As filed with the Securities and Exchange Commission on March 2, 1998
Registration Nos. ____________
No. _____________
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ____ o
Post-Effective Amendment No. ____o
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No.
SEPARATE ACCOUNT VA-6NY
(Exact Name of Registrant)
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)
100 Manhattanville Road, Purchase, New York 10577
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (914) 701-6000
Name and Address of Agent for Service: Copy to:
JAMES W. DEDERER, Esq. FREDERICK R. BELLAMY, Esq.
Chairman, General Counsel Sutherland, Asbill & Brennan,
and Corporate Secretary L.L.P.
Transamerica Life Insurance Company of New York 1275 Pennsylvania Avenue, N.W.
100 Manhattanville Road Washington, D.C. 20004-2404
Purchase, New York 10577
Approximate date of proposed public
offering: As soon as practicable after effectiveness of
the Registration Statement.
Title of securities being registered:
Interests in a separate account under flexible premium deferred
variable annuity contracts.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
PART A
Item of Form N-4 Prospectus Caption
1. Cover Page................................Cover Page
2. Definitions...............................Definitions
3. Synopsis..................................Summary of this Prospectus;
Variable Account Fee Table
4. Condensed Financial Information...........Condensed Financial Information
5. General
(a) Depositor......................Transamerica and the Separate Account
(b) Registrant.....................Transamerica and the Separate Account
(c) Portfolio Company....................The Funds
(d) Fund Prospectus......................The Funds
(e) Voting Rights........................Voting Rights
(f) Administrator........................Charges under the Contracts
6. Deductions and Expenses
(a) General..............................Charges under the Contracts
(b) Sales Load %.........................Charges under the Contracts
(c) Special Purchase Plan................Not Applicable
(d) Commissions..........................Underwriter
(e) Fund Expenses........................Charges under the Contracts
(f) Operating Expenses...................Fee Table
7. Contracts
(a) Persons with Rights..................Description of the Contracts;
Surrender of a Contract;
Death Benefits; Voting Rights;
Ownership
(b) (i) Allocation of Purchase Payments
Payments.......................Description of the Contracts
(ii) Transfers......................Transfers
(iii) Exchanges......................Federal Tax Matters
(c) Changes..............................The Funds; Voting Rights
(d) Inquiries............................Voting Rights
8. Annuity Period............................Settlement Payments
9. Death Benefit.............................Death Benefits
10. Purchase and Contract Value
(a) Purchases............................Description of the Contracts
(b) Valuation............................Description of the Contracts
(c) Daily Calculation....................Description of the Contracts
(d) Underwriter..........................Underwriter
11. Redemptions
(a) By Contract Owners...................Surrender of a Contract
By Annuitant.........................Not Applicable
(b) Texas ORP............................Not Applicable
(c) Check Delay..........................Surrender of a Contract
(d) Lapse................................Not Applicable
(e) Free Look............................Right to Cancel
12. Taxes.....................................Federal Tax Matters
13. Legal Proceedings.........................Legal Proceedings
14. Table of Contents for the
Statement of
Additional Information....................Table of Contents of the
Statement of Additional
Information
PART B
Item of Form N-4 Statement of Additional
Information Caption
15. Cover Page................................Cover Page
16. Table of Contents.........................Table of Contents
17. General Information
and History...............................General Information and History
18. Services
(a) Fees and Expenses
of Registrant........................(Prospectus) Variable Account
Fee Table; (Prospectus)The Funds
(b) Management Contracts.................Not Applicable
(c) Custodian............................Safekeeping of Separate Account
Assets; Records and
Reports
Independent Auditors ...............Accountants
(d) Assets of Registrant.................Not Applicable
(e) Affiliated Person....................Not Applicable
(f) Principal Underwriter................The Underwriter
19. Purchase of Securities
Being Offered.............................(Prospectus) Description of the
Contracts
Offering Sales Load.......................Charges under the Contracts
20. Underwriters..............................The Underwriter
21. Calculation of Performance Data...........Calculation of Yields and
Total Returns
22. Annuity Payments..........................(Prospectus) Settlement
Option Payments
23. Financial Statements......................Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial STATEMENTS
and Exhibits
(a) Financial Statements.................Financial Statements
(b) Exhibits.............................Exhibits
25. Directors and Officers of
the Depositor.............................Directors and Officers of the
Depositor
26. Persons Controlled By or Under
Common Control with the
Depositor or Registrant ..................Persons Controlled By or
Under Common Control with the
Depositor or Registrant
27. Number of Contract Owners.................Number of Contract Owners
28. Indemnification...........................Indemnification
29. Principal Underwriters....................Principal Underwriter
30. Location of Accounts
and Records...............................Location of Accounts and Records
31. Management Services.......................Management Services
32. Undertakings..............................Undertakings
Signature Page............................Signature Page
<PAGE>
TRANSAMERICA SERIES sm
TRANSAMERICA CLASSIC sm
VARIABLE ANNUITY
A Flexible Premium Deferred Variable Annuity
Issued by
Transamerica Life Insurance Company of New York
100 Manhattanville Road, Purchase, New York 10577
This prospectus describes the Transamerica Classic Variable Annuity, a
variable annuity policy ("policy") issued by Transamerica Life Insurance Company
of New York (referred to as "Transamerica"). The policy allows you, the owner,
to accumulate assets on a tax-deferred basis for retirement and other long-term
financial purposes.
You may direct your premiums, as well as any value accumulated under
the contract,policy, to one or more variable sub-accounts of Separate Account
options,VA-6-NY or to the fixed account, or to both. The money you place in each
variable sub-account will be invested solely in a corresponding mutual fund
investment portfolio ("portfolio"). The value of each variable sub-account will
vary in accordance with the investment performance of the portfolio in which
that variable sub-account invests. You bear the entire investment risk for all
assets you place in the variable sub-accounts. This means that, depending on
market conditions, the amount you invest in the variable sub-accounts may
increase or decline. Currently you may choose among the following 17 variable
sub-
accounts:
Janus Aspen Worldwide Growth Alger American Income & Growth
Morgan Stanley UF International Magnum Alliance VPF Growth & Income
Dreyfus VIF Small Cap MFS VIT Growth with Income
OCC Accumulation Trust Small Cap Janus Aspen Balanced
MFS VIT Emerging Growth OCC Accumulation Trust Managed
Alliance VPF Premier Growth Morgan Stanley UF High Yield
Dreyfus VIF Capital Appreciation Morgan Stanley UF Fixed Income
MFS VIT Research Transamerica VIF Money Market
Transamerica VIF Growth
You may also place your premiums or variable accumulated value in the
fixed account. For premiums allocated to the fixed account, Transamerica
guarantees the return of the amount invested at a specified rate of interest for
at least 12 months. Transamerica will periodically declare the rate of interest
applicable to each amount allocated to the fixed account. The minimum rate of
interest credited to the fixed account will be 3%.
This prospectus contains vital information that you should know before
investing. You can obtain more information about the policy by requesting a copy
of the Statement of Additional Information ("SAI") dated ____________________.
The SAI is available free by writing to Transamerica Life Insurance Company of
New York, Annuity Service Center, 401 North Tryon Street, Charlotte, North
Carolina, 28202 or by calling (800) 420-7749. The current SAI has been filed
with the Securities and Exchange Commission and is incorporated by reference
into this prospectus. The table of contents of the SAI is included at the end of
this prospectus.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, nor has the Commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
For your own benefit and protection, please
read this prospectus carefully before you
invest. Keep it on hand for future
reference.
The date of this prospectus is April ___, 1998.
<PAGE>
Under the terms of the policy, we promise to pay you a series of
monthly settlement option payments. Payments may be for a fixed or a variable
amount or a combination of both, for the life of the annuitant or for some other
period as you select prior to the annuity date.
On or before the annuity date, you may transfer assets between and
among the variable sub-accounts and the fixed account. The fixed account has
restrictions on certain transfers . After the annuity date, transfers are
permitted among the variable sub-accounts only if you elect to receive variable
settlement option payments.
On or before the annuity date, you may elect to withdraw all or a
portion of your cash surrender value in exchange for a cash payment. Withdrawals
may be subject to a contingent deferred sales load, certain administrative fees,
premium tax charges, federal, state or local income taxes, and/or a tax penalty.
This prospectus must be accompanied by current prospectuses for the
portfolios.
THIS PROSPECTUS MAY NOT BE OFFERED IN ANY JURISDICTION WHERE SUCH OFFERING IS
UNLAWFUL. ANY INFORMATION THAT A DEALER, SALESPERSON, OR OTHER PERSON GIVES YOU
ABOUT THIS POLICY SHOULD BE CONTAINED IN THIS PROSPECTUS. IF YOU RECEIVE ANY
INFORMATION ABOUT THE POLICY THAT IS NOT CONTAINED IN THIS PROSPECTUS, YOU
SHOULD NOT RELY ON THAT INFORMATION.
Please note that your investment in the policy:
o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency.
Investing in the policy involves certain investment risks, including possible
loss of principal.
This prospectus generally describes only the variable
account portion of the policy, except when the fixed
account is specifically mentioned.
<PAGE>
TABLE OF CONTENTS Page
DEFINITIONS.................................................................6
SUMMARY.....................................................................8
CONDENSED FINANCIAL INFORMATION............................................16
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE ACCOUNT...16
Transamerica Life Insurance Company of New York...................16
Published Ratings.................................................16
The Variable Account..............................................16
THE PORTFOLIOS.............................................................17
THE POLICY.................................................................22
Ownership.........................................................22
PREMIUMS...................................................................23
Premiums..........................................................23
Allocation of Premiums............................................23
Investment Option Limits..........................................24
POLICY VALUE...............................................................24
TRANSFERS..................................................................25
Before the Annuity Date...........................................25
Other Restrictions................................................25
Dollar Cost Averaging.............................................26
Automatic Asset Rebalancing.......................................26
After the Annuity Date............................................26
CASH WITHDRAWALS...........................................................26
Systematic Withdrawal Option......................................27
Automatic Payment Option (APO)....................................28
DEATH BENEFIT..............................................................28
Payment of Death Benefit..........................................29
Designation of Beneficiaries......................................29
Death of Owner Before Annuity Date................................29
If Annuitant Dies Before Annuity Date.............................30
Death After Annuity Date..........................................30
Survival Provision................................................31
CHARGES, FEES AND DEDUCTIONS...............................................31
Contingent Deferred Sales Load....................................31
Free Withdrawals - Allowed Amount.................................31
Other Free Withdrawals............................................32
Administrative Charges............................................32
Mortality and Expense Risk Charge.................................32
Premium Tax Charges...............................................33
Transfer Fee......................................................33
Option and Service Fees...........................................33
Taxes.............................................................33
Portfolio Expenses................................................33
SETTLEMENT OPTION PAYMENTS.................................................33
Annuity Date......................................................33
Settlement Option Payments........................................34
Election of Settlement Option Forms and Payment Options...........34
Payment Options...................................................34
Fixed Payment Option..............................................35
Variable Payment Option...........................................35
Settlement Option Forms...........................................35
FEDERAL TAX MATTERS........................................................36
Introduction......................................................36
Premiums..........................................................36
Taxation of Annuities.............................................37
Qualified Policies................................................39
Taxation of Transamerica .........................................40
Tax Status of Policy..............................................41
Possible Changes in Taxation......................................42
Other Tax Consequences............................................42
PERFORMANCE DATA ..........................................................42
DISTRIBUTION OF THE POLICY.................................................43
LEGAL PROCEEDINGS..........................................................44
LEGAL MATTERS..............................................................44
ACCOUNTANTS................................................................44
VOTING RIGHTS..............................................................44
AVAILABLE INFORMATION......................................................45
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS....................46
APPENDIX A - THE FIXED ACCOUNT............................................A-1
APPENDIX B................................................................B-1
Example of Variable Accumulation Unit Value Calculations.........B-1
Example of Variable Annuity Unit Value Calculations..............B-1
Example of Variable Annuity Payment Calculations.................B-1
APPENDIX C
Disclosure Statement for Individual Retirement
Annuities ..................................................C-1
The policy is available only in New York.
<PAGE>
DEFINITIONS
Annuity Date: The date on which the annuitization phase of the policy begins.
Cash Surrender Value: The amount we will pay to the owner if the policy is
surrendered on or before the annuity date. The cash surrender value is equal to:
the policy value; less any policy fee, contingent deferred sales load, and
premium tax charges.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations issued under it.
Policy Anniversary: The anniversary of the policy effective date each year.
Policy Effective Date: The effective date of the policy as shown on the
information page of the policy.
Policy Year: A 12-month period starting on the policy effective date and ending
with the day before the policy anniversary, and each 12-month period thereafter.
Fixed Account: An account which credits a rate of interest for a period of at
least twelve months for each allocation or transfer.
Fixed Account Accumulated Value: The total dollar value of all amounts the owner
allocates or transfers to the fixed account; plus interest credited; less any
amounts withdrawn, applicable fees or premium tax charges, or transfers out to
the variable account prior to the annuity date.
Policy Value: The sum of the variable accumulated value and the fixed account
accumulated value.
Portfolio: The investment portfolio underlying each variable sub-account in
which we will invest any amounts the owner allocates to that variable
sub-account.
Service Center: Transamerica's Annuity Service Center, at P.O. Box 31848,
Charlotte, North Carolina 28231-1848, telephone (800) 258-4260.
Status (Qualified and Non-Qualified): The policy has a qualified status if it is
issued in connection with a tax-favored retirement plan or program. Otherwise,
the status is non-qualified.
Valuation Day: Any day the New York Stock Exchange is open. To determine the
value of an asset on a day that is not a valuation day, we will use the value of
that asset as of the end of the next valuation day.
Valuation Period: The time interval between the closing (generally 4:00 p.m.
Eastern Time) of the New York Stock Exchange on consecutive valuation days.
Variable Account: Separate Account VA-6-NY, a separate account established and
maintained by Transamerica for the investment of a portion of its assets
pursuant to Section 4240 of the New York Insurance Code.
Variable Accumulation Unit: A unit of measure used to determine the variable
accumulated value before the annuity date. The value of a variable accumulation
unit varies with each variable sub-account.
Variable Accumulated Value: The total dollar value of all variable accumulation
units under this policy prior to the annuity date.
Variable Sub-Account(s): One or more divisions of the variable account which
invests solely in shares of one of the underlying portfolios.
We: The company, Transamerica.
You: The owner.
<PAGE>
SUMMARY
The Policy
The Transamerica Classic sm Variable Annuity is a flexible premium
deferred annuity that is designed to aid your long-term financial planning and
retirement needs. The policy may be used in connection with a retirement plan
which qualifies as a retirement program under Sections 403(b), 408 or 408A of
the Code, with various types of qualified pension and profit sharing plans under
Section 401 of the Code, or with non-qualified plans. Some qualified policies
may not be available in all situations. The policy is issued by Transamerica
Life Insurance Company of New York (formerly called First Transamerica Life
Insurance Company) ("Transamerica"), a wholly-owned subsidiary of Transamerica
Occidental Life Insurance Company. Its principal office is at
100 Manhattanville Road, Purchase, New York 10577, telephone (914)
701-6000. The change in name to Transamerica Life Insurance Company of New York
became effective May 1, 1997.
Transamerica will establish and maintain an account for each policy.
Each owner will an individual annuity policy. The policy provides that the
policy value, after certain adjustments, will be applied to a settlement option
on a future date you select ("annuity date").
You may allocate all or portions of your premiums to one or more
variable sub-accounts or to the fixed account.
The policy value prior to the annuity date, except for amounts in the
options,fixed account, will vary depending on the investment experience of each
of the variable sub-accounts selected by the owner. All benefits and values
provided under the policy, when based on the investment experience of the
variable account, are variable and are not guaranteed as to dollar amount.
Therefore, prior to the annuity date the owner bears the entire investment risk
under the policy for amounts allocated to the variable account.
There is no guaranteed or minimum cash surrender value on amounts
allocated to the variable account, so the proceeds of a surrender could be less
than the amount invested.
The initial premium for each policy must be at least $5,000 ($2,000 for
contributory IRAs, SEP/IRAs and Roth IRAs). Generally each additional premium
must be at least $1,000, unless an automatic premium plan is selected. See page
23."Premiums" page 28.
The Variable Account
The variable account is a separate account (designated Separate Account
VA-6-NY) that is subdivided into variable sub-accounts. See "The Variable
Account" page 21. Assets of each variable sub-account are invested in a
specified mutual fund portfolio ("portfolio"). The variable sub-accounts
currently available for investment are:
Janus Aspen Worldwide Growth
Morgan Stanley UF International Magnum
Dreyfus VIF Small Cap
OCC Accumulation Trust Small Cap
MFS VIT Emerging Growth
Alliance VPF Premier Growth
Dreyfus VIF Capital Appreciation
MFS VIT Research
Transamerica VIF Growth
Alger American Income & Growth
Alliance VPF Growth & Income
MFS VIT Growth with Income
Janus Aspen Balanced
OCC Accumulation Trust Managed
Morgan Stanley UF High Yield
Morgan Stanley UF Fixed Income
Transamerica VIF Money Market
The portfolios pay their investment advisers and administrators certain
fees charged against the assets of each portfolio. The variable accumulated
value, if any, of a policy and the amount of any variable settlement option
payments will vary to reflect the investment performance of the variable
sub-accounts to which amounts have been allocated. Additionally, applicable
charges are deducted. See "Charges, Fees and Deductions" page 37. For more
information about the portfolios, see "The Portfolios" page 21 and the
accompanying portfolios' prospectuses.
The Fixed Account
The policy provides an option to invest premiums in a fixed account
which is part of the general account of Transamerica.
The amounts in the fixed account will be credited interest at a rate of
not less than 3% annually. Transamerica may credit interest at a rate in excess
of 3% at its discretion for any class. Each interest rate will be guaranteed to
be credited for at least 12 months.
Investment Option Limits
Currently, the owner may not elect more than a total of eighteen
investment options over the life of the policy. Investment options include
variable sub-accounts and the fixed account. See "Investment Option Limits" page
29.
Transfers Before the Annuity Date
Prior to the annuity date, you may transfer values between the variable
sub-accounts and the fixed account (within limits). For transfers after the
annuity date, see "After the Annuity Date" page 32
Transfers out of the fixed account are restricted to four per policy
year and to a limited percentage of the fixed policy value. More frequent
transfers may be allowed under certain services and options, for example, dollar
cost averaging. See "The Fixed Account" in Appendix A.
Transamerica currently imposes a transfer fee of $10 for each transfer
in excess of 12 made during the same policy year. See "Transfers" on page 30 for
additional limitations and information regarding transfers.
Withdrawals
You may withdraw all or part of the cash surrender value on or before
the annuity date. The cash surrender value of your policy is the policy value
less any policy fee, contingent deferred sales load and premium tax charges. The
policy fee generally will be deducted on a full surrender of a policy if the
policy value is then less than $50,000. Transamerica may delay payment of any
withdrawal from the fixed account for up to six months. See "Cash Withdrawals"
page 32
Withdrawals may be taxable, subject to withholding and subject to a
penalty tax. Withdrawals from a qualified policy may be subject to severe
restrictions and, in certain circumstances, prohibited. See "Federal Tax
Matters" page 43.
Contingent Deferred Sales Load
Transamerica does not deduct a sales charge when premiums are paid
(although premium tax charges may be deducted). However, if any part of the
policy value is withdrawn, a contingent deferred sales load of up to 6% of
premiums may be deducted. After a premium has been held by Transamerica for
seven years, it may be withdrawn without charge. No contingent deferred sales
load is assessed on payment of the death benefit, on transfers within the
policy, or on certain annuitizations. See "Contingent Deferred Sales Load" page
37, and "Withdrawals" page 32.
Also, beginning 30 days from the policy effective date (or the end of
the free look period if later), any portion of the "allowed amount" may be
withdrawn each policy year without imposition of any contingent deferred sales
load. The allowed amount for each policy year is equal to 10% of premiums, that
were received during the last seven years, as of the prior policy anniversary,
less any withdrawals already taken that policy year. All premiums not previously
withdrawn that have been held at least seven years are not subject to a
contingent deferred sales load. For purposes of calculating the contingent
deferred sales load, withdrawals will be considered to be taken first from
premiums, on a first in/first out basis, and then from earnings.
Other Charges and Deductions
Transamerica deducts a mortality and expense risk charge of 1.20%
(annually) of the assets in the variable account and an administrative expense
charge of 0.15% (annually) of these assets. The administrative expense charge
may change, but it is guaranteed not to exceed a maximum effective annual rate
of 0.35%. See "Mortality and Expense Risk Charge" page 39 and "Administrative
Charges" page 38.
An policy fee of currently $30 (or 2% of the policy value, if less) is
deducted at the end of each policy year and upon surrender. This fee may change
but it is guaranteed not to exceed $60 (or 2% of the policy value, if less) per
policy year. If the policy value is more than $50,000 on the last business day
of a policy year (or as of the date the policy is surrendered), the policy fee
will be waived for that year.
After the annuity date, the annual annuity fee of $30 will be deducted
in equal installments from each periodic payment under the variable payment
option.
For each transfer in excess of 12 during a policy year, a transfer fee
of $10 will be imposed. See "Transfer Fee" page 40.
Also, New York currently has no premium tax nor retaliatory premium
tax. If New York imposes these taxes in the future, or if the owner is or
becomes a resident of a state other than New York where such taxes apply, the
charges could be deducted from premiums and/or from the annuity purchase amount
upon annuitization (See "Premium Taxes" page 39.)
Currently, no fees are deducted for any other services or options under
the policy. However, Transamerica does reserve the right to impose fees to cover
processing for certain services and options in the future, including dollar cost
averaging, systematic withdrawals, automatic payouts, asset allocation and asset
rebalancing.
Variable Policy Fee Table
The purpose of this table is to assist in understanding the various
costs and expenses that the owner will bear directly and indirectly. The table
reflects expenses of the variable account as well as of the mutual fund
portfolios. The table assumes that the entire policy value is in the variable
account. The information below should be considered together with the narrative
provided under the heading "Charges, Fees and Deductions" on page 31 of this
prospectus, and with the prospectuses for the portfolios. In addition to the
expenses listed below, premium tax charges may be applicable.
Sales Load(1)
Sales Load Imposed on Premiums 0
Maximum Contingent Deferred Sales Load(2) 6%
Range of Contingent Deferred Sales Load Over Time
Years Since Contingent Deferred Sales Load
Premium Receipt (as a percentage of premium)
Less than 1 year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less 7 years 2%
7 or more years 0%
Other Policy Expenses
Transfer Fee (first 12 per policy year)(3) 0
Fees For Other Services and Options(4) 0
Policy Fee(5) $30
Variable Account Annual Expenses(7)
(as a percentage of the variable accumulated value)
Mortality and Expense Risk Charge 1.20%
Administrative Expense Charge(8) 0.15%
Total Variable Account Annual Expenses 1.35%
<PAGE>
Portfolio Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)(8)
Total
Portfolio
Management Other Annual
Portfolio Fees Expenses Expenses
Janus Aspen Worldwide Growth 0.66 0.08 0.74
Morgan Stanley UF International 0.00 1.15 1.15
Magnum
Dreyfus VIF Small Cap 0.75 0.03 0.78
OCC Accumulation Trust Small Cap 0.80 0.17 0.97
MFS VIT Emerging Growth 0.75 0.15 0.90
Alliance VPF Premier Growth 0.85 0.10 0.95
Dreyfus VIF Capital Appreciation 0.75 0.05 0.80
MFS VIT Research 0.75 0.17 0.92
Transamerica VIF Growth 0.62 0.23 0.85
Alger American Income & Growth 0.625 0.115 0.74
Alliance VPF Growth & Income 0.63 0.09 0.72
MFS VIT Growth with Income 0.75 0.25 1.00
Janus Aspen Balanced 0.76 0.07 0.83
OCC Accumulation Trust Managed 0.80 0.07 0.87
Morgan Stanley UF High Yield 0.00 0.80 0.80
Morgan Stanley UF Fixed Income 0.00 0.70 0.70
Transamerica VIF Money Market 0.35 0.25 0.60
Expense information regarding the portfolios has been provided by the
portfolios. In preparing the tables above and below and the examples that
follow, Transamerica has relied on the figures provided by the portfolios.
Transamerica has no reason to doubt the accuracy of that information, but
Transamerica has not verified those figures. These figures are for the year
ended December 31, 1997, except for the Transamerica VIF Money Market Portfolio
which are estimates for the year 1998, its first year of operation. Actual
expenses in future years may be higher or lower than these figures.
Notes to Fee Table:
(1) The contingent deferred sales load applies to each policy, regardless
of how the policy value is allocated between the variable account and
the fixed account.
(2) A portion of the premiums may be withdrawn each policy year without
imposition of any contingent deferred sales load, and after seven
years, a premium may be withdrawn free of any contingent deferred sales
load. See "Charges, Fees and Deductions" page 37.
(3) A transfer fee of $10 will be imposed for each transfer in excess of
12 in a policy year. See "Charges, Fees and Deductions" page 37.
(4) Transamerica currently does not impose fees for any other services, or
options. However, Transamerica reserves the right to impose a fee for
various services and options including dollar cost averaging,
systematic withdrawals, automatic payouts, asset allocation and asset
rebalancing.
(5) The current policy fee is $30 (or 2% of the policy value, if less) per
policy year. This fee will be waived for policy values over $50,000.
This limit may be changed in the future. The fee may be changed, but it
may not exceed $60 (or 2% of the policy value, if less).
See "Charges, Fees and Deductions" page 37.
(6) The variable account annual expenses do not apply to the fixed account.
(7) The current annual administrative expense charge of 0.15% may be
increased to 0.35%. See "Charges, Fees and Deductions" page 37.
(8) From time to time, the portfolios' investment advisers, each in its own
discretion, may voluntarily waive all or part of their fees and/or
voluntarily assume certain portfolio expenses. The expenses shown in
the Portfolio Expenses table are the expenses paid for 1997 (except for
the Transamerica VIF Money Market Portfolio, which are estimates). The
expenses shown in the table reflect a portfolio's adviser's waivers or
fees or reimbursement of expenses if applicable. It is anticipated that
such waivers or reimbursements will continue for calendar year 1998.
Without such waivers or reimbursements, the annual expenses for 1997
for certain portfolios would have been, as a percentage of assets, as
follows:
<TABLE>
<CAPTION>
Total Portfolio
Management Fee Other Expenses Annual Expense
<S> <C> <C> <C>
Janus Aspen Worldwide Growth 0.72 0.09 0.81
Morgan Stanley UF International Magnum 0.80 1.98 2.78
Alliance VPF Premier Growth 1.00 0.10 1.10
Transamerica VIF Growth 0.75 0.23 0.98
Alliance VPF Growth & Income 0.63 0.09 0.72
MFS VIT Growth with Income 0.75 0.35 1.10
Janus Aspen Balanced 0.77 0.06 0.83
Morgan Stanley UF High Yield 0.80 0.88 1.68
Morgan Stanley UF Fixed Income 0.40 1.31 1.71
</TABLE>
Without expense reimbursements, the other expenses for the first year
of operation for the Transamerica VIF Money Market Portfolio are
expected to be 0.80% There were no fee waivers or expense
reimbursements during 1997 for the Dreyfus VIF Small Cap Portfolio, OCC
Accumulation Trust Small Cap Portfolio, MFS VIT Emerging Growth
Portfolio, Dreyfus VIF Capital Appreciation Portfolio, MFS VIT Research
Portfolio, Alger American Income and Growth Portfolio or OCC
Accumulation Trust Managed Portfolio.
<PAGE>
EXAMPLES
The following tables show the total expenses an owner would incur in
various situations assuming a $1,000 investment and a 5% annual return on
assets.
These examples assume an average policy value of $40,000 and,
therefore, a deduction of 0.075% has been made to reflect the $30 policy fee.
These examples also assume that all amounts were allocated to the variable
sub-account indicated. These examples also assume that no transfer fees or other
option or service fees or premium tax charges have been assessed. Premium tax
charges may be applicable, but are not currently assessed by the State of New
York. See "Premium Tax Charges" page 39.
Examples 1 through 3 show expenses for policies based on fee waivers
and reimbursements for the portfolios for 1996. There is no guarantee that any
fee waivers or expense reimbursements will continue in the future. For
annuitizations before the first policy anniversary, and for annuitizations under
a form that does not include life contingencies, the contingent deferred sales
load may apply (see expense examples in column 1).
<TABLE>
<CAPTION>
3. If the owner elects
Examples 1-3 to annuitize at the end
An owner would pay the following 1. If the owner 2. If the owner does of the applicable
expenses on a $1,000 investment, surrenders the policy not surrender and does period under a
assuming a 5% annual return on assets: at the end of the not annuitize the Settlement Option with
applicable time period: policy: life contingencies:
1 Year 3 Years 1 Year 3 Years 1 Year 3 Years
<S> <C> <C> <C> <C> <C> <C>
Janus Aspen Worldwide Growth 75.96 112.76 21.96 67.76 21.96 67.76
Morgan Stanley UF International Magnum 80.06 125.10 26.06 80.10 26.06 80.10
Dreyfus VIF Small Cap 76.36 113.97 22.36 68.97 22.36 68.97
OCC Accumulation Trust Small Cap 78.24 119.50 24.24 74.50 24.24 74.50
MFS VIT Emerging Growth 77.56 117.59 23.56 72.59 23.56 72.59
Alliance VPF Premium Growth 78.06 119.10 24.06 74.10 24.06 74.10
Dreyfus VIF Capital Appreciation 76.26 113.66 22.26 68.66 22.26 68.66
MFS VIT Research 77.76 118.19 23.76 73.19 23.76 73.19
Transamerica VIF Growth 77.06 116.08 23.06 71.08 23.06 71.08
Alger American Income & Growth 75.96 112.76 21.96 67.76 21.96 67.76
Alliance VPF Growth and Income 75.76 112.15 21.76 67.15 21.76 67.15
MFS VIF Growth with Income 78.56 120.60 24.56 75.60 24.56 75.60
Janus Aspen Balanced 76.86 115.48 22.86 70.48 22.86 70.48
OCC Accumulation Trust Managed 77.23 116.39 23.23 71.39 23.23 71.39
Morgan Stanley UF High Yield 76.56 114.57 22.56 69.57 22.56 69.57
Morgan Stanley UF Fixed Income 75.56 111.54 21.56 66.54 21.56 66.54
Transamerica VIF Money Market 74.55 108.51 20.55 63.51 20.55 63.51
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES PAID MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT
TO THE GUARANTEES IN THE POLICY. THE ASSUMED 5% ANNUAL RATE OF RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS THAN THIS ASSUMED RATE.
Settlement Option Payments
Settlement option payments will be made either on a fixed basis or a
variable basis or a combination of a fixed and variable basis, as you select.
You have flexibility in choosing the annuity date, but it may generally not be a
date later than the annuitant's 90th birthday. Certain qualified policies may
have restrictions as to the annuity date and the types of settlement options
available. See "Settlement Option Payments" page 40.
Four settlement options are available under the policy: (1) life
annuity; (2) life and contingent annuity; (3) life annuity with period
certain; and (4) joint and survivor annuity. See "Settlement Option Forms"
page 42.
Death of Owner Before the Annuity Date
If an owner dies prior to the annuity date and before either the
owner's or any joint owner's 85th birthday, the death benefit for the policy
will be the greatest of (a) the policy value or (b) the sum of all premiums paid
to the policy, less withdrawals and applicable premium tax charges, or (c) the
highest policy value on any policy anniversary prior to the earlier of the
owner's or joint owner's 85th birthday, plus premiums made and less withdrawals
and applicable premium tax charges since that policy anniversary. If death
occurs after the earlier of the owner's or joint owner's 85th birthday, the
death benefit will be the policy value. If the owner is not a natural person,
the annuitant will be treated as the owner(s) for purposes of the death benefit.
The death benefit will generally be paid within seven days of receipt
of the required proof of death of the owner and election of the method of
settlement or as soon thereafter as Transamerica has sufficient information to
make the payment. If no settlement method is elected the death benefit will be
distributed within five years after the owner's death. No contingent deferred
sales load is imposed. The death benefit may be paid as either a lump sum or as
a settlement option. See "Death Benefit" page 34.
Federal Income Tax Consequences
An owner who is a natural person generally should not be taxed on
increases in the policy value until a distribution under the policy occurs
(e.g., a withdrawal or settlement option payment) or is deemed to occur (e.g., a
pledge, loan, or assignment of a policy). Generally, a portion (up to 100%) of
any distribution or deemed distribution is taxable as ordinary income. The
taxable portion of distributions is generally subject to income tax withholding
unless the recipient elects otherwise (although withholding is mandatory for
certain qualified policies). In addition, a federal penalty tax may apply to
certain distributions. See "Federal Tax Matters" page 43.
Right to Cancel
The owner has the right to examine the policy for a limited period,
known as a "free look period." The owner can cancel the policy during this
period by delivering a written notice of cancellation or sending a telegram and
returning the policy to (a) the agent through whom the policy was purchased or
(b) the Service Center before midnight of the tenth day after receipt of the
policy (or longer if required by state law). Notice given by mail and return of
the policy by mail, properly addressed and postage prepaid, will be deemed by
Transamerica to have been made on the date postmarked. Unless otherwise required
by law, Transamerica will refund the premium(s) allocated to the fixed account
(less any withdrawals) plus the variable accumulated value as of the date the
written notice and the policy are received by Transamerica. See "Premiums" page
28 and "Policy Value" page 26.
Questions
Questions about procedures or the policy can be answered by the
Transamerica Annuity Service Center ("Service Center"), at P.O. Box 31848,
Charlotte, North Carolina 28231-1848, telephone (800) 258-4260. All inquiries
should include the policy number and the owner's name.
NOTE: The foregoing summary is qualified in its entirety by the
detailed information in the remainder of this prospectus and in the prospectuses
for the portfolios which should be referred to for more detailed information.
With respect to qualified policies, it should be noted that the requirements of
a particular retirement plan, an endorsement to the policy, or limitations or
penalties imposed by the Code or the Employee Retirement Income Security Act of
1974, as amended, may impose additional limits or restrictions on premiums,
withdrawals, distributions, or benefits, or on other provisions of the policy.
This prospectus does not describe such limitations or restrictions. See "Federal
Tax Matters" page 43.
CONDENSED FINANCIAL INFORMATION
Because the variable account has not yet commenced operations, there
are no financial statements available.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE ACCOUNT
Transamerica Life Insurance Company of New York
Transamerica Life Insurance Company of New York (formerly called First
Transamerica Life Insurance Company) ("Transamerica") is a stock life insurance
company incorporated under the laws of the State of New York on February 5,
1986. It is principally engaged in the sale of life insurance and annuity
policies. Transamerica is a wholly-owned subsidiary of Transamerica Occidental
Life Insurance Company. The address of Transamerica is 100 Manhattanville Road,
Purchase, New York 10577. The name change for Transamerica became effective May
1, 1997.
Published Ratings
Transamerica may from time to time publish in advertisements, sales
literature and reports to owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A.M. Best Company,
Standard & Poor's, Moody's, and Duff & Phelps. The ratings reflect the financial
strength and/or claims-paying ability of Transamerica and should not be
considered as bearing on the investment performance of the variable account.
Each year the A.M. Best Company reviews the financial status of thousands of
insurers, culminating in the assignment of Best's Ratings. These ratings reflect
their current opinion of the relative financial strength and operating
performance of an insurance company in comparison to the norms of the
life/health insurance industry. In addition, the claims-paying ability of
Transamerica as measured by Standard & Poor's Insurance Ratings Services,
Moody's, or Duff & Phelps may be referred to in advertisements or sales
literature or in reports to owners. These ratings are opinions of an operating
insurance company's financial capacity to meet the obligations of its insurance
and annuity policies in accordance with their terms, including its obligations
under the fixed account of this policy. Such ratings do not reflect the
investment performance of the variable account or the degree of risk associated
with an investment in the variable account.
The Variable Account
Separate Account VA-6-NY of Transamerica (the "variable account") was
established by Transamerica as a separate account under the laws of the State of
New York pursuant to September 11, 1996, resolutions of Transamerica's Board of
Directors. The variable account is registered with the Securities and Exchange
Commission ("Commission") under the Investment Company Act of 1940 (the "1940
Act") as a unit investment trust. It meets the definition of a separate account
under the federal securities laws. However, the Commission does not supervise
the management or the investment practices or policies of the variable account.
The assets of the variable account are owned by Transamerica but they
are held separately from the other assets of Transamerica. Section 4240 of the
New York Insurance Code provides that the assets of a separate account are not
chargeable with liabilities incurred in any other business operation of the
insurance company (except to the extent that assets in the separate account
exceed the reserves and other liabilities of the separate account). Income,
gains and losses incurred on the assets in the variable account, whether or not
realized, are credited to or charged against the variable account without regard
to other income, gains or losses of Transamerica. Therefore, the investment
performance of the variable account is entirely independent of the investment
performance of Transamerica's general account assets or any other separate
account maintained by Transamerica.
The variable account currently has seventeen variable sub-accounts
available under the policy, each of which invests solely in a specific
corresponding portfolio. Changes to the variable sub-accounts may be made at the
discretion of Transamerica. See "Addition, Deletion, or Substitution" page 26.
THE PORTFOLIOS
Each of the variable sub-accounts offered under the policy invests
exclusively in one of the portfolios. Descriptions of each portfolio's
investment objectives follow. The management fees listed below are fees
specified in the applicable advisory policy (i.e., before any fee waivers).
The Worldwide Growth Portfolio of the Janus Aspen Series seeks long-term growth
of capital in a manner consistent with the preservation of capital. It is a
diversified portfolio that pursues its objective primarily through investments
in common stocks of foreign and domestic issuers. The portfolio has the
flexibility to invest on a worldwide basis in companies and other organizations
of any size, regardless of country of organization or place of principal
business activity. The portfolio normally invests in issuers from at least five
different countries, including the United States. The portfolio may at times
invest in fewer than five countries or even a single country.
Adviser: Janus Capital Corporation. Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200 million plus 0.65% of the assets over $500
million.
The International Magnum Portfolio of the Morgan Stanley Universal Funds, Inc.,
seeks long-term capital appreciation by investing primarily in equity securities
of non-U.S. issuers domiciled in EAFE countries. The countries in which the
portfolio will invest are those comprising the Morgan Stanley Capital
International EAFE Index, which includes Australia, Japan, New Zealand, most
nations located in Western Europe and certain developed countries in Asia, such
as Hong Kong and Singapore (collectively the "EAFE countries"). The portfolio
may invest up to 5% of its total assets in securities of issuers domiciled in
non-EAFE countries. Under normal circumstances, at least 65% of the total assets
of the portfolio will be invested in equity securities of issuers in at least
three different EAFE countries.
Adviser: Morgan Stanley Asset Management Inc. Management Fee: 0.80% of the first
$500 million plus 0.75% of the next $500 million plus 0.70% of the assets over
$1 billion.
The Small Cap Portfolio of the Dreyfus Variable Investment Fund seeks to
maximize capital appreciation. It seeks to achieve its objective by investing
principally in common stocks. Under normal market conditions, the portfolio will
invest at least 65% of its total assets in companies with market capitalizations
of less than $1.5 billion at the time of purchase which The Dreyfus Corporation
believes to be characterized by new or innovative products, services or
processes which should enhance prospects for growth in future earnings.
Adviser: The Dreyfus Corporation. Management Fee: 0.75%.
The Small Cap Portfolio of the OCC Accumulation Trust seeks capital appreciation
through investments in a diversified portfolio consisting primarily of equity
securities of companies with market capitalizations of under $1 billion. Under
normal circumstances at least 65% of the portfolio's assets will be invested in
equity securities. The majority of securities purchased by the portfolio will be
traded on the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market, and will also include options, warrants, bonds, notes
and debentures which are convertible into or exchangeable for, or which grant a
right to purchase or sell, such securities. In addition, the portfolio may also
purchase foreign securities provided that they are listed on a domestic or
foreign securities exchange or are represented by American depository receipts
listed on a domestic securities exchange or traded in domestic or foreign
over-the-counter markets.
Adviser: OpCap Advisors. Management Fee: 0.80% of the first $400 million plus
0.75% of the next $400 million plus 0.70% of assets over $800 million.
The Emerging Growth Series of the MFS Variable Insurance Trust seeks to provide
long-term growth of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the investment objective of long-term
growth of capital. The policy is to invest primarily (i.e., at least 80% of its
assets under normal circumstances) in common stocks of companies that the
Adviser believes are early in their life cycle but which have the potential to
become major enterprises (emerging growth companies). While the portfolio will
invest primarily in common stocks, the portfolio may, to a limited extent, seek
appreciation in other types of securities such as fixed income securities (which
may be unrated), convertible securities and warrants when relative values make
such purchases appear attractive either as individual issues or as types of
securities in certain economic environments. The portfolio may invest in
non-convertible fixed income securities rated lower than "investment grade"
(commonly known as "junk bonds") or in comparable unrated securities, when, in
the opinion of the Adviser, such an investment presents a greater opportunity
for appreciation with comparable risk to an investment in "investment grade"
securities. Under normal market conditions the portfolio will invest not more
than 5% of its nets assets in these securities. Consistent with its investment
objective and policies described above, the portfolio may also invest up to 25%
(and generally expects to invest not more than 15%) of its net assets in foreign
securities (including emerging market securities and Brady Bonds) which are not
traded on a U.S. exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Premier Growth Portfolio of Alliance Variable Products Series Fund, Inc.,
seeks growth of capital by pursuing aggressive investment policies. Since
investments will be made based upon their potential for capital appreciation,
current income will be incidental to the objective of capital growth. The
portfolio will invest predominantly in the equity securities (common stocks,
securities convertible into commons stocks and rights and warrants to subscribe
for or purchase common stocks) of a limited number of large, carefully selected,
high-quality U.S. companies that, in the judgment of the Adviser, are likely to
achieve superior earnings growth. The portfolio investments in the 25 such
companies most highly regarded at any point in time by the Adviser will usually
constitute approximately 70% of the portfolio's net assets. The portfolio thus
differs from more typical equity mutual funds by investing most of its assets in
a relatively small number of intensively researched companies. The portfolio
will, under normal circumstances, invest at least 85% of the value of its total
assets in the equity securities of U.S. companies.
Adviser: Alliance Capital Management L.P. Management Fee: 1%.
The Capital Appreciation Portfolio of the Dreyfus Variable Investment Fund is a
diversified portfolio, the primary investment objective of which is to provide
long-term capital growth consistent with the preservation of capital; current
income is a secondary investment objective. During periods which the Sub-Adviser
determines to be of market strength, the portfolio acts aggressively to increase
shareholders' capital by investing principally in common stocks of domestic and
foreign issuers, common stocks with warrants attached and debt securities of
foreign governments. The portfolio will seek investment opportunities generally
in large capitalization companies (those with market capitalizations exceeding
$500 million) which the Sub-Adviser believes have the potential to experience
above average and predictable earnings growth.
Adviser: The Dreyfus Corporation. Sub-Adviser: Fayez Sarofim & Co. Management
Fee: 0.75%.
The Research Series of the MFS Variable Insurance Trust seeks long-term growth
of capital and future income. The policy is to invest a substantial proportion
of its assets in equity securities of companies believed to possess better than
average prospects for long-term growth. Equity securities in which the portfolio
may invest include the following: common stocks, preferred stocks and preference
stocks, securities such as bonds, warrants or rights that are convertible into
stocks and depository receipts for those securities. These securities may be
listed on securities exchanges, traded in various over-the-counter markets or
have no organized markets. A smaller proportion of the assets may be invested in
bonds, short-term obligations, preferred stocks or common stocks whose principal
characteristic is income production rather than growth. Such securities may also
offer opportunities for growth of capital as well as income. In the case of both
growth stocks and income issues, emphasis is placed on the selection of
progressive, well-managed companies. The portfolio's non-convertible debt
investments, if any, may consist of "investment grade" securities, and, with
respect to no more than 10% of the portfolio's net assets, securities in the
lower rated categories or securities which the Adviser believes to be a similar
quality to these lower rated securities (commonly know as "junk bonds").
Consistent with its investment objective and policies described above, the
portfolio may also invest up to 20% of its net assets in foreign securities
(including emerging market securities) which are not traded on a U.S. exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., seeks
long-term capital growth. Common stock (listed and unlisted) is the basic form
of investment. Although the portfolio invests the majority of its assets in
common stocks, the portfolio may also invest in debt securities and preferred
stocks (both having a call on common stocks by means of a conversion privilege
or attached warrants) and warrants or other rights to purchase common stocks.
Unless market conditions would indicate otherwise, the portfolio will be
invested primarily in such equity-type securities. When in the judgment of the
Sub-Adviser market conditions warrant, the portfolio may, for temporary
defensive purposes, hold part or all of its assets in cash, debt or money market
instruments. The portfolio may invest up to 10% of its assets in debt securities
having a call on common stocks that are rated below investment grade.
Adviser: Transamerica Occidental Life Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc. Management Fee: 0.75%.
The Income and Growth Portfolio of The Alger American Fund seeks, primarily, a
high level of dividend income. Capital appreciation is a secondary objective of
the portfolio. Except during temporary defensive periods, the portfolio attempts
to invest 100%, and it is a fundamental policy of the portfolio to invest at
least 65%, of its total assets in dividend paying equity securities. Alger
Management will favor securities it believes also offer opportunities for
capital appreciation. The portfolio may invest up to 35% of its total assets in
money market instruments and repurchase agreements and in excess of that amount
(up to 100% of its assets) during temporary defensive periods.
Adviser: Fred Alger Management, Inc. Management Fee: 0.625%.
The Growth and Income Portfolio of the Alliance Variable Products Series Fund,
Inc., seeks reasonable current income and reasonable opportunity for
appreciation through investments primarily in dividend-paying common stocks of
good quality. Whenever the economic outlook is unfavorable for investment in
common stock, investments in other types of securities, such as bonds,
convertible bonds, preferred stock and convertible preferred stocks may be made
by the portfolio. Purchases and sales of portfolio securities are made at such
times and in such amounts as are deemed advisable in light of market, economic
and other conditions.
Adviser: Alliance Capital Management L.P. Management Fee: 0.625%.
The Growth with Income Series of the MFS Variable Insurance Trust seeks
reasonable current income and long-term growth of capital and income. Under
normal market conditions, the portfolio will invest at least 65% of its assets
in equity securities of companies that are believed to have long-term prospects
for growth and income. Equity securities in which the portfolio may invest
include the following: common stocks, preferred stocks and preference stock;
securities such as bonds, warrants or rights that are convertible into stocks;
and depository receipts for those securities. These securities may be listed on
securities exchanges, traded in various over-the-counter markets or have no
organized markets. Consistent with its investment objective and policies
described above, the portfolio may also invest up to 75% (and generally expects
to invest no more than 15%) of its net assets in foreign securities (including
emerging market securities and Brady Bonds) which are not traded on a U.S.
exchange.
Adviser: Massachusetts Financial Services Company. Management Fee: 0.75%.
The Balanced Portfolio of the Janus Aspen Series seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. It is a
diversified portfolio that, under normal circumstances, pursues its objective by
investing 40-60% of its assets in securities selected primarily for their growth
potential and 40-60% of its assets in securities selected primarily for their
income potential. This portfolio normally invests at least 25% of its assets in
fixed-income senior securities, which include debt securities and preferred
stocks.
Adviser: Janus Capital Corporation. Management Fee: 0.75% of the first $300
million plus 0.70% of the next $200 million plus 0.65% of the assets over $500
million.
The Managed Portfolio of the OCC Accumulation Trust seeks growth of capital over
time through investment in a portfolio consisting of common stocks, bonds and
cash equivalents, the percentages of which will vary based on the Adviser's
assessments of the relative outlook for such investments. Debt securities are
expected to be predominantly investment grade intermediate to long term U.S.
Government and corporate debt, although the portfolio will also invest in high
quality short term money market and cash equivalent securities and may invest
almost all of its assets in such securities when the Adviser deems it advisable
in order to preserve capital. In addition, the portfolio may also purchase
foreign securities provided that they are listed on a domestic or foreign
securities exchange or are represented by American depository receipts listed on
a domestic securities exchange or traded in domestic or foreign over-the-counter
markets.
Adviser: OpCap Advisors. Management Fee: 0.80% of first $400 million plus 0.75%
of next $400 million plus 0.70% of the assets over $800 million.
The High Yield Portfolio of the Morgan Stanley Universal Funds, Inc., seeks
above-average total return over a market cycle of three to five years by
investing primarily in high yield securities of U. S. and foreign issuers,
including corporate bonds and other fixed income securities and derivatives.
High yield securities are rated below investment grade and are commonly referred
to as "junk bonds." The portfolio's average weighted maturity will ordinarily
exceed five years and will usually be between five and fifteen years.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.50% of first $500
million plus 0.45% of next $500 million plus 0.40% of the assets over $1
billion.
The Fixed Income Portfolio of the Morgan Stanley Universal Funds, Inc., seeks
above-average total return over a market cycle of three to five years by
investing primarily in a diversified portfolio of U.S. government and agencies,
corporate bonds, mortgage backed securities, foreign bonds and other fixed
income securities and derivatives. The portfolio's average weighted maturity
will ordinarily exceed five years and will usually be between five and fifteen
years.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.40% of the first
$500 million plus 0.35% of the next $500 million plus 0.30% of the assets over
$1 billion.
The Money Market Portfolio of the Transamerica Variable Insurance Fund, Inc.,
seeks to maximize current income from money market securities consistent with
liquidity and the preservation of principal. The portfolio invests primarily in
high quality U. S. dollar-denominated money market instruments with remaining
maturities of 13 months or less, including: obligations issued or guaranteed by
the U. S. and foreign governments and their agencies and instrumentalities;
obligations of U. S. and foreign banks, or their foreign branches, and U. S.
savings banks; short-term corporate obligations, including commercial paper,
notes and bonds; other short-term debt obligations with remaining maturities of
397 days or less; and repurchase agreements involving any of the securities
mentioned above. The portfolio may also purchase other marketable,
non-convertible corporate debt securities of U. S. issuers. These investments
include bonds, debentures, floating rate obligations, and issues with optional
maturities.
Adviser: Transamerica Occidental Life Insurance Company. Sub-Adviser:
Transamerica Investment Services, Inc. Management Fee: 0.35%.
Meeting investment objectives depends on various factors, including, but not
limited to, how well the portfolio managers anticipate changing economic and
market conditions. THERE IS NO ASSURANCE THAT ANY OF THESE PORTFOLIOS WILL
ACHIEVE THEIR STATED OBJECTIVES.
An investment in the policy is not a deposit or obligation of, or
guaranteed or endorsed, by any bank, nor is the policy federally insured by the
Federal Deposit Insurance Corporation or any other government agency. Investing
in the policy involves certain investment risks, including possible loss of
principal.
Since all of the portfolios are available to registered separate
accounts offering variable annuity and variable life products of Transamerica as
well as other insurance companies, there is a possibility that a material
conflict may arise between the interests of the variable account and one or more
other separate accounts investing in the portfolios. In the event of a material
conflict, the affected insurance companies will take any necessary steps to
resolve the matter, including stopping their separate accounts from investing in
the portfolios. See the portfolios' prospectuses for greater details.
Additional information concerning the investment objectives and
policies of all of the portfolios, the investment advisory services and
administrative services and charges can be found in the current prospectuses for
the portfolios which accompany this prospectus. The portfolios' prospectuses
should be read carefully before any decision is made concerning the allocation
of premiums to, or transfers among, the variable sub-accounts.
Transamerica may receive payments from some or all of the portfolios or
their advisers, in varying amounts, that may be based on the amount of assets
allocated to the portfolios. The payments are for administrative or distribution
services.
Addition, Deletion, or Substitution
Transamerica does not control the portfolios and cannot guarantee that
any of the variable sub-accounts offered under this policy or any of the
portfolios will always be available for allocation of premiums or transfers.
Transamerica retains the right to make changes in the variable account and in
its investments.
Transamerica reserves the right to eliminate the shares of any
portfolio held by a variable sub-account and to substitute shares of another
portfolio or of another investment company for the shares of any portfolio, if
the shares of the portfolio are no longer available for investment or if, in
Transamerica's judgment, investment in any portfolio would be inappropriate in
view of the purposes of the variable account. To the extent required by the 1940
Act, a substitution of shares attributable to the owner's interest in a variable
sub-account will not be made without prior notice to the owner and the prior
approval of the Commission. Nothing contained herein shall prevent the variable
account from purchasing other securities for other series or classes of variable
annuity policies, or from effecting an exchange between series or classes of
variable policies on the basis of requests made by owners.
New variable sub-accounts for the policies may be established when, in
the sole discretion of Transamerica, marketing, tax, investment or other
conditions so warrant. Any new variable sub-accounts will be made available to
existing owners on a basis to be determined by Transamerica. Each additional
variable sub-account will purchase shares in a mutual fund portfolio or other
investment vehicle. Transamerica may also eliminate one or more variable
sub-accounts if, in its sole discretion, marketing, tax, investment or other
conditions so warrant. In the event any variable sub-account is eliminated,
Transamerica will notify owners and request a re-allocation of the amounts
invested in the eliminated variable sub-account.
In the event of any substitution or change, Transamerica may make such
changes in the policy as may be necessary or appropriate to reflect such
substitution or change. Furthermore, if deemed to be in the best interests of
persons having voting rights under the policies, the variable account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under such Act in the event such registration is no
longer required, or may be combined with one or more other separate accounts.
Subject to the approval of the New York Insurance Department, Transamerica
reserves the right to eliminate the shares of any Portfolio held by a
sub-account, and to substitute shares of another portfolio or of another
investment company for the shares of any portfolio, if the shares of the
portfolio are no longer available for investment or if, in Transamerica's
judgment, investment in any portfolio would be inappropriate in view of the
purposes of the variable account. To the extent required by the 1940 Act, a
substitution of shares attributable to the owner's interest in a sub-account
will not be made without prior notice to the owner and the prior approval of the
Commission. Nothing contained herein shall prevent the variable account from
purchasing other securities for other series or classes of variable annuity
policies, or from effecting an exchange between series or classes of variable
policies on the basis of requests made by Owners.
THE POLICY
The policy is a flexible premium deferred annuity policy. The rights
and benefits are described below and in the individual policy; however,
Transamerica reserves the right to make any modification to conform the policy
to, or give the owner the benefit of, any federal or state statute or rule or
regulation. The obligations under the policy are obligations of Transamerica.
The policies are available on a non-qualified basis and on a qualified basis.
Policies available on a qualified basis are as follows: (1) rollover and
contributory individual retirement annuities (IRAs) under Code Sections 408(a)
and 408(b); (2) conversion and contributory Roth IRAs under Code Section 408A;
(3) simplified employee pension plans (SEP/IRAs) that qualify for special
federal income tax treatment under Code Section 408(k); (4) Code Section 403(b)
annuities; and (5) qualified pension and profit sharing plans intended to
qualify under Code Section 401. Generally, qualified policies contain certain
restrictive provisions limiting the timing and amount of premiums to, and
distributions from, the qualified contract.policy. For further discussion
concerning qualified policies, see "Federal Tax Matters" page 43.
Ownership
The owner is entitled to the rights granted by the policy. If the owner
dies, the rights of the owner belong to the joint owner, if any, and then to the
owner's beneficiary. If there are joint owners, the one designated as the
primary owner will receive all mail and any tax reporting information.
For non-qualified policies, the owner is entitled to designate the
annuitant(s) and, if the owner is an individual, the owner can change the
annuitant(s) at any time before the annuity date. Any such change will be
subject to our then current underwriting requirements. Transamerica reserves the
right to reject any change of annuitant(s) which has been made without our prior
written consent.
If the owner is not an individual, the annuitant(s) may not be changed
once the policy is issued. Different rules apply to qualified policies. See
"Federal Tax Matters," page 43.
For each
policy, a different account will be established and values, benefits
and charges will be calculated separately. The various administrative rules
described below will apply separately to each policy, unless otherwise noted.
PREMIUMS
Premiums
All premiums must be paid to the Service Center. A confirmation will be
issued to the owner upon the acceptance of each premium.
The initial premium must be at least $5,000 ($2,000 for contributory
IRAs, SEP/IRAs and Roth IRAs).
The policy will be issued and the initial premium generally will be
credited within two business days after the receipt of both sufficient
information to issue a policy and the initial premium at the Service Center.
Acceptance is subject to sufficient information being provided in a form
acceptable to Transamerica, and Transamerica reserves the right to reject any
request for issuance of a policy or premium. Policies normally will not be
issued with respect to owners, joint owners, or annuitants more than 80 years
old, although Transamerica in its discretion may waive this restriction in
appropriate cases. Transamerica further reserves the right to not accept
premiums after the owners' (or annuitants' if non-individual owner) 81st
birthday.
If the initial premium allocated to the variable sub-account(s) cannot
be credited within two days of receipt of the premium and information requesting
issuance of a policy because the information is incomplete or for any other
reason, then Transamerica will contact the owner, explain the reason for the
delay and will refund the initial premium within five business days, unless the
owner consents to Transamerica retaining the initial premium and crediting it as
soon as the requirements are fulfilled.
Additional premiums may be made at any time prior to the annuity date.
Additional premiums must be at least $1,000 or at least $100 if made pursuant to
an automatic premium plan under which the additional premiums are automatically
deducted from a bank account and allocated to the policy. In addition, minimum
allocation amounts apply (see "Allocation of Premiums" below). Additional
premiums are credited to the policy as of the date the payment is received.
Total premiums for any policy may not exceed $1,000,000 without prior
approval of Transamerica.
In no event may the sum of all premiums for a policy during any taxable
year exceed the limits imposed by any applicable federal or state law, rules, or
regulations.
Allocation of Premiums
You specify how premiums will be allocated under the policy. You may
allocate premiums between and among one or more of the variable sub-accounts and
the general account options as long as the portions are whole number percentages
and any allocation percentage for a variable sub-account is at least 10%. In
addition, there is a minimum allocation of $100 to any variable sub-account and
the fixed account. Transamerica may waive this minimum allocation amount under
certain options and circumstances.
Each premium will be subject to the allocation percentages in effect at
the time of receipt of such premium. The allocation percentages for additional
premiums may be changed by the owner at any time by submitting a request for
such change, in a form and manner acceptable to Transamerica, to the Service
Center. Any changes to the allocation percentages are subject to the
limitation(s) above. Any change will take effect with the first premium received
with or after receipt by the Service Center of the request for such change and
will continue in effect until subsequently changed.
In certain jurisdictions and under certain conditions where by law
Transamerica is required to return upon the exercise of the free look option,
either (1) the premium or (2) the greater of the premium or account value, any
initial allocation to the variable account may be held in the money market
variable sub-account during the applicable free look period plus 5 days for
delivery. Any such allocations to the money market variable sub-account will
automatically be transferred at the end of the free-look period plus 5 days
according to the owner's requested allocation. Such transfer will not count
against the 12 allowed transfers without charge during the first policy year.
Investment Option Limits
Currently, the owner may not allocate amounts to more than eighteen
investment options over the life of the policy. Investment options include
variable sub-accounts and general account options. Each variable sub-account,
each duration of guarantee period under the guarantee period account and the
fixed account that ever received a transfer or premium allocation count as one
towards this total of eighteen limit. Transamerica may waive this limit in the
future.......
For example, if the owner makes an allocation to the money market
variable sub-account and later transfers all amounts out of this money market
variable sub-account, it would still count as one for the purposes of the
limitation even if it held no value. If the owner transfers from a variable
sub-account to another variable sub-account and later back to the first, the
count towards the limitation would be two, not three. If the owner selects a
guarantee period and renews for the same term, the count will be one; but if the
owner renews to a guarantee period with a different term, the count will be two.
POLICY VALUE
Before the annuity date, the policy value is equal to: (a) the fixed
account accumulated value plus (b) the variable accumulated value.
The variable accumulated value is determined at the end of each
valuation day. To determine the variable accumulated value on a day that is not
a valuation day, the value as of the end of the next valuation day will be used.
The variable accumulated value is expected to change from valuation period to
valuation period, reflecting the investment experience of the selected
portfolios as well as the deductions for charges and fees. A valuation period is
the period between successive valuation days. It begins at the close of the New
York Stock Exchange (generally 4:00 p.m. ET) on each valuation day and ends at
the close of the New York Stock Exchange on the next succeeding valuation day. A
valuation day is each day that the New York Stock Exchange is open for regular
business.
Premiums allocated to a variable sub-account are credited to the
variable accumulated value in the form of variable accumulation units. The
number of variable accumulation units credited for each variable sub-account is
determined by dividing the premium allocated to the variable sub-account by the
variable accumulation unit value for that variable sub-account. In the case of
the initial premium, variable accumulation units for that payment will be
credited to the variable accumulated value within two valuation days of the
later of: (a) the date sufficient information, in an acceptable manner and form,
is received at our Service Center; or (b) the date our Service Center receives
the initial payment.premium. In the case of any additional premium, variable
accumulation units for that premium will be credited at the end of the valuation
period during which Transamerica receives the payment.premium. The value of a
variable accumulation unit for each variable sub-account is established at the
end of each valuation period and is calculated by multiplying the value of that
unit at the end of the prior valuation period by the variable sub-account's net
investment factor for the valuation period. The value of a variable accumulation
unit may go up or down.
The net investment factor is used to determine the value of
accumulation and annuity unit values for the end of a valuation period. The
applicable formula can be found in the Statement of Additional Information.
Transfers involving variable sub-accounts will result in the crediting
and/or cancellation of variable accumulation units having a total value equal to
the dollar amount being transferred to or from a particular variable
sub-account. The crediting and cancellation of such units is made using the
variable accumulation unit value of the applicable variable sub-account as of
the end of the valuation day in which the transfer is effective.
TRANSFERS
Before the Annuity Date
Before the annuity date, you may transfer all or any portion of the
policy value among the variable sub-accounts. Transfers are restricted into
or out of the fixed account. See "The Fixed Account" in Appendix A.
Transfers among the variable sub-accounts may be made by submitting a
request, in a form and manner acceptable to Transamerica, to the Service Center.
The transfer request must specify: (1) the variable sub-account(s) and/or fixed
account from which the transfer is to be made; (2) the amount of the transfer;
and (3) the variable sub-account(s) to receive the transferred amount. The
minimum amount which may be transferred from the variable sub-accounts is
$1,000. Transfers among the variable sub-accounts are also subject to such terms
and conditions as may be imposed by the portfolios.
Transamerica currently imposes a transfer fee of $10 for each transfer
in excess of 12 made during the same policy year. Transamerica reserves the
right to waive the transfer fee or vary the number of transfers without charge
or not count transfers under certain options or services for purposes of the
allowed number without charge. A transfer generally will be effective on the
date the request for transfer is received by the Service Center.
If a transfer reduces the value in a variable sub-account or in the
fixed account to less than $1,000, then Transamerica reserves the right to
transfer the remaining amount along with the amount requested to be transferred
in accordance with the transfer instructions provided by the owner. Under
current law, there will not be any tax liability for transfers within the
policy.
Other Restrictions
Transamerica reserves the right without prior notice to modify,
restrict, suspend or eliminate the transfer
<PAGE>
privileges at any time and for any reason. For example, restrictions may be
necessary to protect owners from adverse impacts on portfolio management of
large and/or numerous transfers by market timers or others. Transamerica has
determined that the movement of significant variable sub-accountsub-policy
values from one variable sub-account to another may prevent the underlying
portfolio from taking advantage of investment opportunities because the
portfolio must maintain a significant cash position in order to handle
redemptions. Such movement may also cause a substantial increase in portfolio
transaction costs which must be indirectly borne by owners. Therefore,
Transamerica reserves the right to require that all transfer requests be made by
the owner and not by a third party holding a power of attorney and to require
that each transfer request be made by a separate communication to Transamerica.
Transamerica also reserves the right to require that each transfer request be
submitted in writing and be manually signed by the owner(s) .
Dollar Cost Averaging
Prior to the annuity date, the owner may request that amounts be
automatically transferred on a monthly basis from a "source account," which is
currently either the money market sub-account or the fixed account, to any of
the variable sub-accounts by submitting a request to the Service Center in a
form and manner acceptable to Transamerica. Other source accounts may be
available; call the Service Center for availability.
Only one source account can be elected at a time. The transfers will
begin when the owner requests, but no sooner than one week following, receipt of
such request, provided that dollar cost averaging transfers will not commence
until the later of (a) 30 days after the policy effective date, or (b) the
estimated end of the free look period (allowing 5 days for delivery). Transfers
will continue for the number of consecutive months selected by the owner unless
(1) terminated by the owner, (2) automatically terminated by Transamerica
because there are insufficient amounts in the source account, or (3) for other
reasons as described in the election form. The owner may request that monthly
transfers be continued for a term then available by giving notice to the Service
Center in a form and manner acceptable to Transamerica within 30 days prior to
the last monthly transfer. If no request to continue the monthly transfers is
made by the owner, this option will terminate automatically with the last
transfer at the end of the term.
In order to be eligible for dollar cost averaging, the following
conditions must be met: (1) the value of the source account must be at least
$5,000; (2) the minimum amount that can be transferred out of the source account
is $250 per month; and (3) the minimum amount transferred into any other
variable sub-account is the greater of $250 or 10% of the amount being
transferred. These limits may be changed for new elections of this service.
Dollar cost averaging transfers can not be made from a source account from which
systematic withdrawals or automatic payouts are also being made. Dollar cost
averaging may not be elected at the same time automatic asset rebalancing is in
effect.
There is currently no charge for the dollar cost averaging option and
transfers due to dollar cost averaging currently will not count toward the
number of transfers allowed without charge per policy year. Transamerica may
charge in the future for dollar cost averaging.
Dollar cost averaging transfers may not be made to the fixed account.
Automatic Asset Rebalancing
After premiums have been allocated among the variable sub-accounts, the
performance of each variable sub-account may cause proportions of the values in
the variable sub-accounts to vary from the allocation percentages. The owner may
instruct Transamerica to automatically rebalance the amounts in the variable
account by reallocating amounts among the variable sub-accounts, at the time,
and in the percentages, specified in the owner instructions to Transamerica and
accepted by Transamerica. The owner may elect to have the rebalancing done on an
annual, semi-annual or quarterly basis. The owner may elect to have amounts
allocated among the variable sub-accounts using whole percentages, with a
minimum of 10% allocated to each variable sub-account.
The owner may elect to establish, change or terminate the automatic
asset rebalancing by submitting a request to the Service Center in a form and
manner acceptable to Transamerica. Automatic asset rebalancing currently will
not count towards the number of transfers without charge in a policy year.
Transamerica reserves the right to discontinue the automatic asset rebalancing
service at any time for any reason. There is currently no charge for the
automatic asset rebalancing service. Transamerica may in the future charge for
this service and may count the transfers toward those allowed without charge.
Automatic asset rebalancing may not be elected at the same time that
dollar cost averaging is in effect.
After the Annuity Date
If a variable payment option is elected, the owner may make transfers
among variable sub-accounts after the annuity date by giving a written request
to the Service Center, subject to the following provisions: (1) transfers after
the annuity date may be made no more than four times during any policy year; and
(2) the minimum amount transferred from one variable sub-account to another is
the amount supporting a current $50 monthly payment.
Transfers among variable sub-accounts after the annuity date will be
processed based on the formula outlined in the appendix in the Statement of
Additional Information.
CASH WITHDRAWALS
The owner of a non-qualified policy may withdraw all or part of the
cash surrender value at any time prior to the annuity date by giving a written
request to the Service Center. For qualified contracts,policies, reference
should be made to the terms of the particular retirement plan or arrangement for
any additional limitations or restrictions, including prohibitions on cash
withdrawals. See "Federal Tax Matters," page 43. The cash surrender value is
equal to the policy value, less any policy fee, contingent deferred sales load
and premium tax charges. A full surrender will result in a cash withdrawal
payment equal to the cash surrender value at the end of the valuation period
during which the election is received along with all completed forms then
required by Transamerica. No surrenders or withdrawals may be made after the
annuity date. Partial withdrawals must be at least $1,000.
In the case of a partial withdrawal, you may direct the Service Center
to withdraw amounts from specific variable sub-account(s) and/or from the fixed
account. If the owner does not specify, the withdrawal will be taken pro rata
from policy value.
A partial withdrawal request cannot be made if it would reduce the
policy value to less than $2,000. In that case, the owner will be notified.
Withdrawal (including surrender) requests generally will be processed
as of the end of the valuation period during which the request, including all
completed forms, is received. Payment of any cash withdrawal, settlement option
payment or lump sum death benefit due from the variable account and processing
of any transfers will occur within seven days from the date the election is
received, except that Transamerica may postpone such payment if: (1) the New
York Stock Exchange is closed for other than usual weekends or holidays, or
trading on the Exchange is otherwise restricted; or (2) an emergency exists as
defined by the Commission, or the Commission requires that trading be
restricted; or (3) the Commission permits a delay for the protection of owners.
The withdrawal request will be effective when all required withdrawal request
forms are received. Payments of any amounts derived from a premium paid by check
may be delayed until the check has cleared the owner's bank.
Transamerica may delay payment of any withdrawal from the fixed account
for up to six months after Transamerica receives the request for such
withdrawal. If Transamerica delays payment for more than 30 days, Transamerica
will pay interest on the withdrawal amount up to the date of payment.
SINCE THE OWNER ASSUMES THE INVESTMENT RISK FOR ALL AMOUNTS IN THE
VARIABLE ACCOUNT AND BECAUSE CERTAIN WITHDRAWALS ARE SUBJECT TO A CONTINGENT
DEFERRED SALES LOAD AND OTHER CHARGES, THE TOTAL AMOUNT PAID UPON SURRENDER OF
THE POLICY MAY BE MORE OR LESS THAN THE TOTAL PREMIUMS CONTRIBUTED.
An owner may elect, under the systematic withdrawal option or automatic
payout option (but not both), to withdraw certain amounts on a periodic basis
from the variable sub-accounts prior to the annuity date.
The tax consequences of a withdrawal or surrender are discussed later
in this prospectus. See "Federal Tax Matters" page 43.
Systematic Withdrawal Option
Prior to the annuity date, you may elect to have withdrawals
automatically made from one or more variable sub-account(s) on a monthly basis.
Other distribution modes may be permitted. The withdrawals will not begin until
the later of (a) 30 days after the policy effective date or (b) the end of the
free look period. Withdrawals will be from the variable sub-account(s) and in
the percentage allocations that you specify. If no specifications are made,
withdrawals will be pro rata based on value from all variable sub-account(s) and
the fixed account, if it has values. Systematic withdrawals cannot be made from
a variable sub-account from which dollar cost averaging transfers are being made
and cannot be elected concurrently with the automatic payout option. The
systematic withdrawal option is currently not available with respect to the
fixed account.
To be eligible for the systematic withdrawal option, the policy value
must be at least $12,000 at the time of election. The minimum monthly amount
that can be withdrawn is $100. Currently, the owner can elect any amount over
$100 to be withdrawn systematically. The owner may also make partial withdrawals
while receiving systematic withdrawals. If the total withdrawals (systematic,
automatic, or partial) in a policy year exceed the allowed amount to be
withdrawn without charge for that year, any applicable contingent deferred sales
load will then apply.
The withdrawals will continue indefinitely unless terminated. If this
option is terminated it may not be elected again until the end of the next 12
full months.
Transamerica reserves the right to impose an annual fee of up to $25
for processing payments under this option. This fee, which is currently waived,
will be deducted in equal installments from each systematic withdrawal during a
policy year.
Systematic withdrawals may be taxable and, prior to age 59 1/2, subject
to a 10% federal tax penalty. See "Federal Tax Matters," page 43.
Automatic Payout Option ("APO")
Prior to the annuity date, for qualified policies, the owner may elect
the automatic payout option (APO) to satisfy minimum distribution requirements
under Sections 401(a)(9), 403(b), and 408(b)(3) of the Code. See "Federal Tax
Matters" page 43. For IRAs and SEP/IRAs this may be elected no earlier than six
months prior to the calendar year in which the owner attains age 701/2, but
payments may not begin earlier than January of such calendar year. For other
qualified policies, APO can be elected no earlier than six months prior to the
later of when the owner (a) attains age 70 1/2; and (b) retires from employment.
Additionally, APO withdrawals may not begin before the later of (a) 30 days
after the policy effective date or (b) the end of the free look period. APO may
be elected in any calendar month, but no later than the month of the owner's
84th birthday.
Withdrawals will be from the variable sub-account(s) and in the
percentage allocations you specify. If no specifications are made, withdrawals
will be pro rata based on policy value. Withdrawals can not be made from a
variable sub-account from which dollar cost averaging transfers are being made.
The APO is not currently available with respect to the fixed account. The
calculation of the APO amount will reflect the total policy value although the
withdrawals are only from the variable sub-accounts.
This calculation and APO are based solely on value in this policy.
To be eligible for this option, the following conditions must be met:
(1) the policy value must be at least $12,000 at the time of election; (2) the
annual withdrawal amount is the larger of the required minimum distribution
under Code Sections 401(a)(9) or 408(b)(3) or $500. These conditions may change.
Currently, withdrawals under this option are only paid annually.
The withdrawals will continue indefinitely unless terminated. If there
are insufficient amounts in the variable account to make a withdrawal, this
option generally will terminate. Once terminated, APO may not be elected again.
DEATH BENEFIT
If an owner dies before the annuity date, a death benefit is payable.
If death occurs prior to any owner's or joint owner's 85th birthday, the death
benefit will be equal to the greatest of (a) the policy value, or (b) the sum of
all premiums made to the policy less withdrawals and applicable premium tax
charges, or (c) the highest policy value on any policy anniversary prior to the
earlier of the owner's or joint owner's 85th birthday, plus premiums made less
withdrawals and applicable premium tax charges since that policy anniversary. If
the owner or joint owner dies before the annuity date and after either the
deceased owner's or joint owner's 85th birthday, the death benefit is equal to
the policy value. For purposes of calculating such death benefit, the policy
value is determined as of the date the benefit is paid. If the owner is not a
natural person, the annuitant(s) will be treated as the owner(s) for purposes of
the death benefit. For example, if the owner is a trust that allows a person(s)
other than the trustee to exercise the ownership rights under this certificate,
such person(s) must be named annuitant(s) and will be treated as the owner(s) so
the death benefit will be determined based on the age of the annuitant(s).
An ownership change will be subject to our then current underwriting
rules and may decrease the death benefit. However, such reduction will never
decrease the death benefit below the policy value.
Payment of Death Benefit
The death benefit is generally payable upon receipt of proof of death
of the owner. Upon receipt of this proof and an election of a method of
settlement, the death benefit generally will be paid within seven days, or as
soon thereafter as Transamerica has sufficient information about the beneficiary
to make the payment.
The death benefit will be determined as of the end of the valuation
period during which our Service Center receives both proof of death of the owner
or joint owner and the written notice of the settlement option elected by the
person to whom the death benefit is payable. If no settlement method is elected,
the death benefit will be a lump sum distributed within five years after the
owner's death. No contingent deferred sales load will apply.
Until the death benefit is paid, the policy value allocated to the
variable account remains in the variable account, and fluctuates with investment
performance of the applicable portfolio(s). Accordingly, the amount of the death
benefit depends on the policy value at the time the death benefit is paid, not
at the time of death.
Designation of Beneficiaries
The owner may select one or more beneficiaries by designating the
person(s) to receive the amounts payable under this policy if: the owner dies
before the annuity date and there is no joint owner, or the owner dies after the
annuity date and settlement option payments have begun under a selected
settlement option that guarantees payments for a certain period of time. The
interest of any beneficiary who dies before the owner will terminate at time of
death of such beneficiary.
A beneficiary may be named or changed at any time in a form and manner
acceptable to us. Any change made to an irrevocable beneficiary must also
include the written consent of the beneficiary, except as otherwise required by
law.
If more than one beneficiary is named, each named beneficiary will
share equally in any benefits or rights granted by this policy unless the owner
gives us other instructions at the time the beneficiaries are named.
Transamerica may rely on any affidavit by any responsible person in
determining the identity or non-existence of any beneficiary not identified
by name
Death of Owner or Joint Owner Before the Annuity Date
If the owner or joint owner dies before the annuity date, we will pay
the death benefit as specified in this section. The entire death benefit will be
distributed within five years after the owner's death. If the owner is not an
individual, an annuitant's death will be treated as the death of the owner as
provided in Code Section 72 (s)(6). For example, the policy will remain in force
with the annuitant's surviving spouse as the new annuitant if:
o This policy is owned by a trust; and
o The beneficiary is either the annuitant's surviving spouse or
a trust holding the contractpolicy solely for the benefit of
such spouse.
The manner in which we will pay the death benefit depends on the status
of the person(s) involved in the policy. The death benefit will be payable to
the first person from the applicable list below:
If the owner is the annuitant:
o The joint owner, if any, then
o The beneficiary, if any.
If the owner is not the annuitant:
o The joint owner, if any; then
o The beneficiary, if any; then
o The annuitant; then
o The joint annuitant; if any.
If the death benefit is payable to the owner's surviving spouse (or to a trust
for the sole benefit of such surviving spouse),
We will continue this policy with the owner's spouse as the new
annuitant (if the owner was the annuitant) and the new owner (if applicable),
unless such spouse selects another option as provided below.
If the death benefit is payable to someone other that the owner's surviving
spouse,
We will pay the death benefit in a lump sum payment to, or for the
benefit of, such person within five years after the owner's death, unless such
person(s) selects another option as provided below.
In lieu of the automatic form of death benefit specified above,
The person(s) to whom the death benefit is payable may elect to receive
it:
o In a lump sum; or
o As settlement option payments, provided the person making the
election is an individual. Such payments must begin within one
year after the owner's death and must be in equal amounts over
a period of time not extending beyond the individual's life or
life expectancy.
Election of either option must be made no later than 60 days prior to
the one-year anniversary of the owner's death. Otherwise, the death benefit will
be settled under the appropriate automatic form of benefit specified above.
If the person to whom the death benefit is payable dies before the entire death
benefit is paid,
We will pay the remaining death benefit in a lump sum to the payee
named by such person or, if no payee was named, to such person's estate.
If the death benefit is payable to a non-individual (subject to the special rule
for a trust for the sole benefit of a surviving spouse),
We will pay the death benefit in a lump sum within one year after the
owner's death.
If the Annuitant Dies Before the Annuity Date
If an owner and an annuitant are not the same individual and the
annuitant (or the last of joint annuitants) dies before the annuity date, the
owner will become the annuitant until a new annuitant is selected.
Death after the Annuity Date
If an owner or the annuitant dies after the annuity date, any amounts
payable will continue to be distributed at least as rapidly as under the
settlement and payment option then in effect on the date of death.
Upon the owner's death after the annuity date, any remaining ownership
rights granted under this contractpolicy will pass to the person to whom the
death benefit would have been paid if the owner had died before the annuity
date, as specified above.
Survival Provision
The interest of any person to whom the death benefit is payable who
dies at the time of, or within 30 days after, the death of the owner will also
terminate if no benefits have been paid to such beneficiary, unless the owner
had given us written notice of some other arrangement.
CHARGES, FEES AND DEDUCTIONS
No deductions are currently made from premiums (although we reserve the
right to charge for any applicable premium tax charges). Therefore, the full
amount of the premiums are invested in one or more of the variable sub-accounts
and/or the fixed account.
Contingent Deferred Sales Load
No deduction for sales charges is made from premiums at the time they
are made. However, a contingent deferred sales load of up to 6% of premiums may
be imposed on certain withdrawals or surrenders to partially cover certain
expenses incurred by Transamerica relating to the sale of the policy, including
commissions paid to salespersons, the costs of preparation of sales literature
and other promotional costs and acquisition expenses.
The contingent deferred sales load percentage varies according to the
number of years between when a premium was credited to the policy and when the
withdrawal is made. The amount of the contingent deferred sales load is
determined by multiplying the amount withdrawn subject to the contingent
deferred sales load by the contingent deferred sales load percentage in
accordance with the following table. In no event shall the aggregate contingent
deferred sales load assessed against the policy exceed 6% of the aggregate
premiums.
Number of Years Since Contingent Deferred Sales Load
Receipt of Premium As a Percentage of Premium
Less than one year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more years 0%
Free Withdrawals - Allowed Amount
Beginning 30 days after the policy effective date (or the end of the
free-look period, if later), the owner may make a withdrawal up to the "allowed
amount", without incurring a contingent deferred sales load each policy year,
before the annuity date.
The allowed amount each policy year is equal to 10% of the total
premiums received during the last seven years determined as of the last policy
anniversary less any withdrawals during the present policy year. In the first
policy year, the 10% will be applied to the total premiums paid at the time of
the first withdrawal.
Premiums held for seven full years or more may be withdrawn without
charge.
Withdrawals will be made first from premiums on a first-in/first-out
basis and then from earnings. The allowed amount may vary depending on the state
of issuance. If the allowed amount is not fully withdrawn or paid out during a
policy year, it does not carry over to the next
policy year.
Other Free Withdrawals
In addition, no contingent deferred sales load is assessed: upon
annuitization after the first contractpolicy year to an option involving life
contingencies; upon payment of the death benefit; or upon transfers of policy
value. Any applicable contingent deferred sales load will be deducted from the
amount requested for both partial withdrawals (including withdrawals under the
systematic withdrawal option or the APO) and full surrenders unless the owner
elects to "gross-up" the amount for a partial withdrawal to cover the applicable
contingent deferred sales load.
Administrative Charges
Policy Fee
At the end of each policy year before the annuity date, Transamerica
deducts an annual accountpolicy fee as partial compensation for expenses
relating to the issue and maintenance of the policy and the variable account.
The annual policy fee is equal to the lesser of $30 or 2% of the policy value.
The policy fee may be increased upon 30 days advance written notice subject to
the prior notice,approval of the New York State Insurance Department, but in no
event may it exceed $60 (or 2% of the accountpolicy value, if less) per policy
year. If the policy is surrendered, the policy fee, unless waived, will be
deducted from a full surrender before the application of any continent deferred
sales load. The policy fee will be deducted on a pro rata basis (based on
values) from the policy value including both the variable sub-accounts and the
fixed account. The contractpolicy fee for a policy year will be waived if the
policy value exceeds $50,000 on the last business day of that policy year or as
of the date the policy is surrendered.
Annuity Fee
After the annuity date, an annual annuity fee of $30 to help cover
processing costs will be deducted in equal amounts from each variable payment
made during the year ($2.50 each month if monthly payments). This fee will not
be changed but may be waived. No annuity fee will be deducted from fixed
payments.
Administrative Expense Charge
Transamerica also makes a daily deduction (the administrative expense
charge) from the variable account (both before and after the policy date) at an
effective current annual rate of 0.15% of assets held in each variable
sub-account to reimburse Transamerica for administrative expenses. Transamerica
has the ability in most states to increase or decrease this charge, but the
charge is guaranteed not to exceed 0.35%. Transamerica will provide 30 days
written notice of any change in fees. The administrative charges do not bear any
relationship to the actual administrative costs of a particular policy. The
administrative expense charge is reflected in the variable accumulation or
variable annuity unit values for each variable sub-account.
Mortality and Expense Risk Charge
Transamerica deducts a charge for bearing certain mortality and expense
risks under the contracts.policies. This is a daily charge at an effective
annual rate of 1.20% of the assets in the variable account. Transamerica
guarantees that this charge of 1.20% will never increase. The mortality and
expense risk charge is reflected in the variable accumulation and variable
annuity unit values for each variable sub-account.
Variable accumulated values and variable settlement option payments are
not affected by changes in actual mortality experience incurred by Transamerica.
The mortality risks assumed by Transamerica arise from its contractual
obligations to make settlement option payments determined in accordance with the
settlement option tables and other provisions contained in the policy and to pay
death benefits prior to the annuity date.
The expense risk assumed by Transamerica is the risk that
Transamerica's actual expenses in administering the policies and the variable
account will exceed the amount recovered through the administrative expense
charge, policy fees, transfer fees and any fees imposed for certain options and
services.
If the mortality and expense risk charge is insufficient to cover
actual costs and risks assumed, the loss will fall on Transamerica. Conversely,
if this charge is more than sufficient, any excess will be profit to
Transamerica. Currently, Transamerica expects a profit from this charge.
Transamerica anticipates that the contingent deferred sales load will
not generate sufficient funds to pay the cost of distributing the policies. To
the extent that the contingent deferred sales load is insufficient to cover the
actual cost of policy distribution, the deficiency will be met from
Transamerica's general corporate assets which may include amounts, if any,
derived from the mortality and expense risk charge.
Premium Tax Charges
Currently, New York has no premium tax or retaliatory premium tax. If
New York imposes these taxes in the future, or if the owner is or becomes a
resident of a state where such taxes apply, Transamerica will deduct applicable
premium taxes, including any retaliatory taxes paid with respect to a particular
policy from the premiums, from amounts withdrawn, or from amounts applied on the
Annuity Date.
Transfer Fee
Transamerica currently imposes a fee for each transfer in excess of the
first 12 in a single contractpolicy year. Transamerica will deduct the charge
from the amount transferred. This fee is $10 and will be used to help cover
Transamerica's costs of processing transfers. Transamerica reserves the right to
waive this fee or to not count transfers under certain options and services as
part of the number of allowed annual transfers without charge.
Option and Service Fees
Transamerica reserves the right to impose reasonable fees for
administrative expenses associated with processing certain options and services.
These fees would be deducted from each use of the option or service during a
policy year.
Taxes
No charges are currently made for taxes. However, Transamerica reserves
the right to deduct charges in the future for federal, state, and local taxes or
the economic burden resulting from the application of any tax laws that
Transamerica determines to be attributable to the policies.
Portfolio Expenses
The value of the assets in the variable account reflects the value of
portfolio shares and therefore the fees and expenses paid by each portfolio. A
complete description of the fees, expenses, and deductions from the portfolios
are found in the portfolios' prospectuses. See "The Portfolios" page 21.
SETTLEMENT OPTION PAYMENTS
Annuity Date
The annuity date is the date that the annuitization phase of the policy
begins. On the annuity date, we will apply the annuity amount (defined below) to
provide payments under the settlement option selected by the owner. The annuity
date is selected by the owner and may be changed from time to time by the owner
by giving notice, in a form and manner acceptable to Transamerica, to the
Service Center, provided that notice of each change is received by the Service
Center at least thirty (30) days prior to the then-current annuity date. The
annuity date cannot be earlier than the first policy anniversary except for
certain qualified policies. The latest annuity date which may be elected is the
first day of the calendar month immediately preceding the month of the
annuitant's or joint annuitants' 90th birthday.
The annuity date must be the first day of a calendar month. The first
settlement option payment will be on the first day of the month immediately
following the annuity date. Certain qualified policies may have restrictions as
to the annuity date and the types of settlement options available. See "Federal
Tax Matters," page 43.
Settlement Option Payments
The annuity amount is the policy value, less any applicable contingent
deferred sales load, and less any applicable premium tax charges. Any contingent
deferred sales load will be waived if the settlement option payments involve
life contingencies and begin on or after the first policy anniversary.
If the amount of the monthly payment from the settlement option
selected by the owner would result in a monthly settlement option payment of
less than $20, or if the annuity amount is less than $2,000, Transamerica
reserves the right to offer a less frequent mode of payment or pay the policy
value in a cash payment. Monthly settlement option payments from the variable
payment option will further be subject to a minimum monthly payment of $50 from
each variable sub-account from which such payments are made.
The owner may choose from the settlement options below. Transamerica
may consent to other plans of payment before the annuity date. For settlement
options involving life contingencies, the actual age and/or sex of the
annuitant, or a joint annuitant will affect the amount of each payment.
Sex-distinct rates generally are not allowed under certain qualified policies.
Transamerica reserves the right to ask for satisfactory proof of the annuitant's
(or joint annuitant's) age. Transamerica may delay settlement option payments
until satisfactory proof is received. Since payments to older annuitants are
expected to be fewer in number, the amount of each annuity payment shall be
greater for older annuitants than for younger annuitants.
The owner may choose from the two payment options described below. The
annuity date and settlement options available for qualified policies may also be
controlled by endorsements, the plan or applicable law.
Election of Settlement Option Forms and Payment Options
Before the annuity date, and while the annuitant is living, the owner
may, by written request, change the settlement option or payment option. The
request for change must be received by the Service Center at least 30 days prior
to the annuity date.
In the event that a settlement option form and payment option is not
selected at least 30 days before the annuity date, Transamerica will make
settlement option payments in accordance with the 120 month period certain and
life settlement option and the applicable provisions of the policy.
Payment Options
Owners may elect a fixed or a variable payment option, or a
combination of both (in 25% increments of the annuity amount).
Unless specified otherwise, the annuity amount in the variable account
will be used to provide a variable payment option and the amount in the fixed
account will be used to provide a fixed payment option. In this event, the
initial allocation of variable annuity units for the variable sub-accounts will
be in proportion to the policy value in the variable sub-accounts on the annuity
date.
Fixed Payment Option
A fixed payment option provides for payments which will remain constant
pursuant to the terms of the settlement option elected. If a fixed payment
option is selected, the portion of the annuity amount used to provide that
payment option will be transferred to the general account assets of
Transamerica, and the amount of payments will be established by the fixed
settlement option selected and the age and sex (if sex-distinct rates are
allowed by law) of the annuitant(s) and will not reflect investment experience
after the annuity date. The fixed payment amounts are determined by applying the
fixed settlement option purchase rate specified in the policy to the portion of
the annuity amount applied to the payment option. Payments may vary after the
death of an annuitant under some options; the amounts of variances are fixed on
the annuity date.
Variable Payment Option
A variable payment option provides for payments that vary in dollar
amount, based on the investment performance of the selected variable
sub-account(s). The variable settlement option purchase rate tables in the
policy reflect an assumed annual interest rate of 4%, so if the actual net
investment performance of the variable sub-account(s) is less than 4%, then the
dollar amount of the actual payments will decrease. If the actual net investment
performance of the variable sub-account(s) is higher than 4%, then the dollar
amount of the actual payments will increase. If the net investment performance
exactly equals the 4% rate, then the dollar amount of the actual payments will
remain constant. Transamerica may offer other assumed annual interest rates.
Variable payments will be based on the variable sub-accounts selected
by the owner, and on the allocations among the variable sub-accounts.
For further details as to the determination of variable payments, see
the Statement of Additional Information.
Settlement Option Forms
The owner may choose any of the settlement option forms described
below. Subject to approval by Transamerica, the owner may select any other
settlement option form then being offered by Transamerica.
(1) Life Annuity. Payments start on the first day of the month
immediately following the annuity date, if the annuitant is living. Payments end
with the payment due just before the annuitant's death. There is no death
benefit. It is possible that no payment will be made if the annuitant dies after
the annuity date but before the first payment is due; only one payment will be
made if the annuitant dies before the second payment is due, and so forth.
(2) Life and Contingent Annuity. Payments start on the first day of the
month immediately following the annuity date, if the annuitant is living.
Payments will continue for as long as the annuitant lives. After the annuitant
dies, payments will be made to the contingent annuitant, for as long as the
contingent annuitant lives. The continued payments can be in the same amount as
the original payments, or in an amount equal to one-half or two-thirds thereof.
Payments will end with the payment due just before the death of the contingent
annuitant. There is no death benefit after both die. If the contingent annuitant
does not survive the annuitant, payments will end with the payment due just
before the death of the annuitant. It is possible that no payments or very few
payments will be made, if the annuitant and contingent annuitant die shortly
after the annuity date.
The written request for this form must: (a) name the contingent
annuitant; and (b) state the percentage of payments to be made after the
annuitant dies. Once payments start under this settlement option form, the
person named as contingent annuitant for purposes of being the measuring life,
may not be changed. Transamerica will require proof of age for the annuitant and
for the contingent annuitant before payments start.
(3) Life Annuity With Period Certain. Payments start on the first day
of the month immediately following the annuity date, if the annuitant is
living. Payments will be made for the longer of: (a) the annuitant's life;
or (b) the period certain. The period certain may be 120 or 180 or 240
months.
If the annuitant dies after all payments have been made for the period
certain, payments will cease with the payment due just before the annuitant's
death. No benefit will then be payable to the beneficiary.
If the annuitant dies during the period certain, the rest of the period
certain payments will be made to the beneficiary, unless the owner provides
otherwise.
The written request for this form must: (a) state the length of the
period certain; and (b) name the beneficiary.
(4) Joint and Survivor Annuity. Payments will be made starting on the
first day of the month immediately following the annuity date, if and for as
long as the annuitant and joint annuitant are living. After the annuitant or
joint annuitant dies, payments will continue for so long as the survivor lives.
Payments end with the payment due just before the death of the survivor. The
continued payments can be in the same amount as the original payments, or in an
amount equal to one-half or two-thirds thereof. It is possible that no payments
or very few payments will be made under this form if the annuitant and joint
annuitant both die shortly after the annuity date.
The written request for this form must: (a) name the joint annuitant;
and (b) state the percentage of continued payments to be made after the first
death. Once payments start under this settlement option form, the person named
as joint annuitant, for the purpose of being the measuring life, may not be
changed. Transamerica will need proof of age for the annuitant and joint
annuitant before payments start.
(5) Other Forms of Payment. Benefits can be provided under other
settlement options not described in this section subject to Transamerica's
agreement and any applicable state or federal law or regulation. Requests for
any other settlement option must be made in writing to the Service Center at
least 30 days before the annuity date.
After the annuity date, (a) no changes can be made in the settlement
option and payment option; (b) no additional premium will be accepted under the
policy; and (c) no further withdrawals will be allowed.
The owner of a non-qualified policy may, at any time after the annuity
date by written notice to us at the Service Center, change the payee of benefits
being provided under the policy. The effective date of change in payee will be
the latter of: (a) the date we receive the written request for such change; or
(b) the date specified by the owner. The owner of a qualified policy may not
change payees, except as permitted by the plan, arrangement or federal law.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax
considerations relating to the contractpolicy and is not intended as tax advice.
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under the policy. Any person concerned about these tax implications
should consult a competent tax adviser before initiating any transaction. This
discussion is based upon Transamerica's understanding of the present federal
income tax laws as they are currently interpreted by the Internal Revenue
Service ("IRS"). No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The policy contract may be purchased on a non-tax qualified basis
("non-qualified policy") or purchased and used in connection with plans or
arrangements qualifying for special tax treatment ("qualified policy").
Qualified policies are designed for use in connection with plans or arrangements
entitled to special income tax treatment under Sections 401, 403(b), 408 and
408A of the Code. The ultimate effect of federal income taxes on the amounts
held under a policy, on settlement option payments, and on the economic benefit
to the owner, the annuitant, or the beneficiary may depend on the type of
retirement plan or arrangement for which the policy is purchased, on the tax and
employment status of the individual concerned, and on Transamerica's tax status.
In addition, certain requirements must be satisfied in purchasing a qualified
policy with proceeds from a tax qualified retirement plan or arrangement and
receiving distributions from a qualified policy in order to continue receiving
favorable tax treatment. Therefore, purchasers of qualified policies should seek
competent legal and tax advice regarding the suitability of the policy for their
situation, the applicable requirements, and the tax treatment of the rights and
benefits of the policy. The following discussion is based on the assumption that
the policy qualifies as an annuity for federal income tax purposes and that all
premiums made to qualified policies are in compliance with all requirements
under the Code and the specific retirement plan or arrangement.
Purchase PaymentsPremiums
At the time the initial premium purchase payment is paid, a prospective
purchaser must specify whether he or she is purchasing a non-qualified policy
contract or a qualified policy contract. If the initial premium purchase payment
is derived from an exchange, transfer, conversion or surrender of another
annuity policy contract, Transamerica may require that the prospective purchaser
provide information with regard to the federal income tax status of the previous
annuity policy contract. Transamerica will require that persons purchase
separate contracts if they desire to invest monies qualifying for different
annuity tax treatment under the Code. Each such separate policy contract would
require the minimum initial premium purchase payment previously described.
Additional premium purchase payments under a policy contract must qualify for
the same federal income tax treatment as the initial premium purchase payment
under the policy contract Transamerica will not accept an additional premium
purchase payment under a policy contract if the federal income tax treatment of
such premium purchase payment would be different from that of the initial
premium purchase payment.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities in general.
Transamerica believes that an owner who is a natural person, generally, is not
taxed on increases in the value of a policy until distribution occurs by
withdrawing all or part of the policy value (e.g., withdrawals or settlement
option payments). For this purpose, the assignment, pledge, or agreement to
assign or pledge any portion of the policy value (and in the case of a qualified
policy, any portion of an interest in the plan) generally will be treated as a
distribution. The taxable portion of a distribution is taxable as ordinary
income.
The owner of any policy who is not a natural person generally must
include in income any increase in the excess of the policy value over the
"investment in the policy" (discussed below) during the taxable year. There are
some exceptions to this rule and a prospective owner that is not a natural
person should discuss these with a competent tax adviser.
The following discussion generally applies to a policy owned by a
natural person.
Withdrawals
With respect to non-qualified policies, partial withdrawals (including
withdrawals under the systematic withdrawal option) are generally treated as
taxable income to the extent that the policy value immediately before the
withdrawal exceeds the "investment in the policy" at that time. The "investment
in the policy" generally equals the amount of non-deductible premiums made.
In the case of a withdrawal from qualified policies (including
withdrawals under the systematic withdrawal option or the automatic payout
option), a ratable portion of the amount received is taxable, generally based on
the ratio of the "investment in the policy" to the individual's total accrued
benefit under the retirement plan or arrangement. The "investment in the policy"
generally equals the amount of non-deductible premiums made by or on behalf of
any individual. For certain qualified contracts,policies, the "investment in the
policy" can be zero. Special tax rules applicable to certain distributions from
qualified policies are discussed below, under "Qualified Policies."
Full surrenders are treated as taxable income to the extent that the
amount received exceeds the "investment in the policy."
Settlement Option Payments
Although the tax consequences may vary depending on the settlement
option elected under the contract,policy, in general a ratable portion of each
payment that represents the amount by which the accountpolicy value exceeds the
"investment in the policy" will be taxed based on the ratio of the "investment
in the policy" to the total benefit payable; after the "investment in the
policy" is recovered, the full amount of any additional settlement option
payments is taxable.
For variable payments, the taxable portion is generally determined by
an equation that establishes a specific dollar amount of each payment that is
not taxed. The dollar amount is determined by dividing the "investment in the
policy" by the total number of expected periodic payments. However, the entire
distribution will be taxable once the recipient has recovered the dollar amount
of his or her "investment in the policy."
For fixed payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the policy"
bears to the total expected value of the payments for the term selected;
however, the remainder of each settlement option payment is taxable. Once the
"investment in the policy" has been fully recovered, the full amount of any
additional settlement option payments is taxable. If settlement option payments
cease as a result of an annuitant's death before full recovery of the
"investment in the policy," consult a competent tax adviser regarding
deductibility of the unrecovered amount.
Withholding
The Code requires Transamerica to withhold federal income tax from
withdrawals. However, except for certain qualified policies, an owner will be
entitled to elect, in writing, not to have tax withholding apply. Withholding
applies to the portion of the distribution which is includible in income and
subject to federal income tax. The federal income tax withholding rate is 10%,
or 20% in the case of certain qualified plans, of the taxable amount of the
distribution. Withholding applies only if the taxable amount of the distribution
is at least $200. Some states also require withholding for state income taxes.
Penalty Tax
There may be imposed a federal income tax penalty equal to 10% of the
amount treated as taxable income. In general, however, there is no penalty tax
on distributions: (1) made on or after the date on which the owner attains age
591/2; (2) made as a result of death or disability of the owner; or (3) received
in substantially equal periodic payments as a life annuity or a joint and
survivor annuity for the life(ves) or life expectancy(ies) of the owner and a
"designated beneficiary." Other exceptions to the tax penalty may apply to
certain distributions from a qualified policy.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the policy because of the death of an
owner. Generally such amounts are includible in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same manner as
a full surrender as described above, or (2) if distributed under a settlement
option, they are taxed in the same manner as settlement option payments, as
described above. For these purposes, the investment in the policy is not
affected by the owner's death. That is, the investment in the contractpolicy
remains the amount of any premiums paid which are not excluded from gross
income.
Transfers, Assignments, or Exchanges of the Policy
For non-qualified policies, a transfer of ownership of a policy, the
designation of an annuitant, payee, or other beneficiary who is not also the
owner, or the exchange of a policy may result in certain tax consequences to the
owner that are not discussed herein. An owner contemplating any such
designation, transfer, assignment, or exchange should contact a competent tax
adviser with respect to the potential tax effects of such a transaction.
Qualified policies may not be assigned or transferred, except as permitted by
the Code or the Employee Retirement Income Security Act of 1974 (ERISA).
Multiple Policies
All deferred non-qualified policies that are issued by Transamerica (or
its affiliates) to the same owner during any calendar year are treated as one
policy for purposes of determining the amount includible in gross income under
Section 72(e) of the Code. In addition, the Treasury Department has specific
authority to issue regulations that prevent the avoidance of Section 72(e)
through the serial purchase of policies or otherwise. Congress has also
indicated that the Treasury Department may have authority to treat the
combination purchase of an immediate annuity policy and separate deferred
annuity contractspolicies as a single annuity policy under its general authority
to prescribe rules as may be necessary to enforce the income tax laws.
Qualified Policies
In General
The qualified policies are designed for use with several types of
retirement plans and arrangements. The tax rules applicable to participants and
beneficiaries in retirement plans or arrangements vary according to the type of
plan and the terms and conditions of the plan. Special tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 591/2 (subject to certain exceptions); distributions
that do not conform to specified commencement and minimum distribution rules;
aggregate distributions in excess of a specified annual amount; and in other
specified circumstances.
We make no attempt to provide more than general information about use
of the policies with the various types of retirement plans. Owners and
participants under retirement plans, as well as annuitants and beneficiaries,
are cautioned that the rights of any person to any benefits under qualified
policies may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the policy (including any
endorsements) issued in connection with such a plan. Some retirement plans are
subject to distribution and other requirements that are not incorporated in the
administration of the contracts.policies. Owners are responsible for determining
that contributions and other transactions with respect to the policies satisfy
applicable law. Purchasers of policies for use with any retirement plan should
consult their legal counsel and tax adviser regarding the suitability of the
policy.
Qualified Pension and Profit Sharing Plans
Section 401(a) of the Code permits employers to establish various types
of retirement plans for employees. Such retirement plans may permit the purchase
of the policy in order to provide retirement savings under the plans. Adverse
tax consequences to the plan, to the participant or to both may result if this
policy is assigned or transferred to any individual as a means to provide
benefits payments. Purchasers of a policy for use with such plans should seek
competent advice regarding the suitability of the proposed plan documents and
the policy to their specific needs.
Individual Retirement Annuities, Simplified Employee Plans and Roth
IRAs
The policy is also designed for use with IRA rollovers and contributory
IRA's. A contributory IRA is a policy to which initial and subsequent premiums
are subject to limitations imposed by the Code. Section 408 of the Code permits
eligible individuals to contribute to an individual retirement program known as
an Individual Retirement Annuity or Individual Retirement Account (each
hereinafter referred to as an "IRA"). Also, distributions from certain other
types of qualified plans may be "rolled over" on a tax-deferred basis into an
IRA.
The sale of a policy for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of a policy
for use with IRAs will be provided with supplemental information required by the
Internal Revenue Service or other appropriate agency. Such purchasers will have
the right to revoke their purchase within 7 days of the earlier of the
establishment of the IRA or their purchase. Purchasers should seek competent
advice as to the suitability of the policy for use with IRAs.
Eligible employers that meet specified criteria under Code Section
408(k) could establish simplified employee pension plans (SEP/IRAs) for their
employees using IRAs. Employer contributions that may be made to such plans are
larger than the amounts that may be contributed to regular IRAs, and may be
deductible to the employer.
The policy may also be used for Roth IRA conversions and contributory
Roth IRAs. A contributory Roth IRA is a policy to which initial and subsequent
premiums are subject to limitations imposed by the Code. Section 408A of the
Code permits eligible individuals to contribute to an individual retirement
program known as a Roth IRA on a non-deductible basis. In addition,
distributions from a non-Roth IRA may be converted to a Roth IRA. A non-Roth IRA
is an individual retirement account or annuity described in section 408(a) or
408(b), other than a Roth IRA. Purchasers should seek competent advise as to the
suitability of the policy for use with Roth IRAs.
Tax Sheltered Annuities
Under Code Section 403(b), payments made by public school systems and
certain tax exempt organizations to purchase annuity policies for their
employees are excludable from the gross income of the employee, subject to
certain limitations. However, these payments may be subject to Social Security
and Medicare (FICA) taxes.
Code Section 403(b)(11) restricts the distribution under Code Section
403(b) annuity policies of: (1) elective contributions made in years beginning
after December 31, 1988; (2) earnings on those contributions; and (3) earnings
in such years on amounts held as of the last year beginning before January 1,
1989. Distribution of those amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Pre-1989 contributions and earnings through December 31, 1989 are not
subject to the restrictions described above. However, funds transferred to a
qualified policy from a Section 403(b)(7) custodial account will be subject to
the restrictions.
Restrictions under Qualified Policies
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under qualified policies or under the terms
of the plans in respect of which qualified policies are issued.
Taxation of Transamerica
Transamerica is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the variable account is not an entity separate
from Transamerica, and its operations form a part of Transamerica, it will not
be taxed separately as a "regulated investment company" under Subchapter M of
the Code. Investment income and realized capital gains are automatically applied
to increase reserves under the policies. Under existing federal income tax law,
Transamerica believes that the variable account investment income and realized
net capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the policies.
Accordingly, Transamerica does not anticipate that it will incur any
federal income tax liability attributable to the variable account and,
therefore, Transamerica does not intend to make provisions for any such taxes.
However, if changes in the federal tax laws or interpretations thereof result in
Transamerica being taxed on income or gains attributable to the variable
account, then Transamerica may impose a charge against the variable account
(with respect to some or all policies) in order to set aside provisions to pay
such taxes.
Tax Status of the Policy
Diversification Requirements
Section 817(h) of the Code requires that with respect to
non-qualified policies, the investments of the portfolios be "adequately
diversified" in accordance with Treasury regulations in order for the policies
to qualify as annuity policies under federal tax law. The variable account,
through the portfolios, intends to comply with the diversification requirements
prescribed by the Treasury in Reg. Sec. 1.817-5, which affect how the
portfolios' assets may be invested.
In certain circumstances, owners of variable annuity policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policy owner's gross income. The IRS has stated in published rulings that a
variable policy owner will be considered the owner of separate account assets if
the policy owner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
has also announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control for the investments of a segregated
asset account may cause the investor (i.e., the owner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular Sub-Accounts without being treated as owners of the
underlying assets."
The ownership rights under the policy are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of separate account assets. For
example, the owner has additional flexibility in allocating premium payments and
policy values. These differences could result in an owner being treated as the
owner of a pro rata portion of the assets of the variable account. In addition,
Transamerica does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. Transamerica therefore reserves the right to modify the policy as
necessary to attempt to prevent an owner from being considered the owner of a
pro rata share of the assets of the variable account.
Required Distributions
In order to be treated as an annuity policy for federal income tax
purposes, section 72(s) of the Code requires any non-qualified policy to provide
that (a) if any owner dies on or after the annuity date but prior to the time
the entire interest in the policy has been distributed, the remaining portion of
such interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that owner's death; and (b) if any
owner dies prior to the annuity date, the entire interest in the policy will be
distributed within five years after the date of the owner's death. These
requirements will be considered satisfied as to any portion of the owner's
interest which is payable to or for the benefit of a "designated beneficiary"
and which is distributed over the life of such "designated beneficiary" or over
a period not extending beyond the life expectancy of that beneficiary, provided
that such distributions begin within one year of the owner's death. The owner's
"designated beneficiary" refers to a natural person designated by such owner as
a beneficiary and to whom ownership of the policy passes by reason of death.
However, if the owner's "designated beneficiary" is the surviving spouse of the
deceased owner, the policy may be continued with the surviving spouse as the new
owner.
The non-qualified policies contain provisions which are intended to
comply with the requirements of Section 72(s) of the Code, although no
regulations interpreting these requirements have yet been issued. All provisions
in the policy will be interpreted to maintain such tax qualification. We may
make changes in order to maintain this qualification or to conform the policy to
any applicable changes in the tax qualification requirements. We will provide
you with a copy of any changes made to the policy.
Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of the date of this prospectus Congress is not
actively considering any legislation regarding the taxation of annuities, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change).
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this prospectus. Further, the federal
income tax consequences discussed herein reflect Transamerica's understanding of
current law and the law may change. Federal estate and gift tax consequences and
state and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under the policy depend on the individual circumstances
of each owner or recipient of the distribution. A competent tax adviser should
be consulted for further information.
PERFORMANCE DATA
From time to time, Transamerica may advertise yields and average annual
total returns for the variable sub-accounts. In addition, Transamerica may
advertise the effective yield of the money market variable sub-account. These
figures will be based on historical information and are not intended to indicate
future performance.
The yield of the money market variable sub-account refers to the
annualized income generated by an investment in that variable sub-account over a
specified seven-day period. The yield is calculated by assuming that the income
generated for that seven-day period is generated each seven-day period over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in that variable sub-account is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The yield of a variable sub-account (other than the money market
variable sub-account) refers to the annualized income generated by an investment
in the variable sub-account over a specified thirty-day period. The yield is
calculated by assuming that the income generated by the investment during that
thirty-day period is generated each thirty-day period over a twelve-month period
and is shown as a percentage of the investment.
The yield calculations do not reflect the effect of any contingent
deferred sales load or premium taxes that may be applicable to a particular
policy. To the extent that the contingent deferred sales load or premium taxes
are applicable to a particular policy, the yield of that policy will be reduced.
For additional information regarding yields and total returns, please refer to
the Statement of Additional Information.
The average annual total return of a variable sub-account refers to
return quotations assuming an investment has been held in the variable
sub-account for various periods of time including, but not limited to, a period
measured from the date the variable sub-account commenced operations. When a
variable sub-account has been in operation for 1, 5, and 10 years, respectively,
the average annual total return for these periods will be provided. The average
annual total return quotations will represent the average annual compounded
rates of return that would equate an initial investment of $1,000 to the
redemption value of that investment (including the deduction of any applicable
contingent deferred sales load but excluding deduction of any premium taxes) as
of the last day of each of the periods for which total return quotations are
provided.
Performance information for any variable sub-account reflects only the
performance of a hypothetical policy under which policy value is allocated to a
variable sub-account during a particular time period on which the calculations
are based. Performance information should be considered in light of the
investment objectives and policies and characteristics of the portfolios in
which the variable sub-account invests, and the market conditions during the
given time period, and should not be considered as a representation of what may
be achieved in the future. For a description of the methods used to determine
yield and total returns, see the Statement of Additional Information.
Reports and promotional literature may also contain other information
including (1) the ranking of any variable sub-account derived from rankings of
variable annuity separate accounts or their investment products tracked by
Lipper Analytical Services, Inc., VARDS, IBC/Donoghue's Money Fund Report,
Financial Planning Magazine, Money Magazine, Bank Rate Monitor, Standard and
Poor's Indices, Dow Jones Industrial Average, and other rating services,
companies, publications, or other persons who rank separate accounts or other
investment products on overall performance or other criteria, and (2) the effect
of tax deferred compounding on variable sub-account investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise,
and which may include a comparison, at various points in time, of the return
from an investment in a contractpolicy (or returns in general) on a tax-deferred
basis (assuming one or more tax rates) with the return on a currently taxable
basis. Other ranking services and indices may be used.
In its advertisements and sales literature, Transamerica may discuss,
and may illustrate by graphs, charts, or otherwise, the implications of longer
life expectancy for retirement planning, the tax and other consequences of
long-term investment in the policy, the effects of the policy's lifetime payout
options, and the operation of certain special investment features of the policy
- -- such as the dollar cost averaging option. Transamerica may explain and depict
in charts, or other graphics, the effects of certain investment strategies, such
as allocating premiums between the fixed and a variable sub-account.
Transamerica may also discuss the Social Security system and its projected
payout levels and retirement plans generally, using graphs, charts and other
illustrations.
Transamerica may from time to time also disclose average annual total
return in non-standard formats and cumulative (non-annualized) total return for
the variable sub-accounts. The non-standard average annual total return and
cumulative total return will assume that no contingent deferred sales load is
applicable. Transamerica may from time to time also disclose yield, standard
total returns, and non-standard total returns for any or all variable
sub-accounts.
All non-standard performance data will only be disclosed if the
standard performance data is also disclosed. For additional information
regarding the calculation of other performance data, please refer to the
Statement of Additional Information.
Transamerica may also advertise performance figures for the variable
sub-accounts based on the performance of a portfolio prior to the time the
variable account commenced operations.
DISTRIBUTION OF THE POLICY
Transamerica Securities Sales Corporation ("TSSC") is the principal
underwriter of the policies under a Distribution Agreement with Transamerica.
TSSC may also serve as an underwriter and distributor of other policies issued
through the variable account and certain other separate accounts of Transamerica
and affiliates of Transamerica. TSSC is an indirect wholly-owned subsidiary of
Transamerica Corporation. TSSC is registered with the Commission as a
broker/dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD"). Its principal offices are located at 1150 South Olive Street, Los
Angeles, California 90015. TSSC may enter into sales agreements with
broker/dealers to solicit applications for the policies through registered
representatives who are licensed to sell securities and variable insurance
products.
Under the Sales Agreements, TSSC will pay broker-dealers compensation
based on a percentage of each premium. The percentage may be up to 5.75% and in
certain situations additional amounts for marketing allowances, production
bonuses, service fees, sales awards and meetings, and asset based trailer
commissions may be paid.
LEGAL PROCEEDINGS
There is no pending, material legal proceeding affecting the variable
account. Transamerica is involved in various kinds of routine litigation which,
in management's judgment, are not of material importance to Transamerica's
assets or to the variable account.
LEGAL MATTERS
The organization of Transamerica, its authority to issue the policy and
the validity of the form of the policy have been passed upon by David M.
Goldstein, Counsel to Transamerica.
ACCOUNTANTS
The consolidated financial statements of Transamerica for each of the
three years in the period ended December 31, 1997, have been audited by Ernst &
Young LLP, Independent Auditors, as set forth in their reports appearing in the
Statement of Additional Information, and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing. There are no audited financial statements for the variable account
since it had not commenced operations as of the date of this prospectus.
VOTING RIGHTS
To the extent required by applicable law, all portfolio shares held in
the variable account will be voted by Transamerica at regular and special
shareholder meetings of the respective portfolio in accordance with instructions
received from persons having voting interests in the corresponding variable
sub-account. If, however, the 1940 Act or any regulation thereunder should be
amended, or if the present interpretation thereof should change, or if
Transamerica determines that it is allowed to vote all portfolio shares in its
own right, Transamerica may elect to do so.
The person with the voting interest is the owner. The number of votes
which are available to an owner will be calculated separately for each variable
sub-account. Before the annuity date, that number will be determined by applying
his or her percentage interest, if any, in a particular variable sub-account to
the total number of votes attributable to that variable sub-account. The owner
holds a voting interest in each variable sub-account to which the policy value
is allocated. After the annuity date, the number of votes decreases as
settlement option payments are made and as the reserves for the policy decrease.
The number of votes of a portfolio will be determined as of the date
coinciding with the date established by that portfolio for determining
shareholders eligible to vote at the meeting of the portfolios. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the respective portfolios.
Shares as to which no timely instructions are received and shares held
by Transamerica as to which owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
policies participating in the variable sub-account. Voting instructions to
abstain on any item to be voted upon will be applied on a pro rata basis.
Each person or entity having a voting interest in a variable
sub-account will receive proxy material, reports and other material relating to
the appropriate portfolio.
It should be noted that generally the portfolios are not required, and
do not intend, to hold annual or other regular meetings of shareholders.
AVAILABLE INFORMATION
Transamerica has filed a registration statement (the "Registration
Statement") with the Securities and Exchange Commission under the 1933 Act
relating to the policy offered by this prospectus. This prospectus has been
filed as a part of the Registration Statement and does not contain all of the
information set forth in the Registration Statement and exhibits thereto, and
reference is hereby made to such Registration Statement and exhibits for further
information relating to Transamerica and the policy. Statements contained in
this prospectus, as to the content of the policy and other legal instruments,
are summaries. For a complete statement of the terms thereof, reference is made
to the instruments filed as exhibits to the Registration Statement. The
Registration Statement and the exhibits thereto may be inspected and copied at
the office of the Commission, located at 450 Fifth Street, N.W., Washington,
D.C.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available which contains more
details concerning the subjects discussed in this prospectus. The following is
the Table of Contents for that Statement:
TABLE OF CONTENTS Page
THE POLICY ..............................................................3
NET INVESTMENT FACTOR....................................................3
SETTLEMENT OPTION PAYMENTS...............................................3
Variable Annuity Units and Payments.............................3
Variable Annuity Unit Value.....................................3
Transfers After the Annuity Date ...............................4
GENERAL PROVISIONS ......................................................4
IRS Required Distributions......................................4
Non-Participating...............................................4
Misstatement of Age or Sex .....................................4
Proof of Existence and Age .....................................4
Annuity Data....................................................4
Assignment......................................................5
Annual Report...................................................5
Incontestability................................................5
Entire Policy...................................................5
Changes in the Policy...........................................5
Protection of Benefits..........................................5
Delay of Payments...............................................5
Notices and Directions..........................................6
CALCULATION OF YIELDS AND TOTAL RETURNS..................................6
Money Market Sub-Account Yield Calculation......................6
Other Sub-Account Yield Calculations............................6
Standard Total Return Calculations..............................7
Adjusted Historical Portfolio Performance Data..................7
Other Performance Data..........................................7
HISTORIC PERFORMANCE DATA................................................8
General Limitations.............................................8
Adjusted Historical Sub-Account Performance Data................8
DISTRIBUTION OF THE POLICY..............................................18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS..................................18
STATE REGULATION........................................................18
RECORDS AND REPORTS.....................................................18
FINANCIAL STATEMENTS....................................................18
APPENDIX - Accumulation Transfer Formula................................19
<PAGE>
Appendix A
THE FIXED ACCOUNT
.........This prospectus is generally intended to serve as a disclosure
document only for the variable account of the policy. For complete details
regarding the contractfixed account, see the policy itself.
.........The account value allocated to the fixed account becomes part of
the general account of Transamerica, which supports insurance and annuity
obligations. Because of exemptive and exclusionary provisions, interests in the
general account have not been registered under the Securities Act of 1933 (the
"1933 Act"), nor is the general account registered as an investment company
under the 1940 Act. Accordingly, neither the general account nor any interests
therein are generally subject to the provisions of the 1933 Act or the 1940 Act,
and the staff of the Securities and Exchange Commission has not reviewed the
disclosures in this prospectus which relate to the fixed account.
.........The fixed account is part of the general account of Transamerica.
The general account of Transamerica consists of all the general assets of
Transamerica, other than those in the variable account, or in any other separate
account. Transamerica has sole discretion to invest the assets of its
general account subject to applicable law.
.........The allocation or transfer of funds to the fixed account does not
entitle the owner to share in the investment experience of Transamerica's
general account.
.........
.........Currently, Transamerica guarantees that it will credit interest at
a rate of not less than 3% per year, compounded annually, to amounts allocated
to the fixed account under the policies. However, Transamerica reserves the
right to change the minimum rate according to state insurance law. Transamerica
may credit interest at a rate in excess of 3% per year. There is no specific
formula for the determination of excess interest credits. Some of the factors
that the company may consider in determining whether to credit excess interest
to amounts allocated to the fixed account and amounts in that account are
general economic trends, rates of return currently available and anticipated on
the company's investments, regulatory and tax requirements, and
competitive factors.
==============================================================================
Any interest credited to amounts allocated to the fixed account
in excess of 3% per year will be determined in the sole discretion of
Transamerica. The owner assumes the risk that interest credited to the fixed
account allocations may not exceed the minimum guarantee of 3% for any given
year.
==============================================================================
.........Rates of interest credited to the fixed account will be guaranteed
for at least twelve months and will vary by the timing and class of the
allocation, transfer or renewal. At any time after the end of the twelve month
period for a particular allocation, Transamerica may change the annual rate of
interest for that class; this new annual rate of interest will remain in effect
for at least twelve months. New purchase payments made to the policy which are
allocated to the fixed account may receive different rates of interest. These
rates of interest may differ from those interest rates credited to amounts
transferred from the variable sub-accounts or guarantee period account and from
those credited amounts remaining in the fixed account and receiving renewal
rates. These rates of interest may also differ from those rates for allocations
applied under certain options and services Transamerica may be offering.
<PAGE>
Transfers
.........Each policy year the owner may transfer a percentage of the value
of the fixed account to variable sub-accounts. The maximum percentage that may
be transferred will be declared annually by Transamerica. This percentage will
be determined by Transamerica at its sole discretion, but will not be less than
10% of the value of the fixed account on the preceding policy anniversary and
will be declared each year. Currently, this percentage is 25%. The owner is
limited to four transfers from the fixed account each policy year, and the total
of all such transfers cannot exceed the current maximum. If Transamerica permits
dollar cost averaging from the fixed account to the variable sub-accounts, the
above restrictions are not applicable.
.........Generally, transfers may not be made from any variable sub-account
to the fixed account for the six-month90-day period following any transfer from
the fixed account to one or more of the variable sub-accounts.
Transamerica reserves the right to modify the limitations on transfers to
and from the fixed account and to defer transfers from the fixed account for up
to six months from the date of
request.
==============================================================================
==============================================================================
==============================================================================
1
==============================================================================
A-1
<PAGE>
Appendix B
Example of Variable Accumulation Unit Value Calculations
Suppose the net asset value per share of a portfolio at the end of the
current valuation period is $20.15; at the end of the immediately preceding
valuation period it was $20.10; the valuation period is one day; and no
dividends or distributions caused the portfolio to go "ex-dividend" during the
current valuation period. $20.15 divided by $20.10 is 1.002488. Subtracting the
one day risk factor for mortality and expense risk charge and the administrative
expense charge of .00367% (the daily equivalent of the current charge of 1.35%
on an annual basis) gives a net investment factor of 1.00245. If the value of
the variable accumulation unit for the immediately preceding valuation period
had been 15.500000, the value for the current valuation period would be 15.53798
(15.5 x 1.00245).
Example of Variable Annuity Unit Value Calculations
Suppose the circumstances of the first example exist, and the value of
a variable annuity unit for the immediately preceding valuation period had been
13.500000. If the first variable annuity payment is determined by using an
annuity payment based on an assumed interest rate of 4% per year, the value of
the variable annuity unit for the current valuation period would be 13.53163
(13.5 x 1.00245 (the net investment factor) x 0.999893). 0.999893 is the factor,
for a one day valuation period, that neutralizes the assumed rate of four
percent (4%) per year used to establish the variable annuity rates found in the
contract.
Example of Variable Annuity Payment Calculations
Suppose that the account is currently credited with 3,200.000000
variable accumulation units of a particular variable sub-account.
Also suppose that the variable accumulation unit value and the variable
annuity unit value for the particular variable sub-account for the valuation
period which ends immediately preceding the first day of the month is 15.500000
and 13.500000 respectively, and that the variable annuity rate for the age and
elected is $5.73 per $1,000. Then the first variable annuity payment would be:
3,200 x 15.5 x 5.73 divided by 1,000 = $284.21,
and the number of variable annuity units credited for future
payments would be:
284.21 divided by 13.5 = 21.052444.
For the second monthly payment, suppose that the variable annuity unit
value on the 10th day of the second month is 13.565712. Then the second variable
annuity payment would be $285.59 (21.052444 x 13.565712).
B-1
<PAGE>
Appendix C
Transamerica Life Insurance Company of New York
DISCLOSURE STATEMENT
for Individual Retirement Annuities, IRA's and SEP-IRA
The following information is being provided to you, the Owner, in
accordance with the requirements of the Internal Revenue Service (IRS). This
Disclosure Statement contains information about opening and maintaining an
Individual Retirement Annuity ("IRA") and summarizes some of the financial and
tax consequences of establishing an IRA. Part I of this Disclosure Statement
discusses Traditional IRAs, while Part II addresses Roth IRAs. Because the tax
consequences of the two categories of IRAs differ significantly, it is important
that you review the correct part of this Disclosure Statement to learn about
your particular IRA. It is intended to be read together with, and be a part of,
the prospectus and the terms used here will have the same meaning as in the
prospectus, unless otherwise stated.
We have filed the Transamerica Life Individual Retirement Annuity
("Transamerica Life IRA") Contract with the IRS for approval. Please note that
IRS approval applies only to the form of the contract and does not represent a
determination of the merits of such IRA contract.
It may be necessary for us to amend your Transamerica Life IRA Contract
in order for us to obtain or maintain IRS approval. In addition, laws and
regulations adopted in the future may require changes to your contract in order
to preserve its status as an IRA. We will send you a copy of any such amendment.
No contribution will be accepted under a SIMPLE plan established by any
employer pursuant to Internal Revenue Code Section 408(p). No transfer or
rollover of funds attributable to contributions made by a employer to your
SIMPLE IRA under the employer's SIMPLE plan may be transferred or rolled over to
your Transamerica Life IRA prior to the expiration of the two (2) year period
beginning on the date you first participated in the employer's SIMPLE plan. In
addition, depending on the annuity contract you purchased, contributory IRAs may
or may not be available. Please refer to your prospectus.
This Disclosure Statement includes the non-technical explanation of
some of the changes made by the Tax Reform Act of 1986 applicable to IRAs and
more recent changes made by the Small Business Job Protection Act of 1996
(SBA-96), the Health Insurance Portability and Accountability Act of 1996
(HIPAA) and the Tax Relief Act of 1997 (TRA-97). The information provided
applies to contributions made and distributions received after December 31,
1986, and reflects the relevant provisions of the Code as in effect on January
1, 1998. This Disclosure Statement is not intended to constitute tax advice, and
you should consult a tax professional if you have questions about your own
circumstances.
Definitions
Contributions - Purchase Payments or Premiums as applicable to your Contract.
Policy - Certificate or contract as applicable.
Compensation - For purposes of determining allowable contributions, the term
"Compensation" includes all earned-income, including net earnings from self
employment and alimony or separate maintenance payments received and includable
in your gross income, but does not include deferred compensation or any amount
received as a pension or annuity.
<PAGE>
Revocation of Your IRA or Roth IRA
You have the right to revoke your IRA or Roth IRA during the seven
calendar day period following its establishment. The establishment of your IRA
or Roth IRA will be the contract effective date for your contract. This seven
day calendar period may or may not coincide with the free look period of your
contract. In order to revoke your IRA or Roth IRA, you must notify us in writing
and you must mail or deliver your revocation to us postage prepaid, at: P.O. Box
31848, Charlotte, NC 28231-1848. The date of the postmark (or the date of
certification or registration if sent by certified or registered mail) will be
considered your revocation date. If you revoke your IRA or Roth IRA during the
seven day period, an amount equal to your purchase payment (without any
adjustments for items such as administrative expenses, fees, or fluctuation in
market value) will be returned to you.
The rules that apply to a Traditional Individual Retirement Annuity
(which is referred to in this Disclosure Statement simply as an "IRA" or as a
"Traditional IRA) generally also apply to IRAs under Simplified Employee Pension
plans (SEP-IRAs), unless specific rules for SEP-IRAs are stated.
Contributions
(a) Regular IRA. You may make contributions to a regular IRA in any
amount up to the combined tax deductible and non-tax deductible contribution
limit described in Part I Section 2 of this Disclosure Statement. Such
contributions are also subject to the minimum amount under the contract. Such
contributions shall be in cash. Your contribution to a regular IRA for a tax
year must be made by the due date (not including extensions) for your federal
tax return for that tax year.
(b) Spousal IRA. If you and a non-working spouse file a joint federal
income tax return for the taxable year and if your spouse's compensation, if
any, includable in gross income for the year is less than the compensation
includable in your gross income for the year, you and your spouse may each
establish your own individual IRA and may make contributions to those IRAs in
accordance with the rules and limits for tax deductible and non-tax deductible
contributions contained in Section 219(c) of the Code, which are summarized in
Part I, section 2 of this Disclosure Statement. Such contributions shall be in
cash. Your contribution to a Spousal IRA for a tax year must be made by the due
date (not including extension) for your federal income tax return for that tax
year.
(c) Rollover IRA. Rollover contributions are unlimited in dollar
amount. These consist of eligible distributions received by you from another IRA
or tax-qualified retirement plan. If you elect to make a direct rollover from
another IRA, your distribution will be directly deposited into your rollover
IRA. However, you may only rollover the amounts from one IRA into another IRA
once in any 365-day period. A direct rollover distribution is not taxable until
you withdraw the amounts from your rollover IRA, and no income tax will be
withheld from the direct rollover distribution. If a distribution is paid to you
and you want to roll over all or part of the distributed amount to this IRA, the
rollovers must be accomplished within 60 days of the date you receive the amount
to be rolled over. Generally, any distribution from a tax-qualified retirement
plan, such as a pension plan, 401(k) plan, profit sharing or Keogh plan, can be
rolled over unless it is a "minimum required distribution" (see below). A direct
transfer from a tax-qualified retirement plan to an IRA is considered a
rollover. However, distributions of "after-tax" plan contributions (i.e. amounts
which are not subject to federal income tax when distributed from a
tax-qualified retirement plan) cannot be rolled over to an IRA. In addition, you
may not roll over any payment that is a minimum required distribution (as
discussed in Part I, Section 4(a), or that is part of a series of payments that
are to be made to you from a tax-qualified retirement plan or IRA that is to be
paid to your over your life, life expectancy, or for a period of at least 10
years.
Strict limitations apply to rollovers, and you should seek competent
tax advice in order to comply with all the rules governing rollovers.
(d) Transfers. You may make an initial or subsequent contribution to
your Transamerica IRA hereunder by directing a Trustee of an existing individual
retirement account or IRA to transfer an amount in cash to this IRA.
(e) Simplified Employee Pension Plan (SEP-IRA). If an IRA is
established that meets the requirements of a SEP-IRA, your employer may
contribute an amount not to exceed the lesser of 15% of your includable
compensation ($160,000 for 1998, adjusted for inflation thereafter) or $30,000.
The amount of such contribution is not includable in your income as wages for
federal income tax purposes. Within that overall limit you may elect to defer up
to $10,000 of your compensation in 1998 (as adjusted for inflation in accordance
with the Code) if your employer's SEP-IRA plan permits and if the compensation
deferral feature was in effect prior to January 1, 1997. The amount of such
elective deferral is excludable from your income as wages for federal income tax
purposes.
Your employer is not required to make a SEP-IRA contribution in any
year nor make the same percentage contribution each year. But, if contributions
are made, they must be made to the SEP-IRA for all eligible employees and must
not discriminate in favor of highly compensated employees. If the rules are not
met, any SEP-IRA contributions by the employer will be treated as taxable to the
employees and could result in adverse tax consequences to the participating
employee. For further details, see your employer.
(f) Responsibility of the Owner. Contributions, rollovers, or transfers
to this IRA must be made in accordance with the appropriate sections of the
Code. It is your full and sole responsibility to determine the tax deductibility
of any contribution, and to make such contributions in accordance with the Code.
Transamerica does not provide tax advice, and assumes no liability for the tax
consequences of any contribution to this IRA.
3. Deductibility of Contributions
(a) Eligibility. If neither you, nor your spouse, is an active
participant (see b. below) and you file a joint income tax return, for each
taxable year you and your spouse may contribute up to $4,000 together (but no
more than $2,000 to each IRA) if your combined compensation is at least equal to
that amount. In this case you and your spouse may take a deduction for the
entire amount contributed. If you are an active participant but have an adjusted
gross income (AGI) below a certain level (see c. below), you may make a
deductible contribution as under current law. If, however, you or your spouse is
an active participant and your combined AGI is above the specified level, the
amount of the deductible contribution you may make to an IRA is phased out and
eventually eliminated. Beginning in 1998, if you are not an active participant
(even though your spouse is), you may take a full $2,000 deduction for
contributions to an IRA. This deduction is subject to phase out at joint AGI
levels between $150,000 and $160,000, and is eliminated for AGI levels above
$160,000.
(b) Active Participant. You are an "active participant" for a year if
you participate in a retirement plan. For example, if you participate in a
pension plan, profit sharing plan, a 401 plan, certain government plans, a
tax-sheltered arrangement under Code Section 403, or a SEP-IRA plan, you are
considered to be an active participant. Your Form W-2 for the year should
indicate your participation status.
(c) Adjusted Gross Income (AGI). If you are an active participant, you
must look at your AGI for the year (or if you and your spouse file a joint tax
return, you use your combined AGI) to determine whether you can make a
deductible IRA contribution for that taxable year. The instructions for your tax
return will show you how to calculate your AGI for this purpose. If you are at
or below a certain AGI level, called the Threshold Level, you are treated as if
you were not an active participant and can make a deductible contribution under
the same rules as a person who is not an active participant.
Your Threshold Level depends upon whether you are a married taxpayer
filing a joint tax return, an unmarried taxpayer, or a married taxpayer filing a
separate tax return. If you are a married taxpayer but file a separate tax
return, the Threshold Level is $0. If you are a married taxpayer filing a joint
tax return, or an unmarried taxpayer, your Threshold Level depends upon the
taxable year, and can be determined using the appropriate table below:
Married Filing Jointly Unmarried
Taxable Applicable Taxable Applicable
Year Dollar Limitation Year Dollar Limitation
1997...........$40,000 1997................ $25,000
1998...........$50,000 1998................ $30,000
1999...........$51,000 1999................ $31,000
2000...........$52,000 2000................ $32,000
2001...........$53,000 2001.................$33,000
2002...........$54,000 2002.................$34,000
2003...........$60,000 2003.................$40,000
2004...........$65,000 2004.................$45,000
2005...........$70,000 2005 and
2006...........$75,000 thereafter...........$50,000
2007 and
thereafter.....$80,000
If your AGI is less than $10,000 above your Threshold Level ($20,000
for married taxpayers filing jointly for the taxable year beginning on or after
January 1, 2007) you will still be able to make a deductible contribution, but
it will be limited in amount. The amount by which your AGI exceeds your
Threshold Level is called your Excess AGI. The Maximum Allowable Deduction is
$2,000 (and an additional $2,000 for a Spousal IRA).
You can calculate your Deduction Limit as follows:
10,000 - Excess AGI x Maximum Allowable Deduction = Deduction Limit
-------------------
10,000
For taxable years beginning on or after January 1, 2007, married
taxpayers filing jointly should substitute 20,000 for 10,000 in the numerator
and denominator of the above equation.
You must round up the result to the next highest $10 level (the next
highest number which ends in zero). For example, if the result is $1,525, you
must round it up to $1,530. If the final result is below $200 but above zero,
your Deduction Limit is $200. Your Deduction Limit cannot in any event exceed
100% of your earned income.
(d) Restrictions.No deduction is allowed for (i) contributions other
than in cash; (ii) contributions (other than those by an employer to a SEP-IRA)
made during the calendar year in which you attain age 70 1/2 or thereafter; or
(iii) for any amount you contribute which was a distribution from another
retirement plan ("rollover" contribution). However, the limitations in
paragraphs a. and c. of this section do not apply to rollover contributions.
3. Nondeductible Contributions to IRAs
Even if you are above the Threshold Level and, thus, may not make a
deductible contribution of $2,000 (and an additional $2,000 for a Spousal IRA),
you may still contribute up to the lesser of 100% of compensation or $2,000 to
an IRA (and an additional $2,000 for a Spousal IRA). The amount of your
contribution which is not deductible will be a nondeductible contribution to the
IRA. You may also choose to make a nondeductible contribution even if you could
have deducted part or all of the contribution. Interest or other earnings on
your IRA contribution, whether from deductible or nondeductible contributions,
will not be taxed until taken out of your IRA and distributed to you.
If you make a nondeductible contribution to an IRA you must report the
amount of the nondeductible contribution to the IRS as a part of your tax return
for the year.
4. Distributions
(a) Required Minimum Distributions. Distribution of your IRA must be
made or begin no later than April 1 of the calendar year following the calendar
year in which you attain age 70 1/2 (the required beginning date). You may take
required minimum distributions from any IRA you maintain as long as: (i)
distributions begin when required; (ii) periodic payments are made at least once
a year; and (iii) the amount to be distributed is not less than the minimum
required under current federal law. If you own more than on IRA, you can choose
whether to take your minimum distribution from one IRA or a combination of your
IRAs. A distribution may be made at once in a lump sum, or it may be made in
installments. Installment payments must be made in equal or substantially equal
amounts over: (i) your life or the joint lives of you and your beneficiary; or
(ii) a period not exceeding your life expectancy (as re-determined annually
under IRA tables), or the joint life expectancy of you and your beneficiary (as
re-determined annually, if that beneficiary is your spouse). Also, special rules
may apply if the age difference between you and your designated beneficiary
(other than your spouse) is greater than ten year.
If settlement option payments start prior to the April 1 following the
year you turn age 70 1/2, then the annuity date of such settlement option
payments will be treated as the required beginning date for purposes of the
death benefit provisions below.
If you die before the entire interest in your IRA is distributed to
you, but after your required beginning date, the entire interest in the IRA must
be distributed to your beneficiary at least as rapidly as your IRA was being
distributed prior to your death. If you die before your required beginning date
and if you have no designated beneficiary, distribution must be completed by
December 31 of the calendar year that is five years after your death. If you die
before your required beginning date and if you have a designated beneficiary,
distributions to your designated beneficiary must be made in substantially equal
installments over the life of life expectancy of the designated beneficiary,
beginning by December 31 of the calendar year that is one year after your death.
If the beneficiary is your surviving spouse, and you die before your
required beginning date will become the new owner/annuitant and can continue
this IRA on the same basis as before your death. If your surviving spouse does
not wish to continue this contract as his or her IRA, he or she may elect to
receive the death benefit in the form of settlement option payments. Such
payments must be in equal amounts over your spouse's life or a period not
extending beyond his or her life expectancy. The surviving spouse must elect
this option and begin receiving payments no later than the earliest of the
following dates: (i) December 31 of the year following the year you died; or
(ii) December 31 of the year in which you would have reached the required
beginning date if you had not died. Either you or, if applicable, your
beneficiary, is responsible for assuring that the required minimum distribution
is taken in a timely manner and that the correct amount is distributed.
(b) Taxation of IRA Distributions.Because nondeductible IRA
contributions are made using income which has already been taxed (that is, they
are not deductible contributions), the portion of the IRA distributions
consisting of nondeductible contributions will not be taxed again when received
by you. If you make any nondeductible IRA contributions, each distribution from
your IRAs will consist of a nontaxable portion (return of nondeductible
contributions) and a taxable portion (return of deductible contributions, if
any, and earnings).
Thus, if you require a distribution from your IRA and you previously
made deductible and nondeductible contributions, you may not take an IRA
distribution which is entirely tax-free. The following formula is used to
determine the nontaxable portion of your distributions for a taxable year.
Remaining Nondeductible contributions Total distributions
Year-end total IRA balances X (for the year) =
Nontaxable distributions
(for the year)
To figure the year-end total IRA balance, you must treat all of your
IRAs as a single IRA. This includes all regular IRAs, as well as SEP-IRAs, and
Rollover IRAs. You also add back the distributions taken during the year. Please
refer to IRS Publication 590, Individual Retirement Arrangements, for
instructions, including worksheets that can assist you in these calculations.
Transamerica Life will report all distributions to the IRS as fully taxable
income to you.
Even if you withdrew all of the money in your IRA in a lump sum, you
will not be entitled to use any form of income averaging to reduce the federal
income tax on your distribution. Also, no portion of your distribution is
taxable as a capital gain.
(c) Withholding. Unless you elect not to have withholding apply,
federal income tax will be withheld from your IRA distributions currently at a
10% rate. If payments are delivered to foreign countries, federal income, tax
will generally be withheld at a 10% rate unless you certify to Transamerica Life
that you are not a U.S. citizen residing abroad or a "tax avoidance expatriate"
as defined in Code Section 877. Such certification may result in mandatory
withholding of federal income taxes at a different rate.
6. Penalties
(a) Excess Contributions. If at the end of any taxable year your IRA
contributions (other than rollovers or transfers) exceed the maximum allowable
(deductible and nondeductible) contributions for that year, the excess
contribution amount will be subject to a nondeductible 6% excise (penalty) tax.
However, if you withdraw the excess contribution, plus any earnings on it,
before the due date for filing your federal income tax return for the year
(including extensions) for the taxable year in which you made the excess
contribution, the excess contribution will not be subject to the 6% penalty tax.
The amount of the excess contribution withdrawn will not be considered an early
distribution, but the earnings withdrawn will be taxable income to you and may
be subject to an additional 10% tax on early distributions. Alternatively,
excess contributions for one year maybe withdrawn in a later year or may be
carried forward as IRA contributions in the following year to the extent that
the excess, when aggregated with your IRA contribution (if any) for the
subsequent year, does not exceed the maximum allowable (deductible and
nondeductible) amount for that year. The 6% excise tax will be imposed on excess
contributions in each year they are neither returned to you or applied as
contributions in subsequent years.
Excess contributions that were withdrawn will not be taxable income to
you if you did not take a deduction for the excess amount.
(b) Early Distributions. Since the purpose of an IRA is to accumulate
funds for retirement, your receipt or use of any portion of your IRA before you
attain age 59 1/2 constitutes an early distribution subject to a 10% penalty tax
unless the distribution occurs as a result of your death or disability or is
part of a series of substantially equal payments made over your life expectancy
(as determined from IRS tables in the income tax regulations) or the joint life
expectancies of you and your beneficiary. Also, the 10% penalty will not apply
if distributions are used to pay for medical expenses in excess of 7.5% of your
AGI or if distributions are used to pay for health insurance premiums for you,
your spouse and/or your dependents if you are an unemployed individual who is
receiving unemployment compensation under federal or state programs for at least
12 consecutive weeks. Effective for distribution made in 1998 or later, the 10%
penalty also will not apply to an early distribution made to pay for first-time
homebuyer expenses of you or certain family members, or for higher education
expenses for you or certain family members. First-time homebuyer expenses must
be paid within 120 days of the distribution from the IRA and include up to
$10,000 of the costs of acquiring, constructing, or reconstructing a principal
residence, including settlement, financing and closing costs. Higher education
expenses include tuition, fees, books, supplies, and equipment required for
enrollment, attendance, and room and board at a post-secondary educational
institution. The amount of an early distribution (excluding any nondeductible
contribution included therein) is includable in your gross income and may be
subject to the 10% penalty tax unless you transfer it to another IRA as a
qualifying rollover contribution.
(c) Required Minimum Distributions (RMD). If the RMD rules described in
Part I, section 4 (a) of this Disclosure Statement apply to you and if the
amount distributed during a calendar year is less than the minimum amount
required to be distributed, you will be subject to a penalty tax equal to 50% of
the difference between the amount required to be distributed and the amount
actually distributed.
(d) Prohibited Transactions. If you or the beneficiary engage in any
prohibited transaction (such as any sale, exchange or leasing of any property
between you and the IRA, or any interference with the independent status of the
IRA), the IRA will lose its tax exemption and be treated as having been
distributed to you. The value of the entire IRA (excluding any nondeductible
contributions included therein) will be includable in your gross income; and, if
at the time of the prohibited transaction you are under age 59 1/2, you may also
be subject to the 10% penalty tax on early distributions. If you pledge your
IRA, or your benefits under the contract, as security for a loan, the portion
pledged as security will cease to be tax-qualified, the value of that portion
will be treated as distributed to you, and you will have to include the value of
the portion pledged as security in your income that year for federal tax
purposes. You may also be subject to early withdrawal penalties, as described in
Part I, Section 5.B.
(e) Overstatement or Understatement of Nondeductible Contributions. If
you overstate your nondeductible IRA contributions on your federal income tax
return (without reasonable cause) you may be subject to a penalty. A penalty
also applies for failure to file any form required by the IRS to report
nondeductible contributions. These penalties are (in addition to any generally
applicable tax, interest, and penalties for which you may be liable if you
understate income upon receiving a distribution from your IRA'S). See Part I,
section 4(b) of this Disclosure Statement. See Part I, section 4(b).
IRA PART II: ROTH IRAs
1. Contributions
(a) Regular Roth IRA. You may make contributions to a regular Roth IRA
in any amount up to the contribution limits described in Part II, Section 3 of
this Disclosure Statement. Such contributions are also subject to the minimum
amount under the Contract. Such contribution shall be in cash. Your contribution
for a tax year must be made by the due date (not including extensions) for your
federal income tax return for that tax year.
Spousal Roth IRA. If you and your spouse file a joint federal income
tax return for the taxable year and if your spouse's compensation, if any,
includable in gross income for the year is less than the compensation includable
in your gross income for the year, you and your spouse may each establish your
own individual IRA and may make contributions to those IRAs in accordance with
the rules and limits for contributions contained in the Code, which are
described in Part II, Section 3 of this Disclosure Statement. Such contributions
shall be in cash. Your contribution to a Spousal Roth IRA for a tax year must be
made by the due date (not including extensions) for your federal income tax
return for that tax year.
(c) Rollover Roth IRA. You may make contributions to a Rollover Roth
IRA within 60 days after receiving a distribution from an existing Roth IRA,
subject to certain limitations discussed in Part II, Section 3.
(d) Transfer Roth IRA. You may make an initial or subsequent
contribution hereunder by directing a Trustee of an existing Roth IRA to
transfer the assets in that Roth IRA to your new Roth IRA.
(e) Conversion Roth IRA. You may open a Conversion Roth IRA within 60
days of receiving a distribution form an existing Traditional IRA or by
instructing the Trustee or issuer of an existing Traditional IRA to transfer the
assets in that Traditional IRA account to your new Roth IRA, subject to certain
restrictions and subject to income tax on some or all of the converted amounts.
If your Adjusted Gross Income ("AGI"), not including the rollover or transfer
amount, is greater than $100,000, or if you are married and you and your spouse
file separate tax returns, you may not roll over or transfer a Traditional IRA
into a Roth IRA.
(f) Responsibility of the Owner. Contributions, rollovers or transfers
to this Roth IRA must be made in accordance with the appropriate sections of the
Code. It is your full and sole responsibility to make contributions to your Roth
IRA in accordance with the Code. Transamerica Life Insurance and Annuity Company
does not provide tax advice, and assumes no liability for the tax consequences
of any contribution to your Roth IRA.
2. Deductibility of Contributions
Your Roth IRA permits only nondeductible after-tax contributions.
However, distributions from your Roth IRA are generally not subject to federal
income tax (see Part II, 4(b) below). This is unlike a Traditional IRA, which
permits deductible and nondeductible contributions, but which provides that most
distributions are subject to federal income tax.
3. Contribution Limits
Contributions for each taxable year to all Traditional and Roth IRAs
may not exceed the lesser of 100% of your compensation or $2,000 each year.
Rollover, transfer and conversion contributions, if properly made, do not count
towards your maximum annual contribution limit.
(a) Regular Roth IRAs. The maximum amount you may contribute to a
Regular Roth IRA will depend on the amount of your income. Your maximum $2,000
contribution begins to phase out when your AGI reaches $95,000 (unmarried) or
$150,000 (married filing jointly). Under the phase out, your maximum
contributions generally will not be less than $200; however, no contribution is
allowed if your AGI exceeds $110,000(unmarried) or ($160,000 (married filing
jointly). If you are married and you and your spouse file separate tax returns,
your maximum contribution phases out between $0 and $10,000. You should consult
your tax advisor to determine your maximum contribution.
If you are married but you and your spouse lived apart for the entire
taxable year and file separate federal income tax returns, your maximum
contribution is calculated as if you were not married.
(b) Spousal Roth IRAs. Contributions to your lower-earning spouse's
Spousal Roth IRA may not exceed the lesser of (a) 100% of both spouses' combined
compensation minus any Roth or deductible Traditional IRA contribution for the
spouse with the higher compensation or (b) $2,000. A maximum of $4,000 may be
contributed to both spouses' Spousal Roth IRAs. Contributions can be divided
between the spouses' Roth IRAs as you and your spouse wish, but no more than
$2,000 can be contributed to either one of the Roth IRAs each year.
(c) Rollover Roth IRAs. There is no contribution limit on the amounts
that you may rollover form another Roth IRA into this Roth IRA. You may roll
over a distribution from any single Roth IRA to another Roth IRA only once in
any 365-day period.
(d) Transfer Roth IRAs. There is no contribution limit on amounts that
you transfer from another Roth IRA into this Roth IRA.
(e) Conversion Roth IRAs. There is no contribution limit on amounts
that you convert from your Traditional IRA into this Roth IRA if you are
eligible to open a Conversion Roth IRA as described above. However, the
distribution proceeds from your Traditional IRA are includable in your taxable
income to the extent that they represent a return of deductible contributions
and earnings on any contributions. The distribution proceeds form your
Traditional are not subject to the 10% premature withdrawal tax (described
below) if the distribution proceeds are deposited to your Rollover Roth IRA
within 60 days. You may roll over a distribution from any single Traditional IRA
to a Rollover Roth IRA or any other IRA only once in any 365-day period.
You can also open a Conversion Roth IRA by instructing the issuer,
custodian or trustee of your existing Traditional IRA to transfer your
Traditional IRA assets to Roth IRA, which will be the successor to your existing
Traditional IRA. The transfer will be treated as a distribution from your
Traditional IRA, and that amount will be includable in your taxable income to
the extent that it represents a return of deductible contributions and earnings
on any contributions, but will not be subject to the 10% premature withdrawal
tax.
For tax years before 1999, if you make a rollover or transfer from a
Traditional IRA to a Roth IRA, you may pay the income tax due upon distribution
from the Traditional IRA ratably over four years beginning in the year of the
rollover.
Also, consult your tax advisor before combining amounts in a Conversion
Roth IRA with any regular contributions or with amounts rolled over or
transferred into the Conversion IRA in other tax years.
4. Distributions
(a) Required Minimum Distribution. Unlike a Traditional IRA, there are
no rules that require that distribution be made to you from Roth IRA during your
lifetime.
If you die before the entire value of your Roth IRA is distributed to
you, the balance of your Roth IRA must be distributed by December 31 of the
calendar year that is five years after your death. However, if you die and you
have a designated beneficiary, distributions to your designated beneficiary must
be made in substantially equal installments over the life or life expectancy of
the designated beneficiary, beginning by December 31 of the calendar year that
is one year after your death.
If your beneficiary is your surviving spouse, he or she will become a
new owner/annuitant and can continue this Roth IRA on the same basis as before
your death. If your surviving spouse does not wish to continue this Contract as
his or her Roth IRA, he or she may elect to receive the death benefit in the
form of settlement option payments. Such payments must be in equal amounts over
the spouse's life not extending beyond his or her expectancy. The surviving
spouse must elect this option and begin receiving payments no later than the
earliest of the following dates: (i) December 31 of the year following the year
you died; or (ii) December 31 of the year in which you would have reached age
70 1/2. Your beneficiary is responsible for assuring that the required minimum
distribution following your death is taken in a timely manner and that the
correct amount is distributed.
(b) Taxation of Roth IRA Distributions. The amounts that you withdraw
from your Roth IRA are generally tax-free. However, since the purpose of a Roth
IRA is to accumulate funds for retirement, your receipt or use of Roth IRA
earnings before you attain age 59 1/2 , or within 5 years of your first
contribution to the Roth IRA, or within 5 years of a contribution rolled over or
transferred from a Traditional IRA, will generally be treated as a premature
withdrawal subject to a regular income tax. No income tax will apply to earnings
that are withdrawn before you attain age 59 1/2, but which are withdrawn five or
more years after the first contribution or the rollover or transfer contribution
from a Traditional IRA to the Roth IRA, where the withdrawal is made (I) upon
your death or disability, or (ii) to pay first-time homebuyer expenses of you or
certain family members. Note that for amounts converted from a Traditional IRA
to a Roth IRA, the five-year period applies separately to amounts converted. No
portion of your distribution is taxable as a capital gain.
(c) Withholding. If the distribution from your Roth IRA is subject to
federal income tax, unless you elect not to have withholding apply, federal
income tax will be withheld from your Roth IRA distributions (currently, at a
10% rate). If payments are delivered to foreign countries, federal income tax
will generally be withheld at a 10% rate unless you certify to Transamerica Life
Insurance and Annuity Company that you are not a U.S. citizen residing abroad or
a "tax avoidance expatriate" as defined in Code Section 877. Such certification
may result in mandatory withholding of federal income taxes at a different rate.
5. Penalties
(a) Excess Contributions. If at the end of any taxable year your Roth
IRA contributions (other than rollovers or transfers) exceed the maximum
allowable contributions for that year, the excess contribution amount will be
subject to a nondeductible 6% excise (penalty) tax. However, if you withdraw the
excess contribution, plus any earnings on it, before the due date for filing
your federal income tax return for the year (including extensions) for the
taxable year in which you made the excess contribution, the excess contribution
will not be subject to the 6% penalty tax. The amount of the excess contribution
withdrawn will not be considered an early distribution, but the earnings
withdrawn will be taxable income to you and may be subject to an additional 10%
tax on early distributions. Alternatively, excess contributions for one year may
be withdrawn in a later year or may be carried forward as Roth IRA contributions
in a later year to the extent that the excess, when aggregated with your Roth
IRA contribution (if any) for the subsequent year, does not exceed the maximum
allowable contribution for that year. The 6% excise tax will be imposed on
excess contributions in each year they are neither returned to your nor applied
as contributions in subsequent years.
(b) Early Distributions. Since the purpose of a Roth IRA is to
accumulate funds for retirement, your receipt or use of any portion of your Roth
IRA before you attain age 59 1/2 , or within 5 years of your first contribution
to the Roth IRA, or within 5 years of a contribution rolled over or transferred
from a Traditional IRA, constitutes an early distribution subject a 10% penalty
tax on the earnings in your Roth IRA. This penalty tax will not apply if the
distribution occurs as a result of your death or disability or is part of a
series of substantially equal payments made over your life expectancy (as
determined from IRA tables in the income tax regulations) or the joint life
expectancies of you and your beneficiary. also, the 10% penalty will not apply
if distributions are used to pay for medical expenses in excess of 7.5% or your
AGI; or if distributions are used to pay for health insurance premiums for you,
your spouse and/or your dependents if you are unemployed individual who is
receiving unemployment compensation under federal or state programs for at least
12 consecutive weeks. The 10% penalty also will not apply to an early
distribution made to pay for first-time homebuyer expenses of your or certain
family members, or for higher education expenses for you or certain family
members. First-time homebuyer expenses must be paid within 120 days of the
distribution from the IRA and include up to $10,000 of the costs of acquiring,
constructing, or reconstructing a principle residence, including settlement,
financing and closing costs. Higher education expenses include tuition, fees,
books, supplies, and equipment required for enrollment, attendance, and room and
board at a post-secondary educational institution.
In addition, it is likely that the law will change in 1998 to provide
retroactively that if amounts transferred or rolled-over from a Traditional IRA
to a Roth IRA are withdrawn before five years, (i) the entire amount that was
transferred or rolled over, not just the earnings, may be subject to the 10%
penalty tax, and (ii) an additional 10% tax may apply if the amounts transferred
or rolled over were (or are to be) included in income ratably over four years.
Special rules may apply to withdrawals from a Roth IRA that includes both
amounts transferred or rolled over from a Traditional IRA and annual
contributions to the Roth IRA; for that reason, it may be advisable to establish
separate Roth IRAs for amounts transferred or rolled over and annual
contributions.
(c) Required Distributions Upon Death. If the required minimum
distribution rules described in Part II, Section 4(a) of this Disclosure
Statement apply to your beneficiary and if the amount distributed in during a
calendar year is less than the minimum amount required to be distributed, your
beneficiary will be subject to a penalty tax equal to 50% of the difference
between the amount required to be distributed and the amount actually
distributed.
(d) Prohibited Transactions. If you or the beneficiary engage in any
prohibited transaction (such as any sale, exchange or leasing of any property
between you and the Roth IRA, or any interference with the independent status of
the Roth IRA), the Roth IRA will lose its tax exemption and be treated as having
been distributed to you. The value of any earnings on your Roth IRA
contributions will be includable in your gross income; and if at the time you
are under age 59 1/2 or its is within five years of your first contribution to
the Roth IRA, or within five year of a rollover contribution from a Traditional
IRA, you may also be subject to the 10% penalty tax on early distributions. If
you pledge your Roth IRA, your benefits under the contract, as a security for a
loan, the portion pledged as security will cease to be tax-qualified, the value
of that portion will be treated as distributed to you, and you may be subject to
the 10% penalty tax on premature distributions from a Roth IRA.
7. Federal Estate and Gift Taxes
Any amount distributed from your IRA's upon your death may be subject
to federal estate and gift taxes. The exercise or non-exercise of an option to
pay an annuity to your beneficiary at or after your death will not be considered
a transfer for gift tax purposes under Code Section 2517.
8. Tax Reporting
You need not file IRS Form 5329 with your income tax return unless
during the taxable year there is an excess contribution to, an early
distribution from, or insufficient minimum required distributions from your IRA
or Roth IRA. You must report contributions to, and distributions from your IRA
and Roth IRA (including the year end aggregate account balance of all IRAs and
Roth IRA) on your federal income tax return for the year. For Traditional IRA,
you must designate on the return how much of your annual contribution is
deductible and how much is nondeductible.
(3) IRS Approval
This contract has been filed with the IRS for approval as to its form.
Such approval is a determination only as to the form of the annuity and does not
represent a determination of the merits of such annuity.
(4) Vesting
Your interest in your IRA and Roth IRA must be nonforfeitable at all
times.
(5) Exclusive Benefit
Your interest in your IRA and Roth IRA is for the exclusive benefit of
you and your beneficiaries.
(6) Publication 590
Additional information about your IRA or Roth IRA can be obtained from
any district office of the IRS and by calling 1-800-TAX-FORM for a free copy of
Publication 590, Individual Retirement Arrangements.
C-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION FOR
TRANSAMERICA SERIES sm -
TRANSAMERICA CLASSIC sm
VARIABLE ANNUITY
Issued By
Transamerica Life Insurance Company of New York
This statement of additional information expands upon subjects
discussed in the April ___, 1998, prospectus for the Transamerica Classic sm
Variable Annuity ("policy") issued by Transamerica Life Insurance Company of New
York ("Transamerica") through Separate Account VA-6-NY. The owner may obtain a
free copy of the prospectus by writing to: Transamerica Life Insurance Company
of New York, Annuity Service Center, 401 North Tryon Street, Suite 700,
Charlotte, North Carolina 28202 or calling (800) 420-7749. Terms used in the
current prospectus for the policy are incorporated into this statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND SHOULD BE READ ONLY IN CONJUNCTION
WITH THE PROSPECTUS FOR THE POLICY AND THE
PORTFOLIOS.
April ___, 1998
<PAGE>
TABLE OF CONTENTS Page
THE POLICY.................................................................3
NET INVESTMENT FACTOR......................................................3
SETTLEMENT OPTION PAYMENTS.................................................3
Variable Annuity Units and Payments...............................3
Variable Annuity Unit Value.......................................3
Transfers After the Annuity Date .................................4
GENERAL PROVISIONS ........................................................4
IRS Required Distributions........................................4
Non-Participating.................................................4
Misstatement of Age or Sex .......................................4
Proof of Existence and Age .......................................4
Annuity Data......................................................4
Assignment........................................................5
Annual Report.....................................................5
Incontestability..................................................5
Entire Policy.....................................................5
Changes in the Policy.............................................5
Protection of Benefits............................................5
Delay of Payments.................................................5
Notices and Directions............................................6
CALCULATION OF YIELDS AND TOTAL RETURNS....................................6
Money Market Sub-Account Yield Calculation........................6
Other Sub-Account Yield Calculations..............................6
Standard Total Return Calculations................................7
Adjusted Historical Portfolio Performance Data....................7
Other Performance Data............................................7
HISTORIC PERFORMANCE DATA..................................................8
General Limitations...............................................8
Adjusted Historical Sub-Account Performance Data..................8
DISTRIBUTION OF THE POLICY................................................18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS....................................18
STATE REGULATION..........................................................18
RECORDS AND REPORTS.......................................................18
FINANCIAL STATEMENTS......................................................18
APPENDIX - Accumulation Transfer Formula..................................19
<PAGE>
<PAGE>
THE POLICY
The following pages provide additional information about the policy
which may be of interest to some owners.
NET INVESTMENT FACTOR
For any sub-account of the variable account, the net investment factor
for a valuation period, before the annuity date, is (a) divided by (b), minus
(c) minus (d):
Where (a) is:
The net asset value per share held in the sub-account, as of the end of
the valuation period; plus the per-share amount of any dividend or
capital gain distributions if the "ex-dividend" date occurs in the
valuation period; plus or minus a per-share charge or credit as
Transamerica may determine, as of the end of the valuation period, for
taxes.
Where (b) is:
The net asset value per share held in the sub-account as of the end of
the last prior valuation period.
Where (c) is:
The daily charge of 0.00329% (1.20% annually) for the mortality and
expense risk charge times the number of calendar days in the current
valuation period.
Where (d) is:
The daily administrative expense charge, currently 0.000411% (0.15%
annually) times the number of calendar days in the current valuation
period. This charge may be increased, but will not exceed 0.00096%
(0.35% annually).
A valuation day is defined as any day that the New York Stock
Exchange is open.
SETTLEMENT OPTION PAYMENTS The variable settlement options provide for payments
that fluctuate in dollar amount, based on the investment performance of the
selected variable sub-account(s).
Variable Annuity Units and Payments
For the first monthly payment, the number of variable annuity units
credited in each variable sub-account will be determined by dividing: (a) the
product of the portion of the value to be applied to the variable sub-account
and the variable annuity purchase rate specified in the policy; by (b) the value
of one variable annuity unit in that sub-account on the annuity date.
The amount of each subsequent variable payment equals the product of
the number of variable annuity units in each variable sub-account and the
variable sub-account's variable annuity unit value as of the tenth day of the
month before the payment due date. The amount of each payment may vary.
Variable Annuity Unit Value
The value of a variable annuity unit in a variable sub-account on any
valuation day is determined as described below.
The net investment factor for the valuation period (for the appropriate
payment frequency) just ended is multiplied by the value of the variable annuity
unit for the sub-account on the preceding valuation day. The net investment
factor after the annuity date is calculated in the same manner as before the
annuity date and then multiplied by an interest factor. The interest factor
equals (.999893)n where n is the number of days since the preceding valuation
day. This compensates for the 4% interest assumption built into the variable
annuity purchase rates. Transamerica may offer other assumed interest rates than
4%. The appropriate interest factor will be applied to compensate for the
assumed interest rate.
Transfers After the Annuity Date
After the annuity date, the owner may transfer variable annuity units
from one sub-account to another, subject to certain limitations. See "Transfers"
page 24 of the prospectus. The dollar amount of each subsequent monthly annuity
payment after the transfer must be determined using the new number of variable
annuity units multiplied by the variable sub-account's variable annuity unit
value on the tenth day of the month preceding payment. Transamerica reserves the
right to change this day of the month.
The formula used to determine a transfer after the annuity date can be
found in the Appendix to this statement of additional information.
GENERAL PROVISIONS
IRS Required Distributions
If any owner under a non-qualified policy dies before the entire
interest in the policy is distributed, the value generally must be distributed
to the designated beneficiary so that the policy qualifies as an annuity under
the Code. (See "Federal Tax Matters" page 36 of the prospectus.)
Non-Participating
The policy is non-participating. No dividends are payable and the
policy will not share in the profits or surplus earnings of Transamerica.
Misstatement of Age or Sex
If the age or sex of the annuitant or any other measuring life has been
misstated in the application, the settlement option payments under the policy
will be whatever the annuity amount applied on the annuity date would purchase
on the basis of the correct age or sex of the annuitant and/or other measuring
life. Any overpayments or underpayments by Transamerica as a result of any such
misstatement may be respectively charged against or credited to the settlement
option payment or payments to be made after the correction so as to adjust for
such overpayment or underpayment.
Proof of Existence and Age
Before making any payment under the policy, Transamerica may require
proof of the existence and/or proof of the age of the annuitant or any other
measuring life, or any other information deemed necessary in order to provide
benefits under the policy.
Annuity Data
Transamerica will not be liable for obligations which depend on
receiving information from a payee or measuring life until such information is
received in a satisfactory form.
<PAGE>
Assignment
No assignment of a policy will be binding on Transamerica unless made
in writing and given to Transamerica at the Service Center. Transamerica is not
responsible for the adequacy of any assignment. The owner's rights and the
interest of any annuitant or non-irrevocable beneficiary will be subject to the
rights of any assignee of record.
Annual Report
At least once each policy year prior to the annuity date, the owner
will be given a report of the current account value allocated to each
sub-account of the variable account and option.the fixed account. This report
will also include any other information required by law or regulation. After the
annuity date, a confirmation will be provided with every variable annuity
payment.
Incontestability
Each policy is incontestable from the policy effective date.
Entire Policy
Transamerica has issued the policy in consideration and acceptance of
the application and payment of the initial premium. A copy of the application is
attached to and is part of the policy and along with the policy constitutes the
entire contract. All statements made by the Owner are considered representations
and not warranties. Transamerica will not use any statement in defense of a
claim unless it is made in the application and a copy of the application is
attached to the policy when issued.
Changes in the Policy
Only two authorized officers of Transamerica, acting together, have
the authority to bind Transamerica or to make any change in the individual
thereunder policy and then only in writing. Transamerica will not be bound by
any promise or representation made by any other persons.
Transamerica may not change or amend the policy, except as provided in
the policy, without the Owner's consent. However, Transamerica may change or
amend the individual policy if such change or amendment is necessary for the
individual policy to comply with any state or federal law, rule or regulation.
Protection of Benefits
To the extent permitted by law, no benefit (including death benefits)
under the policy will be subject to any claim or process of law by any creditor.
Delay of Payments
Payment of any cash withdrawal, lump sum death benefit, or variable
payment or transfer due from the variable account will occur within seven days
from the date the election becomes effective, except that Transamerica may be
permitted to postpone such payment if: (1) the New York Stock Exchange is closed
for other than usual weekends or holidays, or trading on the Exchange is
otherwise restricted; or (2) an emergency exists as defined by the Securities
and Exchange Commission (Commission), or the Commission requires that trading be
restricted; or (3) the Commission permits a delay for the protection of owners.
In addition, while it is our intention to process all transfers from
the sub-accounts immediately upon receipt of a transfer request, we have the
right to delay effecting a transfer from a variable sub-account for up to seven
days, but only in certain limited circumstances. We may delay effecting such a
transfer if there is a delay of payment from an affected portfolio. If this
happens, then we will calculate the dollar value or number of units involved in
the transfer from a variable sub-account on or as of the date we receive a
transfer request in a acceptable form and manner, but will not process the
transfer to the transferee sub-account until a later date during the seven-day
delay period when the portfolio underlying the transferring sub-account obtains
liquidity to fund the transfer request through sales of portfolio securities,
new premiums, transfers by investors or otherwise. During this period, the
amount transferred would not be invested in a variable sub-account.
Transamerica may delay payment of any withdrawal from the fixed account
for a period of not more than six months after Transamerica receives the request
for such withdrawal. If Transamerica delays payment for more than 10 days,
Transamerica will pay interest on the withdrawal amount up to the date of
payment. See "Cash Withdrawals" page 26 of the prospectus.
Notices and Directions
Transamerica will not be bound by any authorization, direction,
election or notice which is not, in a form and manner acceptable to
Transamerica, and received at the Service Center.
Any written notice requirement by Transamerica to the owner will be
satisfied by our mailing of any such required written notice, by first-class
mail, to the owner's last known address as shown on our records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission, Transamerica
is required to compute the money market sub-account's current annualized yield
for a seven-day period in a manner which does not take into consideration any
realized or unrealized gains or losses on shares of the money market series or
on its portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of realized gains and losses on the sale
of securities and unrealized appreciation and depreciation) in the value of a
hypothetical account having a balance of one unit of the money market
sub-account at the beginning of such seven-day period, dividing such net change
in account value by the value of the account at the beginning of the period to
determine the base period return and annualizing this quotient on a 365-day
basis. The net change in account value reflects the deductions for the annual
account fee, the mortality and expense risk charge and administrative expense
charges and income and expenses accrued during the period. Because of these
deductions, the yield for the money market sub-account of the variable account
will be lower than the yield for the money market series or any comparable
substitute funding vehicle.
The Commission also permits Transamerica to disclose the effective
yield of the money market sub-account for the same seven-day period, determined
on a compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting one from the
result.
The yield on amounts held in the money market sub-account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The money market sub-account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
money market series or substitute funding vehicle, the types and quality of
portfolio securities held by the money market series or substitute funding
vehicle, and operating expenses. In addition, the yield figures do not reflect
the effect of any contingent deferred sales load (of up to 6% of premiums) that
may be applicable to a policy.
Other Sub-Account Yield Calculations
Transamerica may from time to time disclose the current annualized
yield of one or more of the variable sub-accounts (except the money market
sub-account) for 30-day periods. The annualized yield of a sub-account refers to
the income generated by the sub-account over a specified 30-day period. Because
this yield is annualized, the yield generated by a sub-account during the 30-day
period is assumed to be generated each 30-day period. The yield is computed by
dividing the net investment income per variable accumulation unit earned during
the period by the price per unit on the last day of the period, according to the
following formula:
YIELD = 2[{a-b + 1}6 - 1]
cd
Where:
a = net investment income earned during the period by the portfolio
attributable to the shares owned by the sub-account.
b = expenses for the sub-account accrued for the period (net of
reimbursements).
c = the average daily number of variable accumulation units
outstanding during the period. d = the maximum offering price per
variable accumulation unit on the last day of the period.
Net investment income will be determined in accordance with rules
established by the Commission. Accrued expenses will include all recurring fees
that are charged to all policies. The yield calculations do not reflect the
effect of any contingent deferred sales load that may be applicable to a
particular policy. Contingent deferred sales load range from 6% to 0% of the
amount of account value withdrawn depending on the elapsed time since the
receipt of each premium.
Because of the charges and deductions imposed by the variable account,
the yield for the sub-account will be lower than the yield for the corresponding
portfolio. The yield on amounts held in the variable sub-accounts normally will
fluctuate over time. Therefore, the disclosed yield for any given period is not
an indication or representation of future yields or rates of return. The
variable sub-account's actual yield will be affected by the types and quality of
portfolio securities held by the portfolio, and its operating expenses.
Standard Total Return Calculations
Transamerica may from time to time also disclose average annual total
returns for one or more of the sub-accounts for various periods of time. Average
annual total return quotations are computed by finding the average annual
compounded rates of return over one, five and ten year periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P{1 + T}n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one, five or
ten-year period at the end of the one, five, or
ten-year period (or fractional portion of such
period).
All recurring fees are recognized in the ending redeemable value. The
standard average annual total return calculations will reflect the effect of any
contingent deferred sales loads that may be applicable to a particular period.
Adjusted Historical Portfolio Performance Data
Transamerica may also disclose "historic" performance data for a
portfolio, for periods before the variable sub-account commenced operations.
Such performance information will be calculated based on the performance of the
portfolio and the assumption that the sub-account was in existence for the same
periods as those indicated for the portfolio, with a level of policy charges
currently in effect.
This type of adjusted historical performance data may be disclosed on
both an average annual total return and a cumulative total return basis.
Moreover, it may be disclosed assuming that the policy is not surrendered (i.e.,
with no deduction for the contingent deferred sales load) and assuming that the
contractpolicy is surrendered at the end of the applicable period (i.e.,
reflecting a deduction for any applicable contingent deferred sales load).
Other Performance Data
Transamerica may from time to time also disclose average annual total
returns in a non-standard format in conjunction with the standard described
above. The non-standard format will be identical to the standard format except
that the contingent deferred sales load percentage will be assumed to be 0%.
Transamerica may from time to time also disclose cumulative total
returns in conjunction with the standard format described above. The cumulative
returns will be calculated using the following formula assuming that the
contingent deferred sales load percentage will be 0%.
CTR = {ERV/P} - 1
Where:
CTR = the cumulative total return net of sub-account recurring
charges for the period.
ERV = ending redeemable value of a hypothetical $1,000 payment
at the beginning of the one, five, or ten-year period at the
end of the one, five, or ten-year period (or fractional
portion of the period).
P = a hypothetical initial payment of $1,000.
All non-standard performance data will be advertised only if the
standard performance data is also disclosed.
HISTORIC PERFORMANCE DATA
General Limitations
The figures below represent past performance and are not indicative of
future performance. The figures may reflect the waiver of advisory fees and
reimbursement of other expenses which may not continue in the future.
Portfolio information, including historical daily net asset values and
capital gains and dividends distributions regarding each portfolio has been
provided by that portfolio. The adjusted historical sub-account performance data
is derived from the data provided by the portfolios. Transamerica has no reason
to doubt the accuracy of the figures provided by the portfolios. Transamerica
has not verified these figures.
Adjusted Historical Sub-Account Performance Data
The charts below show adjusted historical performance data for
sub-accounts for the periods, prior to the inception of the sub-accounts, based
on the performance of the corresponding portfolios since their inception date,
with a level of charges equal to those currently assessed under the policies.
These figures are not an indication of the future performance of the
sub-accounts.
The dates next to each sub-account name indicates the date of
commencement of operation of the corresponding portfolio. The sub-accounts have
not yet commenced operations. Hence, there is no actual performance data for
these sub-accounts.
Notes:
1. On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust")
at which time the Present Trust commenced operations. The total net assets of
the Small Cap Portfolio immediately after the transaction were $139,812,573 in
the Old Trust and $8,129,274 in the Present Trust. For the period prior to
September 16, 1994, the performance figures for the Small Cap Portfolio of the
Present Trust reflect the performance of the Small Cap Portfolio of the Old
Trust.
2. The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., is
the successor to Separate Account Fund C of Transamerica Occidental Life
Insurance Company, a management investment company funding variable annuities,
through a reorganization on November 1, 1996. Accordingly, the performance data
for the Transamerica VIF Growth Portfolio includes performance of its
predecessor.
3. On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, called Quest for Value Accumulation Trust (the "Old Trust")
was effectively divided into two investment funds - The Old Trust and the
present OCC Accumulation Trust (the "Present Trust") at the time of the
transaction there was $682,601,380 in the Old Trust and $51,345,102 in the
Present Trust. For the period prior to September 16, 1994, the performance
figures for the Managed Portfolio of the Present Trust reflect the performance
of the Managed Portfolio of the Old Trust.
<PAGE>
Adjusted Historical Performance Data Charts
1. Average Annual Total Returns - Assuming surrender but no Living Benefits
Rider
2. Average Annual Total Returns - Assuming surrender and Living Benefits Rider
3. Average Annual Total Returns - Assuming no surrender or Living Benefits
Rider
4. Average Annual Total Returns - Assuming no surrender but reflecting Living
Benefits Rider
5. Cumulative Returns - Assuming surrender but no Living Benefits Rider
6. Cumulative Returns - Assuming surrender and Living Benefits Rider
7. Cumulative Returns - Assuming no surrender or Living Benefits Rider
8. Cumulative Returns - Assuming no surrender but reflecting Living Benefits
Rider
<PAGE>
1. Average Annual Total Returns - Assuming surrender but no Living Benefits
Rider
Average annual total returns for periods since inception of the
portfolio, including adjusted historical performance for each sub-account are as
follows. These figures include mortality and expenses charges of 1.20% per
annum, administrative expenses charge of 0.15% per annum, an account fee of $30
per annum adjusted for average account size and the applicable contingent
deferred sales load (maximum of 8% of purchase payments) and do not reflect any
fee deduction for the optional Living Benefits Rider. Any credit is not
reflected in this calculation.
<TABLE>
<CAPTION>
- --------------------------------- -------------- ---------------- --------------- ----------------- ------------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
SUB-ACCOUNT For the For the For the 5-year For the 10-year For the period
(date of commencement 1-year 3-year period period ending period ending from
of operation of period ending ending 12/31/97 12/31/97 commencement of
corresponding portfolio) 12/31/97 12/31/97 portfolio
operations to
12/31/97
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide Growth 14.43% 22.90% N/A N/A 20.60%
(9/12/93)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Morgan Stanley UF International -4.86% N/A N/A N/A -4.87%
Magnum (1/1/97)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Dreyfus VIF Small Cap (8/30/90) 10.01% 18.04% 24.18% N/A 41.92%
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
OCC Accumulation Trust Small 14.30% 15.99% 12.52% N/A 13.83%
Cap (7/31/88) (1)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Emerging Growth 14.28% N/A N/A N/A 19.78%
(7/23/95)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alliance VPF Premier Growth 26.23% 30.58% 18.93% N/A 19.73%
(6/26/92)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Dreyfus VIF Capital 19.64% 25.91% N/A N/A 17.93%
Appreciation (4/27/93)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Research (7/25/95) 12.56% N/A N/A N/A 18.38%
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Transamerica VIF Growth 35.88% 39.19% 28.40% 23.59% 17.82%
(12/1/80) (2)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alger American Income & Growth 28.96% 27.02% 15.39% N/A 12.19%
(11/14/88)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Alliance VPF Growth & Income 21.05% 26.56% 17.15% N/A 13.50%
(1/14/91)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
MFS VIT Growth w/ Income 22.26% N/A N/A N/A 23.75%
(10/5/95)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Janus Aspen Balanced (9/12/93) 14.01% 17.74% N/A N/A 13.97%
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- --------------- ---------------- --------------- ----------------- ------------------
OCC Accumulation Trust Managed 13.98% 26.61% 17.82% N/A 18.63%
(7/31/88) (3)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Morgan Stanley UF High Yield 4.73% N/A N/A N/A 4.75%
(1/1/97)
- --------------------------------- --------------- ---------------- --------------- ----------------- -----------------
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Morgan Stanley UF Fixed Income 1.19% N/A N/A N/A 1.19%
(1/1/97)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
Transamerica VIF Money Market N/A N/A N/A N/A N/A
(1/1/98)
- --------------------------------- -------------- --------------- ---------------- ----------------- ------------------
</TABLE>
<PAGE>
2. Average Annual Total Returns - Assuming surrender and reflecting Living
Benefits Rider
Average annual total returns for periods since inception of the
portfolio, including adjusted historical performance for each sub-account are as
follows. These figures include mortality and expenses charges of 1.20% per
annum, administrative expenses charge of 0.15% per annum, an account fee of $30
per annum adjusted for average account size, the applicable contingent deferred
sales load (maximum 8% of purchase payments) and optional Living Benefits Rider
fee of 0.05% per annum. Any credit is not reflected in this calculation.
<TABLE>
<CAPTION>
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
SUB-ACCOUNT For the For the 3-year For the For the For the period from
(date of commencement of 1-year period period ending 5-year period 10-year period commencement of
operation of ending 12/31/97 ending ending 12/31/97 portfolio operations
corresponding portfolio) 12/31/97 12/31/97 to 12/31/97
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide 14.37% 22.84% N/A N/A 20.54%
Growth (9/12/93)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF -4.91% N/A N/A N/A -4.92%
International Magnum
(1/1/97)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Small Cap 9.95% 17.98% 24.12% N/A 41.85%
(8/30/90)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust 14.24% 15.93% 12.46% N/A 13.77%
Small Cap (7/31/88) (1)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Emerging Growth 14.22% N/A N/A N/A 19.72%
(7/23/95)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Premier 26.17% 30.51% 18.87% N/A 19.67%
Growth (6/26/92)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Capital 19.57% 25.84% N/A N/A 17.87%
Appreciation (4/27/93)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Research (7/25/95) 12.50% N/A N/A N/A 18.32%
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Growth 35.81% 39.12% 28.34% 23.52% 17.76%
(12/1/80) (2)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alger American Income & 28.89% 26.96% 15.33% N/A 12.13%
Growth (11/14/88)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Growth & 20.98% 26.49% 17.10% N/A 13.45%
Income (1/14/91)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Growth w/ Income 21.80% N/A N/A N/A 23.56%
(10/8/95)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Balanced 13.95% 17.68% N/A N/A 13.91%
(9/12/93)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust 13.92% 26.55% 17.76% N/A 18.57%
Managed (7/31/88) (3)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF High 4.68% N/A N/A N/A 4.69%
Yield (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF Fixed 1.13% N/A N/A N/A 1.14%
Income (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
</TABLE>
<PAGE>
3. Average Annual Total Returns - Assuming no surrender or Living Benefits
Rider
Non-standard average annual total returns for periods since inception
of the portfolio, including adjusted historical performance for each sub-account
are as follows. These figures include mortality and expenses charges of 1.20%
per annum, administrative expenses charge of 0.15% per annum and an account fee
of $30 per annum adjusted for average account size, but do not reflect any
applicable contingent deferred sales load (maximum of 6%8% of purchase payments)
and do not reflect any fee deduction for the optional Living Benefits Rider. Any
credit is not reflected in this calculation.
<TABLE>
<CAPTION>
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
SUB-ACCOUNT For the For the 3-year For the For the For the period from
(date of commencement of 1-year period period ending 5-year period 10-year period commencement of
operation of ending 12/31/97 ending ending 12/31/97 portfolio operations
corresponding portfolio) 12/31/97 12/31/97 to 12/31/97
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide 21.63% 24.28% N/A N/A 21.16%
Growth (9/12/93)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF 2.34% N/A N/A N/A 2.35%
International Magnum
(1/1/97)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Small Cap 17.21% 19.53% 24.56% N/A 41.92%
(8/30/90)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust 21.50% 17.53% 13.08% N/A 13.83%
Small Cap (7/31/88) (1)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Emerging Growth 21.48% N/A N/A N/A 21.75%
(7/23/95)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Premier 33.43% 31.80% N/A N/A 20.02%
Growth (6/26/92)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Capital 26.84% 27.22% N/A N/A 18.45%
Appreciation (4/27/93)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Research (7/25/95) 19.76% N/A N/A N/A 20.38%
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Growth 43.08% 40.27% 28.73% 23.59% 17.82%
(12/1/80) (2)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alger American Income & 36.16% 28.31% 15.89% N/A 12.19%
Growth (11/14/88)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Growth & 28.25% 27.86% 17.63% N/A 13.69%
Income (1/14/91)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Growth w/ Income 29.06% N/A N/A N/A 25.78%
(10/8/95)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Balanced 21.21% 19.23% N/A N/A 14.64%
(9/12/93)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust 21.18% 27.91% 18.29% N/A 18.63%
Managed (7/31/88) (3)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF High 11.93% N/A N/A N/A 11.97%
Yield (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF Fixed 8.39% N/A N/A N/A 8.41%
Income (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
</TABLE>
<PAGE>
4. Average Annual Total Returns - Assuming no surrender but reflecting Living
Benefits Rider
Non-standard average annual total returns for periods since inception
of the portfolio, including adjusted historical performance for each sub-account
are as follows. These figures include mortality and expenses charges of 1.20%
per annum, administrative expenses charge of 0.15% per annum and, an account fee
of $30 per annum adjusted for average account size, but do not reflect any
applicable contingent deferred sales load (maximum 8% of purchase payments).
They do reflect deduction of the fee for the optional Living Benefits Rider Fee
of 0.05% per annum. Any credit is not reflected in this calculation.
<TABLE>
<CAPTION>
- ------------------------------- --------------- --------------- --------------- --------------- ---------------------
- ------------------------------- --------------- --------------- --------------- --------------- ---------------------
- ------------------------------- --------------- --------------- --------------- --------------- ---------------------
SUB-ACCOUNT For the For the For the For the For the period from
(date of commencement of 1-year period 3-year period 5-year 10-year commencement of
operation of ending ending period period ending portfolio operations
corresponding portfolio) 12/31/97 12/31/97 ending 12/31/97 to 12/31/97
12/31/97
- ------------------------------- --------------- --------------- --------------- --------------- ---------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide Growth 21.57% 24.22% N/A N/A 21.10%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF 2.29% N/A N/A N/A 2.30%
International Magnum (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 17.15% 19.47% 24.50% N/A 41.85%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Small 21.44% 17.47% 13.02% N/A 13.77%
Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 21.42% N/A N/A N/A 21.69%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier Growth 33.37% 31.73% 19.32% N/A 19.96%
(6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 26.77% 27.16% N/A N/A 18.39%
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 19.70% N/A N/A N/A 20.32%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 43.01% 40.20% 28.67% 23.52% 17.76%
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 36.09% 28.25% 15.83% N/A 12.13%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & Income 28.18% 27.79% 17.57% N/A 13.63%
(1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 29.00% N/A N/A N/A 25.72%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced (9/12/93) 21.15% 19.17% N/A N/A 14.58%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 21.12% 27.84% 18.23% N/A 18.57%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High Yield 11.88% N/A N/A N/A 11.91%
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed 8.33% N/A N/A N/A 8.36%
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money Market N/A N/A N/A N/A N/A
(1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
5. Cumulative Returns - Assuming surrender but no Living Benefits Rider
Adjusted historical standard cumulative total returns for periods since
inception of the portfolio for each sub-account are as follows. These figures
include mortality and expenses charges of 1.20% per annum, administrative
expenses charge of 0.15% per annum, an account fee of $30 per annum adjusted for
average account size and the applicable contingent deferred sales load (maximum
of 8% of purchase payments) and do not reflect any fee deduction for the
optional Living Benefits Rider. Any credit is not reflected in this calculation.
<TABLE>
<CAPTION>
- --------------------------- ---------------- ---------------- --------------- ----------------- ---------------------
- --------------------------- ---------------- ---------------- --------------- ----------------- ---------------------
- --------------------------- --------------- ---------------- ---------------- ---------------- ----------------------
SUB-ACCOUNT For the 1- For the 3- For the 5- For the 10- For the period from
(date of commencement of year period year period year period year period commencement of
operation of ending ending 12/31/97 ending 12/31/97 ending 12/31/97 portfolio operations
corresponding portfolio) 12/31/97 to 12/31/97
- --------------------------- --------------- ---------------- ---------------- ---------------- ----------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide 14.43% 85.65% N/A N/A 123.91%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF -4.86% N/A N/A N/A -4.86%
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 10.01% 64.46% 195.33% N/A 1207.41%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 14.30% 56.03% 80.38% N/A 239.00%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 14.28% N/A N/A NA/ 55.45%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 26.23% 122.65% N/A N/A 170.07%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 19.64% 99.61% N/A N/A 116.44%
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 12.56% N/A N/A N/A 50.90%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 35.88% 169.68% 249.01% 731.19% 1549.63%
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 28.96% 104.95% 104.53% N/A 185.94%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 21.05% 102.71% 120.70% N/A 141.70%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 21.86% N/A N/A N/A 60.58%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 14.01% 63.21% N/A NA/ 75.55%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 13.98% 102.96% 127.07% N/A 400.31%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High 4.73% N/A N/A N/A 4.73%
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed 1.19% N/A N/A N/A 1.19%
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6. Cumulative Return - Assuming surrender and Living Benefits Rider
Adjusted historical standard cumulative total returns for periods since
inception of the portfolio for each sub-account are as follows. These figures
include mortality and expenses charges of 1.20% per annum, administrative
expenses charge of 0.15% per annum, an account fee of $30 per annum adjusted for
average account size, the applicable contingent deferred sales load (maximum 8%
of purchase payments) and the optional Living Benefits Rider Fee of 0.05% per
annum. Any credit is not reflected in this calculation.
<TABLE>
<CAPTION>
- --------------------------- ----------------- --------------- ---------------- ---------------- ---------------------
- --------------------------- ----------------- --------------- ---------------- ---------------- ---------------------
- --------------------------- ---------------- ---------------- ---------------- --------------- ----------------------
SUB-ACCOUNT For the 1- For the 3-year For the For the For the period from
(date of commencement of year period period ending 5-year period 10-year commencement of
operation of ending 12/31/97 ending period ending portfolio operations
corresponding portfolio) 12/31/97 12/31/97 12/31/97 to 12/31/97
- --------------------------- ---------------- ---------------- ---------------- --------------- ----------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide 14.37% 85.36% N/A N/A 123.42%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF -4.91% N/A N/A N/A -4.91%
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 9.95% 64.20% 194.58% N/A 1202.63%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 14.24% 55.79% 79.92% N/A 237.41%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 14.22% N/A N/A N/A 55.25%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 26.17% 122.31% 137.37% N/A 169.32%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 19.57% 99.30% N/A N/A 115.93%
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 12.50% N/A N/A N/A 50.71%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 35.81% 169.27% 248.13% 727.06% 1535.61%
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 28.89% 104.63% 104.01% N/A 184.64%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 20.98% 102.40% 120.14% N/A 140.85%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 21.80% N/A N/A N/A 60.40%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 13.95% 62.96% N/A N/A 75.17%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 13.92% 102.65% 126.49% N/A 397.96%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High 4.68% N/A N/A N/A 4.68%
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed 1.13% N/A N/A N/A 1.13%
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
7. Cumulative Returns - Assuming no surrender or Living Benefits Rider
Adjusted historical non-standard cumulative total returns for periods
since inception of the portfolio for each sub-account are as follow. These
figures include mortality and expenses charges of 1.20% per annum,
administrative expenses charge of 0.15% per annum and an account fee of $30 per
annum adjusted for average account size but do not reflect any applicable
contingent deferred sales load (maximum of 8% of purchase payments) and do not
reflect any fee deduction for the optional Living Benefits Rider. Any credit is
not reflected in this calculation.
<TABLE>
<CAPTION>
- --------------------------- ----------------- --------------- ---------------- ---------------- ---------------------
- --------------------------- ----------------- --------------- ---------------- ---------------- ---------------------
- ---------------------------- ---------------- ---------------- --------------- --------------- ----------------------
SUB-ACCOUNT For the 1- For the 3-year For the For the For the period from
(date of commencement of year period period ending 5-year period 10-year commencement of
operation of ending 12/31/97 ending period ending portfolio operations
corresponding portfolio) 12/31/97 12/31/97 12/31/97 to 12/31/97
- ---------------------------- ---------------- ---------------- --------------- --------------- ----------------------
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide 21.63% 91.95% N/A N/A 128.41%
Growth (9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF 2.34% N/A N/A N/A 2.34%
International Magnum
(1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 17.21% 70.76% 199.83% N/A 1207.41%
(8/30/90)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 21.50% 62.33% 84.88% N/A 239.00%
Small Cap (7/31/88) (1)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 21.48% N/A N/A N/A 61.75%
(7/23/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Premier 33.43% 128.95% N/A N/A 173.67%
Growth (6/26/92)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Capital 26.84% 105.91% N/A N/A 120.94%
Appreciation (4/27/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Research (7/25/95) 19.76% N/A N/A N/A 57.20%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 43.08% 175.98% 253.51% 731.19% 1549.63%
(12/1/80) (2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alger American Income & 36.16% 111.25% 109.03% N/A 185.94%
Growth (11/14/88)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Alliance VPF Growth & 28.25% 109.01% 125.20% N/A 144.40%
Income (1/14/91)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 29.06% N/A N/A N/A 66.88%
(10/8/95)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced 21.21% 69.51% N/A N/A 80.05%
(9/12/93)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 21.18% 109.26% 131.57% N/A 400.31%
Managed (7/31/88) (3)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF High 11.93% N/A N/A N/A 11.93%
Yield (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Morgan Stanley UF Fixed 8.39% N/A N/A N/A 8.39%
Income (1/1/97)
- ---------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8. Cumulative Returns - Assuming no surrender but reflecting Living Benefits
Rider
Adjusted historical non-standard cumulative total returns for periods
since inception of the portfolio for each sub-account are as follow. These
figures include mortality and expenses charges of 1.20% per annum,
administrative expenses charge of 0.15% per annum and an account fee of $30 per
annum adjusted for average account size, but do not reflect any applicable
contingent deferred sales load (maximum 8% of purchase payments). They do
reflect deductions of the fee for the optional Living Benefits Rider Fee of
0.05% per annum. Any credit is not reflected in this calculation.
<TABLE>
<CAPTION>
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
SUB-ACCOUNT For the For the 3-year For the For the For the period from
(date of commencement of 1-year period period ending 5-year period 10-year period commencement of
operation of ending 12/31/97 ending ending 12/31/97 portfolio operations
corresponding portfolio) 12/31/97 12/31/97 to 12/31/97
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Worldwide 21.57% 91.66% N/A N/A 127.92%
Growth (9/12/93)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF 2.29% N/A N/A N/A 2.29%
International Magnum
(1/1/97)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Small Cap 17.15% 70.50% 199.08% N/A 1202.63%
(8/30/90)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust 21.44% 62.09% 84.42% N/A 237.41%
Small Cap (7/31/88)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Emerging Growth 21.42% N/A N/A N/A 61.55%
(7/23/95)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Premier 33.37% 128.61% 141.87% N/A 172.92%
Growth (6/26/92)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Dreyfus VIF Capital 26.77% 105.60% N/A N/A 120.45%
Appreciation (4/27/93)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Research (7/25/95) 19.70% N/A N/A N/A 57.01%
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Growth 43.01% 175.57% 252.63% 727.06% 1535.61%
(12/1/80)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alger American Income & 36.09% 110.93% 108.51% N/A 184.64%
Growth (11/14/88)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Alliance VPF Growth & 28.18% 108.70% 124.64% N/A 143.55%
Income (1/14/91)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
MFS VIT Growth w/ Income 29.00% N/A N/A N/A 66.70%
(10/8/95)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Janus Aspen Balanced 21.15% 69.26% N/A N/A 79.67%
(9/12/93)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
OCC Accumulation Trust 21.12% 108.95% 130.99% N/A 397.96%
Managed (7/31/88)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF High 11.88% N/A N/A N/A 11.88%
Yield (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ----------------- ---------------------
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Morgan Stanley UF Fixed 8.33% N/A N/A N/A 8.33%
Income (1/1/97)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
Transamerica VIF Money N/A N/A N/A N/A N/A
Market (1/1/98)
- ---------------------------- --------------- ---------------- --------------- ---------------- ----------------------
</TABLE>
<PAGE>
DISTRIBUTION OF THE POLICY
Transamerica Securities Sales Corporation ("TSSC") is principal
underwriter of the policies. TSSC may also serve as principal underwriter and
distributor of other policies issued through the variable account and certain
other separate accounts of Transamerica and any affiliated of Transamerica. TSSC
is a wholly owned subsidiary of Transamerica Insurance Corporation of
California, which is a subsidiary of Transamerica Corporation. TSSC is
registered with the Commission as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Transamerica pays
TSSC for acting as the principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker-dealers to
solicit applications for the policies through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the policies may be solicited by registered
representatives of the broker-dealers appointed by Transamerica to sell its
variable life insurance and variable annuities. These broker-dealers are
registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Under the agreements, applications for policies will be sold by
broker-dealers which will receive compensation as described in the Prospectus.
The offering of the policies is expected to be continuous and TSSC does
not anticipate discontinuing the offering of the policies. However, TSSC
reserves the right to discontinue the offering of the policies.
During fiscal year 1997, no commissions were paid to TSSC as
underwriter of the contracts;policies; no amounts were retained by TSSC. Under
the Sales Agreement, TSSC will pay broker-dealers compensation based on a
percentage of each premium. The percentage may be up to 5.75% and in certain
situations additional amounts for marketing allowances, production bonuses,
service fees, sales awards and meetings, and asset based trailer commission may
be paid.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the variable account is held by Transamerica. The
assets of the variable account are kept separate and apart from Transamerica
general account assets. Records are maintained of all purchases and redemptions
of portfolio shares held by each of the sub-accounts.
STATE REGULATION
Transamerica is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain policy
rights and provisions depends on state approval and/or filing and review
processes. Where required by state law or regulation, the policy will be
modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the variable account will be
maintained by Transamerica or by the Service Center. As presently required by
the provisions of the 1940 Act and regulations promulgated thereunder which
pertain to the variable account, reports containing such information as may be
required under the 1940 Act or by other applicable law or regulation will be
sent to owners semi-annually at their last known address of record.
FINANCIAL STATEMENTS
Because the variable account has not yet commenced operations, there is
no financial statement for the variable account.
The financial statements for Transamerica included in this statement of
additional information should be considered only as bearing on the ability of
Transamerica to meet its obligations under the policies. They should not be
considered as bearing on the investment performance of the assets in the
variable account.
<PAGE>
APPENDIX
Accumulation Transfer Formula
Transfers after the annuity date are implemented according to the
following formulas:
(1) Determine the number of units to be transferred from the variable
sub-account as follows: = AT/AUV1
(2) Determine the number of variable accumulation units remaining in
such variable sub-account (after the transfer): = UNIT1 AT/AUV1
(3) Determine the number of variable accumulation units in the
transferee variable sub-account (after the transfer): =
UNIT2 + AT/AUV2
(4) Subsequent variable accumulation payments will reflect the
changes in variable accumulation units in each variable
sub-account as of the next variable accumulation payment's due
date.
Where:
(AUV1) is the variable accumulation unit value of the variable
sub-account that the transfer is being made from as of the end of
the valuation period in which the transfer request was received.
(AUV2) is the variable accumulation unit value of the variable
sub-account that the transfer is being made to as of the end of
the valuation period in which the transfer request was received.
(UNIT1) is the number of variable accumulation units in the
variable sub-account that the transfer is being made from, before
the transfer.
(UNIT2) is the number of variable accumulation units in the
variable sub-account that the transfer is being made to, before
the transfer.
(AT) is the dollar amount being transferred from the variable
sub-account.
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Not Applicable.
(b) Exhibits:
(1) Resolutions of Board of Directors of Transamerica Life Insurance
Company of New York (the "Company") authorizing the creation of
Separate Account VA-6NY (the "Separate Account"). 1/
(2) Not Applicable.
(3) Form of Underwriting Agreement between the Company, the Separate
Account and Transamerica Securities Sales Corporation. 1/
(4) Form of Flexible Premium Deferred Variable Annuity Contract. 1/
(a) Rider re Election of Automatic Asset Rebalancing or Dollar
Cost Averaging 1/
(b) Individual Retirement Annuity Endorsement 1/
(c) Tax Sheltered Annuity Endorsement 1/
(d) Pension and Profit Sharing Plan Endorsement 1/
(5) Form of Application for Flexible Premium Variable Annuity. 1/
(6) (a) Articles of Incorporation of Transamerica Life Insurance
Company of New York. 1/
(b) By-Laws of Transamerica Life Insurance Company of New York.
1/
(7) Not Applicable.
(8) Form of Participation Agreements regarding the Portfolio.
(a) re The Alger American Fund 1/
(b) re Alliance Variable Products Series Fund, Inc. 1/
(c) re Dreyfus Variable Investment Fund 2/
(d) re Janus Aspen Series 1/
(e) re MFS Variable Insurance Trust 1/
(f) re Morgan Stanley Universal Funds, Inc. 1/
(g) re OCC Accumulation Trust 1/
(h) re Transamerica Variable Insurance Fund, Inc. 1/
(9) Opinion and Consent of Counsel. 1/
(10) (a) Not Applicable.
(b) Consent of Independent Auditors. 2/
(11) Not Applicable.
(12) Not Applicable.
(13) Performance Data Calculations. 2/
(14) Not Applicable.
(15) Powers of Attorney. 1/
- ----------------------------
1/ Filed herewith.
2/ To be filed by subsequent pre-effective amendment filing.
<PAGE>
Item 25. Directors and Officers of the Depositor.
The names of Directors and Executive Officers of the Company, their
positions and offices with the Company, and their other affiliations
are as follows. The address of Directors and Executive Officers is 1150
South Olive Street, Los Angeles, California 90015-2211, unless
indicated by asterisk.
List of Directors of Transamerica Life Insurance Company of New York:
Robert Abeles
*Marc C. Abrahms
*James T. Byrne, Jr.
*Alan T. Cunningham
Thomas J. Cusack
James W. Dederer
John A. Fibiger
David E. Gooding
*Allan D. Greenberg
*James Inzerillo
Daniel E. Jund
*Cecelia Kempler
*John A. Paganelli
James B. Roszak
Nooruddin S. Veerjee
List of Officers for Transamerica Life Insurance Company of New York:
James W. Dederer CLU Chairman, General Counsel
and Corporate Secretary
*Alan T. Cunningham President
*Robert Rubinstein Senior Vice President,
Chief Actuary & Chief Operating Officer
Gary U. Rolle Investment Officer
Susan A. Silbert Investment Officer
Nicki Bair FSA,MAAA Vice President
Roy Chong-Kit FSA,MAAA Vice President
Paul Hankwitz MD Vice President and Chief Medical Director
Ken Kilbane Vice President
*William J. Lyons Vice President and Chief Underwriter
*Alison B. Pettingall Vice President - Marketing
*Alexander Smith, Jr. Vice President, Administration
and Controller
*Martin V. Mandato Second Vice President and
Director of Operations
Kamran Haghighi Tax Officer
William M. Hurst Assistant Secretary
Sally S. Yamada CPA,FLMI Treasurer
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
Registrant is a separate account of Transamerica Life
Insurance Company of New York, is controlled by the Contract
Owners, and is not controlled by or under common control with
any other person. The Depositor, Transamerica Life Insurance
Company of New York, is wholly owned by Transamerica
Occidental Life Insurance Company, which is wholly owned by
Transamerica Insurance Corporation of California
(Transamerica-California). Transamerica-California may be
deemed to be controlled by its parent, Transamerica
Corporation.
The following chart indicates the persons controlled by or
under common control with Transamerica.
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation - DE
ARC Reinsurance Corporation - Hawaii
Transamerica Management, Inc. - DE
Criterion Investment Management Company - Texas
Inter-America Corporation - California
Mortgage Corporation of America - California
Pyramid Insurance Company, Ltd. - Hawaii
Pacific Cable Ltd. - Bermuda
TC Cable, Inc. - Delaware
RTI Holdings, Inc. - Delaware
Transamerica Airlines, Inc. - Delaware
Transamerica Business Technologies Corporation - DE
Transamerica CBO I, Inc. - Delaware
Transamerica Corporation (Oregon) - Oregon
Transamerica Delaware, L.P. - Delaware
Transamerica Finance Corporation - Delaware
TA Leasing Holding Co., Inc. - Delaware
Trans Ocean Ltd. - Delaware
Trans Ocean Container Corp. - Delaware
Spacewise Inc. - Delaware
TOD Liquidating Corp. - California
TOL S.R.L. - Italy
Trans Ocean Leasing Deutschland GMBH - Germany
Trans Ocean Leasing Pty Limited - Australia
Trans Ocean Management Corporation - California
Trans Ocean Management Corporation - S.A. - SWTZ
Trans Ocean Regional Corporate Holdings - California
Trans Ocean Tank Services Corporation - Delaware
Transamerica Leasing Inc. - Delaware
Better Asset Management Company LLC - Delaware
Transamerica Leasing Holdings Inc. - Delaware
Greybox Logistics Services Inc. - Delaware
Greybox L.L.C. - Delaware
Transamerica Trailer Leasing S.N.C. - France
Greybox Services Limited - United Kingdom
Intermodal Equipment, Inc. - Delaware
Transamerica Leasing N.V. - Belgium
Transamerica Leasing SRL - Italy
Transamerica Distribution Services Inc. - Delaware
Transamerica Leasing Coordination Center - Belgium
Transamerica Leasing do Brasil Ltda. - Brazil
Transamerica Leasing GmbH - West Germany
Transamerica Leasing Limited - United Kingdom
ICS Terminals (UK) Limited - United Kingdom
Transamerica Leasing Pty. Ltd. - Australia
Transamerica Leasing (Canada) Inc. - Canada
Transamerica Leasing (HK) Ltd. - Hong Kong
Transamerica Leasing (Pty) Limited - South Africa
Transamerica Tank Container Leasing Pty. Ltd. - Aust
Transamerica Trailer Holdings I Inc. - Delaware
Transamerica Trailer Holdings II Inc. - Delaware
Transamerica Trailer Holdings III Inc. - Delaware
Transamerica Trailer Leasing AB - Sweden
Transamerica Trailer Leasing AB - Switzerland
Transamerica Trailer Leasing A/S - Denmark.
Transamerica Trailer Leasing GmbH - Germany
Transamerica Trailer Leasing (Belgium) N.V. - Belgm
Transamerica Trailer Leasing (Netherl'ds) B.V.-Neth.
Transamerica Trailer Spain S.A. - Spain
Transamerica Transport Inc. - NJ
Transamerica Commercial Finance Corporation, I - Delaware
BWAC Credit Corporation - Delaware
BWAC International Corporation - Delaware
BWAC Twelve, Inc. - DE
TIFCO Lending Corporation - IL
Transamerica Insurance Finance Corporation - MD
Transamerica Insurance Finance Company (Europe) - MD
Transamerica Insurance Finance Corp., Calif. - CA
Transamerica Insurance Finance Corp., Canada - ON
Transamerica Business Credit Corporation - Delaware
Direct Capital Equity Investment, Inc. - DE
TA Air III, Corp. - DE
TA Air II, Corp. - DE
TA Air IV, Corp. - DE
TA Air I, Corp. - DE
TBC III, Inc. - DE
TBC II, Inc. - DE
TBC I, Inc. - DE
The Plain Company - DE
Transamerica Consumer Finance Holding Company - DE
Metropolitan Mortgage Company - FL
Easy Yes Mortgage , Inc. - FL
Easy Yes Mortgage , Inc. - GA
First Florida Appraisal Services, Inc. - FL
First Georgia Appraisal Services, Inc. - FL
Freedom Tax Services, Inc. - FL
J.J. & W. Advertising, Inc. - FL
J.J. & W. Realty Services, Inc. -
Liberty Mortgage Company of Ft. Myers, Inc. -
Metropolis Mortgage Co. -
Perfect Mortgage Company - FL
Pacific Agency, Inc. - Indiana
Transamerica Consumer Mortgage Receivables Corp - DE
Transamerica Home Loan - CA
Transamerica Lending Company - DE
Transamerica Mortgage Company - DE
Transamerica Distribution Finance corporation - DE
Transamerica Accounts Holding Corporation - DE
Transamerica Commercial Finance Corporation - DE
TCF Asset Management Corporation - CO
Transamerica Joint Ventures, Inc. - DE
Transamerica Inventory Finance Corporation - DE
BWAC Seventeen, Inc. - Delaware
Transamerica Commercial Finance CN, Ltd. - ON
Transamerica Commercial Fin Corp, Canada - CN
BWAC Twenty-One, Inc. - Delaware
Transamerica Commercial Finance France S.A. - Fra
Transamerica GmbH Inc. - Delaware
Transamerica Retail Financial Services Corp - DE
Transamerica Vendor Financial Services - DE
Transamerica Federal Savings Bank -
Transamerica HomeFirst, Inc. - CA
Transamerica Financial Products, Inc. - CA
Transamerica Foundation - California
Transamerica Insurance Corporation of California - California
Arbor Life Insurance Company - Arizona
Plaza Insurance Sales, Inc. - California
Transamerica Advisors, Inc. - California
Transamerica Annuity Service Corporation - New Mexico
Transamerica Financial Resources, Inc. - Delaware
Financial Resources Insurance Agency of Texas - Texas
TBK Insurance Agency of Ohio, Inc. - Ohio
Transamerica Financ'l Resources Ins Agency of AL Inc.- AL
Transamerica Financ'l Resources Ins Agency of MA Inc.- MA
Transamerica International Insurance Services, Inc. - DE
Home Loans and Finance Ltd. - United Kingdom
Transamerica Occidental Life Insurance Company - California
NEF Investment Company - California
Transamerica China Investments Holdings Limited - H.K.
Transamerica Life Insurance and Annuity Company - NC
Transamerica Assurance Company - Colorado
Transamerica Life Insurance Company of Canada - Canada
Transamerica Life Insurance Company of New York - NY
Transamerica Variable Insurance Fund, Inc. - Maryland
USA Administration Services, Inc. - Kansas
Transamerica Products, Inc. - California
Transamerica Leasing Ventures, Inc. - California
Transamerica Products II, Inc. - California
Transamerica Products IV, Inc. - California
Transamerica Products I, Inc. - California
Transamerica Securities Sales Corporation - Maryland
Transamerica Service Company - Delaware
Transamerica Intellitech, Inc. - DE
Transamerica International Holdings, Inc. - Delaware
Transamerica Investment Services, Inc. - Delaware
Transamerica Income Shares, Inc. (managd by TA Inv Svs) - MD
Transamerica LP Holdings Corp. - Delaware
Transamerica Real Estate Tax Service (A Div of TA Corp) - N/A
Transamerica Flood Hazard Certification
(A Div of Transamerica Real Estate Tax Service) - N/A
Transamerica Realty Services, Inc. - Delaware
Bankers Mortgage Company of California - California
Pyramid Investment Corporation - Delaware
The Gilwell Company - California
Transamerica Affordable Housing, Inc. - California
Transamerica Minerals Company - California
Transamerica Oakmont Corporation - California
Ventana Inn, Inc. - California
Transamerica Senior Properties, Inc. - DE
Transamerica Senior Living, Inc. - DE
Item 27. Number of Contractowners
None.
Item 28. Indemnification
Transamerica Life Insurance Company of New York's ByLaws
provide in Article VIII as follows:
Indemnification of Officers and Directors
Section 1. Indemnification.
(a) The Corporation shall indemnify to the fullest
extent now or hereafter provided for or permitted by law
each person involved in, or made or threatened to be made
a party to, any action suit, claim or proceeding, whether
civil or criminal, including any investigative,
administrative, legislative, or other proceeding, and
including any action by or in the right of the Corporation
or any other corporation, or any partnership, joint
venture, trust, employee benefit plan, or other enterprise
(any such entity, other than the Corporation, being
hereinafter referred to as an "Enterprise"), and including
appeals therein (any such action or process being
hereinafter referred to as a "Proceeding"), by reason of
the fact that such person, such person's testator or
intestate (i) is or was a director or officer of the
Corporation, or (ii) is or was serving, at the request of
the Corporation, as a director, officer, or in any other
capacity, or any other Enterprise, against any and all
judgments, amounts paid in settlement, and expenses,
including attorney's fees, actually and reasonably
incurred as a result of or in connection with any
Proceeding, except as provided in Subsection (b) below.
(b) No indemnification shall be made to or on behalf
of any such person if a judgment or other final
adjudication adverse to such person establishes that such
person's acts were committed in bad faith or were the
result of active and deliberate dishonesty and were
material to the cause of action so adjudicated, or that
such person personally gained in fact a financial profit
or other advantage to which such person was not legally
entitled. In addition, no indemnification shall be made
with respect to any Proceeding initiated by any such
person against the Corporation, or a director or officer
of the Corporation, other than to enforce the terms of
this Article VIII, unless such Proceeding was authorized
by the Board of Directors. Further, no indemnification
shall be made with respect to any settlement or compromise
of any Proceeding unless and until the Corporation has
consented to such settlement or compromise.
(c) Written notice of any Proceeding for which
indemnification may be sought by any person shall be given
to the Corporation as soon as practicable. The Corporation
shall then be permitted to participate in the defense of
any such proceeding or, unless conflicts of interest or
position exist between such person and the Corporation in
the conduct of such defense, to assume such defense. In
the event that the Corporation assumes the defense of any
such Proceeding, legal counsel selected by the Corporation
shall be reasonably acceptable to such person. After such
an assumption, the Corporation shall not be liable to such
person for any legal or other expenses subsequently
incurred unless such expenses have been expressly
authorized by the Corporation. In the event that the
Corporation participates in the defense of any such
Proceeding, such person may select counsel to represent
him in regard to such a Proceeding; however, such person
shall cooperate in good faith with any request that common
counsel be utilized by the parties to any Proceeding who
are similarly situated, unless to do so would be
inappropriate due to actual or potential differing
interests between or among such parties.
(d) In making any determination regarding any
person's entitlement to indemnification hereunder, it
shall be presumed that such person is entitled to
indemnification, and the Corporation shall have the burden
of proving the contrary.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling person of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liability (other than
the payment by the registrant of expenses incurred or paid by
the director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the 1933 Act and will be governed by the final adjudication of
such issue.
The directors and officers of Transamerica Life Insurance
Company of New York are covered under a Directors and Officers
liability program which includes direct coverage to directors
and officers (Coverage A) and corporate reimbursement
(Coverage B) to reimburse the Company for indemnification of
its directors and officers. Such directors and officers are
indemnified for loss arising from any covered claim by reason
of any Wrongful Act in their capacities as directors or
officers. In general, the term "loss" means any amount which
the insureds are legally obligated to pay for a claim for
Wrongful Acts. In general, the term "Wrongful Acts" means any
breach of duty, neglect, error, misstatement, misleading
statement or omission caused, committed or attempted by a
director or officer while acting individually or collectively
in their capacity as such, claimed against them solely by
reason of their being directors and officers.
Item 29. Principal Underwriter
(a) Transamerica Securities Sales Corporation, the
principal underwriter, is also the underwriter for:
Transamerica Investors, Inc.; Transamerica Variable
Insurance Fund, Inc.; Transamerica Occidental Life
Insurance Company's Separate Accounts: VL, VA-2;
VA-2L; VA-2NL; VA-2NLNY; VA-5; and VA-5NLNY;
Transamerica Life Insurance and Annuity Company's
Separate Account and VA-1. The Underwriter is
wholly-owned by Transamerica Insurance Corporation of
California.
(b) The following table furnishes information with
respect to each director and officer of the principal
Underwriter currently distributing securities of the
registrant:
Barbara Kelley Director & President
Regina Fink Director & Secretary
Nooruddin Veerjee Director
Dan Trivers Senior Vice President
Nicki Bair Vice President
Chris Shaw Second Vice President
Ben Tang Treasurer
Item 30. Location of Accounts and Records
Physical possession of each account, book, or other
document required to be maintained is kept at the
Company's offices at 100 Manhattanville Road, Purchase,
New York 10577.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The registrant undertakes that it will file a
post-effective amendment to this registration
statement as frequently as is necessary to ensure
that the audited financial statements in the
registration statement are never more than 16
months old for as long as premiums under the
policies offered herein are being accepted.
(b) Registrant hereby undertakes to include either
(1) as part of any application to purchase a
Contract offered by the prospectus, a space that
an applicant can check to request a Statement of
Additional Information, or (2) a post card or
similar written communication affixed to or
included in the prospectus that the applicant can
remove to send for a Statement of Additional
Information;
(c) Registrant hereby undertakes to deliver any
Statement of Additional Information and any
financial statements required to be made
available under Form N-4 promptly upon written or
oral request.
(d) Transamerica hereby represents that the fees and
charges deducted under the Contracts are
reasonable in the aggregate in relation to
services rendered, expenses expected to be
incurred and risks assumed by Transamerica.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Transamerica Life Insurance Company of New York certifies that it has
caused this Registration Statement to be signed on its behalf in the City of Los
Angeles, State of California, on the 26th day of February, 1998.
SEPARATE ACCOUNT VA-6NY OF
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(REGISTRANT)
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
(DEPOSITOR)
/s/ David E. Gooding
----------------------------
David E. Gooding
Executive Vice President
As required by the Securities Act of 1933, this Registration Statement has been
signed below on February 26, 1998 by the following persons or by their duly
appointed attorney-in-fact in the capacities specified:
Signatures Titles Date
______________________* Chairman,
James W. Dederer General Counsel &
Corporate Secretary February 26, 1998
______________________* Director February 26, 1998
Robert Abeles
______________________* Director February 26, 1998
Marc C. Abrahms
______________________* Director February 26, 1998
James T. Byrne, Jr.
______________________* Director February 26, 1998
Alan T. Cunningham
______________________* Director February 26, 1998
Thomas J. Cusack
______________________* Director February 26, 1998
John A. Fibiger
/s/ David E. Gooding * Director February 26, 1998
- ----------------------
David E. Gooding
______________________* Director February 26, 1998
Allan D. Greenberg
______________________* Director February 26, 1998
James Inzerillo
______________________* Director February 26, 1998
Daniel E. Jund
______________________* Director February 26, 1998
Cecelia Kempler
______________________* Director February 26, 1998
John A. Paganelli
______________________* Director February 26, 1998
James B. Roszak
______________________* Director February 26, 1998
Nooruddin S. Veerjee
*By: David E. Gooding On February 26, 1998 as Attorney-in-Fact
pursuant to powers of attorney filed herewith.
<PAGE>
Exhibits
(1) Resolutions of Board of Directors of Transamerica Life Insurance Company of
New York (the "Company") authorizing the creation of Separate Account
VA-6NY (the "Separate Account").
(3) Form of Underwriting Agreement between the Company, the Separate Account
and Transamerica Securities Sales Corporation.
(4) Form of Flexible Premium Deferred Variable Annuity Contract.
(a) Rider re Election of Automatic Asset Rebalancing or Dollar Cost
Averaging
(b) Individual Retirement Annuity Endorsement
(c) Tax Sheltered annuity Endorsement
(d) Pension and Profit Sharing Plan Endorsement
(5) Form of Application for Flexible Premium Variable Annuity.
(6) (a) Articles of Incorporation of Transamerica Life Insurance Company of
New York.
(b) By-Laws of Transamerica Life Insurance Company of New York.
(8) Form of Participation Agreements regarding the Portfolio.
(a) re The Alger American Fund
(b) re Alliance Variable Products Series Fund, Inc.
(d) re Janus Aspen Series
(e) re MFS Variable Insurance Trust
(f) re Morgan Stanley Universal Funds, Inc.
(g) re OCC Accumulation Trust
(h) re Transamerica Variable Insurance Fund, Inc.
(9) Opinion and Consent of Counsel.
(15) Powers of Attorney.
<PAGE>
Exhibit (1) Resolutions of Board of Directors of Transamerica Life Insurance
Company of New York (the "Company") authorizing the creation of
Separate Account VA-6NY (the "Separate Account").
<PAGE>
FIRST TRANSAMERICA LIFE INSURANCE COMPANY
III. RESOLUTION:
SEPARATE ACCOUNTS
WHEREAS, New York Insurance Law Section 4240 (the "Insurance Law")
permits the establishment of one or more separate accounts; and
WHEREAS, it is desired that First Transamerica Life Insurance Company
("Corporation") utilize separate accounts in certain contracts contemplated by
the Insurance Law (collectively, "separate account contracts") that it proposes
to issue:
NOW THEREFORE, BE IT RESOLVED, that this Corporation reaffirms that its
proper executive officers, be and hereby are authorized (1) to enter into, make,
perform and carry out agreements of every sort and kind which may be necessary,
suitable or convenient to the conduct of business pursuant to the Insurance Law,
which permits a life insurance company to establish one or more separate
accounts and to allocate to such separate accounts amounts that are received or
retained in connection with separate account contracts; and (2) to do all and
everything necessary, suitable or convenient to the conduct of such business,
including any act or thing incidental or related to, or connected with, the
conduct of such business and further including, but not limited to, the power to
establish new separate accounts and to amend or terminate present or new
separate accounts both pooled and non-pooled, without further action or approval
by this Board of Directors provided, however, that any such action(s) taken by
the Corporation's executive officers shall be promptly reported to the Board of
Directors or the Executive Committee thereof; and
FURTHER RESOLVED, that (1) the income, gains and losses, whether
realized or unrealized, from assets allocated to each such separate account
shall, in accordance with applicable separate account contract(s), be credited
to or charged against the appropriate separate account without regard to other
income, gains or losses of the Corporation; and (2) if and to the extent so
provided under the applicable separate account contracts, the assets of any such
separate account shall not be chargeable with liabilities rising out of any
other business of the Corporation; and
FURTHER RESOLVED, that the proper executive officers are authorized to
take all necessary and appropriate actions in order to effectuate the offering
and sale of separate account contracts, including preparing, executing and/or
filing all necessary papers and documents including, but not limited to,
registration statements and applications for exemption, Plans of Operation and
policy forms, and amendments thereto, with the Securities and Exchange
Commission, the New York Insurance Department and/or other appropriate
regulators and government agencies.
September 11, 1996
<PAGE>
Exhibit (3) Form of Underwriting Agreement between the Company, the Separate
Account and Transamerica Securities Sales Corporation.
<PAGE>
DISTRIBUTION AGREEMENT BETWEEN
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
AND TRANSAMERICA SECURITIES SALES CORPORATION
This Agreement (the "Agreement") effective as of 24th day of August
1994, by and between TRANSAMERICA SECURITIES SALES CORPORATION (the
"Distributor"), a corporation organized and existing under the laws of the State
of Maryland with its principal place of business in Los Angeles, California, and
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK (the "Company"), an insurance
company organized and existing under the laws of the State of New York with its
principal place of business in New York, New York, for itself and on behalf of
certain of its separate accounts.
W I T N E S S E T H
WHEREAS, the Company has established and maintains the class or classes
of variable annuity contracts set forth on Schedule 1 to this Agreement as in
effect at the time this Agreement is executed, and such other classes of
variable annuity contracts and variable life insurance contracts (collectively,
"variable insurance products") that may be added to Schedule 1 from time to time
in accordance with Section 18 of this Agreement, and including any riders to
such contracts and any other contract offered in connection therewith
(collectively the "Contracts") (A "class of Contracts" shall mean those
Contracts issued by the Company on the same policy form or forms and covered by
the same Registration Statement.); and
WHEREAS, the Distributor, a wholly-owned subsidiary of Transamerica
Insurance Corporation of California, is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended (the "1934 Act") and is a member of the National Association
of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the parties desire to have the Distributor act as the
principal underwriter for and in connection with the sale of the Contracts to
the public and assume full responsibility for the securities activities of each
"associated person" (as that term is defined in Section 3(a)(18) of the 1934
Act) of the Distributor, including each associated person of the Distributor
engaged in the offer and sale of the Contracts (a "Representative"); and
WHEREAS, the Distributor and the Company acknowledge that the Company
is best suited to provide certain administrative functions in connection with
the Contracts, subject at all times to the control and direction of the
Distributor with respect to the broker-dealer operations;
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained, the Distributor and the Company agree as follows:
1. Definitions
a. Fund -- An investment company serving as the funding medium
for any Contracts, specified in Schedule 2 to this Agreement as in
effect at the time this Agreement is executed, and such other
investment companies that may be added to Schedule 2 from time to time
in accordance with Section 18 of this Agreement.
b. Intermediary Distributors -- A person registered as a
broker-dealer and licensed as a life insurance agent or affiliated with
a person so licensed, and authorized to distribute the Contracts
pursuant to a sales agreement as provided for in Section 2 of this
Agreement (the "Sales Agreement").
c. Separate Account -- Each separate account of the Company
specified on Schedule 3 to this Agreement as in effect at the time this
Agreement is executed, and such other separate accounts of the Company
that may be added to Schedule 3 from time to time in accordance with
Section 18 of this Agreement, the plan of operations of which will be
approved by the Superintendent of Insurance of the State of New York
under Section 4240 of the New York Insurance Law.
2. Distribution Duties and Responsibilities. The Distributor shall act
as principal underwriter for the Contracts in connection with their sale during
the term of this Agreement in each state or other jurisdiction where they may
legally be sold (the "Territory"). If properly licensed, the Distributor is
authorized to solicit applications for the Contracts ("Applications") directly
from customers and prospective customers in the Territory and to select all
persons who will be authorized to engage in solicitation activities with respect
to the Contracts. Such selection activity shall include the recruitment and
appointment of third parties to act as distributors. In turn such third parties
may be authorized as Intermediary Distributors to engage in solicitation
activities, including the solicitation of Applications directly from customers
and prospective customers in the Territory and/or as Intermediary Distributors
to recruit other third parties to act as Intermediary Distributors, in each case
as the Company and the Distributor shall agree to. The Distributor shall enter
into separate written Sales Agreements with each such Intermediary Distributor.
Such Sales Agreements will be substantially in the form attached to this
Agreement as Exhibit A, but may include such additional or alternative terms and
conditions that are not otherwise inconsistent with this Agreement, subject to
the Company's review and prior written consent (which may be given by
facsimile), which consent will not be unreasonably withheld, and which will be
deemed to have been given if the Company has not responded in writing (by
facsimile or otherwise) within 10 calendar days. The Distributor will provide
the Company with a profile on each Intermediary Distributor. The Distributor
shall use its best efforts to market the Contracts actively, both directly and
through Intermediary Distributors.
The Distributor shall have the power and authority to select and
recommend Representatives of the Distributor, and to authorize an Intermediary
Distributor to select and recommend representatives of such Intermediary
Distributor (the "Intermediary's Representatives"), for appointment as agents of
the Company, and only such Representatives and Intermediary's Representatives
shall become agents of the Company with authority to engage in solicitation
activities with respect to the Contracts. The Distributor shall be solely
responsible for background investigations of its Representatives to determine
their qualifications, good character and moral fitness to sell the Contracts,
and pursuant to the Sales Agreement, each Intermediary Distributor shall be
solely responsible for background investigations of its Intermediary's
Representatives to determine their qualifications, good character and moral
fitness to sell the Contracts. The Company shall appoint in the appropriate
states or jurisdictions such selected and recommended agents, provided that the
Company reserves the right, which right shall not be exercised unreasonably, to
refuse to appoint as agent any Representative or Intermediary's Representative,
or, once appointed, to terminate the same at any time with or without cause. No
other individuals, persons or entities, other than affiliates of the Company,
shall have authority to engage in solicitation activities with respect to the
Contracts, without the express prior written consent of the Company.
The Distributor shall at all times be an independent contractor, and
shall be under no obligation to produce any particular amount of sales of the
Contracts. Anything in this Agreement to the contrary notwithstanding, the
Company retains ultimate responsibility for the direction and control of the
services provided under this Agreement, and the ultimate right to control the
sale of the Contracts, including the right to suspend sales in any jurisdiction
or jurisdictions, to appoint and discharge agents of the Company, or to refuse
to sell a Contract to any applicant for purchase of a Contract (an "Applicant")
for any reason whatsoever. The Distributor and the Distributor's Representatives
shall not have the authority, and shall not grant the authority to Intermediary
Distributors or the Intermediary's Representatives, on behalf of the Company: to
make, alter or discharge any Contract or other contract entered into pursuant to
a Contract; to waive any Contract forfeiture provision; to extend the time of
paying any premium on the Contracts; or to receive any monies or premiums
(except for the sole purpose of forwarding such monies or premiums to the
Company). The Distributor shall not possess or exercise any authority on behalf
of the Company other than that expressly conferred upon the Distributor by this
Agreement.
3. Filings, Marketing Materials and Representatives. The Distributor
will assume full responsibility for the securities activities of its
Representatives, and, similarly, each Intermediary Distributor shall assume,
pursuant to the Sales Agreement, full responsibility for the Intermediary's
Representatives' securities activities, including compliance with the NASD Rules
of Fair Practice and any applicable state securities laws and regulations. The
Distributor, either directly or indirectly through the Company as its agent,
shall: (a) make timely filings with the SEC, the NASD, and any other appropriate
securities regulatory authorities of any advertisements, sales literature, or
other materials relating to the Contracts, as required by law or regulation to
be filed; (b) make available to the Company for approval copies of all
agreements and other written plans and documents relating to the sale of the
Contracts, and shall, if necessary, submit such agreements and other plans and
documents to the appropriate securities regulatory authorities for approval
prior to their use; (c) assist its Representatives in their efforts to prepare
themselves to pass any and all applicable NASD and state insurance qualification
examinations; (d) register its Representatives with the NASD and any other
appropriate securities regulatory authorities; and (e) supervise and control
their Representatives in the performance of their selling activities. The
Intermediary Distributors, pursuant to each Sales Agreement, shall have similar
responsibilities with regard to the assistance, registration, supervision and
control of the Intermediary's Representatives. In connection with obtaining the
clearances of the appropriate regulatory authorities, the parties agree to use
their best efforts to obtain such clearances as expeditiously as possible, and
shall not use any sales material, plan, or other agreement in any jurisdiction
unless the appropriate filings have been made and approvals obtained that are
necessary to make their use proper and legal therein.
The Distributor will take reasonable steps to ensure that the
Representatives do not make any recommendations to Applicants for the purchase
of a Contract(s) in the absence of reasonable grounds to believe that the
purchase of such Contracts is suitable for the Applicants. Determinations of
suitability will be based on various types of information including, but not
limited to, information furnished to a Representative by an Applicant after
reasonable inquiry by the Representative concerning the Applicant's insurance
and investment objectives, financial situation, and needs, including the
likelihood that the Applicant will be financially able to make sufficient
premium payments to derive the benefits from the Contracts. Likewise, pursuant
to each Sales Agreement, each Intermediary Distributor shall take reasonable
steps to ensure that the Intermediary's Representatives do not make any
recommendations to any Applicant in the absence of reasonable grounds to believe
that the purchase of such Contracts is suitable for the Applicant, with
determinations of suitability based upon the factors set forth immediately
above.
The Distributor will not encourage a prospective Applicant to surrender
or exchange an insurance contract in order to purchase a Contract, nor will the
Distributor encourage any existing holder of a Contract (a "Contractholder") to
surrender or exchange a Contract in order to purchase another insurance
contract. Likewise, each Intermediary Distributor, pursuant to each Sales
Agreement with the Distributor, shall not encourage a prospective Applicant to
surrender or exchange an insurance contract in order to purchase a Contract, nor
encourage any Contractholder to surrender or exchange a Contract in order to
purchase another insurance contract. The obligations under this paragraph are
subject to applicable NASD Rules of Fair Practice and any other applicable laws,
regulations and regulatory guidelines.
The Distributor and each Intermediary Distributor, pursuant to each
Sales Agreement, each shall take reasonable steps to ensure that their
respective Representatives or Intermediary's Representatives do not use any
advertisement, sales literature, or other promotional material which has not
been specifically approved in advance by the Company; and the Company, as agent
for the Distributor, shall be responsible for filing such items, as necessary,
with the SEC, the NASD, and any other appropriate securities regulatory
authorities, and, where necessary, shall obtain the approvals of such
authorities. No associated person, either of the Distributor or of any
Intermediary Distributor, shall, in connection with the offer and sale of the
Contracts, make any representation or communicate any information regarding the
Contracts or the Company, which is not inconsistent with (i) materials approved
by the Company for distribution to the public, or (ii) a current prospectus
relating to the Contracts, or (iii) the then effective registration statements
under the Securities Act of 1933 (the "1933 Act") for the Contracts.
4. Offer, Sale and Acceptance of Applications. The Company will
undertake to appoint the Representatives and Intermediary's Representatives as
life insurance agents of the Company, and will be responsible for ensuring that
only agents properly qualified under the insurance laws of all relevant
jurisdictions will engage in the offer and sale of the Contracts. Completed
Applications shall be transmitted directly to the Company for acceptance or
rejection by the Company in its sole discretion, in accordance with its
insurance underwriting and selection rules. Initial and subsequent premium
payments under the Contracts shall be made payable to the Company, and when such
payments are received by a Representative or Intermediary's Representative they
shall be held in a fiduciary capacity and forwarded promptly, and in any event
not later than two business days, in full to the Company. All such premium
payments, whether by check, money order or wire, shall be the property of the
Company.
5. Undertakings. The Distributor, in order to discharge its duties
under this Agreement, may designate certain employees of the Company to become
limited or general securities principals of the Distributor, and the Company
will use its best efforts to ensure the cooperation of such employees. These
individuals will perform various functions on behalf of the Distributor,
including, but not limited to, supervision of the securities sales activities of
the Representatives and enforcement of the compliance rules and procedures of
the Distributor. All books and records relating to the Distributor's operations
shall: (a) be maintained and preserved by the Company as agent for the
Distributor, in conformity with the requirements of SEC Rules 17a-3 and 17a-4
under the 1934 Act; (b) be and remain the property of the Distributor; and (c)
be at all times subject to inspection by the SEC and the NASD in accordance with
Section 17(a) of the 1934 Act.
The Distributor will fully cooperate with the Company in executing such
papers and performing such acts as may be reasonably requested by the Company
from time to time for the purpose of: (a) maintaining the registration of the
Contracts under the 1933 Act, and of the Separate Account(s) under the
Investment Company Act of 1940 (the "1940 Act"); and (b) maintaining the
qualification of the Contracts for sale under applicable state laws.
Upon the completion of each transaction relating to the Contracts for
which a confirmation is legally required, the Company shall, acting as agent of
the Distributor, send a written confirmation of such transaction to the
customer.
6. Servicing of the Contracts. The Company shall provide all necessary
insurance operations, including such actuarial, financial, statistical, premium
billing and collection, accounting, data processing, and investment services as
may be required with respect to the Contracts. In addition to these services, or
other services provided hereunder, the Company shall provide such executive,
legal, clerical, and other personnel related services as may be required to
carry out the Company's obligations under this Agreement, including its
obligation to perform certain functions on behalf of the Distributor.
7. Recordkeeping. The Company shall provide recordkeeping and general
office administration services incidental to or necessary for the proper
performance of the services to be performed by the Company and, to the extent
the Distributor does not elect to perform said recordkeeping and administration
functions, the Distributor in accordance with this Agreement. In addition, the
Company shall maintain all book and records relating to the Contracts, which
materials will be available to the Distributor (to the extent that they relate
to the broker-dealer operations) and to the appropriate regulatory authorities
upon request.
All books, accounts, and records of the Company and the Distributor as
may pertain to the Contracts and this Agreement shall be maintained so as to
clearly and accurately disclose the nature and details of all Contract
transactions and all other transactions relating to this Agreement. The Company
shall own and control all records pertinent to its variable insurance products
operations that are maintained by the Distributor under this Agreement, and in
the event this Agreement is terminated for any reason, all such records shall
promptly be returned to the Company without charge, free from any claim or
retention of rights of the Distributor.
8. Confidentiality. The Distributor shall keep confidential any
information obtained pursuant to this Agreement, and shall disclose such
information only if the Company has authorized such disclosure, or if such
disclosure is expressly required by the appropriate federal or state regulatory
authorities.
9. Expenses and Fees. The Company shall pay commissions to the
Distributor on premiums paid under all Contracts sold pursuant to this Agreement
and any Sales Agreements entered into pursuant to Section 2 of this Agreement.
The Company shall, in connection with the sale of the Contracts, pay all
amounts, including sales commissions, owed by the Distributor to the
Representatives or Intermediary Distributors. The Distributor shall be
responsible for all tax reporting information which the Distributor is required
to provide under applicable tax law to its agents, Representatives or employees
with respect to the Contracts.
The Company shall pay, or cause another person to pay, all expenses
related to: (a) registering the Distributor's associated persons with the NASD
and all other appropriate securities regulatory authorities; (b) preparing the
Distributor's associated persons to pass the applicable NASD and state
qualification examinations; (c) preparing and distributing all prospectuses
(including all amendments and supplements thereto), Contracts, notices,
confirmations, periodic reports, proxy solicitation materials, sales literature
and advertising relating to the sale of the Contracts; and (d) ensuring
compliance with all applicable insurance and securities laws and regulations
relating to the registration of the Contracts and the activities of the
Representatives in connection with the offer and sale of the Contracts. Except
as otherwise indicated herein, or by written agreement of the parties, the
Company shall pay, or cause another person to pay, all expenses resulting from
this Agreement.
10. Dual Interests. It is understood that any shareholder, director,
officer, employee, or agent of the Distributor, or of any organization
affiliated with the Distributor, or of any organization which the Distributor
may have an interest, or of any organization which may have an interest in the
Distributor may be a Contractholder; and that the existence of any such dual
interest shall not affect the validity thereof or the validity of any
transaction hereunder except as may be otherwise provided in the articles of
incorporation or by-laws of the Distributor, or by the specific provisions of
applicable law. For the purpose of this Section 10, the term "affiliated person"
shall have the same definition as set forth in the 1940 Act subject, however, to
such exemptions as may be granted pursuant to the 1940 Act.
11. Customer Claims. The Company shall provide all services relating to
claims made under the Contracts, including investigation, adjustment, and
defense of claims, and shall make all payments relating to the Contracts,
including payments representing claims, Contract loans, full and partial
surrenders, and amounts paid under Contract settlement options. The Company
shall retain ultimate authority for adjustments and claim payments, which
payments shall be final and conclusive.
12. Cooperation Regarding Investigations and Proceedings. The
Distributor and the Company agree to fully cooperate with each other in any
insurance regulatory examination, investigation, or proceeding, or in any
judicial proceeding arising in connection with the Contracts distributed under
this Agreement. The Distributor and the Company further agree to fully cooperate
with each other in any securities regulatory examination, investigation, or
proceeding, or in any judicial proceeding with respect to the Company, the
Distributor, their affiliates and agents, or representatives, to the extent that
such examination, investigation, or proceeding is in connection with Contracts
distributed under this Agreement. The Distributor shall, upon request by the
appropriate federal and state regulatory authorities, furnish such authorities
with any information or reports in connection with the Distributor's services
under this Agreement.
13. Sharing of Information. Each party hereto will promptly advise the
other of: (a) any action taken by the SEC, the NASD, or other regulatory
authorities, of which it has knowledge, affecting the registration or
qualification of the Contracts, or the right to offer the Contracts for sale;
and (b) the happening of any event which makes untrue any statement contained in
the registration statements or prospectus, or which requires the making of any
change in the registration statements or prospectus in order to make the
statements therein not misleading.
14. Indemnification.
a. The Company. The Company shall indemnify and hold harmless
the Distributor and each person who controls or is associated with the
Distributor within the meaning of such terms under the federal
securities laws, and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities,
joint or several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of any action, suit or proceeding or any claim asserted), to
which the Distributor and/or any such person may become subject, under
any statute or regulation, any NASD rule or interpretation, at common
law or otherwise, insofar as such losses, claims, damages or
liabilities
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact or
omission or alleged omission to state a materials fact
required to be stated therein or necessary to make the
statements therein not misleading, in light of the
circumstances in which they were made, contained in any (A)
registration statement or in any prospectus; or (B) a blue-sky
application or other document executed by the Company
specifically for the purpose of qualifying any or all of the
Contracts for sale under the securities laws of any
jurisdiction; provided that the Company shall not be liable in
any such case to the extent that such loss, claim, damage or
liability arises out of, or is based upon, an untrue statement
or alleged untrue statement or omission or alleged omission:
(A) made in reliance upon information furnished in writing to
the Company by the Distributor specifically for use in the
preparation of any registration statement or any such blue-sky
application or any amendment thereof or supplement thereto; or
(B) contained in any registration statement, or any
post-effective amendment thereto which becomes effective,
filed by a Fund with the SEC relating to shares of such Fund
(the "Shares"), including any financial statements included
in, or any exhibit to, such registration statement or
post-effective amendment, any prospectus of a Fund relating to
the Shares either contained in any such registration statement
or post-effective amendment or filed pursuant to Rule 497(c)
or Rule 497(e) under the 1933 Act, any blue-sky application or
other document executed by a Fund specifically for the purpose
of qualifying any or all of the shares of such Fund for sale
under the securities laws of any jurisdiction or any
promotional, sales or advertising material or written
information relating to the Shares authorized by a Fund; or
(ii) result because of the terms of any Contract or
because of any breach by the Company of any provision of this
Agreement or of any Contract or which proximately result from
any activities of the Company's officers, directors, employees
or agents or their failure to take any action in connection
with the sale, processing or administration of the Contracts.
This indemnification agreement shall be in addition to any
liability that the Company may otherwise have; provided, however, that
no person shall be entitled to indemnification pursuant to this
provision if such loss, claim, damage or liability is due to the
willful misfeasance, bad faith, gross negligence or reckless disregard
of duty by the person seeking indemnification.
b. The Distributor. The Distributor shall indemnify and hold
harmless the Company and each person who controls or is associated with
the Company within the meaning of such terms under the federal
securities laws, and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities,
joint or several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of any action, suit or proceeding or any claim asserted), to
which the Company and/or any such person may become subject, under any
statute or regulation, any NASD rule or interpretation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon:
(i) violations(s) by the Distributor or a
Representative of federal or state securities law(s) or
regulation(s), applicable banking law(s) or regulation(s),
insurance law(s) or regulation(s) or any rule or requirement
of the NASD; or
(ii) any unauthorized use of sales or advertising
material, any oral or written misrepresentations, or any
unlawful sales practices concerning the Contracts, by the
Distributor or a Representative; or
(iii) claims by the Representatives or other agents
or representatives of the Distributor for commissions or other
compensation or remuneration of any type; or
(iv) any action or inaction by a clearing broker
through whom the Distributor purchases any transaction
pursuant to this Agreement; or
(v) any failure on the part of the Distributor or a
Representative to submit premiums or Applications to the
Company, or to submit the correct amount of a premium, on a
timely basis and in accordance with Section 4 of this
Agreement, subject to applicable law; or
(vi) any failure on the part of the Distributor or a
Representative to deliver the Contracts to purchasers thereof
on a timely basis; or
(vii) a breach by the Distributor of any provisions
of this Agreement.
This indemnification agreement shall be in addition to any
liability that the Distributor may otherwise have; provided, however,
that no person shall be entitled to indemnification pursuant to this
provision if such loss, claim, damage or liability is due to the
willful misfeasance, bad faith, gross negligence or reckless disregard
of duty by the person seeking indemnification.
c. In General. After receipt by a party entitled to
indemnification (the "indemnified party") under this Section 14 of
notice of the commencement of any action, if a claim in respect
thereof is to be made against any person obligated to provide
indemnification under this Section 14 (the "indemnifying party"), such
indemnified party shall notify the indemnifying party in writing of
the commencement thereof as soon as practicable thereafter, provided
that the omission to so notify the indemnifying party shall not
relieve the indemnifying party from any liability under this Section
14, except to the extent that the omission results in a failure of
actual notice to the indemnifying party and such indemnifying party is
damaged solely as a result of the failure to give such notice. The
indemnifying party, upon the request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party
may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention
of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party shall
indemnify the indemnified party from and against any loss or liability
by reason of such settlement or judgment. The indemnification
provisions contained in this Section 14 shall remain operative in full
force and effect, regardless of (i) any investigation made by or on
behalf of the Company or by or on behalf of any controlling person
thereof, (ii) delivery of any Contracts and premiums therefor, and
(iii) any termination of this Agreement. A successor by law of the
Distributor or the Company, as the case may be, shall be entitled to
the benefits of the indemnification provisions contained in this
Section 14.
15. Standard of Care. Neither the Company nor the Distributor shall be
liable to the other for any action taken or omitted by any of their officers,
directors, employees, or agents, in connection with the good faith performance
of their responsibilities under this Agreement, except for willful misconduct,
bad faith, negligence, or reckless disregard of the duties of the parties under
this Agreement.
16. Control by Board of Directors. The performance of the Distributor
under this Agreement with respect to the business and operations of the Company
shall at all times be subject to the direction and control of the Board of
Directors of the Company.
17. Assignment. The Distributor may not assign or delegate its
responsibilities under this Agreement without the prior written consent of the
Company and the non-disapproval of the New York Superintendent of Insurance.
18. Termination. This Agreement shall become effective as of the date
of its execution, shall continue in full force and effect until terminated, and
may be terminated by either party at any time without penalty upon sixty (60)
days written notice to the other party. This Agreement may be terminated upon
ten days notice upon the other party's material breach of any provision of this
Agreement, unless such breach has been cured to the satisfaction of the
non-breaching party within ten days of receipt by the breaching party of notice
of such breach from the non-breaching party. This Agreement may also be
terminated at any time without penalty if, in the sole discretion of the
Company, the Distributor is not performing its duties in a satisfactory manner.
Upon termination of this Agreement all authorizations, rights and
obligations shall cease except for the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for Contracts in effect
at the time of termination or issued pursuant to Applications received by the
Company prior to termination, and the obligations contained in Sections 7, 10,
11, 12, 13, and 14.
19. Amendment. This Agreement and the Schedules hereto may be amended
at any time by a writing executed by both of the parties hereto provided such
amendment is submitted to the Superintendent and is not disapproved by the
Superintendent.
20. Governing Law. This Agreement, and the rights and liabilities of
the parties hereunder, shall be construed in accordance with the internal laws
of the State of New York .
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
TRANSAMERICA INSURANCE SECURITIES
SALES CORPORATION
By: _____________________________
Name: _____________________________
Title: _____________________________
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
By: _____________________________
Name: _____________________________
Title: _____________________________
<PAGE>
SCHEDULE 1
Variable Insurance Products
Amended November 15, 1997
<TABLE>
<CAPTION>
- ------------------------------------------- -------------------------- ------------------------- ======================
<S> <C> <C> <C>
Contract Marketing Name Policy Form Nos. SEC Registration No. Separate Account
- ------------------------------------------- -------------------------- ------------------------- ======================
Dreyfus-Transamerica Triple Advantage 3-501 11-102 33-55152 VA-2NY
Annuity
- ------------------------------------------- -------------------------- ------------------------- ======================
- ------------------------------------------- -------------------------- ------------------------- ======================
[No-Load Variable Annuity] FTGP-500-192 33-55154 VA-2NLNY
- ------------------------------------------- -------------------------- ------------------------- ======================
- ------------------------------------------- -------------------------- ------------------------- ======================
Distinct Assets Variable Annuity FTCG-101-193 33-71748 VA-5NLNY
- ------------------------------------------- -------------------------- ------------------------- ======================
- ------------------------------------------- -------------------------- ------------------------- ======================
Transamerica Series Variable Annuity 3-504 11-197 UNKNOWN VA-6NY
- ------------------------------------------- -------------------------- ------------------------- ======================
</TABLE>
<PAGE>
SCHEDULE 2
Investment Companies serving as funding medium.
Amended November 15, 1997
<TABLE>
<CAPTION>
- ---------------------------------------- ---------------------------------------------------
<S> <C>
Name of Policy Underlying Portfolios
- ---------------------------------------- ---------------------------------------------------
- ---------------------------------------- ---------------------------------------------------
Dreyfus/Transamerica Triple Advantage Dreyfus Life and Annuity Index Fund, Inc.
Annuity
- ---------------------------------------- ---------------------------------------------------
- ---------------------------------------- ---------------------------------------------------
</TABLE>
Dreyfus Variable Investment Fund
Money Market Portfolio
Special Value Portfolio
Zero Coupon 2000 Portfolio
Quality Bond Portfolio
Small Cap Portfolio
Capital Appreciation Portfolio
Stock Index Portfolio
Socially Responsible Portfolio
Growth and Income Portfolio
International Equity Portfolio
International Value Portfolio
Disciplined Stock Portfolio
Small Company Stock Portfolio
Balanced Portfolio
Limited Term High Income Portfolio
- ---------------------------------------- -------------------------------------
- ---------------------------------------- -------------------------------------
Dreyfus Socially Responsible Growth Fund, Inc.
- ---------------------------------------- -------------------------------------
- ---------------------------------------- -------------------------------------
[No-Load Variable Annuity] Dreyfus Variable Investment Fund
- ---------------------------------------- --------------------------------------
- ---------------------------------------- --------------------------------------
Dreyfus Life and Annuity Index Fund, Inc.
<TABLE>
<CAPTION>
- ---------------------------------------- ---------------------------------------------------
- ---------------------------------------- ---------------------------------------------------
<S> <C>
Distinct Assets American Century VIP Capital Appreciation Portfolio
Federated American Leaders Fund II
INVESCO VIF-High Yield Fund
INVESCO VIF-Industrial Income Fund
INVESCO VIF-Total Return Fund
Janus Aspen Growth Portfolio
Lexington Emerging Markets Fund
Schwab Money Market Portfolio
SteinRoe Capital Appreciation Fund
Strong Discovery Fund II
- ---------------------------------------- ---------------------------------------------------
- ---------------------------------------- ---------------------------------------------------
Transamerica Series Variable Annuity Janus Aspen Worldwide Growth Portfolio
Morgan Stanley UF International Magnum Portfolio
Dreyfus VIF Small Cap Portfolio
OCC Accum Trust Small Cap Portfolio
MFS VIT Emerging Growth Portfolio
Alliance VPF Premier Growth Portfolio
Dreyfus VIF Capital Appreciation Portfolio
MFS VIT Research Portfolio
Transamerica VIF Growth Portfolio
Alger American Income & Growth Portfolio
Alliance VPF Growth & Income Portfolio
MFS VIT Growth with Income Portfolio
Janus Aspen Balanced Portfolio Portfolio
OCC Accum Trust Managed Portfolio
Morgan Stanley UF High Yield Portfolio
Morgan Stanley UF Fixed Income Portfolio
Transamerica VIF Money Market Portfolio
- ---------------------------------------- ---------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 3
Separate Accounts of Transamerica Life Insurance Company of New York
Amended November 15, 1997
1. Separate Account VA-2LNY of Transamerica Life Insurance Company of New York
2. Separate Account VA-2NLNY of Transamerica Life Insurance Company of New York
3. Separate Account VA-5NLNY of Transmaerica Life Insurance Company of New York
4. Separate Account VA-6NY of Transamerica Life Insurance Company of New York
<PAGE>
Exhibit (4) Form of Flexible Premium Deferred Variable Annuity Contract.
<PAGE>
[LOGO] TRANSAMERICA LIFE INSURANCE
COMPANY OF NEW YORK
Transamerica Life Insurance Company of New York
Home Office: 100 Manhattanville Road
Purchase, New York 10577-2135
A Stock Company
- ------------------------------------------------------------------------------
About your policy
- ------------------------------------------------------------------------------
This is a legal policy between you, the "owner", and Transamerica Life Insurance
Company of New York (referred to as "we", "us", and "our" in this policy).
Please read it carefully.
The owner will be entitled to certain benefits provided under this policy,
subject to its provisions.
Right to Cancel
The owner may cancel this policy by returning it to: (a) the agent or (b)
Transamerica Life Insurance Company of New York, Annuity Service Center, P.O.
Box 31848, Charlotte, North Carolina 28231-1848, before midnight of the tenth
day after receipt of the policy. The return of the policy will be effective as
of the date the notice is received. We will refund an amount equal to the sum
of: (i) all premiums allocated to the fixed account less any withdrawals; and
(ii) the variable accumulated value of the policy.
PAYMENTS AND VALUES PROVIDED UNDER THIS POLICY WHEN BASED ON THE INVESTMENT
PERFORMANCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. REFER TO PAGE 7 FOR ADDITIONAL INFORMATION ON THE VARIABLE
ACCOUNT.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
/S/ James W. Dederer /s/ Alan T. Cunningham
CHAIRMAN PRESIDENT
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Variable and fixed dollar settlement options
Separate Account Investments
Non-participating - No annual dividends
- -------------------------------------------------------------------------------
3-504 11-197 Page 1
<PAGE>
- -------------------------------------------------------------------------------
Information page
- -------------------------------------------------------------------------------
<TABLE>
--------------------------- ---------------
<CAPTION>
Policy Information .......................... Beneficiary Information
--------------------------- ---------------
--------------------------- ---------------
<S> <C> <C> <C>
Policy Number: .............. Specimen Beneficiary: Judy Doe
Policy Effective Date: ...... July 1, 1997 Date of Birth: January 1, 1959
Income Tax Status: .......... Non-Qualified Tax ID Number: 999-99-9999
Initial Premium: ............ $ 20,000
Annuity Date: ............... July 1, 2044
--------------------------- ---------------
Owner Information ........... Annuitant Information
--------------------------- ---------------
Owner: ...................... John Doe Annuitant: John Doe
Date of Birth: .............. January 1, 1959 Date of Birth: January 1, 1959
Tax ID Number: .............. 999-99-9999 Tax ID Number: 999-99-9999
--------------------------- ---------------
--------------------------- ---------------
Joint Owner Information ..... Joint Annuitant Information
--------------------------- ---------------
Joint Owner: ................ Jane Doe Joint Annuitant: Jane Doe
Date of Birth: .............. January 1, 1959 Date of Birth: January 1, 1959
Tax ID Number: .............. 999-99-9999 Tax ID Number: 999-99-9999
</TABLE>
- ------------------------------------------------- ---------------
- ------------------------------------------------- ---------------
Allocation of Initial Premium
- ------------------------------------------------- ---------------
Variable Sub-accounts
[Alliance VPF Premier Growth] .......................... ____%
[Alliance VPF Growth and Income] ....................... ____%
[Alger American Income and Growth] ..................... ____%
[Dreyfus VIF Capital Appreciation] ..................... ____%
[Dreyfus VIF Small Cap] ................................ ____%
[Janus Aspen Balance] .................................. ____%
[Janus Aspen Worldwide Growth] ......................... ____%
[MFS VIT Emerging Growth] .............................. ____%
[MFS VIT Growth and Income] ............................ ____%
[MFS VIT Research] ..................................... ____%
[Morgan Stanley UF Fixed Income]........................ ____%
[Morgan Stanley UF High Yield].......................... ____%
[Morgan Stanley UF International Magnum]................ ____%
[OCC Accumulation Trust Managed]........................ ____%
[OCC Accumulation Trust Small Cap]...................... ____%
[Transamerica VIF Growth Fund].......................... ____%
[Transamerica VIF Money Market Portfolio]............... ____%
[Fixed Account]......................................... ____%
[Guarantee Period Account Option- 1-10 Yr.]............. ____%
Total Allocation: 100%
- --------------------------------------------------- ---------------
The data above reflects the information you provided us to issue this policy. If
you wish to change/correct any information on this page or for inquiries
regarding coverage or customer service please call us immediately at our service
center.
SERVICE CENTER: Transamerica Life Insurance Company of New York
Annuity Service Center
P.O. Box 31848
Charlotte, North Carolina 28231-1848
1-800 258-4260
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Continued on the next page
- -------------------------------------------------------------------------------
3-504 11-197 Page 2
<PAGE>
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Information page (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ANNUAL CHARGES AND FEES
Charges and fees at the time we issued this policy are shown below.
- -------------------------------------------------------------------------------
- ---------------------------------------- --------------------------------------------------------
<S> <C>
Mortality and Expense Risk Charge [1.20% of the assets in each variable sub-account]
- --------------------------------------- --------------------------------------------------------
- --------------------------------------- --------------------------------------------------------
Administrative Expense Charge [0.15% of the assets in each variable sub-account]
- --------------------------------------- --------------------------------------------------------
Transfer Fee $10 for each transfer over [twelve] in each policy year
- --------------------------------------- --------------------------------------------------------
- --------------------------------------- --------------------------------------------------------
Systematic Withdrawal Fee [Currently None]
- --------------------------------------- --------------------------------------------------------
[($30 or 2% of the policy value if less)]
Account Fee (before the annuity date) [(We will waive if policy value is over $25,000)]
- --------------------------------------- --------------------------------------------------------
Annuity Fee (after the annuity date) [$30]
- --------------------------------------- --------------------------------------------------------
- ---------------------------------------- ---------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES LOAD
Number of Complete Years Contingent Deferred Sales Load
From Receipt of Premium as a Percentage of Premium
Less than 1 year..................................6%
1 year but less than 2 years......................6%
2 years but less than 3 years.....................5%
3 years but less than 4 years.....................5%
4 years but less than 5 years.....................4%
5 years but less than 6 years.....................4%
6 years but less than 7 years.....................2%
7 or more years...................................0%
<TABLE>
<CAPTION>
Additional Information
<S> <C>
Minimum Initial Premium: [$5,000]
[$2,000 for IRA's]
Additional Premium Minimum: [$1,000]
Maximum Total Premium(s): [$1,000,000]
Minimum Initial Variable Sub-account Allocation or Transfer: [$1,000]
Minimum Initial Fixed Account Allocation or Transfer: [$1,000]
Maximum Transfer Percentage
from the Fixed Account: [10%]
Minimum Policy Value: [$2,000]
</TABLE>
- -------------------------------------------------------------------------------
End of Information Page
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3-504 11-197 Page 2A
<PAGE>
- -------------------------------------------------------------------------------
Table of Contents
- -------------------------------------------------------------------------------
PAGE
INFORMATION PAGE...............................................2 & 2A
DEFINITIONS.........................................................4
OWNER, ANNUITANT, BENEFICIARY.......................................5
ESTABLISHING THIS POLICY............................................6
THE VARIABLE ACCOUNT................................................7
THE FIXED ACCOUNT...................................................8
TRANSFER PROVISIONS.................................................9
WITHDRAWAL PROVISIONS...............................................9
SETTLEMENT OPTION PROVISIONS ......................................11
SETTLEMENT OPTION PAYMENTS.........................................12
DEATH BENEFIT PROVISIONS ..........................................13
CHARGES, FEES AND SERVICES ........................................15
GENERAL PROVISIONS.................................................16
APPENDIX - ANNUITY RATE TABLES.....................................18
3-504 11-197 Page 3
<PAGE>
- ------------------------------------------------------------------------------
Definitions
- ------------------------------------------------------------------------------
Annuity Date
The date the annuitization phase of this policy begins. The annuity date is
shown on the Information Page.
Cash Surrender Value
The amount we will pay to the owner if the policy is surrendered on or before
the annuity date. The cash surrender value is equal to the policy value; less
any account fee, contingent deferred sales load, or premium tax charges.
Code
The Internal Revenue Code of 1986, as amended, and the rules and regulations
issued under it.
Fixed Account
An account which credits a rate of interest for a period of at least twelve
months for each allocation or transfer.
Fixed Account Accumulated Value
The total dollar value of all amounts the owner allocates or transfers to the
fixed account; plus interest credited; less any amounts withdrawn, applicable
fees and premium tax charges, and/or transfers out to the variable account prior
to the annuity date.
Policy Anniversary
The anniversary each year of the policy effective date as shown on the
Information Page.
Policy Value
The sum of the variable accumulated value and the fixed account accumulated
value.
Policy Year
The 12-month period starting on the policy effective date and ending with the
day before the policy anniversary, and each 12-month period thereafter.
Portfolio
The investment portfolio underlying each variable sub-account in which we will
invest any amounts the owner allocates to that variable sub-account.
Status (Qualified and Non-Qualified)
The status shown on the Information Page. This policy has a qualified status if
it is issued in connection with a retirement plan or program.
Valuation Day
Any day the New York Stock Exchange is open. To determine the value of an asset
on a day that is not a valuation day, we will use the value of that asset as of
the end of the next valuation day.
Valuation Period
The time interval between the closing (generally 4:00 p.m. Eastern Time) of the
New York Stock Exchange on consecutive valuation days.
Variable Account
The variable account (separate account VA-6NY) is a separate account established
and maintained by us for the investment of a portion of our assets.
Variable Accumulated Value
The total dollar value of all variable accumulation units under this policy
prior to the annuity date.
Variable Accumulation Unit
A unit of measure used to determine the variable accumulated value before the
annuity date. The value of a variable accumulation unit varies with each
variable sub-account.
Variable Sub-accounts
One or more divisions of the variable account each of which invests solely in
shares of one of the portfolios. The variable sub-accounts selected by the owner
are shown on the Information Page.
3-504 11-197 Page 4
<PAGE>
- -------------------------------------------------------------------------------
Owner, Annuitant, Beneficiary
- -------------------------------------------------------------------------------
Owner (Joint Owners)
The person(s) named on the Information Page who, while living, controls all
rights and benefits under this policy. If the owner is a trust that allows a
person(s) other than the trustee to exercise the ownership rights under this
policy, such person(s) must be named annuitant(s) and will be treated as the
owner.
If joint owners are named, the joint owners share ownership in this policy
equally with the right of survivorship. The right of survivorship means that if
a joint owner dies, his or her interest in the policy will pass to the surviving
joint owner subject to the death benefit provisions.
The owner(s) is entitled to designate the annuitant, beneficiary or other payee,
settlement option, and annuity date. The owner must notify us at our service
center to make changes to these designations in a form and manner acceptable to
us.
Annuitant (Joint Annuitant)
The person(s) named on the Information Page whose age and sex is used to
determine the amount of settlement option payments on the annuity date. If a
joint annuitant is named, that joint annuitant must be the annuitant's spouse.
The joint annuitant will become the annuitant if the annuitant dies. If there is
no joint annuitant and the annuitant dies, an individual owner will become the
new annuitant until the owner names another annuitant.
If the owner is an individual, the annuitant(s) may be changed by the owner at
any time before the annuity date. Any such change will be subject to the then
current underwriting requirements. We reserve the right to reject any change of
the annuitant(s) which has been made without our prior written consent.
If the owner is not an individual, the annuitant(s) may not be changed.
Beneficiary
The person(s) named on the Information Page who is designated to receive the
amounts payable under this policy if:
The owner dies before the annuity date and there is no joint owner; or
The owner dies after the annuity date and settlement option payments have
begun under a selected settlement option that guarantees payments for a
certain period of time.
The interest of any beneficiary who dies before the owner will terminate at time
of death of such beneficiary.
A beneficiary may be named or changed at any time. Any change made to an
irrevocable beneficiary must also include the written consent of the
beneficiary, except as otherwise required by law.
If more than one beneficiary is named, each named beneficiary will share equally
in any benefits or rights granted by this policy unless the owner gives us other
instructions at the time the beneficiaries are named.
3-504 11-197 Page 5
<PAGE>
Establishing this Policy
This policy was established on the policy effective date shown on the
Information Page.
Any time before the annuity date the owner may make additional premiums to this
policy. We reserve the right to not accept additional premiums beyond certain
attained ages of the owner or annuitant.
The owner may allocate premiums to the fixed account or one or more of the
variable sub-accounts we offer at the time we receive a premium. We reserve the
right to limit the total number of investment options that may be chosen over
the lifetime of the policy.
All premiums are subject to the conditions listed below.
- -------------------------------------------------------------------------------
Premium Provisions
Payment and Acceptance of Premiums
Premiums are payments the owner makes to us for the benefits under this policy.
All premiums must be made to either an agent designated by us or our service
center.
The initial premium, as shown on the Information Page, will be credited to the
variable sub-accounts and/or the fixed account according to the owner's
instructions within two business days of the date our service center receives
both the initial premium and sufficient information, in a form and manner
acceptable to us, to issue this policy.
Additional premiums will be credited on the date we receive them at our service
center and are subject to the conditions listed below. Premiums must:
Meet the additional payment minimum shown on the Information Page.
Not exceed any federal or state limitations during any taxable year; and
Not exceed the maximum total premium amount, as shown on the Information
Page, without our prior approval.
We may return to the owner any premiums that do not meet the conditions
described in this section.
Allocating Each Premium
Allocations the owner makes to the variable sub-accounts and the fixed account
are subject to the following conditions. The owner must allocate:
In whole number percentages;
A minimum of 10% of each premium to any variable sub-account or the fixed
account.
Not less than the variable sub-account minimum, as shown on the
Information Page, to variable sub-accounts with a zero balance.
Not less than the fixed account minimum, as shown on the Information Page.
The owner may change allocation elections for future premiums any time before
the annuity date by notifying us at our service center.
Continuation of this Policy
If the owner stops making additional premiums to this policy, the provisions of
the policy will continue in force until all values have been distributed. The
owner may exercise all ownership rights under this policy during that time,
including making withdrawals and applying the annuity amount, as defined in the
settlement option provisions section, to provide payments under a settlement
option described in this policy.
3-504 11-197 Page 6
<PAGE>
- -------------------------------------------------------------------------------
The Variable Account
- -------------------------------------------------------------------------------
The variable account is a separate account established and maintained by the
Company for the investment of a portion of our assets pursuant to Section 4240
of the New York Insurance Law and New York Insurance Department Regulation 47
(11NYCRR50). We will use the assets of the variable account to buy shares in the
various portfolios. Premiums allocated or transfers made to one or more variable
sub-accounts will become a part of the variable account.
The assets of the variable account are owned by us. The assets in the variable
account are not chargeable with liabilities arising out of any other business we
conduct, except to the extent that they exceed the reserves and other
liabilities of the variable account. The assets of the variable account
maintained under this policy will be kept separate from the assets held in our
general account.
Variable Sub-accounts
The variable account is composed of a number of variable sub-accounts. The
investment performance of each variable sub-account is linked directly to the
investment performance of the underlying portfolio.
We cannot and do not guarantee that any of the variable sub-accounts will always
be available for investment. We reserve the right, subject to compliance with
applicable federal or state law, rules or regulations, to add, delete, or
substitute the variable sub-accounts or the portfolio shares held by a variable
sub-account, if we believe that further investment in the shares is no longer
appropriate or shares in a portfolio become no longer available for investment.
We will send written notification to the owner of such changes.
Variable Accumulation Unit
A variable accumulation unit is a unit of measure we use to determine the
variable accumulated value each day before the annuity date. The variable
accumulated value is the total dollar value of all variable accumulation units
for each variable sub-account. The value of a variable accumulation unit varies
with each variable sub-account. Premiums allocated or transfers made to a
variable sub-account are credited to the variable accumulated value in the form
of variable accumulation units. Transfers, withdrawals, or fees made from a
variable sub-account will result in the cancellation of variable accumulation
units.
Each time a premium is allocated or a transfer is made to a variable
sub-account, the number of variable accumulation units credited will be
determined. We will determine the number of variable accumulation units by
dividing the total amount allocated by the value of that variable sub-account's
variable accumulation unit for the valuation day on which either we received the
premium allocation or transfer request at our service center.
The value of a variable accumulation unit for each variable sub-account is
determined by multiplying the value of that unit at the end of the prior
valuation period by the net investment factor of the variable sub-account for
the valuation period. The value of a variable accumulation unit may increase or
decrease.
Net Investment Factor
The net investment factor is the formula that measures the investment
performance of a variable sub-account from one valuation period to the next. For
any variable sub-account, the net investment factor for a valuation period is
determined by dividing (A) by (B), then subtracting (C) where;
(A) is The net asset value per share held in the variable sub-account, as
of the end of the valuation period; plus (minus)
The per-share amount of any dividend or capital gain distributions if the
"ex-dividend" date occurs in the valuation period; plus (minus)
A per-share charge or credit as of the end of the valuation period for tax
reserves for realized and unrealized capital gains, if any.
3-504 11-197 Page 7
<PAGE>
(B) is The net asset value per share held in the variable sub-account as of
the end of the prior valuation period.
(C) is The daily mortality and expense risk charge multiplied by the number
of calendar days in the current valuation period; plus
The daily administrative expense charge multiplied by the number of
calendar days in the current valuation period.
- -------------------------------------------------------------------------------
The Fixed Account
- -------------------------------------------------------------------------------
Crediting of Interest
We will establish effective annual rates of interest for any amounts allocated
or transferred to this fixed account from time to time. Any premium allocation
or transfer to the fixed account will be credited interest at the rate
applicable for its class. We guarantee that the rate of interest in effect for
any amounts allocated or transferred will remain in effect for at least twelve
months from the date such allocation or transfer is made. At any time after the
end of the twelve month period for a particular allocation, we may change the
annual rate of interest without prior notice. We guarantee that any subsequent
change in the annual rate of interest will remain in effect for a minimum of
twelve months from the effective date of change.
Interest will be credited on a daily basis at a daily rate which is equivalent
to the effective annual interest rate for that allocation. The effective annual
interest rate applicable to an allocation will never be less than 3% annually.
Transfer Limitations
Transfers from and to the fixed account are subject to the following conditions:
The owner may make four transfers from the fixed account to the
variable account each policy year. The total amount transferred may not
exceed the maximum amount allowed for any policy year. We reserve the right
to waive this limitation.
The maximum amount that may be transferred each policy year is a
percentage of the value of the fixed account as of the last policy
anniversary less any prior transfers made that policy year. The percentage
rate, which will be declared by the Company from time to time, will not be
less than 10 percent. The percentage rate on the policy effective date for
the maximum transfer amount is shown on the Information Page.
Amounts from the fixed account may not be transferred to any variable
sub-account as identified by us whose underlying portfolio's assets consist
of more than 50% investment in income producing securities, such as the
money market accounts, certificates of deposit, U.S. Treasury or other U.S.
Government securities, bonds or any other fixed income investment.
Each time an amount is transferred from the fixed account into the
variable account, the owner may not transfer any amounts back to the fixed
account for six months following the date of the original transfer.
- -------------------------------------------------------------------------------
Transfer Provisions
- ------------------------------------------------------------------------------
The owner may transfer all or a portion of the policy value between and among
the variable sub-accounts and the fixed account are subject to the limitations
as described in this section and the fixed account section of this policy.
All transfer requests must specify (a) the amount of the transfer; (b) the
variable sub-account or the fixed account from which the transfer is to be made;
and (c) the variable sub-account or fixed account which is to receive the
transfer. All transfers will be made as of the valuation day we receive the
request at our service center.
Before the annuity date, transfers in excess of the maximum per policy year, as
shown on the Information Page, will be subject to a transfer fee, as described
in the charges, fees and services section of this policy. We reserve the right
to waive the transfer fee.
3-504 11-197 Page 8
<PAGE>
After the annuity date, transfers are only permitted if a variable payment
option is elected. Such transfers among the variable sub-accounts are limited to
four per policy year. We reserve the right to change the number of transfers
available after the annuity date.
The minimum amount that may be transferred from a variable sub-account or the
fixed account is the lesser of $1,000 or the entire value of the variable
sub-account or fixed account from which the transfer is being made. The minimum
amount that may be initially allocated or transferred into a variable
sub-account or the fixed account is shown on the Information Page. We reserve
the right to waive the minimum(s) in connection with certain options offered
with this policy.
- -------------------------------------------------------------------------------
Withdrawal Provisions
- -------------------------------------------------------------------------------
Before the annuity date and subject to the conditions below the owner may:
Withdraw a portion of the policy value for cash subject to any applicable
contingent deferred sales load and premium tax charges; or
Automatically withdraw a portion of the policy value by electing the
systematic withdrawal option; or
Withdraw the cash surrender value and terminate this policy.
Any amount withdrawn that exceeds the allowed amount, as described below, may be
subject to a contingent deferred sales load. All withdrawals will be made from
premiums on a first in, first out basis and then from earnings.
- -------------------------------------------------------------------------------
Partial Withdrawal Provisions
- -------------------------------------------------------------------------------
Partial withdrawals taken from the variable sub-accounts or the fixed account
are subject to a minimum withdrawal amount equal to the lesser of $1,000 or the
entire value of the variable sub-account or fixed account from which the
withdrawal is being made. We reserve the right to limit the number of partial
withdrawals that may be taken from the fixed account in any policy year. We
reserve the right not to process any withdrawal if the resulting policy value is
below the minimum, as shown on the Information Page.
Systematic Withdrawal Option
The owner may elect to automatically receive a series of partial withdrawals
under the systematic withdrawal option subject to the following conditions:
Systematic withdrawals may be subject to a fee as described in the
charges, fees and services section of this policy.
Systematic withdrawals may only be taken from variable sub-accounts
and the fixed account as designated by us from time to time. We reserve the
right to prospectively change such designations.
The owner may terminate systematic withdrawals at any time by notifying us at
our service center. Once the option has been terminated, it may not be elected
again for a twelve month period. Systematic withdrawals will automatically
terminate if the policy is annuitized, surrendered or otherwise distributed as a
result of the owner's death.
Surrender of this Policy
The owner may surrender this policy to us for its cash surrender value on or
before the annuity date. Surrender of the policy will be subject to any
withdrawal limitations imposed under applicable federal or state law, rules or
regulations.
Payment of the cash surrender value to the owner will be in full settlement of
our liability under the policy.
Withdrawal of Funds Without Charges
At the end of the free look period or 30 days after the policy effective date,
whichever is later, the owner may make withdrawals up to the allowed amount each
policy year before the annuity date without incurring a contingent deferred
sales load.
3-504 11-197 Page 9
<PAGE>
The allowed amount is equal to 10% of premiums less than seven years old as of
the last policy anniversary, less any previous withdrawals taken in that policy
year. For the first policy year, the allowed amount is equal to 10% of premiums
as of the time of the first withdrawal, less any previous withdrawals taken that
policy year. Previous withdrawals include partial withdrawals and certain
scheduled withdrawals, such as systematic withdrawals. Any amounts that exceed
the allowed amount will be subject to a contingent deferred sales load. Premiums
that are older than seven years old will not be subject to a contingent deferred
sales load.
Contingent Deferred Sales Load
A contingent deferred sales load may apply when a withdrawal from, or surrender
of, this policy occurs. For purposes of determining the contingent deferred
sales load, all withdrawals are made first from premiums on a first-in,
first-out basis and then from earnings.
We calculate the contingent deferred sales load separately for each premium
received by us. The contingent deferred sales load is a percentage of the
withdrawn premium.
The applicable contingent deferred sales load percentages, as shown on the
Information Page, are based on the number of complete years from the receipt of
the premium(s) to the date of withdrawal.
Waiver of Contingent Deferred Sales Load
We will waive the contingent deferred sales load:
On the allowed amount.
Upon annuitization on or after the first policy anniversary, if the
selected settlement option involves life contingencies.
Upon the owner's death before the annuity date.
- -------------------------------------------------------------------------------
Settlement Option Provisions
- -------------------------------------------------------------------------------
On the annuity date, we will apply the annuity amount, as defined below,
to provide payments under the settlement option selected by the owner. The
first settlement option payment will be made 30 days after the annuity
date.
Settlement option payments may be made in monthly, quarterly, semi-annual
or annual installments as selected by the owner.
- -------------------------------------------------------------------------------
The owner may change the annuity date and settlement and payment option by
notifying our service center at least 30 days in advance of the annuity date.
The annuity date must be on or before the first day of the calendar month
immediately preceding the month of the annuitant's or joint annuitant's 90th
birthday, whichever is earlier.
The annuity date may not be earlier than the first day of the calendar month
coinciding with the first policy anniversary.
After the annuity date, we will not allow the owner to make:
Any changes to either the settlement or payment option;
Additional premiums; or
Any further withdrawals.
Annuity Amount
The annuity amount we will apply to provide payments is equal to the policy
value, less any applicable contingent deferred sales load and premium tax
charges.
Minimum Requirements
We reserve the right to offer a less frequent mode of payment than the mode
selected by the owner or make a cash payment to the owner equal to the cash
surrender value if:
The annuity amount is less than $2,000; or
The amount of the first fixed payment is less than $20; or
The amount of the first variable payment is less than $20 or if a variable
payment from a variable sub-account is less than $50.
If we make such a cash payment it will be in full settlement of our liability
under this policy.
3-504 11-197 Page 10
<PAGE>
Settlement Options
The settlement options the owner may choose from are listed below. For any
settlement option involving life contingencies, it is possible that no
settlement option payments will be made from this policy if, after the annuity
date but before the first settlement option payment is made, the annuitant and
joint annuitant or contingent annuitant, as applicable, dies.
Life Annuity
Provides payments to the owner for as long as the annuitant lives. Payments will
end with the payment due just before the annuitant's death and there is no
provision for a death benefit payable to a beneficiary.
Life Annuity with Period Certain
Provides payments to the owner for the longer of: a) the annuitant's life;
or (b) the period certain. The period certain may be 120, 180 or 240 months. If
the annuitant dies during the period certain, payments will continue until the
end of the period certain.
Life and Contingent Annuity
Provides payments to the owner for as long as the annuitant lives. If the
annuitant dies, payments will continue for as long as the contingent annuitant
lives in an amount equal to 50%, 66 2/3% or 100% of the original payment, as
selected. Payments will then end with the payment due just before the contingent
annuitant's death.
Joint and Survivor Annuity
Provides payments to the owner for as long as the survivor of the annuitant or
joint annuitant lives. After the first annuitant dies, payments will continue
for as long as the survivor lives in an amount equal to 50%, 66 2/3% or 100% of
the original payment, as selected. Payments will then end with the payment due
just before the death of the survivor.
Other Forms of Payment
Payments can be provided under other settlement options not described in this
section. Contact our service center for more information.
- -------------------------------------------------------------------------------
Settlement Option Payments
- -------------------------------------------------------------------------------
Settlement option payments may be fixed or variable or a combination of
both.
The fixed payment option provides for settlement option payments that
remain constant and are not affected by the investment performance of the
variable sub-accounts.
The variable payment option provides for settlement option payments that
vary based on the investment performance of the variable sub-account(s)
selected by the owner. These payments may increase, decrease or remain the
same.
- -------------------------------------------------------------------------------
Fixed Payment Option
Amount of Fixed Payment
The owner may elect to have all or a portion of the annuity amount applied to
provide fixed payments. On the annuity date, we will determine the dollar amount
of the fixed payments by applying the portion of the annuity amount allocated to
provide fixed payments as a single payment based on the settlement option chosen
and the age and sex of the annuitant(s), using the appropriate guaranteed
annuity rate tables. If required by law, we will use the appropriate unisex
guaranteed annuity rate tables. The monthly annuity rate tables are contained in
the appendix.
Variable Payment Option
Amount of First Variable Payment
The owner may elect to have all or a portion of the annuity amount applied to
provide settlement option payments that vary based on the investment performance
of selected variable sub-accounts. The amount of the first variable payment will
be equal to the benefit that could be purchased by applying the portion of the
annuity amount allocated to provide the variable payments as a single payment
based on the settlement option chosen and age and sex of the annuitant(s) using
the appropriate guaranteed annuity rate tables. If required by law, we will use
the appropriate unisex guaranteed annuity rate tables. The monthly annuity rate
tables are contained in the appendix.
Amount of Subsequent Variable Payments
We determine the dollar amount of the second and subsequent variable payments by
first identifying the number and value of the variable annuity units for each
variable sub-account.
3-504 11-197 Page 11
<PAGE>
Variable annuity units are the unit of measure used to determine such payments.
For each payment we multiply the number of variable annuity units by the value
of the variable annuity units for each variable sub-account.
The number of variable annuity units for each variable sub-account will remain
the same for the second and subsequent variable payments (unless amounts are
transferred to or from a variable sub-account) and the value of the variable
annuity units in each variable sub-account will vary. As a result of the
variation in the value of variable annuity units for each variable sub-account
between payments, the dollar amount of each variable payment after the first may
increase, decrease or remain the same.
Number of Variable Annuity Units
The number of variable annuity units for each variable sub-account is determined
by dividing the first variable payment by the value of the variable annuity
units of each variable sub-account on the annuity date.
Value of Variable Annuity Units
The variable annuity unit values depend on the net investment factor and the
assumed interest rate. The value of a variable annuity unit for each variable
sub-account for any valuation day is equal to (A) times (B) times (C), where:
(A) is the variable annuity unit value on the immediately preceding
valuation day;
(B) is the net investment factor (determined in accordance with the net
investment factor provision on Page 7), for the valuation period just
ended; and
(C) is the investment result adjustment factor (.99989255)n, which
recognizes an assumed interest rate of 4% per year. The Company reserves
the right to offer other assumed interest rates with appropriate investment
result adjustment factors. The "n" in the investment result adjustment
factor is the number of days since the preceding valuation day.
Once settlement option payments begin, we guarantee the amount of each variable
payment will not be affected by variations in expenses or mortality experience.
- -------------------------------------------------------------------------------
Death Benefit Provisions
- -------------------------------------------------------------------------------
We must distribute death benefits or continue making settlement option payments
under this policy according to the requirements of Code Section 72(s) as long as
this policy is in force or benefits remain to be paid.
We will not accept any additional premiums after the death of the owner or joint
owner.
If any ownership change is made, the death benefit under this policy may be
reduced in accordance with our then current underwriting rules. Such reduction
will never decrease the death benefit below the policy value.
We must receive proof of death before any benefits are distributed from this
policy. Proof of death acceptable to us includes:
A certified copy of a death policy
A certified copy of a court decree stating the cause of death
A written statement by a medical doctor who attended the deceased
Any other proof or documents we may require
- -------------------------------------------------------------------------------
Amount of Death Benefit
If the owner or joint owner dies before the annuity date and neither the
deceased owner nor the joint owner had attained the age of 85, the guaranteed
minimum death benefit is equal to the greatest of (A), (B) or (C) where:
(A) is the policy value.
(B) is 100% of premiums, less the sum of all withdrawals and any applicable
premium tax charges.
(C) is the highest policy value on any policy anniversary, increased by the
sum of all premiums received since that policy anniversary, less the sum of
all withdrawals and any applicable premium tax charges since that
anniversary.
The guaranteed minimum death benefit will be determined as of the end of the
valuation period during which our service center receives both proof of death of
the owner or joint owner and the written notice of the form of benefit elected
by the person to whom the death benefit is payable.
3-504 11-197 Page 12
<PAGE>
Amount of Death Benefit after the Owner or Joint Owner attains age 85
If the owner or joint owner dies before the annuity date and either the deceased
owner or surviving owner had attained the age of 85, the death benefit is equal
to the policy value. For purposes of calculating such death benefit, the policy
value is determined as of the date the death benefit is paid.
Death of Owner or Joint Owner before the Annuity Date
If the owner or joint owner dies before the annuity date, we will pay the death
benefit as specified in this section. The entire death benefit must be
distributed within five years after the owner's death. If the owner is not an
individual, an annuitant's death will be treated as the death of the owner as
provided in Code Section 72(s)(6). For example, this policy will remain in force
with the annuitant's surviving spouse as the new annuitant if:
This policy is owned by a trust; and
The beneficiary shown on the Information Page is either the annuitant's
surviving spouse, or a trust holding the policy solely for the benefit of
such spouse.
The manner in which we will pay the death benefit depends on the status of the
person(s) involved in this policy. The death benefit will be payable to the
first person from the applicable list below:
If the owner is the annuitant:
The joint owner, if any; then
The beneficiary, if any.
If the owner is not the annuitant:
The joint owner, if any; then
The beneficiary, if any; then
The annuitant; then
The joint annuitant; if any.
If the death benefit is payable to the owner's surviving spouse, (or to a trust
for the sole benefit of such surviving spouse), we will continue this policy
with the owner's spouse as the new annuitant (if the owner was the annuitant)
and the new owner (if applicable), unless such spouse selects another option as
provided below.
If the death benefit is payable to someone other that the owner's surviving
spouse, we will pay the death benefit in a lump sum payment to, or for the
benefit of, such person within five years after the owner's death, unless such
person(s) selects another option as provided below.
In lieu of the automatic form of death benefit specified above, the person(s) to
whom the death benefit is payable may elect to receive it:
In a lump sum; or
As settlement option payments, provided the person making the election is
an individual. Such payments must begin within one year after the owner's
death and must be in equal amounts over a period of time not extending
beyond the individual's life or life expectancy.
Election of either option must be made no later than 60 days prior to the one
year anniversary of the owner's death. Otherwise, the death benefit will be
settled under the appropriate automatic form of benefit specified above.
If the person to whom the death benefit is payable dies before the entire death
benefit is paid, we will pay the remaining death benefit in a lump sum to the
payee named by such person or, if no payee was named, to such person's estate.
If the death benefit is payable to a non-individual (subject to the special rule
for a trust for the sole benefit of a surviving spouse), we will pay the death
benefit in a lump sum within one year after the owner's death.
If the Annuitant Dies Before the Annuity Date
If an owner and an annuitant are not the same individual and the annuitant (or
the last of joint annuitants) dies before the annuity date, the owner will
become the annuitant until a new annuitant is selected.
Death after the Annuity Date
If an owner or an annuitant dies after the annuity date, any amounts payable
will continue to be distributed at least as rapidly as under the settlement and
payment option then in effect on the date of death.
3-504 11-197 Page 13
<PAGE>
Upon the owner's death after the annuity date, any remaining ownership rights
granted under this policy will pass to the person to whom the death benefit
would have been paid if the owner had died before the annuity date, as specified
above.
Survival Provision
The interest of any person to whom the death benefit is payable who dies at the
time of, or within 30 days after, the death of the owner will also terminate if
no benefits have been paid to such beneficiary, unless the owner had given us
written notice of some other arrangement.
- ------------------------------------------------------------------------------
Charges, Fees and Services
- ------------------------------------------------------------------------------
Premium Tax Charge
Some jurisdictions impose on us a premium tax on annuities. If a premium tax is
imposed, we reserve the right to deduct this amount from premiums or policy
value, as appropriate. For purposes of this policy, premium tax charges include
retaliatory taxes or other similar taxes.
Mortality and Expense Risk Charge
The amount of the annual mortality and expense risk charge is shown on the
Information Page. The mortality and expense risk charge will be deducted on a
daily basis from the assets in each variable sub-account as part of the
calculation of the variable accumulation unit.
Administrative Expense Charge
The amount of the annual administrative expense charge on the policy effective
date is shown on the Information Page. The administrative expense charge will be
deducted on a daily basis from the assets in each variable sub-account as part
of the calculation of the variable accumulation unit.
We may change this charge upon 30 days advance written notice to the owner. Any
increase in the administrative expense charge will apply prospectively to
administrative expense charges deducted after the effective date of change. The
administrative expense charge will not exceed an annual charge of 0.35%.
Transfer Fee
We reserve the right to impose a transfer fee for each transfer in excess of the
number shown on the Information Page made during a single policy year. The
amount of the transfer fee on the policy effective date is shown on the
Information Page. This fee will not increase. The transfer fee will be deducted
from the amount of the transfer prior to its reallocation. We reserve the right
to waive the transfer fee.
Systematic Withdrawal Fee
We reserve the right to impose an annual processing fee for the systematic
withdrawal option. The amount of the systematic withdrawal fee on the policy
effective date is shown on the Information Page. Any fee imposed will not exceed
$25 per policy year.
Account Fee
Before the annuity date, an annual account fee will be deducted from the policy
value on the last business day of each policy year and if different, the date
the policy is surrendered. The amount of the annual account fee on the policy
effective date is shown on the Information Page. The account fee will be
deducted on a pro rata basis from the policy value.
We may change this fee prospectively upon 30 days advance written notice to the
owner. Any increase will not result in the account fee exceeding a maximum
annual account fee equal to the lesser of 2% of the policy value or $60.
Annuity Fee
After the annuity date, an annual fee equal to the amount shown on the
Information Page will be deducted in equal amounts from distributions made under
the variable payment option. We reserve the right to waive this fee.
Statements of Account
At least once during each policy year, we will send the owner a statement of
account reflecting the policy value of the policy. Statements of account will
cease to be provided to the owner after the annuity date.
3-504 11-197 Page 14
<PAGE>
- -------------------------------------------------------------------------------
General Provisions
- -------------------------------------------------------------------------------
Entire Contract
This policy and any attached endorsements and riders are the entire contract.
Misstatement of Age and Sex
If the age or sex of the annuitant(s) and/or of any other measuring life has
been misstated, the settlement option payments payable under this policy will be
whatever the annuity amount would provide for the correct age or sex of the
annuitant(s) and/or of any other measuring life on the annuity date. Any
underpayment or overpayment by us, as a result of such misstatement, with
interest at 6% per annum, will credited to, or charged against, the current or
next succeeding payments.
Proof of Existence and Age
Before making any payment under this policy, we may require proof of the
existence and age of the owner, the annuitant and/or any other measuring life.
We may also require any other information as we may need in order to provide
benefits under the policy.
Changes
No provision of this policy may be changed or waived unless done in writing and
signed by two of our authorized officers. We will not make any change that
reduces the amounts payable under this policy unless the change is required by
law. We will provide the owner a copy of any changes we make to this policy.
Income Tax Qualification
This policy is intended to qualify as an annuity for federal income tax
purposes. All provisions in this policy will be interpreted to maintain such tax
qualification. We may make changes in order to maintain this qualification or to
conform this policy to any applicable changes made in the tax qualification
requirements. We will provide the owner with a copy of any changes we make to
this policy.
Incontestability
This policy is incontestable from the policy effective date.
Assignment of this Policy
To make ownership changes or assign rights to another person, the owner must
notify us at our service center. An assignment or ownership change is not
binding on us until we receive the necessary documentation and acknowledge the
request. We are not responsible for the validity or effect - tax or otherwise of
any assignment or ownership change. If an ownership change is made, the death
benefit under this policy may be reduced in accordance with our then current
underwriting rules. Such reduction will never decrease the death benefit below
the policy value.
Payments by/to the Company
All premiums paid to us or amounts paid by us from this policy will be made in
the legal currency of the United States of America.
Delay of Payment or Transfer
Except as provided below, we will pay amounts due from this policy within seven
days of the date our service center receives both the request for such amount
and all the necessary requirements in a form and manner acceptable to us.
We reserve the right to delay the payment of any benefits payable, amounts
withdrawn or transfers requested from the variable account due to: (a) the
closure of the New York Stock Exchange for reasons other than usual weekends,
holidays or if trading on such Exchange is restricted; (b) the existence of an
emergency as defined by the Securities and Exchange Commission of the United
States Government or restrictions of trading by the Commission; or (c) delays
permitted by the Securities and Exchange Commission for the protection of
security holders.
We further reserve the right to delay payment of any withdrawal from the fixed
account for up to six months after we receive the request for withdrawal. If we
delay payment for more than 30 days, we will pay interest as provided in this
policy on the withdrawal amount up to the date of payment.
Minimum Benefits
Any settlement option payments, cash surrender value or death benefits that may
be available under this policy will not be less than the minimum benefits
required by any statute of the jurisdiction in which this policy was issued.
3-504 11-197 Page 15
<PAGE>
Protection of Benefits/Proceeds
To the extent permitted by law, no payment of benefits or interest will be
subject to the claim(s) of any creditor of any owner, annuitant or beneficiary
or to any claim or process of law against any owner, annuitant or beneficiary.
Non-Participating
This policy is classified as a non-participating policy. It does not participate
in our profits or surplus, and therefore no dividends are payable.
APPENDIX
ANNUITY RATE TABLES
Applicability of Rates - The guaranteed annuity rates contained in Tables I, II
and III will be used to provide a minimum guaranteed monthly annuity under the
fixed annuity payment option. The annuity rates contained in Tables IV, V and VI
will be used to determine the first monthly annuity payment under the variable
annuity payment option.
The rates contained in this policy are for each $1,000 applied under the
applicable settlement option and do not include any applicable premium tax
charges. Any applicable premium tax charges will be withdrawn as described in
the premium tax charge provision of the policy.
Tables I and II under the fixed annuity payment option and Tables IV and V under
the variable annuity payment option, as applicable, will be used for all
settlement options, subject to any limitations imposed under: (a) a retirement
plan or program under which this policy is issued; or (b) applicable federal or
state law, rules or regulations which restrict the use of such rates. If any
federal or state law, rules or regulations prohibits the use of the rates
provided under these Tables, then the annuity rates provided under Tables III
and VI, as applicable, will be used.
Rates Not Shown - Any rates not shown in the Tables contained in this policy
will be provided by us upon request.
3-504 11-197 Page 16
<PAGE>
APPENDIX (continued)
TABLES OF GUARANTEED ANNUITY RATES UNDER
FIXED ANNUITY PAYMENT OPTION
TABLE I - MALE RATES
LIFE LIFE ANNUITY WITH PERIOD CERTAIN
Age ANNUITY 120 Months 180 Months 240 Months
===============================================================================
40 3.76 3.76 3.75 3.73
41 3.80 3.79 3.78 3.76
42 3.84 3.83 3.82 3.80
43 3.88 3.87 3.86 3.83
44 3.93 3.92 3.90 3.87
45 3.97 3.96 3.94 3.91
46 4.02 4.01 3.98 3.95
47 4.07 4.06 4.03 3.99
48 4.13 4.11 4.08 4.03
49 4.18 4.16 4.13 4.08
50 4.24 4.21 4.18 4.13
51 4.30 4.27 4.23 4.17
52 4.37 4.33 4.29 4.22
53 4.43 4.40 4.34 4.28
54 4.51 4.46 4.41 4.33
55 4.58 4.53 4.47 4.38
56 4.66 4.60 4.54 4.44
57 4.74 4.68 4.60 4.50
58 4.83 4.76 4.67 4.56
59 4.92 4.84 4.75 4.61
60 5.02 4.93 4.83 4.68
61 5.12 5.02 4.90 4.74
62 5.23 5.12 4.99 4.80
63 5.34 5.22 5.07 4.87
64 5.47 5.33 5.16 4.93
65 5.60 5.45 5.25 5.00
66 5.74 5.57 5.35 5.06
67 5.90 5.69 5.45 5.12
68 6.06 5.83 5.55 5.18
69 6.24 5.97 5.64 5.24
70 6.43 6.11 5.74 5.30
71 6.63 6.26 5.84 5.35
72 6.84 6.42 5.95 5.41
73 7.07 6.58 6.05 5.45
74 7.32 6.74 6.14 5.50
75 7.58 6.91 6.24 5.54
76 7.86 7.08 6.33 5.57
77 8.16 7.26 6.42 5.61
78 8.48 7.43 6.50 5.63
79 8.83 7.61 6.58 5.66
80 9.20 7.79 6.65 5.68
===============================================================================
Basis of Computation - The actuarial basis for the annuity rates contained in
this Table I, is the 1983a Annuity Mortality Table for males, without
projection, set back 5 years, with an interest rate of 3.5% per annum.
3-504 11-197 Page 17
<PAGE>
APPENDIX (continued)
TABLES OF GUARANTEED ANNUITY RATES UNDER
FIXED ANNUITY PAYMENT OPTION
TABLE II - FEMALE RATES
LIFE LIFE ANNUITY WITH PERIOD CERTAIN
Age ANNUITY 120 Months 180 Months 240 Months
===============================================================================
40 3.58 3.58 3.57 3.56
41 3.61 3.60 3.60 3.59
42 3.64 3.64 3.63 3.62
43 3.67 3.67 3.66 3.65
44 3.71 3.70 3.69 3.68
45 3.74 3.74 3.73 3.71
46 3.78 3.77 3.76 3.75
47 3.82 3.81 3.80 3.78
48 3.86 3.85 3.84 3.82
49 3.90 3.89 3.88 3.86
50 3.95 3.94 3.92 3.90
51 4.00 3.98 3.97 3.94
52 4.05 4.03 4.01 3.98
53 4.10 4.08 4.06 4.03
54 4.15 4.14 4.11 4.08
55 4.21 4.19 4.17 4.13
56 4.28 4.25 4.22 4.18
57 4.34 4.32 4.28 4.23
58 4.41 4.38 4.34 4.28
59 4.48 4.45 4.41 4.34
60 4.56 4.52 4.47 4.40
61 4.64 4.60 4.55 4.46
62 4.73 4.68 4.62 4.52
63 4.82 4.77 4.70 4.59
64 4.92 4.86 4.78 4.66
65 5.03 4.96 4.86 4.72
66 5.14 5.06 4.95 4.79
67 5.26 5.17 5.04 4.86
68 5.39 5.28 5.14 4.93
69 5.52 5.40 5.24 5.01
70 5.67 5.52 5.34 5.07
71 5.82 5.66 5.44 5.14
72 5.99 5.80 5.55 5.21
73 6.17 5.95 5.66 5.27
74 6.36 6.10 5.77 5.34
75 6.57 6.27 5.88 5.40
76 6.80 6.44 6.00 5.45
77 7.04 6.61 6.11 5.50
78 7.31 6.80 6.21 5.54
79 7.60 6.99 6.32 5.58
80 7.91 7.18 6.42 5.62
===============================================================================
Basis of Computation - The actuarial basis for the annuity rates contained in
this Table II, is the 1983a Annuity Mortality Table for females, without
projection, set back 5 years, with an interest rate of 3.5% per annum.
3-504 11-197 Page 18
<PAGE>
APPENDIX (continued)
TABLES OF GUARANTEED ANNUITY RATES UNDER
FIXED ANNUITY PAYMENT OPTION
TABLE III - UNISEX RATES
LIFE LIFE ANNUITY WITH PERIOD CERTAIN
Age ANNUITY 120 Months 180 Months 240 Months
===============================================================================
40 3.69 3.69 3.68 3.66
41 3.73 3.72 3.71 3.70
42 3.76 3.76 3.75 3.73
43 3.80 3.79 3.78 3.76
44 3.84 3.83 3.82 3.80
45 3.88 3.87 3.86 3.83
46 3.93 3.92 3.90 3.87
47 3.97 3.96 3.94 3.91
48 4.02 4.01 3.98 3.95
49 4.07 4.06 4.03 4.00
50 4.13 4.11 4.08 4.04
51 4.18 4.16 4.13 4.08
52 4.24 4.22 4.18 4.13
53 4.30 4.27 4.24 4.18
54 4.37 4.33 4.29 4.23
55 4.44 4.40 4.35 4.28
56 4.51 4.47 4.42 4.34
57 4.59 4.54 4.48 4.40
58 4.66 4.61 4.55 4.45
59 4.75 4.69 4.62 4.51
60 4.84 4.77 4.69 4.57
61 4.93 4.86 4.77 4.64
62 5.03 4.95 4.85 4.70
63 5.14 5.05 4.93 4.76
64 5.25 5.15 5.02 4.83
65 5.37 5.26 5.11 4.89
66 5.50 5.37 5.20 4.96
67 5.64 5.49 5.29 5.03
68 5.79 5.61 5.39 5.09
69 5.95 5.75 5.49 5.15
70 6.12 5.88 5.59 5.22
71 6.31 6.03 5.69 5.28
72 6.50 6.18 5.80 5.34
73 6.71 6.33 5.90 5.39
74 6.93 6.49 6.01 5.44
75 7.17 6.66 6.11 5.49
76 7.43 6.84 6.21 5.53
77 7.71 7.01 6.31 5.57
78 8.01 7.19 6.40 5.61
79 8.33 7.37 6.49 5.63
80 8.67 7.56 6.57 5.66
===============================================================================
Basis of Computation - The actuarial basis for the annuity rates contained in
this Table III, is the 1983a Annuity Mortality Table, without projection,
blended 60% males and 40% females, set back 5 years, with an interest rate of
3.5% per annum.
3-504 11-197 Page 19
<PAGE>
APPENDIX (continued)
TABLES OF ANNUITY RATES UNDER
VARIABLE ANNUITY PAYMENT OPTION
TABLE IV - MALE RATES
LIFE LIFE ANNUITY WITH PERIOD CERTAIN
Age ANNUITY 120 Months 180 Months 240 Months
===============================================================================
40 4.08 4.07 4.06 4.04
41 4.12 4.11 4.09 4.07
42 4.16 4.15 4.13 4.11
43 4.20 4.18 4.17 4.14
44 4.24 4.23 4.21 4.18
45 4.29 4.27 4.25 4.21
46 4.33 4.32 4.29 4.25
47 4.38 4.36 4.33 4.29
48 4.44 4.41 4.38 4.33
49 4.49 4.46 4.43 4.38
50 4.55 4.52 4.48 4.42
51 4.61 4.57 4.53 4.47
52 4.67 4.63 4.59 4.52
53 4.74 4.69 4.64 4.57
54 4.81 4.76 4.70 4.62
55 4.88 4.83 4.76 4.67
56 4.96 4.90 4.83 4.73
57 5.04 4.97 4.89 4.78
58 5.13 5.05 4.96 4.84
59 5.22 5.13 5.04 4.90
60 5.31 5.22 5.11 4.96
61 5.42 5.31 5.19 5.02
62 5.52 5.41 5.27 5.08
63 5.64 5.51 5.36 5.14
64 5.76 5.62 5.44 5.20
65 5.90 5.73 5.53 5.27
66 6.04 5.85 5.62 5.33
67 6.19 5.98 5.72 5.39
68 6.36 6.11 5.82 5.45
69 6.53 6.25 5.91 5.51
70 6.72 6.39 6.01 5.56
71 6.92 6.54 6.11 5.61
72 7.14 6.69 6.21 5.67
73 7.37 6.85 6.31 5.71
74 7.62 7.01 6.40 5.75
75 7.88 7.18 6.49 5.79
76 8.16 7.35 6.58 5.83
77 8.46 7.52 6.67 5.86
78 8.79 7.70 6.75 5.89
79 9.13 7.87 6.83 5.91
80 9.51 8.05 6.90 5.93
===============================================================================
Basis of Computation - The actuarial basis for the annuity rates contained in
this Table IV, is the 1983a Annuity Mortality Table for males, without
projection, set back 5 years, with an assumed interest rate of 4% per annum.
3-504 11-197 Page 20
<PAGE>
APPENDIX (continued)
TABLES OF ANNUITY RATES UNDER
VARIABLE ANNUITY PAYMENT OPTION
TABLE V - FEMALE RATES
LIFE LIFE ANNUITY WITH PERIOD CERTAIN
Age ANNUITY 120 Months 180 Months 240 Months
===============================================================================
40 3.90 3.90 3.89 3.88
41 3.93 3.92 3.92 3.91
42 3.96 3.95 3.95 3.94
43 3.99 3.98 3.97 3.96
44 4.02 4.01 4.01 3.99
45 4.06 4.05 4.04 4.02
46 4.09 4.08 4.07 4.06
47 4.13 4.12 4.11 4.09
48 4.17 4.16 4.15 4.13
49 4.21 4.20 4.19 4.16
50 4.26 4.24 4.23 4.20
51 4.30 4.29 4.27 4.24
52 4.35 4.34 4.32 4.28
53 4.40 4.39 4.36 4.33
54 4.46 4.44 4.41 4.37
55 4.52 4.49 4.46 4.42
56 4.58 4.55 4.52 4.47
57 4.64 4.61 4.58 4.52
58 4.71 4.68 4.64 4.57
59 4.78 4.75 4.70 4.63
60 4.86 4.82 4.77 4.69
61 4.94 4.89 4.84 4.75
62 5.03 4.98 4.91 4.81
63 5.12 5.06 4.98 4.87
64 5.22 5.15 5.06 4.94
65 5.32 5.24 5.14 5.00
66 5.43 5.34 5.23 5.07
67 5.55 5.45 5.32 5.14
68 5.68 5.56 5.41 5.21
69 5.81 5.68 5.51 5.27
70 5.96 5.80 5.61 5.34
71 6.11 5.93 5.71 5.41
72 6.28 6.08 5.82 5.48
73 6.46 6.22 5.93 5.54
74 6.65 6.37 6.04 5.60
75 6.86 6.54 6.15 5.66
76 7.09 6.71 6.25 5.71
77 7.33 6.88 6.37 5.76
78 7.60 7.07 6.47 5.80
79 7.89 7.25 6.57 5.84
80 8.20 7.45 6.67 5.88
===============================================================================
Basis of Computation - The actuarial basis for the annuity rates contained in
this Table V, is the 1983a Annuity Mortality Table for females, without
projection, set back 5 years, with an assumed interest rate of 4% per annum.
3-504 11-197 Page 21
<PAGE>
APPENDIX (continued)
TABLES OF ANNUITY RATES UNDER
VARIABLE ANNUITY PAYMENT OPTION
TABLE VI - UNISEX RATES
LIFE LIFE ANNUITY WITH PERIOD CERTAIN
Age ANNUITY 120 Months 180 Months 240 Months
===============================================================================
40 4.01 4.00 4.00 3.98
41 4.05 4.04 4.03 4.01
42 4.08 4.07 4.06 4.04
43 4.12 4.11 4.09 4.07
44 4.16 4.14 4.13 4.11
45 4.20 4.18 4.17 4.14
46 4.24 4.22 4.21 4.18
47 4.28 4.27 4.25 4.22
48 4.33 4.31 4.29 4.26
49 4.38 4.36 4.33 4.30
50 4.43 4.41 4.38 4.34
51 4.49 4.46 4.43 4.38
52 4.55 4.52 4.48 4.43
53 4.61 4.57 4.54 4.48
54 4.67 4.64 4.59 4.53
55 4.74 4.70 4.65 4.58
56 4.81 4.76 4.71 4.63
57 4.89 4.83 4.77 4.68
58 4.96 4.91 4.84 4.74
59 5.05 4.99 4.91 4.80
60 5.14 5.07 4.98 4.86
61 5.23 5.15 5.05 4.92
62 5.33 5.24 5.13 4.98
63 5.43 5.34 5.21 5.04
64 5.55 5.44 5.30 5.10
65 5.67 5.54 5.39 5.17
66 5.80 5.66 5.48 5.23
67 5.94 5.77 5.57 5.30
68 6.09 5.90 5.67 5.36
69 6.25 6.03 5.76 5.42
70 6.42 6.16 5.86 5.48
71 6.60 6.31 5.96 5.54
72 6.79 6.46 6.06 5.60
73 7.00 6.61 6.17 5.65
74 7.23 6.77 6.27 5.70
75 7.47 6.93 6.37 5.75
76 7.73 7.10 6.46 5.79
77 8.01 7.28 6.56 5.82
78 8.31 7.46 6.65 5.86
79 8.63 7.64 6.73 5.89
80 8.98 7.82 6.82 5.91
===============================================================================
Basis of Computation - The actuarial basis for the annuity rates contained in
this Table VI, is the 1983a Annuity Mortality Table, without projection, blended
60% males and 40% females, set back 5 years, with an assumed interest rate of 4%
per annum.
3-504 11-197 Page 22
<PAGE>
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Variable and fixed dollar settlement options
Separate Account Investments
Non-participating - No annual dividends
[LOGO] TRANSAMERICA LIFE INSURANCE
COMPANY OF NEW YORK Home Office:
100 Manhattanville Road
Purchase, NY 10577-2135
A Stock Company 3-504 11-197
- -------------------------------------------------------------------------------
<PAGE>
Exhibit (4) Form of Flexible Premium Deferred Variable Annuity Contract.
(a) Rider re Election of Automatic Asset Rebalancing or
Dollar Cost Averaging
<PAGE>
Rider
About this rider
Transamerica Life Insurance Company of New York has issued this rider as a part
of the policy to which it is attached.
This rider adds an Automatic Asset Rebalancing Option and a Dollar Cost
Averaging Option to the policy.
Before the annuity date, the owner may elect either option however both options
are not available at the same time. These options may be changed or terminated
at any time by contacting our Service Center. These options apply only if
elected by the owner as described below. The owner's election of either of these
options will have no affect on benefits provided by the policy, other than as
specifically provided.
The terms defined in the policy and in any other rider attached to the policy
will have the same meaning when used in this rider.
- -----------------------------------------------------------------------------
Election of Automatic Asset Rebalancing
If the owner elects the Automatic Asset Rebalancing Option, we will periodically
and automatically rebalance the allocations of the variable sub-accounts of the
policy.
The owner's request for this option must specify the amounts in whole
percentages and the variable sub-accounts to which funds will be allocated. The
owner must also specify the beginning date and the frequency that funds in the
variable sub-accounts should be rebalanced.
Election of Dollar Cost Averaging
If the owner elects the Dollar Cost Averaging Option, we will automatically
transfer amounts from one selected variable sub-account or the fixed account
(from among those being allowed by us at such time) to one or more variable
sub-accounts on a monthly basis. For the purposes of this rider, the selected
variable sub-account or the fixed account will be referred to as the source
account. Dollar cost averaging transfers may not be made from a source account
from which systematic withdrawals or automatic payouts are also being made.
Transfers under this option may not begin earlier than: (a) 30 days after the
policy date shown on the policy Information Page; or (b) the end of the
free-look period, whichever is later.
At the time of the owner's election and the first automatic transfer, the value
of the source account from which the transfers are to be made must be at least
$5,000.
The minimum monthly amount that can be transferred from the selected source
account is $250, subject to a maximum monthly amount equal to one-twelfth of the
value of that source account. The minimum monthly amount that can be transferred
into any other sub-account is the greater of $250, or 10% of the total monthly
amount being transferred from the selected source account.
Automatic monthly transfers will continue for the duration selected by the owner
unless:
The option is terminated by the owner.
The option is automatically terminated because there are insufficient funds
in the source account.
Transfers made as a result the Dollar Cost Averaging Option will not be counted
towards the number of free transfers allowed per policy year, as described under
the transfer provisions of the policy.
3-007 22-197 Page 1
<PAGE>
Signed for the Company at Purchase, New York to be effective on the policy
effective date.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
/s/ James W. Dederer
CHAIRMAN
/s/ Alan T. Cunningham
PRESIDENT
3-007 22-197 Page 2
<PAGE>
Exhibit (4) Form of Flexible Premium Deferred Variable Annuity Contract.
(b) Individual Retirement Annuity Endorsement
<PAGE>
Individual Retirement Annuity
Endorsement
About this endorsement
Transamerica Life Insurance Company of New York has issued this endorsement as a
part of the policy to which it is attached.
An Individual Retirement Annuity (IRA) is a retirement plan described in Code
Section 408(b). It must comply with federal IRA requirements. As an IRA, this
policy is intended to qualify under Code Section 408(b) and all provisions of
this policy will be interpreted to ensure and maintain such qualification,
despite any other provisions to the contrary. This policy is for the exclusive
benefit of the owner and the beneficiary. The owner's rights and entire interest
in this policy are nonforfeitable.
Some of the provisions in this endorsement will be different than as described
in the attached policy. The specific differences in your IRA annuity are
described below.
- -----------------------------------------------------------------------------
Ownership Provisions
As an IRA, the following conditions apply:
The owner and annuitant must be the same person.
Joint ownership is not allowed.
The owner cannot pledge or assign any interest in this policy to another
person.
The owner cannot transfer ownership, except in the event of divorce or
separation, as allowed by federal IRA requirements.
The owner cannot borrow any amounts from this policy, nor use this policy
as security for a loan.
Contributions
Premiums must be paid to us in cash. Except in the case of an allowable rollover
or transfer contribution, or a contribution made according to the terms of a
Simplified Employee Pension (SEP) plan, the total premium for any taxable year
cannot be more than $2,000. We reserve the right to return any portion of a
premium that represents an excess contribution.
No contribution will be accepted under a SIMPLE plan established by any employer
pursuant to Code Section 408(p). No transfer or rollover of funds attributable
to contributions made by a particular employer under its SIMPLE plan will be
accepted from a SIMPLE IRA, (an IRA used in conjunction with a SIMPLE plan)
prior to the expiration of the two (2) year period beginning on the date the
owner first participated in the employer's SIMPLE plan.
Required Minimum Distributions
Federal law requires that the owner begin receiving payments from any or all IRA
policies no later than the April 1 following the year the owner turns age 70 1/2
(the required beginning date). If settlement option payments start prior to the
April 1 following the year the owner turns age 70 1/2, then the annuity date of
such settlement option payments will be treated as the required beginning date
for the purposes of the death benefit provisions below. The owner may take
required minimum distributions from any IRA policy he or she currently
maintains, as long as:
Distributions begin when required;
Periodic payments must be made at least once per year; and
The amount to be distributed each year is not less than the minimum
required under current federal law.
The required minimum distribution payments from this policy are considered
partial withdrawals. The amount of each withdrawal during any calendar year must
meet federal IRA requirements and be in equal or substantially equal amounts
over:
3-007 23-197 Page 1
<PAGE>
The life of the owner or over the joint lives of the owner and the
beneficiary; or
A period not extending beyond the life expectancy of the owner or the joint
life expectancy of the owner and the beneficiary.
Required minimum distribution payments will be made annually and the amount will
not increase or will increase only as allowed under federal tax law.
Life Expectancy
Life expectancy is:
The remaining life of the owner;
The remaining joint life expectancy of both the owner and the beneficiary;
or
The remaining life expectancy of the beneficiary.
The life expectancy of the owner or the joint life expectancy of the owner and
the beneficiary are calculated by use of the return multiples in Tables V and VI
of Income Tax Regulation Section 1.72-9.
Before required minimum distributions begin, the owner may choose to have his or
her life expectancy determined under the age recalculation or no age
recalculation method as determined under federal law. If the owner does not make
an election before the required beginning date, the life expectancy of the owner
will be recalculated annually. After an election is made, it may not be changed
and will apply to all subsequent years in which required minimum distributions
are made.
If the owner dies before the required beginning date and the beneficiary is the
owner's surviving spouse, then such beneficiary may also choose to have his or
her life expectancy determined under the age recalculation or no age
recalculation method. Once the owner's surviving spouse makes an election, such
election may not be changed and will apply to all subsequent years. If the
owner's surviving spouse does not make an election by the time distributions are
scheduled to begin under the Death Provisions, the surviving spouse's life
expectancy will be recalculated annually for all years and may not be changed.
In all cases, if the beneficiary is not the owner's surviving spouse, his or her
life expectancy may not be recalculated and will be determined using his or her
attained age on the date settlement option payments or any other distribution is
scheduled to begin. Payments for subsequent years will be based on such life
expectancy reduced by one year for each calendar year which has elapsed since
the calendar year in which the life expectancy of the non-spouse beneficiary was
first calculated.
Automatic Payout Option (APO)
Before the annuity date, the owner may elect to have us calculate and annually
distribute required minimum distribution amounts from this policy if the
following requirements are met:
The owner is or will be age 70 1/2 in the year the first APO payment is to
be made;
This policy is at least one policy year old;
The owner is not receiving distributions under any other periodic payment
option;
The owner elects one of the methods of calculating minimum required
distributions that we offer.
While receiving APO payments, the owner may not make any additional premiums to
this policy. Rollovers and transfers may be accepted, but only with our
approval.
Distributions under this option must begin no earlier than January of the year
in which the owner reaches age 70 1/2. The election of APO must be in a form and
manner prescribed by us. We must receive such election at least 30 days before
payments are to begin.
We will automatically postpone the annuity date one year for each year the owner
receives APO payments up to the later of:
The owner's 85th birthday; or
The first day of the eleventh policy year.
If the owner does not want us to delay the annuity date, he or she should
contact our service center.
3-007 23-197 Page 2
<PAGE>
We will automatically cancel this option if:
The owner makes more than one change in beneficiaries, unless the changes
are made due to death, divorce or marriage;
The owner begins receiving settlement option payments;
A withdrawal (whether partial or an APO payment) reduces the policy value
to less than the minimum policy value required as shown on the Information
Page.
If this happens, we reserve the right to pay the owner the total
withdrawal value and cancel the policy;
The owner makes more than one partial withdrawal in the same policy year he
or she receives APO payments; or
The owner dies.
After this option is canceled for any reason, it may not be reelected.
We reserve the right to impose an annual processing fee for the automatic payout
option. The amount of the automatic payout fee at issue is shown on the
Information Page.
Death Provisions
If the owner dies before the required beginning date, the entire death benefit
must:
Be completely distributed no later than December 31 of the fifth year
following the year the owner died; or
Begin to be distributed under one of the options available to the
beneficiary, as described below.
The following options are available to the beneficiary as soon as we receive
proof of the owner's death.
The beneficiary may elect to receive the death benefit in the form of
settlement option payments from us. The option selected must pay out equal
or substantially equal amounts over the beneficiary's life or over a period
not extending beyond the beneficiary's life expectancy. Once settlement
option payments begin, no changes may be made to the selected option.
If the beneficiary is the owner's surviving spouse, he or she will become
the new owner/annuitant and can continue this IRA on the same basis as
before the owner's death.
If the owner's surviving spouse does not wish to continue this policy
as his or her own IRA, he or she may elect to receive the death
benefit in the form of settlement option payments. Such payments must
be in equal or substantially equal amounts over the spouse's life or a
period not extending beyond his or her life expectancy.
The surviving spouse must elect this option and begin receiving
payments no later than the earliest of the following dates:
December 31 of the year following the year the owner died; or
December 31 of the year in which the owner would have reached the
required beginning date if he or she had not died.
If the owner dies after the required beginning date, we will continue to
distribute the remaining death benefit at least as rapidly as under the
settlement option in effect at the date of the owner's death.
Signed for the Company at Purchase, New York to be effective on the policy
effective date.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
/s/ James W. Dederer
CHAIRMAN
/s/ Alan T. Cunningham
PRESIDENT
3-007 23-197 Page 3
<PAGE>
Exhibit (4) Form of Flexible Premium Deferred Variable Annuity Contract.
(c) Tax Sheltered annuity Endorsement
<PAGE>
Tax Sheltered Annuity
Endorsement
(Code Section 403(b))
- ------------------------------------------------------------------------------
SPECIAL NOTICE - Please read this endorsement carefully. It contains important
information which can affect the tax status of the owner's Tax Sheltered
Annuity. If the owner does not comply with the provisions of this endorsement,
the owner may be subject to adverse tax consequences. As with all tax matters,
the owner should consult a tax adviser to assess the impact of the owner's
failure to comply with these provisions.
- ------------------------------------------------------------------------------
About this endorsement
Transamerica Life Insurance Company of New York (we) has issued this endorsement
as part of the attached policy. This endorsement supersedes any contrary
provision of the policy.
This policy is issued to the owner as part of a TSA. This means that part or all
of the premiums for this policy are paid either with "pre-tax" contributions
that the owner made through elective salary deferral contributions under a
salary reduction agreement between the owner and the owner's employer or with
employer contributions. Income taxation on the premiums paid for this policy is
deferred, thus providing the owner with a current tax benefit. However, as a
condition of this special tax treatment, the Code imposes several limitations,
including restrictions on when the owner may make withdrawals of the policy
value under Code Section 403(b)(11) and minimum distribution requirements for
the owner and/or the beneficiary under Code Sections 401(a)(9) and 403(b)(10),
including the incidental death requirements of Code Section 401(a)(9)(G). The
owner must comply with the provisions of this endorsement in order to maintain
the deferred tax benefits of this policy. If the owner does not comply with the
provisions of this endorsement, the owner will lose the special tax treatment
and may incur additional tax penalties.
This policy is for the exclusive benefit of the owner and the beneficiary. The
owner's rights and entire interest in this policy are nonforfeitable.
- -----------------------------------------------------------------------------
Definition of Terms
Unless redefined below, the terms used in the policy will have the same meaning
when used in this endorsement. For purposes of this endorsement, the following
definitions apply:
Beneficiary is any individual the owner named in writing in the
application, enrollment form or any subsequent change of beneficiary form.
The beneficiary will receive the proceeds of the policy in the event the
owner dies before permissible distribution of those proceeds is made to the
owner.
Direct Rollover is a distribution made directly to an eligible retirement
plan of all or a portion of the policy value.
Eligible Retirement Plan is (1) an annuity policy as described in Code
Section 403(b); or (2) an individual retirement account as described in
Code Section 408(a); or (3) an individual retirement annuity as described
in Code Section 408(b).
Eligible Rollover Distribution is any distribution to the owner or to the
owner's surviving spouse (or if the owner is divorced, to the owner's
former spouse as an alternate payee under a QDRO) of all or any portion of
the policy value. An eligible rollover distribution does not include any
distribution: (1) that is a minimum required distribution under Code
Section 401(a)(9); or (2) that is not included in the owner's gross income;
or (3) that is one of a series of substantially equal periodic payments
over the owner's life (or life expectancy) or the joint lives(or joint life
expectancies) of the owner and the beneficiary or for a period of 10 years
or more.
3-007 24-197 Page 1
<PAGE>
Pension Plan is an employee pension benefit plan as defined under Section
3(2)(A) of the Employee Retirement Income Security Act of 1974, as amended
(ERISA).
Owner is the individual in whose name and for whose exclusive benefit the
policy was purchased, whether the policy describes such individual as owner
or annuitant. While such individual is living, he or she will be the sole
owner of the policy.
Qualified Domestic Relations Order (QDRO) is a domestic relations order
described in Code Section 414(p) that creates or recognizes the existence
of an alternate payee's right to, or assigns to an alternate payee the
right to, receive all or a portion of the benefits payable to the owner
under this policy. A domestic relations order is a judgment, decree, or
order (including approval of a property settlement agreement) made pursuant
to a state domestic relations law (including a community property law) that
relates to the provision of child support, alimony payments, or marital
property rights of an alternate payee.
Required Beginning Date is April 1 of the calendar year following the later
of (1) the calendar year in which the owner attains age 70 1/2, or (2) the
calendar year in which the owner retires. However, the required beginning
date means April 1 of the calendar year following the calendar year in
which the owner attains age 70 1/2 for an owner who:
(a) is a 5% owner (as defined in Code Section 416) of an organization
described in Code Section 403(b)(1)(A) with respect to the plan year
ending in the calendar year in which the owner attains age 70 1/2; and
(b) did not attain age 70 1/2 before January 1, 1988; and (c) is not
in a governmental plan or a church plan (as defined in Code Section
401(a)(9)(C)).
Tax Sheltered Annuity (TSA) is an annuity policy intended to meet the
requirements of Code Section 403(b).
Ownership
As a TSA, the following conditions apply:
The owner and annuitant must be the same person.
Joint ownership is not allowed.
The owner cannot pledge or assign any interest in this policy to another
person, except as permitted by law, such as in the case of a QDRO.
The owner cannot borrow any amounts from this policy, nor use this policy
as security for a loan.
Nontransferability
Except as permitted by law, no person has the right to anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge any benefit under the policy.
When permitted by law, an assignment of benefits to which the owner is entitled
under the policy will not be binding on the Company unless made in writing and
given to us at our Service Center. We are not responsible for the adequacy of
any assignment. However, when a written assignment is filed with us and recorded
by us at our Service Center, the owner's rights and those of any revocable
beneficiary will be subject to the assignment.
Premium Limitations
No premiums will be accepted unless they represent amounts rolled over or
transferred from another Code Section 403(b)(1) TSA policy, Code Section
403(b)(7) custodial account in conformance with Code Section 403(b)(8) or any
other rule or regulation issued under the Code, or a transfer pursuant to
Revenue Ruling 90-24, 1990-1 C.B. 97.
Restrictions on Withdrawals
Withdrawals of any part of the policy value may not be made under the policy
except as provided in this provision. The owner may not make a withdrawal of any
part of the policy value made pursuant to a salary reduction agreement after
December 31, 1988, and the earnings on such contributions and amounts held on
December 31, 1988, unless the owner (1) is at least age 59 1/2; (2) becomes
disabled within the meaning of Code Section 72(m)(7); (3) separates from
employment with the owner's employer; or (4) incurs financial hardship within
the meaning of Code Section 403(b)(11) (any withdrawal to meet a financial
hardship may not include any earnings attributable to the owner's elective
deferrals).
The owner may not make a withdrawal from a custodial account qualifying under
Code Section
3-007 24-197 Page 2
<PAGE>
403(b)(7) (or amounts attributable to such an account) and earnings on such
amounts unless the owner (1) dies; (2) is at least age 59 1/2; (3) becomes
disabled within the meaning of Code Section 72(m)(7); (4) separates from
employment with the owner's employer; or (5) incurs a financial hardship within
the meaning of Code Section 403(b)(11) (any withdrawal to meet a financial
hardship may not include any earnings attributable to the owner's elective
deferrals).
However, these restrictions do not apply if (a) the withdrawal is for payment to
an alternate payee under a QDRO; or (b) the withdrawal is made for the purpose
of making a direct transfer to another Code Section 403(b) TSA as provided in
Revenue Ruling 90-24, 1990-1 C.B. 97.
Code Section 72(m)(7) currently defines disability as the inability to engage in
any substantial gainful activity by reason of any medically determined physical
or mental impairment which can be expected to be of long-continued and
indefinite duration, or which will result in the owner's death.
Under Code Section 403(b)(11), a financial hardship currently means an immediate
and heavy financial need for which funds are not available from any other
resources. Any withdrawal based upon financial hardship cannot exceed the amount
required to meet the immediate financial need and cannot include earnings.
The owner's employer or the employer's TSA plan administrator, if any, will
determine whether a domestic relations order is a QDRO, and will tell us whether
or not to comply with the order. However, if the owner's employer or the TSA
administrator asks us to make this determination, we will do so. We will provide
the owner's employer, the TSA administrator and/or the owner with information
about the value and form of the benefits available under such an order.
Any withdrawals of the policy value will be subject to the qualified
pre-retirement survivor annuity and qualified joint and survivor annuity
requirements of ERISA Section 205, as set forth in the Waiver and Spousal
Requirements provision.
Required Minimum Distribution
Federal law requires that the owner begin receiving distributions from this TSA
or from another
TSA arrangement by the required beginning date. If settlement option payments
start prior to the required beginning date, then the annuity date of such
settlement option payments will be treated as the required beginning date for
purposes of the death benefit provisions below. The owner may take required
minimum distributions from any TSA the owner currently maintains, as long as:
Distributions begin when required;
Periodic payments are made at least once per year; and
The amount to be distributed each year is not less than the minimum
required under current federal law.
The required minimum distribution payments from this policy are considered
partial withdrawals. The amount of each withdrawal during any calendar year must
meet federal TSA requirements and be in equal or substantially equal amounts
over:
The owner's life or over the joint lives of the owner and the beneficiary;
or
A period not extending beyond the owner's life expectancy or the joint life
expectancies of the owner and the beneficiary.
Required minimum distribution payments will be made annually and the amount will
not increase or will increase only as allowed under federal tax law. Contingent
deferred sales load may be charged on any required minimum distribution payments
made under the policy. We reserve the right to waive any applicable contingent
deferred sales load.
Life Expectancy
Life expectancy is:
The owner's remaining life;
The remaining joint life expectancy of both the owner and the beneficiary;
or
The remaining life expectancy of the beneficiary.
The owner's life expectancy or the joint life expectancy of both the owner and
the beneficiary are calculated by use of the return multiples in Tables V and VI
of Income Tax Regulation Section 1.72-9.
Before required minimum distributions begin,
3-007 24-197 Page 3
<PAGE>
the owner may choose to have the owner's life expectancy determined under the
(1) age recalculation, or (2) no age recalculation method as determined under
federal law. If the owner does not make an election before the required
beginning date, the owner's life expectancy will be recalculated annually. After
the owner's election is made, it may not be changed and will apply to all
subsequent years in which required minimum distributions are made.
If the owner dies before the required beginning date and the beneficiary is the
owner's surviving spouse, then he or she may also choose to have his or her life
expectancy determined under the (1) age recalculation, or (2) no age
recalculation method. Once the beneficiary makes an election, such election may
not be changed and will apply to all subsequent years. If the beneficiary does
not make an election by the time distributions are scheduled to begin under the
Death Provisions, the beneficiary's life expectancy will be recalculated
annually for all years and may not be changed.
In all cases, if the beneficiary is not the owner's surviving spouse, his or her
life expectancy may not be recalculated and will be determined using his or her
attained age on the date settlement option payments or any other distribution is
scheduled to begin. Payments for subsequent years will be based on the
beneficiary's life expectancy reduced by one year for each calendar year which
has elapsed since the calendar year in which the life expectancy of the
beneficiary was first calculated.
Automatic Payout Option (APO)
Before the annuity date, and subject to our then current underwriting
guidelines, the owner may elect to have us calculate and annually distribute
required minimum distribution amounts from this policy if the owner meets the
following requirements:
The owner is or will be age 70 1/2 and is retired in the year the first APO
payment is to be made;
This policy has been in force at least one year;
The owner is not receiving distributions under any other periodic payment
option;
The owner elects one of the methods of calculating minimum required
distributions that we offer.
The owner's distributions under this option must begin no earlier than January 1
of the year in which the owner reaches age 70 1/2 and the owner must be retired.
The owner's election of APO must be in a form and manner we prescribe. We must
receive the owner's election at least 30 days before the payments are to begin.
We will automatically postpone the owner's annuity date one year for each year
the owner receives APO payments up to the later of:
The owner's 85th birthday; or
The first day of the eleventh policy year.
If the owner decides he or she does not want us to delay the annuity date,
please contact us.
We will automatically cancel this option if:
The owner makes more than one change in beneficiaries, unless the changes
are made due to death, divorce or marriage;
The owner begins receiving settlement option payments;
A withdrawal (whether partial or an APO payment) reduces the policy value
to less than the minimum value shown on the Information Page.
If this happens, we reserve the right to pay the owner the cash
surrender value and cancel the policy; or
The owner dies.
After this option is canceled for any reason, the owner may not reelect it.
Contingent deferred sales load may be charged on APO payments made under the
policy. We reserve the right to waive any applicable contingent deferred sales
load.
Death Provisions
If the owner dies before the required beginning date, the entire death benefit
must:
Be completely distributed no later than December 31 of the fifth year
following the year the owner died; or
Begin to be distributed to the beneficiary in the form of settlement option
payments, as described below.
The settlement option must pay out equal or
3-007 24-197 Page 4
<PAGE>
substantially equal amounts over the beneficiary's life or over a period not
extending beyond the beneficiary's life expectancy. Once settlement option
payments begin, no changes may be made to the option.
If the beneficiary is the owner's surviving spouse, he or she must elect to
begin receiving settlement option payments no later than the earliest of (1)
December 31 of the year following the year following the year the owner died; or
(2) December 31 of the year following the year in which the owner would have
reached the required beginning date if the owner had not died.
If the beneficiary is not the owner's surviving spouse, he or she must elect to
begin receiving settlement option payments no later than December 31 of the year
following the year in which the owner died.
If the owner dies after the required beginning date, we will continue to
distribute the remaining death benefit at least as rapidly as under the
settlement option in effect at the date of the owner's death.
If the policy is subject to the requirements of ERISA, the following provisions
shall apply:
Limitation of Payment
If the policy value at the time of annuitization is $3,500 or less, we will pay
the policy value in a cash payment, regardless of the settlement option the
owner or any other payee chooses. Such cash payment will be in full settlement
of our liability to the payee for the benefit. In addition, such cash payment
will not require spousal consent as described below.
Waiver and Spousal Requirements
If the owner is legally married, we will require the owner's written waiver of
the qualified pre-retirement survivor annuity and/or qualified joint and
survivor annuity and his or her spouse's written consent before the owner can:
(a) name a beneficiary other than the owner's spouse; or (b) make a partial or
full withdrawal from the policy; or (c) choose a form of payment other than a
life and contingent annuity where the spouse is not named as the contingent
annuitant.
The spouse's written consent must (i) be on a form we approve; (ii) acknowledge
his/her understanding of the effect of such consent; and (iii) be witnessed by a
notary public. However, the owner's written waiver and the spouse's written
consent will not be required if the withdrawal is made for the purpose of making
a direct transfer to another Code Section 403(b) TSA as provided in Revenue
Ruling 90-24, 1990-1 C.B. 97.
We will not accept any request under (a), (b) or (c), above, without the owner's
written waiver and the spouse's written consent. However, if the owner can prove
that the spouse's written consent cannot be obtained because: (1) the spouse has
died; or (2) the spouse cannot be located; or (3) the spouse is held to be
incompetent and the owner has a court order to that effect; or (4) the owner has
been abandoned by the spouse (within the meaning of local law) and the owner has
a court order to that effect, then, unless required by a QDRO, the owner's
request under (a), (b) or (c), above, will be accepted without the owner's
written waiver and the spouse's written consent.
Payments to Minors
If the owner has died, any amount paid to a child of the owner will be treated
as if it had been paid to the owner's surviving spouse if the remainder of the
value of the policy becomes payable to the surviving spouse when the child
reaches the age of majority.
This endorsement shall terminate when the policy is surrendered or the policy
value is otherwise distributed.
Signed for the Company at Purchase, New York to be effective on the policy
effective date.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
/s/ James W. Dederer
CHAIRMAN
/s/ Alan T. Cunningham
PRESIDENT
3-007 24-197 Page 5
<PAGE>
Exhibit (4) Form of Flexible Premium Deferred Variable Annuity Contract.
(d) Pension and Profit Sharing Plan Endorsement
<PAGE>
Pension and Profit Sharing Plan
Endorsement
- ------------------------------------------------------------------------------
SPECIAL NOTICE - Please read this endorsement carefully. It contains
important information which can affect the tax status of the pension plan. If
the owner does not comply with the provisions of this endorsement, the owner may
be subject to adverse tax consequences. As with all tax matters, the owner
should consult a tax adviser to assess the impact of the owner's failure to
comply with these provisions.
- ------------------------------------------------------------------------------
About this endorsement
This policy is issued as part of a pension plan. This means that part or
all of the premiums for this policy are paid either with "pre-tax" contributions
made through elective salary deferral contributions under an employee salary
reduction agreement or with employer contributions. Income taxation on the
premiums paid for this policy is deferred, thus providing the owner with a
current tax benefit. However, as a condition of this special tax treatment, the
Code imposes several limitations, including minimum distribution requirements
for the owner and/or the beneficiary under Code Section 401(a)(9), including the
incidental death requirements of Code Section 401(a)(9)(G). The owner must
comply with the provisions of this endorsement in order to maintain the deferred
tax benefits of this policy. If the owner does not comply with the provisions of
this endorsement, the owner will lose the special tax treatment and may incur
additional tax penalties. This policy is for the exclusive benefit of the owner
and the beneficiary. The owner's rights and entire interest in this policy are
nonforfeitable.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Definition of Terms
Unless redefined below, the terms used in the policy will have the same meaning
when used in this endorsement. For purposes of this endorsement, the following
definitions apply:
Beneficiary is any individual the owner named in writing in the
application, enrollment form or any subsequent change of beneficiary form.
The beneficiary will receive the proceeds of the policy in the event the
owner dies before permissible distribution of those proceeds is made to the
owner.
Direct Rollover is a distribution made directly to an eligible
retirement plan of all or a portion of the policy value.
Eligible Retirement Plan is (1) a qualified trust as described in Code
Section 401(a); or (2) an individual retirement account as described in
Code Section 408(a); or (3) an individual retirement annuity as described
in Code Section 408(b); or (4) an annuity plan as described in Code Section
403(a).
Eligible Rollover Distribution is any distribution to the owner or to
the owner's surviv ing spouse (or if the owner is divorced, to the owner's
former spouse as an alternate payee under a QDRO) of all or any portion of
the policy value. An eligible rollover distribution does not include any
distribution: (1) that is a minimum required distribution under Code
Section 401(a)(9); or (2) that is not included in the owner's gross income;
or (3) that is one of a series of substantially equal periodic payments
over the owner's life (or life expectancy) or the joint lives (or joint
life expectancies) of the owner and the beneficiary or for a period of 10
years or more.
Pension Plan is an employee pension benefit plan as defined under
Section 3(2)(A) of the Employee Retirement Income Security Act of 1974, as
amended (ERISA).
Owner is the individual in whose name and for whose exclusive benefit
the policy was purchased, whether the policy describes such individual as
owner or annuitant. While such individual is living, he or she will be the
sole owner of the policy.
Qualified Domestic Relations Order (QDRO) is a domestic relations
order described in Code Section 414(p) that creates
3-007 25-197 Page 1
<PAGE>
or recognizes the existence of an alternate payee's right to, or assigns to
an alternate payee the right to, all or a portion of the benefits payable
to the owner under this policy. A domestic relations order is a judgment,
decree, or order (including approval of a property settlement agreement)
made pursuant to a state domestic relations law (including a community
property law) that relates to the provision of child support, alimony
payments, or marital property rights of an alternate payee.
Required Beginning Date is April 1 of the calendar year following the
later of (1) the calendar year in which the owner attains age 70 1/2, or
(2) the calendar year in which the owner retires. However, the required
beginning date means April 1 of the calendar year following the calendar
year in which the owner attains age 70 1/2 for an owner who:
(a) is a 5% owner (as defined in Code Section 416) with respect to the
plan year ending in the calendar year in which the owner attains age
70 1/2; and
(b) did not attain age 70 1/2 before January 1, 1988; and
(c) is not in a governmental plan or a church plan (as defined in Code
Section 401(a)(9)(C)).
Ownership
As a qualified plan, the following conditions apply:
The owner and annuitant must be the same person.
Joint ownership is not allowed.
The owner cannot pledge or assign any interest in this policy to another
person, except as permitted by law, such as in the case of a QDRO.
The owner cannot borrow any amounts from this policy, nor use this policy
as security for a loan.
Distributions
The owner's entire interest in this policy shall be distributed as required
under Section 401(a)(9) of the Code.
Limitation on Period Certain Distributions
In compliance with Code Sections 401(a)(9), no period certain settlement
option which extends beyond the life expectancy of the owner will be allowed.
Required Minimum Distribution
Distribution must be made from the policy in a manner which satisfies the
requirements of Code Section 401(a)(9), including the incidental death benefit
requirements of Code Section 401(a)(9)(G) as follows:
(a) The entire policy value must be distributed, or must begin to be
distributed, no later than the required beginning date, in equal or
substantially equal amounts over (a) the life of the owner or over the joint
lives of the owner and the beneficiary; or (b) a period certain not extending
beyond the life expectancy of the owner, or the joint life expectancy of such
owner and the beneficiary.
(b) If the policy value is to be distributed in any form other than a lump
sum, then the amount to be distributed each calendar year must be at least an
amount equal to the quotient obtained by dividing (a) the entire policy value as
of December 31 of the calendar year immediately preceding the calendar year for
which the distribution is being made; by (b) the life expectancy of the owner,
or the joint life expectancy of such owner and the beneficiary.
If settlement option payments start prior to the required beginning date,
then the annuity date of such settlement option payments will be treated as the
required beginning date for purposes of the death benefit provisions below.
Contingent deferred sales load may be charged on any required minimum
distribution payments made under the policy. We reserve the right to waive any
applicable contingent deferred sales load.
Life Expectancy
Life expectancy is:
The owner's remaining life;
The remaining joint life expectancy of both the owner and the beneficiary;
or
The remaining life expectancy of the beneficiary.
3-007 25-197 Page 2
<PAGE>
The owner's life expectancy or the joint life expectancy of both the owner
and the beneficiary are calculated by use of the return multiples in Tables V
and VI of Income Tax Regulation Section 1.72-9.
Before required minimum distributions begin, the owner may choose to have
the owner's life expectancy determined under (1) the age recalculation, or (2)
no age recalculation method as determined under federal law. If the owner does
not make an election before the required beginning date, the owner's life
expectancy will be recalculated annually. After the owner makes an election,
such election may not be changed and will apply to all subsequent years in which
required minimum distributions are made.
If the owner dies before the required beginning date and the beneficiary is
the owner's surviving spouse, then he or she may also choose to have his or her
life expectancy determined under (1) the age recalculation, or (2) no age
recalculation method. Once the beneficiary makes an election, such election may
not be changed and will apply to all subsequent years. If the beneficiary does
not make an election by the time distributions are scheduled to begin under the
Death Provisions, the beneficiary's life expectancy will be recalculated
annually for all years and may not be changed.
In all cases, if the beneficiary is not the owner's surviving spouse, his
or her life expectancy may not be recalculated and will be determined using his
or her attained age on the date settlement option payments or any other
distribution is scheduled to begin. Payments for subsequent years will be based
on such life expectancy reduced by one year for each calendar year which has
elapsed since the calendar year in which the life expectancy of the non-spouse
beneficiary was first calculated.
Automatic Payout Option (APO)
Before the annuity date, and subject to our then current underwriting
guidelines, the owner may elect to have us calculate and annually distribute
required minimum distribution amounts from this policy if the owner meets the
following requirements:
The owner is or will be age 70 1/2 and is retired in the year the first
APO payment is to be made;
This policy has been in force at least one year;
The owner is not receiving distributions under any other payment option;
The owner elects one of the methods of calculating minimum required
distributions that we offer.
The distributions under this option must begin no earlier than January 1 of
the year in which the owner reaches age 70 1/2 and the owner must be retired.
The owner's election of APO must be in a form and manner we prescribe. We must
receive the owner's election at least 30 days before the payments are to begin.
We will automatically postpone the owner's annuity date one year for each
year the owner receives APO payments up to the later of:
The owner's 85th birthday; or
The first day of the eleventh policy year.
If the owner decides he or she does not want us to delay the annuity date,
please contact us.
We will automatically cancel this option if:
The owner makes more than one change in beneficiaries, unless the
changes are made due to death, divorce or marriage;
The owner begins receiving settlement option payments;
A withdrawal (whether partial or an APO payment) reduces the policy
value to less than the minimum policy value shown on the Information
Page.
If this happens, we reserve the right to pay the owner the cash
surrender value and cancel the policy; or
The owner dies.
After this option is canceled for any reason, the owner may not reelect it.
Contingent deferred sales load may be charged on APO payments made under the
policy. We reserve the right to waive any applicable contingent deferred sales
load.
Death Provisions
If the owner dies before the required beginning date, the entire death
benefit must:
Be completely distributed no later than December 31 of the fifth year
following the year the owner died; or
3-007 25-197 Page 3
<PAGE>
Begin to be distributed to the beneficiary in the form of settlement
option payments, as described below.
The settlement option must pay out equal or substantially equal amounts
over the beneficiary's life or over a period not extending beyond the
beneficiary's life expectancy. Once settlement option payments begin, no changes
may be made to the option.
If the beneficiary is the owner's surviving spouse, he or she must elect to
begin receiving settlement option payments no later than the earliest of (1)
December 31 of the year following the year the owner died; or (2) December 31 of
the year following the year in which the owner would have reached the required
beginning date if the owner had not died.
If the beneficiary is not the owner's surviving spouse, he or she must
elect to begin receiving settlement option payments no later than December 31 of
the year following the year in the owner died.
If the owner dies after the required beginning date, we will continue to
distribute the remaining death benefit at least as rapidly as under the
settlement option in effect at the date of the owner's death.
Limitation of Payment
If the policy value at the time of annuitization is $3,500 or less, we will
pay the policy value in a cash payment, regardless of the settlement option the
owner or any other payee chooses. Such cash payment will be in full settlement
of our liability to the payee for the benefit. In addition, such cash payment
will not require spousal consent as described below.
Waiver and Spousal Requirements
If the owner is legally married, we will require the owner's written waiver
of the qualified pre-retirement survivor annuity and/or qualified joint and
survivor annuity and his or her spouse's written consent before the owner can:
(a) name a beneficiary other than the spouse; or (b) make a partial or full
withdrawal from the policy; or (c) choose a form of payment other than a life
and contingent annuity where the spouse is not named as the contingent
annuitant. The spouse's written consent must (i) be on a form we approve; (ii)
acknowledge his/her understanding of the effect of such consent; and (iii) be
witnessed by a notary public.
We will not accept any request under (a), (b) or (c), above, without the
owner's written waiver and the spouse's written consent. However, if the owner
can prove that the spouse's written consent cannot be obtained because: (1) the
spouse has died; or (2) the spouse cannot be located; or (3) the spouse is held
to be incompetent and the owner has a court order to that effect; or (4) the
owner has been abandoned by the spouse (within the meaning of local law) and the
owner has a court order to that effect, then, unless required by a QDRO, the
owner's request under (a), (b) or (c), above, will be accepted without the
owner's written waiver and the spouse's written consent.
Payments to Minors
If the owner has died, any amount paid to a child of the owner will be
treated as if it had been paid to the owner's surviving spouse if the remainder
of the value of the policy becomes payable to the surviving spouse when the
child reaches the age of majority.
This endorsement shall terminate when the policy is surrendered or the
policy value is otherwise distributed.
Signed for the Company at Purchase, New York to be effective on the policy
effective date.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
/s/ James W. Dederer
CHAIRMAN
/s/ Alan T. Cunningham
PRESIDENT
3-007 25-197 Page 4
<PAGE>
Exhibit (5) Form of Application for Flexible Premium Variable Annuity.
<PAGE>
[LOGO] TRANAMERICA LIFE INSURANCE
COMPANY OF NEW YORK
Transamerica Life Insurance Company of New York
Home Office: 100 Manhattanville Road
Purchase, New York 10577-2135
Mailing Address: P.O. Box 31848
Charlotte, NC 28232-2128
Annuity Service Center: (800) 258-4260
Variable Annuity Application
1 Type of Plan
Check one only:
|_| Non-Qualified |_| TSA 403(b) * (Rev. Rul. 90-24)
|_| IRA 408(b) |_| 401(a) Pension/Profit Sharing*
|_| SEP-IRA 408(k)* [|_| Other]
* Submit required additional forms
2 Owner
Note: All mail and tax reporting will be sent only to the Owner.
- ------------------------------------------ |-| |-|
Print Full Name Male Female
- ----------------------------------------------------------
Residence Street Address
- ----------------------------------------------------------
City State Zip Code
- ---------------- -------------------------------------
Date of Birth Taxpayer Identification Number
Married: |_| Yes |_| No
( )------------------------ ( )-------------------------
Daytime Telephone Evening Telephone
3 Joint Owner (Optional)
Note: Non-Qualified only.
- ------------------------------------------- |-| |-|
Print Full Name Male Female
- ---------------- ------------------------------------
Date of Birth Taxpayer Identification Number
4 Beneficiary
Note: If More Than One, Use Beneficiary Designation Form.
- --------------------------- ------------------------------
Full Name Taxpayer Identification Number
- --------------------------- ------------------------------
Date of Birth Relationship to Owner
5 Annuitant
Note: Complete only if different from Owner.
- ------------------------------------------ |-| |-|
Print Full Name Male Female
- -------------------------------------------------------
Residence Street Address
- -------------------------------------------------------
City State Zip Code
- ----------------------- ------------------------------
Date of Birth Social Security Number
6 Joint Annuitant (Optional)
Note: Non-Qualified only. Must be Annuitant's spouse.
- ------------------------------------------ |-| |-|
Print Full Name Male Female
- ----------------------- -----------------------------
Date of Birth Social Security Number
7 Premium Allocation
Please use whole percentages. No fractions, please.
Minimum 10% allocation per Portfolio. Total must equal 100%.
[The maximum number of total investment options is limited to
18 over the lifetime of the policy.]
[Alliance VPF Premier Growth] ____%
[Alliance VPF Growth and Income] ____%
[Alger American Income and Growth] ____%
[Dreyfus VIF Capital Appreciation] ____%
[Dreyfus VIF Small Cap] ____%
[Janus Aspen Balance] ____%
[Janus Aspen Worldwide Growth] ____%
[MFS VIT Emerging Growth] ____%
[MFS VIT Growth and Income] ____%
[MFS VIT Research] ____%
[Morgan Stanley UF Fixed Income] ____%
[Morgan Stanley UF High Yield] ____%
[Morgan Stanley UF International Magnum] ____%
[OCC Accumulation Trust Managed] ____%
[OCC Accumulation Trust Small Cap] ____%
[Transamerica VIF Growth Fund] ____%
[Transamerica VIF Money Market Portfolio] ____%
[Fixed Account] ____%
Total 100%
8 Method of Payment
Please indicate the method of payment below:
Minimum Initial Premium: $5,000 ($2,000 for contributory IRA's)
|_| Check for $ ____________ (payable to Transamerica Life
Insurance Company of New York) is enclosed.
For new Transamerica IRAs: Amount remitted includes
$__________ as a rollover, which Owner irrevocably
elects to treat as a rollover contribution;
$__________ for Tax Year ________; and
$__________ for Tax Year ________.
|_| Pre-authorized Payment Plan on a monthly basis.
To establish this option, submit the Automatic Investing form.
|_| Transfer balance from existing life insurance or annuity policy
(submit the 1035 Exchange Form).
|_| Transfer funds from my existing qualified plan , IRA or
Sec. 403(b) arrangement in accordance with Rev. Rul. 90-24.
(submit the Transfer Letter of Direction Form).
- -------------------------------------------------------------------
Do not write in this space. Home office use only.
- -------------------------------------------------------------------
FTLA-8-197
<PAGE>
9 Owner Information
If the Owner is not the Annuitant, the Owner is a (an):
|_| Individual |_| Trust* |_| [Other ______________]
|_| Custodianship |_| Corporation
*If the Owner is a Trust, this annuity must be held by the
Trust as an agent for the Annuitant(s).
If the Annuitant is a minor please provide (1) the relationship to
the Owner and (2) the mother's name and father's name:
--------------------------------------------------------------------
--------------------------------------------------------------------
Has the Owner purchased or applied for other non-qualified deferred
annuities issued by any of the Transamerica Life Companies during the
current calendar year?
|_| Yes |_| No If Yes, provide policy number(s):
---------------------------------------------------------
10 Replacement
Will this annuity replace or change any life insurance or annuity
contract(s).
|_| Yes |_| No If Yes, provide name and address of insurance
company and policy number(s):
-------------------------------------------------------------
-------------------------------------------------------------
Note: Please submit replacement forms as required.
11 Rebalancing Option
|_| Yes |_| Annually |_| Semi-Annually |_| Quarterly
I/We elect the variable sub-account rebalancing option. With this election,
all amounts in the variable sub-accounts are re-allocated to reflect the
percentages indicated on this application. Unless and until a rebalancing
election form has been submitted changing these allocation percentages,
Transamerica will allocate all contributions according to the percentages
shown on this application. Note: Not available if Dollar Cost Averaging
(DCA) is in effect.
12 Dollar Cost Averaging Option
|_| I/We elect Dollar Cost Averaging (DCA) for a period of
_______ months. (6 to 60 months)
Each month transfer $ _________
From: (Circle One) [(Money Market or Fixed Account)]
To: (Total must equal 100%)
Amount Fund
======================= ===================================
----------------------- -----------------------------------
----------------------- -----------------------------------
----------------------- -----------------------------------
Note: Not available if Rebalancing is in effect.
13 Remarks
===============================================
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
14 Disclosures & Signatures
I/We understand that I/We have applied for a variable annuity policy
("policy") issued by Transamerica Life Insurance Company of New York. I/We
have received current prospectuses for the policy and for the portfolios.
I/We are aware that (a) payments and values provided under the policy, when
based on the investment experience of the Variable Account, vary and are
not guaranteed as to dollar amount; (b) periodic charges and fees are
associated with the policy; and (c) this policy and its associated
investment portfolios are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or the U.S. government, and are not
federally insured by the FDIC, the Federal Reserve Board, or any other
agency. Portfolio shares involve certain investment risks, including the
possible loss of principal. I/We declare that all statements made on this
application are true to the best of my/our knowledge and belief.
|_| ________ (Please initial) I hereby appoint the registered
representative named on this application to act as my Limited Power of
Attorney in Fact to direct Transamerica's Annuity Service Center to effect
transfers among the variable sub-accounts and/or general account options. I
and my Limited Power of Attorney in Fact, jointly, and severally, agree to
indemnify and hold harmless Transamerica, and its affiliates, officers,
directors, and employees from any and all losses, costs (including
reasonable attorney's fees), expenses, judgments, and liabilities of any
nature whatsoever arising from reliance on my grant of this Limited Power
of Attorney, or any action or commission by my Limited Power of Attorney in
Fact. This Limited Power of Attorney remains valid until Transamerica's
Annuity Service Center is furnished with its written revocation, and
Transamerica records the revocation. This Limited Power of Attorney is
personal to the holder and may not be delegated to any other person. The
holder must be a currently licensed and appointed representative of the
Broker of Record for this Annuity, or this Limited Power of Attorney will
automatically terminate.
Signed at ___________________________________ on _________________
City State Date
-----------------------------------------------------
Owner's Signature
-----------------------------------------------------
Joint Owner's Signature (If Any)
15 Registered Representatives Only
Registered Representative: Do you have reason to believe the annuity
applied for will replace any life insurance or annuity policy with us or
any other company? |_| Yes |_| No
Please check one of the following boxes (contact your home office for more
information). Once selected, an option may not be changed.
[|_| Option A |_| Option B |_| Option C ]
--------------------------------------------------------------
Witness (Licensed Registered Representative)
--------------------------------------------------------------
Print or Type Name of Registered Representative/Code
--------------------------------------------------------------
Print or Type Name of Broker/Dealer
--------------------------------------------------------------
Branch Office/Telephone Number/Code
Mail completed application and any additional required forms to the Annuity
Service Center address shown on Page 1.
FTLA-8-197
<PAGE>
Exhibit (6) (a) Articles of Incorporation of Transamerica Life
Insurance Company of New York.
<PAGE>
FTL\RESTATED-ART.DOC 5
RESTATED
CERTIFICATE OF THE CHARTER
OF
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
WE, THE UNDERSIGNED, being the Chairman and the Assistant Secretary of
Transamerica Life Insurance Company of New York, hereby certify and set forth:
1. The name of the corporation is Transamerica Life Insurance Company
of New York. The corporation was originally incorporated under the name of First
Transamerica Life Insurance Company.
2. The Charter of Transamerica Life Insurance Company of New York
(formerly First Transamerica Life Insurance Company) was filed in the office of
the Superintendent of Insurance of the State of New York on February 5, 1986,
and amended on August 22, 1989, December 27, 1996, and May 1, 1997,
respectively.
3. The Charter of Transamerica Life Insurance Company of New York is
hereby restated in its entirety as follows:
ARTICLE I
The name of this Corporation shall be:
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK.
ARTICLE II
The principal office of this Corporation shall be in the County of
Westchester, in the State of New York.
ARTICLE III
SECTION 1. The kinds of insurance to be transacted by the Corporation
are those kinds specified in Paragraphs "1", "2", and "3", of Section 1113(a) of
the Insurance Law of the State of New York as follows:
(1) "Life Insurance," means every insurance upon the lives of human
beings, and every insurance appertaining thereto, including the
granting of endowment benefits, additional benefits in the event of
death by accident, additional benefits to safeguard the contract from
lapse, accelerated
<PAGE>
payments of part or all of the death benefit or a special surrender
value upon diagnosis (A) of terminal illness defined as a life
expectancy of twelve months or less, or (B) of a medical condition
requiring extraordinary medical care or treatment regardless of life
expectancy, or provide a special surrender value, upon total and
permanent disability of the insured, and optional modes of settlement
of proceeds. "Life insurance" also includes additional benefits to
safeguard the contract against lapse in the event of unemployment of
the insured. Amounts paid the insurer for life insurance and proceeds
applied under optional modes of settlement or under dividend options
may be allocated by the insurer to one or more separate accounts
pursuant to Section Four Thousand Two Hundred Forty of this Chapter.
(2) "Annuities," means all agreements to make periodical payments for a
period certain or where the making or continuance of all or some of a
series of such payments, or the amount of any such payment, depends
upon the continuance of human life, except payments under the authority
of paragraph one hereof. Amounts paid the insurer to provide annuities
and proceeds applied under optional modes of settlement or under
dividend options may be allocated by the insurer to one or more
separate accounts pursuant to Section Four Thousand Two Hundred Forty
of this Chapter.
(3) "Accident and Health Insurance," means (i) insurance against death
or personal injury by accident or by any specified kind or kinds of
accident and insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits pursuant to Article 9
of the workers' compensation law, except as specified in item (ii)
hereof; and (ii) non-cancelable disability insurance, meaning insurance
against disability resulting from sickness, ailment or bodily injury
(but excluding insurance solely against accidental injury) under any
contract which does not give the insurer the option to cancel or
otherwise terminate the contract at or after one year from its
effective date or renewal date.
SECTION 2. The Corporation may also engage in the reinsurance of the
kinds of insurance business it is authorized to do.
SECTION 3. The foregoing enumeration of specific kinds of insurance
shall not be held to limit or restrict the powers of the Corporation to carry on
any other business to the extent necessarily or properly incidental to such
kinds of insurance.
<PAGE>
SECTION 4. The Corporation shall have full power and authority to cede
reinsurance of any risks taken by it subject to the Insurance Law and the rules
and regulations of the Insurance Department of the State of New York.
ARTICLE IV
The mode and manner in which the corporate powers of the Corporation
shall be exercised is through a Board of Directors and through such Committees
of the Board of Directors, officers and agents as such Board and the By-Laws of
the Corporation shall empower.
ARTICLE V
SECTION 1. The number of directors of the Corporation shall be not less
than thirteen (13) nor more than twenty-one (21) and shall be determined by the
provisions of the By-Laws. In no case shall the number of directors be less than
thirteen (13). In no case shall a decrease in the number of directors shorten
the term of any incumbent director.
SECTION 2. The directors shall be elected at each annual meeting of the
shareholders of the Corporation, which shall be held on the first Monday in May
of each year, and the directors so elected shall hold office for one year and
until their respective successors shall have been elected and shall have
qualified. The directors shall be chosen and elected by a plurality of the whole
number of shares voted.
SECTION 3. At all times a majority of the directors shall be citizens
and residents of the United States, and not less than three (3) thereof shall be
residents of the State of New York, and each director shall be at least eighteen
(18) years of age.
ARTICLE VI
The amount of the authorized capital of this Corporation shall be TWO
MILLION DOLLARS ($2,000,000), to consist of TWO THOUSAND (2,000) shares of stock
of the par value of ONE THOUSAND DOLLARS ($1,000) per share.
ARTICLE VII
The holders of stock of the Corporation shall not have any pre-emptive,
preferential or other right to subscribe for or purchase or acquire any shares
of any class of stock or any other securities of the Corporation, whether now or
hereafter authorized, and whether or not convertible into, or evidencing or
carrying the right to purchase, shares of stock of any class or any other
securities now or hereafter authorized.
<PAGE>
ARTICLE VIII
The Board of Directors shall have the power to adopt By-Laws of the
Corporation and to amend the same from time to time in whole or in part.
ARTICLE IX
The duration of the corporate existence of this Corporation shall be
perpetual.
ARTICLE X
No director shall be personally liable to the Corporation or any of its
shareholders for damages for any breach of duty as a director; provided,
however, that the foregoing provision shall not eliminate or limit (i) the
liability of a director if a judgment or other final adjudication adverse to him
or her establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or any violation of the Insurance Law or knowing
violation of any other law or that he or she personally gained in fact a
financial profit or other advantage to which he or she was not legally entitled;
or (ii) the liability of a director for any act or omission prior to the
adoption of this restatement by the shareholders of the Corporation.
This Restated Certificate of the Charter of Transamerica Life Insurance
Company of New York was authorized by the Board of Directors at a meeting held
on June 12, 1997, followed by the affirmative vote of the sole shareholder by
written consent in lieu of a special meeting executed as of June 12, 1997.
IN WITNESS, the undersigned have executed and signed this Certificate
this 16th day of September, 1997.
/s/ James W. Dederer
James W. Dederer
(SEAL) Chairman
/s/ William M. Hurst
William M. Hurst
Assistant Secretary
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
On the 16th day of September, 1997, before me, Doris D. Motherspaw, Notary
Public, personally appeared James W. Dederer and William M. Hurst, personally
known to me or proved to me on the basis of satisfactory evidence to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the same in their authorized capacity of Chairman and
Assistant Secretary of Transamerica Life Insurance Company of New York, and that
by their signatures on the instrument the entity upon behalf of which the
persons acted, and executed the instrument.
WITNESS my hand and official seal.
(SEAL) /s/ Doris Motherspaw
Notary Public
My commission expires: May 29, 1998
<PAGE>
Exhibit (6) (b) By-Laws of Transamerica Life Insurance Company of New
York.
<PAGE>
FTL\RESTATED-BYLAWS.DOC 24
RESTATED
BY-LAWS
OF
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
ARTICLE I
LOCATION
Section 1. The principal office of the Corporation shall be in the
County of Westchester and the State of New York. The Corporation may, in
addition to the principal office, establish and maintain such other
office or offices, whether in the State of New York or otherwise, as the
Board of Directors may from time to time designate or the business of the
Corporation may require.
ARTICLE II
CORPORATE SEAL
Section 1. The Corporation shall have a seal. The corporate seal shall
have inscribed thereon the name of the Corporation. The corporate seal shall be
in seal form and have inscribed thereon such additional words and symbols as the
Board of Directors may from time to time prescribe. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or otherwise
reproduced.
ARTICLE III
MEETINGS OF SHAREHOLDERS
Section 1. Time and Place. All meetings of the shareholders for the
election of directors and all meetings of shareholders for that or any other
purpose may be held at such place within or without the State of New York, and
at such time as may be designated in the notice of meeting.
Section 2. Annual Meetings. The annual meeting of shareholders shall be
held on the first Monday of May in each year, if not a legal holiday, and if a
legal holiday, then on the next succeeding business day, at 10:00 o'clock a.m.,
or at such other hour as may from time to time be designated by the Board of
Directors.
Section 3. Special Meetings. Except as otherwise provided by statute,
special meetings of shareholders may be called for any purpose or purposes at
any time by the Chairman of the Board of Directors, the President, the Board of
Directors, or by the President and Secretary upon the written request of one or
more shareholders holding a majority in interest of the stock of the Corporation
issued and outstanding and entitled to vote at such meeting. Any such request
shall state the purpose or purposes of the proposed meeting.
Section 4. Notice of Meeting. Notice of the time and place of holding
each annual and special meeting of the shareholders shall be in writing and
signed by the President or a Vice President, or the Secretary or an Assistant
Secretary, and a copy thereof shall be served, either personally or by mail,
upon each shareholder entitled to vote at such meeting, not less than ten (10)
nor more than fifty (50) days before the meeting, and if mailed, it shall be
directed to such shareholder at such shareholder's address as it appears on the
books of the Corporation unless a written request be given that notices intended
for such shareholder be mailed to some other address, in which case it shall be
mailed to the address designated in such request.
The notice of every special meeting, besides stating the time and place
of such meeting, shall state the purpose or purposes thereof, and no business
other than that specified in such notice or germane thereto shall be transacted
at the meeting.
Section 5. Waiver of Notice. Notice of meeting need not be given (1) to
any shareholder who submits a signed waiver of notice, or (2) to any shareholder
who is in attendance at any meeting, in person or by proxy, without protesting
prior to the conclusion of the meeting the last of notice of such meeting.
Section 6. Quorum. At every meeting of the shareholders of the
Corporation, except as otherwise provided by law, the holders of a majority of
the issued and outstanding shares of capital stock of the Corporation, present
in person or by proxy and entitled to vote thereat, shall constitute a quorum,
for the transaction of business. In the absence of a quorum a majority in
interest of the shareholders so present or represented and entitled to vote
thereat may adjourn the meeting from time to time and place to place until a
quorum is obtained, and the meeting may be held as adjourned without further
notice. At any such adjourned meeting at which a quorum is present any business
may be transacted which might have been transacted at the meeting as originally
called. The shareholders present at a duly called or held meeting at which a
quorum is present may continue to transact business until a final adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 7. Voting. At all meetings of shareholders, every shareholder
entitled to vote thereat shall be entitled to one vote, in person or by proxy,
for each share of stock outstanding in such shareholder's name on the books of
the Corporation on the date for the determination of shareholders entitled to
vote at such meeting. Every proxy must be executed in writing by the shareholder
or by his duly authorized attorney and must be delivered to the Secretary of the
meeting. No proxy shall be valid after the expiration of eleven (11) months from
the date of its execution unless the shareholder executing it shall have
specified therein a longer duration. At all meetings of the shareholders, a
quorum being present, all matters except as otherwise provided by law, or the
Charter of the Corporation, or these by-laws, shall be decided by a majority in
interest of the shareholders of the Corporation present in person or by proxy
and entitled to vote. All elections of directors may, but need not be, held by
ballot.
Section 8. Organization. Meetings of the shareholders shall be presided
over by the Chairman of the Board of Directors, or, if he is not present, by the
President, and if the President is not present, by a Vice President in the order
determined by the President; or, if none of the foregoing are present, by a
chairman to be chosen by a majority of the shareholders entitled to vote who are
present in person or by proxy at the meeting. The Secretary of the Corporation,
or in his or her absence, an Assistant Secretary, shall act as Secretary of
every meeting, but if neither the Secretary nor an Assistant Secretary is
present, the meeting shall choose any person present to act as Secretary of the
meeting.
Section 9. Consent. Whenever by any provision of law or of the Charter
of this Corporation the vote of shareholders at a meeting thereof is required or
permitted to be taken in connection with any corporate action, the meeting and
vote of shareholders may be dispensed with, if all the shareholders who would
have been entitled to vote upon the action, if such meeting were held, shall
consent in writing to such action being taken. However, this section shall not
be construed to alter or modify any provision of law or of the Charter under
which the written consent of the holders of less than all outstanding shares is
sufficient for corporate action.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Election and Qualification of Directors. Directors shall be
elected at the annual meeting of shareholders by a plurality of the votes cast
and shall hold office for one (1) year and until their respective successors
shall have been elected and shall have qualified. All directors shall be at
least eighteen (18) years of age and at least three (3) shall be citizens and
residents of the State of New York. Directors need not be shareholders. A copy
of the notice of any meeting at which directors are elected, which is sent to
the shareholders, shall be filed in the Office of the Superintendent of
Insurance of the State of New York at least ten (10) days before the day on
which such meeting is to be held.
Section 2. Number of Directors. The number of directors shall not be
less than thirteen (13) nor more than twenty-one (21); subject to change by
action of the shareholders or by resolution of the Board of Directors, the
number of directors of the Corporation shall be thirteen (13). Any change in the
number of directors made by resolution of the Board of Directors shall require
the affirmative vote of a majority of all directors then in office, but no
decrease in the number of directors so made shall shorten the term of any
incumbent director.
Section 3. Vacancies. A vacancy or vacancies in the Board resulting
from death, resignation or removal of any director, or from the increase in the
number of directors, or for any other cause, may be filled for the remainder of
the term by majority vote of the remaining directors at any regular meeting of
the Board or at any special meeting called for that purpose. A director so
elected shall not take office or exercise the duties thereof until ten (10) days
after written notice of his or her election shall have been filed in the Office
of the Superintendent of Insurance of the State of New York.
Section 4. Duties and Powers. The Board of Directors shall have control
and management of the affairs and property of the Corporation and may adopt such
rules and regulations for the conduct of their meetings and the management of
the Corporation as they deem proper not inconsistent with law or with the
Charter of the Corporation or with these By-Laws.
Section 5. Meetings. Meetings of the Board of Directors shall be held
at such place within or without the State of New York as may from time to time
be fixed by resolution of the Board of Directors, or as may be specified in the
notice of the meeting. Regular meetings of the Board of Directors shall be held
at such times as may from time to time be fixed by resolution of the Board of
Directors and special meetings may be held at any time upon the call of the
Chairman of the Board of Directors, the President or Vice President, or the
Secretary or an Assistant Secretary, or any two (2) directors or by oral,
telegraphic, or written notice duly served on or sent or mailed to each director
not less than two (2) days before such meeting. A meeting of the Board of
Directors may be held without notice immediately after the annual meeting of
shareholders. Notice need not be given of regular meetings of the Board of
Directors. Meetings may be held at any time without notice if all the directors
are present, or if at any time before or after the meeting those not present
waive notice of the meeting in writing.
Any one or more members of the Board of Directors or any committee
thereof may participate in a meeting of such Board of Directors or committee by
means of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
Section 6. Quorum. A majority of the Board of Directors then in office
at a meeting duly assembled shall be necessary to constitute a quorum of the
transaction of business. Except as otherwise provided by law or by the Charter
of the Corporation, the act of a majority of directors present at such meeting
shall be the act of the Board.
Section 7. Resignations. Any director of the Corporation may resign at
any time by giving written notice to the Board or to the President or to the
Secretary of the Corporation. Such resignation shall take effect at the time
specified therein; and unless otherwise specified therein the acceptance of such
resignation shall not be necessary to make it effective.
Section 8. Removal. Any one or more of the directors may be removed
either with or without cause at any time by a vote of a majority of the shares
issued and outstanding and entitled to vote. Not less than one-third (1/3) of
the directors may call a special meeting for the purpose of removing for cause
any other director and at such special meeting so called, such director may be
removed by the affirmative vote of a majority of the remaining directors present
at such meeting. Immediately following each vote by which a director is removed
the Board of Directors shall declare the office of the removed director to be
vacant.
Section 9. Compensation of Directors. Directors may, by resolution of
the Directors, be allowed a sum for serving as directors and expenses for
attendance at regular or special meetings of the Board of Directors; provided
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees, and others who attend
pursuant to direction, may, by vote of the Board of Directors, be allowed a
fixed sum and expenses for attending committee meetings.
Section 10. Chairman of the Board. The Board of Directors shall,
immediately after the organization of the Corporation, and thereafter at their
first meeting following the annual election of directors, elect from among their
number, a Chairman of the Board who shall preside at all meetings of the
shareholders and of the Board of Directors. He or she shall have such other
powers and perform such other duties as may be assigned to him by the Board of
Directors.
ARTICLE V
COMMITTEES
Section 1. Executive Committee. The Board of Directors may, by
resolution adopted by a majority of the entire Board, designate an Executive
Committee from among its members consisting of five (5) or more directors as it
may, in its discretion, think proper and shall so designate by resolution.
The Executive Committee shall have and may exercise, when the Board is
not in session, so far as may be permitted by law, all of the rights and powers
of the Board of Directors in the management of the business and affairs of the
Corporation, except to the extent such powers of the Board are by resolution of
the Board or by these By-Laws reserved to the Board or to other committees of
the Board, and shall have power to authorize the seal of the Corporation to be
affixed to all papers which may require it; but the Executive Committee shall
not have power to: fill vacancies in the Board; to make or amend the By-Laws of
the Corporation; to fix the compensation of directors for serving on the Board
or any Committee; to amend or repeal any resolution of the Board which by its
terms shall not be so amendable or repealable; or to make investments or loans
which shall be the function of the Finance Committee.
The Board shall have the power at any time to fill vacancies in, to
change the membership of, to change the number of members of, designate one or
more alternate members of, or to dissolve the Executive Committee. The Executive
Committee may make rules for the conduct of this business and may appoint such
committees and assistants as it shall from time to time deem necessary.
The Committee shall keep a record of its proceedings and shall adopt
its own rules of procedure except that a quorum shall consist of at least three
(3) members, not more than two (2) of whom may be officers or salaried employees
of the Corporation. The Committee shall submit copies of its minutes to the
Board of Directors.
Section 2. Finance Committee. The investments and loans, other than
policy loans of the Corporation, shall be managed and controlled by a Finance
Committee. The Finance Committee shall consist of at least five (5) members who
shall be appointed by the Board of Directors from its own membership at the
annual meeting of the Board of Directors to serve until the next succeeding
annual meeting and until their successors on the Committee have been appointed.
The Board shall have the power at any time to fill vacancies in, to change the
membership of, to change the number of members of, to designate one (1) or more
alternate members of, or to dissolve, the Finance Committee.
The Finance Committee shall have and may exercise, when the Board is
not in session, all the rights and powers of the Board of Directors to make,
supervise, and control the investments of the Corporation, inclusive of all real
and personal property acquired by virtue of or incidental to any investment, to
sell, assign, exchange, lease or otherwise dispose of such investments and
property; and to do and perform all things deemed necessary and proper in
relation to such investments and property.
The Committee shall keep a record of its proceedings and shall adopt
its own rules of procedure, except that a quorum shall consist of at least three
(3) members, not more than two (2) of whom may be officers or salaried employees
of the Corporation. The Committee shall submit copies of its minutes to the
Board of Directors and shall report all investments to the Executive Committee
when the Board is not in session.
Section 3. Audit Committee. The Audit Committee shall consist of at
least three (3) members who shall be appointed by the Board of Directors from
its own membership at the annual meeting of the Board of Directors to serve
until the next succeeding annual meeting and until their successors on the
Committee have been appointed. The Board shall have the power at any time to
fill vacancies in, to change the membership of, to change the number of members
of, to designate one (1) or more alternate members of, or to dissolve, the Audit
Committee.
The Audit Committee will meet with the Internal Auditor and shall
review the results of audits conducted by the Internal Audit staff. The
Committee shall also review the audit schedule and may direct the Internal
Auditor to carry out any additional audits that it deems necessary.
The Committee shall keep a record of its proceedings and shall adopt
its own rules of procedure except that a quorum shall consist of at least three
(3) members, not more than one (1) of whom may be an officer or salaried
employee of the Corporation. The Committee shall submit copies of its minutes to
the Board of Directors.
Section 4. Independent Committee. The Independent Committee shall
consist of at least three (3) members who shall be appointed by the Board of
Directors from its own membership at the annual meeting of the Board of
Directors to serve until the next succeeding annual meeting and until their
successors on the Committee have been appointed. The Board shall have the power
at any time to fill vacancies in, to change the membership of, to change the
number of members of, to designate one or more alternate members of, or to
dissolve the Independent Committee. All of the members of the Independent
Committee shall be individuals who are not officers or employees of the
Corporation or of any entity controlling, controlled by, or under common control
with the Corporation and who are not beneficial owners of a controlling interest
in the voting stock of the Corporation or any such entity.
The Independent Committee shall have the following functions:
1. Responsibility for recommending the selection of independent
certified public accountants;
2. Responsibility for reviewing the Corporation's financial
condition;
3. Responsibility for final review of the scope and results of the
independent audit and any internal audit;
4. Responsibility for nominating candidates for director for
election by shareholders; and
5. Responsibility for evaluating the performance of officers deemed to
be principal officers of the Corporation and recommending to the Board of
Directors the selection and compensation of such principal officers.
The Committee shall keep a record of its proceedings and shall adopt
its own rules of procedure except that a quorum shall consist of at least three
(3) members. The Committee shall submit copies of its minutes to the Board of
Directors.
Section 5. Other Committees. The Board of Directors may from time to
time by resolution create such other committee or committees of Directors,
officers, employees or other persons designated by the Board, to advise with the
Board, the Executive Committee and the officer and employees of the Corporation
in all such matters as the Board shall deem advisable, and with such functions
and duties as the Board shall by resolution prescribe. A majority of all members
of any such committee may determine its actions and fix the time and place of
its meeting, unless the Board of Directors shall otherwise provide. The Board of
Directors shall have power to change the members of any such committee at any
time, and to discharge any such committee, either with or without cause at any
time.
ARTICLE VI
OFFICERS
Section 1. Officers. The Board of Directors shall, immediately
after the organization of the Corporation, and thereafter at their first meeting
following the annual election of directors, elect from among their number a
President, and shall also elect a Secretary and a Treasurer, who need not be
members of the Board of Directors. The Board may, at any time, also elect one or
more Vice Presidents, and such Assistant Treasurers and Assistant Secretaries,
or other officers, as it may deem proper. More than one office may be held by
the same person, except that the offices of President and Secretary may not be
held by the same person.
Section 2. Term. Each officer of the Corporation elected by the
Board of Directors shall hold office until his or her successor is chosen and
qualified, or until he or she shall have died or resigned or shall have been
removed as hereinafter provided. A vacancy in any office arising from any cause
may be filled by the Board of Directors.
Section 3. Duties of the President. The President shall be the
Chief Executive Officer of the Corporation unless otherwise directed by the
Board. He or she shall have general and active supervision and direction over
the business offices of the Corporation, subject to the control of the Board of
Directors whose policies he or she shall execute. He or she shall see that all
orders and resolutions of the Board of Directors are carried into effect and
shall, in the absence of the Chairman of the Board, preside at all meetings of
shareholders and of the Board of Directors. Except when inconsistent with the
Corporation's Charter, these by-laws, or with the orders and resolutions of the
Board of Directors, he or she shall have the power to employ, fix the duties,
and discharge such employees as he or she may deem necessary and proper. The
President shall make such reports to the Board of Directors as it may require.
Section 4. Duties of Vice President. Each Vice President, shall
undertake such of the duties of the President or such other duties, as may be
delegated to him or her from time to time by the Board of Directors.
Section 5. Duties of Secretary. The Secretary shall attend all
meetings of the shareholders, of the Board of Directors, and of the Executive
Committee of the Board, and record their proceedings in a book kept for that
purpose. He or she shall perform other duties incident to his or her office and
such other duties as may be delegated to him or her by the Board of Directors or
the President. He or she shall see that proper notice is given of all meetings
of the shareholders of the Corporation and of the Board of Directors, and he or
she shall have charge of the corporate seal, the minute books, and such other
corporate records as are not otherwise provided for. He or she shall affix the
seal to any instrument requiring the same. Any Assistant Secretary may perform
duties of the Secretary in his or her absence, and such of the duties of the
Secretary as may be delegated to him or her by that officer or by the Board of
Directors or the President.
Section 6. Duties of Treasurer. The Treasurer shall be charged with
the supervision of the keeping of the funds and books of account of the
Corporation and with their safekeeping, shall carry out such duties as are
incident to his or her office and shall further perform such other duties as may
be delegated to him or her by the Board of Directors or by the President. Any
Assistant Treasurer may perform the duties of the Treasurer in his or her
absence, and such of the duties of the Treasurer as may be delegated to him or
her by that officer or by the Board of Directors or the President.
ARTICLE VII
SHARE CERTIFICATES
Section 1. Form of Certificates. The shares of the Corporation
shall be represented by certificates, in such form as the Board of Directors may
from time to time prescribe, signed by the Chairman of the Board of Directors,
the President, or a Vice President and the Secretary or an Assistant Secretary
or the Treasurer or an Assistant Treasurer, and sealed with the seal of the
Corporation. Such seal may be a facsimile, engraved or printed. Where any such
certificate is signed by a transfer agent or transfer clerk and by a registrar,
the signatures of any such Chairman of the Board of Directors, President, Vice
President, Secretary, Assistant Secretary, Treasurer, or Assistant Treasurer
upon such certificate may be facsimiles, engraved or printed. In case any such
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such before such certificate is issued, it
may be issued by the Corporation with the same effect as if such officer had not
ceased to be such at the date of its issue.
Every certificate representing shares issued by the Corporation
shall plainly state upon the face thereof the number, kind and class of shares
which it represents.
Section 2. Transfers. Transfers of shares shall be made only upon
the books of the Corporation by the registered holders in person or by power of
attorney duly executed and acknowledged and filed with the Secretary of the
Corporation, or with a duly appointed Transfer Agent acting for and on behalf of
the Secretary, and upon the surrender of the certificate or certificates for
such shares.
Section 3. Lost Certificates. If any certificate or shares shall be
lost, the holder thereof shall forthwith notify the Corporation of the facts and
the Board of Directors or the Executive Committee may then authorize a new
certificate to be issued to him. The Board of Directors or the Executive
Committee may in its discretion require, as a condition precedent, deposit of a
bond in such amount and in such form and with surety or sureties as the Board of
the said Committee may direct.
Section 4. Closing Share Books. The Board of Directors or the
Executive Committee may by resolution prescribe a period not less than ten (10)
nor more than fifty (50) days prior to any meeting of shareholders during which
no transfer of shares on the books of the Corporation may be made; or in lieu of
prohibiting the transfer of share may fix a day and hour not less than ten (10)
nor more than fifty (50) days prior to the holding of any meeting of
shareholders as the time as of which shareholders entitled to notice of any to
vote at such meeting shall be determined or for the making of a dividend list.
The share books may also be closed for the payment of dividends for such like
period, if any, as may be prescribed by resolution of the Board of Directors or
of the Executive Committee.
Section 5. Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer clerks or one or more transfer agents, and one or
more registrars, and may require all certificates for shares to bear the
signature or signatures of any of them.
ARTICLE VIII
Indemnification of Officers and Directors
Section 1. Indemnification.
(a) The Corporation shall indemnify to the fullest extent now or
hereafter provided for or permitted by law each person involved in, or made
or threatened to be made a party to, any action suit, claim or proceeding,
whether civil or criminal, including any investigative, administrative,
legislative, or other proceeding, and including any action by or in the right of
the Corporation or any other corporation, or any partnership, joint venture,
trust, employee benefit plan, or other enterprise (any such entity, other than
the Corporation, being hereinafter referred to as an "Enterprise"), and
including appeals therein (any such action or process being hereinafter referred
to as a "Proceeding"), by reason of the fact that such person, such person's
testator or intestate (i) is or was a director or officer of the Corporation, or
(ii) is or was serving, at the request of the Corporation, as a director,
officer, or in any other capacity, or any other Enterprise, against any and all
judgments, amounts paid in settlement, and expenses, including attorney's fees,
actually and reasonably incurred as a result of or in connection with any
Proceeding, except as provided in Subsection (b) below.
(b) No indemnification shall be made to or on behalf of any such
person if a judgment or other final adjudication adverse to such person
establishes that such person's acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or that such person personally gained in fact a financial
profit or other advantage to which such person was not legally entitled. In
addition, no indemnification shall be made with respect to any Proceeding
initiated by any such person against the Corporation, or a director or officer
of the Corporation, other than to enforce the terms of this Article VIII, unless
such Proceeding was authorized by the Board of Directors. Further, no
indemnification shall be made with respect to any settlement or compromise of
any Proceeding unless and until the Corporation has consented to such settlement
or compromise.
(c) Written notice of any Proceeding for which indemnification may
be sought by any person shall be given to the Corporation as soon as
practicable. The Corporation shall then be permitted to participate in the
defense of any such proceeding or, unless conflicts of interest or position
exist between such person and the Corporation in the conduct of such defense, to
assume such defense. In the event that the Corporation assumes the defense of
any such Proceeding, legal counsel selected by the Corporation shall be
reasonably acceptable to such person. After such an assumption, the Corporation
shall not be liable to such person for any legal or other expenses subsequently
incurred unless such expenses have been expressly authorized by the Corporation.
In the event that the Corporation participates in the defense of any such
Proceeding, such person may select counsel to represent him in regard to such a
Proceeding; however, such person shall cooperate in good faith with any request
that common counsel be utilized by the parties to any Proceeding who are
similarly situated, unless to do so would be inappropriate due to actual or
potential differing interests between or among such parties.
(d) In making any determination regarding any person's entitlement
to indemnification hereunder, it shall be presumed that such person is entitled
to indemnification, and the Corporation shall have the burden of proving the
contrary.
Section 2. Advancement of Expenses. Except in the case of a
Proceeding against a director, officer, or other person specifically approved by
the Board of Directors, the Corporation shall, subject to Section 1 of this
Article VIII above, pay expenses actually and reasonably incurred by or on
behalf of such a person in defending any Proceeding in advance of the final
disposition of such Proceeding. Such payments shall be made promptly upon
receipt by the Corporation, from time to time, or of written demand by such
person for such advancement, together with an undertaking by or on behalf of
such person to repay any expenses so advanced to the extent that the person
receiving the advancement is ultimately found not to be entitled to
indemnification for part or all of such expenses.
Section 3. Rights Not Exclusive. The rights to indemnification and
advancement of expenses granted by or pursuant to this Article VIII (i) shall
not limit or exclude, but shall be in addition to, any other rights which may be
granted by or pursuant to any statute, corporate charter, by-law, resolution of
shareholders or directors or agreement, (ii) shall be deemed to constitute
contractual obligations of the Corporation to any person who serves in a
capacity referred to in Section 1 of this Article VIII at any tine while this
Article VIII is in effect, (iii) shall continue to exist after the repeal or
modification of this Article VIII with respect to events occurring prior
thereto, and (iv) shall continue as to a person who has ceased to be a director
or officer and shall inure to the benefit of the estate, spouse, heirs,
executors, administrators or assigns of such person. It is the intent of this
Article VIII to require the Corporation to indemnify the persons referred to
herein for the aforementioned judgments, amounts paid in settlement, and
expenses, including attorneys' fees, in each and every circumstance in which
such indemnification could lawfully be permitted by express provisions of
by-laws, and the indemnification required by this Article VIII shall not be
limited by the absence of an express recital of such circumstances.
Section 4. Indemnification of Employees and Others.
The Corporation may, from time to time, with the approval of the Board of
Directors, and to the extent authorized, grant rights to indemnification, and to
the advancement of expenses, to any employee or agent of the Corporation or to
any person serving at the request of the Corporation as a director or officer,
or in any other capacity, of any other Enterprise, to the fullest extent of the
provisions of this Article VIII with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
Section 5. Authorization of Contracts. The Corporation may, with
the approval of the Board of Directors, enter into an agreement with any person
who is, or is about to become, a director, officer, employee or agent of the
Corporation, or who is serving, or is about to serve, at the request of the
Corporation, as a director, officer, or in any other capacity, of any other
Enterprise, which agreement may provide for indemnification of such person and
advancement of expenses to such person upon terms, and to the extent, not
prohibited by law. The failure to enter into any such agreement shall not affect
or limit the rights of any such person under this Article VIII.
Section 6. Insurance. The Corporation may purchase and maintain
insurance to indemnify the Corporation and any person eligible to be
indemnified under this Article VIII within the limits permitted by law.
Section 7. Severability. If any provision of this Article VIII is
determined at any time to be unenforceable in any respect, the other
provisions shall not in any way be affected or impaired thereby.
ARTICLE IX
CONFLICT OF INTEREST
No director or officer of the Corporation shall receive, in
addition to his fixed salary or compensation, any money or valuable thing,
either directly or indirectly, or through any substantial interest in any other
corporation or business unit, for negotiating, procuring, recommending or aiding
in any purchase or sale of property, or loan, made by the Corporation or any
affiliate or subsidiary thereof; nor shall he or she be peculiarly interested,
either as principal, co-principal, agent or beneficiary, either directly or
indirectly, or through any substantial interest in any other corporation or
business unit, in any such purchase sale or loan.
ARTICLE X
DIVIDENDS
Section 1. Dividends. Dividends on the issued and outstanding
stock from the profits made by the Corporation, not including the surplus
arising from the sale of stock, may be declared by the Board of Directors, from
time to time. The Board of Directors shall fix the date of payment of dividends
and the record date of stock entitled thereto.
ARTICLE XI
MISCELLANEOUS
Section 1. Execution of Contracts and Other Instruments. The
President and Vice President, the Secretary, and the Treasurer shall each have
general authority to execute contracts, bonds, deeds and powers of attorney in
the name and on behalf of the Corporation. Any contract, bond, deed or power of
attorney may also be executed in the name of and on behalf of the Corporation by
such other officer or such other agent as the Board of Directors may from time
to time direct. The provisions of this Section 1 are supplementary to any other
provision of these By-Laws.
Section 2. Shares of Other Corporations. The President and any Vice
President is authorized to vote, represent and exercise on behalf of the
Corporation, all rights incident to any and all shares of any other corporation
or corporations standing in the name of the Corporation. The authority herein
granted to said officer to vote or represent on behalf of the Corporation any
and all shares held by the Corporation in any other corporation or corporations
may be exercised either by said officer in person or by any person authorized so
to do by proxy or power of attorney duly executed by said officer.
Notwithstanding the above, however, the Board of Directors, in its discretion,
may designate by resolution the person to vote or represent said shares of other
corporations.
ARTICLE XII
AMENDMENTS
Section 1. Power to Amend. These By-Laws may be altered, repealed,
or amended in whole or in part by the Board of Directors at any regular meeting
of the Board of Directors, or at a special meeting called for that purpose,
provided that notice of the proposed change is incorporated in the notice of
such special meeting.
Section 2. Notice to Shareholders. If any By-Law regulating an
impending election of directors is adopted, amended or repealed by the Board of
Directors, there shall be set forth in the notice of the next meeting of
shareholders for the election of directors the By-Laws so adopted, amended or
repealed, together with a concise statement of the changes made.
FTL\RESTATED-BYLAWS.DOC (Restated 06/12/97)
<PAGE>
Exhibit (8) Form of Participation Agreements regarding the Portfolio.
(a) re The Alger American Fund
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT is made this _____ day of ______________ , 1997, by and
among The Alger American Fund (the "Trust"), an open-end management investment
company organized as a Massachusetts business trust, Fred Alger Management,
Inc., an investment adviser organized under the laws of the state of New York (
the "Adviser"), Transamerica Life Insurance Company of New York, a life
insurance company organized as a corporation under the laws of the State of New
York, (the "Company"), on its own behalf and on behalf of each segregated asset
account of the Company set forth in Schedule A, as may be amended from time to
time (the "Accounts"), and Fred Alger and Company, Incorporated, a Delaware
corporation, the Trust's distributor (the "Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares under the Securities Act of 1933, as amended (the "1933
Act");
WHEREAS, the Trust and the Distributor desire that Trust shares be used
as an investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided into
the following series which are available for purchase by the Company for the
Accounts: Alger American Small Capitalization Portfolio, Alger American Growth
Portfolio, Alger American Income & Growth Portfolio, Alger American Balanced
Portfolio, Alger American MidCap Growth Portfolio, and Alger American Leveraged
AllCap Portfolio;
WHEREAS, the Trust has received an order from the Commission, dated
February 17, 1989 (File No. 812-7076), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the Trust to be sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933 Act
certain variable life insurance policies and variable annuity contracts to be
issued by the Company under which the Portfolios are to be made available as
investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act unless an exemption from registration
under the 1940 Act is available and the Trust has been so advised;
WHEREAS, the Company may contract with an Administrator to perform
certain services with regard to the Contracts and, therefore, certain
obligations ans services of the Adviser and/or Trust should be directed to the
Administrator, as directed by the Company,
WHEREAS, the Company desires to use shares of the Portfolios
indicated on Schedule A as investment vehicles for the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I.
Purchase and Redemption of Trust Portfolio Shares
1.1. For purposes of this Article I, the Company or its administrator shall
be the Trust's agent for the receipt from each account of purchase
orders and requests for redemption pursuant to the Contracts relating
to each Portfolio, provided that the Company or its administrator
notifies the Trust of such purchase orders and requests for redemption
by 9:30 a.m. Eastern time on the next following Business Day, as
defined in Section 1.3.
1.2. The Trust shall make shares of the Portfolios available to the
Accounts at the net asset value next computed after receipt of a
purchase order by the Trust (or its agent), as established in
accordance with the provisions of the then current prospectus of the
Trust describing Portfolio purchase procedures. The Company or its
administrator will transmit orders from time to time to the Trust for
the purchase and redemption of shares of the Portfolios. The Trustees
of the Trust (the "Trustees") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole
discretion of the Trustees acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, such
action is deemed in the best interests of the shareholders of such
Portfolio.
1.3. The Company shall pay for the purchase of shares of a Portfolio on
behalf of an Account with federal funds to be transmitted by wire to
the Trust, with the reasonable expectation of receipt by the Trust by
2:00 p.m. Eastern time on the next Business Day after the Trust (or its
agent) receives the purchase order. Upon receipt by the Trust of the
federal funds so wired, such funds shall cease to be the responsibility
of the Company and shall become the responsibility of the Trust for
this purpose. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading.
1.4. The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at
the net asset value next computed after receipt by the Trust (or its
agent) of the request for redemption, as established in accordance
with the provisions of the then current prospectus of the Trust
describing Portfolio redemption procedures. The Trust shall make
payment for such shares in the manner established from time to time by
the Trust. Proceeds of redemption with respect to a Portfolio will be
paid to the Company for an Account in federal funds transmitted by
wire to the Company by order of the Trust with the reasonable
expectation of receipt by the Company by 2:00 p.m. Eastern time on the
next Business Day after the receipt by the Trust (or its agent) of the
request for redemption. Such payment may be delayed if, for example,
the Portfolio's cash position so requires or if extraordinary market
conditions exist, but in no event shall payment be delayed for a
greater period than is permitted by the 1940 Act. The Trust reserves
the right to suspend the right of redemption, consistent with Section
22(e) of the 1940 Act and any rules thereunder.
1.5. Payments for the purchase of shares of the Trust's Portfolios by the
Company under Section 1.3 and payments for the redemption of shares of
the Trust's Portfolios under Section 1.4 on any Business Day may be
netted against one another for the purpose of determining the amount of
any wire transfer.
1.6. Issuance and transfer of the Trust's Portfolio shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Portfolio Shares purchased from the Trust will be recorded in
the appropriate title for each Account or the appropriate subaccount of
each Account.
1.7. The Trust shall furnish, two days before the ex-dividend date, notice
to the Company that an income dividend or capital gain distribution
will be paid on the shares of any Portfolio of the Trust. The Company
hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional
shares of that Portfolio. The Trust shall notify the Company of the
number of shares so issued as payment of such dividends and
distributions.
1.8. The Trust shall calculate the net asset value of each Portfolio on each
Business Day, as defined in Section 1.3. The Trust shall make the net
asset value per share for each Portfolio available to the Company or
its designated agent on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available to the
Company by 6:30 p.m. Eastern time each Business Day.
1.9. The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their segregated asset accounts,
to the Fund Sponsor or its affiliates and to such other entities as may
be permitted by Section 817(h) of the Code, the regulations hereunder,
or judicial or administrative interpretations thereof. No shares of any
Portfolio will be sold directly to the general public. The Company
agrees that it will use Trust shares only for the purposes of funding
the Contracts through the Accounts listed in Schedule A, as amended
from time to time.
1.10. The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding materially to those contained in
Section 2.9 and Article IV of this Agreement.
ARTICLE II.
Obligations of the Parties
2.1. The Trust shall prepare and be responsible for filing with the
Commission and any state regulators requiring such filing all
shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and
statements of additional information of the Trust. The Trust shall bear
the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this
Section 2.1 and all taxes to which an issuer is subject on the issuance
and transfer of its shares.
2.2. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Trust to the Contract owners as required to be
distributed to such Contract owners under applicable federal or state
law.
2.3. The Trust shall provide such documentation (including a final copy of
the prospectus(es) of the Portfolios indicated on Schedule A as set in
type or in camera-ready copy) and other assistance as is reasonably
necessary in order for the Company to print together in one document
the current prospectus for the Contracts issued by the Company and the
current prospectus for the Trust. The Trust shall bear the expense of
printing copies of its current prospectus that will be distributed to
existing Contract owners, and the Company shall bear the expense of
printing copies of the Trust's prospectus that are used in connection
with offering the Contracts issued by the Company.
2.4. The Trust and the Distributor shall provide (1) at the Trust's expense,
one copy of the Trust's current Statement of Additional Information
("SAI") to the Company and to any Contract owner who requests such SAI,
(2) at the Company's expense, such additional copies of the Trust's
current SAI as the Company shall reasonably request and that the
Company shall require in accordance with applicable law in connection
with offering the Contracts issued by the Company.
2.5. The Trust, at its expense, shall provide the Company with copies of
its proxy material, periodic reports to shareholders and other
communications to shareholders in such quantity as the Company shall
reasonably require for purposes of distributing to Contract owners.
The Trust, at the Company's expense, shall provide the Company with
copies of its periodic reports to shareholders and other
communications to shareholders in such quantity as the Company shall
reasonably request for use in connection with offering the Contracts
issued by the Company. If requested by the Company in lieu thereof,
the Trust shall provide such documentation (including a final copy of
the Trust's proxy materials, periodic reports to shareholders and
other communications to shareholders, as set in type or in
camera-ready copy) and other assistance as reasonably necessary in
order for the Company to print such shareholder communications for
distribution to Contract owners.
2.6. The Company agrees and acknowledges that the Distributor is the sole
owner of the name and mark "Alger" and that all use of any designation
comprised in whole or part of such name or mark under this Agreement
shall inure to the benefit of the Distributor. Except as provided in
Section 2.5, the Company shall not use any such name or mark on its own
behalf or on behalf of the Accounts or Contracts in any registration
statement, advertisement, sales literature or other materials relating
to the Accounts or Contracts without the prior written consent of the
Distributor. Upon termination of this Agreement for any reason, the
Company shall cease all use of any such name or mark as soon as
reasonably practicable.
2.7. The Company shall furnish, or cause to be furnished, to the Trust or
its designee a copy of each Contract prospectus and/or statement of
additional information describing the Contracts, each report to
Contract owners, proxy statement, application for exemption or request
for no-action letter in which the Trust or the Distributor is named
contemporaneously with the filing of such document with the
Commission. The Company shall furnish, or shall cause to be furnished,
to the Trust or its designee each piece of sales literature or other
promotional material in which the Trust or the Distributor is named,
at least five Business Days prior to its use. No such material shall
be used if the Trust or its designee reasonably objects to such use
within three Business Days after receipt of such material.
2.8. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the
Trust or the Distributor in connection with the sale of the Contracts
other than information or representations contained in and accurately
derived from the registration statement or prospectus for the Trust
shares (as such registration statement and prospectus may be amended
or supplemented from time to time), annual and semi-annual reports of
the Trust, Trust-sponsored proxy statements, or in sales literature or
other promotional material approved by the Trust or its designee,
except as required by legal process or regulatory authorities or with
the prior written permission of the Trust, the Distributor or their
respective designees. The Trust and the Distributor agree to respond
to any request for approval on a prompt and timely basis. The Company
shall adopt and implement procedures reasonably designed to ensure
that "broker only" materials including information therein about the
Trust or the Distributor are not distributed to existing or
prospective Contract owners.
2.9. The Trust shall use its best efforts to provide the Company, on a
timely basis, with such information about the Trust, the Portfolios and
the Distributor, in such form as the Company may reasonably require, as
the Company shall reasonably request in connection with the preparation
of registration statements, prospectuses and annual and semi-annual
reports pertaining to the Contracts.
2.10. The Trust and the Distributor shall not give, and agree that no
affiliate of either of them shall give, any information or make any
representations or statements on behalf of the Company or concerning
the Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from the
registration statement or prospectus for the Contracts (as such
registration statement and prospectus may be amended or supplemented
from time to time), or in materials approved by the Company for
distribution including sales literature or other promotional
materials, except as required by legal process or regulatory
authorities or with the prior written permission of the Company. The
Company agrees to respond to any request for approval on a prompt and
timely basis.
2.11. So long as, and to the extent that, the Commission interprets the
1940 Act to require pass-through voting privileges for Contract
owners, the Company will provide pass-through voting privileges to
Contract owners whose cash values are invested, through the registered
Accounts, in shares of one or more Portfolios of the Trust. The Trust
shall require all Participating Insurance Companies to calculate
voting privileges in the same manner and the Company shall be
responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each
registered Account, the Company will vote shares of each Portfolio of
the Trust held by a registered Account and for which no timely voting
instructions from Contract owners are received in the same proportion
as those shares for which voting instructions are received. The
Company and its agents will in no way recommend or oppose or interfere
with the solicitation of proxies for Portfolio shares held to fund the
Contacts without the prior written consent of the Trust, which consent
may be withheld in the Trust's sole discretion. The Company reserves
the right, to the extent permitted by law, to vote shares held in any
Account in its sole discretion.
2.12. The Company and the Trust will each provide to the other information
about the results of any regulatory examination relating to the
Contracts or the Trust, including relevant portions of any "deficiency
letter" and any response thereto.
2.13. No compensation shall be paid by the Trust to the Company, or by the
Company to the Trust, under this Agreement (except for specified
expense reimbursements). However, nothing herein shall prevent the
parties hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust, the
Accounts or both.
ARTICLE III.
Representations and Warranties
3.1. The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of New
York and that it has legally and validly established each Account as a
segregated asset account under such law as of the date set forth in
Schedule A, and that _________________________________, the principal
underwriter for the Contracts, is registered as a broker-dealer under
the Securities Exchange Act of 1934 and is a member in good standing of
the National Association of Securities Dealers, Inc.
3.2. The Company represents and warrants that it has registered or, prior to
any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act
and cause each Account to remain so registered to serve as a segregated
asset account for the Contracts, unless an exemption from registration
is available.
3.3. The Company represents and warrants that the Contracts will be
registered under the 1933 Act unless an exemption from registration is
available prior to any issuance or sale of the Contracts; the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance law suitability
requirements.
3.4. The Trust represents and warrants that it is duly organized and validly
existing under the laws of the Commonwealth of Massachusetts and that
it does and will comply in all material respects with the 1940 Act and
the rules and regulations thereunder.
3.5. The Trust and the Distributor represent and warrant that the Portfolio
shares offered and sold pursuant to this Agreement will be registered
under the 1933 Act and sold in accordance with all applicable federal
and state laws, and the Trust shall be registered under the 1940 Act
prior to and at the time of any issuance or sale of such shares. The
Trust shall amend its registration statement under the 1933 Act and the
1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and qualify
its shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Trust.
3.6. The Trust and Adviser represent and warrant that the investments of
each Portfolio complies and will comply with the diversification
requirements for variable annuity, endowment or life insurance
contracts set forth in Section 817(h) of the Internal Revenue Code of
1986, as amended (the "Code"), and the rules and regulations
thereunder, including without limitation Treasury Regulation 1.817-5,
and will notify the Company immediately upon having a reasonable basis
for believing any Portfolio has ceased to comply or might not so comply
and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance within the grace period afforded by
Regulation 1.817-5.
3.7. The Trust and Adviser represent and warrant that each Portfolio is
currently qualified as a "regulated investment company" under
Subchapter M of the Code, that such qualification will be maintained
and the Trust or the Adviser will notify the Company immediately upon
having a reasonable basis for believing it has ceased to so qualify or
might not so qualify in the future.
3.8. The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of
a Portfolio shall at all times be covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less
than the minimum coverage required by Rule 17g-1 or other applicable
regulations under the 1940 Act. Such bond shall include coverage for
larceny and embezzlement and be issued by a reputable bonding company.
3.9. The Distributor represents that it is duly organized and validly
existing under the laws of the State of Delaware and that it is
registered, and will remain registered, during the term of this
Agreement, as a broker-dealer under the Securities Exchange Act of 1934
and is a member in good standing of the National Association of
Securities Dealers, Inc.
ARTICLE IV.
Potential Conflicts
4.1. The parties acknowledge that a Portfolio's shares may be made
available for investment to other Participating Insurance Companies.
In such event, the Trustees will monitor the Trust for the existence
of any material irreconcilable conflict between the interests of the
contract owners of all Participating Insurance Companies. A material
irreconcilable conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d)
the manner in which the investments of any Portfolio are being
managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a
decision by an insurer to disregard the voting instructions of
contract owners. The Trust shall promptly inform the Company of any
determination by the Trustees that a material irreconcilable conflict
exists and of the implications thereof.
4.2. The Company agrees to report promptly any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist
the Trustees in carrying out their responsibilities under the Shared
Funding Exemptive Order by providing the Trustees with all information
reasonably necessary for and requested by the Trustees to consider any
issues raised including, but not limited to, information as to a
decision by the Company to disregard Contract owner voting
instructions. All communications from the Company to the Trustees may
be made in care of the Trust.
4.3. If it is determined by a majority of the Trustees, or a majority
of the disinterested Trustees, that a material irreconcilable conflict
exists that affects the interests of contract owners, the Company
shall, in cooperation with other Participating Insurance Companies
whose contract owners are also affected, at its own expense and to the
extent reasonably practicable (as determined by the Trustees) take
whatever steps are necessary to remedy or eliminate the material
irreconcilable conflict, which steps could include: (a) withdrawing
the assets allocable to some or all of the Accounts from the Trust or
any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Trust,
or submitting the question of whether or not such segregation should
be implemented to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (b)
establishing a new registered management investment company or managed
separate account.
4.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting
instructions and that decision represents a minority position or would
preclude a majority vote, the Company may be required, at the Trust's
election, to withdraw the affected Account's investment in the Trust
and terminate this Agreement with respect to such Account; provided,
however that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Any such
withdrawal and termination must take place within six (6) months after
the Trust gives written notice that this provision is being
implemented. Until the end of such six (6) month period, the Trust
shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the
Company will withdraw the affected Account's investment in the Trust
and terminate this Agreement with respect to such Account within six
(6) months after the Trustees inform the Company in writing that the
Trust has determined that such decision has created a material
irreconcilable conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested Trustees. Until the end of such six (6) month period,
the Trust shall continue to accept and implement orders by the Company
for the purchase and redemption of shares of the Trust.
4.6. For purposes of Section 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any
proposed action adequately remedies any material irreconcilable
conflict, but in no event will the Trust be required to establish a
new funding medium for any Contract. The Company shall not be required
to establish a new funding medium for the Contracts if an offer to do
so has been declined by vote of a majority of Contract owners
materially adversely affected by the material irreconcilable conflict.
In the event that the Trustees determine that any proposed action does
not adequately remedy any material irreconcilable conflict, then the
Company will withdraw the Account's investment in the Trust and
terminate this Agreement within six (6) months after the Trustees
inform the Company in writing of the foregoing determination;
provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the disinterested Trustees.
4.7. The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so
that the Trustees may fully carry out the duties imposed upon them by
the Shared Funding Exemptive Order, and said reports, materials and
data shall be submitted more frequently if reasonably deemed
appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-3(T) is amended, or Rule 6e-3 is
adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared
Funding Exemptive Order, then the Trust and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rule 6e-3(T), as amended, or Rule 6e-3, as
adopted, to the extent such rules are applicable.
ARTICLE V.
Indemnification
5.1. Indemnification By the Company. The Company agrees to indemnify
and hold harmless the Adviser, Distributor, the Trust and each of its
Trustees, officers, employees and agents and each person, if any, who
controls the Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section
5.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal
counsel fees incurred in connection therewith) (collectively,
"Losses"), to which the Indemnified Parties may become subject under
any statute or regulation, or at common law or otherwise, insofar as
such Losses are related to the sale or acquisition of the Contracts or
Trust shares and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in the
Contracts themselves or in sales literature generated or approved
by the Company on behalf of the Contracts or Accounts (or any
amendment or supplement to any of the foregoing) (collectively,
"Company Documents" for the purposes of this Article V), or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided
that this indemnity shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or
omission was made in reliance upon and was accurately derived
from written information furnished to the Company by or on behalf
of the Trust for use in Company Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and
accurately derived from Trust Documents as defined in Section
5.2(a)) or wrongful conduct of the Company or persons under
its control, with respect to the sale or acquisition of the
Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading if such statement or omission was made in
reliance upon and accurately derived from written information
furnished to the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company or
administrator to provide the services or furnish the materials
required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company or
administrator in this Agreement or arise out of or result from
any other material breach of this Agreement by the Company or
administrator; or
(f) arise out of or result from the provision by the Company or
administrator to the Trust of insufficient or incorrect
information regarding the purchase or sale of shares of any
Portfolio, or the failure of the Company or administrator to
provide such information on a timely basis.
5.2. Indemnification by the Distributor. The Distributor, Adviser and
Trust each jointly and severally agree to indemnify and hold harmless
the Company and each of its directors, officers, employees, and agents
and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for the purposes of this Section 5.2) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Distributor, which consent shall not
be unreasonably withheld) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as such Losses are
related to the sale or acquisition of the Contracts or Trust shares
and: (a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Trust (or any amendment
or supplement thereto) (collectively, "Trust Documents" for the
purposes of this Article V), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Adviser,
Distributor or the Trust by or on behalf of the Company for use in
Trust Documents or otherwise for use in connection with the sale of
the Contracts or Trust shares and; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and
accurately derived form Company Documents) or wrongful conduct
of the Adviser, Distributor or persons under their control,
with respect to the sale or acquisition of the Contracts or
Portfolio shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading if such statement
or omission was made in reliance upon and accurately derived
from written information furnished to the Company by or on
behalf of the Trust, Adviser or Distributor; or
(d) arise out of or result from any failure by the Adviser,
Distributor or the Trust to provide the services or furnish
the materials required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser,
Distributor or the Trust in this Agreement ( including a
failure, whether unintentional or in good faith or otherwise,
to comply with the diversification and subchapter M
requirements specified in Article III ) or arise out of or
result from any other material breach of this Agreement by the
Adviser Distributor or the Trust; or
(f) arise out of or result from the materially incorrect or
materially untimely calculation or reporting of the daily
net asset value per share or dividend or capital gain
distribution rate.
5.3. None of the Company, the Adviser, the Trust or the Distributor
shall be liable under the indemnification provisions of Sections 5.1
or 5.2, as applicable, with respect to any Losses incurred or assessed
against an Indemnified Party that arise from such Indemnified Party's
willful misfeasance, bad faith or negligence in the performance of
such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this
Agreement.
5.4. None of the Company, the Adviser, Trust or the Distributor shall
be liable under the indemnification provisions of Sections 5.1 or 5.2,
as applicable, with respect to any claim made against an Indemnified
party unless such Indemnified Party shall have notified the other
party in writing within a reasonable time after the summons, or other
first written notification, giving information of the nature of the
claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received
notice of service upon or other notification to any designated agent),
but failure to notify the party against whom indemnification is sought
of any such claim shall not relieve that party from any liability
which it may have to the Indemnified Party in the absence of Sections
5.1 and 5.2.
5.5. In case any such action is brought against an Indemnified Party,
the indemnifying party shall be entitled to participate, at its own
expense, in the defense of such action. The indemnifying party also
shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the party named in the action. After notice
from the indemnifying party to the Indemnified Party of an election to
assume such defense, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified Party under
this Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
ARTICLE VI.
Termination
6.1. This Agreement shall terminate:
(a) at the option of any party upon 60 days advance written notice
to the other parties, unless a shorter time is agreed to by
the parties;
(b) at the option of the Trust or the Distributor if the Contracts
issued by the Company cease to qualify as annuity contracts or
life insurance contracts, as applicable, under the Code or if
the Contracts are not registered, issued or sold in accordance
with applicable state and/or federal law; or
(c) at the option of any party upon a determination by a majority
of the Trustees of the Trust, or a majority of its
disinterested Trustees, that a material irreconcilable
conflict exists; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust or the Distributor by the NASD,
the SEC, or any state securities or insurance department or
any other regulatory body regarding the Trust's or the
Distributor's duties under this Agreement or related to the
sale of Trust shares or the operation of the Trust; or
(e) at the option of the Company if the Trust or a Portfolio fails
to meet the diversification requirements specified in Section
3.6 hereof; or
(f) at the option of the Company if shares of the Series are not
reasonably available to meet the requirements of the Variable
Contracts issued by the Company, as determined by the Company,
and upon prompt notice by the Company to the other parties; or
(g) at the option of the Company in the event any of the shares of
the Portfolio are not registered, issued or sold in accordance
with applicable state and/or federal law, or such law
precludes the use of such shares as the underlying investment
media of the Variable Contracts issued or to be issued by the
Company; or
(h) at the option of the Company, if the Portfolio fails to
qualify as a Regulated Investment Company under Subchapter M
of the Code; or
(i) at the option of the Distributor if it shall determine in its
sole judgment exercised in good faith, that the Company and/or
its affiliated companies has suffered a material adverse
change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject
of material adverse publicity.
6.2. Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares
of any Portfolio and redeem shares of any Portfolio pursuant to the
terms and conditions of this Agreement for all Contracts in effect on
the effective date of termination of this Agreement.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Articles I,II,III,IV, and VII and
shall survive the termination of this Agreement as long as shares of
the Trust are held on behalf of Contract owners in accordance with
Section 6.2.
ARTICLE VII.
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust, its Adviser, or its Distributor:
Fred Alger Management, Inc.
30 Montgomery Street
Jersey City, NJ 07302
Attn: Gregory S. Duch
If to the Company:
Transamerica Life Insurance Company of New York
Corporate Secretary
100 Manhattanville Rd.
Purchase, NY 10577
ARTICLE VIII.
Miscellaneous
8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
8.2. This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
8.3. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
8.4. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York. It
shall also be subject to the provisions of the federal securities laws
and the rules and regulations thereunder and to any orders of the
Commission granting exemptive relief therefrom and the conditions of
such orders. Copies of any such orders shall be promptly forwarded by
the Trust to the Company.
8.5. All liabilities of the Trust arising, directly or indirectly, under
this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Trust and no Trustee, officer, agent or
holder of shares of beneficial interest of the Trust shall be
personally liable for any such liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Commission,
the National Association of Securities Dealers, Inc. and state
insurance regulators) and shall permit such authorities reasonable
access to its books and records in connection with any investigation or
inquiry relating to this Agreement or the transactions contemplated
hereby.
8.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal laws.
8.8. This Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the
other party.
8.10. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by both parties.
8.11. Each party hereto shall, except as required by law or otherwise
permitted by this Agreement, treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto, and
shall not disclose such confidential information without the written
consent of the affected party unless such information has become
publicly available.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
Fred Alger and Company, Incorporated
By:________________________________
Name:
Title:
The Alger American Fund
By:_________________________________
Name:
Title:
Transamerica Life Insurance Company of New York
By:___________________________________
Name:
Title:
<PAGE>
SCHEDULE A
The Alger American Fund:
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American Income & Growth Portfolio
<PAGE>
Exhibit (8) Form of Participation Agreements regarding the Portfolio.
(b) re Alliance Variable Products Series Fund, Inc.
<PAGE>
PARTICIPATION AGREEMENT
AMONG
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
TRANSAMERICA SECURITIES SALES CORPORATION
ALLIANCE CAPITAL MANAGEMENT LP
AND
ALLIANCE FUND DISTRIBUTORS, INC.
DATED AS OF
[ ]
<PAGE>
2
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the ___ day of ___________,
199__ ("Agreement"), by and among Transamerica Life Insurance and Annuity
Company, a North Carolina life insurance company ("Insurer") (on behalf of
itself and its "Separate Account," defined below); Transamerica Securities Sales
Corporation, a Maryland corporation ("Contracts Distributor"), the principal
underwriter with respect to the Contracts referred to below; Alliance Capital
Management L.P., a Delaware limited partnership ("Adviser"), the investment
adviser of the Fund referred to below; and Alliance Fund Distributors, Inc., a
Delaware, corporation ("Distributor"), the Fund's principal underwriter
(collectively, the "Parties"),
WITNESSETH THAT:
WHEREAS Insurer, the Distributor, and Alliance Variable Products Series
Fund, Inc. (the "Fund") desire that shares of the Fund's Premier Growth
Portfolio (the "Portfolios"; reference herein to the "Fund" includes reference
to each Portfolio to the extent the context requires) be made available by
Distributor to serve as underlying investment media for those combination fixed
and variable annuity contracts of Insurer that are the subject of Insurer's Form
N-4 registration statement filed with the Securities and Exchange Commission
(the "SEC"), (the "Contracts"), to be offered through Contracts Distributor and
other registered broker-dealer firms as agreed to by Insurer and Contracts
Distributor; and
WHEREAS the Contracts provide for the allocation of net amounts
received by Insurer to separate series (the "Divisions"; reference herein to the
"Separate Account" includes reference to each Division to the extent the context
requires) of the Separate Account for investment in the shares of corresponding
Portfolios of the Fund that are made available through the Separate Account to
act as underlying investment media,
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Fund and Distributor will make shares of the Portfolios
available to Insurer for this purpose at net asset value and with no sales
charges, all subject to the following provisions:
Section 1. Additional Portfolios
The Fund has and may, from time to time, add additional Portfolios,
which will become subject to this Agreement, if, upon the written consent of
each of the Parties hereto, they are made available as investment media for the
Contracts.
Section 2. Processing Transactions
2.1 Timely Pricing and Orders.
The Adviser or its designated agent will provide closing net asset
value, dividend and capital gain information for each Portfolio to Insurer at
the close of trading on each day (a "Business Day") on which (a) the New York
Stock Exchange is open for regular trading, (b) the Fund calculates the
Portfolio's net asset value and (c) Insurer is open for business. The Fund or
its designated agent will use its best efforts to provide this information by
6:00 p.m., Eastern time. Insurer will use these data to calculate unit values,
which in turn will be used to process transactions that receive that same
Business Day's Separate Account Division's unit values. Such Separate Account
processing will be done the same evening, and corresponding orders with respect
to Fund shares will be placed the morning of the following Business Day. Insurer
will use its best efforts to place such orders with the Fund by 10:00 a.m.,
Eastern time.
2.2 Timely Payments.
Insurer will transmit orders for purchases and redemptions of Fund
shares to Distributor, and will wire payment for net purchases to a custodial
account designated by the Fund on the day the order for Fund shares is placed,
to the extent practicable. Payment for net redemptions will be wired by the Fund
to an account designated by Insurer on the same day as the order is placed, to
the extent practicable, and in any event be made within six calendar days after
the date the order is placed in order to enable Insurer to pay redemption
proceeds within the time specified in Section 22(e) of the Investment Company
Act of 1940, as amended (the "1940 Act").
2.3 Redemption in Kind.
The Fund reserves the right to pay any portion of a redemption in kind
of portfolio securities, if the Fund's board of directors (the "Board of
Directors") determines that it would be detrimental to the best interests of
shareholders to make a redemption wholly in cash.
2.4 Applicable Price.
The Parties agree that Portfolio share purchase and redemption orders
resulting from Contract owner purchase payments, surrenders, partial
withdrawals, routine withdrawals of charges, or other transactions under
Contracts will be executed at the net asset values as determined as of the close
of regular trading on the New York Stock Exchange on the Business Day that
Insurer receives such orders and processes such transactions, which, Insurer
agrees shall occur not earlier than the Business Day prior to Distributor's
receipt of the corresponding orders for purchases and redemptions of Portfolio
shares. For the purposes of this section, Insurer shall be deemed to be the
agent of the Fund for receipt of such orders from holders or applicants of
contracts, and receipt by Insurer shall constitute receipt by the Fund. All
other purchases and redemptions of Portfolio shares by Insurer, will be effected
at the net asset values next computed after receipt by Distributor of the order
therefor, and such orders will be irrevocable. Insurer hereby elects to reinvest
all dividends and capital gains distributions in additional shares of the
corresponding Portfolio at the record-date net asset values until Insurer
otherwise notifies the Fund in writing, it being agreed by the Parties that the
record date and the payment date with respect to any dividend or distribution
will be the same Business Day.
Section 3. Costs and Expenses
3.1 General.
Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
3.2 Registration.
The Fund will bear the cost of its registering as a management
investment company under the 1940 Act and registering its shares under the
Securities Act of 1933, as amended (the "1933 Act"), and keeping such
registrations current and effective; including, without limitation, the
preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices
respecting the Fund and its shares and payment of all applicable registration or
filing fees with respect to any of the foregoing. Insurer will bear the cost of
registering the Separate Account as a unit investment trust under the 1940 Act
and registering units of interest under the Contracts under the 1933 Act and
keeping such registrations current and effective; including, without limitation,
the preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices
respecting the Separate Account and its units of interest and payment of all
applicable registration or filing fees with respect to any of the foregoing.
3.3 Other (Non-Sales-Related) Expenses.
The Fund will bear the costs of preparing, filing with the SEC and
setting for printing the Fund's prospectus, statement of additional information
and any amendments or supplements thereto (collectively, the "Fund Prospectus"),
periodic reports to shareholders, Fund proxy material and other shareholder
communications and any related requests for voting instructions from
Participants (as defined below). Insurer will bear the costs of preparing,
filing with the SEC and setting for printing, the Separate Account's prospectus,
statement of additional information and any amendments or supplements thereto
(collectively, the "Separate Account Prospectus"), any periodic reports to
owners, annuitants or participants under the Contracts (collectively,
"Participants"), and other Participant communications. The Fund and Insurer each
will bear the costs of printing in quantity and delivering to existing
Participants the documents as to which it bears the cost of preparation as set
forth above in this Section 3.3, it being understood that reasonable cost
allocations will be made in cases where any such Fund and Insurer documents are
printed or mailed on a combined or coordinated basis. If requested by Insurer,
the Fund will provide annual Prospectus text to Insurer on diskette for printing
and binding with the Separate Account Prospectus.
3.4 Other Sales-Related Expenses.
Expenses of distributing the Portfolio's shares and the Contracts will
be paid by Contracts Distributor and other parties, as they shall determine by
separate agreement.
3.5 Parties to Cooperate.
The Adviser, Insurer, Contracts Distributor, and Distributor each
agrees to cooperate with the others, as applicable, in arranging to print, mail
and/or deliver combined or coordinated prospectuses or other materials of the
Fund and Separate Account.
Section 4. Legal Compliance
4.1 Tax Laws.
(a) The Adviser will use its best efforts to qualify and to maintain
qualification of each Portfolio as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
the Adviser or Distributor will notify Insurer immediately upon having a
reasonable basis for believing that a Portfolio has ceased to so qualify or that
it might not so qualify in the future.
(b) Insurer represents that it believes, in good faith, that the
Contracts will be treated as annuity contracts under applicable provisions of
the Code and that it will make every effort to maintain such treatment. Insurer
will notify the Fund and Distributor immediately upon having a reasonable basis
for believing that any of the Contracts have ceased to be so treated or that
they might not be so treated in the future.
(c) The Fund will use its best efforts to comply and to maintain each
Portfolio's compliance with the diversification requirements set forth in
Section 817(h) of the Code and Section 1.817-5(b) of the regulations under the
Code, and the Fund, Adviser or Distributor will notify Insurer immediately upon
having a reasonable basis for believing that a Portfolio has ceased to so comply
or that a Portfolio might not so comply in the future.
(d) Insurer represents that it believes, in good faith, that the
Separate Account is a "segregated asset account" and that interests in the
Separate Account are offered exclusively through the purchase of or transfer
into a "variable contract," within the meaning of such terms under Section
817(h) of the Code and the regulations thereunder. Insurer will make every
effort to continue to meet such definitional requirements, and it will notify
the Fund and Distributor immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they might not be
met in the future.
(e) The Adviser will manage the Fund as a RIC in compliance with
Subchapter M of the Code and will use its best efforts to manage to be in
compliance with Section 817(h) of the Code and regulations thereunder. The Fund
has adopted and will maintain procedures for ensuring that the Fund is managed
in compliance with Subchapter M and Section 817(h) and regulations thereunder.
(f) Should the Distributor or Adviser become aware of a failure of
Fund, or any of its Portfolios, to be in compliance with Subchapter M of the
Code or Section 817(h) of the Code and regulations thereunder, they represent
and agree that they will immediately notify Insurer of such in writing.
4.2 Insurance and Certain Other Laws.
(a) The Adviser will use its best efforts to cause the Fund to comply
with any applicable state insurance laws or regulations, to the extent
specifically requested in writing by Insurer. If it cannot comply, it will so
notify Insurer in writing.
(b) Insurer represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of [____________] and has full corporate power, authority and legal right
to execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains the
Separate Account as a segregated asset account under [State Law], and (iii) the
Contracts comply in all material respects with all other applicable federal and
state laws and regulations.
(c) Insurer and Contracts Distributor represent and warrant that
Contracts Distributor is a business corporation duly organized, validly
existing, and in good standing under the laws of the State of [____________] and
has full corporate power, authority and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.
(d) Distributor represents and warrants that it is a business
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full corporate power, authority and legal
right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.
(e) Distributor represents and warrants that the Fund is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Maryland and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
(f) Adviser represents and warrants that it is a limited partnership,
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
4.3 Securities Laws.
(a) Insurer represents and warrants that (i) interests in the Separate
Account pursuant to the Contracts will be registered under the 1933 Act to the
extent required by the 1933 Act and the Contracts will be duly authorized for
issuance and sold in compliance with [State] law, (ii) the Separate Account is
and will remain registered under the 1940 Act to the extent required by the 1940
Act, (iii) the Separate Account does and will comply in all material respects
with the requirements of the 1940 Act and the rules thereunder, (iv) the
Separate Account's 1933 Act registration statement relating to the Contracts,
together with any amendments thereto, will, at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder, and (v)
the Separate Account Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.
(b) The Adviser and Distributor represent and warrant that (i) Fund
shares sold pursuant to this Agreement will be registered under the 1933 Act to
the extent required by the 1933 Act and duly authorized for issuance and sold in
compliance with Maryland law, (ii) the Fund is and will remain registered under
the 1940 Act to the extent required by the 1940 Act, (iii) the Fund will amend
the registration statement for its shares under the 1933 Act and itself under
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares, (iv) the Fund does and will comply in all material
respects with the requirements of the 1940 Act and the rules thereunder, (v) the
Fund's 1933 Act registration statement, together with any amendments thereto,
will at all times comply in all material respects with the requirements of the
1933 Act and rules thereunder, and (vi) the Fund Prospectus will at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder.
(c) The Fund will register and qualify its shares for sale in
accordance with the laws of any state or other jurisdiction only if and to the
extent reasonably deemed advisable by the Fund, Insurer or any other life
insurance company utilizing the Fund.
(d) Distributor and Contracts Distributor each represents and warrants
that it is registered as a broker-dealer with the SEC under the Securities
Exchange Act of 1934, as amended, and is a member in good standing of the
National Association of Securities Dealers Inc. (the "NASD").
4.4 Notice of Certain Proceedings and Other Circumstances.
(a) Distributor or the Fund shall immediately notify Insurer of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to the Fund's registration statement
under the 1933 Act or the Fund Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or Fund Prospectus, (iii) the
initiation of any proceedings for that purpose or for any other purpose relating
to the registration or offering of the Fund's shares, or (iv) any other action
or circumstances that may prevent the lawful offer or sale of Fund shares in any
state or jurisdiction, including, without limitation, any circumstances in which
(x) the Fund's shares are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law or (y) such law
precludes the use of such shares as an underlying investment medium of the
Contracts issued or to be issued by Insurer. Distributor and the Fund will make
every reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) Insurer and Contracts Distributor shall immediately notify the Fund
of (i) the issuance by any court or regulatory body of any stop order, cease and
desist order or similar order with respect to the Separate Account's
registration statement under the 1933 Act relating to the Contracts or the
Separate Account Prospectus, (ii) any request by the SEC for any amendment to
such registration statement or Separate Account Prospectus, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of the Separate Account interests pursuant to the
Contracts, or (iv) any other action or circumstances that may prevent the lawful
offer or sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. Insurer and Contracts Distributor will make every reasonable effort
to prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting thereof at
the earliest possible time.
4.5 Insurer to Provide Documents.
Upon request, Insurer will provide the Fund and the Distributor one
complete copy of SEC registration statements, Separate Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and amendments to
any of the above, that relate to the Separate Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
4.6 Fund to Provide Documents.
Upon request, the Fund will provide to Insurer one complete copy of SEC
registration statements, Fund Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
Section 5. Mixed and Shared Funding
5.1 General.
The Fund has obtained an order exempting it from certain provisions of
the 1940 Act and rules thereunder so that the Fund is available for investment
by certain other entities, including, without limitation, separate accounts
funding variable life insurance policies and separate accounts of insurance
companies unaffiliated with Insurer ("Mixed and Shared Funding Order"). The
Parties recognize that the SEC has imposed terms and conditions for such orders
that are substantially identical to many of the provisions of this Section 5.
5.2 Disinterested Directors.
The Fund agrees that its Board of Directors shall at all times consist
of directors a majority of whom (the "Disinterested Directors") are not
interested persons of Adviser or Distributor within the meaning of Section
2(a)(I 9) of the 1940 Act.
5.3 Monitoring for Material Irreconcilable Conflicts.
The Fund agrees that its Board of Directors will monitor for the
existence of any material irreconcilable conflict between the interests of the
participants in all separate accounts of life insurance companies utilizing the
Fund, including the Separate Account. Insurer agrees to inform the Board of
Directors of the Fund of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The concept of a "material
irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder,
but the Parties recognize that such a conflict may arise for a variety of
reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax or
securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract participants or by
participants of different life insurance companies utilizing the Fund; or
(f) a decision by a life insurance company utilizing the Fund to
disregard the voting instructions of participants.
Insurer will assist the Board of Directors in carrying out its
responsibilities by providing the Board of Directors with all information
reasonably necessary for the Board of Directors to consider any issue raised,
including information as to a decision by Insurer to disregard voting
instructions of Participants.
5.4 Conflict Remedies.
(a) It is agreed that if it is determined by a majority of the members
of the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, Insurer and the other life insurance
companies utilizing the Fund will, at their own expense and to the extent
reasonably practicable (as determined by a majority of the Disinterested
Directors), take whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, which steps may include, but are not limited
to:
(i) withdrawing the assets allocable to some or all of the
separate accounts from the Fund or any Portfolio and
reinvesting such assets in a different investment medium,
including another Portfolio of the Fund, or submitting the
question whether such segregation should be implemented to a
vote of all affected participants and, as appropriate,
segregating the assets of any particular group (e.g.,
annuity contract owners or participants, life insurance
contract owners or all contract owners and participants of
one or more life insurance companies utilizing the Fund)
that votes in favor of such segregation, or offering to the
affected contract owners or participants the option of
making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "Management Company" in Section 4(3) of the
1940 Act or a new separate account that is operated as a
Management Company.
(b) If the material irreconcilable conflict arises because of Insurer's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, Insurer may be
required, at the Fund's election, to withdraw the Separate Account's investment
in the Fund. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal must take place within six months after the Fund
gives notice to Insurer that this provision is being implemented, and until such
withdrawal Distributor and the Fund shall continue to accept and implement
orders by Insurer for the purchase and redemption of shares of the Fund.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Insurer conflicts with the
majority of other state regulators, then Insurer will withdraw the Separate
Account's investment in the Fund within six months after the Fund's Board of
Directors informs Insurer that it has determined that such decision has created
a material irreconcilable conflict, and until such withdrawal Distributor and
Fund shall continue to accept and implement orders by Insurer for the purchase
and redemption of shares of the Fund.
(d) Insurer agrees that any remedial action taken by it in resolving
any material irreconcilable conflict will be carried out at its expense and with
a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will the Fund or Distributor be
required to establish a new funding medium for any Contracts. Insurer will not
be required by the terms hereof to establish a new funding medium for any
Contracts if an offer to do so has been declined by vote of a majority of
Participants materially adversely affected by the material irreconcilable
conflict.
5.5 Notice to Insurer.
The Fund will promptly make known in writing to Insurer the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 Information Requested by Board of Directors.
Insurer and the Fund will at least annually submit to the Board of
Directors of the Fund such reports, materials or data as the Board of Directors
may reasonably request so that the Board of Directors may fully carry out the
obligations imposed upon it by the provisions hereof, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Directors. All reports received by the Board of Directors of
potential or existing conflicts, and all Board of Directors actions with regard
to determining the existence of a conflict, notifying life insurance companies
utilizing the Fund of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Directors or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
5.7 Compliance with SEC Rules.
If, at any time during which the Fund is serving an investment medium
for variable life insurance policies, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to mixed and shared funding, the Parties agree that they will comply
with the terms and conditions thereof and that the terms of this Section 5 shall
be deemed modified if and only to the extent required in order also to comply
with the terms and conditions of such exemptive relief that is afforded by any
of said rules that are applicable.
Section 6. Termination
6.1 Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a
Portfolio:
(a) at the option of Insurer or Distributor upon at least six months
advance written notice to the other Parties, or
(b) at the option of the Fund upon (i) at least sixty days advance
written notice to the other parties, and (ii) approval by (x) a majority of the
disinterested Directors upon a finding that a continuation of this Contract is
contrary to the best interests of the Fund, or (y) a majority vote of the shares
of the affected Portfolio in the corresponding Division of the Separate Account
(pursuant to the procedures set forth in Section 10 of this Agreement for voting
Trust shares in accordance with Participant instructions).
(c) at the option of the Fund upon institution of formal proceedings
against Insurer or Contracts Distributor by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding Insurer's obligations
under this Agreement or related to the sale of the Contracts, the operation of
the Separate Account, or the purchase of the Fund shares, if, in each case, the
Fund reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on the Portfolio to be terminated; or
(d) at the option of Insurer upon institution of formal proceedings
against the Fund, Adviser, or Distributor by the NASD, the SEC, or any state
insurance regulator or any other regulatory body regarding the Fund's, Adviser's
or Distributor's obligations under this Agreement or related to the operation or
management of the Fund or the purchase of Fund shares, if, in each case, Insurer
reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on Insurer, Contracts Distributor or the Division
corresponding to the Portfolio to be terminated; or
(e) at the option of any Party in the event that (i) the Portfolio's
shares are not registered and, in all material respects, issued and sold in
accordance with any applicable state and federal law or (ii) such law precludes
the use of such shares as an underlying investment medium of the Contracts
issued or to be issued by Insurer; or
(f) upon termination of the corresponding Division's investment in the
Portfolio pursuant to Section 5 hereof; or
(g) at the option of Insurer if the Portfolio ceases to qualify as a
RIC under Subchapter M of the Code or under successor or similar provisions; or
(h) at the option of Insurer if the Portfolio fails to comply with
Section 817(h) of the Code or with successor or similar provisions; or
(i) at the option of Insurer if Insurer reasonably believes that any
change in a Fund's investment adviser or investment practices will materially
increase the risks incurred by Insurer.
6.2 Funds to Remain Available.
Except (i) as necessary to implement Participant-initiated
transactions, (ii) as required by state insurance laws or regulations, (iii) as
required pursuant to Section 5 of this Agreement, or (iv) with respect to any
Portfolio as to which this Agreement has terminated, Insurer shall not (x)
redeem Fund shares attributable to the Contracts, or (y) prevent Participants
from allocating payments to or transferring amounts from a Portfolio that was
otherwise available under the Contracts, until, in either case, 90 calendar days
after Insurer shall have notified the Fund or Distributor of its intention to do
so.
6.3 Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of
this Agreement.
6.4 Continuance of Agreement for Certain Purposes.
Notwithstanding any termination of this Agreement, the Distributor
shall continue to make available shares of the Portfolios pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (the "Existing Contracts"), except as
otherwise provided under Section 5 of this Agreement. Specifically, and without
limitation, the Distributor shall facilitate the sale and purchase of shares of
the Portfolios as necessary in order to process premium payments, surrenders and
other withdrawals, and transfers or reallocations of values under Existing
Contracts.
Section 7. Parties to Cooperate Respecting Termination
The other Parties hereto agree to cooperate with and give reasonable
assistance to Insurer in taking all necessary and appropriate steps for the
purpose of ensuring that the Separate Account owns no shares of a Portfolio
after the Final Termination Date with respect thereto.
Section 8. Assignment
This Agreement may not be assigned by any Party, except with the
written consent of each other Party.
Section 9. Notices
Notices and communications required or permitted by Section 2 hereof
will be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
Insurer
[address]
[Contracts Distributor]
[address]
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York NY 10105
Attn.: Edmund P. Bergan
FAX: (212) 969-2290
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York NY 10105
Attn: Edmund P. Bergan
FAX: (212) 969-2290
Section 10. Voting Procedures
Subject to the cost allocation procedures set forth in Section 3
hereof, Insurer will distribute all proxy material furnished by the Fund to
Participants and will vote Fund shares in accordance with instructions received
from Participants. Insurer will vote Fund shares that are (a) not attributable
to Participants or (b) attributable to Participants, but for which no
instructions have been received, in the same proportion as Fund shares for which
said instructions have been received from Participants. Insurer agrees that it
will disregard Participant voting instructions only to the extent it would be
permitted to do so pursuant to Rule 6e-3 (T)(b)(15)(iii) under the 1940 Act if
the Contracts were variable life insurance policies subject to that rule. Other
participating life insurance companies utilizing the Fund will be responsible
for calculating voting privileges in a manner consistent with that of Insurer,
as prescribed by this Section 10.
Section 11. Foreign Tax Credits
The Adviser agrees to consult in advance with Insurer concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to the Fund's shareholders.
Section 12. Indemnification
12.1 Of Fund, Distributor and Adviser by Insurer.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, Insurer agrees to indemnify and hold harmless the Fund, Distributor and
Adviser, each of their directors and officers, and each person, if any, who
controls the Fund, Distributor or Adviser within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 12. 1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Insurer) or
actions in respect thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or actions are related to the sale, acquisition, or holding
of the Fund's shares and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Separate Account's 1933 Act registration statement, the
Separate Account Prospectus, the Contracts or, to the extent
prepared by Insurer or Contracts Distributor, sales
literature or advertising for the Contracts (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading; provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to Insurer or Contracts Distributor by or on
behalf of the Fund, Distributor or Adviser for use in the
Separate Account's 1933 Act registration statement, the
Separate Account Prospectus, the Contracts, or sales
literature or advertising (or any amendment or supplement to
any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Fund's 1933 Act registration statement,
Fund Prospectus, sales literature or advertising of the
Fund, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of
Insurer or Contracts Distributor) or the negligent, illegal
or fraudulent conduct of Insurer or Contracts Distributor or
persons under their control (including, without limitation,
their employees and "Associated Persons," as that term is
defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Fund's 1933 Act registration statement, Fund Prospectus,
sales literature or advertising of the Fund, or any
amendment or supplement to any of the foregoing, or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund, Adviser or Distributor by
or on behalf of Insurer or Contracts Distributor for use in
the Fund's 1933 Act registration statement, Fund Prospectus,
sales literature or advertising of the Fund, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by Insurer or Contracts
Distributor to perform the obligations, provide the services
and furnish the materials required of them under the terms
of this Agreement.
(b) Insurer shall not be liable under this Section 12.1 with respect to
any losses, claims, damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that Indemnified Party of its duties or
by reason of that Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to Distributor or to the Fund.
(c) Insurer shall not be liable under this Section 12.1 with respect to
any action against an Indemnified Party unless the Fund, Distributor or Adviser
shall have notified Insurer in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Insurer of any such action shall not relieve
Insurer from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this Section 12. 1. In
case any such action is brought against an Indemnified Party, Insurer shall be
entitled to participate, at its own expense, in the defense of such action.
Insurer also shall be entitled to assume the defense thereof, with counsel
approved by the Indemnified Party named in the action, which approval shall not
be unreasonably withheld. After notice from Insurer to such Indemnified Party of
Insurer's election to assume the defense thereof, the Indemnified Party will
cooperate fully with Insurer and shall bear the fees and expenses of any
additional counsel retained by it, and Insurer will not be liable to such
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection with
the defense thereof, other than reasonable costs of investigation.
12.2 Indemnification of Insurer and Contracts Distributor by Adviser.
(a) Except to the extent provided in Sections 12.2(d) and 12.2(e),
below, Adviser agrees to indemnify and hold harmless Insurer and Contracts
Distributor, each of their directors and officers, and each person, if any, who
controls Insurer or Contracts Distributor within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 12.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Adviser) or
actions in respect thereof (including, to the extent reasonable, legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or actions are related to the sale, acquisition, or holding of the Fund's shares
and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Fund's 1933 Act registration statement, Fund Prospectus,
sales literature or advertising of the Fund or, to the
extent not prepared by Insurer or Contracts Distributor,
sales literature or advertising for the Contracts (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading; provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to Distributor, Adviser or the Fund by or on
behalf of Insurer or Contracts Distributor for use in the
Fund's 1933 Act registration statement, Fund Prospectus, or
in sales literature or advertising (or any amendment or
supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Separate Account's 1933 Act registration
statement, Separate Account Prospectus, sales literature or
advertising for the Contracts, or any amendment or
supplement to any of the foregoing, not supplied for use
therein by or on behalf of Distributor, Adviser, or the
Fund) or the negligent, illegal or fraudulent conduct of the
Fund, Distributor, Adviser or persons under their control
(including, without limitation, their employees and
Associated Persons), in connection with the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Separate Account's 1933 Act registration statement,
Separate Account Prospectus, sales literature or advertising
covering the Contracts, or any amendment or supplement to
any of the foregoing, or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
if such statement or omission was made in reliance upon and
in conformity with information furnished to Insurer or
Contracts Distributor by or on behalf of the Fund,
Distributor or Adviser for use in the Separate Account's
1933 Act registration statement, Separate Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by the Fund, Adviser or
Distributor to perform the obligations, provide the services
and furnish the materials required of them under the terms
of this Agreement;
(b) Except to the extent provided in Sections 12.2(d) and 12.2(e)
hereof, Adviser agrees to indemnify and hold harmless the Indemnified Parties
from and against any and all losses, claims, damages, liabilities (including
amounts paid in settlement thereof with, except as set forth in Section 12.2(c)
below, the written consent of Adviser) or actions in respect thereof (including,
to the extent reasonable, legal and other expenses) to which the Indemnified
Parties may become subject directly or indirectly under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
actions directly or indirectly result from or arise out of the failure of any
Portfolio to operate as a regulated investment company in compliance with (i)
Subchapter M of the Code and regulations thereunder and (ii) Section 817(h) of
the Code and regulations thereunder (except to the extent that such failure is
caused by Insurer), including, without limitation, any income taxes and related
penalties, rescission charges, liability under state law to Contract owners or
Participants asserting liability against Insurer or Contracts Distributor
pursuant to the Contracts, the costs of any ruling and closing agreement or
other settlement with the Internal Revenue Service, and the cost of any
substitution by Insurer of shares of another investment company or portfolio for
those of any adversely affected Portfolio as a funding medium for the Separate
Account that Insurer deems necessary or appropriate as a result of the
noncompliance.
(c) The written consent of Adviser referred to in Section 12.2(b) above
shall not be required with respect to amounts paid in connection with any ruling
and closing agreement or other settlement with the Internal Revenue Service.
(d) Adviser shall not be liable under this Section 12.2 with respect to
any losses, claims; damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that Indemnified Party of its duties or
by reason of such Indemnified Party's reckless disregard of its obligations and
duties under this Agreement or to Insurer, Contracts Distributor or the Separate
Account.
(e) Adviser shall not be liable under this Section 12.2 with respect to
any action against an Indemnified Party unless Insurer or Contracts Distributor
shall have notified Adviser in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Adviser of any such action shall not relieve
Adviser from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this Section 12.2. In
case any such action is brought against an Indemnified Party, Adviser will be
entitled to participate, at its own expense, in the defense of such action.
Adviser also shall be entitled to assume the defense thereof (which shall
include, without limitation, the conduct of any ruling request and closing
agreement or other settlement proceeding with the Internal Revenue Service),
with counsel approved by the Indemnified Party named in the action, which
approval shall not be unreasonably withheld. After notice from Adviser to such
Indemnified Party of Adviser's election to assume the defense thereof, the
Indemnified Party will cooperate fully with Adviser and shall bear the fees and
expenses of any additional counsel retained by it, and Adviser will not be
liable to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
12.3 Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Section 12.1(c) or 12.2(e) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.
Section 13. Applicable Law
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with New York law, without regard for that state's
principles of conflict of laws.
Section 14. Execution in Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
Section 15. Severability
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
Section 16. Rights Cumulative
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
Section 17. Restrictions on Sales of Fund Shares
Insurer agrees that the Fund will be permitted (subject to the other
terms of this
Agreement) to make its shares available to separate accounts of other
life insurance companies.
Section 18. Headings
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers signing below.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
By:
Name:
Title:
TRANSAMERICA SECURITIES SALES CORPORATION
By:
Name:
Title:
ALLIANCE CAPITAL MANAGEMENT LP
By: Alliance Capital Management Corporation,
its General Partner
By:
Name:
Title:
ALLIANCE FUND DISTRIBUTORS, INC.
By:
Name:
Title:
<PAGE>
Exhibit (8) Form of Participation Agreements regarding the Portfolio.
(d) re Janus Aspen Series
<PAGE>
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this ____ day of __________, 199_, between JANUS
ASPEN SERIES, an open-end management investment company organized as a Delaware
business trust (the "Trust"), JANUS CAPITAL CORPORATION (the "Adviser"), a
Colorado Corporation and the investment adviser to the Trust, and TRANSAMERICA
LIFE INSURANCE COMPANY OF NEW YORK, a life insurance company organized under the
laws of the State of North Carolina (the "Company"), on its own behalf and on
behalf of each segregated asset account of the Company set forth on Schedule A,
as may be amended from time to time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust has registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and has registered the offer
and sale of its shares under the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has received an order from the Securities and
Exchange Commission granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless
registration is not required under applicable law) certain variable life
insurance policies and/or variable annuity contracts under the 1933 Act (the
"Contracts"); and
WHEREAS, the Company has registered or will register (unless
registration is not required under applicable law) each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Adviser is registered with the Securities and Exchange
Commission as an investment adviser under the Investment Advisers Act of 1940,
as amended;
WHEREAS, the Company desires to utilize shares of one or more
Portfolios as an investment vehicle of the Accounts;
WHEREAS, the Company may contract with an Administrator to perform
certain administrative services with regard to the Contracts and Account(s) and,
therefore, certain obligations of the Trust and/or Adviser shall be directed to
the Administrator, as directed by the Company.
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
Sale of Trust Shares
1.1 The Trust and the Adviser shall make shares of the Trust's
Portfolios available to the Accounts at the net asset value next computed after
receipt of such purchase order by the Trust (or its agent), as established in
accordance with the provisions of the then current prospectus of the Trust.
Shares of a particular Portfolio of the Trust shall be ordered in such
quantities and at such times as determined by the Company or its Administrator
to be necessary to meet the requirements of the Contracts. The Trustees of the
Trust (the "Trustees") may refuse to sell shares of any Portfolio to any person,
or suspend or terminate the offering of shares of any Portfolio if such action
is required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Trustees acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Portfolio.
1.2 The Trust will redeem any full or fractional shares of any
Portfolio when requested by the Company or its Administrator on behalf of an
Account at the net asset value next computed after receipt by the Trust (or its
agent) of the request for redemption, as established in accordance with the
provisions of the then current prospectus of the Trust.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints
the Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. Receipt by the Company shall constitute receipt by the Trust
provided that i) such orders are received by the Company in good order prior to
the time the net asset value of each Portfolio is priced in accordance with its
prospectus and ii) the Trust receives notice of such orders by 11:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading unless the Trust is not
required to calculate its net asset value on such a day pursuant to the rules of
the Securities and Exchange Commission ("SEC").
1.4 Purchase orders that are transmitted to the Trust in accordance
with Section 1.3 shall be paid for no later than 12:00 noon New York time on the
same Business Day that the Trust receives notice of the order. The Trust shall
use its best efforts to make payment for redemption orders transmitted to the
Trust in accordance with Section 1.3 by 3:00 p.m. New York time on the same
Business Day that the Trust receives notice of the order, but in no event shall
payment be delayed for a greater period than is permitted by the 1940 Act.
Payments shall be made in federal funds transmitted by wire.
1.5 Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6 The Trust shall furnish prompt notice to the Company or its
Administrator, as specified by the Company, of any income dividends or capital
gain distributions payable on the Trust's shares prior to the payment of such
dividends. The Company hereby elects to receive all such income dividends and
capital gain distributions as are payable on a Portfolio's shares in additional
shares of that Portfolio. The Trust shall notify the Company or its
Administrator, as specified by the Company, of the number of shares so issued as
payment of such dividends and distributions prior to the payment of such
dividends.
1.7 The Trust shall make the net asset value per share for each
Portfolio available to the Company or its Administrator, as specified by the
Company, on a daily basis every Business Day as soon as reasonably practical
after the net asset value per share is calculated and shall use its best efforts
to make such net asset value per share available by 6 p.m. New York time.
1.8 The Trust and the Adviser agree that the Trust's shares will be
sold only to Participating Insurance Companies and their separate accounts and
to certain qualified pension and retirement plans to the extent permitted by the
Exemptive Order. No shares of any Portfolio will be sold directly to the general
public. The Company agrees that Trust shares will be used only for the purposes
of funding the Contracts and Accounts listed in Schedule A, as amended from time
to time.
1.9 The Trust and the Adviser agree that all Participating Insurance
Companies shall have the obligations and responsibilities regarding pass-through
voting and conflicts of interest corresponding to those contained in Section 2.8
and Article IV of this Agreement.
1.10 If the Trust provides materially incorrect share net asset value
information through no fault of the Company, the Company shall be entitled to an
adjustment with respect to the Trust shares purchased or redeemed to reflect the
correct net asset value per share. The determination of the materiality of any
net asset value pricing error shall be based on the SEC's recommended guidelines
regarding such errors. The correction of any such errors shall be made at the
Company level and shall be made pursuant to the SEC's recommended guidelines.
Any material error in the calculation or reporting of net asset value per share,
dividend or capital gain information shall be reported promptly upon discovery
to the Company.
ARTICLE II
Obligations of the Parties
2.1 The Trust and the Adviser shall prepare and be responsible for
filing with the Securities and Exchange Commission and any state regulators
requiring such filing all shareholder reports, notices, proxy materials (or
similar materials such as voting instruction solicitation materials),
prospectuses, statements of additional information, and fund profiles (upon the
adoption of Rule 498 under the 1933 Act) of the Trust. The Trust shall bear the
costs of registration and qualification of its shares, preparation and filing of
the documents listed in this Section 2.1 and all taxes to which an issuer is
subject on the issuance and transfer of its shares.
2.2 At the option of the Company, the Trust shall either (a) provide
the Company (at the Company's expense) with as many copies of the current
prospectus, annual report, semi-annual report, fund profiles and other
shareholder communications, including any amendments or supplements to any of
the foregoing, for the Trust's Portfolios in which the Accounts invest, as the
Company shall reasonably request; or (b) provide the Company with a camera ready
copy of such documents in a form suitable for printing. The Trust shall provide
the Company with a copy of its statement of additional information in a form
suitable for duplication by the Company. The Trust (at its expense) shall
provide the Company with copies of any Trust-sponsored proxy materials in such
quantity as the Company shall reasonably require for distribution to Contract
owners.
2.3 The Company shall bear the costs of printing and distributing the
Trust's prospectus, statement of additional information, shareholder reports and
other shareholder communications to owners of and applicants for policies for
which the Trust is serving or is to serve as an investment vehicle. The Company
shall bear the costs of distributing proxy materials (or similar materials such
as voting solicitation instructions) to Contract owners. The Company assumes
sole responsibility for ensuring that such materials are delivered to Contract
owners in accordance with applicable federal and state securities laws.
2.4 The Company agrees and acknowledges that the Adviser is the sole
owner of the name and mark "Janus" and that all use of any designation comprised
in whole or part of Janus (a "Janus Mark") under this Agreement shall inure to
the benefit of the Adviser. Except as provided in Section 2.5, the Company shall
not use any Janus Mark on its own behalf or on behalf of the Accounts or
Contracts in any registration statement, advertisement, sales literature or
other materials relating to the Accounts or Contracts without the prior written
consent of the Adviser. Upon termination of this Agreement for any reason, the
Company shall cease all use of any Janus Mark(s) as soon as reasonably
practicable except with respect to shares of the Trust that continue to be made
available to Contract owners in accordance with Section 6.2.
2.5 The Company shall furnish, or cause to be furnished, to the Trust
or its designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or the Adviser is named prior to the filing of
such document with the Securities and Exchange Commission. The Company shall
furnish, or shall cause to be furnished, to the Trust or its designee, each
piece of sales literature or other promotional material in which the Trust or
the Adviser is named, at least fifteen Business Days prior to its use. No such
material shall be used if the Trust or its designee reasonably objects to such
use within fifteen Business Days after receipt of such material.
2.6 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust or
the Adviser in connection with the sale of the Contracts other than information
or representations contained in and accurately derived from the registration
statement or prospectus for the Trust shares (as such registration statement and
prospectus may be amended or supplemented from time to time), reports of the
Trust, Trust-sponsored proxy statements, or in sales literature or other
promotional material approved by the Trust or its designee, except as required
by legal process or regulatory authorities or with the written permission of the
Trust or its designee.
2.7 The Trust and the Adviser shall not give any information or make
any representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and prospectus may
be amended or supplemented from time to time), or in materials approved by the
Company for distribution including sales literature or other promotional
materials, except as required by legal process or regulatory authorities or with
the written permission of the Company.
2.8 So long as, and to the extent that the Securities and Exchange
Commission interprets the 1940 Act to require pass-through voting privileges for
variable policyowners, the Company will provide pass-through voting privileges
to owners of policies whose cash values are invested, through the Accounts, in
shares of the Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each Account, the
Company will vote shares of the Trust held by the Account and for which no
timely voting instructions from policyowners are received as well as shares it
owns that are held by that Account, in the same proportion as those shares for
which voting instructions are received. The Company and its agents will in no
way recommend or oppose or interfere with the solicitation of proxies for Trust
shares held by Contract owners without the prior written consent of the Trust,
which consent may be withheld in the Trust's sole discretion.
2.9 The Company shall notify the Trust of any applicable state
insurance laws that restrict the Portfolios' investments or otherwise affect the
operation of the Trust and shall notify the Trust of any changes in such laws.
ARTICLE III
Representations and Warranties
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of North
Carolina and that it has legally and validly established each Account as a
segregated asset account under such law.
3.2 The Company represents and warrants that each Account (1) has been
registered or, prior to any issuance or sale of the Contracts, will be
registered as a unit investment trust in accordance with the provisions of the
1940 Act or, alternatively (2) has not been registered in proper reliance upon
an exclusion from registration under the 1940 Act.
3.3 The Company represents and warrants that the Contracts or interests
in the Accounts (1) are or, prior to issuance, will be registered as securities
under the 1933 Act or, alternatively (2) are not registered because they are
properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the Contracts will be
issued in compliance in all material respects with all applicable federal and
state laws and the Company represents and warrants that it will make every
effort to see that the Contracts are sold in compliance in all material respects
with all applicable federal and state laws and that the sale of the Contracts
shall comply in all material respects with state insurance suitability
requirements.
3.4 The Trust and the Adviser represent and warrant that the Trust is
duly organized and validly existing under the laws of the State of Delaware.
3.5 The Trust and the Adviser represent and warrant that the Trust
shares offered and sold pursuant to this Agreement will be registered under the
1933 Act and the Trust shall be registered under the 1940 Act prior to any
issuance or sale of such shares. The Trust shall amend its registration
statement under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Trust shall register
and qualify its shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Trust.
3.6 The Trust and the Adviser represent and warrant that the
investments of each Portfolio will comply with the diversification requirements
set forth in Section 817(h) of the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder, that the Trust and Adviser will notify
the Company immediately upon having a reasonable basis for believing that the
Trust or any Portfolio has ceased to meet such diversification requirements and
will immediately take steps to adequately diversify the Trust and/or Portfolio
to achieve compliance within the grace period afforded by Treas. Reg. Section
1.817-5.
3.7 the Trust and the Adviser represent and warrant that the Trust and
each Portfolio is currently qualified as a regulated investment company under
Subchapter M of the Code, that they will maintain that qualification and that
they will notify the Company immediately upon having a reasonable basis for
believing that the Trust has ceased to qualify or may not qualify in the future.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that the Trust's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3 If it is determined by a majority of the Trustees, or a majority of
its disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by the
Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Trust or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the question of
whether or not such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Contract owners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
4.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Any such withdrawal and
termination must take place within six (6) months after the Trust gives written
notice that this provision is being implemented. Until the end of such six (6)
month period, the Trust shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Trust.
4.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Trust and terminate this Agreement with
respect to such Account within six (6) months after the Trustees inform the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. Until the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase and redemption of
shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Company be required to establish a new funding medium for the Contracts
if an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable.
ARTICLE V
Indemnification
5.1 Indemnification By the Company. The Company agrees to indemnify and
hold harmless the Trust, the Adviser, and each of their Trustees, Directors,
officers, employees and agents and each person, if any, who controls the Trust
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Article V) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage, liability or expense
and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become subject
under any statute or regulation, or at common law or otherwise, insofar as such
Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in the
Contracts themselves or in sales literature generated or approved by
the Company on behalf of the Contracts or Accounts (or any amendment or
supplement to any of the foregoing) (collectively, "Company Documents"
for the purposes of this Article V), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not apply as
to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Company by or on
behalf of the Trust for use in Company Documents or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Trust Documents as defined in Section 5.2(a)) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived
from written information furnished to the Trust by or on behalf of the
Company; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company.
5.2 Indemnification By the Trust and the Adviser. The Trust and the
Adviser agree to indemnify and hold harmless the Company and each of its
directors, officers, employees and agents and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Article V) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Trust or the Adviser) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise, insofar
as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Trust (or any amendment or
supplement thereto), (collectively, "Trust Documents" for the purposes
of this Article V), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Trust by or on behalf
of the Company for use in Trust Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Company Documents) or wrongful conduct of the Trust or
Adviser or persons under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to the Company by or on behalf of the Trust or the Adviser;
or
(d) arise out of or result from any failure by the Trust or
the Adviser to provide the services or furnish the materials required
under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust or the Adviser in this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification or Sub-Chapter M
requirements of Article III of this Agreement) or arise out of or
result from any other material breach of this Agreement by the Trust or
the Adviser.
(f) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate.
5.3 Neither the Company nor the Trust or the Adviser shall be liable
under the indemnification provisions of Sections 5.1 or 5.2, as applicable, with
respect to any Losses incurred or assessed against an Indemnified Party that
arise from such Indemnified Party's willful misfeasance, bad faith or negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
5.4 Neither the Company nor the Trust or the Adviser shall be liable
under the indemnification provisions of Sections 5.1 or 5.2, as applicable, with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the other party in writing within a reasonable time
after the summons, or other first written notification, giving information of
the nature of the claim shall have been served upon or otherwise received by
such Indemnified Party (or after such Indemnified Party shall have received
notice of service upon or other notification to any designated agent), but
failure to notify the party against whom indemnification is sought of any such
claim shall not relieve that party from any liability which it may have to the
Indemnified Party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against the Indemnified Parties,
the indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the indemnifying party to the Indemnified
Party of an election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
ARTICLE VI
Termination
6.1 This Agreement may be terminated
(a) by any party for any reason by ninety (90) days' advance
written notice delivered to the other parties.
(b) at the option of the Company to the extent that the
Portfolios are not reasonably available to meet the requirements of the
Contracts or are not "appropriate funding vehicles" for the Contracts,
as reasonably determined by the Company. Without limiting the
generality of the foregoing, the Portfolios would not be "appropriate
funding vehicles" if, for example, such Portfolios did not meet the
diversification or other requirements referred to in Article III
hereof; or if the Company would be permitted to disregard Contract
owner voting instructions pursuant to Rule 6e-2 or 6e-3(T) under the
1940 Act. Prompt notice of the election to terminate for such cause and
an explanation of such cause shall be furnished to the Trust by the
Company; or
(c) at the option of the Trust or the Adviser upon institution
of formal proceedings against the Company by the NASD, the SEC, or any
insurance department or other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the Contracts,
the operation of the Accounts, or the purchase of the shares of the
Portfolios; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body
regarding the Trust's or the Adviser's duties under this Agreement or
related to the sale of the shares of the Portfolios; or
(e) at the option of the Company, the Trust or the Adviser
upon receipt of any necessary regulatory approvals and/or the vote of
the Contract owners having an interest in the Accounts (or any
subaccounts) to substitute the shares of another investment company for
the corresponding Portfolio shares in accordance with the terms of the
Contracts for which those Portfolio shares had been selected to serve
as the underlying investment media. The Company will give thirty (30)
days' prior written notice to the Trust of the date of any proposed
vote or other action taken to replace the Portfolio shares; or
(f) termination by either the Trust or the Adviser by written
notice to the Company, if either one or both of the Trust or the
Adviser respectively, shall determine, in their sole judgment exercised
in good faith, that the Company has suffered a material adverse change
in its business, operations, financial condition, or prospects since
the date of this Agreement or is the subject of material adverse
publicity; or
(g) termination by the Company by written notice to the Trust
and the Adviser, if the Company shall determine, in its sole judgment
exercised in good faith, that the Trust or the Adviser has suffered a
material adverse change in this business, operations, financial
condition or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(h) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the
written consent of the parties hereto.
6.2 Notwithstanding any termination of this Agreement, the Trust and
the Adviser shall, at the option of the Company, continue to make available
additional shares of the Trust (or any Portfolio) pursuant to the terms and
conditions of this Agreement for all Contracts in effect on the effective date
of termination of this Agreement, provided that the Company continues to pay the
costs set forth in Section 2.3.
6.3 The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.8 shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract owners in accordance with Section 6.2.
ARTICLE VII
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
Janus Aspen Series
100 Fillmore Street
Denver, Colorado 80206
Attention: General Counsel
If to the Adviser:
Janus Capital Corporation
100 Fillmore Street
Denver, Colorado 80206
Attention: General Counsel
If to the Company:
Transamerica Life Insurance Company of New York
Corporate Secretary
100 Manhattanville Rd.
Purchase, NY 10577
ARTICLE VIII
Miscellaneous
8.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of North
Carolina.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers, Inc., and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
8.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
8.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
party.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
JANUS ASPEN SERIES
By:
Name:
Title:
JANUS CAPITAL CORPORATION
By:
Name:
Title:
TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY
By:
Name:
Title:
Schedule A
Separate Accounts and Associated Contracts
Contracts Funded
Name of Separate Account By Separate Account
Separate Account VA-6 TCG-311-197
-------------
TCG-313-197
<PAGE>
Exhibit (8) Form of Participation Agreements regarding the Portfolio.
(e) re MFS Variable Insurance Trust
<PAGE>
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this ____ day of ____ 1997, by
and among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), Transamerica Life Insurance and Annuity Company, a North Carolina
corporation (the "Company") on its own behalf and on behalf of each of the
segregated asset accounts of the Company set forth in Schedule A hereto, as may
be amended from time to time (the "Accounts"), and MASSACHUSETTS FINANCIAL
SERVICES COMPANY, a Delaware corporation ("MFS").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and its shares are registered or will be registered under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, the series of shares of the Trust offered by the Trust to the
Company and the Accounts are set forth on Schedule A attached hereto (each, a
"Portfolio," and, collectively, the "Portfolios");
WHEREAS, MFS is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law, and is the Trust's investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or
variable life insurance contracts (individually, the "Policy" or, collectively,
the "Policies") which, if required by applicable law, will be registered under
the 1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolution of the Board of Directors of the
Company, to set aside and invest assets attributable to the aforesaid variable
annuity and/or variable life insurance contracts that are allocated to the
Accounts (the Policies and the Accounts covered by this Agreement, and each
corresponding Portfolio covered by this Agreement in which the Accounts invest,
is specified in Schedule A attached hereto as may be modified from time to
time);
WHEREAS, the Company has registered or will register the Accounts as
unit investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, MFS Fund Distributors, Inc. (the "Underwriter") is registered
as a broker-dealer with the Securities and Exchange Commission (the "SEC") under
the Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"),
and is a member in good standing of the National Association of Securities
Dealers, Inc. (the "NASD");
WHEREAS, the company, the underwriter for the individual variable
annuity and the variable life policies, is registered as a broker-dealer with
the SEC under the 1934 Act and is a member in good standing of the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Policies, and the Trust intends to sell such Shares to
the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust,
MFS, and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Company those Shares which the
Accounts order (based on orders placed by Policy holders on that
Business Day, as defined below) and which are available for purchase by
such Accounts, executing such orders on a daily basis at the net asset
value next computed after receipt by the Trust or its designee of the
order for the Shares. For purposes of this Section 1.1, the Company
shall be the designee of the Trust for receipt of such orders from
Policy owners and receipt by such designee shall constitute receipt by
the Trust; provided that the Trust receives notice of such orders by
9:30 a.m. New York time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange, Inc. (the
"NYSE") is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the SEC.
1.2. The Trust agrees to make the Shares available indefinitely for
purchase at the applicable net asset value per share by the Company and
the Accounts on those days on which the Trust calculates its net asset
value pursuant to rules of the SEC and the Trust shall calculate such
net asset value on each day which the NYSE is open for trading.
Notwithstanding the foregoing, the Board of Trustees of the Trust (the
"Board") may refuse to sell any Shares to the Company and the Accounts,
or suspend or terminate the offering of the Shares if such action is
required by law or by regulatory authorities having jurisdiction or is,
in the sole discretion of the Board acting in good faith and in light
of its fiduciary duties under federal and any applicable state laws,
necessary in the best interest of the Shareholders of such Portfolio.
1.3. The Trust and MFS agree that the Shares will be sold only to
insurance companies which have entered into participation agreements
with the Trust and MFS (the "Participating Insurance Companies") and
their separate accounts, qualified pension and retirement plans and MFS
or its affiliates. The Trust and MFS will not sell Trust shares to any
insurance company or separate account unless an agreement containing
provisions substantially the same as Articles III and VII of this
Agreement is in effect to govern such sales. The Company will not
resell the Shares except to the Trust or its agents.
1.4. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional Shares held by the Accounts (based on orders placed
by Policy owners on that Business Day), executing such requests on a
daily basis at the net asset value next computed after receipt by the
Trust or its designee of the request for redemption. For purposes of
this Section 1.4, the Company shall be the designee of the Trust for
receipt of requests for redemption from Policy owners and receipt by
such designee shall constitute receipt by the Trust; provided that the
Trust receives notice of such request for redemption by 9:30 a.m.
New York time on the next following Business Day.
1.5. Each purchase, redemption and exchange order placed by the Company
shall be placed separately for each Portfolio and shall not be netted
with respect to any Portfolio. However, with respect to payment of the
purchase price by the Company and of redemption proceeds by the Trust,
the Company and the Trust shall net purchase and redemption orders with
respect to each Portfolio and shall transmit one net payment for all of
the Portfolios in accordance with Section 1.6 hereof.
1.6. In the event of net purchases, the Company shall pay for the
Shares by 2:00 p.m. New York time on the next Business Day after an
order to purchase the Shares is made in accordance with the provisions
of Section 1.1. hereof. In the event of net redemptions, the Trust
shall pay the redemption proceeds by 2:00 p.m. New York time on the
next Business Day after an order to redeem the shares is made in
accordance with the provisions of Section 1.4. hereof. All such
payments shall be in federal funds transmitted by wire.
1.7. Issuance and transfer of the Shares will be by book entry only.
Stock certificates will not be issued to the Company or the Accounts.
The Shares ordered from the Trust will be recorded in an appropriate
title for the Accounts or the appropriate subaccounts of the Accounts.
1.8. The Trust shall furnish same day notice (by wire or telephone
followed by written confirmation) to the Company of any dividends or
capital gain distributions payable on the Shares. The Company hereby
elects to receive all such dividends and distributions as are payable
on a Portfolio's Shares in additional Shares of that Portfolio. The
Trust shall notify the Company of the number of Shares so issued as
payment of such dividends and distributions.
1.9. The Trust or its custodian shall make the net asset value per
share for each Portfolio available to the Company on each Business Day
as soon as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make such net asset value
per share available by 6:30 p.m. New York time. In the event that the
Trust is unable to meet the 6:30 p.m. time stated herein, it shall
provide additional time for the Company to place orders for the
purchase and redemption of Shares. Such additional time shall be equal
to the additional time which the Trust takes to make the net asset
value available to the Company. If the Trust provides materially
incorrect share net asset value information, the Trust shall make an
adjustment to the number of shares purchased or redeemed for the
Accounts to reflect the correct net asset value per share. Any material
error in the calculation or reporting of net asset value per share,
dividend or capital gains information shall be reported promptly upon
discovery to the Company.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Policies are or will
be registered under the 1933 Act or are exempt from or not subject to
registration thereunder, and that the Policies will be issued, sold,
and distributed in compliance in all material respects with all
applicable state and federal laws, including without limitation the
1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the 1940 Act. The Company further represents and warrants
that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established
the Account as a segregated asset account under applicable law and has
registered or, prior to any issuance or sale of the Policies, will
register the Accounts as unit investment trusts in accordance with the
provisions of the 1940 Act (unless exempt therefrom) to serve as
segregated investment accounts for the Policies, and that it will
maintain such registration for so long as any Policies are outstanding.
The Company shall amend the registration statements under the 1933 Act
for the Policies and the registration statements under the 1940 Act for
the Accounts from time to time as required in order to effect the
continuous offering of the Policies or as may otherwise be required by
applicable law. The Company shall register and qualify the Policies for
sales in accordance with the securities laws of the various states only
if and to the extent deemed necessary by the Company.
2.2. The Company represents and warrants that the Policies are
currently and at the time of issuance will be treated as life
insurance, endowment or annuity contract under applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), that it
will maintain such treatment and that it will notify the Trust or MFS
immediately upon having a reasonable basis for believing that the
Policies have ceased to be so treated or that they might not be so
treated in the future.
2.3. The Company represents and warrants that Transamerica Securities
Sales Corporation, the underwriter for the individual variable annuity
and the variable life policies, is a member in good standing of the
NASD and is a registered broker-dealer with the SEC. The Company
represents and warrants that the Company and American National will
sell and distribute such policies in accordance in all material
respects with all applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 1940
Act.
2.4. The Trust and MFS represent and warrant that the Shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of The
Commonwealth of Massachusetts and all applicable federal and state
securities laws and that the Trust is and shall remain registered under
the 1940 Act. The Trust shall amend the registration statement for its
Shares under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of its Shares. The
Trust shall register and qualify the Shares for sale in accordance with
the laws of the various states only if and to the extent deemed
necessary by the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in
good standing of the NASD and is registered as a broker-dealer with the
SEC. The Trust and MFS represent that the Trust and the Underwriter
will sell and distribute the Shares in accordance in all material
respects with all applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 1940
Act.
2.6. The Trust represents that it is lawfully organized and validly
existing under the laws of The Commonwealth of Massachusetts and that
it does and will comply in all material respects with the 1940 Act and
any applicable regulations thereunder.
2.7. MFS represents and warrants that it is and shall remain duly
registered under all applicable federal securities laws and that it
shall perform its obligations for the Trust in compliance in all
material respects with any applicable federal securities laws and with
the securities laws of The Commonwealth of Massachusetts. MFS
represents and warrants that it is not subject to state securities laws
other than the securities laws of The Commonwealth of Massachusetts and
that it is exempt from registration as an investment adviser under the
securities laws of The Commonwealth of Massachusetts.
2.8. No less frequently than annually, the Company shall submit to the
Board such reports, material or data as the Board may reasonably
request so that it may carry out fully the obligations imposed upon it
by the conditions contained in the exemptive application pursuant to
which the SEC has granted exemptive relief to permit mixed and shared
funding (the "Mixed and Shared Funding Exemptive Order").
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, the Trust or its designee shall provide the
Company, free of charge, with as many copies of the current prospectus
(describing only the Portfolios listed in Schedule A hereto) for the
Shares as the Company may reasonably request for distribution to
existing Policy owners whose Policies are funded by such Shares. The
Trust or its designee shall provide the Company, at the Company's
expense, with as many copies of the current prospectus for the Shares
as the Company may reasonably request for distribution to prospective
purchasers of Policies. If requested by the Company in lieu thereof,
the Trust or its designee shall provide such documentation (including a
"camera ready" copy of the new prospectus as set in type or, at the
request of the Company, as a diskette in the form sent to the financial
printer) and other assistance as is reasonably necessary in order for
the parties hereto once each year (or more frequently if the prospectus
for the Shares is supplemented or amended) to have the prospectus for
the Policies and the prospectus for the Shares printed together in one
document; the expenses of such printing to be apportioned between (a)
the Company and (b) the Trust or its designee in proportion to the
number of pages of the Policy and Shares' prospectuses, taking account
of other relevant factors affecting the expense of printing, such as
covers, columns, graphs and charts; the Trust or its designee to bear
the cost of printing the Shares' prospectus portion of such document
for distribution to owners of existing Policies funded by the Shares
and the Company to bear the expenses of printing the portion of such
document relating to the Accounts; provided, however, that the Company
shall bear all printing expenses of such combined documents where used
for distribution to prospective purchasers or to owners of existing
Policies not funded by the Shares. In the event that the Company
requests that the Trust or its designee provides the Trust's prospectus
in a "camera ready" or diskette format, the Trust shall be responsible
for providing the prospectus in the format in which it or MFS is
accustomed to formatting prospectuses and shall bear the expense of
providing the prospectus in such format (e.g., typesetting expenses),
and the Company shall bear the expense of adjusting or changing the
format to conform with any of its prospectuses.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Trust or
its designee. The Trust or its designee, at its expense, shall print
and provide such statement of additional information to the Company (or
a master of such statement suitable for duplication by the Company) for
distribution to any owner of a Policy funded by the Shares. The Trust
or its designee, at the Company's expense, shall print and provide such
statement to the Company (or a master of such statement suitable for
duplication by the Company) for distribution to a prospective purchaser
who requests such statement or to an owner of a Policy not funded by
the Shares.
3.3. The Trust or its designee shall provide the Company free of charge
copies, if and to the extent applicable to the Shares, of the Trust's
proxy materials, reports to Shareholders and other communications to
Shareholders in such quantity as the Company shall reasonably require
for distribution to Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3
above, or of Article V below, the Company shall pay the expense of
printing or providing documents to the extent such cost is considered a
distribution expense. Distribution expenses would include by way of
illustration, but are not limited to, the printing of the Shares'
prospectus or prospectuses for distribution to prospective purchasers
or to owners of existing Policies not funded by such Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate
to include in the prospectus pursuant to which a Policy is offered
disclosure regarding the potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions
received from Policy owners; and
(c) vote the Shares for which no instructions have been
received in the same proportion as the Shares of such
Portfolio for which instructions have been received
from Policy owners;
so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass through voting privileges for variable
contract owners. The Company will in no way recommend action in
connection with or oppose or interfere with the solicitation of proxies
for the Shares held for such Policy owners. The Company reserves the
right to vote shares held in any segregated asset account in its own
right, to the extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each of their separate
accounts holding Shares calculates voting privileges in the manner
required by the Mixed and Shared Funding Exemptive Order. The Trust and
MFS will notify the Company of any changes of interpretations or
amendments to the Mixed and Shared Funding Exemptive Order.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other
promotional material in which the Trust, MFS, any other investment
adviser to the Trust, or any affiliate of MFS are named, at least three
(3) Business Days prior to its use. No such material shall be used if
the Trust, MFS, or their respective designees reasonably objects to
such use within three (3) Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statement on behalf of the Trust, MFS, any other
investment adviser to the Trust, or any affiliate of MFS or concerning
the Trust or any other such entity in connection with the sale of the
Policies other than the information or representations contained in the
registration statement, prospectus or statement of additional
information for the Shares, as such registration statement, prospectus
and statement of additional information may be amended or supplemented
from time to time, or in reports or proxy statements for the Trust, or
in sales literature or other promotional material approved by the
Trust, MFS or their respective designees, except with the permission of
the Trust, MFS or their respective designees. The Trust, MFS or their
respective designees each agrees to respond to any request for approval
on a prompt and timely basis. The Company shall adopt and implement
procedures reasonably designed to ensure that information concerning
the Trust, MFS or any of their affiliates which is intended for use
only by brokers or agents selling the Policies (i.e., information that
is not intended for distribution to Policy owners or prospective Policy
owners) is so used, and neither the Trust, MFS nor any of their
affiliates shall be liable for any losses, damages or expenses relating
to the improper use of such broker only materials.
4.3. The Trust or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or
the Accounts is named, at least three (3) Business Days prior to its
use. No such material shall be used if the Company or its designee
reasonably objects to such use within three (3) Business Days after
receipt of such material.
4.4. The Trust and MFS shall not give, and agree that the Underwriter
shall not give, any information or make any representations on behalf
of the Company or concerning the Company, the Accounts, or the Policies
in connection with the sale of the Policies other than the information
or representations contained in a registration statement, prospectus,
or statement of additional information for the Policies, as such
registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time, or in
reports for the Accounts, or in sales literature or other promotional
material approved by the Company or its designee, except with the
permission of the Company. The Company or its designee agrees to
respond to any request for approval on a prompt and timely basis. The
parties hereto agree that this Section 4.4. is neither intended to
designate nor otherwise imply that MFS is an underwriter or distributor
of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company
or the Trust, as appropriate) will each provide to the other at least
one complete copy of all registration statements, prospectuses,
statements of additional information, reports, proxy statements, sales
literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Policies, or to the Trust or its
Shares, prior to or contemporaneously with the filing of such document
with the SEC or other regulatory authorities. The Company and the Trust
shall also each promptly inform the other of the results of any
examination by the SEC (or other regulatory authorities) that relates
to the Policies, the Trust or its Shares, and the party that was the
subject of the examination shall provide the other party with a copy of
relevant portions of any "deficiency letter" or other correspondence or
written report regarding any such examination.
4.6. The Trust and MFS will provide the Company with as much notice as
is reasonably practicable of any proxy solicitation for any Portfolio,
and of any material change in the Trust's registration statement,
particularly any change resulting in change to the registration
statement or prospectus or statement of additional information for any
Account. The Trust and MFS will cooperate with the Company so as to
enable the Company to solicit proxies from Policy owners or to make
changes to its prospectus, statement of additional information or
registration statement, in an orderly manner. The Trust and MFS will
make reasonable efforts to attempt to have changes affecting Policy
prospectuses become effective simultaneously with the annual updates
for such prospectuses.
4.7. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited
to advertisements (such as material published, or designed for use in,
a newspaper, magazine, or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures, or other public media), and sales literature (such as
brochures, circulars, reprints or excerpts or any other advertisement,
sales literature, or published articles), distributed or made generally
available to customers or the public, educational or training materials
or communications distributed or made generally available to some or
all agents or employees.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no fee or other compensation to the Company
under this Agreement, and the Company shall pay no fee or other
compensation to the Trust, except that if the Trust or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act
to finance distribution and Shareholder servicing expenses, then,
subject to obtaining any required exemptive orders or regulatory
approvals, the Trust may make payments to the Company or to the
underwriter for the Policies if and in amounts agreed to by the Trust
in writing. Each party, however, shall, in accordance with the
allocation of expenses specified in Articles III and V hereof,
reimburse other parties for expenses initially paid by one party but
allocated to another party. In addition, nothing herein shall prevent
the parties hereto from otherwise agreeing to perform, and arranging
for appropriate compensation for, other services relating to the Trust
and/or to the Accounts.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable
federal and state laws, including preparation and filing of the Trust's
registration statement, and payment of filing fees and registration
fees; preparation and filing of the Trust's proxy materials and reports
to Shareholders; setting in type and printing its prospectus and
statement of additional information (to the extent provided by and as
determined in accordance with Article III above); setting in type and
printing the proxy materials and reports to Shareholders (to the extent
provided by and as determined in accordance with Article III above);
the preparation of all statements and notices required of the Trust by
any federal or state law with respect to its Shares; all taxes on the
issuance or transfer of the Shares; and the costs of distributing the
Trust's prospectuses and proxy materials to owners of Policies funded
by the Shares and any expenses permitted to be paid or assumed by the
Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
The Trust shall not bear any expenses of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses in connection with new sales of the Policies
and of distributing the Trust's Shareholder reports to Policy owners.
The Company shall bear all expenses associated with the registration,
qualification, and filing of the Policies under applicable federal
securities and state insurance laws; the cost of preparing, printing
and distributing the Policy prospectus and statement of additional
information; and the cost of preparing, printing and distributing
annual individual account statements for Policy owners as required by
state insurance laws.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and MFS represent and warrant that each Portfolio of the
Trust will meet the diversification requirements of Section 817 (h) (1)
of the Code and Treas. Reg. 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance
contracts, as they may be amended from time to time (and any revenue
rulings, revenue procedures, notices, and other published announcements
of the Internal Revenue Service interpreting these sections), as if
those requirements applied directly to each such Portfolio.
6.2. The Trust and MFS represent that each Portfolio will elect to be
qualified as a Regulated Investment Company under Subchapter M of the
Code and that they will maintain such qualification (under Subchapter M
or any successor or similar provision).
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for
the existence of any material irreconcilable conflict between the
interests of the variable annuity contract owners and the variable life
insurance policy owners of the Company and/or affiliated companies
("contract owners") investing in the Trust. The Board shall have the
sole authority to determine if a material irreconcilable conflict
exists, and such determination shall be binding on the Company only if
approved in the form of a resolution by a majority of the Board, or a
majority of the disinterested trustees of the Board. The Board will
give prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the
Board in carrying out its responsibilities under the conditions set
forth in the Trust's exemptive application pursuant to which the SEC
has granted the Mixed and Shared Funding Exemptive Order by providing
the Board, as it may reasonably request, with all information necessary
for the Board to consider any issues raised and agrees that it will be
responsible for promptly reporting any potential or existing conflicts
of which it is aware to the Board including, but not limited to, an
obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded. The Company also agrees that, if a
material irreconcilable conflict arises, it will at its own cost remedy
such conflict up to and including (a) withdrawing the assets allocable
to some or all of the Accounts from the Trust or any Portfolio and
reinvesting such assets in a different investment medium, including
(but not limited to) another Portfolio of the Trust, or submitting to a
vote of all affected contract owners whether to withdraw assets from
the Trust or any Portfolio and reinvesting such assets in a different
investment medium and, as appropriate, segregating the assets
attributable to any appropriate group of contract owners that votes in
favor of such segregation, or offering to any of the affected contract
owners the option of segregating the assets attributable to their
contracts or policies, and (b) establishing a new registered management
investment company and segregating the assets underlying the Policies,
unless a majority of Policy owners materially adversely affected by the
conflict have voted to decline the offer to establish a new registered
management investment company.
7.3. A majority of the disinterested trustees of the Board shall
determine whether any proposed action by the Company adequately
remedies any material irreconcilable conflict. In the event that the
Board determines that any proposed action does not adequately remedy
any material irreconcilable conflict, the Company will withdraw from
investment in the Trust each of the Accounts designated by the
disinterested trustees and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination
shall be limited to the extent required to remedy any such material
irreconcilable conflict as determined by a majority of the
disinterested trustees of the Board.
7.4. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Mixed and Shared Funding Exemptive Order, then
(a) the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with
Rule 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2,
7.3 and 7.4 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such
Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification by the Company
The Company agrees to indemnify and hold harmless the Trust,
MFS, any affiliates of MFS, and each of their respective
directors/trustees, officers and each person, if any, who controls the
Trust or MFS within the meaning of Section 15 of the 1933 Act, and any
agents or employees of the foregoing (each an "Indemnified Party," or
collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company) or expenses (including reasonable counsel fees) to which any
Indemnified Party may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Shares or the Policies
and:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus or statement of
additional information for the Policies or contained in the
Policies or sales literature or other promotional material
for the Policies (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reasonable reliance upon
and in conformity with information furnished to the Company
or its designee by or on behalf of the Trust or MFS for use
in the registration statement, prospectus or statement of
additional information for the Policies or in the Policies
or sales literature or other promotional material (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional
material of the Trust not supplied by the Company or its
designee, or persons under its control and on which the
Company has reasonably relied) or wrongful conduct of the
Company or persons under its control, with respect to the
sale or distribution of the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the registration
statement, prospectus, statement of additional information,
or sales literature or other promotional literature of the
Trust, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Trust by or on behalf of the Company; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement;
as limited by and in accordance with the provisions of this
Article VIII.
8.2. Indemnification by the Trust
The Trust agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act,
and any agents or employees of the foregoing (each an "Indemnified
Party," or collectively, the "Indemnified Parties" for purposes of this
Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Trust) or expenses (including reasonable counsel fees) to which any
Indemnified Party may become subject under any statute, at common law
or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to
the sale or acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus, statement of
additional information or sales literature or other
promotional material of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement therein not misleading,
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reasonable
reliance upon and in conformity with information furnished
to the Trust, MFS, the Underwriter or their respective
designees by or on behalf of the Company for use in the
registration statement, prospectus or statement of
additional information for the Trust or in sales literature
or other promotional material for the Trust (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional
material for the Policies not supplied by the Trust, MFS,
the Underwriter or any of their respective designees or
persons under their respective control and on which any such
entity has reasonably relied) or wrongful conduct of the
Trust or persons under its control, with respect to the sale
or distribution of the Policies or Shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the registration
statement, prospectus, statement of additional information,
or sales literature or other promotional literature of the
Accounts or relating to the Policies, or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statement or
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to
the Company by or on behalf of the Trust, MFS or the
Underwriter; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement) or
arise out of or result from any other material breach of
this Agreement by the Trust; or
(e) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset
value per share or dividend or capital gain distribution
rate; or
(f) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of the
Agreement;
as limited by and in accordance with the provisions of this
Article VIII.
8.3. In no event shall the Trust be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including without limitation, the Company, or any Participating
Insurance Company or any Policy holder, with respect to any losses,
claims, damages, liabilities or expenses that arise out of or result
from (i) a breach of any representation, warranty, and/or covenant made
by the Company hereunder or by any Participating Insurance Company
under an agreement containing substantially similar representations,
warranties and covenants; (ii) the failure by the Company or any
Participating Insurance Company to maintain its segregated asset
account (which invests in any Portfolio) as a legally and validly
established segregated asset account under applicable state law and as
a duly registered unit investment trust under the provisions of the
1940 Act (unless exempt therefrom); or (iii) the failure by the Company
or any Participating Insurance Company to maintain its variable annuity
and/or variable life insurance contracts (with respect to which any
Portfolio serves as an underlying funding vehicle) as life insurance,
endowment or annuity contracts under applicable provisions of the Code.
8.4. Neither the Company nor the Trust shall be liable under the
indemnification provisions contained in this Agreement with respect to
any losses, claims, damages, liabilities or expenses to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, willful misconduct, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations
and duties under this Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section
8.5. of notice of commencement of any action, such Indemnified Party
will, if a claim in respect thereof is to be made against the
indemnifying party under this section, notify the indemnifying party of
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any Indemnified Party otherwise than under this section. In
case any such action is brought against any Indemnified Party, and it
notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such Indemnified Party. After notice from the
indemnifying party of its intention to assume the defense of an action,
the Indemnified Party shall bear the expenses of any additional counsel
obtained by it, and the indemnifying party shall not be liable to such
Indemnified Party under this section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation.
8.6. Each of the parties agrees promptly to notify the other parties of
the commencement of any litigation or proceeding against it or any of
its respective officers, directors, trustees, employees or 1933 Act
control persons in connection with the Agreement, the issuance or sale
of the Policies, the operation of the Accounts, or the sale or
acquisition of Shares.
8.7. A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this
Article VIII. The indemnification provisions contained in this Article
VIII shall survive any termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
The Trust, MFS, and the Company agree that each such party shall promptly
notify the other parties to this Agreement, in writing, of the institution of
any formal proceedings brought against such party or its designees by the NASD,
the SEC, or any insurance department or any other regulatory body regarding such
party's duties under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares.
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts, or
one, some, or all Portfolios:
(a) at the option of any party upon six (6) months' advance
written notice to the other parties; or
(b) at the option of the Company to the extent that the Shares
of Portfolios are not reasonably available to meet the
requirements of the Policies or are not "appropriate funding
vehicles" for the Policies, as reasonably determined by the
Company. Without limiting the generality of the foregoing,
the Shares of a Portfolio would not be "appropriate funding
vehicles" if, for example, such Shares did not meet the
diversification or other requirements referred to in Article
VI hereof; or if the Company would be permitted to disregard
Policy owner voting instructions pursuant to Rule 6e-2 or
6e-3(T) under the 1940 Act. Prompt notice of the election to
terminate for such cause and an explanation of such cause
shall be furnished to the Trust by the Company; or
(c) at the option of the Trust or MFS upon institution of formal
proceedings against the Company by the NASD, the SEC, or any
insurance department or any other regulatory body regarding
the Company's duties under this Agreement or related to the
sale of the Policies, the operation of the Accounts, or the
purchase of the Shares; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any
state securities or insurance department or any other
regulatory body regarding the Trust's or MFS' duties under
this Agreement or related to the sale of the Shares; or
(e) at the option of the Company, the Trust or MFS upon receipt
of any necessary regulatory approvals and/or the vote of the
Policy owners having an interest in the Accounts (or any
subaccounts) to substitute the shares of another investment
company for the corresponding Portfolio Shares in accordance
with the terms of the Policies for which those Portfolio
Shares had been selected to serve as the underlying
investment media. The Company will give thirty (30) days'
prior written notice to the Trust of the Date of any
proposed vote or other action taken to replace the Shares;
or
(f) termination by either the Trust or MFS by written notice to
the Company, if either one or both of the Trust or MFS
respectively, shall determine, in their sole judgment
exercised in good faith, that the Company has suffered a
material adverse change in its business, operations,
financial condition, or prospects since the date of this
Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Trust
and MFS, if the Company shall determine, in its sole
judgment exercised in good faith, that the Trust or MFS has
suffered a material adverse change in this business,
operations, financial condition or prospects since the date
of this Agreement or is the subject of material adverse
publicity; or
(h) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement;
or
(i) upon assignment of this Agreement, unless made with the
written consent of the parties
hereto.
11.2. The notice shall specify the Portfolio or Portfolios, Policies
and, if applicable, the Accounts as to which the Agreement is to be
terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1(a) may be exercised
for cause or for no cause.
11.4. Except as necessary to implement Policy owner initiated
transactions, or as required by state insurance laws or regulations,
the Company shall not redeem the Shares attributable to the Policies
(as opposed to the Shares attributable to the Company's assets held in
the Accounts), and the Company shall not prevent Policy owners from
allocating payments to a Portfolio that was otherwise available under
the Policies, until thirty (30) days after the Company shall have
notified the Trust of its intention to do so.
11.5. Notwithstanding any termination of this Agreement, the Trust and
MFS shall, at the option of the Company, continue to make available
additional shares of the Portfolios pursuant to the terms and
conditions of this Agreement, for all Policies in effect on the
effective date of termination of this Agreement (the "Existing
Policies"), except as otherwise provided under Article VII of this
Agreement. Specifically, without limitation, the owners of the Existing
Policies shall be permitted to transfer or reallocate investment under
the Policies, redeem investments in any Portfolio and/or invest in the
Trust upon the making of additional purchase payments under the
Existing Policies.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail, overnight courier or facsimile to the other party at the address
of such party set forth below or at such other address as such party may from
time to time specify in writing to the other party.
If to the Trust:
MFS Variable Insurance Trust
500 Boylston Street
Boston, Massachusetts 02116
Facsimile No.: (617) 954-6624
Attn: Stephen E. Cavan, Secretary
If to the Company:
Facsimile No.:
Attn:
If to MFS:
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
Facsimile No.: (617) 954-6624
Attn: Stephen E. Cavan, General Counsel
ARTICLE XIII. MISCELLANEOUS
13.1. Subject to the requirement of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Policies and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement or as otherwise required by
applicable law or regulation, shall not disclose, disseminate or
utilize such names and addresses and other confidential information
without the express written consent of the affected party until such
time as it may come into the public domain.
13.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
13.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
13.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities
(including without limitation the SEC, the NASD, and state insurance
regulators) relating to this Agreement or the transactions contemplated
hereby.
13.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal laws.
13.8. A copy of the Trust's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The Company
acknowledges that the obligations of or arising out of this instrument
are not binding upon any of the Trust's trustees, officers, employees,
agents or shareholders individually, but are binding solely upon the
assets and property of the Trust in accordance with its proportionate
interest hereunder. The Company further acknowledges that the assets
and liabilities of each Portfolio are separate and distinct and that
the obligations of or arising out of this instrument are binding solely
upon the assets or property of the Portfolio on whose behalf the Trust
has executed this instrument. The Company also agrees that the
obligations of each Portfolio hereunder shall be several and not joint,
in accordance with its proportionate interest hereunder, and the
Company agrees not to proceed against any Portfolio for the obligations
of another Portfolio.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
By its authorized officer,
By: _______________________________
Title: ____________________________
MFS VARIABLE INSURANCE TRUST, on behalf of the Portfolios
By its authorized officer and not individually,
By: _______________________________
Title: ____________________________
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: _______________________________
Title: ____________________________
<PAGE>
As of ____________________
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
- -------------------------------------------- =================================
Name of Separate Portfolios
Account Applicable to Policies
- -------------------------------------------- =================================
Separate Account VA-6 MFS Emerging Growth
- -------------------------------------------- ---------------------------------
<PAGE>
Exhibit (8) Form of Participation Agreements regarding the Portfolio.
(f) re Morgan Stanley Universal Funds, Inc.
<PAGE>
PARTICIPATION AGREEMENT
Among
MORGAN STANLEY UNIVERSAL FUNDS, INC.,
MORGAN STANLEY ASSET MANAGEMENT INC.
MILLER ANDERSON & SHERRERD, LLP
and
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
DATED AS OF
DECEMBER 15, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. Purchase of Fund Shares 2
ARTICLE II Representations and Warranties 4
ARTICLE III. Prospectuses, Reports to Shareholders
and Proxy Statements, Voting 6
ARTICLE IV. Sales Material and Information 8
ARTICLE V Fees and Expenses 9
ARTICLE VI. Diversification 9
ARTICLE VII. Potential Conflicts 10
ARTICLE VIII. Indemnification 12
ARTICLE IX. Applicable Law 18
ARTICLE X. Termination 18
ARTICLE XI. Notices 20
ARTICLE XII. Miscellaneous 20
SCHEDULE A Separate Accounts and Contracts A-1
SCHEDULE B Portfolios of Morgan Stanley
Universal Funds, Inc. B-1
SCHEDULE C Proxy Voting Procedures C-1
<PAGE>
THIS AGREEMENT, made and entered into as of the 15th day of December,
1997 by and among TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY (hereinafter
the "Company"), a North Carolina corporation, on its own behalf and on behalf of
each separate account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and MORGAN STANLEY UNIVERSAL FUNDS, INC. (hereinafter the "Fund"), a
Maryland corporation, and MORGAN STANLEY ASSET MANAGEMENT INC. and MILLER
ANDERSON & SHERRERD, LLP (hereinafter collectively the "Advisers" and
individually the "Adviser"), a Delaware corporation and a Pennsylvania limited
liability partnership, respectively.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as (i) the investment vehicle for
separate accounts established by insurance companies for individual and group
life insurance policies and annuity contracts with variable accumulation and/or
pay-out provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products") and (ii) the investment vehicle for certain
qualified pension and retirement plans (hereinafter "Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Fund as an
investment vehicle under their Variable Insurance Contracts enter into
participation agreements with the Fund and the Advisers (the "Participating
Insurance Companies");
WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of securities
and other assets, any one or more of which may be made available under this
Agreement, as may be amended from time to time by mutual agreement of the
parties hereto (each such series hereinafter referred to as a "Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 19, 1996 (File No. 812-10118), granting
Participating Insurance Companies and Variable Insurance Product separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended (hereinafter the "1940
Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by Variable
Annuity Product separate accounts of both affiliated and unaffiliated life
insurance companies and Qualified Plans (hereinafter the "Shared Funding
Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, each Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, each Adviser manages certain Portfolios of the Fund; and
WHEREAS, Morgan Stanley & Co. Incorporated (the "Underwriter") is
registered as a broker/dealer under the Securities Exchange Act of 1934, as
amended (hereinafter the "1934 Act"), is a member in good standing of the
National Association of Securities Dealers, Inc. (hereinafter "NASD") and serves
as principal underwriter of the shares of the Fund; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the aforesaid Variable
Insurance Product; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase, on behalf of each Account, shares
in the Portfolios, set forth in Schedule B attached to this Agreement, to fund
certain of the aforesaid Variable Insurance Products and the Underwriter is
authorized to sell such shares to each such Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Purchase of Fund Shares
1.1. The Fund agrees to make available for purchase by the Company
shares of the Fund and shall execute orders placed for each Account on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of such order. For purposes of this Section 1.1, the Company or its
administrator shall be the designee of the Fund for receipt of such orders from
each Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 10:00 a.m. Eastern time
on the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading.
1.2. The Fund, so long as this Agreement is in effect, agrees to make
its shares available indefinitely for purchase at the applicable net asset value
per share by the Company and its Accounts on those days on which the Fund
calculates its net asset value pursuant to rules of the Securities and Exchange
Commission and the Fund shall use reasonable efforts to calculate such net asset
value on each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Directors of the Fund (hereinafter
the "Board") may refuse to permit the Fund to sell shares of any Portfolio to
any person, or suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts and to certain
Qualified Plans. No shares of any Portfolio will be sold to the general public.
1.4. The Fund will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, V,VI, VII and Section 2.5 of Article II of
this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company or its administrator shall be the designee of the Fund
for receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Variable Insurance
Products issued by the Company, under which amounts may be invested in the Fund
(hereinafter the "Contracts"), are listed on Schedule A attached hereto and
incorporated herein by reference, as such Schedule A may be amended from time to
time by mutual written agreement of all of the parties hereto. The Company will
give the Fund and the Adviser 45 days written notice of its intention to make
available in the future, as a funding vehicle under the Contracts, any other
investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purposes of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company or its administrator of any
income, dividends or capital gain distributions payable on the Fund's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company or its administrator, as directed by the Company,
of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company or its administrator, as directed by the
Company, on a daily basis as soon as reasonably practical after the net asset
value per share is calculated (normally by 6:30 p.m. Eastern time) and shall use
its best efforts to make such net asset value per share available by 7:00 p.m.
Eastern time.
1.11. If the Fund provides materially incorrect share net asset value
information through no fault of the Company, the Company or its administrator
shall be entitled to an adjustment with respect to the Fund shares purchased or
redeemed to reflect the correct net asset value per share. The determination of
the materiality of any net asset value pricing error shall be based on the SEC's
recommended guidelines regarding such errors. The correction of any such errors
shall be made at the Company level and shall be made pursuant to the SEC's
recommended guidelines. Any material error in the calculation or reporting of
net asset value per share, dividend or capital gain information shall be
reported promptly upon discovery to the Company.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act and that the Contracts will be issued in
compliance in all material respects with all applicable federal and state laws.
The Company represents and warrants that it will make every effort to ensure
that the Contracts are sold in compliance in all material respects with all
applicable federal and state laws and that the sale of the Contracts comply in
all material respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under North Carolina Law and has registered or, prior to any
issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Maryland and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund.
2.3 The Fund and each Adviser represents with respect to the Portfolios
for which it acts as investment adviser, that the Portfolios to which this
agreement applies are currently qualified as a Regulated Investment Company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), that the Portfolios will maintain such qualification (under Subchapter
M or any successor or similar provision) and that they will notify the Company
immediately upon having a reasonable basis for believing that it has ceased to
so qualify or that it might not so qualify in the future.
2.4. The Company represents that the Contracts are currently treated as
life insurance policies or annuity contracts, under Sections 7702, 7702A or 72,
their amendments and successors thereto, of the Code and that it will maintain
such treatment and that it will notify the Fund immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5.. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have a board of directors, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Maryland and the Fund represents that their respective operations are
and shall at all times remain in material compliance with the laws of the State
of Maryland to the extent required to perform this Agreement.
2.7. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.8. Each Adviser represents and warrants that it is and shall remain
duly registered in all material respects under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile and
any applicable state and federal securities laws.
2.9. The Fund represents and warrants that its directors, officers,
employees, and other individuals/entities dealing with the money and/or
securities of the Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than the minimal coverage as required currently by Rule 17g-(1)
of the 1940 Act or related provisions as may be promulgated from time to time.
The aforesaid blanket fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.10. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage, in an amount not less $5 million. The aforesaid
includes coverage for larceny and embezzlement is issued by a reputable bonding
company. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such coverage no longer
applies.
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy Statements; Voting
3.1. The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus (relating to the Portfolios) and
statement of additional information as the Company may reasonably request. If
requested by the Company, in lieu of providing printed copies the Fund shall
provide camera-ready film or computer diskettes containing the Fund's prospectus
(relating to the Portfolios) and statement of additional information, and such
other assistance as is reasonably necessary in order for the Company once each
year (or more frequently if the prospectus and/or statement of additional
information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus (relating to the Portfolios) printed
together in one document, and to have the statement of additional information
for the Fund and the statement of additional information for the Contracts
printed together in one document. Alternatively, the Company may print the
Fund's prospectus and/or its statement of additional information in combination
with other fund companies' prospectuses and statements of additional
information.
3.2. Except as provided in this Section 3.2., all expenses of printing
and distributing Fund prospectuses and statements of additional information
shall be the expense of the Company. For prospectuses and statements of
additional information provided by the Company to its existing owners of
Contracts who currently own shares of one or more of the Fund's Portfolios, in
order to update disclosure as required by the 1933 Act and/or the 1940 Act, the
cost of printing shall be borne by the Fund. If the Company chooses to receive
camera-ready film or computer diskettes in lieu of receiving printed copies of
the Fund's prospectus, the Fund will reimburse the Company in an amount equal to
the product of x and y where x is the number of such prospectuses distributed to
owners of the Contracts who currently own shares of one or more of the Fund's
Portfolios, and y is the Fund's per unit cost of typesetting and printing the
Fund's prospectus. The same procedures shall be followed with respect to the
Fund's statement of additional information. The Company agrees to provide the
Fund or its designee with such information as may be reasonably requested by the
Fund to assure that the Fund's expenses do not include the cost of printing any
prospectuses or statements of additional information other than those actually
distributed to existing owners of the Contracts.
3.3. The Fund's statement of additional information shall be obtainable
from the Fund, the Company or such other person as the Fund may designate, as
agreed upon by the parties.
3.4. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications (except
for prospectuses and statements of additional information, which are covered in
section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.5. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
Portfolio for which instructions have been received, so long
as and to the extent that the Securities and Exchange
Commission continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners.
The Company reserves the right to vote Fund shares held in
any segregated asset account in its own right, to the extent
permitted by law. The Fund and the Company shall follow the
procedures, and shall have the corresponding
responsibilities, for the handling of proxy and voting
instruction solicitations, as set forth in Schedule C
attached hereto and incorporated herein by reference.
Participating Insurance Companies shall be responsible for
ensuring that each of their separate accounts participating
in the Fund calculates voting privileges in a manner
consistent with the standards set forth on Schedule C, which
standards will also be provided to the other Participating
Insurance Companies.
3.7. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
and with whatever rules the Commission may promulgate with respect thereto.
3.8. The Fund shall use reasonable efforts to provide Fund
prospectuses, reports to shareholders, proxy materials and other Fund
communications (or camera-ready equivalents) to the Company sufficiently in
advance of the Company's mailing dates to enable the Company to complete, at
reasonable cost, the printing, assembling and/or distribution of the
communications in accordance with applicable laws and regulations.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or the Adviser(s) is named, at least ten Business
Days prior to its use. No such material shall be used if the Fund or its
designee reasonably objects to such use within ten Business Days after receipt
of such material. The Fund and the Adviser(s) shall use their best efforts to
review any such material within five Business Days of receipt from the Company.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund.
4.3. The Fund or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its separate account(s)
is named at least ten Business Days prior to its use. No such material shall be
used if the Company or its designee reasonably objects to such use within ten
Business Days after receipt of such material. The Company shall use its best
efforts to review any such material within five Business Days of receipt from
the Fund or the Fund's designee.
4.4. The Fund and the Advisers shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, which are relevant
to the Company or the Contracts.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the investment
in the Fund under the Contracts.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund shall pay no fee or other compensation to the Company
under this Agreement, except that if the Fund or any Portfolio adopts and
implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then
the Underwriter may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Underwriter in writing.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
ARTICLE VI. Diversification
6.1. The Advisers and the Fund each represent and warrant that they
will at all times invest money from the Contracts in such a manner as to ensure
that the Contracts will be treated as variable contracts under the Code and the
regulations issued thereunder. Without limiting the scope of the foregoing, the
Fund will at all times comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, and Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify immediately the Company of such breach
and (b) to adequately diversify the Fund so as to achieve compliance within the
grace period afforded by Regulation 817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by Variable Insurance Product owners; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of contract owners. The
Board shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance policy
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
(at the Company's expense); provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a) The Company agrees to indemnify and hold harmless the Fund and
each member of the Board and officers, and each Adviser and each director and
officer of each Adviser, and each person, if any, who controls the Fund or the
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually, "Indemnified Party," for purposes of
this Section 8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement or prospectus for the Contracts
or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or
on behalf of the Fund for use in the registration statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of
the Fund not supplied by the Company, or persons under its
control and other than statements or representations
authorized by the Fund or an Adviser) or unlawful conduct of
the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature of
the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and
in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the operation
of the Fund.
8.2. Indemnification by the Advisers
8.2(a). Each Adviser agrees, with respect to each Portfolio that it
manages, to indemnify and hold harmless the Company and each of its directors
and officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
and individually, "Indemnified Party," for purposes of this Section 8.2) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of shares of the Portfolio that it
manages or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus or sales literature
of the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Fund by or on
behalf of the Company for use in the registration statement
or prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Portfolio shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for
the Contracts not supplied by the Fund or persons under its
control and other than statements or representations
authorized by the Company) or unlawful conduct of the Fund,
Adviser(s) or Underwriter or persons under their control,
with respect to the sale or distribution of the Contracts or
Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser (including a
failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements
of Article IV or the Subchapter M qualification of Section
2.3 of this Agreement); as limited by and in accordance with
the provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b). An Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
8.2(c). An Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. Indemnification by the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (hereinafter
collectively, the "Indemnified Parties" and individually, "Indemnified Party,"
for purposes of this Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Fund) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of the Board or any member thereof, are related to
the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms
of this Agreement; or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Fund
(including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversifictation
requirements of Article IV or the Subchapter M
qualification of Section 2.3 of this Agreement);
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company agrees promptly to notify the Fund of the
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by
ninety (90) days advance written notice delivered to the
other parties; or
(b) termination by the Company by written notice to
the Fund and the Adviser with respect to any Portfolio based
upon the Company's determination that shares of such Portfolio
is not reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to
the Fund and the Adviser with respect to any Portfolio in the
event any of the Portfolio's shares are not registered, issued
or sold in accordance with applicable state and/or federal law
or such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
the Company; or
(d) termination by the Company by written notice to
the Fund and the Adviser with respect to any Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to
the Fund and the Adviser with respect to any Portfolio in the
event that such Portfolio falls to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the Fund by written notice
to the Company if the Fund shall determine, in its sole
judgment exercised in good faith, that the Company and/or its
affiliated companies has suffered a material adverse change in
its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material
adverse publicity, or
(g) termination by the Company by written notice to
the Fund and the Adviser, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Fund or the Adviser has suffered a material adverse change in
its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Adviser by written
notice to the Company, if the Company gives the Fund and the
Adviser the written notice specified in Section 1.6 hereof and
at the time such notice was given there was no notice of
termination outstanding under any other provision of this
Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty five 45 days after
the notice specified in Section 1.6 was given.
10.2. Notwithstanding any termination of this Agreement, the Fund
shall at the option of the Company, continue to make available additional shares
of the Fund pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing, Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to direct
reallocation of investments in the Fund, redemption of investments in the Fund
and/or investment in the Fund upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.2 shall not
apply to any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the Securities and Exchange Commission pursuant to
Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish
to the Fund the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund) to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall not
prevent Contract Owners from allocating payments to a Portfolio that was
otherwise available under the Contracts without first giving the Fund 90 days
prior written notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Morgan Stanley Universal Funds, Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: Secretary
If to Adviser:
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: Harold J. Schaaff, Jr., Esq.
If to Adviser:
Miller Anderson & Sherrerd, LLP
One Tower Bridge
West Conshohocken, Pennsylvania 19428
Attention: Lorraine Truten
If to the Company:
Transamerica Life Insurance and Annuity Company
1150 South Olive Street
Los Angeles, California 90015
Attention: Corporate Secretary
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that an Adviser may assign this Agreement or
any rights or obligations hereunder to any affiliate of or company under common
control with the Adviser, if such assignee is duly licensed and registered to
perform the obligations of the Adviser under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in any
event within 90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP, if any),
as soon as practical and in any event within 45 days after the end of each
quarterly period:
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as practical
after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange Commission or
any state insurance regulator, as soon as practical after the filing
thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Company, as soon as practical after the receipt
thereof.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
By: ______________________________
Name:
Title:
MORGAN STANLEY UNIVERSAL FUNDS, INC.
By: ______________________________
Name:
Title:
MORGAN STANLEY ASSET MANAGEMENT INC.
By: ______________________________
Name:
Title:
MILLER ANDERSON & SHERRERD, LLP
By: ______________________________
Name:
Title:
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
Name of Separate Account Form Number and Name of Contract
Funded by Separate
Account Sep Acct VA-6
Variable Annuity - Products A, B and C
(A) Policy Form No. TCG - 311-197
(B) Policy Form No. - Not yet assigned
(C) Policy Form No. TCG - 313-197
A-1
<PAGE>
SCHEDULE B
PORTFOLIOS OF MORGAN STANLEY
UNIVERSAL FUNDS, INC.
Fixed Income Portfolio
High Yield Portfolio
International Magnum Portfolio
B-1
<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of
voting instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will
inform the Company of the Record, Mailing and Meeting dates.
This will be done verbally approximately two months before meeting.
. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to
call in the number of Customers to the Fund , as soon as possible, but
no later than two weeks after the Record Date.
. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Fund will provide the last
Annual Report to the Company pursuant to the terms of Section 3.3 of
the Agreement to which this Schedule relates.
. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Fund or its affiliate must approve the Card before it is printed.
Allow approximately 2-4 business days for printing information on the
Cards. Information commonly found on the Cards includes:
C-1
<PAGE>
. name (legal name as found on account registration)
. address
. fund or account number
. coding to state number of units
. individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
. During this time, the Fund will develop, produce and pay for the Notice
of Proxy and the Proxy Statement (one document). Printed and folded
notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by
the Company). Contents of envelope sent to Customers by the Company
will include:
. Voting Instruction Card(s)
. One proxy notice and statement (one document)
. return envelope (postage pre-paid by Company) addressed to
the Company or its tabulation agent
. "urge buckslip" - optional, but recommended.
(This is a small, single sheet of paper that requests
Customers to vote as quickly as possible and that their vote
is important. One copy will be supplied by the Fund.)
. cover letter - optional, supplied by Company and reviewed
and approved in advance by the Fund.
. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Fund.
. Package mailed by the Company. * The Fund must allow at least a
15-day solicitation time to the Company as the shareowner. (A 5-week
period is recommended.) Solicitation time is calculated as calendar
days from (but not including,) the meeting, counting backwards.
. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
C-2
<PAGE>
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by the Fund in the past.
. Signatures on Card checked against legal name on account registration
which was printed on the Card. Note: For Example, if the account
registration is under "John A. Smith, Trustee," then that is the exact
legal name to be printed on the Card and is the signature needed on
the Card.
. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be not received for purposes of
vote tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to
why they did not complete the system. Any questions on those Cards are
usually remedied individually.
. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
. The actual tabulation of votes is done in units which is then
converted to shares. (It is very important that the Fund receives the
tabulations stated in terms of a percentage and the number of shares.)
The Fund must review and approve tabulation format.
. Final tabulation in shares is verbally given by the Company to the Fund
on the morning of the meeting not later than 10:00 a.m. Eastern time.
The Fund may request an earlier deadline if reasonable and if required
to calculate the vote in time for the meeting.
. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
C-3
<PAGE>
. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will
be permitted reasonable access to such Cards.
. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
C-4
<PAGE>
Exhibit (8) Form of Participation Agreements regarding the Portfolio.
(g) re OCC Accumulation Trust
<PAGE>
PARTICIPATION AGREEMENT
By and Among
OCC ACCUMULATION TRUST
And
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
And
OCC DISTRIBUTORS
And
OpCap Advisors
THIS AGREEMENT, made and entered into this 18th day of
December, 1997, by and among Transamerica Life Insurance Company of New York, a
North Carolina Corporation (hereinafter the "Company"), on its own behalf and on
behalf of each separate account of the Company named in Schedule 1 to this
Agreement, as may be amended from time to time (each account referred to as the
"Account"), OCC ACCUMULATION TRUST, an open-end diversified management
investment company organized under the laws of the State of Massachusetts
(hereinafter the "Fund"), OpCap Advisors (hereinafter the "Adviser") and OCC
DISTRIBUTORS, a Delaware general partnership (hereinafter the "Underwriter").
WHEREAS, the Fund engages in business as an open-end
diversified, management investment company and was established for the purpose
of serving as the investment vehicle for separate accounts established for
variable life insurance contracts and variable annuity contracts to be offered
by insurance companies which have entered into participation agreements
substantially identical to this Agreement (hereinafter "Participating Insurance
Companies"); and
WHEREAS, beneficial interests in the Fund are divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has obtained an order from the Securities &
Exchange Commission (alternatively referred to as the "SEC" or the
"Commission"), dated February 22, 1995 (File No. 812-9290), granting
Participating Insurance Companies and variable annuity separate accounts and
variable life insurance separate accounts relief from the provisions of Sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity separate accounts and variable life insurance
separate accounts of both affiliated and unaffiliated Participating Insurance
Companies and qualified pension and retirement plans (hereinafter the "Mixed and
Shared Funding Exemptive Order");and
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Company has registered or will register certain
variable annuity or life insurance contracts (the "Contracts") under the 1933
Act; and
WHEREAS, the Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company under the insurance laws of the State of North Carolina, to set
aside and invest assets attributable to the Contracts; and
WHEREAS, the Company has registered the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer with
the SEC under the Securities Exchange Act of 1934, as amended (hereinafter the
"1934 Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios named
in Schedule 2 on behalf of the Account to fund the Contracts and the Underwriter
is authorized to sell such shares to unit investment trusts such as the Account
at net asset value;
WHEREAS, the Company may contract with an Administrator to
perform certain services with regard to the Contracts and, therefore, certain
obligations and services of the Adviser and/or Trust should be directed to the
Administrator, as directed by the Company;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those
shares of the Fund which the Company or its Administrator orders on behalf of
the Account, executing such orders on a daily basis at the net asset value next
computed after receipt and acceptance by the Fund or its agent of the order for
the shares of the Fund. For purposes of this Section 1.1, the Company or its
Administrator shall be the designee of the Fund for receipt of such orders from
each Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 10:00 a.m. Eastern Time
on the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading.
1.2. The Company shall pay for Fund shares on the next
Business Day after it places an order to purchase Fund shares in accordance with
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
1.3. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by Participating
Insurance Companies and their separate accounts each Business Day; provided,
however, that the Board of Trustees of the Fund (hereinafter the "Directors")
may refuse to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action is required by
law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Directors, acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of any Portfolio.
1.4. The Fund and the Underwriter agree that shares of the
Fund shall be sold only to Participating Insurance Companies and their separate
accounts, qualified pension and retirement plans or such other persons as are
permitted under applicable provisions of the Internal Revenue Code of 1986, as
amended, (the "Internal Revenue Code"), and regulations promulgated thereunder,
the sale to which will not impair the tax treatment currently afforded the
contracts. No shares of any Portfolio shall be sold to the general public.
1.5. The Fund and the Underwriter shall not sell Fund shares
to any insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VI and VII of this
Agreement are in effect to govern such sales. The Fund shall make available upon
written request from the Company (i) a list of all other Participating Insurance
Companies and (ii) a copy of the Participation Agreement executed by any other
Participating Insurance Company.
1.6. The Fund agrees to redeem for cash, upon the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt and acceptance by the Fund or its agent of the request for
redemption. For purposes of this Section 1.6, the Company or its Administrator
shall be the designee of the Fund for receipt of requests for redemption from
each Account and receipt by such designee shall constitute receipt by the Fund;
provided the Fund receives notice of request for redemption by 10:00 a.m.
Eastern Time on the next following Business Day. Payment shall be in federal
funds transmitted by wire to the Company's account as designated by the Company
in writing from time to time, on the same Business Day the Fund receives notice
of the redemption order from the Company except that the Fund reserves the right
to delay payment of redemption proceeds, but in no event may such payment be
delayed longer than the period permitted under Section 22(e) of the 1940 Act.
Neither the Fund nor the Underwriter shall bear any responsibility whatsoever
for the proper disbursement or crediting of redemption proceeds to Contract
owners; the Company alone shall be responsible for such action. If notification
of redemption is received after 10:00 a.m. Eastern Time, payment for redeemed
shares will be made on the next following Business Day.
1.7. The Company agrees to purchase and redeem the shares of
the Portfolios named in Schedule 2 offered by the then current prospectus of the
Fund in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the Contracts shall be invested in the
Fund, or in the Company's general account; provided that such amounts may also
be invested in an investment company other than the Fund if (a) such other
investment company, or series thereof, has investment objectives or policies
that are substantially different from the investment objectives and policies of
the Portfolios of the Fund named in Schedule 2; or (b) the Company gives the
Fund and the Underwriter 45 days written notice of its intention to make such
other investment company available as a funding vehicle for the Contracts; or
(c) such other investment company was available as a funding vehicle for the
Contracts prior to the date of this Agreement and the Company so informs the
Fund and Underwriter prior to their signing this Agreement; or (d) the Fund or
Underwriter consents in writing to the use of such other investment company.
1.8. Issuance and transfer of the Fund's shares will be by
book entry only. Stock certificates will not be issued to the Company or any
Account. Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of each
Account.
1.9. The Fund shall furnish notice to Company or its
Administrator by Company, two days prior to the distribution of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such dividends and distributions as are
payable on the Portfolio shares in the form of additional shares of that
Portfolio. The Company reserves the right to revoke this election and to receive
all such dividends and distributions in cash. The Fund shall notify the Company
of the number of shares so issued as payment of such dividends and distributions
the day of distribution when it reports the Portfolio's NAV pursuant to Section
1.10.
1.10. The Fund shall report the net asset value per share for
each Portfolio to the Company or its Administrator, as directed by Company, on a
daily basis as soon as reasonably practical after the net asset value per share
is calculated and shall use its best efforts to make such net asset value per
share available by 5:30 p.m., Eastern Time, each business day. If the Fund
provides materially incorrect share net asset value information, the Fund shall
make an adjustment to the number of shares purchased or redeemed for the
Accounts to reflect the correct net asset value per share. Any material error in
the calculation or reporting of net asset value per share, dividend or capital
gains information shall be reported promptly upon discovery to the Company.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts
are or will be registered under the 1933 Act and that the Contracts will be
issued and sold in compliance with all applicable federal and state laws. The
Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established each Account as a segregated asset account under applicable
state law and has registered each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as segregated investment
accounts for the Contracts, and that it will maintain such registration for so
long as any Contracts are outstanding. The Company shall amend the registration
statement under the 1933 Act for the Contracts and the registration statement
under the 1940 Act for the Account from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be required
by applicable law. The Company shall register and qualify the Contracts for sale
in accordance with the securities laws of the various states only if and to the
extent deemed necessary by the Company.
2.2. The Company represents that the Contracts are currently
and at the time of issuance will be treated as life insurance or annuity
contracts under Sections 7702 or 72 of the Internal Revenue Code and that it
will maintain such treatment and that it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.3. The Fund and Adviser represent and warrant that Fund
shares sold pursuant to this Agreement shall be registered under the 1933 Act
and duly authorized for issuance in accordance with applicable law and that the
Fund is and shall remain registered under the 1940 Act for as long as the Fund
shares are sold. The Fund shall amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares. The Fund shall register and
qualify the shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Fund or the Underwriter.
2.4. The Fund and Adviser represent and warrant that the Fund
and each of the Portfolios is currently qualified as a Regulated Investment
Company under Subchapter M of the Internal Revenue Code, and that they will
maintain such qualification (under Subchapter M or any successor or similar
provision) (or correct any failure during the applicable grace period) and that
they will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.5. The Fund represents that its investment objectives,
policies and restrictions comply with applicable state investment laws as they
may apply to the Fund. The Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws and regulations of any
state. The Company alone shall be responsible for informing the Fund of any
insurance restrictions imposed by state insurance laws which are applicable to
the Fund. To the extent feasible and consistent with market conditions, the Fund
will adjust its investments to comply with the aforementioned state insurance
laws upon written notice from the Company of such requirements and proposed
adjustments, it being agreed and understood that in any such case the Fund shall
be allowed a reasonable period of time under the circumstances after receipt of
such notice to make any such adjustment.
2.6. The Fund currently does not intend to make any payments
to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. To the extent that
it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund
undertakes to have its Board of Trustees, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.7. The Underwriter represents and warrants that it is a
member in good standing of the National Association of Securities Dealers, Inc.,
("NASD") and is registered as a broker-dealer with the SEC. The Underwriter
further represents that it will sell and distribute the Fund shares in
accordance with all applicable federal and state securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of Massachusetts and that it does and will
comply with applicable provisions of the 1940 Act.
2.9. The Underwriter and the Adviser represent and warrant
that Adviser is and shall remain duly registered under all applicable federal
and state securities laws and that the Adviser will perform its obligations to
the Fund in accordance with the laws of Massachusetts and any applicable state
and federal securities laws.
2.10. The Fund, Adviser and Underwriter represent and warrant
that all of their directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the Fund
are and continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
includes coverage for larceny and embezzlement and is issued by a reputable
bonding company.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other individuals/
entities dealing with the money and/or securities of the Fund are covered by a
blanket fidelity bond or similar coverage for the benefit of the Fund, in an
amount not less than $5 million. The aforesaid includes coverage for larceny and
embezzlement and is issued by a reputable bonding company. The Company agrees to
make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company, at the
Company's expense, with as many copies of the current prospectuses for the
Portfolios listed on Schedule 2 as the Company may reasonably request for use
with prospective contractowners and applicants. The Underwriter shall print and
distribute, at the Fund's or Underwriter's expense, as many copies of said
prospectuses as necessary for distribution to existing contractowners or
participants. If requested by the Company in lieu thereof, the Fund shall
provide such documentation including a final copy of a current prospectus set in
type at the Fund's expense and other assistance as is reasonably necessary in
order for the Company at least annually (or more frequently if the said
prospectuses are amended more frequently) to have the new prospectus for the
Contracts and the Portfolios' new prospectuses printed together in one document.
In such case the Fund shall bear its share of expenses as described above.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or
alternatively from the Company (or, in the Fund's discretion, the Prospectus
shall state that such Statement is available from the Fund), and the Underwriter
(or the Fund) shall provide such Statement, at its expense, to the Company and
to any owner of or participant under a Contract who requests such Statement or,
at the Company's expense, to any prospective contractowner and applicant who
requests such statement.
3.3. The Fund, at its expense, shall provide the Company with
copies of proxy material, if any, reports to shareholders and other
communications to shareholders with regard to the Portfolios listed in Schedule
2 in such quantity as the Company shall reasonably require and shall bear the
costs of distributing them to existing contractowners or participants.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from contractowners or
participants;
(ii) vote the Fund shares held in the Account in accordance
with instructions received from contractowners or
participants; and
(iii) vote Fund shares held in the Account for which no
timely instructions have been received, in the same
proportion as Fund shares of such Portfolio for which
instructions have been received from the Company's
contractowners or participants;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass through voting privileges for variable contractowners. The Company
reserves the right to vote Fund shares held in any segregated asset account in
its own right, to the extent permitted by law. Participating Insurance Companies
shall be responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a manner consistent
with other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular as required, the Fund will
either provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the SEC interpretation of the requirements
of Section 16(a) with respect to periodic elections of directors and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be
furnished, to the Fund or the Underwriter, each piece of sales literature or
other promotional material in which the Fund or the Fund's adviser or the
Underwriter is named, at least five business days prior to its use. No such
material shall be used if the Fund or the Underwriter reasonably objects in
writing to such use within fifteen business days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or by
the Underwriter, except with the permission of the Fund or the Underwriter. The
Fund and the Underwriter agree to respond to any request for approval on a
prompt and timely basis.
4.3. The Fund or the Underwriter shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company or its separate account is
named, at least fifteen business days prior to its use. No such material shall
be used if the Company reasonably objects in writing to such use within fifteen
business days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any
information or make any representations on behalf of the Company or concerning
the Company, each Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Account which
are in the public domain or approved by the Company for distribution to
contractowners or participants, or in sales literature or other promotional
material approved by the Company, except with the permission of the Company. The
Company agrees to respond to any request for approval on a prompt and timely
basis.
4.5. The Fund will provide to the Company at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or its
shares, contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
4.6. The Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Contracts or each Account, contemporaneously with the filing of
such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under NASD rules, the 1940 Act or the 1933 Act.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then, subject to obtaining any required exemptive orders
or other regulatory approvals, the Underwriter may make payments to the Company
or to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund of this
Agreement shall be paid by the Fund to the extent permitted by law. All Fund
shares will be duly authorized for issuance and registered in accordance with
applicable federal law and to the extent deemed advisable by the Fund, in
accordance with applicable state law, prior to sale. The Fund shall bear the
expenses for the cost of registration and qualification of the Fund's shares,
preparation and filing of the Fund's prospectus and registration statement, Fund
proxy materials and reports, setting in type, printing and distributing the
prospectuses, the proxy materials and reports to existing shareholders and
contractowners, the preparation of all statements and notices required by any
federal or state law, all taxes on the issuance or transfer of the Fund's
shares, and any expenses permitted to be paid or assumed by the Fund pursuant to
a plan, if any, under Rule 12b-1 under the 1940 Act.
5.3 Adviser will quarterly reimburse the Company certain of
the administrative costs and expenses incurred by the Company as a result of
operations necessitated by the beneficial ownership by Contract owners of shares
of the Portfolios of the Fund, equal to 0.15% per annum of the average daily net
assets of the Fund attributable to variable life or variable annuity contracts
offered by the Company or its affiliates up to $300 million and 0.20% per annum
of the average daily net assets of the Fund attributable to such contracts in
excess of $300 million but less than $600 million and 0.25% per annum of the
average daily net assets of the Fund attributable to such contracts in excess of
$600 million. In no event shall such fee be paid by the Fund, its shareholders
or by the contract holders.
ARTICLE VI. Diversification
6.1. The Fund and the Adviser represent and warrant that the
Fund will at all times invest money from the Contracts in such a manner as to
ensure that the Contracts will be treated as variable contracts under the
Internal Revenue Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will comply with Section 817(h) of the
Internal Revenue Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify the Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period
afforded by Treasury Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board of Trustees of the Fund (the "Fund Board") will
monitor the Fund for the existence of any material irreconcilable conflict among
the interests of the contractowners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by
Participating Insurance Companies or by variable annuity contract and variable
life insurance contractowners; or (f) a decision by an insurer to disregard the
voting instructions of contractowners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof. A majority of the Fund Board shall consist of persons who
are not "interested" persons of the Fund.
7.2. The Company has reviewed a copy of the Mixed and Shared
Funding Exemptive Order, and in particular, has reviewed the conditions to the
requested relief set forth therein. As set forth in the Mixed and Shared Funding
Exemptive Order, the Company will report any potential or existing conflicts of
which it is aware to the Fund Board. The Company agrees to assist the Fund Board
in carrying out its responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the Fund Board with all information reasonably
necessary for the Fund Board to consider any issues raised. This includes, but
is not limited to, an obligation by the Company to inform the Fund Board
whenever contractowner voting instructions are disregarded. The Fund Board shall
record in its minutes or other appropriate records, all reports received by it
and all action with regard to a conflict.
7.3. If it is determined by a majority of the Fund Board, or a
majority of its disinterested Directors, that an irreconcilable material
conflict exists, the Company and other Participating Insurance Companies shall,
at their expense and to the extent reasonably practicable (as determined by a
majority of the disinterested Directors), take whatever steps are necessary to
remedy or eliminate the irreconcilable material conflict, up to and including:
(1) withdrawing the assets allocable to some or all of the separate accounts
from the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the Fund,
or submitting the question whether such segregation should be implemented to a
vote of all affected contractowners and, as appropriate, segregating the assets
of any appropriate group (i.e., variable annuity contractowners or variable life
insurance contractowners, of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contractowners
the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
7.4. If the Company's disregard of voting instructions could
conflict with the majority of contractowner voting instructions, and the
Company's judgment represents a minority position or would preclude a majority
vote, the Company may be required, at the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement with respect to
such Account. Any such withdrawal and termination must take place within 60 days
after the Fund gives written notice to the Company that this provision is being
implemented. Until the end of such 60 day period the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.5. If a particular state insurance regulator's decision
applicable to the Company conflicts with the majority of other state insurance
regulators, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement with respect to such Account. Any such withdrawal
and termination must take place within 60 days after the Fund gives written
notice to the Company that this provision is being implemented. Until the end of
such 60 day period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the disinterested members of the Fund Board shall
determine whether any proposed action adequately remedies any irreconcilable
material conflict, but in no event will the Fund or Quest Advisors be required
to establish a new funding medium for the Contracts. The Company shall not be
required by Section 7.3 to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of contractowners
materially adversely affected by the irreconcilable material conflict.
7.7. The Company shall at least annually submit to the Fund
Board such reports, materials or data as the Fund Board may reasonably request
so that the Fund Board may fully carry out the duties imposed upon it as
delineated in the Mixed and Shared Funding Exemptive Order, and said reports,
materials and data shall be submitted more frequently if deemed appropriate by
the Fund Board.
7. 8. If and to the extent that Rule 6e-2 and Rule 6e-3 (T)
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the Act or the rules promulgated thereunder with respect to mixed
or shared funding (as defined in the Mixed and Shared Funding Exemptive Order)
on terms and conditions materially different from those contained in the Mixed
and Shared Funding Exemptive Order, (a) the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be necessary
to comply with Rules 6e-2 and 6e-3 (T), as amended, and Rule 6e-3, as adopted,
to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2,
7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent
that terms and conditions substantially identical to such Sections are contained
in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the
Fund, the Adviser, the Underwriter, and each of the Fund's or the Underwriter's
directors, officers, employees or agents and each person, if any, who controls
or is associated with the Fund or the Underwriter within the meaning of such
terms under the federal securities laws (collectively, the "indemnified parties"
for purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including reasonable legal and other expenses), to
which the indemnified parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact
contained in the registration statement, prospectus or
statement of additional information for the Contracts
or contained in the Contracts or sales literature or
other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made; provided that
this agreement to indemnify shall not apply as to any
indemnified party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to the
Company by or on behalf of the Fund for use in the
registration statement, prospectus or statement of
additional information for the Contracts or in the
Contracts or sales literature or other promotional
material for the Contracts (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company (other
than statements or representations contained in the
Fund registration statement, Fund prospectus, Fund
statement of additional information or sales literature
or other promotional material of the Fund not supplied
by the Company or persons under its control) or
wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund
registration statement, Fund prospectus, statement of
additional information or sales literature or other
promotional material of the Fund or any amendment
thereof or supplement thereto or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, if such a
statement or omission was made in reliance upon and in
conformity with information furnished to the Fund by or
on behalf of the Company or persons under its control;
or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials or to
make any payments under the terms of this Agreement; or
(v) arise out of any material breach of any representation
and/or warranty made by the Company in this Agreement
or arise out of or result from any other material
breach by the Company of this Agreement;
except to the extent provided in Sections 8.1(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
(b) No party shall be entitled to indemnification if such
loss, claim, damage, liability or litigation is due to the willful misfeasance,
bad faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
(c) The indemnified parties will promptly notify the Company
of the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the operation
of the Fund.
8.2. Indemnification By the Underwriter
(a) The Underwriter and Adviser, on their own behalf and on
behalf of the Fund, joint and severally agree to indemnify and hold harmless the
Company and each of its directors, officers, employees or agents and each
person, if any, who controls or is associated with the Company within the
meaning of such terms under the federal securities laws (collectively, the
"indemnified parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter or Adviser) or litigation (including
reasonable legal and other expenses) to which the indemnified parties may become
subject under any statute, regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement, prospectus or statement
of additional information for the Fund or sales
literature or other promotional material of the Fund
(or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not misleading
in light of the circumstances in which they were made;
provided that this agreement to indemnify shall not
apply as to any indemnified party if such statement or
omission or such alleged statement or omission was made
in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of
the Company for use in the registration statement,
prospectus or statement of additional information for
the Fund or in sales literature or other promotional
material of the Fund (or any amendment or supplement
thereto) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in the
Contract or Fund registration statement, the Contract
or Fund prospectus, statement of additional
information, or sales literature or other promotional
material for the Contracts or of the Fund not supplied
by the Underwriter or the Fund or persons under the
control of the Underwriter or the Fund respectively) or
wrongful conduct of the Underwriter or the Fund or
persons under the control of the Underwriter or the
Fund respectively, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, statement of
additional information or sales literature or other
promotional material covering the Contracts (or any
amendment thereof or supplement thereto), or the
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statement or statements therein
not misleading in light of the circumstances in which
they were made, if such statement or omission was made
in reliance upon and in conformity with information
furnished to the Company by or on behalf of the
Underwriter or the Fund or persons under the control of
the Underwriter or the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms
of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply
with the diversification requirements and procedures
related thereto specified in Article VI or the
Sub-Chapter M qualification specified in Section 2.4 of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter
or the Fund in this Agreement or arise out of or result
from any other material breach of this Agreement by the
Underwriter or the Fund; or
(vi) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net
asset value per share or dividend or capital gain
distribution rate;
except to the extent provided in Sections 8.2(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Underwriter may
otherwise have.
(b) No party shall be entitled to indemnification if such
loss, claim, damage, liability or litigation is due to the willful misfeasance,
bad faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
(c) The indemnified parties will promptly notify the
Underwriter of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Contracts or the operation of the
Account.
8.3. Indemnification Procedure
Any person obligated to provide indemnification under this
Article VIII ("indemnifying party" for the purpose of this Section 8.3) shall
not be liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification under this
Article VIII ("indemnified party" for the purpose of this Section 8.3) unless
such indemnified party shall have notified the indemnifying party in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
indemnified party (or after such party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under the indemnification provision of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
failure to give such notice. In case any such action is brought against the
indemnified party, the indemnifying party will be entitled to participate, at
its own expense, in the defense thereof. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the indemnifying party to the indemnified
party of the indemnifying party's election to assume the defense thereof, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it, and the indemnifying party will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article VIII.
The indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
8.4. Contribution
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Article VIII is
due in accordance with its terms but for any reason is held to be unenforceable
with respect to a party entitled to indemnification ("indemnified party" for
purposes of this Section 8.4) pursuant to the terms of this Article VIII, then
each party obligated to indemnify pursuant to the terms of this Article VIII
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and litigations in such
proportion as is appropriate to reflect the relative benefits received by the
parties to this Agreement in connection with the offering of Fund shares to the
Account and the acquisition, holding or sale of Fund shares by the Account, or
if such allocation is not permitted by applicable law, in such proportions as is
appropriate to reflect the relative net benefits referred to above but also the
relative fault of the parties to this Agreement in connection with any actions
that lead to such losses, claims, damages, liabilities or litigations, as well
as any other relevant equitable considerations.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of New
York.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon one-year advance written
notice to the other parties unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company if shares of the Portfolios
delineated in Schedule 2 are not reasonably available to meet the requirements
of the Contracts as determined by the Company; or
(c) at the option of the Fund upon institution of formal
proceedings against the Company by the NASD, the SEC, the insurance commission
of any state or any other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the administration of
the Contracts, the operation of the Account, or the purchase of the Fund shares,
which would have a material adverse effect on the Company's ability to perform
its obligations under this Agreement; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund or the Underwriter by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body, which
would have a material adverse effect on the Fund's or the Underwriter's ability
to perform its obligations under this Agreement; or
(e) at the option of the Company or the Fund upon receipt of
any necessary regulatory approvals and/or the vote of the contractowners having
an interest in the Account (or any subaccount) to substitute the shares of
another investment company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts for which those Portfolio shares had
been selected to serve as the underlying investment media. The Company will give
30 days prior written notice to the Fund of the date of any proposed vote or
other action taken to replace the Fund's shares; or
(f) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable material conflict
exists among the interests of (i) all contractowners of variable insurance
products of all separate accounts or (ii) the interests of the Participating
Insurance Companies investing in the Fund as delineated in Article VII of this
Agreement; or
(g) at the option of the Company if the Fund ceases to
qualify as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code, or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(h) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines in
its sole judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its business, operations
or financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company; or
(k) at the option of the Fund or Underwriter, if the Fund or
Underwriter respectively, shall determine in its sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement or is the
subject of material adverse publicity which is
likely to have a material adverse impact upon the business and operations
of the Fund or Underwriter; or
(l) at the option of the Fund in the event any of the
Contracts are not issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon such occurrence
without notice.
10.2. Notice Requirement
(a) In the event that any termination of this Agreement
is based upon the provisions of Article VII, such prior written notice
shall be given in advance of the effective date of termination as required by
such provisions.
(b) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(b) - (d) or 10.1(g) - (i), prompt
written notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating the Agreement to the non-terminating
parties, with said termination to be effective upon receipt of such notice by
the non-terminating parties.
(c) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(j) or 10.1(k), prior written notice
of the election to terminate this Agreement for cause shall be furnished by the
party terminating this Agreement to the non-terminating parties. Such prior
written notice shall be given by the party terminating this Agreement to the
non-terminating parties at least 30 days before the effective date of
termination.
10.3. It is understood and agreed that the right to terminate
this Agreement pursuant to Section 10.1(a) may be exercised for any reason or
for no reason.
10.4. Effect of Termination
(a) Notwithstanding any termination of this Agreement
pursuant to Section 10.1 of this Agreement, and subject to Section 1.3
of this Agreement, the Company may require the Fund and the Underwriter to,
continue to make available additional shares of the Fund for so long after the
termination of this Agreement as the Company desires pursuant to the terms and
conditions of this Agreement as provided in paragraph (b) below, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.4 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement.
(b) If shares of the Fund continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the provisions of
this Agreement shall remain in effect except for Section 10.1(a) and thereafter
the Fund, the Underwriter, or the Company may terminate the Agreement, as so
continued pursuant to this Section 10.4, upon written notice to the other party,
such notice to be for a period that is reasonable under the circumstances but,
if given by the Fund or Underwriter, need not be for more than 90 days.
10.5. Except as necessary to implement contractowner initiated
or approved transactions, or as required by state insurance laws or regulations,
the Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Account), and the Company shall not prevent contractowners from allocating
payments to a Portfolio that was otherwise available under the Contracts, until
90 days after the Company shall have notified the Fund or Underwriter of its
intention to do so.
ARTICLE XI. Notices
Any notice shall be deemed duly given only if sent by hand, evidenced
by written receipt or by certified mail, return receipt requested, to the other
party at the address of such party set forth below or at such other address as
such party may from time to time specify in writing to the other party. All
notices shall be deemed given three business days after the date received or
rejected by the addressee.
If to the Fund:
Mr. Bernard H. Garil
President
OpCap Advisors
200 Liberty Street
New York, NY 10281
If to the Company:
[Name]
[Title]
[Co. Name]
[Address]
If to the Underwriter:
Mr. Thomas E. Duggan
Secretary
OCC Distributors
200 Liberty Street
New York, NY 10281
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to
the property of the Fund for the enforcement of any claims against the Fund as
neither the Directors, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2. Subject to law and regulatory authority, each party
hereto shall treat as confidential all information reasonably identified as such
in writing by any other party hereto (including without limitation the names and
addresses of the owners of the Contracts) and, except as contemplated by this
Agreement, shall not disclose, disseminate or utilize such confidential
information until such time as it may come into the public domain without the
express prior written consent of the affected party.
12.3. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6. This Agreement shall not be assigned by any party hereto
without the prior written consent of all the parties.
12.7. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without limitation the
SEC, the NASD and state insurance regulators) and shall permit each other and
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.8. Each party represents that the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or trust action, as applicable,
by such party and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with its
terms.
12.9. The parties to this Agreement may amend the schedules to
this Agreement from time to time to reflect changes in or relating to the
Contracts, the Accounts or the Portfolios of the Fund.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed in its name and behalf by its duly authorized
representative as of the date and year first written above.
Company:
TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY
SEAL By: ______________________________
Fund:
OCC ACCUMULATION TRUST
SEAL By: ______________________________
Underwriter:
OCC DISTRIBUTORS
By: ______________________________
Adviser:
OpCap Advisors
By:_______________________________
<PAGE>
Schedule 1
Participation Agreement
Among
OCC Accumulation Trust, Transamerica Life Insurance Company of New York
and
OCC Distributors
The following separate accounts of Transamerica Life Insurance Company
of New York are permitted in accordance with the provisions of this Agreement to
invest in Portfolios of the Fund shown in Schedule 2:
Separate Account VUL-1
[Date]
<PAGE>
Schedule 2
Participation Agreement
Among
OCC Accumulation Trust, Transamerica Life Insurance Company of New York
and
OCC Distributors
The Separate Account(s) shown on Schedule 1 may invest in the following
Portfolios of the OCC Accumulation Trust:
[Date]
Oppenheimer Capital Managed
Oppenheimer Capital Value Equity
<PAGE>
Exhibit (8) Form of Participation Agreements regarding the Portfolio.
(h) re Transamerica Variable Insurance Fund, Inc.
<PAGE>
PARTICIPATION AGREEMENT
Among
TRANSAMERICA VARIABLE INSURANCE FUND, INC.
TRANSAMERICA SECURITIES SALES CORPORATION
and
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of this ____ day of _________,
1996 by and among TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY (hereinafter
"Transamerica"), a California life insurance company, on its own behalf and on
behalf of its SEPARATE ACCOUNT C (the "Account"); TRANSAMERICA VARIABLE
INSURANCE FUND, INC., a corporation organized under the laws of Maryland
(hereinafter the "Fund"); and TRANSAMERICA SECURITIES SALES CORPORATION,
(hereinafter the "Underwriter"), a _________ corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies which have entered into participation
agreements similar to this Agreement (hereinafter "Participating Insurance
Companies"), as well as qualified pension and retirement plans; and
WHEREAS, the beneficial interests in the Fund are divided into several
series of shares, each designated a "Portfolio" and representing interests in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission (hereinafter the "SEC"), dated __________ (File No.
812-_____), granting Participating Insurance Companies and variable annuity and
variable life insurance separate accounts exemptions from the provisions of
sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T) (b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
life insurance companies that may or may not be affiliated with one another
(hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Underwriter is duly registered as a broker-dealer under
the Securities Exchange Act of 1934, as amended (the "1934 Act") and is a member
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, Transamerica has registered certain variable annuity contracts
supported wholly or partially by the Account (the "Contracts") under the 1933
Act and said Contracts are listed in Schedule A hereto, as it may be amended
from time to time by mutual written agreement; and
- 2 -
<PAGE>
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of
Transamerica on ________________, to set aside and invest assets attributable to
the Contracts; and
WHEREAS, Transamerica has registered the Account as a unit investment
trust under
the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Transamerica intends to purchase shares in the Portfolios listed in
Schedule B hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios"), on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises,
Transamerica, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to Transamerica those shares of the
Designated Portfolios which Transamerica orders, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Portfolios. For purposes of this
Section 1.1, Transamerica shall be the designee of the Fund for receipt of such
orders and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by ____ a.m. _________ time
on the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Fund calculates
its net asset value.
- 3 -
<PAGE>
1.2. The Fund agrees to make shares of the Designated Portfolios
available for purchase at the applicable net asset value per share by
Transamerica on those days on which the Fund calculates its net asset values,
and the Fund shall calculate such net asset value on each day which the New York
Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of
Directors of the Fund (hereinafter the "Board") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares of any
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in good faith and
in light of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Designated
Portfolios will be sold only to Participating Insurance Companies and their
separate accounts and qualified pension and retirement plans. No shares of any
Designated Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell shares of the
Designated Portfolios to any other insurance company, separate account or
qualified pension and retirement plan unless an agreement containing provisions
substantially the same as Sections 2.1, 3.6, 3.7, 3.8, and Article VII of this
Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on Transamerica's request, any
full or fractional shares of the Fund held by Transamerica, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption, except that the Fund
reserves the right to suspend the right of redemption or
- 4 -
<PAGE>
postpone the date of payment or satisfaction upon redemption consistent with
Section 22(e) of the 1940 Act. For purposes of this Section 1.5, Transamerica
shall be the designee of the Fund for receipt of requests for redemption and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives notice of such request for redemption by _________ a.m.
___________ time on the next following Business Day.
1.6. The Parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies and qualified pension and retirement plans (subject to
Section 1.4 and Article VI hereof) and the cash value of the Contracts may be
invested in other investment companies.
1.7. Transamerica shall pay for Fund shares by _______ a.m.
______________ time on the next Business Day after an order to purchase Fund
shares is made in accordance with the provisions of Section 1.1 hereof. Payment
shall be in federal funds transmitted by wire and/or by a credit for any shares
redeemed the same day as the purchase. Upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of Transamerica
and shall become the responsibility of the Fund.
1.8. The Fund shall pay and transmit the proceeds of redemptions of
Fund shares by _____ a.m. ____________ time on the next Business Day after a
redemption order is received, subject to Section 1.5 hereof. Payment shall be in
federal funds transmitted by wire and/or a credit for any shares purchased the
same day as the redemption.
1.9. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to Transamerica or the Account.
Shares ordered
from the Fund
- 5 -
<PAGE>
will be recorded in an appropriate title for the Account or the appropriate
subaccount of the
Account.
1.10. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to Transamerica of any income, dividends or
capital gain distributions payable on the Designated Portfolios' shares.
Transamerica hereby elects to receive all such income dividends and capital gain
distributions in additional shares of that Portfolio. Transamerica reserves the
right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify Transamerica by the
end of the next following Business Day of the number of shares so issued as
payment of such dividends and distributions.
1.11. The Fund shall make the net asset value per share for each
Designated Portfolio available to Transamerica on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available by _____
p.m. ________ time. If the Fund provides incorrect per share net asset value
information, Transamerica shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct net asset value per share.
Any material error in the calculation or reporting of net asset value per share,
dividend or capital gains information shall be reported immediately upon
discovery to Transamerica. Any error of a lesser amount shall be corrected in
the next Business Day's net asset value per share.
In the event adjustments are required to correct any error in the
computation of a Designated Portfolio's net asset value per share, or dividend
or capital gain distribution, the Underwriter (or the Underwriter or the Fund)
shall notify Transamerica as soon as possible
- 6 -
<PAGE>
after discovering the need for such adjustments. Notification can be made
orally, but must be confirmed in writing. If an adjustment is necessary to
correct an error which caused Contract owners to receive less than the amount to
which they are entitled, the Fund shall make all necessary adjustments to the
number of shares owned by the Account and distribute to the Account the amount
of the underpayment. In no event shall Transamerica be liable to the Fund or the
Underwriter for any such adjustments or overpayment amounts.
ARTICLE II. Representations and Warranties
2.1. Transamerica represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. Transamerica further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established the Account as a segregated asset account under Section 10506 of the
California Insurance Law and has registered the Account as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Designated Portfolio shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
California and all applicable federal and state securities laws including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act and that the
Fund is and shall remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act
- 7 -
<PAGE>
from time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states if and to the extent required by applicable
law.
2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1
under the 1940 Act or impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law and regulation. In any
event, the Fund represents and warrant that the investment advisory or
management fees paid to the adviser by the Fund are legitimate and not
excessive. To the extent that the Fund decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a Board, a majority of whom
are not interested persons of the Fund, formulate and approve any plan pursuant
to Rule 12b- 1 under the 1940 Act to finance distribution expenses.
2.4. The Fund represents and warrants that the investment policies and
fees and expenses of the Designated Portfolios are and shall at all times remain
in compliance with the insurance and other applicable laws of the State of
California and any other applicable state to the extent required to perform this
Agreement. The Fund further represents and warrants that Designated Portfolio
shares will be sold in compliance with the insurance laws of the State of
California and all applicable state securities laws or exemptions therefrom.
Without limiting the generality of the foregoing, the Fund represents and
warrants that it is and shall at all times remain in compliance with the
policies and restrictions enumerated in Schedule C hereto, as amended by
Transamerica from time to time, provided that such amendments shall either be
(a) agreed to by the Fund and Transamerica, or (b) necessary to comply with
applicable laws of the State of California.
- 8 -
<PAGE>
2.5. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Maryland and that it does and
will comply in all material respects with the 1940 Act.
2.6. The Fund represents and warrant that all of their directors,
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Fund are, and shall continue to
be at all times, covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimal coverage required by
Section 17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.7. The Fund will provide Transamerica with as much advance notice as
is reasonably practicable of any material change affecting the Designated
Portfolios (including, but not limited to, any material change in its
registration statement or prospectus affecting the Designated Portfolios and any
proxy solicitation affecting the Designated Portfolios) and consult with
Transamerica in order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize such expenses by
implementing them in conjunction with regular annual updates of the prospectuses
for the Contracts. The Fund agrees to share equitably in expenses incurred by
Transamerica as a result of actions taken by the Fund, as set forth in the
allocation of expenses contained in Schedule D.
- 9 -
<PAGE>
2.8. Transamerica represents, assuming that the Fund complies with
Article VI of this Agreement, that the Contracts are currently treated as
annuity contracts under applicable provisions of the Internal Revenue Code of
1986, as amended, and that it will make every effort to maintain such treatment
and that it will notify the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.9. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify Transamerica immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1(a). At least annually, the Fund, at its expense, shall provide
Transamerica or its designee with as many copies of the Fund's current
prospectuses for the Designated Portfolios as Transamerica may reasonably
request for marketing purposes (including distribution to Contract owners with
respect to new sales of a Contract). If requested by Transamerica in lieu
thereof, the Fund shall provide such documentation (including a final "camera
ready" copy of the new prospectuses for the Designated Portfolios as set in type
at the Fund's expense or, at the request of Transamerica, as a diskette or such
other form as is required by the financial printer) and other assistance as is
reasonably necessary in order for Transamerica once each year (or more
frequently if the prospectus for the Designated Portfolio is amended)
- 10 -
<PAGE>
to have the prospectus for the Contract and the Fund's prospectus for the
Designated Portfolios printed together in one document (the cost of such
printing to be born by the Fund and Transamerica in proportion to the size of
the prospectuses for the Fund and the Contracts).
3.1(b). The Fund agrees that the prospectuses for the Designated
Portfolios will describe only the Designated Portfolios and will not name or
describe any other portfolios or series that may be in the Fund, and that the
Fund will bear the cost of preparing and producing the prospectuses for the
Designated Portfolios that are so custom tailored for use in connection with the
Contracts.
3.2. If applicable state or Federal laws or regulations require that
the Statement of Additional Information ("SAI") for the Fund be distributed to
all purchasers of the Contract, then the Fund shall provide Transamerica with
the Fund's SAI or documentation thereof for the Designated Portfolios in such
quantities and/or with expenses to be borne in accordance with paragraph 3.1(a)
hereof.
3.3. The Fund, at its expense, shall provide Transamerica with as many
copies of the SAI for the Designated Portfolios as may reasonably be requested.
The Fund, at its expense, shall also provide such SAI free of charge to any
owner of a Contract or prospective owner who requests such SAI.
3.4. The Fund, at its expense, shall provide Transamerica with copies
of its prospectus, SAI, proxy material, reports to shareholders and other
communications to shareholders for the Designated Portfolios in such quantity as
Transamerica shall reasonably require for distributing to Contract owners. If
the Contract and Fund prospectuses are printed
- 11 -
<PAGE>
together in one document, the Fund shall bear the portion of such printing
expense as is attributable to the Fund's prospectus. If applicable SEC rules
require that any of the foregoing Fund prospectuses, Fund SAIs, proxy materials,
Fund reports to shareholders or other communications to shareholders be filed
with the SEC, then the Fund or its designee shall prepare and file with the SEC
such prospectus, SAI, proxy materials, reports to shareholders, or other
communications to shareholders in such format as required by such applicable
rules and shall notify Transamerica of such filing.
3.5. It is understood and agreed that, except with respect to
information regarding Transamerica provided in writing by Transamerica,
Transamerica shall not be responsible for the content of the prospectus or SAI
for the Designated Portfolios. It is also understood and agreed that, except
with respect to information regarding the Fund and provided in writing by the
Fund, the Fund shall not be responsible for the content of the prospectus or SAI
for the Contracts.
3.6. If and to the extent required by law Transamerica shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Designated Portfolio shares in accordance with
instructions received from Contract owners: and
(iii) vote Designated Portfolio shares for which no
instruction have been received in the same proportion
as Designated Portfolio shares for which instructions
have been received from Contract owners, so long as
and to the extent that the SEC continues to interpret
the 1940 Act to require pass-through voting
privileges for variable contract owners. Transamerica
reserves the right to vote Fund shares held in any
segregated asset account in its own right, to the
extent permitted by law.
- 12 -
<PAGE>
3.7. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts holding shares of a Designated
Portfolio calculates voting privileges in the manner required by the Shared
Funding Exemptive Order. The Fund agrees to promptly notify Transamerica of any
amendments or changes of interpretations of the Shared Funding Exemptive Order.
3.8. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, comply with
Section 16(c) of the 1940 Act (although the Fund is not one of the trusts
described in Section 16(c) of that Act) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. Transamerica shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature and other promotional
material that Transamerica develops or uses and in which the Fund (or a
Portfolio thereof), its investment adviser or one of its sub-advisers or the
Underwriter for the Fund shares is named in connection with the Contracts, at
least 10 (ten) Business Days prior to its use. No such material shall be used if
the Fund or its designee objects to such use within 10 (ten) Business Days after
receipt of such material.
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4.2. Transamerica shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts inconsistent with the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund.
4.3. The Fund shall furnish, or shall cause to be furnished, to
Transamerica, each piece of sales literature and other promotional material in
which Transamerica and/or the Account is named at least 10 (ten) Business Days
prior to its use. No such material shall be used if Transamerica objects to such
use within 10 (ten) Business Days after receipt of such material.
Notwithstanding the fact that Transamerica or its designee may not initially
object to a piece of sales literature or other promotional material,
Transamerica reserves the right to object at a later date to the continued use
of any such sales literature or promotional material in which Transamerica is
named, and no such material shall be used thereafter if Transamerica or its
designee so objects.
4.4. The Fund shall not give any information or make any
representations on behalf of Transamerica or concerning Transamerica, the
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports for the Account, or in sales literature or other
promotional
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<PAGE>
material approved by Transamerica or its designee, except with the permission of
Transamerica.
4.5. The Fund will provide to Transamerica at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, all supplements thereto, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Designated Portfolios, contemporaneously with the filing of such
document(s) with the SEC, NASD or other regulatory authorities.
4.6. Transamerica will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, all supplements thereto, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, contemporaneously with the
filing of such document(s) with the SEC, NASD, or other regulatory authority.
4.7. For purposes of this Article IV, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, telephone directories (other than routine
listings), electronic or other public media), sales literature (i.e., any
written or electronic communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, performance reports or summaries, form letters, telemarketing
scripts, seminar texts, reprints or excerpts of any other
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<PAGE>
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
Statements of Additional Information, supplements thereto, shareholder reports,
and proxy materials.
4.8. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested in connection
with compliance and regulatory requirements related to this Agreement or any
party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund shall pay no fee or other compensation to Transamerica
under this Agreement, except that if the Fund or any Designated Portfolio adopts
and implements a plan pursuant to Rule 12b-1 of the 1940 Act to finance
distribution and shareholder servicing expenses, then the Underwriter may make
payments to Transamerica or to the distributor for the Contracts if and in
amounts agreed to by the Underwriter in writing and such payments will be made
out of existing fees otherwise payable to the Underwriter, past profits of the
Underwriter or other resources available to the Underwriter. No such payments
shall be made directly by the Fund. Nothing herein shall prevent the parties
hereto from otherwise agreeing to perform, and arrange for appropriate
compensation for, other services relating to the Fund and/or the Account.
Transamerica shall pay no fee or other compensation to the Fund under this
Agreement, although the parties hereto will bear certain expenses in accordance
with Schedule D, Articles III, V, and other provisions of this Agreement.
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5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund, as further provided in Schedule E. The Fund
shall see to it that all shares of the Designated Portfolios are registered and
authorized for issuance in accordance with applicable federal law and, if and to
the extent required, in accordance with applicable state laws prior to their
sale. The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, supplements thereto, proxy materials and
reports, setting the prospectus in type, printing prospectuses for distribution
to Contract owners, setting in type, printing and filing the proxy materials and
reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, all taxes on the issuance or transfer of
the Fund's shares, and the costs of distributing the Fund's prospectuses and
proxy materials to such Contract owners and any expenses permitted to be paid or
assumed by the Fund pursuant to a plan, if any, under Rule 12b-1 under the 1940
Act.
5.3. Transamerica shall bear the expenses of routine annual
distribution of the Fund's prospectus to owners of Contracts issued by
Transamerica and of distributing the Fund's proxy materials and reports to such
Contract owners; this shall not include distribution of the Fund's prospectus
with respect to new sales of a Contract. Transamerica shall bear all expenses
associated with the registration, qualification, and filing of the Contracts
under applicable federal securities and state insurance laws; the cost of
preparing, printing, and distributing the Contract prospectus and SAI; and the
cost of preparing, printing and
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distributing annual individual account statement to Contract owners as required
by state insurance laws.
5.4. The Fund acknowledges that a principal feature of the Contracts is
the Contract owner's ability to choose from a number of unaffiliated mutual
funds (and portfolios or series thereof), including the Designated Portfolios
("Unaffiliated Funds"), and to transfer the Con- tract's cash value between
funds and portfolios. The Fund and Underwriter agree to cooperate with
Transamerica in facilitating the operation of the Account and the Contracts as
intended, including but not limited to cooperation in facilitating transfers
between Unaffiliated Funds.
ARTICLE VI. Diversification and Qualification
6.1. The Fund and Underwriter represent and warrant that the Fund will
at all times sell its shares and invest its assets in such a manner as to ensure
that the Contracts will be treated as annuity contracts under the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Fund and
Underwriter represent and warrant that the Fund and each Designated Portfolio
thereof will at all times comply with Section 817(h) of the Code and Treasury
Regulation ss. 1.817-5, as amended from time to time, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments or
other modifications or successor provisions to such Section or Regulations. The
Fund and the Underwriter agree that shares of the Designated Portfolios will be
sold only to Participating Insurance Companies and their separate accounts and
qualified pension and retirement plans.
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6.2. No shares of any series or portfolio of the Fund will be sold to
the general public.
6.3. The Fund and Underwriter represent and warrant that the Fund and
each Designated Portfolio is currently qualified as a Regulated Investment
Company under Subchapter M of the Code, and that it will maintain such
qualification (under Subchapter M or any successor or similar provisions) as
long as this Agreement is in effect.
6.4. The Fund or Underwriter will notify Transamerica immediately upon
having a reasonable basis for believing that the Fund or any Portfolio has
ceased to comply with the aforesaid Section 817(h) diversification or Subchapter
M qualification requirements or might not so comply in the future.
6.5. The Fund and Underwriter acknowledge that full compliance with the
requirements referred to in Sections 6.1, 6.2, and 6.3 hereof is absolutely
essential because any failure to meet those requirements would result in the
Contracts not being treated as annuity contracts for federal income tax
purposes, which would have adverse tax consequences for Contract owners and
could also adversely affect Transamerica's corporate tax liability. The Fund and
Underwriter also acknowledge that it is solely within their power and control to
meet those requirements. Accordingly, without in any way limiting the effect of
Section 8.3 hereof and without in any way limiting or restricting any other
remedies available to Transamerica, the Underwriter will pay all costs
associated with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Designated Portfolio to comply with
Sections 6.1, 6.2, or 6.3 hereof, including all costs associated with correcting
or responding to any such failure; such costs may include, but are not limited
to,
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the costs involved in creating, organizing, and registering a new investment
company as a funding medium for the Contracts and/or the costs of obtaining
whatever regulatory authorizations are required to substitute shares of another
investment company for those of the failed Portfolio (including but not limited
to an order pursuant to Section 26(b) of the 1940 Act); such costs are to
include, but are not limited to, fees and expenses of legal counsel and other
advisors to Transamerica and any federal income taxes or tax penalties (or "toll
charges" or exactments or amounts paid in settlement) incurred by Transamerica
in connection with any such failure or anticipated or reasonably foreseeable
failure.
6.6. The Fund shall provide Transamerica or its designee with reports
certifying compliance with the aforesaid Section 817(h) diversification and
Subchapter M qualification requirements, at times provided for and substantially
in the form attached hereto as Schedule E; provided, however, that providing
such reports does not relieve the Fund or Underwriter of their responsibility
for such compliance or of their liability for any non-compliance.
6.7. The Fund and the Underwriter represent and warrant that the Fund
will comply with the investment limitations under applicable state law for
investment companies funding separate accounts.
ARTICLE VII. Potential Conflicts and Compliance With
Shared Funding Exemptive Order
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in
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applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of contract owners. The
Board shall promptly inform Transamerica if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2. Transamerica will report any potential or existing conflicts of
which it is aware to the Board. Transamerica will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by
Transamerica to inform the Board whenever contract owner voting instructions are
disregarded. Such responsibilities shall be carried out by Transamerica with a
view only to the interests of its Contract Owners.
7.3. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Fund, its adviser or any
sub-adviser to any of the Portfolios (the "Independent Directors"), that a
material irreconcilable conflict exists, Transamerica and other Participating
Insurance Companies shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the Independent Directors), take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to
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and including: (1) withdrawing the assets allocable to some or all of the
separate accounts from the Fund or any Portfolio and reinvesting such assets in
a different investment medium, including (but not limited to) another Portfolio
of the Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such segregation, or
offering to the affected contract owners the option of making such a change; and
(2) establishing a new registered management investment company or managed
separate account. Transamerica shall not be required by this Section 7.3 to
establish a new funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely affected
by the irreconcilable material conflict.
7.4. If a material irreconcilable conflict arises because of a decision
by Transamerica to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
Transamerica may be required, at the Fund's election, to withdraw the Account's
investment in the Fund and terminate this Agreement; provided, however that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Independent Directors. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this provision is
being implemented, and until the end of that six month period the Underwriter
and the Fund shall continue to
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<PAGE>
accept and implement orders by Transamerica for the purchase (and redemption
of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Transamerica conflicts with
the majority of other state regulators, then Transamerica will withdraw the
Account's investment in the Fund and terminate this Agreement within six months
after the Board informs Transamerica in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested members of the Board. Until the end of the foregoing six month
period, the Underwriter and the Fund shall continue to accept and implement
orders by Transamerica for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Directors shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules
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6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable: and (b) Sections 3.6, 3.7, 3.8, 7.1, 7.2, 7.3, 7.4, and
7.5 of this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By Transamerica
8.1(a). Transamerica agrees to indemnify and hold harmless the
Fund and its officers and each member of its Board (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of Transamerica) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement or prospectus or SAI for the
Contracts or contained in the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this Agreement to in demnify shall not apply
as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to
Transamerica by or on behalf of the Underwriter or Fund for
use in the registration statement or prospectus for the
Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
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<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of
the Fund not supplied by Transamerica or persons under its
control) or wrongful conduct of Transamerica or persons
under its control, with respect to the sale or distribution
of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Fund or
any amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon information furnished in
writing to the Fund by or on behalf of Transamerica; or
(iv) arise as a result of any failure by Transamerica to provide
the services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Transamerica in this
Agreement or arise out of or result from any other material
breach of this Agreement by Transamerica,
as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1
(c) hereof.
8.1(b). Transamerica shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject if caused by such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Fund, whichever is applicable.
8.1(c). Transamerica shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified Transamerica in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served
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upon such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify
Transamerica of any such claim shall not relieve Transamerica from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, Transamerica shall be
entitled to participate, at its own expense, in the defense of such action.
Transamerica also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from Transamerica to
such party of Transamerica's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and Transamerica will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Parties will promptly notify
Transamerica of the commencement of any litigation or proceedings against them
in connection with the issuance or sale of the Fund Shares or the Contracts or
the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harm-less
Transamerica and each of its directors and officers and each person, if any, who
controls Transamerica within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
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(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus or SAI or sales
literature of the Fund (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this
Agreement to indemnify shall not apply as to any --------
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and
in conformity with information furnished in writing to the
Underwriter or Fund by or on behalf of Transamerica for use
in the Registration Statement or prospectus for the Fund or
in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for
the Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund or
Underwriter or persons under their control, with respect to
the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus or sales literature covering the
Contracts, or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished in writing to Transamerica by or on
behalf of the Underwriter or Fund; or
(iv) arise as a result of any failure by the Fund or Underwriter
to provide the services and furnish the materials under the
terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with
the diversification and other qualification requirements
specified in Article VI of this Agreement); or
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<PAGE>
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or
Underwriter in this Agreement or arise out of or result from
any other material breach of this Agreement by the Fund or
Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Underwriter specified in Article VI
hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance or such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to Transamerica or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party
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<PAGE>
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). Transamerica agrees promptly to notify the Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of California.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
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<PAGE>
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Portfolios, upon one (1) year advance
written notice delivered to the other parties; provided,
however, that such notice shall not be given earlier than one
year following the date of this Agreement; or (b) at the
option of Transamerica by written notice to the other parties
with respect to any Portfolio based upon Transamerica's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or (c) at
the option of Transamerica by written notice to the other
parties with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in
accordance with applicable state and/ or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
Transamerica; or (d) at the option of the Fund in the event
that formal administrative proceedings are instituted against
Transamerica by the National Association of Securities
Dealers, Inc. ("NASD"), the Securities and Exchange
Commission, the Insurance Commissioner or like official of any
state or any other regulatory body regarding Transamerica's
duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of
the Fund shares, provided, however, that the Fund determines
in its sole judgment
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exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of Transamerica to perform its obligations under this
Agreement; or (e) at the option of Transamerica in the event
that formal administrative proceedings are instituted against
the Fund or Underwriter by the NASD, the Securities and
Exchange Commission, or any state securities or insurance
department or any other regulatory body, provided, however,
that Transamerica determines in its sole judgment exercised in
good faith, that any such administrative proceedings will have
a material adverse effect upon the ability of the Fund or
Underwriter to perform its obligations under this Agreement;
or (f) at the option of Transamerica by written notice to the
Fund and the Underwriter with respect to any Portfolio if
Transamerica reasonably believes that the Portfolio may fail
to meet the Section 817(h) diversification requirements or
Subchapter M qualifications specified in Article VI hereof; or
(g) at the option of either the Fund or the Underwriter, if
(i) the Fund or Underwriter, respectively, shall determine, in
their sole judgement reasonably exercised in good faith, that
Transamerica has suffered a material adverse change in its
business or financial condition or is the subject of material
adverse publicity and that material adverse change or
publicity will have a material adverse impact on
Transamerica's ability to perform its obligations under this
Agreement, (ii) the Fund or Underwriter notifies Transamerica
of that determination and its intent to terminate this
Agreement, and (iii) after
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considering the actions taken by Transamerica and any other
changes in circumstances since the giving of such a notice,
the determination of the Fund or Underwriter shall continue on
the sixtieth (60th) day following the giving of that notice,
which sixtieth day shall be the effective date of termination;
or (h) at the option of Transamerica, if (i) Transamerica
shall determine, in its sole judgement reasonably exercised in
good faith, that either the Fund or the Underwriter have
suffered a material adverse change in their business or
financial condition or is the subject of material adverse
publicity and that material adverse change or publicity will
have a material adverse impact on the Fund's or Underwriter's
ability to perform its obligations under this Agreement, (ii)
Transamerica notifies the Fund or Underwriter, as appropriate,
of that determination and its intent to terminate this
Agreement, and (iii) after considering the actions taken by
the Fund or Underwriter and any other changes in circumstances
since the giving of such a notice, the determination of
Transamerica shall continue on the sixtieth (60th) day
following the giving of that notice, which sixtieth day shall
be the effective date of termination; or (i) at the option of
any party to this Agreement, upon another party's material
breach of any provision of this Agreement; or (j) upon
assignment of this Agreement, unless made with the written
consent of the parties hereto; or (k) at the option of
Transamerica or the Fund by written notice to the other party
upon a determination by the Fund's Board that a material
irreconcilable
- 32 -
<PAGE>
conflict exists among the interests of (i) all contract owners
of all separate accounts investing in the Fund or (ii) the
interests of the Participating Insurance Companies; or (l) at
the option of Transamerica by written notice to the Fund or
the Underwriter upon the sale, acquisition or change of
control of the Underwriter.
10.2. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to terminate, which notice
shall set forth the basis for the termination.
10.3. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of Transamerica,
continue to make available additional shares of the Fund for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts") pursuant to the terms and conditions of
this Agreement. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.3 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.4. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing
- 33 -
<PAGE>
Contracts, all provisions of this Agreement shall also survive and not be
affected by any termination of this Agreement.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail or by overnight mail sent through a nationally-recognized
delivery service to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Transamerica Variable Insurance Fund, Inc.
Transamerica Center
1150 South Olive Street
Los Angeles, CA 90015
Attention: General Counsel
If to Transamerica:
Transamerica Life Insurance Company of New York
Corporate Secretary
100 Manhattanville Rd.
Purchase, NY 10577
Attention: President, Living Benefits Division
If to the Underwriter:
Transamerica Securities Sales Corporation, Inc.
Transamerica Center
1150 South Olive Street
Los Angeles, CA 90015
Attention: General Counsel
- 34 -
<PAGE>
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information that another party reasonably considers to be proprietary.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry
- 35 -
<PAGE>
relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of Transamerica are being conducted in a manner consistent with the
California Variable Annuity Regulations and any other applicable law or
regulations.
12.6. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.7. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.8. The Schedules attached hereto, as modified from time to time, are
incorporated herein by reference and are part of this Agreement.
- 36 -
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
TRANSAMERICA LIFE INSURANCE
COMPANY OF NEW YORK
By its authorized officer
SEAL By:
Title:
Date:
TRANSAMERICA VARIABLE INSURANCE FUND, INC.:
By its authorized officer,
SEAL By:
Title:
Date:
TRANSAMERICA SECURITIES SALES CORPORATION:
By its authorized officer,
SEAL By:
Title:
Date:
- 37 -
<PAGE>
SCHEDULE A
Contracts Form Numbers
<PAGE>
SCHEDULE B
Designated Portfolios
<PAGE>
SCHEDULE C
Certain Investment Policies and Restrictions
Imposed by the
California Department of Insurance
Pursuant to Section 2.4 hereof, the Fund represents and warrants that
it is and shall all times remain in compliance with the following investment
policies and restrictions. THESE ARE IN ADDITION TO other related obligations of
the Fund, including the general obligation to comply with all applicable laws
and regulation, including but not limited to California insurance laws and
regulations, the Investment Company Act of 1940, and other applicable insurance
and securities laws.
[Note: The following are derived from a questionnaire used by the California
Department of Insurance as part of an insurance company's application for
qualification to transact a variable annuity business. The parenthetical
references below are to question numbers in that questionnaire.]
The Fund represents and warrants that:
1. All repurchase agreements will be transacted only with entities meeting
specific credit and solvency standards administered and verified by the
Underwriter (46(a)).
2. All repurchase transactions will be executed pursuant to a comprehensive
master repurchase agreement setting forth the terms and conditions of the
transaction, and having the incidents of a valid promissory note in favor of the
Fund (46(b)).
3. A valid, binding security interest in favor of the Fund or portfolio thereof
will be created and perfected in all collateral securing such repurchase
agreements (46(c)).
4. All such repurchase agreements will be secured at all times by collateral
consisting of liquid assets having a market value of not less than 102% of the
cash or assets transferred to the other party (46(d)).
5. All securities lending activities will be entered into only with entities
meeting specific credit and solvency standards administered and verified by the
Underwriter (47).
6. All investments in instruments or certificates of any sort issued by the U.S.
Office of a bank or other savings institution domiciled in a foreign nation, or
a foreign branch of a U.S. savings institution, will be instruments or
certificates payable in the United States and in U.S. dollars (48).
<PAGE>
7. All investments of the Fund which possess a readily-available market value
will be valued either at their market value on the date of valuation, or at
amortized cost if it approximates market value within the limits and constraints
imposed by the U.S. Securities and Exchange Commission (49).
8. All investments of the Fund which lack a readily-available market will be
valued according to specific, objective methods or procedures set forth in
writing (50).
9. The investment manager of each portfolio or series of the Fund possesses
substantial expertise and experience as an investment manager or advisor of a
portfolio consisting of asset and investments of the same type as he or she will
manage in regard to the portfolio or series. (If experience is less than three
years, please provide resume of investment manager; note that in this case, the
Company must provide notarized certifications that it has fully investigated and
is satisfied with the qualifications, background, and expertise of the
investment manager.) (52).
10. At no time during the past ten years have the managers of any portfolio or
series resigned to avoid dismissal or been dismissed or requested to resign from
any position involving investment duties, on account of violation of any law,
rule or ethical standard relating to insurance, annuities, or securities (53).
11. The investment advisory agreements concerning the Fund's operations provide
in substance that notwithstanding any other provisions of the agreement, it is
understood and agreed that the Fund shall retain the ultimate responsibility for
and control of all investments made pursuant to the agreement, and reserve the
right to direct, approve or disapprove any action taken on its behalf by the
investment advisor (54).
12. Every custodian holding securities or other assets of the Fund is an
institution permitted to serve in such capacity by the Investment Company Act of
1940 and/or reviewed and approved for such purpose by the U.S. Securities and
Exchange Commission (55).
13. The Fund refuses to employ in any material connection with the handling of
assets of the Fund, any person who:
(a) In the last 10 years has been convicted of any felony or misdemeanor
arising out of conduct involving embezzlement, fraudulent conversion,
or misappropriation of funds or securities, or involving violations of
Title 18, United States Code ss.ss.1341, 1342, or 1343 (58(a)).
(b) Within the last 10 years has been found by any-state regulatory
authority to have violated, or has acknowledged violation of, any
provision of any state insurance law involving fraud, deceit or
knowing misrepresentation (59(b)).
(c) Within the last 10 years has been found by any federal or state
regulatory authorities to have violated, or have acknowledged
violation of, any provisions of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation (58(c)).
<PAGE>
14. The Fund will make inquiries and attempt to determine that no persons,
firms, or employees of firms which supply consulting, investment,
administrative, custodial or other services affecting the administration of the
Company's variable annuity business (including such services for the Fund), have
been subject to the sanctions described in the preceding representation (59).
15. The Fund will seek to prevent its officers and Board members, and officers,
directors and portfolio managers of the investment advisor, from receiving,
directly or indirectly, any commission, or any other compensation with respect
to the purchase or sale of assets of the Fund (61).
16. No officer, director, trustee, or member of any governing board or body of
the Fund will receive directly or indirectly any commissions or any other
compensation contingent upon the writing, issuance, sale, procurement of
application for, or renewal, of any variable annuity contract (62).
17. All service agreements affecting the administration of the Fund allow the
Fund to terminate such contracts without payment of any penalty, forfeiture,
compulsory buyout amount, or performance of any other obligation which could
deter termination (65).
18. All service agreements affecting the administration of the Fund afford the
Fund a right to cancel the contract and discharge the servicing entity or person
in the event such entity or person fails to perform in a satisfactory manner
(66).
19. All service agreements affecting the administration of the Fund provide that
the Fund shall own and control all the pertinent records pertaining to its
operations (67).
20. All service agreements affecting the administration of the Fund provide that
the Fund shall have the right to inspect, audit and copy all records pertaining
to performance of services under the agreement (68).
<PAGE>
SCHEDULE D
Expenses
============================================================================
RESPONSIBLE
ITEM FUNCTION PARTY
- ----------------------------------------------------------------------------
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
- ----------------------------------------------------------------------------
MARKETING
1. Prospectus Printing
Supply copies of prospectus described in Parts 3.1 and 3.3 in
numbers equal to Transamerica's reasonable request.
If requested by Transamerica in lieu thereof such
documentation and other assistance as is reasonably necessary
for Transamerica to have the prospectus for the Contracts and
the prospectus for the Fund printed together in one document.
2. Initial
Sales Distribution
Printing
Distribution
- --------------------------------------------------------------
EXISTING OWNERS
1. Annual Printing
Updates Distribution
Printing & Distribution
(a) If required by Fund or Adviser or Distributor
2. Interim (b) If required by Transamerica
Updates (c) If required by other participating insurance
company (PIC)
- -----------------------------------------------------------------------------
PROXY MATERIALS Printing and Distribution
OF THE FUND (a) If required by law
(b) If required by Transamerica
(c) If required by other participating insurance
company
(d) If required by Fund or Adviser or Distributor
<PAGE>
PrintingDER
Distribution
- ---------------------------------------------------------------------------
OTHER Printing & Distribution
COMMUNICATIONS (a) If required by law
WITH (b) If required by Transamerica
SHAREHOLDERS OF (c) If required by other participating insurance
THE FUND company
(d) If required by Fund or Adviser or Distributor
- ----------------------------------------------------------------------------
OPERATIONS OF All operations and related expenses, including the
FUND cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's
prospectus and registration statement, proxy
materials and reports, the preparation of all
statements and notices required by any federal or
state law and all taxes on the issuance or transfer
of the Fund's shares, and all costs of management of
the business affairs of the Fund
<PAGE>
SCHEDULE E
Reports per Section 6.6
With regard to the reports relating to the quarterly testing of
compliance with the requirement of Section 817(h) and Subchapter M under the
Internal Revenue Code (the "Code") and the regulations thereunder, the Fund
shall provide within twenty (20) Business Days of the close of the calendar
quarter a report [in a form to be attached] regarding the status under such
sections of the Code of the Designated Portfolios, and if necessary,
identification of any remedial action to be taken to remedy non-compliance.
With regard to the reports relating to the year-end testing of
compliance with the requirements of Subchapter M of the Code, referred to
hereinafter as "RIC status," the Fund will provide the reports on the following
basis: (i) the last quarter's quarterly reports can be supplied within the
20-day period, and (ii) the year-end report [in a form to be attached] will be
provided 45 days after the end of the calendar year, but prior thereto, the Fund
will provide the additional interim and supplemental reports, described below.
The additional reports are as follows:
1. A report in the usual reporting format and content, as of
November 30, of each future fiscal year. The report will be
provided under cover of a letter from the Underwriter
stating that the Fund is in full compliance with the
requirements of Section 817(h) and Subchapter M of the Code.
Assuming such satisfactory report, the Fund will not provide
any additional interim reports. The report will be delivered
by facsimile by the twentieth day of December.
2. In the alternative, if a problem, as defined below, is
identified in the November report or its accompanying
transmittal letter, additional interim reports, on a weekly
basis, starting on the 15th of December and through the 30th
of December, also will be supplied ("additional interim
reports"). The additional interim reports will not follow
the format of the regular reports, but will specifically
address the problem identified in the November 30 report. If
any interim report, thereafter, memorialize the cure of the
problem, subsequent additional reports will not be required.
With regard to delivery of the additional reports, they will
be transmitted by facsimile on the next Business Day,
subject to the following schedule of special dates: if the
15th of December is a Saturday, the required report date
will be accelerated to the 14th of December; if the 15th of
December is a Sunday, the report will be transmitted on the
16th of December.
3. A problem with regard to RIC status is defined as any
violation of the following standards, as referenced to the
applicable sections of the Code:
<PAGE>
(a) Less than ninety-five percent of gross income is
derived from sources of income specified in Section
851(b)(2);
(b) Twenty-five percent or greater gross income is derived
from the sale or disposition of assets specified in
Section 851(b)(3);
(c) Fifty-five percent or less of the value of total assets
consists of assets specified in Section 851(b)(4)(A);
and
(d) Twenty percent or more of the value of total assets is
invested in the securities of one issuer, as that
requirement is set forth in Section 851(b)(4)(B).
<PAGE>
Exhibit (9) Opinion and Consent of Counsel.
<PAGE>
February 26, 1998
Transamerica Life Insurance Company of New York
100 Manhattanville Road
Purchase, New York 10577
Gentlemen:
With reference to the Registration Statement on Form N-4 filed by Transamerica
Life Insurance Company of New York ("Company") and its Separate Account VA-6NY
with the Securities and Exchange Commission covering certain variable annuity
contracts, I have examined such documents and such law as I considered necessary
and appropriate, and on the basis of such examinations, it is my opinion that:
1. Company is duly organized and validly existing under the laws of the
State of New York.
2. The variable annuity contracts, when issued as contemplated by
the said Form N-4 Registration Statement, as amended, will
constitute legal, validly issued and binding obligations of
Transamerica Life Insurance Company of New York.
I hereby consent to the filing of this opinion as an exhibit to the said Form
N-4 Registration Statement and to the reference to my name under the caption
"Legal Matters" in the Prospectus contained in the said Registration Statement.
In giving this consent, I am not admitting that I am in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ David M. Goldstein
David M. Goldstein
Counsel to
Transamerica Life Insurance Company of New York
M:\DAILY\EDGAR\consent.doc
<PAGE>
Exhibit (15) Powers of Attorney.
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints Aldo
Davanzo, James W. Dederer, Charles E. LeDoyen and David E. Gooding and each of
them (with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933 and under the Investment Company Act of 1940 with
respect to any life insurance or annuity policies: registration statements on
any form or forms under the Securities Act of 1933 and under the Investment Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ Thomas J. Cusack
-------------------------
Thomas J. Cusack
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints Aldo
Davanzo, James W. Dederer, Charles E. LeDoyen and David E. Gooding and each of
them (with full power to each of them to act alone), his or her true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him or
her and on his or her behalf and in his or her name, place and stead, to execute
and file any of the documents referred to below relating to registrations under
the Securities Act of 1933 and under the Investment Company Act of 1940 with
respect to any life insurance or annuity policies: registration statements on
any form or forms under the Securities Act of 1933 and under the Investment Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ Daniel E. Jund
-----------------------------
Daniel E. Jund
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ Marc C. Abrahms
-----------------------------
Marc C. Abrahms
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ Barbara Biben
-----------------------------
Barbara Biben
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ James T. Byrne, Jr.
-----------------------------
James T. Byrne, Jr.
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ Cecelia Kempler
-----------------------------
Cecelia Kempler
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ James Inzerillo
-----------------------------
James Inzerillo
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of July, 1996.
/s/ Robert Abeles
-----------------------------
Robert Abeles
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ John A. Paganelli
-----------------------------
John A. Paganelli
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1997.
/s/ Alan T. Cunningham
-----------------------------
Alan T. Cunningham
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ James W. Dederer
-----------------------------
James W. Dederer
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ David E. Gooding
-----------------------------
David E. Gooding
<PAGE>
POWER OF ATTORNEY
The undersigned director of First Transamerica Life Insurance Company,
a New York corporation (the "Company"), hereby constitutes and appoints John A.
Paganelli, Aldo Davanzo, James W. Dederer, Charles E. LeDoyen and David E.
Gooding and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent, with full power of substitution
to each, for him or her and on his or her behalf and in his or her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance or annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Act of 1940, and any and all amendments and supplements
thereto, with all exhibits and all instruments necessary or appropriate in
connection therewith, each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or other, and to
have full power and authority to do or cause to be done in the name and on
behalf of the undersigned each and every act and thing requisite and necessary
or appropriate with respect thereto to be done in and about the premises in
order to effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, may do or cause to be
done by virtue thereof.
By this Power of Attorney the undersigned hereby revokes all previous
Powers of Attorney executed by the undersigned and pertaining to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand,
this ______ day of January, 1996.
/s/ Allan D. Greenberg
-----------------------------
Allan D. Greenberg
<PAGE>
