide.
If the application is approved, the date of issue will be the date the
terms of the conditional insurance agreement are met. If the
Applicant does not wish to make any payment until the Contract is
issued, the Company will require payment upon delivery of the
Contract in order to place the Contract in force upon delivery of the
Contract. If the Contract is not issued, the Company will issue an
Annuity Contract to the Contract Owner. If the Contract Owner elects
not to receive an Annuity Contract, the premium will be returned to
the Applicant, WITHOUT INTEREST.
15. DESCRIBE THE PROCEDURE WITH RESPECT TO THE RECEIPT OF PAYMENTS FROM
PURCHASERS OF THE TRUST'S SECURITIES AND THE HANDLING OF THE PROCEEDS
THEREOF, AND STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT PERTAINING THERETO.
PREMIUM PAYMENTS - Payments are payable only to the Company, and may
be mailed to the Principal Office or paid through an authorized agent
of the Company. All payments are credited to the Separate Account or
General Account as of date of receipt at the Principal Office.
The Contract requires a single payment of at least $25,000 on or
before the Date of Issue. The initial payment is used to determine
the face amount of the Policy, by treating the initial payment as
equal to 100% of the Guideline Single premium. The Contract owner may
indicate the desired Face Amount on the application. If the Face
Amount specified exceeds 100% of the Guideline Single Premium for the
Payment Amount, the Application will be amended and a Contract with a
higher Face Amount will be issued. If the Face Amount specified is
less than 80% of the Guideline Single Premium for the Payment amount,
the application will be amended and a Contract with a lower Face
Amount will be issued.
Additional Payments of at least $10,000 may be made as long as the
total Payments do not exceed the maximum payment specified in the
Contract. The total of all premiums paid can never exceed the
then-current maximum premium limitation determined by Internal Revenue
Service rules. Where total payments would exceed the current maximum
payment limits, the Company will only accept that part of a Payment
which will make total payments equal the maximum. The Company will
return any part of a payment that is greater than that amount.
However, the Company will accept a payment needed to prevent Contract
lapse during a contract year.
16. DESCRIBE THE PROCEDURE WITH RESPECT TO THE ACQUISITION OF UNDERLYING
SECURITIES AND THE DISPOSITION THEREOF, AND STATE THE SUBSTANCE OF THE
PROVISIONS OF ANY INDENTURE OR AGREEMENT PERTAINING THERETO.
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<PAGE>
Each Sub-Account of the Separate Account invests its assets in shares
of a corresponding Underlying Fund. Purchases and redemptions of such
shares are made at net asset value, with no deduction for sales load.
Amounts of net purchase payments allocated to a Sub-Account, transfers
to that Sub-Account, and reserve adjustment transfers, if any, will be
netted as of each valuation date against amounts withdrawn from the
Sub-Account in connection with Contract surrenders, partial
withdrawals, transfers, and death benefits, as well as the asset
charge and amounts paid to the Company in lieu of taxes, if any. A
net purchase or sale of Underlying Fund shares will be made for a
Sub-Account at net asset value. All income, dividends and realized
gain distributions of a Underlying Fund will be reinvested in shares
of the respective Underlying Fund at net asset value. Valuation dates
currently occur on each day on which the New York Stock Exchange is
open for trading, and on such other days where there is a sufficient
degree of trading in a Underlying Fund's securities such that the
current net asset value of the Sub-Accounts may be materially
affected.
17. (a) DESCRIBE THE PROCEDURE WITH RESPECT TO WITHDRAWAL OR REDEMPTION
BY SECURITY HOLDERS.
SURRENDER - A Contract Owner may at any time surrender the
Contract and receive its surrender value (i.e., Contract value,
less Debt and applicable surrender charges) upon written request
signed by the Contract Owner and return of the Contract to the
Principal Office. The surrender value will be based on the
Contract value as of the valuation date on which the request and
Contract are received at the Principal Office. A surrender
charge may be deducted when a Contract is surrendered. See Item
13(a), "Surrender."
The surrender value is normally payable within seven days
following the Company's receipt of the surrender request. The
Company reserves the right to defer surrenders and partial
withdrawals of amounts funded by each Sub-Account during any
period when (1) trading on the New York Stock Exchange is
restricted as determined by the SEC or such Exchange is closed
for other than weekends and holidays, (2) the SEC has by order
permitted such suspension, or (3) an emergency, as determined by
the SEC, exists such that disposal of portfolio securities or
valuation of assets of each Sub-Account is not reasonably
practicable.
The right is reserved by the Company to defer surrenders and
partial withdrawal of amounts allocated to the Company's General
Account for a period not to exceed six months.
PARTIAL WITHDRAWAL - At any time after the first Contract year, a
Contract Owner may redeem a portion of the Contract value of his
or her Contract, subject to the limits stated below, upon written
request signed by the Contract Owner and filed at the Principal
Office. Where allocations have been made to more than one
account, a percentage of the partial withdrawal may be allocated
to each such account. The written request must indicate the
dollar amount the Contract Owner wishes to receive and the
account from which such amount is to be redeemed.
The Contract Owner may allocate the amount withdrawn among the
Sub-Accounts and the General Account. If no allocation
instructions are provided, the Company will make a pro rata
allocation.
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<PAGE>
A partial withdrawal from a Sub-Account will result in
cancellation of a number of Units equivalent in value to the
amount withdrawn, computed as of the valuation date that the
request is received at the Company's Principal Office. The
amount withdrawn equals the amount requested by the Contract
Owner plus any applicable charges. The Company will normally pay
the amount of the partial withdrawal within seven days, but may
delay payment under certain circumstances described above under
"Surrender." Each partial withdrawal must be in a minimum amount
of $1000, or the entire amount in a Sub-Account, if less. The
Company will not allow a partial withdrawal if it would reduce
the Contract Value below $10,000. The Face amount is reduced
proportionately based on the ratios of the amount of the partial
withdrawal and charges to the Contract Value on the date of
withdrawal. See Item 13(a), "Partial Withdrawals."
(b) FURNISH THE NAMES OF ANY PERSONS WHO MAY REDEEM OR REPURCHASE, OR
ARE REQUIRED TO REDEEM OR REPURCHASE, THE TRUST'S SECURITIES OR
UNDERLYING SECURITIES FROM SECURITY HOLDERS, AND THE SUBSTANCE OF
THE PROVISIONS OF ANY INDENTURE OR AGREEMENT PERTAINING THERETO.
The Company is required to process all surrender and partial
withdrawal requests as described in Item 17(a). The Underlying
Funds will redeem their shares upon the Company's request in
accordance with the Investment Company Act of 1940. Redeemed
shares may later be reissued.
(c) INDICATE WHETHER REPURCHASED OR REDEEMED SECURITIES WILL BE
CANCELED OR MAY BE RESOLD.
If a Contract is surrendered, the Contract will be canceled and
may not be reissued. If a Contract terminates due to lapse or
foreclosure, the Contract may be reinstated as provided below.
TERMINATION - The Contract will terminate if on a monthly
processing date the surrender value is zero or less. If this
situation occurs, the Contract will be in default. The Contract
Owner will then have a grace period of 62 days, measured from the
date of default, to make a payment sufficient to prevent
termination. On the date of default, the Company will send a
notice to the Contract Owner and to any assignee on record. The
notice will state the amount of premium due and the date on which
it is due. Failure to make a sufficient payment within the grace
period will result in termination of the Contract without any
Contract value. If the Insured dies during the grace period,
the Net Death Benefit will still be payable, but any overdue
charges will be deducted from the Net Death Benefit.
REINSTATEMENT - If the Contract has not been surrendered and the
Insured is alive, the terminated Contract may be reinstated
anytime within three years after the date of default by
submitting the following to the Company: (1) a written
application for reinstatement; (2) evidence of insurability
showing the Insured is insurable according to the Company's
underwriting rules; (3) a payment that is large enough to cover
the cost of all contract charges that were due and unpaid during
the grace period and to keep the Contact in force for three
months; and (4) a payment or reinstatement of any loan against
the Contract that existed at the end of the grace period.
SURRENDER CHARGE - For the purpose of measuring the surrender
charge period, the
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<PAGE>
contract will be reinstated as of the date of default. The
surrender charge on the date of reinstatement is the surrender
charge which would have been in effect on the date of default.
CONTRACT VALUE ON REINSTATEMENT - The Contract value on the date
of reinstatement is:
- the payment made to reinstate the Contract increased by
interest from the date the payment was received at the
Company's Principal Office; plus
- the Contract value less any outstanding loan on the date of
default (to the extent it does not exceed the surrender
charge on the date of reinstatement); minus
- the Monthly Deductions due on the date of reinstatement.
The Contract Owner may reinstate any outstanding loan.
18. (a) DESCRIBE THE PROCEDURE WITH RESPECT TO THE RECEIPT, CUSTODY AND
DISPOSITION OF THE INCOME AND OTHER DISTRIBUTABLE FUNDS OF THE
TRUST AND STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE
OR AGREEMENT PERTAINING THERETO.
Distributions with respect to the shares of a Underlying Fund
held by a Sub-Account are reinvested in shares of that Underlying
Fund at net asset value. Such shares are added to the assets of
the respective Sub-Account.
(b) DESCRIBE THE PROCEDURE, IF ANY, WITH RESPECT TO THE REINVESTMENT
OF DISTRIBUTIONS TO SECURITY HOLDERS AND STATE THE SUBSTANCE OF
THE PROVISIONS OF ANY INDENTURE OR AGREEMENT PERTAINING THERETO.
No distributions are made to Contract Owners other than in
connection with a death benefit or with a Contract
Owner-initiated loan, partial withdrawal or surrender of the
Contract. See Items 13(a) and 21.
(c) IF ANY RESERVES OR SPECIAL FUNDS ARE CREATED OUT OF INCOME OR
PRINCIPAL, STATE WITH RESPECT TO EACH SUCH RESERVE OR FUND THE
PURPOSE AND ULTIMATE DISPOSITION THEREOF, AND DESCRIBE THE MANNER
OF HANDLING SAME.
Payments placed in the Separate Account constitute certain
reserves for benefits under the Contract.
(d) SUBMIT A SCHEDULE SHOWING THE PERIODIC AND SPECIAL DISTRIBUTIONS
WHICH HAVE BEEN MADE TO SECURITY HOLDERS DURING THE THREE YEARS
COVERED BY THE FINANCIAL STATEMENTS FILED HEREWITH. STATE FOR
EACH SUCH DISTRIBUTION THE AGGREGATE AMOUNT AND AMOUNT PER SHARE.
IF DISTRIBUTIONS FROM SOURCES OTHER THAN CURRENT INCOME HAVE BEEN
MADE, IDENTIFY EACH SUCH OTHER SOURCE AND INDICATE WHETHER SUCH
DISTRIBUTION REPRESENTS THE RETURN OF PRINCIPAL PAYMENTS TO
SECURITY HOLDERS. IF PAYMENTS OTHER THAN CASH WERE MADE,
DESCRIBE THE NATURE THEREOF, THE ACCOUNT CHARGED AND THE BASIS OF
DETERMINING THE AMOUNT OF SUCH CHARGE.
Not Applicable. The Separate Account has not begun business
operations.
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<PAGE>
19. DESCRIBE THE PROCEDURE WITH RESPECT TO THE KEEPING OF RECORDS AND
ACCOUNTS OF THE TRUST, THE MAKING OF REPORTS AND THE FURNISHING OF
INFORMATION TO SECURITY HOLDERS, AND THE SUBSTANCE OF THE PROVISIONS
OF ANY INDENTURE OR AGREEMENT PERTAINING THERETO.
The Company will maintain the records and books of the Separate
Account. The Company will also maintain records for each Contract,
including the number and value of units of each Sub-Account credited
to each Contract and the value of accumulations in the General
Account.
Issuance and transfer of Underlying Fund shares will be by book entry
only. Stock certificates will not be issued to the Company or
Separate Account. Shares ordered from the Underlying Funds will be
recorded in an appropriate title for the Separate Account or
appropriate Sub-Account.
Contract Owners will be sent promptly statements of significant
transactions such as premium payments, changes in specified face
amount, transfers among Sub-Accounts and the General Account, partial
withdrawals, increases in loan amount by the Contractowner, loan
repayments, lapse, termination for any reason, and reinstatement. An
annual statement will also be sent to the Contract Owner within 30
days after a Contract year. The annual statement will summarize all
of the above transactions and deductions of charges during the
Contract year. It will also set forth the status of the death
benefit, Contract value, surrender value, amounts in the Sub-Accounts
and General Account, and any Contract loan(s).
In addition, the Contract Owner will be sent semi-annual reports
containing financial statements and other information for the Separate
Account and the Underlying Funds, as required by the 1940 Act.
20. STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR AGREEMENT
CONCERNING THE TRUST WITH RESPECT TO THE FOLLOWING:
(a) AMENDMENTS TO SUCH INDENTURE OR AGREEMENT.
Not Applicable.
(b) THE EXTENSION OR TERMINATION OF SUCH INDENTURE OR AGREEMENT.
Not Applicable.
(c) THE REMOVAL OR RESIGNATION OF THE TRUSTEE OR CUSTODIAN, OR THE
FAILURE OF THE TRUSTEE OR CUSTODIAN TO PERFORM ITS DUTIES,
OBLIGATIONS AND FUNCTIONS.
The Company will act as the custodian of assets of the Separate
Account. The Company may appoint another custodian. In such
event, the custodial agreement will provide that the assets owned
by the Separate Account shall be delivered directly by the
Company to a successor custodian.
(d) THE APPOINTMENT OF A SUCCESSOR TRUSTEE AND THE PROCEDURE IF A
SUCCESSOR TRUSTEE IS NOT APPOINTED.
Not Applicable.
(e) THE REMOVAL OR RESIGNATION OF THE DEPOSITOR, OR THE FAILURE OF
THE DEPOSITOR TO
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<PAGE>
PERFORM ITS DUTIES, OBLIGATIONS AND FUNCTIONS.
There is no such provision in an indenture or agreement. Under
Delaware law, the Company may not abrogate its obligation under
the Contracts.
(f) THE APPOINTMENT OF A SUCCESSOR DEPOSITOR AND THE PROCEDURE IF A
SUCCESSOR DEPOSITOR IS NOT APPOINTED.
There is no such provision in any indenture or agreement.
21. (a) STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT WITH RESPECT TO LOANS TO SECURITY HOLDERS.
Loans may be obtained by request to the Company on the sole
security of the Contract. The total amount which may be borrowed
is the loan value. The Loan Value is 90% of an amount is equal
to the Contract value less surrender charges. The minimum loan
amount is $1,000. The maximum loan amount is the Loan Value
minus any outstanding loans.
A Contract loan may be allocated among the General Account and
one or more Sub-Accounts. If the Contract Owner does not make an
allocation, the Company will allocate the loan among the accounts
in the same proportion that the Contract value in the General
Account (other than value reflecting an outstanding loan), and
the Contract value in each Sub-Account bear to the total Contract
value (other than value reflecting an outstanding loan) on the
date the Company receives the loan request. Contract value in
each Sub-Account equal to the Contract loan allocated to such
Sub-Account will be transferred to the General Account, and the
number of Units equal to Contract value so transferred will be
canceled. Amounts transferred to or held in the General Account
to secure Debt will earn interest at a rate equal to an effective
annual yield of at least 4.0%.
PREFERRED LOAN OPTION - Any portion of the Outstanding Loan that
represents earnings in the Contract, a loan from an exchanged
life insurance policy that was as carried over to the Contract,
or the gain in the exchanged life insurance policy that was
carried over to the Contract may be treated as a preferred loan.
The guaranteed annual interest rate credited to the Contract
Value securing a preferred loan will be at least 5.5%. The
available percentage of the gain carried over from an exchanged
policy less any policy loan carried over which will be eligible
for preferred loan treatment is as follows:
<TABLE>
<CAPTION>
Beginning of Contract Year Unloaned Gain Available
-------------------------- -----------------------
<S> <C>
1 0%
2 10%
3 20%
4 30%
5 40%
6 50%
7 60%
8 70%
9 80%
- --------------------------------------------------------------------------
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<PAGE>
10 90%
11 100%
- --------------------------------------------------------------------------
</TABLE>
LOAN INTEREST CHARGED - Interest accrues daily and is payable in
arrears at the annual rate of 6.0%. Interest is payable at the
end of each Contract year or on a pro rata basis for such shorter
period as the loan may exist. Interest not paid when due will be
added to the loan principal and bear interest at the same rate.
REPAYMENT OF LOANS - Loans may be repaid at any time prior to the
lapse of the Contract. Upon repayment of Debt, the portion of
the Contract value that is in the General Account securing the
loan will be transferred to the various Sub-Accounts in
accordance with the Contract Owner's instructions. If the
Contract Owner does not make a repayment allocation, the Company
will allocate Contract value in accordance with the
Contractowner's most recent payment allocation instructions;
provided, however, that loan repayments allocated to the Separate
Account cannot exceed Contract value previously transferred from
the Separate Account to secure the outstanding loan.
FORECLOSURE - If Debt exceeds the surrender value of the
Contract, the Contract will terminate. A notice of such pending
termination will be mailed to the last known address of the
Contract Owner and any assignee. If the excess Debt is not paid
within 62 days after this notice is mailed, the Contract will
terminate with no value. A Contract may be reinstated following
loan foreclosure.
(b) FURNISH A BRIEF DESCRIPTION OF ANY PROCEDURE OR ARRANGEMENT BY
WHICH LOANS ARE MADE AVAILABLE TO SECURITY HOLDERS BY THE
DEPOSITOR, PRINCIPAL UNDERWRITER, TRUSTEE OR CUSTODIAN, OR ANY
AFFILIATED PERSON OF THE FOREGOING.
See item 21(a), above. No other loans are made, except under the
terms of life insurance Contracts which may be issued by the
depositor or affiliated insurance companies.
(c) IF SUCH LOANS ARE MADE, FURNISH THE AGGREGATE AMOUNT OF LOANS
OUTSTANDING AT THE END OF THE LAST FISCAL YEAR, THE AMOUNT OF
INTEREST COLLECTED DURING THE LAST FISCAL YEAR ALLOCATED TO THE
DEPOSITOR, PRINCIPAL UNDERWRITER, TRUSTEE OR CUSTODIAN OR
AFFILIATED PERSON OF THE FOREGOING, AGGREGATE AMOUNT OF LOANS IN
DEFAULT AT THE END OF THE LAST FISCAL YEAR COVERED BY FINANCIAL
STATEMENTS FILED HEREWITH.
Not Applicable.
22. STATE THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR AGREEMENT
WITH RESPECT TO LIMITATIONS ON THE LIABILITIES OF THE DEPOSITOR,
TRUSTEE OR CUSTODIAN, OR ANY OTHER PARTY TO SUCH INDENTURE OR
AGREEMENT.
The Contracts provide that the Company shall not be charged with
notice of any assignment of the Contract unless it is in writing and
filed at the Company's Principal Office. The Company assumes no
liability for the validity of any assignment.
2323. DESCRIBE ANY BONDING ARRANGEMENT FOR OFFICERS, DIRECTORS, PARTNERS OR
EMPLOYEES OF THE DEPOSITOR OR PRINCIPAL UNDERWRITER OF THE TRUST,
INCLUDING THE AMOUNT OF COVERAGE AND THE TYPE OF BOND.
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<PAGE>
The Company and Allmerica Investments, Inc. are named Insureds under a
blanket bond in the amount of $20 million, issued by Lloyds of London.
The bond covers officers, directors, and employees of the Company and
Allmerica Investments, Inc., all of whom are employees of First
Allmerica.
AIT maintains a fidelity bond pursuant to Rule 17(g) under the 1940
Act, in the amount of $2 million, issued by Lloyds of London. The
bond covers directors and officers of AIT, who may also be director or
officers of the depositor and principle underwriter, and employees of
First Allmerica who are "access persons" of AIT.
24. STATE THE SUBSTANCE OF ANY OTHER MATERIAL PROVISIONS OF ANY INDENTURE
OR AGREEMENT CONCERNING THE TRUST OR ITS SECURITIES AND A DESCRIPTION
OF ANY OTHER MATERIAL FUNCTIONS OR DUTIES OF THE DEPOSITOR, TRUSTEE OR
CUSTODIAN NOT STATED IN ITEM 10 OR ITEMS 14 TO 23 INCLUSIVE.
PARTICIPATION AGREEMENT. The Company and Separate Account has entered
into Participation Agreements with the Underlying Funds, which define
the terms under which the Sub-Accounts of Separate Account invest in
the Underlying Funds.
CONTRACT OWNER - The Contract Owner is the Insured unless another
Contract Owner has been named in the application for the Contract.
The Contract Owner is generally entitled to exercise all rights under
a Contract while the Insured is alive, subject to the consent of any
irrevocable beneficiary (the consent of a revocable beneficiary is not
required). The consent of the Insured is required whenever the face
amount of insurance is increased.
BENEFICIARY - The beneficiary is the person or persons to whom the
insurance proceeds are payable upon the Insured's death. Unless
otherwise stated in the Contract, the beneficiary has no rights in the
Contract before the death of the Insured. While the Insured is alive,
the Contract Owner may change any beneficiary unless the Contract
Owner has declared a beneficiary to be irrevocable. If no beneficiary
is alive when the Insured dies, the Contract Owner (or the Contract
Owner's estate) will be the beneficiary. If more than one beneficiary
is alive when the Insured dies, they will be paid in equal shares,
unless the Contract Owner has chosen otherwise. Where there is more
than one beneficiary, the interest of a beneficiary who dies before
Insured will pass to surviving beneficiaries proportionally.
INCONTESTABILITY - The Company will not contest the validity of a
Contract after it has been in force during the Insured's lifetime for
two years from the date of issue.
SUICIDE - The Net Death Benefit will not be paid if the Insured
commits suicide, generally within two years from the date of issue.
Instead, the Company will pay the beneficiary an amount equal to all
payments paid for the Contract, without interest, less any
outstanding Debt and less any partial withdrawals.
AGE AND SEX - If the Insured's age or sex as stated in the application
for a Contract is not correct, benefits under a Contract will be
adjusted to reflect the correct age and sex. The adjustment will be
based upon the ratio of the Maximum Payment for the Contract to the
Maximum payment for the Contract issued for the correct age or sex.
The benefit will be that which the most recent cost of insurance
charge would have purchased for the correct age and sex. In no event
will the death benefit be reduced to less than the Guideline Minimum
Sum Insured. In the case of a Contract issued on a unisex basis, this
provision
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<PAGE>
(as it relates to misstatement of sex) does not apply.
ASSIGNMENT - The Contract Owner may assign a Contract as collateral or
make an absolute assignment of the Contract. All rights under the
Contract will be transferred to the extent of the assignee's interest.
When recorded, the assignment will take effect as of the date the
written request was signed. The Company is not bound by an assignment
or release thereof, unless it is in writing and is recorded at the
Company's Principal Office. Any rights created by the assignment will
be subject to any payments made or actions taken by the Company before
the assignment is recorded. The Company is not responsible for the
validity of any assignment or release.
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
ORGANIZATION AND OPERATIONS OF DEPOSITOR
25. STATE THE FORM OF ORGANIZATION OF THE DEPOSITOR OF THE TRUST, THE
NAME OF THE STATE OR OTHER SOVEREIGN POWER UNDER THE LAWS OF
WHICH THE DEPOSITOR WAS ORGANIZED AND THE DATE OF ORGANIZATION.
The Company is a life insurance company organized as a corporation
under the laws of the State of Delaware on July 26, 1974. Prior to
January 1, 1982, the Company was known as the "American Variable
Annuity Life Assurance Company." The Company is the successor in
interest by virtue of merger to a life insurance company of that
name which was organized under the laws of the State of Arkansas in
January 1967. Effective October 1, 1995, the Company changed its
name to "Allmerica Financial Life Insurance and Annuity Company."
The Company is an indirect subsidiary of First Allmerica Financial
Life Insurance Company ("First Allmerica"), which in turn is a
wholly-owned subsidiary of Allmerica Financial Corporation, 440
Lincoln Street, Worcester, Massachusetts, 01653.
26. (a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ALL FEES
RECEIVED BY THE DEPOSITOR OF THE TRUST IN CONNECTION WITH THE
EXERCISE OF ANY FUNCTIONS OR DUTIES CONCERNING SECURITIES. OF THE
TRUST DURING THE PERIOD COVERED BY THE FINANCIAL STATEMENTS FILED
HEREWITH:
Not Applicable.
(b) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ANY FEE OR ANY
PARTICIPATION IN FEES RECEIVED BY THE DEPOSITOR FROM ANY
UNDERLYING INVESTMENT COMPANY OR ANY AFFILIATED PERSON OR
INVESTMENT ADVISER OF SUCH COMPANY:
The Company receives fees from the investment advisers or other
service providers of certain Underlying Funds in return for
providing services with respect to the Underlying Funds to
Contract owners. Currently, the Company receives service fees
with respect to the Fidelity VIP Overseas Portfolio, Fidelity VIP
Equity-Income Portfolio, Fidelity VIP Growth Portfolio, Fidelity
VIP High Income Portfolio, and Fidelity VIP II Asset Manager
Portfolio, at an annual rate of 0.10% of the aggregate net asset
value, respectively, of the shares held by the Variable Account.
With respect to the T. Rowe Price International Stock Portfolio,
the Company receives service fees at an annual rate of 0.15% per
annum of the aggregate net asset value of shares held by the
Variable Account.
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<PAGE>
The Company may in the future render services for which it will
receive compensation from the investment advisers or other
service providers of other Underlying Funds.
The Company has not received any such fee or participation.
(1) THE NATURE OF SUCH FEE OR PARTICIPATION.
See 26(b), above.
(2) THE NAME OF THE PERSON MAKING PAYMENTS.
See 26(b), above.
(3) THE NATURE OF THE SERVICES RENDERED IN CONSIDERATION FOR
SUCH FEE OR PARTICIPATION.
See 26(b), above.
(4) THE AGGREGATE AMOUNT RECEIVED DURING THE LAST FISCAL YEAR
COVERED BY THE FINANCIAL STATEMENTS FILED HEREWITH.
Not Applicable.
27. DESCRIBE THE GENERAL CHARACTER OF THE BUSINESS ENGAGED IN BY THE
DEPOSITOR INCLUDING A STATEMENT AS TO ANY BUSINESS OTHER THAN THAT OF
DEPOSITOR OF THE TRUST. IF THE DEPOSITOR ACTS OR HAS ACTED IN ANY
CAPACITY WITH RESPECT TO ANY INVESTMENT COMPANY OR COMPANIES OTHER
THAN THE TRUST, STATE THE NAME OR NAMES OF SUCH COMPANY OR COMPANIES,
THEIR RELATIONSHIP, IF ANY, TO THE TRUST, AND THE NATURE OF THE
DEPOSITOR'S ACTIVITIES THEREWITH. IF THE DEPOSITOR HAS CEASED TO ACT
IN SUCH NAMED CAPACITY, STATE THE DATE OF AND CIRCUMSTANCES
SURROUNDING SUCH CESSATION.
The Company is licensed to write life insurance, health insurance, and
variable contracts in the District of Columbia, Puerto Rico, the
Virgin Islands, and all states except New York and Hawaii.
The Company offers variable life and annuity Contracts through other
of its Separate Accounts, all of which are registered as unit
investment trusts under the Investment Company Act of 1940.
The Company served as investment adviser for its Separate Account
VA-A (formerly the "American Variable Annuity Fund") from 1967 until
1969. The Company also served as principal underwriter for Separate
Account VA-A from 1967 until 1972.
OFFICIALS AND AFFILIATED PERSONS OF DEPOSITOR
28. (a) FURNISH AS AT LATEST PRACTICABLE DATE THE FOLLOWING INFORMATION
WITH RESPECT TO THE DEPOSITOR OF THE TRUST, WITH RESPECT TO EACH
OFFICER, DIRECTOR, OR PARTNER OF THE DEPOSITOR, AND WITH RESPECT
TO EACH NATURAL PERSON DIRECTLY OR INDIRECTLY OWING OR HOLDING
WITH POWER TO VOTE 5% OR MORE OF THE OUTSTANDING VOTING
SECURITIES OF THE
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<PAGE>
DEPOSITOR.
(i) NAME AND PRINCIPAL BUSINESS ADDRESS.
(ii) NATURE OF RELATIONSHIP OR AFFILIATION WITH DEPOSITOR OF THE
TRUST;
(iii) OWNERSHIP OF ALL SECURITIES OF THE DEPOSITOR;
(iv) OWNERSHIP OF ALL SECURITIES OF THE TRUST;
(v) OTHER COMPANIES OF WHICH EACH PERSON NAMED ABOVE IS PRESENTLY
OFFICER, DIRECTOR OR PARTNER.
See 28(b) and 29, below.
(b) FURNISH A BRIEF STATEMENT OF THE BUSINESS EXPERIENCE DURING THE LAST
FIVE YEARS OF EACH OFFICER, DIRECTOR OR PARTNER OF THE DEPOSITOR.
The principal occupations and business experience for the last five
years of Directors and Executive Officers of the Company are as
follows:
NAME AND POSITION PRINCIPAL OCCUPATION(S) DURING PAST
FIVE YEARS
Bruce C. Anderson Director of First Allmerica since 1996;
Director Vice President, First Allmerica since
1984
Abigail M. Armstrong Secretary of First Allmerica since
Secretary and Counsel 1996; Counsel, First Allmerica since
1991
Robert E. Bruce Director and Chief Information Officer
Director and Chief Information of First Allmerica since 1997; Vice
Officer President of First Allmerica since
1995; Corporate Manager, Digital
Equipment Corporation 1979 to 1995
John P. Kavanaugh Director and Chief Investment Officer
Director, Vice President and Chief of First Allmerica since 1996; Vice
Investment Officer President, First Allmerica since 1991
John F. Kelly Director of First Allmerica since 1996;
Director, Vice President and General Counsel since 1981; Senior Vice
General Counsel President since 1986, and Assistant
Secretary, First Allmerica since 1991
J. Barry May Director of First Allmerica since 1996;
Director Director and President, The Hanover
Insurance Company since 1996; Vice
President, The Hanover Insurance
Company, 1993 to 1996; General
Manager, The Hanover Insurance
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<PAGE>
Company 1989 to 1993
James R. McAuliffe Director of First Allmerica since 1996;
Director Director of Citizens Insurance Company
of America since 1992; President since
1994 and CEO since 1996; Vice
President, First Allmerica 1982 to 1994
and Chief Investment Officer, First
Allmerica 1986 to 1994.
John F. O'Brien Director, Chairman of the Board,
Director and Chairman of the Board President and Chief Executive Officer,
First Allmerica since 1989
Edward J. Parry, III Director and Chief Financial Officer of
Director, Vice President, Chief First Allmerica since 1996; Vice
Financial Officer, and Treasurer President and Treasurer, First
Allmerica since 1993
Richard M. Reilly Director of First Allmerica since 1996;
Director, President and Vice President, First Allmerica since
Chief Executive Officer 1990; Director, Allmerica Investments,
Inc. since 1990; Director and
President, Allmerica Financial
Investment Management Services, Inc.
since 1990
Robert P. Restrepo, Jr. Director and Vice President of First
Director and Vice President Allmerica since May, 1998; Chief
Executive Officer, Travelers Property
& Casualty Group, 1996 to 1998; Senior
Vice President, Aetna Life & Casualty
Company, 1993 to 1996.
Eric A. Simonsen Director of First Allmerica since 1996;
Director and Vice President Vice President, First Allmerica since
1990; Chief Financial Officer, First
Allmerica 1990 to 1996
Phillip E. Soule Director of First Allmerica since 1996;
Director Vice President, First Allmerica since
1987
COMPANIES OWNING SECURITIES OF DEPOSITOR
29. FURNISH AS AT LATEST PRACTICABLE DATE THE FOLLOWING INFORMATION WITH
RESPECT TO EACH COMPANY WHICH DIRECTLY OR INDIRECTLY OWNS, CONTROLS OR
HOLDS WITH POWER TO VOTE 5% OR MORE OF THE OUTSTANDING VOTING SECURITIES OF
DEPOSITOR.
The Company is a wholly-owned subsidiary of SMA Financial Corp., 440
Lincoln Street, Worcester, Massachusetts, which in turn is a wholly-owned
subsidiary of First Allmerica, which in turn is a wholly-owned subsidiary
of Allmerica Financial Corporation. All are located at 440 Lincoln Street,
Worcester, Massachusetts. The Company and Allmerica Financial Corporation
are Delaware corporations. First Allmerica and SMA Financial Corp. are
organized under the laws of the Commonwealth of Massachusetts.
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<PAGE>
CONTROLLING PERSONS
30. FURNISH AS AT LATEST PRACTICABLE DATE THE FOLLOWING INFORMATION WITH
RESPECT TO ANY PERSON OTHER THAN THOSE COVERED BY ITEMS 28, 29, AND 42
WHO DIRECTLY OR INDIRECTLY CONTROLS THE DEPOSITOR.
None.
COMPENSATION OF OFFICERS AND DIRECTORS
31. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE REMUNERATION FOR
SERVICES PAID BY THE DEPOSITOR DURING THE LAST FISCAL YEAR COVERED
FINANCIAL STATEMENTS FILED HEREWITH;
(a) DIRECTLY TO EACH OF THE OFFICERS OR PARTNERS OR THE DEPOSITOR
DIRECTLY RECEIVING THE THREE HIGHEST AMOUNTS OF REMUNERATION;
None. All officers of the Company are employees of the Company's
parent, First Allmerica, and receive no remuneration from the
Company.
(b) DIRECTLY TO ALL OFFICERS OR PARTNERS OF THE DEPOSITOR AS A GROUP
EXCLUSIVE OF PERSONS WHOSE REMUNERATION IS INCLUDED UNDER ITEM
31(a), STATING SEPARATELY THE AGGREGATE AMOUNT PAID BY THE
DEPOSITOR ITSELF AND THE AGGREGATE AMOUNT PAID BY ALL THE
SUBSIDIARIES;
None. All officers of the Company are employees of the Company's
parent, First Allmerica, and receive no remuneration from the
Company. The Company has no subsidiaries.
(c) INDIRECTLY OR THROUGH SUBSIDIARIES TO EACH OF THE OFFICERS OR
PARTNERS OF THE DEPOSITOR;
Not Applicable. The Company has no subsidiaries.
COMPENSATION OF DIRECTORS
32. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE REMUNERATION FOR
SERVICES, EXCLUSIVE OF REMUNERATION REPORTED UNDER ITEM 31, PAID BY
THE DEPOSITOR DURING THE LAST FISCAL YEAR COVERED BY FINANCIAL
STATEMENTS FILED HEREWITH:
(a) THE AGGREGATE DIRECT REMUNERATION TO DIRECTORS;
None. All directors of the Company are employees of the
Company's parent, First Allmerica, and receive no remuneration
from the Company.
(b) INDIRECTLY OR THROUGH SUBSIDIARIES TO DIRECTORS.
Not Applicable. The Company has no subsidiaries.
COMPENSATION TO EMPLOYEES
33. (a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE AGGREGATE
AMOUNT OF REMUNERATION FOR SERVICES OF ALL EMPLOYEES OF THE
DEPOSITOR (EXCLUSIVE OF PERSONS WHOSE REMUNERATION IS REPORTED IN
ITEMS 31 AND 32) WHO RECEIVED REMUNERATION IN EXCESS OF $10,000
DURING THE LAST FISCAL YEAR COVERED BY FINANCIAL STATEMENTS FILED
- 36 -
<PAGE>
HEREWITH FROM THE DEPOSITOR AND ANY OF ITS SUBSIDIARIES.
None. The Company has no employees. All corporate services are
provided by employees of First Allmerica, pursuant to the terms
of a Service Agreement between the Company and First Allmerica.
(b) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE AGGREGATE
AMOUNT OF REMUNERATION FOR SERVICES INFORMATION DURING THE LAST
FISCAL YEAR COVERED BY FINANCIAL STATEMENTS FILED HEREWITH TO THE
FOLLOWING CLASSES OF PERSONS (EXCLUSIVE OF THOSE PERSONS COVERED
BY ITEM 33(a)): (1) SALES MANAGERS, BRANCH MANAGERS, DISTRICT
MANAGERS AND OTHER PERSONS SUPERVISING THE SALE OF REGISTRANT'S
SECURITIES; (2) SALESMEN, SALES AGENTS, CANVASSERS AND OTHER
PERSONS MAKING SOLICITATIONS BUT NOT IN SUPERVISORY CAPACITY; (3)
ADMINISTRATIVE AND CLERICAL EMPLOYEES; AND (4) OTHERS (SPECIFY).
IF A PERSON IS EMPLOYED IN MORE THAN ONE CAPACITY, CLASSIFY
ACCORDING TO PREDOMINANT TYPE OF WORK.
Not Applicable.
COMPENSATION TO OTHER PERSONS
34. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE AGGREGATE AMOUNT
OF COMPENSATION FOR SERVICES PAID ANY PERSON (EXCLUSIVE OF PERSONS
WHOSE REMUNERATION IS REPORTED IN ITEMS 31, 32 AND 33), WHOSE
AGGREGATE COMPENSATION IN CONNECTION WITH SERVICES RENDERED WITH
RESPECT TO THE TRUST IN ALL CAPACITIES EXCEED $10,000 DURING THE LAST
FISCAL YEAR COVERED BY FINANCIAL STATEMENTS FILED HEREWITH FROM THE
DEPOSITOR AND ANY OF ITS SUBSIDIARIES.
None
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
DISTRIBUTION OF-SECURITIES
35. FURNISH THE NAMES OF THE STATES IN WHICH SALES OF THE TRUST'S
SECURITIES (a) ARE CURRENTLY BEING MADE, (b) ARE PRESENTLY PROPOSED TO
MADE, AND (c) HAVE BEEN DISCONTINUED, INDICATING BY APPROPRIATE LETTER
THE STATUS WITH RESPECT TO EACH STATE.
(a) Sale of the Contracts has not commenced in any state.
(b) Following the effectiveness of the Separate Account's
registration statement under the Securities Act of 1933, and
obtaining required approvals under state law, the Company
proposes issuing the Contracts in the District of Columbia,
Virgin Islands, and Puerto Rico and in all states except New York
and Hawaii.
(c) Not Applicable.
36. IF SALES OF THE TRUST'S SECURITIES HAVE AT ANY TIME SINCE JANUARY 1,
1936 BEEN SUSPENDED FOR MORE THAN A MONTH, DESCRIBE BRIEFLY THE
REASONS FOR SUCH SUSPENSION.
Not Applicable.
- 37 -
<PAGE>
37. (a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO EACH INSTANCE
WHERE SUBSEQUENT TO JANUARY 1, 1937, ANY FEDERAL OR STATE
GOVERNMENTAL OFFICER, AGENCY, OR REGULATORY BODY DENIED AUTHORITY
TO DISTRIBUTE SECURITIES OF THE TRUST, EXCLUDING A DENIAL WHICH
WAS MERELY A PROCEDURAL STEP PRIOR TO ANY DETERMINATION BY SUCH
OFFICER, ETC., AND WHICH DENIAL WAS SUBSEQUENTLY RESCINDED.
(1) NAME OF OFFICER, AGENCY OR BODY
None.
(2) DATE OF DENIAL
Not Applicable.
(3) BRIEF STATEMENT OF REASONS GIVEN FOR DENIAL
Not Applicable.
(b) FURNISH THE FOLLOWING INFORMATION WITH REGARD TO EACH INSTANCE
WHERE, SUBSEQUENT TO JANUARY 1, 1937, THE AUTHORITY TO DISTRIBUTE
SECURITIES OF THE TRUST HAS BEEN REVOKED BY ANY FEDERAL OR STATE
GOVERNMENTAL OFFICER, AGENCY OR REGULATORY BODY.
(1) NAME OF OFFICER, AGENCY OR BODY
None.
(2) DATE OF REVOCATION
Not Applicable.
(3) BRIEF STATEMENT OF REASONS GIVEN FOR REVOCATION
Not Applicable.
38. (a) FURNISH A GENERAL DESCRIPTION OF THE METHOD OF DISTRIBUTION OF
SECURITIES OF THE TRUST.
Allmerica Investments, Inc., an indirect subsidiary of First
Allmerica, will act as principal underwriter of the Contracts
pursuant to a Sales and Administrative Agreement with the Company
and the Separate Account. Allmerica Investments, Inc. is a
broker-dealer and a member of the National Association of
Securities Dealers, Inc. The Contracts will be sold by
registered representatives of Allmerica Investments, Inc. or of
other broker-dealers which have selling agreements with Allmerica
Investments, Inc., and who have been appointed as agents of the
Company.
(b) STATE THE SUBSTANCE OF ANY CURRENT SELLING AGREEMENT BETWEEN EACH
PRINCIPAL UNDERWRITER AND THE TRUST OR THE DEPOSITOR, INCLUDING A
STATEMENT AS TO THE INCEPTION AND TERMINATION DATES OF THE
AGREEMENT, ANY RENEWAL AND TERMINATION PROVISIONS, AND MY
ASSIGNMENT PROVISIONS.
The Company and Separate Account will execute a Sales and
Administrative Services Agreement ("Agreement") with Allmerica
Investments, Inc., its principal underwriter. Unless otherwise
terminated, the Agreement shall continue in effect
- 38 -
<PAGE>
from year to year. The Agreement may be terminated by any party
at any time upon giving 60 days' written notice to the other
parties, and terminates automatically in the event of its
assignment.
(c) STATE THE SUBSTANCE OF ANY CURRENT AGREEMENTS OR ARRANGEMENTS OF
EACH PRINCIPAL UNDERWRITER WITH DEALERS, AGENTS, SALESMEN, ETC.,
WITH RESPECT TO COMMISSIONS AND OVERRIDING COMMISSIONS,
TERRITORIES, FRANCHISES, QUALIFICATIONS, AND REVOCATIONS. IF THE
TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN CERTIFICATES,
FURNISH SCHEDULES OF COMMISSIONS AND THE BASES THEREOF. IN LIEU
OF A STATEMENT CONCERNING SCHEDULES OF COMMISSIONS, SUCH
SCHEDULES OF COMMISSIONS MAY BE FILED AS EXHIBIT A(3)(c).
Registered representatives of Allmerica Investments, Inc., or of
broker-dealers which have selling agreements with Allmerica
Investments, Inc., will be appointed as agents of the Company in
order to sell the Contract. Such agents will be required to pass
applicable NASD examinations, and qualify under applicable state
insurance licensing requirements. Agents who sell the Contract
will receive commissions based on a commission schedule, and
Managers who supervise the agents will receive overriding
commissions.
(A). Maximum Initial Compensation payable by the Company with
respect to the sale and distribution of the Contracts shall be
5.50% of initial and subsequent payments. Alternative
commission schedules are available with lower initial
commission amounts, plus ongoing annual compensation of up to
1.00% of contract Value. To the extent permitted by NASD
rules, promotional incentives or payments may also be provided
to broker-dealers based on sales volumes, the assumption of
wholesaling functions or other sales-related criteria. Other
payments may be made for other services that do not directly
involve the sale of the Contracts. These services may include
the recruitment and training of personnel, production of
promotional literature, and similar services.
INFORMATION CONCERNING PRINCIPAL UNDERWRITER
39. (a) STATE THE FORM OF ORGANIZATION OF EACH PRINCIPAL UNDERWRITER
OF SECURITIES OF THE TRUST, THE NAME OF THE STATE OR OTHER
SOVEREIGN POWER UNDER THE LAWS OF WHICH EACH UNDERWRITER WAS
ORGANIZED AND THE DATE OF ORGANIZATION.
The principal underwriter of the Contracts, Allmerica
Investments, Inc., was incorporated under the laws of the
Commonwealth of Massachusetts on March 27, 1969.
(b) STATE WHETHER ANY PRINCIPAL UNDERWRITER CURRENTLY
DISTRIBUTING SECURITIES OF THE TRUST IS A MEMBER OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (NASD).
Allmerica Investments, Inc., will be the underwriter of the
Contracts. The Company is also registered as a broker-dealer,
and is a member of the NASD.
40. (a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ALL FEES
RECEIVED BY EACH PRINCIPAL UNDERWRITER OF THE TRUST FROM THE
SALE OF SECURITIES OF THE TRUST AND ANY OTHER FUNCTIONS IN
CONNECTION THEREWITH EXERCISED BY SUCH UNDERWRITER IN SUCH
CAPACITY OR OTHERWISE DURING THE PERIOD COVERED BY THE
FINANCIAL STATEMENT FILED
- 39 -
<PAGE>
HEREWITH.
None.
(b) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ANY FEE OR ANY
PARTICIPATION IN FEES RECEIVED BY EACH PRINCIPAL UNDERWRITER FROM
ANY UNDERLYING INVESTMENT COMPANY OR ANY AFFILIATED PERSON OR
INVESTMENT ADVISER OF SUCH COMPANY:
None.
(1) THE NATURE OF SUCH FEE OR PARTICIPATION.
None.
(2) THE NAME OF THE PERSON MAKING PAYMENT.
None.
(3) THE NATURE OF THE SERVICES RENDERED IN CONSIDERATION FOR
SUCH FEE OR PARTICIPATION.
None.
(4) THE AGGREGATE AMOUNT RECEIVED DURING THE LAST FISCAL YEAR
COVERED BY THE FINANCIAL STATEMENTS FILED HEREWITH.
None.
41. (a) DESCRIBE THE GENERAL CHARACTER OF THE BUSINESS PRINCIPAL
UNDERWRITER, INCLUDING A STATEMENT AS TO ANY BUSINESS OTHER THAN
THE DISTRIBUTION OF SECURITIES OF THE TRUST. IF A PRINCIPAL
UNDERWRITER ACTS OR HAS ACTED IN ANY CAPACITY WITH RESPECT TO ANY
INVESTMENT COMPANY OR COMPANIES OTHER THAN THE TRUST, STATE THE
NAME OR NAMES OF SUCH COMPANY OR COMPANIES, THEIR RELATIONSHIP,
IF ANY, TO THE TRUST AND THE NATURE OF SUCH ACTIVITIES. IF A
PRINCIPAL UNDERWRITER HAS CEASED TO ACT IN SUCH NAMED CAPACITY,
STATE THE DATE OF AND CIRCUMSTANCES SURROUNDING SUCH CESSATION.
Allmerica Investments, Inc. is a registered broker-dealer and a
member of the NASD. Allmerica Investments, Inc. is a retail
broker-dealer of variable contracts (including life and
annuities) issued by the Company and of affiliated and
unaffiliated mutual funds. Allmerica Investments, Inc. acts as
principal underwriter of variable annuity and variable life
contracts issued by Separate Accounts of the Company and of First
Allmerica, which are registered as unit investment trusts under
the 1940 Act in connection with the issuance of variable annuity
and variable life contracts. Allmerica Investments also acts as
principal underwriter of AIT, which is a management investment
company under the 1940 Act. The variable contracts issued by
the Company are sold through registered representatives of
Allmerica Investments, Inc. (or of broker-dealers which have
selling agreements with Allmerica Investments, Inc.), who are
also licensed as insurance agents of the Company.
(b) FURNISH AS AT LATEST PRACTICABLE DATE THE ADDRESS OF EACH BRANCH
OFFICE OF EACH PRINCIPAL UNDERWRITER CURRENTLY SELLING SECURITIES
OF THE TRUST AND FURNISH THE NAME
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<PAGE>
AND RESIDENCE ADDRESS OF THE PERSON IN CHARGE OF SUCH OFFICE.
Not Applicable. The Separate Account is not yet issuing
securities.
(c) FURNISH THE NUMBER OF INDIVIDUAL SALESMEN OF EACH PRINCIPAL
UNDERWRITER THROUGH WHOM ANY OF THE SECURITIES OF THE TRUST WERE
DISTRIBUTED FOR THE LAST FISCAL YEAR OF THE TRUST COVERED BY THE
FINANCIAL STATEMENTS FILED HEREWITH AND FURNISH THE AGGREGATE
AMOUNT OF COMPENSATION RECEIVED BY SUCH SALESMEN IN SUCH YEAR.
Not Applicable. The Contracts have not yet been issued.
42. FURNISH AS AT LATEST PRACTICABLE DATE THE FOLLOWING INFORMATION WITH
RESPECT TO EACH PRINCIPAL UNDERWRITER CURRENTLY DISTRIBUTING
SECURITIES OF THE TRUST AND WITH RESPECT TO EACH OF THE OFFICERS,
DIRECTORS OR PARTNERS OF SUCH UNDERWRITER (OWNERSHIP OF SECURITIES OF
THE TRUST).
Not Applicable. The Contracts have not yet been issued.
43. FURNISH, FOR THE LAST FISCAL YEAR COVERED BY THE FINANCIAL STATEMENTS
FILED HEREWITH, THE AMOUNT OF BROKERAGE COMMISSIONS RECEIVED BY ANY
PRINCIPAL UNDERWRITER WHO IS A MEMBER OF A NATIONAL SECURITIES
EXCHANGE AND WHO IS CURRENTLY DISTRIBUTING THE SECURITIES OF THE TRUST
OR EFFECTING TRANSACTIONS FOR THE TRUST IN THE PORTFOLIO SECURITIES OF
THE TRUST.
Not Applicable.
OFFERING PRICE OR ACQUISITION VALUATION OF SECURITIES OF THE TRUST
44. (a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE METHOD OF
VALUATION USED BY THE TRUST FOR THE PURPOSES OF DETERMINING THE
OFFERING PRICE TO THE PUBLIC OF SECURITIES ISSUED THE TRUST OR
THE VALUATION OF SHARES OR INTERESTS IN THE UNDERLYING SECURITIES
ACQUIRED BY THE HOLDER OF A PERIODIC PAYMENT PLAN CERTIFICATE.
Each payment is allocated to the General Account of the Company
or to the Sub-Account(s) selected by the Contract Owner.
Allocations to the Sub-Accounts are credited to the Contract in
the form of Units. Units are credited separately for each
Sub-Account. The number of Units of each Sub-Account credited to
the Contract is equal to the portion of the payment allocated to
the Sub-Account, divided by the dollar value of the applicable
Unit as of the valuation date the payment is received at the
Company's Principal Office. The number of Units resulting from
each payment will remain fixed unless changed by a subsequent
split of Unit value, transfer, partial withdrawal or surrender.
In addition, if the Company deducts charges from a Sub-Account
(as a result of Contract Owner instructions or the pro rata
allocation of charges if the Contract Owner has given no
instruction), each such deduction will result in cancellation of
a number of Units equal in value to the charge allocated to the
Sub-Account. The dollar value of a Unit of each Sub-Account
varies from valuation date to valuation date based on the
investment experience of that Sub-Account. That experience, in
turn, will reflect the investment performance, expenses and
charges of the respective Underlying Funds. The value of a Unit
is set at $1.00 on the first Valuation Date of each Sub-Account.
The dollar value of a Unit of a Sub-Account varies from Valuation
Date to Valuation
- 41 -
<PAGE>
Date based on the investment experience of that Sub-Account.
This investment experience reflects the investment performance,
expenses and charges of the Underlying Fund in which the
Sub-Account invests. The value of each Unit was set at $1.00 on
the first Valuation Date of each Sub-Account.
The value of a Unit on any Valuation Date is the product of:
- The dollar value of the Unit on the preceding Valuation
Date; times
- The net investment factor.
Net Investment Factor - The net investment factor measures the
investment performance of a Sub-Account during the Valuation
Period just ended. The net investment factor for each
Sub-Account is the result of:
- The net asset value per share of a Fund held in the
Sub-Account determined at the end of the current Valuation
Period; plus
- The per share amount of any dividend or capital gain
distributions made by the Fund on shares in the Sub-Account
if the "ex-dividend" date occurs during the current
Valuation Period; divided by
- The net asset value per share of a Fund share held in the
Sub-Account determined as of the end of the immediately
preceding Valuation Period; minus
- The mortality and expense risk charge for each day in the
Valuation Period, currently at an annual rate of 0.90% of
the daily net asset value of that Sub-Account.
The net investment factor may be greater or less than one.
Therefore, the value of a Unit may increase or decrease. The
Contract Owner bears the investment risk.
Allocations to the General Account are not converted into Units,
but are credited interest at a rate periodically set by the
Company.
(b) FURNISH A SPECIMEN SCHEDULE SHOWING THE COMPONENTS OF THE
OFFERING PRICE OF THE TRUST'S SECURITIES AS OF THE LATEST
PRACTICABLE DATE.
No Contracts have been issued or offered for sale to the public.
(c) IF THERE IS ANY VARIATION IN OFFERING PRICE OF THE TRUST'S
SECURITIES TO ANY PERSON OR CLASSES OF PERSONS OTHER THAN
UNDERWRITERS, STATE THE NATURE AND AMOUNT OF SUCH VARIATION AND
INDICATE THE PERSON OR CLASSES OF PERSONS TO WHOM SUCH OFFERING
IS MADE.
At any time, the "price" of a Unit of a Sub-Account will be the
same for all Contract Owners. However, the cost of insurance
charges for the Contracts will not be the same for all Contract
Owners. The insurance principles of pooling and distribution of
mortality risks is based upon the assumption that each Contract
Owner pays a cost of insurance charge commensurate with the
Insured's mortality risk, which is actuarially determined based
upon factors such as age, sex, health and occupation. In the
context of life insurance, a uniform mortality charge (the "cost
of insurance charge") for all Insureds would discriminate
unfairly in favor of those Insureds representing greater
mortality risks to the disadvantage of those representing lesser
risks. Accordingly, there will be a different "price" for each
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<PAGE>
actuarial category of Contract Owners because different cost of
insurance rates will apply. The "price" will also vary based on
net amount at risk. The Contracts will be offered and sold
pursuant to this cost of insurance schedule, the Company's
underwriting standards, and in accordance with state insurance
laws. Such laws prohibit unfair discrimination among Insureds,
but recognize that premiums must be based upon factors such as
age, health and occupation. Tables showing the maximum cost of
insurance charges will be delivered as part of the Contract.
45. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO ANY SUSPENSION OF
THE REDEMPTION RIGHTS OF THE SECURITIES ISSUED BY THE TRUST DURING THE
THREE FISCAL YEARS COVERED BY THE FINANCIAL STATEMENTS FILED HEREWITH:
Not Applicable.
(a) BY WHOSE ACTION REDEMPTION RIGHTS WERE SUSPENDED.
Not Applicable.
(b) THE NUMBER OF DAYS' WRITTEN NOTICE GIVEN TO SECURITY HOLDERS
PRIOR TO SUSPENSION OF REDEMPTION RIGHTS.
Not Applicable.
(c) REASON FOR SUSPENSION.
Not Applicable.
(d) PERIOD DURING WHICH SUSPENSION WAS IN EFFECT.
Not Applicable.
46. (a) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO THE METHOD OF
DETERMINING THE REDEMPTION OR WITHDRAWAL VALUATION OF SECURITIES
ISSUED BY THE TRUST:
(1) THE SOURCE OF QUOTATIONS USED TO DETERMINE THE VALUE OF
PORTFOLIO SECURITIES.
The Sub-Accounts invest only in shares of the Underlying
Funds. Shares of each are sold and redeemed at their net
asset value as next computed after receipt of the purchase
or redemption order. Each purchase or redemption is
confirmed in a written statement of the number of shares
purchased or redeemed and the aggregate number of shares
currently held by the respective Sub-Accounts. See
Item 44(a).
(2) WHETHER OPENING, CLOSING, BID, ASKED OR ANY OTHER PRICE
ISSUED.
See 44(a) and 46(a)(1), above.
(3) WHETHER PRICE IS AS OF THE DAY OF SALE OR AS OF ANY OTHER
TIME.
See 44(a) and 46(a)(1), above.
(4) A BRIEF DESCRIPTION OF THE METHODS USED BY REGISTRANT FOR
DETERMINING OTHER ASSETS AND LIABILITIES INCLUDING ACCRUAL
FOR EXPENSES AND TAXES (INCLUDING TAXES ON
- 43 -
<PAGE>
UNREALIZED APPRECIATION).
CONTRACT VALUE AND SURRENDER VALUE - The Contract value is
the total amount available for investment and is equal to
the sum of the accumulation in the General Account and the
value of the Units in the Sub-Accounts. The Contract value
is used in determining the surrender value (the Contract
value less any loans and applicable surrender charges).
There is no guaranteed minimum Contract value. Because
Contract value on any date depends upon a number of
variables, it cannot be predetermined. Contract value and
surrender value will reflect frequency and amount of net
premiums paid, interest credited to accumulations in the
General Account, the investment performance of the chosen
Sub-Accounts of the Separate Account, any partial
withdrawals, any loans, any loan repayments, any loan
interest paid or credited, and any charges assessed in
connection with the Contract.
CALCULATION OF CONTRACT VALUE - The Contract value is
determined first on the date of issue and thereafter on each
valuation date. On the date of issue, the Contract value
will be the payments received, plus any interest earned
during the period when premiums are held in the General
Account (before being transferred to the Separate Account)
less any Monthly Deductions due. On each valuation date
after the date of issue the Contract value will be:
(a) the aggregate of the values in each of the Sub-Accounts
on the valuation date, determined for each Sub-Account
by multiplying the value of a Unit in that Sub-Account
on that date by the number of such Units allocated to
the Contract; PLUS
(b) the value in the General Account (including any amounts
transferred to the General Account with respect to a
loan).
Thus, the Contract value is determined by multiplying the
number of Units in each Sub-Account by the value of the
applicable Units on the particular valuation date, adding
the products, and adding the amount of the accumulations in
the General Account, if any. Also see Item 44(a), above.
Because of its current tax status, the Company does not
expect to incur any federal income tax liabilities that
would be charged to the Separate Account, and the Company
does not intend to make a charge for federal income taxes.
The Company may, however, incur state and local taxes (in
addition to premium taxes) in several states. At present,
these taxes are not significant. If there is a material
change in state or local tax laws, charges for such taxes,
if any, attributable to the Separate Account may be made.
(5) OTHER ITEMS WHICH REGISTRANT DEDUCTS FROM THE NET ASSET
VALUE IN COMPUTING REDEMPTION VALUE OF ITS SECURITIES.
Units of the Sub-Accounts will be redeemed at net asset
value. However, under the Contracts, a surrender or partial
redemption may be subject to Surrender charges. See 13(a),
"SURRENDER CHARGES" and "PARTIAL WITHDRAWAL"
(6) WHETHER ADJUSTMENTS ARE MADE FOR FRACTIONS.
- 44 -
<PAGE>
No adjustments are made for fractions.
(b) FURNISH A SPECIMEN SCHEDULE SHOWING THE COMPONENTS OF THE
REDEMPTION PRICE TO THE HOLDERS OF THE TRUST'S SECURITIES AS OF
THE LATEST PRACTICABLE DATE.
No Contracts have been issued or offered for sale to the public.
PURCHASE AND SALE OF INTERESTS IN UNDERLYING SECURITIES FROM AND TO
SECURITY HOLDERS
47. FURNISH A STATEMENT AS TO THE PROCEDURE WITH RESPECT TO THE
MAINTENANCE OF A POSITION IN THE UNDERLYING SECURITIES OR INTERESTS IN
THE UNDERLYING SECURITIES, THE EXTENT AND NATURE THEREOF AND THE
PERSON WHO MAINTAINS SUCH A POSITION. INCLUDE A DESCRIPTION OF THE
PROCEDURE WITH RESPECT TO THE PURCHASE OF UNDERLYING SECURITIES OR
INTERESTS IN THE UNDERLYING SECURITIES FROM SECURITY HOLDERS WHO
EXERCISE REDEMPTION OR WITHDRAWAL RIGHTS AND THE SALE OF SUCH
UNDERLYING SECURITIES AND INTERESTS IN THE UNDERLYING SECURITIES TO
OTHER SECURITY HOLDERS. STATE WHETHER THE METHOD OF VALUATION OF SUCH
UNDERLYING SECURITIES OR INTERESTS IN UNDERLYING SECURITIES DIFFERS
FROM THAT SET FORTH IN ITEMS 44 AND 46. IF ANY ITEM OF EXPENDITURE
INCLUDED IN THE DETERMINATION OF THE VALUATION IS NOT OR MAY NOT
ACTUALLY BE INCURRED OR EXPENDED, EXPLAIN THE NATURE OF SUCH ITEM AND
WHO MAY BENEFIT FROM THE TRANSACTION.
All purchases and redemptions of shares of the Underlying Funds are at
net asset value. Other separate accounts of the Company currently
invest in shares of AIT, and AIT issues shares to separate accounts of
First Allmerica and may issue shares to separate accounts of other
affiliated insurance companies. Other than AIT, the other Underlying
Funds may issue shares to unaffiliated insurance companies. All
transactions are at net asset value. The Company will redeem
sufficient shares of the Underlying Funds to pay certain life
insurance proceeds, benefits at maturity, or surrender proceeds, or
for other purposes contemplated by the Contract.
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. FURNISH THE FOLLOWING INFORMATION AS TO EACH TRUSTEE OR CUSTODIAN OF
THE TRUST.
(a) NAME AND PRINCIPAL ADDRESS:
Allmerica Financial Life Insurance and Annuity Company
440 Lincoln Street
Worcester, MA 01653
(b) FORM OF ORGANIZATION:
Stock life insurance company.
(c) STATE OR OTHER SOVEREIGN POWER UNDER THE LAWS OF WHICH THE
TRUSTEE OR CUSTODIAN WAS ORGANIZED.
Incorporated under the laws of Delaware.
(d) NAME OF GOVERNMENTAL SUPERVISING OR EXAMINING AUTHORITY.
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Delaware Insurance Department. The Company is also subject to
examination by the insurance departments of each state in which
it does business.
49. STATE THE BASIS FOR PAYMENT OF FEES OR EXPENSES OF THE TRUSTEE OR
CUSTODIAN FOR SERVICES RENDERED WITH RESPECT TO THE TRUST AND ITS
SECURITIES, AND THE AMOUNT THEREOF FOR THE LAST FISCAL YEAR. INDICATE
THE PERSON PAYING SUCH FEES OR EXPENSES. IF ANY FEES OR EXPENSES ARE
PREPAID, STATE THE UNEARNED AMOUNTS.
The Company deducts the following monthly charges from the
Contract Value:
- Maintenance Fee -- a $2.50 Maintenance Fee from
Contracts with a Contract Value of less than $100
- Administration Charge -- 0.20% on an annual basis for
the administrative expenses
- Monthly Insurance Protection Charge -- Varies
(depending on the type of Contract and Underwriting
Class) for the cost of insurance
- For the first Contract Year only, Federal and State
Payment Tax Charge 1.50% on an annual basis for
federal, state and local taxes.
- For the first ten Contract years, the Company also
deducts a monthly charges Distribution Fee of 0.90% on
an annual basis for distribution expenses
The following daily charge is deducted from the Sub-Accounts of the
Variable Account:
- Mortality and Expense Risk Charge -- 0.90% on an annual
basis for the mortality and expense risks. This charge is
imposed to compensate the Company for its assumption of
certain mortality and expense risks. Such expense risks
include the risks of increased costs associated with the
custodian function.
The charges below apply only if the Contract Owner surrenders the
Contract or make partial withdrawals:
- Surrender Charge - This charge applies on full surrenders
within ten Contract years. The surrender charge begins at
10.00% of the Payment(s) and decreases to 0% by the tenth
Contract year.
- Partial Withdrawal Costs - The Company deducts from the
Contract Value the following charges for partial
withdrawals:
- A transaction fee of 2.0% of the amount withdrawn, not to
exceed $25, for each partial withdrawal for processing
costs; and
- A surrender charge on a withdrawal exceeding the "Free 10%
Withdrawal," described below.
As the Separate Account has not begun business operations, no fees
have been paid.
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50. STATE WHETHER THE TRUSTEE OR CUSTODIAN OR ANY OTHER PERSON HAS OR MAY
CREATE A LIEN ON THE ASSETS OF THE TRUST, AND, IF SO, GIVE FULL
PARTICULARS, OUTLINING THE SUBSTANCE OF THE PROVISIONS OF ANY
INDENTURE OR AGREEMENT WITH RESPECT THERETO.
None. Under Delaware law, the assets supporting Contract
reserves in the Separate Account may not be charged with any
liabilities arising out of any other business of the Company.
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO INSURANCE OF
HOLDERS OF SECURITIES:
Interests in the Separate Account are sold only to fund the Contracts.
Other than the Contracts themselves, no insurance is sold to Contract
Owners with interests in the Sub-Accounts, in connection with such
interests.
(a) THE NAME AND ADDRESS OF THE INSURANCE COMPANY.
Allmerica Financial Life Insurance and Annuity Company
440 Lincoln Street
Worcester, MA 01653
(b) THE TYPES OF CONTRACTS AND WHETHER INDIVIDUAL OR GROUP CONTRACTS.
The Contracts are modified single payment individual life
insurance Contracts.
(c) THE TYPES OF RISKS INSURED AND EXCLUDED.
The Contracts are offered to individuals age 89 and under,
subject to the Company's underwriting standards. The Company
assumes the risk that the deduction made for mortality and
expense risks will prove inadequate to cover actual insurance
costs and expenses.
(d) THE COVERAGE OF THE CONTRACTS.
The Contracts provide insurance coverage on the life of the
Insured. The Face Amount is stated in each Contract. Death
Benefits will be reduced by any outstanding loans and any due and
unpaid contract charges.
(e) THE BENEFICIARIES OF SUCH CONTRACTS AND THE USES TO WHICH THE
PROCEEDS OF CONTRACTS MUST BE PUT.
The beneficiary is named by the Contract Owner to receive the
death benefit. The interest of any beneficiary will be subject
to any assignment made by the Contract Owner. The Contract Owner
may declare a beneficiary to be revocable (changed any time by
written request) or irrevocable (may be changed only with the
written consent of the beneficiary). The interest of a
beneficiary who dies before the Insured will pass to surviving
beneficiaries. If all beneficiaries die before the Insured, the
death proceeds will pass to the Contract Owner.
(f) THE TERMS AND MANNER OF CANCELLATION AND OF REINSTATEMENT.
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See Item 17(a) for the manner of cancellation and reinstatement.
(g) THE METHOD OF DETERMINING THE AMOUNT OF PREMIUMS TO BE PAID BY
HOLDERS OF SECURITIES.
See answer to Item 13(a) for amount of charges imposed and 44(a)
and 44(c) for the manner in which the premium is determined.
(h) THE AMOUNT OF AGGREGATE PREMIUMS PAID TO THE INSURANCE COMPANY
DURING THE LAST FISCAL YEAR.
The Company has not yet begun issuing the Contracts. In calendar
year 1996, the aggregate payments paid to the Company under all
other life, accident and health, annuity and deposit fund
contracts was approximately $1.53 billion.
(i) WHETHER ANY PERSON OTHER THAN THE INSURANCE COMPANY RECEIVES ANY
PART OF SUCH PREMIUMS, THE NAME OF EACH SUCH PERSON AND THE
AMOUNTS INVOLVED, AND THE NATURE OF THE SERVICES RENDERED
THEREFOR.
No person other than the Company receives any part of the
payments. However, the Company may from time to time enter into
reinsurance agreements with First Allmerica or other insurance
companies under which certain insurance risks, premium income and
related expenses are assumed by First Allmerica or such other
insurance companies.
(j) THE SUBSTANCE OF ANY OTHER MATERIAL PROVISIONS OF ANY INDENTURE
OR AGREEMENT OF THE TRUST RELATING TO INSURANCE.
None.
VII. CONTRACT OF REGISTRANT
52. (a) FURNISH THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT WITH RESPECT TO THE CONDITIONS UPON WHICH AND THE
METHOD OF SELECTION BY WHICH PARTICULAR PORTFOLIO SECURITIES MUST
OR MAY BE ELIMINATED FROM THE ASSETS OF THE TRUST OR MUST OR MAY
BE REPLACED BY OTHER PORTFOLIO SECURITIES. IF AN INVESTMENT
ADVISER OR OTHER PERSON IS TO BE EMPLOYED IN CONNECTION WITH SUCH
SELECTION, ELIMINATION OR SUBSTITUTION, STATE THE NAME OF SUCH
PERSON, THE NATURE OF ANY AFFILIATION TO THE DEPOSITOR, TRUSTEE
OR CUSTODIAN, AND ANY PRINCIPAL UNDERWRITER, AND THE AMOUNT OF
REMUNERATION TO BE RECEIVED FOR SUCH SERVICES. IF ANY PARTICULAR
PERSON IS NOT DESIGNATED IN THE INDENTURE OR AGREEMENT, DESCRIBE
BRIEFLY THE METHOD OF SELECTION OF SUCH PERSON.
The investment policy of each Sub-Account of the Separate Account
is to invest in a particular Underlying Fund.
The Company reserves the right, subject to applicable law, to
make additions to, deletions from, or substitutions for the
shares that are held in the Sub-Accounts of the Separate Account
or that the Sub-Accounts of the Separate Account may purchase.
If the shares of an Underlying Fund are no longer available for
investment or if in the Company's judgment further investment in
any Underlying
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Fund should become inappropriate in view of the purposes of the
Separate Account or the affected Sub-Account, the Company may
redeem the shares of that Underlying Fund and substitute shares
of another registered open-end management company. The Company
will not substitute any shares attributable to a Contract
interest in a Sub-Account without notice and prior approval of
the SEC and state insurance authorities, to the extent required
by the 1940 Act or other applicable law.
The Company also reserves the right to establish additional
Sub-Accounts of the Separate Account, each of which would invest
in shares corresponding to a new Underlying Fund or in shares of
another investment company having a specified investment
objective. Subject to applicable law and any required SEC
approval, the Company may, in its sole discretion, establish new
Sub-Accounts or eliminate one or more Sub-Accounts if marketing
needs, tax considerations or investment conditions warrant. Any
new Sub-Accounts may be deemed available to existing Contract
Owners on a basis to be determined by the Company. If the
Company deems it to be in the best interest of Contract Owners,
and subject to any approvals that may be required under
applicable law, the Variable Account or Sub-Account may be
operated as a management company under the 1940 Act, may be
deregistered if registration is no longer required, or may be
combined with other separate accounts of the Company.
If any of these substitutions or changes are made, the Company
way by appropriate endorsement change the Contract to reflect the
substitution or change.
(b) FURNISH THE FOLLOWING INFORMATION WITH RESPECT TO EACH
TRANSACTION INVOLVING THE ELIMINATION OF ANY UNDERLYING SECURITY
DURING THE PERIOD COVERED BY THE FINANCIAL STATEMENTS FILED
HEREWITH.
Not Applicable.
(c) DESCRIBE THE CONTRACT OF THE TRUST WITH RESPECT TO THE
SUBSTITUTION AND ELIMINATION OF THE UNDERLYING SECURITIES OF THE
TRUST WITH RESPECT TO:
(1) THE GROUNDS FOR ELIMINATION AND SUBSTITUTION;
See 52(a), above.
(2) THE TYPE OF SECURITIES WHICH MAY BE SUBSTITUTED FOR ANY
UNDERLYING SECURITY;
See 52(a), above.
(3) WHETHER THE ACQUISITION OF SUCH SUBSTITUTED SECURITY OR
SECURITIES WOULD CONSTITUTE THE CONCENTRATION OF INVESTMENT
IN A PARTICULAR INDUSTRY OR GROUP OF INDUSTRIES OR WOULD
CONFORM TO A CONTRACT OF CONCENTRATION OF INVESTMENT IN A
PARTICULAR; INDUSTRY OR GROUP OF INDUSTRIES;
Not Applicable.
(4) WHETHER SUCH SUBSTITUTED SECURITIES MAY BE THE SECURITIES OF
ANY
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OTHER INVESTMENT COMPANY; AND
See 52(a), above.
(5) THE SUBSTANCE OF THE PROVISIONS OF ANY INDENTURE OR
AGREEMENT WHICH AUTHORIZE OR RESTRICT THE CONTRACT OF THE
REGISTRANT IN THIS REGARD.
See 52(a) above.
(d) FURNISH A DESCRIPTION OF ANY (EXCLUSIVE OF CONTRACTS COVERED BY
PARAGRAPH (a) AND (b) HEREIN) OF THE TRUST WHICH IS DEEMED A
MATTER OF FUNDAMENTAL CONTRACT AND WHICH IS ELECTED TO BE TREATED
AS SUCH.
None.
REGULATED INVESTMENT COMPANY
53. (a) STATE THE TAXABLE STATUS OF THE TRUST.
Because of its current tax status, the Company does not
expect to incur any federal income tax liabilities that
would be charged to the Separate Account, and the
Company does not intend to make a charge against the
assets of the Separate Account for federal income
taxes. The Company may, however, incur state and local
taxes (in addition to premium taxes) in several states.
At present, these taxes are not significant. If there
is a material change in state or local tax laws,
charges for such taxes, if any, attributable to the
Separate Account may be made.
See also 46(a), above.
(b) STATE WHETHER THE TRUST QUALIFIED FOR THE LAST TAXABLE
AS A REGULATED INVESTMENT COMPANY AS DEFINED IN SECTION
851 OF THE INTERNAL REVENUE CODE OF 1954, AND STATE ITS
PRESENT INTENTION WITH RESPECT TO SUCH QUALIFICATION
DURING THE CURRENT TAXABLE YEAR.
Not Applicable.
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. IF THE TRUST IS NOT THE ISSUER OF PERIODIC PAYMENT PLAN
CERTIFICATES, FURNISH THE FOLLOWING INFORMATION WITH RESPECT
TO EACH CLASS OR SERIES OF ITS SECURITIES.
Not Applicable.
55. IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN
CERTIFICATES, A TRANSCRIPT OF A HYPOTHETICAL ACCOUNT SHALL
BE FILED IN APPROXIMATELY THE FOLLOWING FORM ON THE BASIS OF
THE CERTIFICATE CALLING FOR THE SMALLEST AMOUNT OF PAYMENTS.
THE SCHEDULE SHALL COVER A CERTIFICATE OF THE TYPE CURRENTLY
BEING SOLD ASSUMING THAT SUCH CERTIFICATE HAD BEEN SOLD AT A
DATE APPROXIMATELY TEN YEARS PRIOR TO THE DATE OF
REGISTRATION OR TO THE APPROXIMATE DATE OF ORGANIZATION OF
THE TRUST.
Not Applicable.
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56. IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN
CERTIFICATES, FURNISH BY YEARS FOR THE PERIOD COVERED BY THE
FINANCIAL STATEMENTS FILED HEREWITH IN RESPECT OF
CERTIFICATES SOLD DURING SUCH PERIOD, THE FOLLOWING
INFORMATION FOR EACH FULLY PAID TYPE AND EACH INSTALLMENT
PAYMENT TYPE OF PERIODIC PAYMENT PLAN CERTIFICATE CURRENTLY
BEING ISSUED BY THE TRUST.
Not Applicable.
57. IF THE TRUST IS THE ISSUER OF PERIODIC PAYMENT PLAN
CERTIFICATES, FURNISH BY YEARS FOR THE PERIOD COVERED BY
FINANCIAL STATEMENTS FILED HEREWITH THE FOLLOWING
INFORMATION FOR EACH INSTALLMENT PAYMENT TYPE OF PERIODIC
PAYMENT PLAN CERTIFICATE CURRENTLY BEING ISSUED BY THE
TRUST.
Not Applicable.
58. IF THE TRUST IS THE ISSUER OF PERIODIC PLAN CERTIFICATES
FURNISH THE FOLLOWING INFORMATION FOR EACH INSTALLMENT
PERIODIC PAYMENT PLAN CERTIFICATE OUTSTANDING AS AT THE
LATEST PRACTICABLE DATE.
Not Applicable.
59. FINANCIAL STATEMENTS:
FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT
Financial statements, if any, will be contained in a
pre-effective amendment to the registration statement for
the Contract on Form S-6 filed under the Securities Act of
1933.
FINANCIAL STATEMENTS OF THE DEPOSITOR
The Financial Statements of the Company are contained in
the registration statement on Form S-6 filed by the Registrant
pursuant the Securities Act of 1933. They are incorporated
herein by reference.
IX. EXHIBITS
A. Furnish the most recent form of the following:
(1) Indenture
Certified copy of Resolutions of the Board of Directors
of the Company dated June 3, 1996 authorizing the
establishment of the VEL III Account was previously
filed in Registration No. 333-155569 on November 5,
1996, and is incorporated herein by reference.
(2) Not Applicable.
(3) (a) Form of Underwriting and Administrative Services was
previously filed on April 16, 1998 in Post-Effective
Amendment No. 11 of the VEL II Account (Registration
No. 33-57792) and is incorporated by reference herein.
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(b) Form of General Agent's Agreement is filed is
filed in the Registrant's initial registration
statement on Form S-6, and is incorporated herein
by reference.
(c) Compensation Schedule is filed in the Registrant's
initial registration statement on Form S-6, and is
incorporated herein by reference.
(4) Not Applicable.
(5) Form of Contract and initial Contract riders is filed
in the Registrant's initial registration statement on
Form S-6, and is incorporated herein by reference.
(6) Organizational documents of the Company previously were
filed by the Company in Registration No. 333-155569 on
November 5, 1996, and are incorporated herein by reference.
(7) Not applicable.
(8) (a) Form of Participation Agreement with Allmerica
Investment Trust was previously filed on April 16, 1998 in
Post-Effective Amendment No. 11 of the VEL II Account
(Registration No. 33-57792) and is incorporated by reference
herein.
(b) Form of Participation Agreement with Variable Insurance
Products Fund and Variable Insurance Products Fund II was
previously filed on April 16, 1998 in Post-Effective
Amendment No. 11 of the VEL II Account (Registration
No. 33-57792) and is incorporated by reference herein.
(c) Form of Participation Agreement with Delaware Group
Premium Fund, Inc. was previously filed on April 16, 1998 in
Post-Effective Amendment No. 11 of the VEL II Account
(Registration No. 33-57792) and is incorporated by reference
herein.
(d) Form of Participation Agreement with T. Rowe Price
International Series, Inc. was previously filed on April 16,
1998 in Post-Effective Amendment No. 11 of the VEL II
Account (Registration No. 33-57792) and is incorporated by
reference herein.
(e) Fidelity Service Agreement as of November 1, 1995 was
previously was filed on April 30, 1996 in Post-Effective
Amendment No. 6 to Registration No. 33-57792, and is
incorporated herein by reference. An Amendment to the
Fidelity Service Agreement, effective as of January 1, 1997,
and a form of Fidelity Service Contract were filed on
April 30, 1997 in Post-Effective Amendment No. 9 to
Registration Statement No. 33-57792, and is incorporated
by reference herein.
(f) Service Agreement with Rowe Price-Fleming
International, Inc. was filed on April 30, 1997 in
Post-Effective Amendment No. 9 to Registration Statement No.
33-57792, and is incorporated by reference herein.
(g) BFDS Agreements for lockbox and mailroom services
Fidelity Service Contract, effective as of January 1, 1997,
was previously filed in
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Post-Effective Amendment No. 9 and is incorporated by
reference herein.
(9) Not applicable.
(10) Form of Application for Contract is filed in the Registrant's
initial registration statement on Form S-6, and is incorporated
herein by reference.
(11) None.
B. (1) None.
(2) None.
C. None.
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SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940 Allmerica
Financial Life Insurance and Annuity Company, depositor of the Registrant, has
caused this registration statement to be duly signed on behalf of the Registrant
in the City of Worcester and Commonwealth of Massachusetts on the 25th day of
June, 1998.
VEL ACCOUNT III OF ALLMERICA FINANCIAL
LIFE INSURANCE AND ANNUITY COMPANY
(Name of Registrant)
BY: ALLMERICA FINANCIAL LIFE INSURANCE
AND ANNUITY COMPANY
(Name of Depositor)
By: /S/ Sheila B. St. Hilaire
---------------------------------------
Assistant Vice President and Counsel
Attest: /s/ Abigail M. Armstrong
-------------------------------
(Name)
Secretary and Counsel
-------------------------------
(Title)
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