<PAGE>
As filed with the Securities and Exchange
Commission on September 28,1998
333-47027
---------
811-08377
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 1
-
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 7
PFL ENDEAVOR TARGET ACCOUNT
---------------------------
(Exact Name of Registrant)
PFL Life Insurance Company
--------------------------
(Name of Insurance Company)
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
800-525-6205
Name and Address of Agent for Service: Copy to:
Frank A. Camp, Esquire Frederick R. Bellamy, Esquire
PFL Life Insurance Company Sutherland, Asbill & Brennan LLP
4333 Edgewood Road, N.E. 1275 Pennsylvania Avenue, N.W.
Cedar Rapids, Iowa 52499 Washington, D.C. 20004-2404
Title of Securities Being Registered:
Flexible Premium Variable Annuity Policies
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date.
It is proposed that this filing will become effective:
____________ immediately upon filing pursuant to paragraph (b) of Rule 485
____________ on May 1, 1998 pursuant to paragraph (b) of Rule 485
____________ 60 days after filing pursuant to paragraph (a)(i) of Rule 485
____________ on ____________ pursuant to paragraph (a)(i) of Rule 485
X
____________ 75 days after filing pursuant to paragraph (a)(ii)
____________ on ____________ pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
[X] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<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-3
----------------------------------------------------------
PART A
------
<TABLE>
<CAPTION>
Item of Form N-3 Prospectus Caption
- ---------------- ------------------
<S> <C>
1. Cover Page....................................................... Cover Page
2. Table of Contents................................................ Table of Contents
3. Definitions...................................................... Definitions
4. Synopsis......................................................... Summary of the Policy; Fee Table; Historical
Performance Data of the Mutual Fund Account;
Performance Information
5. Condensed Financial Information.................................. Condensed Financial Information; Financial
Statements
6. General Description of Registrant and Depositor
(a) Depositor.................................................... PFL Life Insurance Company
(b) Registrant................................................... The Endeavor Account - The Target Account;
The Target Account - General
(c) Voting Rights................................................ Voting Rights
7. Management....................................................... The Endeavor Accounts; The Target Account -
General
8. Deductions and Expenses
(a) General...................................................... Charges and Deductions; The Target Account -
General
(b) Sales Load %................................................. Charges and Deductions
(c) Special Purchase Plan........................................ N/A
(d) Commissions.................................................. Distributor of the Policies
(e) Expenses - Registrant........................................ N/A
(f) Subaccount Expenses.......................................... Other Expenses Including Investment Advisory
Fees; The Target Account - General
(g) Organizational Expenses...................................... N/A
9. General Description of Variable Annuity Policies
(a) Persons with Rights.......................................... The Policy; Election of Payment Option; Annuity
Payment Options; Annuity Commencement Date;
Voting Rights
(b)(i) Allocation of Premium Payments............................. Allocation of Premium Payments
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(ii) Transfers................................................. Transfers
(iii) Exchanges................................................. N/A
(c) Changes.................................................... The Mutual Fund Account; Election of Payment
Option; Annuity Commencement Date; Death of
Annuitant/Owner Prior to Annuity Commencement
Date; Beneficiary; Amendments; The Target
Account - General
(d) Inquiries.................................................. Summary of the Policy
10. Annuity Period.................................................. Annuity Payment Options
11. Death Benefit................................................... Death of Annuitant/Owner Prior to Annuity
Commencement Date
12. Purchase and Policy Value
(a) Purchases.................................................. Policy Application and Issuance of Policies -
Premium Payments
(b) Valuation.................................................. Policy Value; The Mutual Fund Account Value;
The Target Account Value
(c) Daily Calculation.......................................... The Mutual Fund Account Value; The Target
Account Value
(d) Underwriter................................................ Distributor of the Policies
13. Redemptions
(a) By Owners.................................................. Surrenders
By Annuitant............................................... N/A
(b) Texas ORP.................................................. Restrictions Under the Texas Optional
Retirement Program
(c) Check Delay................................................ Payment Not Honored by Bank
(d) Lapse...................................................... N/A
(e) Free Look.................................................. Summary of the Policy
14. Taxes........................................................... Certain Federal Income Tax Consequences
15. Legal Proceedings............................................... Legal Proceedings
16. Table of Contents for the Statement of Additional
Information............................................ Table of Contents for the Statement of
Additional Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART B
------
Statement of Additional
Item of Form N-3 Information Caption
- ---------------- -------------------
<S> <C>
17. Cover Page...................................................... Cover Page
18. Table of Contents............................................... Table of Contents
19. General Information and History................................. (Prospectus) PFL Life Insurance Company
20. Investment Objectives and Policies.............................. What is the Investment Strategy; Investment
Restrictions
21. Management...................................................... Management
22. Investment Advisory and Other Services
(a) Investment Advisory Services............................... The Investment Advisory Services
(b) Fees and Expenses of the Registrant........................ N/A
(c) Management Policies........................................ The Manager
(d) Custodian.................................................. Transfer Agent and Custodian; Custody of Assets
Independent Auditors....................................... Independent Auditors
(e) Assets of Registrant....................................... Custody of Assets
(f) Affiliated Person.......................................... N/A
(g) Principal Underwriter...................................... Distribution of Policies
23. Brokerage Allocations........................................... Brokerage Allocation
24. Purchase and Pricing of Securities
Being Offered................................................... Distribution of the Policies
Offering Sales Load............................................. N/A
25. Underwriters.................................................... Distribution of the Policies; (Prospectus)
Distributor of the Policies
26. Calculation of Performance Data................................. Historical Performance Data
27. Annuity Payments................................................ (Prospectus) Election of Payment Option;
(Prospectus) Annuity Payment Options
28. Federal Tax Matters............................................. Federal Tax Matters
29. Financial Statements............................................ Financial Statements
</TABLE>
<PAGE>
PART C - OTHER INFORMATION
--------------------------
<TABLE>
<CAPTION>
Item of Form N-3 Part C Caption
- ---------------- --------------
<S> <C>
30. Financial Statements and Other Exhibits......................... Financial Statements and Exhibits
(a) Financial Statements....................................... Financial Statements
(b) Exhibits................................................... Exhibits
31. Directors and Officers of the
Insurance Company.......................................... Directors and Officers of the Insurance
Company; Business and Other Connections of
Investment Advisor
32. Persons Controlled by or Under Common
Control with the Insurance Company
or Registrant.............................................. Persons Controlled by or Under Common Control
with the Insurance Company or Registrant
33. Number of Policyowners.......................................... Number of Contract Owners
34. Indemnification................................................. Indemnification
35. Business and Other Connection of
Investment Adviser......................................... Directors and Officers of the Insurance
Company; Business and Other Connections of the
Investment Adviser
36. Principal Underwriters.......................................... Principal Underwriters
37. Location of Accounts and Records................................ Location of Accounts and Records
38. Management Services............................................. Management Services
39. Undertakings.................................................... Undertakings
40. Signatures...................................................... Signatures
</TABLE>
<PAGE>
THE ENDEAVOR VARIABLE ANNUITY
ISSUED BY
PFL LIFE INSURANCE COMPANY
Supplement Dated _____________, 1998
To The
Prospectus Dated May 1, 1998
An optional rider for the Family Income Protector benefit has been added to
The Endeavor Variable Annuity. The rights and benefits under the Family Income
Protector are summarized below; however, the description of the Family Income
Protector contained in this prospectus supplement is qualified in its entirety
by reference to the Family Income Protector rider itself, a copy of which is
available upon request from PFL.
All capitalized terms used, which are not defined in this supplement, shall
have the same meanings as the same terms used in the accompanying prospectus.
The Family Income Protector may not be available in all states at the date
of this supplement. Please contact PFL at (800) 525-6205 for additional
information regarding the availability of the Family Income Protector in your
state.
_______________
FAMILY INCOME PROTECTOR
You may elect to purchase this benefit, which guarantees the total amount
you will have to apply to a Family Income Protector payment option and which
guarantees the amounts of those payments once you begin to receive them. The
Family Income Protector assures you of a minimum level of income in the future
by guaranteeing a Minimum Annuitization Value (discussed below) after 10 years,
based on the Policy Value at the date the rider is issued (adjusted for any
withdrawals and applicable taxes and charges), increased by a guaranteed annual
growth rate. By electing the Family Income Protector, you can participate in
the gains of the underlying variable investment options you select while knowing
that you are guaranteed a minimum level of income in the future, regardless of
the performance of the underlying variable investment options.
You may elect to purchase the Family Income Protector at the time you
purchase the Policy or on subsequent Policy Anniversaries. You cannot begin to
obtain payments under the Family Income Protector until the tenth Policy
Anniversary after it is added to your Policy.
THE FAMILY INCOME PROTECTOR DOES NOT ESTABLISH OR GUARANTEE POLICY VALUE OR
GUARANTEE PERFORMANCE OF ANY INVESTMENT OPTION. Because this benefit is based
on conservative actuarial factors, the level of lifetime income that it
guarantees may often be less than the level that would be provided by
application of the Policy Value at otherwise applicable annuity factors.
Therefore, the Family Income Protector should be regarded as a safety net. As
described herein under "MIMIMUM ANNUITIZATION VALUE," withdrawals will reduce
the Minimum Annuitization Value, and may reduce the Minimum Annuitization Value
on a basis greater than dollar-for-dollar.
THIS PROSPECTUS SUPPLEMENT MUST BE ACCOMPANIED
BY THE PROSPECTUS FOR
THE ENDEAVOR VARIABLE ANNUITY DATED MAY 1, 1998
<PAGE>
Illustrated below are the Family Income Protector guaranteed minimum
monthly payment amounts per $100,000 of initial payment, for a male annuitant
and a female joint annuitant, both age 60 (at the date the rider is issued), on
rider anniversaries as indicated below, assuming no subsequent payments,
withdrawals or premium taxes and assuming there was no upgrade of the Minimum
Annuitization Value. PFL will, upon request, provide illustrations of the
Family Income Protector guaranteed minimum payment for an annuitant based on
other assumptions.
<TABLE>
<CAPTION> Joint & Survivor Life
Rider Anniversary at Life Annuity with no Period Life Annuity with no Period Annuity with no Period
Election Date Certain (Male) Certain (Female) Certain
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10 $1135 $ 976 $ 854
- -------------------------------------------------------------------------------------------------------------------------
15 1833 1562 1332
- -------------------------------------------------------------------------------------------------------------------------
20 3049 2597 2145
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION> Joint & Survivor Life
Rider Anniversary at Life Annuity with 10 Year Life Annuity with 10 Year Annuity with 10 Year Period
Election Date Period Certain (Male) Period Certain (Female) Certain
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10 $1067 $ 949 $ 852
- -------------------------------------------------------------------------------------------------------------------------
15 1634 1469 1318
- -------------------------------------------------------------------------------------------------------------------------
20 2479 2286 2078
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Because the annuity payment options provided for in the Policy are based on
the Policy Value at the time you start receiving annuity payments, the amount of
those annuity payments may exceed the payments provided by the Family Income
Protector. Accordingly, you may elect to receive annuity payments from either
the Policy using the Policy Value or the Family Income Protector using the
Minimum Annuitization Value.
MIMIMUM ANNUITIZATION VALUE. On the rider date, the Minimum Annuitization
Value is the Policy Value. Thereafter, the Minimum Annuitization Value will be
the Policy Value on the date the rider is issued, plus any additional payments,
minus an adjustment for any withdrawals made after the date the rider is issued,
accumulated at the annual growth rate written on page one of the Family Income
Protector rider minus any premium taxes. The annual growth rate is currently 6%
per year; PFL may, at its discretion, change the rate in the future, but the
rate will never be less than 3% per year, and once the Family Income Protector
rider is added to your Policy, the annual growth rate will not vary during the
life of that Family Income Protector rider.
Withdrawals will affect the Minimum Annuitization Value as follows: Each
Policy Year, withdrawals up to the limit of the total free amount (the Minimum
Annuitization Value on the last Policy Anniversary multiplied by the annual
growth rate) reduce the Minimum Annuitization Value on a dollar-for-dollar
basis. Withdrawals over this free amount will reduce the Minimum Annuitization
Value on a pro rata basis by an amount equal to the Minimum Annuitization Value
immediately prior to the excess withdrawal multiplied by the percentage
reduction in the Policy Value resulting from the excess withdrawal. The free
amount will always be a relatively small fraction of the Minimum Annuitization
Value.
The Minimum Annuitization Value may only be used to annuitize using the
Family Income Protector payment options (discussed below) and may not be used
with any of the annuitization options shown in the Policy.
<PAGE>
The Minimum Annuitization Value is used solely for purposes of calculating
the Family Income Protector payment and does not establish or guarantee a Policy
Value or guarantee performance of any investment option.
MINIMUM ANNUITIZATION VALUE UPGRADE. Within 30 days after a Policy
Anniversary, you may elect to upgrade the Minimum Annuitization Value to the
Policy Value on that anniversary if the Policy Value is greater than the Minimum
Annuitization Value. The last date to elect to upgrade the Minimum
Annuitization Value is the Policy Anniversary immediately before your 85th
birthday. The laws of some states may require an earlier date. For your
convenience, the last date to upgrade will be set forth on page one of the
Family Income Protector rider.
Upon upgrading, the current Family Income Protector rider will terminate
and a new one will be issued with its own specified guaranteed benefits and
fees. The benefits and fees under the new rider may differ from your benefits
and fees prior to upgrading (the benefits and fees that may change include the
annual growth rate, the Family Income Protector rider fee, the fee waiver
threshold, the stabilized payment fee, and the waiting period before the Famiy
Income Protector can be exercised).
CONDITIONS OF EXERCISE OF THE FAMILY INCOME PROTECTOR. The Family Income
Protector may only be exercised within the 30 days immediately following the
tenth or later Policy Anniversary after the Family Income Protector is elected
or, in the case of an upgrade of the Minimum Annuitization Value, the tenth or
later Policy Anniversary following the upgrade; PFL may, at its discretion,
change the waiting period before the Famiy Income Protector can be exercised in
the future, but once the Family Income Protector rider is added to your Policy,
the waiting period will not vary during the life of that Family Income Protector
rider. For your convenience, the first date to exercise the Family Income
Protector will be set forth on page one of the Family Income Protector rider.
The Family Income Protector may not, however, be exercised after the Policy
Anniversary after your 94th birthday. The laws of some states may require an
earlier date. For your convenience, the last date to exercise the Family Income
Protector will be set forth on page one of the Family Income Protector rider.
If you annuitize your Policy at any time other than indicated above, the
Family Income Protector cannot be exercised and, accordingly, the Family Income
Protector will provide no benefits. For example, if you annuitized your Policy
twelve and one-half years after you purchased the Policy and Family Income
Protector rider, you would not be able to exercise the Family Income Protector
and use the Minimum Annuitization Value or receive guaranteed minimum stabilized
payments.
FAMILY INCOME PROTECTOR PAYMENT OPTIONS. The amount of the first payment
provided by the Family Income Protector will be determined by multiplying each
$1,000 of Minimum Annuitization Value to the applicable annuity factor shown on
Schedule I of the Family Income Protector rider. The applicable annuity factor
depends upon the Annuitant's (and Joint Annuitant's, if any) sex (or without
regard to gender if required by law), age, and the Family Income Protector
payment option selected and is based on a guaranteed interest rate of 3% and the
"1983 Table a" mortality table improved to the year 2000 with projection Scale
G. Subsequent payments will be calculated as described in the Family Income
Protector rider using a 5% assumed investment return. Subsequent payments may
fluctuate annually in accordance with the investment performance of the annuity
subaccounts. However, subsequent payments are guaranteed to never be less than
the initial payment.
The Minimum Annuitization Value and applicable annuity factor may be
applied to the following Family Income Protector payment options:
Life Income -- An election may be made for "No Period Certain" or "10 Years
Certain". In the event of the death of the Annuitant prior to the end of
the chosen period certain, the remaining period certain payments will be
continued to the beneficiary.
<PAGE>
Joint and Full Survivor -- An election may be made for "No Period Certain"
or "10 Years Certain". Payments will be made as long as either the
Annuitant or Joint Annuitant is living. In the event of the death of both
the Annuitant and Joint Annuitant prior to the end of the chosen period
certain, the remaining period certain payments will be continued to the
beneficiary.
The Family Income Protector cannot be used with any other payment options.
GUARANTEED MINIMUM STABILIZED PAYMENTS. Annuity payments under the Family
Income Protector are guaranteed to never be less than the initial payment. The
payments will also be "stabilized" or held constant during each Policy Year.
During the first Policy Year following annuitization using the Family
Income Protector, each stabilized payment will equal the initial payment. On
each Policy Anniversary thereafter, the stabilized payment will increase or
decrease depending on the performance of the subaccounts selected, and then be
held constant at that amount for that Policy Year. The stabilized payment on
each Policy Anniversary will equal the greater of the initial payment or the
payment supportable by the annuity units in the selected subaccounts. The
supportable payment is equal to the number of variable annuity units in the
selected subaccounts multiplied by the variable annuity unit values in those
subaccounts on the date the payment is made. The variable annuity unit values
used to calculate the supportable payment will assume a 5% assumed investment
return. If the supportable payment at any payment date during a Policy Year is
greater than the stabilized payment for that Policy Year, the excess will be
used to purchase additional annuity units. Conversely, if the supportable
payment at any payment date during a Policy Year is less than the stabilized
payment for that Policy Year, there will be a reduction in the number of annuity
units credited to the Policy to fund the deficiency. In the case of a
reduction, you will not participate as fully in the future investment
performance of the subaccounts you selected since fewer annuity units are
credited to your Policy. Purchases and reductions will be allocated to each
subaccount on a proportionate basis.
PFL bears the risk that it will need to make payments if all annuity units
have been used in an attempt to maintain the stabilized payment at the initial
payment level. In such an event, PFL will make all future payments equal to the
initial payment. Once all the annuity units have been used, the amount of your
payment will not increase or decrease and will not depend upon the performance
of any subaccounts. To compensate PFL for this risk, a stabilized payment fee
will be deducted (discussed below).
<PAGE>
ANNUITY POLICY FEE TABLE
<TABLE>
<CAPTION>
POLICY OWNER TRANSACTION EXPENSES SEPARATE ACCOUNT ANNUAL EXPENSES
(AS A PERCENTAGE OF ACCOUNT VALUE)
<S> <C> <C> <C>
Sales Load On Purchase Payments ....... 0 Mortality and Expense Risk Fee/(4)/ ...... 1.25%
Maximum Surrender Charge Administrative Charge .................... 0.15%
(as a % of Premium Distribution Financing Charge.............. 0.15%
Payment Surrendered)/(1)(2) /..... 7% TOTAL SEPARATE ACCOUNT
Surrender Fees.......................... 0 ANNUAL EXPENSES............................ 1.55%
Annual Service Charge/(1)/.............. $35 Per Policy
Transfer Fee/(1)/....................... Currently No Fee
Family Income Protector (optional)/(3)/
Rider Fee......................... 0.30%
Stabilized Payment Fee............ 1.25%
</TABLE>
________________
/(1)/ The Surrender Charge and Transfer Fee, if any is imposed, applies to each
Policy, regardless of how the Policy Value is allocated among the Mutual
Fund Account, the Target Account and the Fixed Account. The Service Charge
is $35 per year, but not greater than 2% of the Policy Value. The Service
Charge applies to the Fixed Account, the Mutual Fund Account, and the
Target Account and is assessed on a pro rata basis relative to each
Account's Policy Value as a percentage of the Policy's total Policy Value.
The Service Charge is deducted on each Policy Anniversary and at the time
of surrender, if surrender occurs during a Policy Year. (See "CHARGES AND
DEDUCTIONS--Administrative Charges" p. 45.) There is no fee for the first
12 transfers per year. For additional transfers PFL may charge a fee of
$10 per transfer but currently does not charge for any transfers.
/(2)/ The Surrender Charge is decreased based on the number of years since the
premium payment date in which the withdrawal is made. The charge is a
percentage of the Premium Payment: 7%, 7%, 6%, 6%, 5%, 4% and 2%; for
years one through seven, respectively, after the Premium Payment was made.
If applicable a Surrender Charge will only be applied to withdrawals that
exceed the amount available under certain listed exceptions. (See "CHARGES
AND DEDUCTIONS--Surrender Charge," p. 44, and "DISTRIBUTIONS UNDER THE
POLICY-- Surrenders," p. 35.)
/(3)/ The annual Family Income Protector Rider Fee is currently equal to 0.30%
of the Minimum Annuitization Value on the previous Policy Anniversary; PFL
may at its discretion change the rate in the future, but the rate will
never be greater than 0.50% per year. The Stabilized Payment Fee is only
charged if you annuitize under the Family Income Protector rider, and then
only after annuitization. This fee is reflected in the amount of the
variable payments. The Stabilized Payment Fee is currently 1.25%; PFL may
at its discretion change the rate in the future, but the rate will never
be greater than 2.25% per year. Once the Family Income Protector rider is
added to your Policy, neither the Rider Fee nor the Stabilized Payment Fee
that is in effect at that time will change during the life of that Family
Income Protector rider.
/(4)/ The Mortality and Expense Risk Fees shown (1.25%) are for the 5% Annually
Compounding Death Benefit and the Double Enhanced Death Benefit. The
corresponding fee for the Return of Premium Death Benefit is 1.10% for
each Subaccount. (See "DISTRIBUTIONS UNDER THE POLICY--Death Benefit," p.
41.)
The Portfolio Annual Expense section, and the footnotes thereto, of the May 1,
1998 prospectus and the June 1, 1998 prospectus supplement remain applicable.
<PAGE>
EXAMPLES
You would pay the following expenses on a $1,000 investment, assuming the
optional Family Income Protector, a hypothetical 5% annual return on assets, and
assuming the entire Policy Value is in the applicable Subaccount:
<TABLE>
<S> <C>
A = 5% Annually Compounding Death Benefit B = Return of Premium Death Benefit
or the Double Enhanced Death Benefit
</TABLE>
<TABLE>
<CAPTION>
=============================================================================================================================
IF THE POLICY IS ANNUITIZED AT
IF THE POLICY IS SURRENDERED THE END OF THE APPLICABLE TIME PERIOD
AT THE END OF THE APPLICABLE OR IF THE POLICY IS NOT SURRENDERED
TIME PERIOD. OR ANNUITIZED.
--------------------------------------- --------------------------------------
1 3 5 10 1 3 5 10
YEAR YEARS YEARS YEARS YEAR YEARS YEARS YEARS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Endeavor Money Market Portfolio A 95 132 179 285 25 79 135 285
-------------------------------------------------------------------------------
B 94 128 172 270 24 74 127 270
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Asset Allocation Portfolio A 98 139 191 309 28 86 147 309
-------------------------------------------------------------------------------
B 96 135 184 294 26 81 139 294
- -----------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Portfolio A 100 146 203 332 30 93 158 332
-------------------------------------------------------------------------------
B 99 142 195 317 29 88 151 317
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Value Equity Portfolio A 98 141 194 314 28 87 149 314
-------------------------------------------------------------------------------
B 97 136 186 299 27 83 142 299
- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Value Portfolio A 99 141 195 316 29 88 150 316
-------------------------------------------------------------------------------
B 97 137 187 301 27 83 143 301
- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus U.S. Government Securities Portfolio A 97 138 189 305 27 85 145 305
-------------------------------------------------------------------------------
B 96 134 182 290 26 80 137 290
- -----------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income Portfolio A 99 142 196 319 29 89 152 319
-------------------------------------------------------------------------------
B 97 138 189 304 27 84 144 304
- -----------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Growth Stock Portfolio A 99 143 197 321 29 89 153 321
-------------------------------------------------------------------------------
B 98 138 190 306 28 85 145 306
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Opportunity Value Portfolio A 101 149 207 339 31 95 162 339
-------------------------------------------------------------------------------
B 99 144 199 325 29 91 155 325
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Enhanced Index Portfolio A 102 153 214 354 32 99 169 354
-------------------------------------------------------------------------------
B 101 149 207 339 31 95 162 339
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Select 50 Portfolio A 104 159 224 372 34 105 179 372
-------------------------------------------------------------------------------
B 103 155 216 358 33 101 172 358
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor High Yield Portfolio A 102 153 214 354 32 99 169 354
-------------------------------------------------------------------------------
B 101 149 207 339 31 95 162 339
- -----------------------------------------------------------------------------------------------------------------------------
WRL Growth Portfolio A 98 140 193 312 28 87 148 312
-------------------------------------------------------------------------------
B 97 136 185 297 27 82 141 297
- -----------------------------------------------------------------------------------------------------------------------------
The Dow Target 10 Subaccount A 102 153 214 354 32 99 169 354
-------------------------------------------------------------------------------
B 101 149 207 339 31 95 162 339
- -----------------------------------------------------------------------------------------------------------------------------
The Dow Target 5 Subaccount A 102 153 214 354 32 99 169 354
-------------------------------------------------------------------------------
B 101 149 207 339 31 95 162 339
=============================================================================================================================
</TABLE>
<PAGE>
The above table is intended to assist the Owner in understanding the costs and
expenses that will be borne, directly or indirectly. These include the 1997
expenses of the Underlying Funds, except amounts shown for the Endeavor Select
50 Portfolio, the Endeavor High Yield Portfolio, The Dow Target 10 and The Dow
Target 5 are estimates for 1998. (See "CHARGES AND DEDUCTIONS," p. 44, and the
Underlying Funds' prospectuses.) In addition to the expenses listed above,
premium taxes may be applicable.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE
ASSUMED 5% ANNUAL RETURN IS PURELY HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE. The figures and data for
underlying fund annual expenses have been provided by the underlying funds and
while PFL does not dispute these figures, PFL has not independently verified
their accuracy.
In these examples, the $35 Annual Service Charge is reflected as a charge of
0.0436% based on an estimated average Policy Value of $80,328. Normally, the
$35 Service Charge would be waived if the Premium Payment(s) less partial
withdrawals, or the Policy Value is at least $50,000. However, it was included
in these examples for illustrative purposes.
FAMILY INCOME PROTECTOR RIDER FEE. The risk assumed by PFL associated with
the Family Income Protector prior to annuitization is that the annuity benefits
payable under the Family Income Protector are greater than the annuity benefits
that would have been payable had the Owner selected another annuity benefit
permitted by the Policy. To compensate PFL for this risk, PFL charges an annual
Family Income Protector rider fee. Prior to annuitization, the Family Income
Protector rider fee is deducted from the Policy Value on each Policy Anniversary
and upon the termination of the Family Income Protector. The amount of the
Family Income Protector rider fee is equal to the rider fee percentage
multiplied by the Minimum Annuitization Value on the previous Policy
Anniversary. The rider fee percentage currently is 0.30%; PFL may, at its
discretion, change this rider fee percentage in the future but it will never be
greater than 0.50%, and once the Family Income Protector rider is added to your
Policy, the rider fee percentage will not vary during the life of that Family
Income Protector rider. The Family Income Protector rider fee is deducted from
each investment option in proportion to the amount of Policy Value in each
subaccount.
The Family Income Protector rider fee for any given Policy Anniversary will
be waived if the Policy Value on that Policy Anniversary exceeds the fee waiver
threshold multiplied by the Minimum Annuitization Value. The fee waiver
threshold is currently one and one-half times the Minimum Annuitization Value;
PFL may, at its discretion, change the fee waiver threshold in the future, but
it will never be greater than two and one-half times the Minimum Annuitization
Value, and once the Family Income Protector rider is added to your Policy, the
fee waiver threshold will not vary during the life of that Family Income
Protector rider. The Family Income Protector rider fee will not be deducted
after annuitization.
STABILIZED PAYMENT FEE. Upon annuitization under the Family Income
Protector, a "stabilized payment" fee will be imposed to reflect PFL's
additional risk from the guaranteed minimum stabilized payments. PFL bears
substantial market risk in connection with the guaranteed minimum stabilized
payments since PFL guarantees that the annuity payments will never be less than
the initial payment regardless of the investment performance of the subaccounts
you select. This market risk is in addition to the mortality and expense risk
already borne by PFL. The stabilized payment fee is currently 1.25%; PFL may,
at its discretion, change this stabilized payment fee in the future but it will
never be greater than 2.25%, and once the Family Income Protector rider is added
to your Policy, the stabilized payment fee will not vary during the life of that
Family Income Protector rider. The stabilized payment fee is included in the
"Mortality and Expense Risk Fee and Administration Charge after the Election
Date" percentage set forth on page one of the Family Income Protector rider.
<PAGE>
TERMINATION. The Family Income Protector is irrevocable. You have the option
not to use the Family Income Protector but there will be no refund of any fees
paid for the Family Income Protector. The Family Income Protector will terminate
upon the earliest of annuitization using either the Minimum Annuitization Value
or Policy Value, upgrade of Minimum Annuitization Value to Policy Value,
termination of the Policy, or 30 days after the Policy Anniversary after your
94th birthday (or earlier if the laws of your state require an earlier date).
However, after an upgrade, a new Family Income Protector rider takes effect, and
if annuity payments are begun using the Family Income Protector, then the
benefits of guaranteed minimum stabilized payments (and the stabilized payment
fee) remain in effect for the life of the Policy.
<PAGE>
THE ENDEAVOR ML VARIABLE ANNUITY
ISSUED BY
PFL LIFE INSURANCE COMPANY
Supplement Dated _____________, 1998
To The
Prospectus Dated May 1, 1998
An optional rider for the Family Income Protector benefit has been added to
The Endeavor ML Variable Annuity. The rights and benefits under the Family
Income Protector are summarized below; however, the description of the Family
Income Protector contained in this prospectus supplement is qualified in its
entirety by reference to the Family Income Protector rider itself, a copy of
which is available upon request from PFL.
All capitalized terms used, which are not defined in this supplement, shall
have the same meanings as the same terms used in the accompanying prospectus.
The Family Income Protector may not be available in all states at the date
of this supplement. Please contact PFL at (800) 525-6205 for additional
information regarding the availability of the Family Income Protector in your
state.
_______________
FAMILY INCOME PROTECTOR
You may elect to purchase this benefit, which guarantees the total amount
you will have to apply to a Family Income Protector payment option and which
guarantees the amounts of those payments once you begin to receive them. The
Family Income Protector assures you of a minimum level of income in the future
by guaranteeing a Minimum Annuitization Value (discussed below) after 10 years,
based on the Policy Value at the date the rider is issued (adjusted for any
withdrawals and applicable taxes and charges), increased by a guaranteed annual
growth rate. By electing the Family Income Protector, you can participate in
the gains of the underlying variable investment options you select while knowing
that you are guaranteed a minimum level of income in the future, regardless of
the performance of the underlying variable investment options.
You may elect to purchase the Family Income Protector at the time you
purchase the Policy or on subsequent Policy Anniversaries. You cannot begin to
obtain payments under the Family Income Protector until the tenth Policy
Anniversary after it is added to your Policy.
THE FAMILY INCOME PROTECTOR DOES NOT ESTABLISH OR GUARANTEE POLICY VALUE OR
GUARANTEE PERFORMANCE OF ANY INVESTMENT OPTION. Because this benefit is based
on conservative actuarial factors, the level of lifetime income that it
guarantees may often be less than the level that would be provided by
application of the Policy Value at otherwise applicable annuity factors.
Therefore, the Family Income Protector should be regarded as a safety net. As
described herein under "MIMIMUM ANNUITIZATION VALUE," withdrawals will reduce
the Minimum Annuitization Value, and may reduce the Minimum Annuitization Value
on a basis greater than dollar-for-dollar.
THIS PROSPECTUS SUPPLEMENT MUST BE ACCOMPANIED
BY THE PROSPECTUS FOR
THE ENDEAVOR ML VARIABLE ANNUITY DATED MAY 1, 1998
9
<PAGE>
Illustrated below are the Family Income Protector guaranteed minimum
monthly payment amounts per $100,000 of initial payment, for a male annuitant
and a female joint annuitant, both age 60 (at the date the rider is issued), on
rider anniversaries as indicated below, assuming no subsequent payments,
withdrawals or premium taxes and assuming there was no upgrade of the Minimum
Annuitization Value. PFL will, upon request, provide illustrations of the
Family Income Protector guaranteed minimum payment for an annuitant based on
other assumptions.
<TABLE>
<CAPTION>
Rider Anniversary at Life Annuity with no Period Life Annuity with no Period Joint & Survivor Life
Election Date Certain (Male) Certain (Female) Annuity with no Period
Certain
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10 $1135 $ 976 $ 854
- -------------------------------------------------------------------------------------------------------------------------
15 1833 1562 1332
- -------------------------------------------------------------------------------------------------------------------------
20 3049 2597 2145
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Joint & Survivor Life
Rider Anniversary at Life Annuity with 10 Year Life Annuity with 10 Year Annuity with 10 Year Period
Election Date Period Certain (Male) Period Certain (Female) Certain
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10 $1067 $ 949 $ 852
- -------------------------------------------------------------------------------------------------------------------------
15 1634 1469 1318
- -------------------------------------------------------------------------------------------------------------------------
20 2479 2286 2078
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Because the annuity payment options provided for in the Policy are based on
the Policy Value at the time you start receiving annuity payments, the amount of
those annuity payments may exceed the payments provided by the Family Income
Protector. Accordingly, you may elect to receive annuity payments from either
the Policy using the Policy Value or the Family Income Protector using the
Minimum Annuitization Value.
MIMIMUM ANNUITIZATION VALUE. On the rider date, the Minimum Annuitization
Value is the Policy Value. Thereafter, the Minimum Annuitization Value will be
the Policy Value on the date the rider is issued, plus any additional payments,
minus an adjustment for any withdrawals made after the date the rider is issued,
accumulated at the annual growth rate written on page one of the Family Income
Protector rider minus any premium taxes. The annual growth rate is currently 6%
per year; PFL may, at its discretion, change the rate in the future, but the
rate will never be less than 3% per year, and once the Family Income Protector
rider is added to your Policy, the annual growth rate will not vary during the
life of that Family Income Protector rider.
Withdrawals will affect the Minimum Annuitization Value as follows: Each
Policy Year, withdrawals up to the limit of the total free amount (the Minimum
Annuitization Value on the last Policy Anniversary multiplied by the annual
growth rate) reduce the Minimum Annuitization Value on a dollar-for-dollar
basis. Withdrawals over this free amount will reduce the Minimum Annuitization
Value on a pro rata basis by an amount equal to the Minimum Annuitization Value
immediately prior to the excess withdrawal multiplied by the percentage
reduction in the Policy Value resulting from the excess withdrawal. The free
amount will always be a relatively small fraction of the Minimum Annuitization
Value.
The Minimum Annuitization Value may only be used to annuitize using the
Family Income Protector payment options (discussed below) and may not be used
with any of the annuitization options shown in the Policy.
10
<PAGE>
The Minimum Annuitization Value is used solely for purposes of calculating
the Family Income Protector payment and does not establish or guarantee a Policy
Value or guarantee performance of any investment option.
MINIMUM ANNUITIZATION VALUE UPGRADE. Within 30 days after a Policy
Anniversary, you may elect to upgrade the Minimum Annuitization Value to the
Policy Value on that anniversary if the Policy Value is greater than the Minimum
Annuitization Value. The last date to elect to upgrade the Minimum
Annuitization Value is the Policy Anniversary immediately before your 85th
birthday. The laws of some states may require an earlier date. For your
convenience, the last date to upgrade will be set forth on page one of the
Family Income Protector rider.
Upon upgrading, the current Family Income Protector rider will terminate
and a new one will be issued with its own specified guaranteed benefits and
fees. The benefits and fees under the new rider may differ from your benefits
and fees prior to upgrading (the benefits and fees that may change include the
annual growth rate, the Family Income Protector rider fee, the fee waiver
threshold, the stabilized payment fee, and the waiting period before the Famiy
Income Protector can be exercised).
CONDITIONS OF EXERCISE OF THE FAMILY INCOME PROTECTOR. The Family Income
Protector may only be exercised within the 30 days immediately following the
tenth or later Policy Anniversary after the Family Income Protector is elected
or, in the case of an upgrade of the Minimum Annuitization Value, the tenth or
later Policy Anniversary following the upgrade; PFL may, at its discretion,
change the waiting period before the Famiy Income Protector can be exercised in
the future, but once the Family Income Protector rider is added to your Policy,
the waiting period will not vary during the life of that Family Income Protector
rider. For your convenience, the first date to exercise the Family Income
Protector will be set forth on page one of the Family Income Protector rider.
The Family Income Protector may not, however, be exercised after the Policy
Anniversary after your 94th birthday. The laws of some states may require an
earlier date. For your convenience, the last date to exercise the Family Income
Protector will be set forth on page one of the Family Income Protector rider.
If you annuitize your Policy at any time other than indicated above, the
Family Income Protector cannot be exercised and, accordingly, the Family Income
Protector will provide no benefits. For example, if you annuitized your Policy
twelve and one-half years after you purchased the Policy and Family Income
Protector rider, you would not be able to exercise the Family Income Protector
and use the Minimum Annuitization Value or receive guaranteed minimum stabilized
payments.
FAMILY INCOME PROTECTOR PAYMENT OPTIONS. The amount of the first payment
provided by the Family Income Protector will be determined by multiplying each
$1,000 of Minimum Annuitization Value to the applicable annuity factor shown on
Schedule I of the Family Income Protector rider. The applicable annuity factor
depends upon the Annuitant's (and Joint Annuitant's, if any) sex (or without
regard to gender if required by law), age, and the Family Income Protector
payment option selected and is based on a guaranteed interest rate of 3% and the
"1983 Table a" mortality table improved to the year 2000 with projection Scale
G. Subsequent payments will be calculated as described in the Family Income
Protector rider using a 5% assumed investment return. Subsequent payments may
fluctuate annually in accordance with the investment performance of the annuity
subaccounts. However, subsequent payments are guaranteed to never be less than
the initial payment.
The Minimum Annuitization Value and applicable annuity factor may be
applied to the following Family Income Protector payment options:
Life Income -- An election may be made for "No Period Certain" or "10 Years
Certain". In the event of the death of the Annuitant prior to the end of
the chosen period certain, the remaining period certain payments will be
continued to the beneficiary.
11
<PAGE>
Joint and Full Survivor -- An election may be made for "No Period Certain"
or "10 Years Certain". Payments will be made as long as either the
Annuitant or Joint Annuitant is living. In the event of the death of both
the Annuitant and Joint Annuitant prior to the end of the chosen period
certain, the remaining period certain payments will be continued to the
beneficiary.
The Family Income Protector cannot be used with any other payment options.
GUARANTEED MINIMUM STABILIZED PAYMENTS. Annuity payments under the Family
Income Protector are guaranteed to never be less than the initial payment. The
payments will also be "stabilized" or held constant during each Policy Year.
During the first Policy Year following annuitization using the Family
Income Protector, each stabilized payment will equal the initial payment. On
each Policy Anniversary thereafter, the stabilized payment will increase or
decrease depending on the performance of the subaccounts selected, and then be
held constant at that amount for that Policy Year. The stabilized payment on
each Policy Anniversary will equal the greater of the initial payment or the
payment supportable by the annuity units in the selected subaccounts. The
supportable payment is equal to the number of variable annuity units in the
selected subaccounts multiplied by the variable annuity unit values in those
subaccounts on the date the payment is made. The variable annuity unit values
used to calculate the supportable payment will assume a 5% assumed investment
return. If the supportable payment at any payment date during a Policy Year is
greater than the stabilized payment for that Policy Year, the excess will be
used to purchase additional annuity units. Conversely, if the supportable
payment at any payment date during a Policy Year is less than the stabilized
payment for that Policy Year, there will be a reduction in the number of annuity
units credited to the Policy to fund the deficiency. In the case of a
reduction, you will not participate as fully in the future investment
performance of the subaccounts you selected since fewer annuity units are
credited to your Policy. Purchases and reductions will be allocated to each
subaccount on a proportionate basis.
PFL bears the risk that it will need to make payments if all annuity units
have been used in an attempt to maintain the stabilized payment at the initial
payment level. In such an event, PFL will make all future payments equal to the
initial payment. Once all the annuity units have been used, the amount of your
payment will not increase or decrease and will not depend upon the performance
of any subaccounts. To compensate PFL for this risk, a stabilized payment fee
will be deducted (discussed below).
12
<PAGE>
ANNUITY POLICY FEE TABLE
<TABLE>
<S> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
POLICY OWNER TRANSACTION EXPENSES (AS A PERCENTAGE OF ACCOUNT VALUE)
Sales Load On Purchase Payments......... 0 Mortality and Expense Risk Fee/(4)/ . 1.25%
Maximum Surrender Charge Administrative Charge .................... 0.15%
(as a % of Premium
Payment Surrendered)/(1)(2)/...... 7%
Distribution Financing Charge.............. 0.15%
TOTAL SEPARATE ACCOUNT
ANNUAL EXPENSES............................ 1.55%
Surrender Fees.......................... 0
Annual Service Charge/(1)/.............. $35 Per Policy
Transfer Fee/(1)/....................... Currently No Fee
Family Income Protector (optional)/(3)/
Rider Fee......................... 0.30%
Stabilized Payment Fee............ 1.25%
</TABLE>
/(1)/The Surrender Charge and Transfer Fee, if any is imposed, apply to each
Policy, regardless of how the Policy Value is allocated among the Mutual
Fund Account, the Target Account and the Fixed Account. The Service Charge
is $35 per year, but not greater than 2% of the Policy Value. The Service
Charge applies to the Fixed Account, the Mutual Fund Account, and the
Target Account and is assessed on a prorata basis relative to each
Account's Policy Value as a percentage of the Policy's total Policy Value.
The Service Charge is deducted on each Policy Anniversary and at the time
of surrender, if surrender occurs during a Policy Year. (See "CHARGES AND
DEDUCTIONS--Administrative Charges," p. 47.) There is no fee for the first
12 transfers per year. For additional transfers PFL may charge a fee of $10
per transfer but currently does not charge for any transfers.
/(2)/The Surrender Charge is decreased based on the number of years since the
premium payment date in which the withdrawal is made. The charge is a
percentage of the Premium Payment: 7%, 7%, 6%, 6%, 5%, 4% and 2%; for years
one through seven, respectively, after the Premium Payment was made. If
applicable, a Surrender Charge will only be applied to withdrawals that
exceed the amount available under certain listed exceptions. (See "CHARGES
AND DEDUCTIONS--Surrender Charge," p. 46, and "DISTRIBUTIONS UNDER THE
POLICIES--Surrenders," p. 36.)
/(3)/The annual Family Income Protector Rider Fee is currently equal to 0.30%
of the Minimum Annuitization Value on the previous Policy Anniversary; PFL
may at its discretion change the rate in the future, but the rate will
never be greater than 0.50% per year. The Stabilized Payment Fee is only
charged if you annuitize under the Family Income Protector rider, and then
only after annuitization. This fee is reflected in the amount of the
variable payments. The Stabilized Payment Fee is currently 1.25%; PFL may
at its discretion change the rate in the future, but the rate will never be
greater than 2.25% per year. Once the Family Income Protector rider is
added to your Policy, neither the Rider Fee nor the Stabilized Payment Fee
that is in effect at that time will change during the life of that Family
Income Protector rider.
/(4)/The Mortality and Expense Risk Fees shown (1.25%) are for the 5% Annually
Compounding Death Benefit and the Double Enhanced Death Benefit. The
corresponding fee for the Return of Premium Death Benefit is 1.10% for each
Subaccount. (See "DISTRIBUTIONS UNDER THE POLICY--Death Benefit," p. 43.)
The Portfolio Annual Expense section, and the footnotes thereto, of the May 1,
1998 prospectus and the June 1, 1998 prospectus supplement remain applicable.
13
<PAGE>
EXAMPLES
You would pay the following expenses on a $1,000 investment, assuming the
optional Family Income Protector, a hypothetical 5% annual return on assets, and
assuming the entire Policy Value is in the applicable Subaccount:
<TABLE>
<CAPTION>
A = 5% Annually Compounding Death Benefit
or the Double Enhanced Death Benefit B = Return of Premium Death Benefit
=================================================================================================================================
IF THE POLICY IS ANNUITIZED AT
IF THE POLICY IS SURRENDERED THE END OF THE APPLICABLE TIME PERIOD
AT THE END OF THE APPLICABLE OR IF THE POLICY IS NOT SURRENDERED
TIME PERIOD. OR ANNUITIZED.
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch Basic Value Focus Fund A 96 134 182 290 26 80 137 290
-------------------------------------------------------------------------------
B 94 129 174 275 24 76 130 275
- -----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Developing Capital Markets A 102 152 212 349 32 98 167 349
Focus Fund -------------------------------------------------------------------------------
B 100 147 204 335 30 94 160 335
- -----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch High Current Income Fund A 95 130 176 279 25 77 132 279
-------------------------------------------------------------------------------
B 93 126 169 264 23 72 124 264
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Money Market Portfolio A 95 132 179 285 25 79 135 285
-------------------------------------------------------------------------------
B 94 128 172 270 24 74 127 270
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Asset Allocation Portfolio A 98 139 191 309 28 86 147 309
-------------------------------------------------------------------------------
B 96 135 184 294 26 81 139 294
- -----------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Portfolio A 100 146 203 332 30 93 158 332
-------------------------------------------------------------------------------
B 99 142 195 317 29 88 151 317
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Value Equity Portfolio A 98 141 194 314 28 87 149 314
-------------------------------------------------------------------------------
B 97 136 186 299 27 83 142 299
- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus Small Cap Value Portfolio A 99 141 195 316 29 88 150 316
-------------------------------------------------------------------------------
B 97 137 187 301 27 83 143 301
- -----------------------------------------------------------------------------------------------------------------------------
Dreyfus U.S. Government Securities Portfolio A 97 138 189 305 27 85 145 305
-------------------------------------------------------------------------------
B 96 134 182 290 26 80 137 290
- -----------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income Portfolio A 99 142 196 319 29 89 152 319
-------------------------------------------------------------------------------
B 97 138 189 304 27 84 144 304
- -----------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Growth Stock Portfolio A 99 143 197 321 29 89 153 321
-------------------------------------------------------------------------------
B 98 138 190 306 28 85 145 306
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Opportunity Value Portfolio A 101 149 207 339 31 95 162 339
-------------------------------------------------------------------------------
B 99 144 199 325 29 91 155 325
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Enhanced Index Portfolio A 102 153 214 354 32 99 169 354
-------------------------------------------------------------------------------
B 101 149 207 339 31 95 162 339
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor Select 50 Portfolio A 104 159 224 372 34 105 179 372
-------------------------------------------------------------------------------
B 103 155 216 358 33 101 172 358
- -----------------------------------------------------------------------------------------------------------------------------
Endeavor High Yield Portfolio A 102 153 214 354 32 99 169 354
-------------------------------------------------------------------------------
B 101 149 207 339 31 95 162 339
- -----------------------------------------------------------------------------------------------------------------------------
WRL Growth Portfolio A 98 140 193 312 28 87 148 312
-------------------------------------------------------------------------------
B 97 136 185 297 27 82 141 297
- -----------------------------------------------------------------------------------------------------------------------------
The Dow Target 10 Subaccount A 102 153 214 354 32 99 169 354
-------------------------------------------------------------------------------
B 101 149 207 339 31 95 162 339
- -----------------------------------------------------------------------------------------------------------------------------
The Dow Target 5 Subaccount A 102 153 214 354 32 99 169 354
-------------------------------------------------------------------------------
B 101 149 207 339 31 95 162 339
=============================================================================================================================
</TABLE>
14
<PAGE>
The above table is intended to assist the Owner in understanding the costs and
expenses that will be borne, directly or indirectly. These include the 1997
expenses of the Underlying Funds, except amounts shown for the Endeavor Select
50 Portfolio, the Endeavor High Yield Portfolio, The Dow Target 10 and The Dow
Target 5 are estimates for 1998. (See "CHARGES AND DEDUCTIONS," p. 45, and the
Underlying Funds' prospectuses.) In addition to the expenses listed above,
premium taxes may be applicable.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE
ASSUMED 5% ANNUAL RETURN IS PURELY HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE. The figures and data for
underlying fund annual expenses have been provided by the underlying funds and
while PFL does not dispute these figures, PFL has not independently verified
their accuracy.
In these examples, the $35 Annual Service Charge is reflected as a charge of
0.0436% based on an estimated average Policy Value of $80,328. Normally, the $35
Service Charge would be waived if the Premium Payment(s) less partial
withdrawals, or the Policy Value is at least $50,000. However, it was included
in these examples for illustrative purposes.
FAMILY INCOME PROTECTOR RIDER FEE. The risk assumed by PFL associated with
the Family Income Protector prior to annuitization is that the annuity benefits
payable under the Family Income Protector are greater than the annuity benefits
that would have been payable had the Owner selected another annuity benefit
permitted by the Policy. To compensate PFL for this risk, PFL charges an annual
Family Income Protector rider fee. Prior to annuitization, the Family Income
Protector rider fee is deducted from the Policy Value on each Policy Anniversary
and upon the termination of the Family Income Protector. The amount of the
Family Income Protector rider fee is equal to the rider fee percentage
multiplied by the Minimum Annuitization Value on the previous Policy
Anniversary. The rider fee percentage currently is 0.30%; PFL may, at its
discretion, change this rider fee percentage in the future but it will never be
greater than 0.50%, and once the Family Income Protector rider is added to your
Policy, the rider fee percentage will not vary during the life of that Family
Income Protector rider. The Family Income Protector rider fee is deducted from
each investment option in proportion to the amount of Policy Value in each
subaccount.
The Family Income Protector rider fee for any given Policy Anniversary will
be waived if the Policy Value on that Policy Anniversary exceeds the fee waiver
threshold multiplied by the Minimum Annuitization Value. The fee waiver
threshold is currently one and one-half times the Minimum Annuitization Value;
PFL may, at its discretion, change the fee waiver threshold in the future, but
it will never be greater than two and one-half times the Minimum Annuitization
Value, and once the Family Income Protector rider is added to your Policy, the
fee waiver threshold will not vary during the life of that Family Income
Protector rider. The Family Income Protector rider fee will not be deducted
after annuitization.
STABILIZED PAYMENT FEE. Upon annuitization under the Family Income
Protector, a "stabilized payment" fee will be imposed to reflect PFL's
additional risk from the guaranteed minimum stabilized payments. PFL bears
substantial market risk in connection with the guaranteed minimum stabilized
payments since PFL guarantees that the annuity payments will never be less than
the initial payment regardless of the investment performance of the subaccounts
you select. This market risk is in addition to the mortality and expense risk
already borne by PFL. The stabilized payment fee is currently 1.25%; PFL may,
at its discretion, change this stabilized payment fee in the future but it will
never be greater than 2.25%, and once the Family Income Protector rider is added
to your Policy, the stabilized payment fee will not vary during the life of that
Family Income Protector rider. The stabilized payment fee is included in the
"Mortality and Expense Risk Fee and Administration Charge after the Election
Date" percentage set forth on page one of the Family Income Protector rider.
15
<PAGE>
TERMINATION. The Family Income Protector is irrevocable. You have the option
not to use the Family Income Protector but there will be no refund of any fees
paid for the Family Income Protector. The Family Income Protector will
terminate upon the earliest of annuitization using either the Minimum
Annuitization Value or Policy Value, upgrade of Minimum Annuitization Value to
Policy Value, termination of the Policy, or 30 days after the Policy Anniversary
Focus Fundafter your 94th birthday (or earlier if the laws of your state require
an earlier date). However, after an upgrade, a new Family Income Protector rider
takes effect, and if annuity payments are begun using the Family Income
Protector, then the benefits of guaranteed minimum stabilized payments (and the
stabilized payment fee) remain in effect for the life of the Policy.
16
<PAGE>
This filing incorporates by reference the Prospectus and Statement of Additional
Information of the Pre-Effective Amendment No. 1 filed on April 30, 1998
<PAGE>
PART C
OTHER INFORMATION
Item 28. Financial Statements and Exhibits
(a) Financial Statements:
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits:
(1) Resolution of the Board of Directors of PFL Life Insurance
Company authorizing the establishment of the Target Account.
(Note 8)
(2) Rules and Regulations of the Target Account. (Note 11)
(3)(a) Custodian Agreement between the Target Account and Boston Safe
Deposit and Trust Company. (Note 11)
(3)(b) Not Applicable.
(4)(a) Management Agreement between the Target Account and Endeavor
Investment Advisers. (Note 11)
(4)(b)(1) Investment Advisory Agreement between Endeavor Investment
Advisers and First Trust Advisers L.P. (DJIA Target 5) (Note
11)
(4)(b)(2) Investment Advisory Agreement between Endeavor Investment
Advisers and First Trust Advisers L.P. (DJIA Target 10) (Note
11)
(5)(a) Principal Underwriting Agreement by and between PFL Life
Insurance Company on its own behalf and on behalf of the
Target Account, and AEG0N USA Securities, Inc. (Note 2)
(5)(a)(1) Principal Underwriting Agreement by and between PFL Life
Insurance Company on its own behalf and on behalf of the
Target Account, and AFSG Securities Corporation. (Note 9)
(5)(a)(2) Termination of Principal Underwriting Agreement by and between
AGEON USA Securities, Inc., formerly known as, MidAmerica
Management Corporation and PFL Life Insurance Company on its
own behalf and on the behalf of PFL Endeavor Variable Annuity
Account. (Note 11)
(5)(b) Form of Broker-Dealer Supervision and Sales Agreement by and
between AFSG Securities Corporation and the Broker-Dealer.
(Note 9)
(6)(a) Form of Policy for the Endeavor Variable Annuity. (Note 2)
(6)(b) Form of Policy Endorsement (Required Distributions) (Note 2)
(6)(c) Form of Policy Endorsement (Death Benefits) (Note 3)
(6)(d) Form of Policy Endorsement (Nursing Care) (Note 4)
(6)(e) Form of Policy Endorsement (Death Benefit) (Note 5)
(6)(f) Form of Policy for the Endeavor Variable Annuity. (Note 6)
(6)(g) Form of Policy Endorsement. (Nursing Care) (Note 6)
(6)(h) Form of Policy for the Endeavor FI Variable Annuity. (Note 7)
(6)(i) Form of Policy Endorsement for Endeavor FI. (Nursing Care)
(Note 7)
(6)(j) Form of Policy Endorsement. (Nursing Care) (Note 7)
<PAGE>
(6)(k) Form of Policy for the Endeavor Variable Annuity. (Note 9)
(6)(l) Form of Policy Endorsement (New Separate Accounts and Annuity
Commencement Date). (Note 9)
(6)(m) Form of Policy Endorsement for the PFL Endeavor and PFL Endeavor
ML Variable Annuity. (GMIB) (Note 11)
(7)(a) Form of Application for the PFL Endeavor Variable Annuity.
(Note 7)
(7)(b) Form of Application for the PFL Endeavor FI Variable Annuity.
(Note 7)
(7)(c) Form of Application for the Endeavor ML Variable Annuity.
(Note 7)
(7)(d) Form of Application for the PFL Endeavor Variable Annuity.
(Note 9)
(7)(e) Form of Application for ML PFL Endeavor Variable Annuity
(Note 11)
(7)(f) Form of Application for the PFL Endeavor ML Variable Annuity
(Note 11)
(8)(a) Articles of Incorporation of PFL Life Insurance Company. (Note 9)
(8)(b) Bylaws of PFL Life Insurance Company. (Note 9)
(9) Not Applicable.
(10) Not Applicable.
(11)(a) Distribution Plan (Note 11).
(11)(b) Administrative Services Agreement with First Data Investors
Services Group (Note 11)
(11)(c) Brokerage Enhancement Plan. (Note 11)
(11)(d) Sublicense Agreement between Dow Jones, First Trust Advisers L.P.
and the Target Account. (Note 12)
(11)(e) Distribution Agreement. (Note 11)
(12) Opinion and Consent of Counsel. (Note 9)
(13)(a) Opinion and Consent of Actuary. (Note 11)
(13)(b) Consent of Independent Auditors. (Note 10)
(14) Not Applicable.
(15) Not Applicable.
(16) Not Applicable.
(17) Financial Data Schedules. (Note 12)
- ----------------------
Note 1. Filed with the initial filing of Form N-4 Registration Statement
(File No. 33-33085) on January 23, 1990 and incorporated herein by
reference.
Note 2. Filed with Post-Effective Amendment No. 2 to Form N-4 Registration
Statement (File No. 33-33085) on April 1, 1991 and is filed
herewith.
Note 3. Filed with Post-Effective Amendment No. 3 to Form N-4 Registration
Statement (File No. 33-33085) on April 29, 1992 and is filed
herewith.
Note 4. Filed with Post-Effective Amendment No. 7 to Form N-4 Registration
Statement (File No. 33-33085) on March 29, 1994 and is filed
herewith.
Note 5. Filed with Post-Effective Amendment No. 10 to Form N-4 Registration
Statement (File No. 33-33085) on April 27, 1995 and incorporated
herein by reference.
<PAGE>
Note 6. Filed with Post-Effective Amendment No. 12 to Form N-4 Registration
Statement (File No. 33-33085) on February 28, 1997 and incorporated
herein by reference.
Note 7. Filed with Post-Effective Amendment No. 13 to Form N-4 Registration
Statement (File No. 33-33085) on April 29, 1997.
Note 8. Filed with the initial filing of Form N-3 Registration Statement (File
No. 333-36297) on September 24, 1997 and incorporated herein by
reference.
Note 9. Filed with the initial filing of Form N-3 Registration Statement (File
No. 333-47027) on February 27, 1998.
Note 10. Filed with Pre-Effective Amendment No. 1 to this form N-3 Registration
Statement (File. No. 333-47027) on April 29, 1998
Note 11. Filed Herewith.
Note 12 To be filed by future Amendment.
<PAGE>
Item 29. Directors and Officers of the Insurance Company
<TABLE>
<CAPTION>
Name and Principal Business Positions and Offices with Insurance Positions and Offices with
Address Company Registrant
- ------- ------- ----------
<C> <S> <C>
William L. Busler Director, Chairman of the Board and
4333 Edgewood Road N.E. President
Cedar Rapids, Iowa
52499-0001
Patrick S. Baird Director, Senior Vice President and
4333 Edgewood Road N.E. Chief Operating Officer
Cedar Rapids, Iowa
52499-0001
Craig D. Vermie Director, Vice President, Secretary
4333 Edgewood Road N.E. and General Counsel
Cedar Rapids, Iowa
52499-0001
Douglas C. Kolsrud Director, Senior Vice President, and
4333 Edgewood Road N.E. Chief Investment Office, Corporate
Cedar Rapids, Iowa Actuary
52499-0001
Larry N. Norman Director, and Executive Vice President
4333 Edgewood Road N.E.
Cedar Rapids, Iowa
52499-0001
Robert J. Kontz Vice President and
4333 Edgewood Road N.E. Corporate Controller
Cedar Rapids, Iowa
52499-0001
Brenda K. Clancy Vice President, Treasurer and Chief
4333 Edgewood Road N.E. Financial Officer
Cedar Rapids, Iowa
52499-0001
</TABLE>
Item 30. Persons Controlled by or Under Common Control with the Insurance
Company or Registrant
<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- ------------- ---------------- --------
<S> <C> <C> <C>
AEGON N.V. Netherlands 53.63% of Vereniging Holding company
Corporation AEGON Netherlands
Membership Association
Groninger Financieringen B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON Netherland N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON Nevak Holding B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON International N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
Voting Trust Delaware Voting Trust
Trustees:
K.J. Storm
Donald J. Shepard
H.B. Van Wijk
Dennis Hersch
AEGON U.S. Holding Delaware 100% of Voting Trust Holding company
Corporation
Short Hills Management New Jersey 100% of AEGON U.S. Holding company
Company Holding Corporation
CORPA Reinsurance New York 100% of AEGON U.S. Holding company
Company Holding Corporation
AEGON Management Indiana 100% of AEGON U.S. Holding company
Company Holding Corporation
RCC North America Inc. Delaware 100% of AEGON U.S. Holding company
Holding Corporation
AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company
Holding Corporation
AUSA Holding Company Maryland 100% AEGON USA, Inc. Holding company
Monumental General Insurance Maryland 100% AUSA Holding Co. Holding company
Group, Inc.
Trip Mate Insurance Agency, Inc. Kansas 100% Monumental General Sale/admin. of travel
Insurance Group, Inc. insurance
Monumental General Maryland 100% Monumental General Provides management srvcs.
Administrators, Inc. Insurance Group, Inc. to unaffiliated third party
administrator
Executive Management and Maryland 100% Monumental General Provides actuarial consulting
Consultant Services, Inc. Administrators, Inc. services
Monumental General Mass Maryland 100% Monumental General Marketing arm for sale of
Marketing, Inc. Insurance Group, Inc. mass marketed insurance
coverages
Diversified Investment Delaware 100% AUSA Holding Co. Registered investment advisor
Advisors, Inc.
Diversified Investors Securities Delaware 100% Diversified Investment Broker-Dealer
Corp. Advisors, Inc.
AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer
Supplemental Ins. Division, Inc. Tennessee 100% AUSA Holding Co. Insurance
Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance
CRC Creditor Resources Canada 100% Creditor Resources, Inc. Insurance agency
Canadian Dealer Network Inc.
AEGON USA Investment Iowa 100% AUSA Holding Co. Investment advisor
Management, Inc.
AEGON USA Realty Iowa 100% AUSA Holding Co. Provides real estate
Advisors, Inc. administrative and real
estate investment services
Quantra Corporation Delaware 100% AEGON USA Realty Real estate and financial
Advisors, Inc. software production and sales
Quantra Software Corporation Delaware 100% Quantra Corporation Manufacture and sell
mortgage loan and security
management software
Landauer Realty Advisors, Inc. Iowa 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Realty Information Systems, Inc. Iowa 100% AEGON USA Realty Information Systems for
Advisors, Inc. real estate investment
management
AEGON USA Realty Iowa 100% AEGON USA Real estate management
Management, Inc Realty Advisors, Inc.
USP Real Estate Investment Trust Iowa 21.89% First AUSA Life Ins. Co. Real estate investment trust
13.11% PFL Life Ins. Co.
4.86% Bankers United Life
Assurance Co.
Cedar Income Fund, Ltd. Iowa 16.73% PFL Life Ins. Co. Real estate investment trust
3.77% Bankers United Life
Assurance Company
3.38% Life Investors Co. of America
1.97% AEGON USA Realty Advisors, Inc.
.18% First AUSA Life Ins. Co.
RCC Properties Limited Iowa AEGON USA Realty Advisors, Limited Partnership
Partnership Inc. is General Partner and 5%
owner.
AUSA Financial Markets, Inc. Iowa 100% AUSA Holding Co. Marketing
Endeavor Investment Advisors California 49.9% AUSA Financial General Partnership
Markets, Inc.
Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party administrator
Investors Warranty of Iowa 100% AUSA Holding Co. Provider of automobile
America, Inc. extended maintenance
contracts
Massachusetts Fidelity Trust Co. Iowa 100% AUSA Holding Co. Trust company
Money Services, Inc. Delaware 100% AUSA Holding Co. Provides financial counseling
for employees and agents of
affiliated companies
Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer
ZCI, Inc. Alabama 100% Zahorik Company, Inc. Insurance agency
AEGON Asset Management Delaware 100% AUSA Holding Co. Registered investment advisor
Services, Inc.
Intersecurities, Inc. Delaware 100% AUSA Holding Co. Broker-Dealer
ISI Insurance Agency, Inc. California 100% Intersecurities, Inc. Insurance agency
ISI Insurance Agency Ohio 100% ISI Insurance Agency, Inc. Insurance agency
of Ohio, Inc.
ISI Insurance Agency Texas 100% ISI Insurance Agency, Inc. Insurance agency
of Texas, Inc.
ISI Insurance Agency Massachusetts 100% ISI Insurance Agency Inc. Insurance Agency
of Massachusetts, Inc.
Associated Mariner Financial Michigan 100% Intersecurities, Inc. Holding co./management
Group, Inc. services
Mariner Financial Services, Inc. Michigan 100% Associated Mariner Broker/Dealer
Financial Group, Inc.
Mariner Planning Corporation Michigan 100% Mariner Financial Financial planning
Services, Inc.
Associated Mariner Agency, Inc. Michigan 100% Associated Mariner Insurance agency
Financial Group, Inc.
Associated Mariner Agency Hawaii 100% Associated Mariner Insurance agency
of Hawaii, Inc. Agency, Inc.
Associated Mariner Ins. Agency Massachusetts 100% Associated Mariner Insurance agency
of Massachusetts, Inc. Agency, Inc.
Associated Mariner Agency Ohio 100% Associated Mariner Insurance agency
Ohio, Inc. Agency, Inc.
Associated Mariner Agency Texas 100% Associated Mariner Insurance agency
Texas, Inc. Agency, Inc.
Associated Mariner Agency New Mexico 100% Associated Mariner Insurance agency
New Mexico, Inc. Agency, Inc.
Mariner Mortgage Corp. Michigan 100% Associated Mariner Mortgage origination
Financial Group, Inc.
Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services
Idex Management, Inc. Delaware 50% AUSA Holding Co. Investment advisor
50% Janus Capital Corp.
IDEX II Series Fund Massachusetts Various Mutual fund
First AUSA Life Insurance Maryland 100% AEGON USA, Inc. Insurance holding company
Company
AUSA Life Insurance New York 100% First AUSA Life Insurance
Company, Inc. Insurance Company
Life Investors Insurance Iowa 100% First AUSA Life Ins. Co. Insurance
Company of America
Bankers United Life Iowa 100% Life Investors Ins. Insurance
Assurance Company Company of America
Life Investors Agency Iowa 100% Life Investors Ins. Marketing
Group, Inc. Company of America
PFL Life Insurance Company Iowa 100% First AUSA Life Ins. Co. Insurance
AEGON Financial Services Minnesota 100% PFL Life Insurance Co. Marketing
Group, Inc.
AEGON Assignment Corporation Kentucky 100% AEGON Financial Administrator of structured
Services Group, Inc. settlements
Southwest Equity Life Ins. Co. Arizona 100% of Common Voting Stock Insurance
First AUSA Life Ins. Co.
Iowa Fidelity Life Insurance Co. Arizona 100% of Common Voting Stock Insurance
First AUSA Life Ins. Co.
Western Reserve Life Assurance Ohio 100% First AUSA Life Ins. Co. Insurance
Co. of Ohio
WRL Series Fund, Inc. Maryland Various Mutual fund
WRL Investment Services, Inc. Florida 100% Western Reserve Life Provides administration for
Assurance Co. of Ohio affiliated mutual fund
WRL Investment Florida 100% Western Reserve Life Registered investment advisor
Management, Inc. Assurance Co. of Ohio
Monumental Life Insurance Co. Maryland 100% First AUSA Life Ins. Co. Insurance
AEGON Special Markets Maryland 100% Monumental Life Ins. Co. Marketing
Group, Inc.
Monumental General Casualty Co. Maryland 100% First AUSA Life Ins. Co. Insurance
United Financial Services, Inc. Maryland 100% First AUSA Life Ins. Co. General agency
Bankers Financial Life Ins. Co. Arizona 100% First AUSA Life Ins. Co. Insurance
The Whitestone Corporation Maryland 100% First AUSA Life Ins. Co. Insurance agency
Cadet Holding Corp. Iowa 100% First AUSA Life Holding company
Insurance Company
Commonwealth General Delaware 100% AEGON USA Holding company
Corporation ("CGC")
PB Series Trust Massachusetts N/A Mutual fund
Monumental Agency Group, Inc. Kentucky 100% CGC Provider of srvcs. to ins. cos.
Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security Life
Insurance Company
Durco Agency, Inc. Virginia 100% Benefit Plans, Inc. General agent
Commonwealth General. Kentucky 100% CGC Administrator of structured
Assignment Corporation settlements
Providian Financial Services, Inc. Pennsylvania 100% CGC Financial services
AFSG Securities Corporation Pennsylvania 100% CGC Broker-Dealer
PB Investment Advisors, Inc. Delaware 100% CGC Registered investment advisor
Diversified Financial Products Inc. Delaware 100% CGC Provider of investment,
marketing and admin.
services to ins. cos.
AEGON USA Real Estate Delaware 100% Diversified Financial Real estate and mortgage
Services, Inc. Products Inc. holding company
Capital Real Estate Delaware 100% CGC Furniture and equiment lessor
Development Corporation
Capital General Development Delaware 100% CGC Holding company
Corporation
Commonwealth Life Kentucky 100% Capital General Insurance company
Insurance Company Development Corporation
Agency Holding I, Inc. Delaware 100% Commonwealth Life Investment subsidiary
Insurance Company
Agency Investments I, Inc. Delaware 100% Agency Holding I, Inc. Investment subsidiary
Peoples Security Life North Carolina 100% Capital General Insurance company
Insurance Company Development Corporation
Ammest Realty Corporation Texas 100% Peoples Security Life Special purpose subsidiary
Insurance Company
Agency Holding II, Inc. Delaware 100% Peoples Security Life Investment subsidiary
Insurance Company
Agency Investments II, Inc. Delaware 100% Agency Holding II, Inc. Investment subsidiary
Agency Holding III, Inc. Delaware 100% Peoples Security Life Investment subsidiary
Insurance Company
Agency Investments III, Inc. Delaware 100% Agency Holding III, Inc. Investment subsidiary
JMH Operating Company, Inc. Mississippi 100% Peoples Security Life Real estate holdings
Insurance Company
Capital Security Life Ins. Co. North Carolina 100% Capital General Insurance company
Development Corporation
Independence Automobile Florida 100% Capital Security Automobile Club
Association, Inc. Life Insurance Company
Independence Automobile Georgia 100% Capital Security Automobile Club
Club, Inc. Life Insurance Company
Capital 200 Block Corporation Delaware 100% CGC Real estate holdings
Capital Broadway Corporation Kentucky 100% CGC Real estate holdings
Southlife, Inc. Tennessee 100% CGC Investment subsidiary
Ampac Insurance Agency, Inc. Pennsylvania 100% CGC Provider of management
(EIN 23-1720755) support services
National Home Life Corporation Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.
Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Corporation Agency, Inc.
Association Consultants, Inc. Illinois 100% Ampac Insurance TPA license-holder
Agency, Inc.
Valley Forge Associates, Inc. Pennsylvania 100% Ampac Insurance Furniture & equipment lessor
Agency, Inc.
Veterans Benefits Plans, Inc. Pennsylvania 100% Ampac Insurance Administator of group
Agency, Inc. insurance programs
Veterans Insurance Services, Inc. Delaware 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.
Financial Planning Services, Inc. Dist. Columbia 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.
Providian Auto and Home Missouri 100% CGC Insurance company
Insurance Company
Academy Insurance Group, Inc. Delaware 100% CGC Holding company
Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company
Group, Inc.
Pension Life Insurance New Jersey 100% Academy Insurance Insurance company
Company of America Group, Inc.
Academy Services, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ammest Development Corp. Inc. Kansas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ammest Insurance Agency, Inc. California 100% Academy Insurance General agent
Group, Inc.
Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose subsidiary
Insurance Agency, Inc. Group, Inc.
Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ampac, Inc. Texas 100% Academy Insurance Managing general agent
Group, Inc.
Ampac Insurance Agency, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
(EIN 23-2364438) Group, Inc.
Data/Mark Services, Inc. Delaware 100% Academy Insurance Provider of mgmt. services
Group, Inc.
Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Force Financial Services, Inc. Massachusetts 100% Force Fin. Group, Inc. Special-purpose subsidiary
Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club
Group, Inc.
NCOAA Management Company Texas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin. services
Services, Inc. Group, Inc.
Unicom Administrative Germany 100%Unicom Administrative Provider of admin. servcies
Services, GmbH Services, Inc.
Providian Property and Casualty Kentucky 100% Providian Auto and Insurance company
Insurance Company Home Insurance Company
Providian Fire Insurance Co. Kentucky 100% Providian Property Insurance company
and Casualty Insurance Co.
Capital Liberty, L.P. Delaware 79.2% Commonwealth Life Holding Company
Insurance Company
19.8% Peoples Security Life
Insurance Company
1% CGC
Commonwealth General LLC Turks & 100% CGC Special-purpose subsidiary
Caicos Islands
Providian Life and Health Missouri 3.7% CGC Insurance company
Insurance Company 15.3% Peoples Security Life
Insurance Company
20% Capital Liberty, L.P.
61% Commonwealth Life
Insurance Company
Veterans Life Insurance Co. Illinois 100% Providian Life and Insurance company
Health Insurance Company
Peoples Benefit Services, Inc. Pennsylvania 100% Veterans Life Ins. Co. Special-purpose subsidiary
First Providian Life and New York 100% Veterans Life Ins. Co. Insurance Company
Health Insurance Company
</TABLE>
Item 31. Number of Contract Owners
As of December 31, 1997, there were 0 Owners of the Policies.
Item 32. Indemnification
The Iowa Code (Sections 490.850 et. seq.) provides for permissive
indemnification in certain situations, mandatory indemnification in other
situations, and prohibits indemnification in certain situations. The Code also
specifies procedures for determining when indemnification payments can be made.
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Depositor pursuant to the foregoing provisions, or otherwise, the Depositor has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Depositor of expenses incurred
or paid by a director, officer or controlling person in connection with the
securities being registered), the Depositor will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 33. Business and Other Connections of Investment Adviser
Manager - Endeavor Investment Advisers
The Manager is a registered investment adviser providing investment
management and administrative services to the Registrant.
The list required by this Item 33 of partners, officers and directors of
the Manager together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedule B
and D of Form ADV filed by the Manager pursuant to the Investment Advisers Act
of 1940 (SEC No. 801-41827).
Advisers - First Trust Advisers L.P.
The list required by Item 33 of partners, officers and directors of the
Adviser together with information as to any other business, profession, vocation
or employment of a substantial nature engaged in by such officers and directors
during the past two years is incorporated by reference to Schedule B and D of
Form ADV filed by the Adviser pursuant to the Investment Advisers Act of 1940
(SEC No. 801-39950).
Item 34. Principal Underwriters
AFSG Securities Corporation
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499-0001
The directors and officers of AFSG Securities Corporation are as follows:
<TABLE>
<CAPTION>
Positions and Offices with Positions and Offices with
Name Underwriter Registrant
- ---- ----------- ----------
<S> <C>
Larry N. Norman Director and President
Harvey E. Willis Vice President and Secretary
Lisa Wachendorf Compliance Officer
Debra C. Cubero Vice President
Gregory J. Garvin Vice President
Michael F. Lane Vice President
Anne Spaes Vice President
Sarah J. Strange Director and Vice President
Brenda K. Clancy Vice President
</TABLE>
<PAGE>
Michael G. Ayers Treasurer / Controller
Colleen S. Lyons Assistant Secretary
John F. Reesor Assistant Secretary
The principal business address of each person listed is AFSG Securities
Corporation, 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001.
AFSG Securities Corporation also serves as the principal underwriter for
the PFL Endeavor VA Separate Account, PFL Life Variable Annuity Account A, the
PFL Retirement Builder Variable Annuity Account, and the AUSA Endeavor Variable
Annuity Account. These accounts are separate accounts of PFL Life Insurance
Company or AUSA Life Insurance Company, Inc., life insurance company affiliates
of AFSG Securities Corporation.
Commissions and Other Compensation Received by Principal Underwriter.
AEGON USA Securities, Inc., the former broker dealer, and/or the broker-dealers
received $0 from the Registrant during the last fiscal year for its services in
distributing the Policies. No other commission or compensation was received by
the principal underwriter, directly or indirectly, from the Registrant for
distributing the Policies during the fiscal year.
Item 35. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are
maintained by PFL Life Insurance Company at 4333 Edgewood Road, N.E., Cedar
Rapids, Iowa 52499-0001.
Item 36. Management Services
All management Contracts are discussed in Part A or Part B.
Item 37. Undertakings
(a) Registrant undertakes to file a post-effective amendment, using
financial statements of the Registrant which need not be certified, within four
to six months from the effective date of the Registrant's 1933 Act registration
statement.
(b) Registrant undertakes that it will file a post-effective amendment
to this registration statement as frequently as necessary to ensure that the
audited financial statements in the registration statement are never more than
16 months old for so long as Premiums under the Policy may be accepted.
(c) Registrant undertakes that it will include either (i) a postcard
or similar written communication affixed to or included in the Prospectus that
the applicant can remove to send for a Statement of Additional Information or
(ii) a space in the Policy application that an applicant can check to request a
Statement of Additional Information.
(d) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request to PFL at the address or phone
number listed in the Prospectus.
(e) PFL Life Insurance Company hereby represents that the fees and
charges deducted under the policies, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by PFL Life Insurance Company.
<PAGE>
Section 403 (b) Representations
- -------------------------------
PFL represents that it is relying on a no-action letter dated November 28,
1988, to the American Council of Life Insurance (Ref. No. IP-6-88), regarding
Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, in
connection with redeemability restrictions on Section 403(b) Policies, and that
paragraphs numbered (1) through (4) of that letter will be complied with.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the PFL Endeavor Target Account has caused this Registration Statement to
be signed on its behalf in the City of Corona Del Mar and State of California on
this 26th day of August, 1998.
PFL ENDEAVOR TARGET ACCOUNT
By: ______________________________*
Vincent J. McGuinness, Jr.
President
PFL LIFE INSURANCE COMPANY
By: ______________________________*
William L. Busler
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the duties indicated.
SIGNATURE TITLE DATE
--------- ----- ----
_______________________* Manager _________________, 1998
Vincent J. McGuinness
_______________________* Manager _________________, 1998
Timothy A. Devine
_______________________* Manager _________________, 1998
Thomas J. Hawekotte
_______________________* Manager _________________, 1998
Steven L. Klosterman
_______________________* Manager _________________, 1998
Halbert D. Linquist
_______________________* Manager _________________, 1998
R. Daniel Olmstead, Jr.
_______________________* Chief Financial Officer _________________, 1998
Michael J. Roland and Treasurer
<PAGE>
___________________________* Manager ___________, 1998
Vincent J. McGuinness, Jr.
___________________________* Manager ___________, 1998
Keith H. Wood
___________________________* Manager ___________, 1998
William L. Busler
/s/ Robert Hickey Power of Attorney August 26 , 1998
- --------------------------- -----------
Robert Hickey
* By Robert Hickey, Attorney-In-Fact.
<PAGE>
REGISTRATION NO.
333-47027
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
EXHIBITS
TO
FORM N-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FOR
PFL ENDEAVOR TARGET ACCOUNT
_______________
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page No. *
- ---------- ---------------------- ----------
<S> <C> <C>
(2) Rules and Regulations of the Target Account.
(3)(a) Custodian Agreement between the Target Account and Boston Safe
Deposit and Trust Company.
(4)(a) Management Agreement between the Target Account and Endeavor
Investment Advisers
(4)(b)(1) Investment Advisory Agreement between Endeavor Investment Advisers
and First Trust Advisers L.P. (The Dow Target 5)
(4)(b)(2) Investment Advisory Agreement between Endeavor Investment Advisers
and First Trust Advisers L.P. (The Dow Target 10)
(5)(a)(2) Termination of Principal Underwriting Agreement by and between AEGON
USA Securities, Inc., formerly known as MidAmerica Management
Corporation, and PFL Life Insurance Company on its own behalf and on
the behalf of PFL Endeavor Variable Annuity Account.
(6)(m) Form of Policy Endorsement for the PFL Endeavor Variable Annuity and
the PFL Endeavor ML Variable Annuity (GMIB).
(7)(e) Form of Application for the PFL Endeavor Variable Annuity.
(7)(f) Form of Application for the PFL Endeavor ML Variable Annuity.
(11)(a) Distribution Plan
(11)(b) Administrative Services Agreement with First Data Investors Services
Group
(11)(c) Brokerage Enhancement Plan
(11)(e) Distribution Agreement
(13)(a) Opinion and Consent of Actuary.
</TABLE>
* Page numbers included only in manually executed original, in compliance
with Rule 403(d).
<PAGE>
EXHIBIT (2)
-----------
RULES AND REGULATIONS OF THE TARGET ACCOUNT
<PAGE>
RULES AND REGULATIONS
---------------------
OF
PFL ENDEAVOR TARGET ACCOUNT
---------------------------
February, 1998
These are the RULES AND REGULATIONS of PFL Endeavor Target Account, a
managed separate account established under the insurance laws of the State of
Iowa (the "Account"), pursuant to a Resolution by written consent of the Board
of Directors of the PFL Life Insurance Company (the "Resolution") made the 16th
day of September, 1997. These Rules and Regulations have been adopted by the
Board of Managers of the Account (the "Managers" or "Board") pursuant to the
authority granted by the Resolution.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I POLICY OWNERS AND POLICY OWNERS' MEETINGS.......................... 1
Section 1.1. Meetings....................................................... 1
Section 1.2. Presiding Officer, Secretary................................... 1
Section 1.3. Authority of Chairman of Meeting............................... 1
Section 1.4. Voting; Quorum................................................. 1
Section 1.5. Inspectors..................................................... 2
Section 1.6. Policy Owners' Action in Writing............................... 3
ARTICLE II MANAGERS AND MANAGERS' MEETINGS.................................... 3
Section 2.1. Number of Managers............................................. 3
Section 2.2. Resignation, Retirement and Removal............................ 3
Section 2.3. Regular Meetings of the Managers............................... 4
Section 2.4. Special Meetings of Managers................................... 4
Section 2.5. Notice of Meetings............................................. 4
Section 2.6. Quorum; Presiding Officer...................................... 5
Section 2.7. Participation by Telephone..................................... 5
Section 2.8. Location of Meetings........................................... 5
Section 2.9. Votes.......................................................... 5
Section 2.10. Rulings of Chairman........................................... 6
Section 2.11. Managers' Action in Writing................................... 6
Section 2.12. Resignations.................................................. 6
ARTICLE III OFFICERS.......................................................... 6
Section 3.1. Officers of the Account........................................ 6
Section 3.2. Time and Terms of Election..................................... 6
Section 3.3. Resignation and Removal........................................ 7
Section 3.4. Fidelity Bond.................................................. 7
Section 3.5. Chairman of the Board.......................................... 7
Section 3.6. President...................................................... 8
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
Section 3.7. Vice-Presidents................................................ 8
Section 3.8. Chief Financial Officer (Treasurer) and Assistant Treasurers... 8
Section 3.9. Controller and Assistant Controllers........................... 9
Section 3.10. Secretary and Assistant Secretaries........................... 10
Section 3.11. Substitutions................................................. 10
Section 3.12. Execution of Deeds, etc....................................... 10
Section 3.13. Power to Vote Securities...................................... 10
ARTICLE IV COMMITTEES......................................................... 11
Section 4.1. Power of Managers to Designate Committees...................... 11
Section 4.2. Rules for Conduct of Committee Affairs......................... 12
Section 4.3. Managers May Alter, Abolish, etc., Committees.................. 12
Section 4.4. Minutes; Review by Managers.................................... 12
ARTICLE V UNIT VALUE.......................................................... 12
ARTICLE VI INDEMNIFICATION.................................................... 13
Section 6.01. Persons Indemnified........................................... 13
Section 6.02. Disabling Conduct............................................. 13
Section 6.03. Determination................................................. 13
Section 6.04. Expenses Prior to Determination............................... 14
Section 6.05. Provisions Not Exclusive...................................... 15
Section 6.06. General....................................................... 15
ARTICLE VII AMENDMENTS........................................................ 15
Section 7.1. Rules and Regulations Subject to Amendment..................... 15
Section 7.2. Notice of Proposal to Amend Rules and Regulations Required..... 16
</TABLE>
2
<PAGE>
ARTICLE I
POLICY OWNERS AND POLICY OWNERS' MEETINGS
-----------------------------------------
Section 1.1. Meetings. Meetings of the policy owners of the Account
----------------------
(the "Policy Owners") or any class or subaccounts thereof shall be held whenever
called by the Managers and whenever a vote of Policy Owners or any class or
subaccounts thereof is required by the provisions of the Investment Company Act
of 1940, as amended (the "1940 Act"). Written notice of any meeting of Policy
Owners or any class or subaccounts thereof shall be given or caused to be given
by the Managers by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Policy Owner entitled to vote at such meeting at the Policy Owner's address as
it appears on the records of the Account.
Section 1.2. Presiding Officer, Secretary. The Chairman of the Board, or in
------------------------------------------
his absence or if there is no Chairman of the Board, the President shall preside
at each Policy Owners' meeting as chairman of the meeting, or in the absence of
the Chairman of the Board and President, the Managers present at the meeting
shall elect one of their number as chairman of the meeting. Unless otherwise
provided for by the Managers, the Secretary of the Account shall be the
secretary of all meetings of Policy Owners and shall record the minutes thereof.
Section 1.3. Authority of Chairman of Meeting. At any Policy Owners'
----------------------------------------------
meeting the chairman of the meeting shall be empowered to determine the
construction or interpretation of the Resolution or these Rules and Regulations,
or any part thereof or hereof, and his ruling shall be final.
Section 1.4. Voting; Quorum. At each meeting of Policy Owners or any class
----------------------------
or subaccounts thereof, every Policy Owner entitled to vote shall be entitled to
a number of votes calculated separately for each subaccount of the Account
("Subaccount"). Prior to the
1
<PAGE>
commencement of variable annuity payments, the number of votes with respect to a
Policy will equal the number of accumulation units credited to the Policy.
After variable annuity payments have commenced, the number of votes with respect
to a Policy will equal the amount of the assets in the Account established to
meet the variable obligations related to the Policy, divided by the value of an
accumulation unit. Policy Owners may vote by proxy and the form of any such
proxy may be prescribed from time to time by the Managers. A quorum shall exist
if the holders of one-third of the outstanding votes without regard to
Subaccounts are present in person or by proxy, but any lesser number shall be
sufficient for adjournments. Matters upon which Policy Owners may vote include
(i) the approval or termination of any contract as to which Policy Owner action
is required by the 1940 Act; (ii) any change in the fundamental investment
policies of a Subaccount; and (iii) any additional matters as may be required by
the 1940 Act, these Rules and Regulations, any registration with the Securities
and Exchange Commission (or any successor agency) or any state, or as the
Managers may consider necessary or desirable. At all meetings of the Policy
Owners, votes of Policy Owners need not be taken by ballot unless otherwise
provided for by vote of the Managers, or as required by the 1940 Act, but the
chairman of the meeting may in his discretion authorize any matter to be voted
upon by ballot.
Section 1.5. Inspectors. At any meeting of Policy Owners, the chairman of
------------------------
the meeting may appoint one or more inspectors of election or balloting to
supervise the voting at such meeting or any adjournment thereof. If inspectors
are not so appointed, the chairman of the meeting may, and on the request of any
Policy Owner present or represented and entitled to vote shall, appoint one or
more inspectors for such purpose. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector of election or balloting, as the case may be, at such
meeting with strict impartiality and according to the best of his ability. If
appointed, inspectors shall take charge of the polls and, when the vote
2
<PAGE>
is competed, shall make a certificate of the result of the vote taken and of
such other facts as may be required by law.
Section 1.6. Policy Owners' Action in Writing. Nothing in this Article I
----------------------------------------------
shall limit the power of the Policy Owners to take any action without a meeting
by means of written instruments. Any action taken by Policy Owners may be taken
without a meeting if a majority of Policy Owners entitled to vote on the matter
(or such larger proportion thereof as shall be required by law or any express
provision of these Rules and Regulations) consent to the action in writing and
such written consents are filed with the records of the meetings of Policy
Owners. Such consent shall be treated for all purposes as a vote taken at a
meeting of Policy Owners.
ARTICLE II
MANAGERS AND MANAGERS' MEETINGS
-------------------------------
Section 2.1. Number of Managers. There shall initially be one or more
--------------------------------
Manager(s) appointed by PFL Life Insurance Company, and the number of Managers
shall thereafter be such number as from time to time shall be fixed by a vote
adopted by a majority of the Managers. A majority of the Managers may increase
or decrease the number of Managers to a number other than the number theretofore
determined. No decease in the number of Managers shall have the effect of
removing any Manager from office prior to the expiration of his term, but the
number of Managers may be decreased in conjunction with the removal of a Manager
pursuant to Section 2.2 of this Article II.
Section 2.2. Resignation, Retirement and Removal. Any Manager may resign
-------------------------------------------------
his position or retire as a Manager, by a written instrument signed by him and
delivered to the other Managers or to any officer of the Account, and such
resignation or retirement shall take effect
3
<PAGE>
upon such delivery or upon such later date as is specified in such instrument.
Any Manager may be removed with or without cause at any time by written
instrument signed by at least two-thirds of the Managers in office immediately
prior to such removal, specifying the date upon which such removal shall become
effective.
Section 2.3. Regular Meetings of the Managers. Regular meetings of the
----------------------------------------------
Managers may be held without call or notice at such places and at such times as
the Managers may from time to time determine; provided, that notice of such
determination, and of the time, place and purposes of the first regular meeting
thereafter, shall be given to each absent Manager in accordance with Section 2.5
hereof.
Section 2.4. Special Meetings of Managers. Special meetings of the
------------------------------------------
Managers may be held at any time and at any place when called by the Chairman of
the Board, if any is elected, the President or the Chief Financial Officer or by
two or more Managers, or if there shall be fewer than three Managers, by any
Manager; provided, that notice of the time, place and purposes thereof is given
to each Manager in accordance with Section 2.5 hereof by the Secretary or an
Assistant Secretary or by the officer or the Manager(s) calling the meeting.
Section 2.5. Notice of Meetings. Notice of any regular or special meeting
--------------------------------
of the Managers shall be sufficient if given in writing to each Manager, and if
sent by mail at least five days, or by telegram or facsimile or e-mail at least
twenty-four hours, before the meeting, addressed to his usual or last known
business or residence address, or if delivered to him in person at least twenty-
four hours before the meeting. Notice of a special meeting need not be given to
any Manager who was present at an earlier meeting, not more than thirty-one days
prior to the subsequent meeting, at which the subsequent meeting was called.
Notice of a meeting
4
<PAGE>
may be waived by any Manager by written waiver of notice, executed by him before
or after the meeting, and such waiver shall be filed with the records of the
meeting. Attendance by a Manager at a meeting shall constitute a waiver of
notice, except where a Manager attends a meeting for the purpose of protesting
prior thereto or at its commencement the lack of notice.
Section 2.6. Quorum; Presiding Officer. At any meeting of the Managers, a
---------------------------------------
Majority of the Managers shall constitute a quorum. Any meeting may be
adjourned from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present, and the meeting may be held as adjourned
without further notice. Unless the Managers shall otherwise elect, generally or
in a particular case, the Chairman of the Board shall preside at each meeting of
the Managers as chairman of the meeting. In the absence of the Chairman of the
Board, or if there is no Chairman of the Board, the Managers present at the
meeting shall elect one of their number as chairman of the meeting.
Section 2.7. Participation by Telephone. One or more of the Managers may
----------------------------------------
participate in a meeting thereof or of any committee of the Managers by means of
a telephone conference call or other communications facility by means of which
all individuals participating in the meeting can hear each other at the same
time and participation by such means shall (except to the extent required
otherwise by the 1940 Act) constitute presence in person at such meeting.
Section 2.8. Location of Meetings. Managers' Meetings may be held at any
----------------------------------
place, within or without Iowa.
Section 2.9. Votes. Voting at Managers' meetings may be conducted orally,
-------------------
by show of hands, or, if requested by any Manager, by written ballot. The
results of all voting shall be recorded by the Secretary in the minute book.
5
<PAGE>
Section 2.10. Rulings of Chairman. All other rules of conduct adopted and
----------------------------------
used at any Managers' meeting shall be determined by the chairman of such
meeting, whose ruling on all procedural matters shall be final.
Section 2.11. Managers' Action in Writing. Nothing in this Article II
------------------------------------------
shall limit the power of the Managers to take action by means of a written
instrument without a meeting.
Section 2.12. Resignations. Any Manager may resign at any time by written
---------------------------
instrument signed by him and delivered to the Chairman of the Board or the
Secretary or to a meeting of the Managers. Such resignation shall be effective
upon receipt unless specified to be effective at some other time.
ARTICLE III
OFFICERS
--------
Section 3.1. Officers of the Account. The officers of the Account shall
-------------------------------------
consist of a President, a Chief Financial Officer (Treasurer) and a Secretary,
and may include one or more Vice Presidents, Assistant Treasurers and Assistant
Secretaries, and such other officers as the Managers may designate. If the
Managers shall elect a Chairman of the Board pursuant to Section 3.5, then the
Chairman of the Board shall also be an officer of the Account. The Chairman of
the Board, if there is one, shall be elected from among the Managers, but no
other officer need be a Manager. Any two or more officers, except those of
President and Vice-President, may be held by the same person.
Section 3.2. Time and Terms of Election. The President, the Chief
----------------------------------------
Financial Officer (Treasurer), and the Secretary shall be elected by the
Managers at their first meeting and
6
<PAGE>
thereafter at the annual meeting of the Managers. Such officers shall hold
office until the next annual meeting of the Managers and until their successors
shall have been duly elected and qualified, and may be removed at any meeting by
the affirmative vote of a Majority of the Managers. All other officers of the
Account may be elected or appointed at any meeting of the Managers. Such other
officers shall hold office for any term, or indefinitely, as determined by the
Managers, and shall be subject to removal, with or without cause, at any time by
the Managers.
Section 3.3. Resignation and Removal. Any officer may resign at any time
-------------------------------------
by giving written notice to the Managers. 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. If
the office of any officer or agent becomes vacant by reason of death,
resignation, retirement, disqualification, removal from office or otherwise, the
Managers may choose a successor, who shall hold office for the unexpired term in
respect of which such vacancy occurred. Except to the extent expressly provided
in a written agreement with the Account, no officer resigning or removed shall
have any right to any compensation for any period following such resignation or
removal, or any right to damages on account of such removal.
Section 3.4. Fidelity Bond. The Managers may, in their discretion, direct
---------------------------
any officer appointed by them to furnish at the expense of the Account a
fidelity bond approved by the Managers, in such amount as the Managers may
prescribe.
Section 3.5. Chairman of the Board. When and if the Managers shall deem
-----------------------------------
such action to be necessary or appropriate, they may elect a Chairman of the
Board from among the Managers. The Chairman of the Board ("Chairman") shall, if
present, preside at all meetings of the Managers and of the Policy Owners, and
he shall have such other powers and duties as may
7
<PAGE>
be prescribed by the Managers. He may use any one or more of the following
titles: Chairman of the Board or Chairman.
Section 3.6. President. The President of the Account shall have general
-----------------------
and active management of the business of the Account, shall see to it that all
orders, policies and resolutions of the Managers are carried into effect, and,
in connection therewith, shall be authorized to delegate to any Vice-President
of the Account such of his powers and duties as President and at such times and
in such manner as he shall deem advisable. In the absence or disability of the
Chairman, or if there is no Chairman, the President shall preside at all
meetings of the Policy Owners and, if he is a Manager, of the Managers; and he
shall have such other powers and perform such other duties as are incident to
the office of a chief executive officer and as the Managers may from time to
time prescribe.
Section 3.7. Vice-Presidents. The Vice-President, if any, or, if there is
-----------------------------
more than one, then the Vice-Presidents of the Account, shall assist the
President in the management of the business of the Account and the
implementation of orders, policies and resolutions of the Managers at such times
and in such manner as the President may deem to be advisable. If there is more
than one Vice-President, the Managers may designate one as the Executive Vice-
President, in which case he shall be first in order of seniority, and the
Managers may also grant to other Vice-Presidents such titles as shall be
descriptive of their respective functions or indicative of their relative
seniority. In the absence or disability of both the President and the Chairman,
or in the absence or disability of the President if there is no Chairman, the
Vice-President, or, if there is more than one, the Vice-Presidents in the order
of their relative seniority, shall exercise the powers and perform the duties of
those officers; and the Vice-President or Vice-Presidents shall have such other
powers and perform such other duties is as from time to time may be prescribed
by the President or by the Managers.
8
<PAGE>
Section 3.8. Chief Financial Officer (Treasurer) and Assistant Treasurers.
--------------------------------------------------------------------------
The Chief Financial Officer (Treasurer) shall keep full and accurate accounts of
receipts and disbursements in books of the Account, and shall have such other
duties and powers as may be prescribed from time to time by the Managers, and
shall render to the Managers, whenever they may require it, an account of all
his transactions as Chief Financial Officer (Treasurer) and of the financial
condition of the Account. If no Controller is elected, the Chief Financial
Officer (Treasurer) shall also have the duties and powers of the Controller, as
provided in these Rules and Regulations. Any Assistant Treasurer shall have such
duties and powers as shall be prescribed from time to time by the Managers or
the Chief Financial Officer (Treasurer), and shall be responsible to and shall
report to the Chief Financial Officer (Treasurer). In the absence or disability
of the Chief Financial Officer (Treasurer), the Assistant Treasurer or, if there
shall be more than one, the Assistant Treasurers in the order of their seniority
or as otherwise designated by the Managers, shall have the powers and duties of
the Chief Financial Officer (Treasurer).
Section 3.9. Controller and Assistant Controllers. If a Controller is
--------------------------------------------------
elected, he shall be the chief accounting officer of the Account, and shall be
in charge of its books of account and accounting records and of its accounting
procedures, and shall have such duties and powers as are commonly incident to
the office of a controller and such other duties and powers as may be prescribed
from time to time by the Managers. The Controller shall be responsible to and
shall report to the Managers, but in the ordinary conduct of the Account's
business, shall be under the supervision of the Chief Financial Officer
(Treasurer). Any Assistant Controller shall have such duties and powers as shall
be prescribed from time to time by the Managers or the Controller, and shall be
responsible and shall report to the Controller. In the absence or disability of
the Controller, the Assistant Controller or, if there shall be more than one,
the Assistant Controllers
9
<PAGE>
in the order of their seniority or as otherwise designated by the Managers,
shall have the powers and duties of the Controller.
Section 3.10. Secretary and Assistant Secretaries. The Secretary shall,
-------------------------------------------------
if and to the extent requested by the Managers, attend all meetings of the
Managers, any committee of the Managers and/or the Policy Owners and record all
votes and the minutes of proceedings in a book to be kept for that purpose, and
shall give or cause to be given notice of all meetings of the Managers, any
committee of the Managers and/or the Policy Owners, and shall perform such other
duties as may be prescribed by the Managers. The Secretary shall be the
custodian of the books, records and papers of the Account (other than financial)
and shall see that all books, reports, statements, certificates and other
documents and records required by law are properly kept and filed. In the
absence or disability of the Secretary, the Assistant Secretary or, if there
shall be more than one, the Assistant Secretaries in the order of their
seniority or as otherwise designated by the Managers, shall have the powers and
duties of the Secretary.
Section 3.11. Substitutions. In case of the absence or disability of any
---------------------------
officer of the Account, or for any other reason that the Managers may deem
sufficient, the Managers may delegate, for the time being, the powers or duties,
or any of them, of such officer to any other officer, or to any Manager.
Section 3.12. Execution of Deeds, etc. Except as the Managers may
-------------------------------------
generally or in particular cases otherwise authorize or direct, all deeds,
leases, transfers, contracts, proposals, bonds, notes, checks, drafts and other
obligations made, accepted or endorsed by the Account shall be signed or
endorsed on behalf of the Account by the President, a Vice-President or the
Chief Financial Officer (Treasurer).
10
<PAGE>
Section 3.13. Power to Vote Securities. Unless otherwise ordered by the
--------------------------------------
Managers, the Chief Financial Officer (Treasurer) shall have full power and
authority on behalf of the Account to give proxies for, and/or to attend and to
act and to vote at, any meeting of stockholders of any corporation in which the
Account may hold stock, and at any such meeting the Chief Financial Officer
(Treasurer) or his proxy shall possess and may exercise any and all rights and
powers incident to the ownership of such stock which, as the owner thereof, the
Account might have possessed and exercised if present. The Managers, by
resolution from time to time, or, in the absence thereof, the Treasurer, may
confer like powers upon any other person or persons as attorneys and proxies of
the Account.
Section 3.14. Limitation of Powers. The Managers and Officers shall
----------------------------------
exercise their powers and authorities (a) in cooperation with the officers of
PFL Life Insurance Company and subject to the rights, powers, and obligations of
PFL Life Insurance Company, and (b) without limiting the generality of the
foregoing, recognizing that the assets of the Account are the property of PFL
Life Insurance Company and that the Policy Owners are owners of policies issued
by PFL Life Insurance Company.
ARTICLE IV
COMMITTEES
----------
Section 4.1. Power of Managers to Designate Committees. The Managers, by
-------------------------------------------------------
vote of a Majority of the Managers, may elect from their number an executive
committee and any other committees and may delegate thereto some or all of their
powers except those which by law or by these Rules and Regulations may not be
delegated; provided, that no committee shall be empowered to elect the Chairman
of the Board, the President, the Chief Financial Officer (Treasurer) or the
Secretary, to amend the Rules and Regulations, to exercise the powers of the
11
<PAGE>
Managers under this Section 4.1 or under Section 4.3 hereof, or to perform any
act for which the action of a Majority of the Managers is required by law or by
these Rules and Regulations. The members of any such committee shall serve at
the pleasure of the Managers.
Section 4.2. Rules for Conduct of Committee Affairs. Except as otherwise
----------------------------------------------------
provided by the Managers, each committee elected or appointed pursuant to this
Article IV may adopt such standing rules and regulations for the conduct of its
affairs as it may deem desirable, subject to review and approval of such rules
and regulations by the Managers at the next succeeding meeting of the Managers,
but in the absence of any such action or any contrary provisions by the
Managers, the business of each committee shall be conducted, so far as
practicable, in the same manner as provided herein for the Managers.
Section 4.3. Managers May Alter, Abolish, etc., Committees. The Managers
-----------------------------------------------------------
may at any time alter or abolish any committee, change the membership of any
committee, or revoke, rescind or modify any action of any committee or the
authority of any committee with respect to any matter or class of matters;
provided, that no such action shall impair the rights of any third parties.
Section 4.4. Minutes; Review by Managers. Any committee to which the
-----------------------------------------
Managers delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Managers.
ARTICLE V
UNIT VALUE
----------
Unit value of each Subaccount shall mean the quotient obtained by dividing
the value of all the assets belonging to such Subaccount, less all liabilities
of such Subaccount, by the number
12
<PAGE>
of units of that Subaccount outstanding, in each case at the time of each
determination. Expenses and liabilities may include such reserves for taxes,
estimated accrued expenses and contingencies as the Managers or their designates
may in their sole discretion deem fair and reasonable under the circumstances.
ARTICLE VI
INDEMNIFICATION
---------------
Section 6.01. Persons Indemnified. The Account shall indemnify each of the
---------------------------------
members of its Board of Managers and officers against all liabilities and
expenses, including but not limited to counsel fees, amounts paid in
satisfaction of judgments, as fines or penalties, or in compromise or
settlement, reasonably incurred in connection with the defense or disposition of
any threatened, pending, or completed claim, action, suit, or other proceeding,
whether civil, criminal, administrative, or investigative, whether before any
court or administrative or legislative body, to which such person may be or may
have been subject, while in office or thereafter, by reason of being or having
been such a member or officer; provided that such person acted, or failed to
act, in good faith and in the reasonable belief that such action was in the best
interests of the Account, and, with respect to any criminal action or
proceeding, such person had no reasonable cause to believe the conduct was
unlawful; and except that no such person shall be indemnified for any
liabilities or expenses arising by reason of disabling conduct, whether or not
there is an adjudication of liability.
Section 6.02. Disabling Conduct. "Disabling conduct" means willful
-------------------------------
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of office.
13
<PAGE>
Section 6.03. Determination. Whether any such liability or expense arose
---------------------------
out of disabling conduct shall be determined: (a) by a final decision on the
merits (including, but not limited to, a dismissal for insufficient evidence of
any disabling conduct) by a court or other body, before whom the proceeding was
brought that the person to be indemnified was not liable by reason of disabling
conduct; or (b) in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that such person was not liable by reason of
disabling conduct, (i) by the vote of a majority of a quorum of Managers who are
neither interested persons of the Account nor parties to the action, suit, or
proceeding in question or another action, suit, or proceeding on the same or
similar grounds ("disinterested, non-party managers"); or (ii) by independent
legal counsel in a written opinion if such quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested managers of the Account so directs; or
(iii) by majority vote of the Policy Owners; or (iv) by any other reasonable and
fair means not inconsistent with any of the above.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
----------------
shall not, of itself, create a presumption that any liability or expense arose
by reason of disabling conduct, or that such person did not act in good faith
and in the reasonable belief that such action was in the best interests of the
Account, or, with respect to any criminal action or proceeding, that such person
had reasonable cause to believe that the conduct was unlawful.
Section 6.04. Expenses Prior to Determination. Any liabilities or expenses
----------------------------------------------
of the type described in Section 6.01 may be paid by the Account in advance of
the final disposition of the claim, action, suit or proceeding, as authorized by
the Board of Managers in the specific case, (a) upon receipt of an undertaking
by or on behalf of the member or officer to repay the advance unless it shall be
ultimately determined that such person is entitled to indemnification, and (b),
provided that (i) the indemnitee shall provide security for that undertaking, or
(ii) the account
14
<PAGE>
shall be insured against losses arising by reason of any lawful advances, or
(iii) a majority of a quorum of disinterested, non-party managers of the
Account, or an independent legal counsel in a written opinion, shall determine,
based on a review of readily available facts (as opposed to a full trial type
inquiry), that there is reason to believe that the indemnitee ultimately will be
found entitled to indemnification.
A determination pursuant to subparagraph (b)(iii) of this section shall not
prevent the recovery from any member of the Board or officer of any amount
advanced to such person as indemnification if such member of the Board or
officer is subsequently determined not to be entitled to indemnification; nor
shall a determination pursuant to said subparagraph prevent the payment of
indemnification if such member of the Board or officer is subsequently found to
be entitled to indemnification.
Section 6.05. Provisions Not Exclusive. The indemnification provided by
--------------------------------------
this Article shall not be deemed exclusive of any rights to which those seeking
indemnification may be entitled under any law, agreement, vote of Policy Owners
or otherwise.
Section 6.06. General. No indemnification provided by this Article shall
---------------------
be inconsistent with the Investment Company Act of 1940 or the Securities Act of
1933.
Any indemnification provided by this Article shall continue as to a person
who has ceased to be a member of the Board of Managers or an officer of the
Account and shall inure to the benefit of the heirs, executors and
administrators of such person.
15
<PAGE>
ARTICLE VII
AMENDMENTS
----------
Section 7.1. Rules and Regulations Subject to Amendment. These Rules and
--------------------------------------------------------
Regulations may be altered, amended or repealed, in whole or in part, at any
time by vote of the Majority of the Managers, except with respect to any
provision hereof which by law or these Rules and Regulations requires action by
the Policy Owners.
Section 7.2. Notice of Proposal to Amend Rules and Regulations Required.
------------------------------------------------------------------------
No proposal to amend or repeal these Rules and Regulations or to adopt new Rules
and Regulations shall be acted upon at a meeting unless either (i) such proposal
is stated in the notice or in the waiver of notice, as the case may be, of the
meeting of the Managers at which such action is taken, or (ii) all of the
Managers, as the case may be, are present at such meeting and all agree to
consider such proposal without protesting the lack of notice.
The foregoing Rules and Regulations were adopted by the Managers on
February 23, 1998.
______________________________________
Secretary
16
<PAGE>
EXHIBIT (3)(a)
--------------
CUSTODIAN AGREEMENT BETWEEN
THE TARGET ACCOUNT AND
BOSTON SAFE DEPOSIT AND TRUST COMPANY
<PAGE>
CUSTODY AGREEMENT
THIS CUSTODY AGREEMENT made as of July 1, 1998 ("Agreement") by and between
PFL Endeavor Target Account, a separate managed account organized under the laws
of the state of Iowa ("Client") and Boston Safe Deposit and Trust Company, a
Massachusetts trust company ("Custodian").
WITNESSETH:
WHEREAS, the Client and the Custodian desire to establish a custody account
to provide for the safekeeping and recordkeeping of certain property of the
Client;
NOW, THEREFORE, the Client and the Custodian, each intending to be legally
bound, agree as follows:
1. ESTABLISHMENT OF/ADDITIONS TO ACCOUNT
-------------------------------------
The Client hereby appoints Boston Safe Deposit and Trust Company as
Custodian for any property acceptable to the Custodian which the Client may
deposit to the Custodian's care ("Account"). The Custodian shall have no
responsibility for any property until it in fact is received by the Custodian or
its agents or subcustodians. "Property" as used herein shall not include any
direct interest in real property, leaseholds or mineral interests.
2. DISTRIBUTIONS
-------------
The Custodian shall make distributions or transfers out of the Account
pursuant to Authorized Instructions, as defined below. In making payments to
service providers pursuant to Authorized Instructions, the Client acknowledges
that the Custodian is acting as a paying agent, and not as the payor, for tax
information reporting and withholding purposes.
3. AUTHORIZED PARTIES
------------------
The Client shall furnish the Custodian with a written list of the names and
signatures of all persons authorized to direct the Custodian on behalf of the
Client under the terms of this Agreement. In addition, the Client may appoint
and remove one or more investment managers ("Investment Manager") for such
portion of the Account as the Client shall designate to the Custodian in
writing. The Investment Manager shall furnish the Custodian with a written list
of the names and signatures of the person or persons who are authorized to
represent the Investment Manager in dealings with the Custodian. The
<PAGE>
Custodian shall be entitled to deal with any person or entity so identified by
the Client or Investment Manager ("Authorized Party or Authorized Parties")
until notified otherwise in writing. The Custodian shall be under no duty to
question any direction of an Authorized Party with respect to the portion of the
Account over which such Authorized Party has authority, to review any Property
held in the Account, to make any suggestions with respect to the investment and
reinvestment of the assets in the Account, or to evaluate or question the
performance of any Authorized Party. The Custodian shall not be responsible or
liable for any diminution of value of any securities or other property held by
the Custodian (or its subcustodians).
4. AUTHORIZED INSTRUCTIONS
-----------------------
All directions and instructions to the Custodian from an Authorized Party
shall be in writing, by facsimile transmission, electronic transmission, or any
other method specifically agreed to in writing by the Client and the Custodian,
provided the Custodian may, in its discretion, accept oral directions and
instructions and may require confirmation in writing. The Custodian shall be
fully protected in acting in accordance with all such directions and
instructions ("Authorized Instructions") which it reasonably believes to have
been given by an Authorized Party or in failing to act in the absence thereof.
5. DIRECTED POWERS OF CUSTODIAN
----------------------------
The Custodian shall have and exercise the following powers and authority in
the administration of the Account upon the direction of an Authorized Party:
a. Settle purchases and sales and engage in other transactions, including
free receipts and deliveries, exchanges and other voluntary corporate actions,
with respect to securities or other property received by the Custodian;
b. Execute proxies for any stocks, bonds or other securities held in the
Account;
c. Lend the assets of the Account in accordance with the terms and
conditions of a separate securities lending agreement; and
d. Take any and all actions necessary to settle transactions in futures
and/or options contracts, short-selling programs, foreign exchange or foreign
exchange contracts, swaps and other derivative investments.
Settlements of transactions may be effected in trading and processing
practices customary in the jurisdiction or market where the transaction occurs.
The Client acknowledges that this may, in certain circumstances, require the
delivery of cash or securities (or other property) without the concurrent
receipt of securities (or other property) or cash and, in such circumstances,
the Client shall have responsibility for
2
<PAGE>
nondelivery of securities or other property (or late delivery) or nonreceipt of
payment (or late payment) by the counterparty.
6. DISCRETIONARY POWERS OF CUSTODIAN
---------------------------------
The Custodian shall have and exercise the following powers and authority in
the administration of the Account:
a. Appoint sub-custodians (including a corporate affiliate of the
Custodian), domestic or foreign, as to part or all of the Account;
b. Hold property in nominee name, in bearer form or in book entry form, in
a clearinghouse corporation or in a depository, so long as the Custodian's
records clearly indicate that the assets held are a part of the Account;
c. Commence or defend suits or legal proceedings and represent the Account
in all suits or legal proceedings in any court or before any other body or
tribunal as the Custodian shall deem necessary to protect the Account;
d. Employ suitable agents and legal counsel, who may be counsel for the
Client, and, as a part of its reimbursable expenses under this Agreement, pay
their reasonable compensation and expenses. The Custodian shall be entitled to
rely on and may act upon advice of counsel on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice;
e. Take all action necessary to pay for authorized transactions, including
exercising the power to borrow or raise monies from the Custodian in its
corporate capacity or an affiliate of the Custodian and shall hold any property
in the Account as security for advances made to the Account for any such
authorized transactions, including disbursements or expenses, or the purchase or
sale of foreign exchange, or of contracts for foreign exchange. The Custodian
shall be entitled to collect from the Account sufficient cash for reimbursement,
and if such cash is insufficient, dispose of the assets of the Account to the
extent necessary to obtain reimbursement;
f. Make, execute and deliver any and all documents, agreements or other
instruments in writing as is necessary or desirable for the accomplishment of
any of the powers in this Agreement; and
g. Generally take all action, whether or not expressly authorized, which
the Custodian may deem necessary or desirable for the fulfillment of its duties
hereunder.
The powers described in this Section 6 may be exercised by the Custodian
with or without Authorized Instructions, but where the Custodian acts on
Authorized Instructions, the Custodian shall be fully protected as described in
Section 4. Without limiting the
3
<PAGE>
generality of the foregoing, the Custodian shall not be liable for the acts or
omissions of any subcustodian appointed under paragraph (a) of this Section 6
pursuant to Authorized Instructions including, but not limited to, any broker-
dealer or other entity designated by the Client or Investment Manager to hold
any property of the Account as collateral or otherwise pursuant to investment
strategy.
7. DUTIES OF CUSTODIAN
-------------------
The Custodian shall perform or cause its agents or subcustodians to perform
the following duties with respect to the Account:
a. Hold the property in safekeeping facilities of the Custodian or of
other custodian banks or clearing corporations, in the United States or
elsewhere; provided that the Custodian shall not be responsible for any losses
resulting from the deposit or maintenance of securities or other property (in
accordance with market practice, custom, or regulation) with any recognized
foreign or domestic clearing facility, book-entry system, centralized custodial
depository, or similar organization;
b. Collect all income payable to and all distributions due to the Account
and sign on the Account's behalf all declarations, affidavits, and certificates
of ownership required to collect income and principal payments; provided that
the Custodian shall not be responsible for the failure to receive payment of (or
late payment of) distributions with respect to securities or other property held
in the Account;
c. Subject to the timely receipt of notice from an issuer or Authorized
Party, collect all proceeds from securities, certificates of deposit or other
investments which may mature or be called;
d. Submit or cause to be submitted to the Client or the Investment
Manager, as designated by the Client, information actually received by the
Custodian regarding ownership rights pertaining to property held in the Account;
e. Attend to involuntary corporate actions;
f. Determine the fair market value of the Account as of such dates as the
Client and the Custodian may agree upon, in accordance with methods consistently
followed and uniformly applied. In determining fair market value of the
Account, the Custodian shall be protected in relying on values recommended by an
Authorized Party; and
g. Render periodic statements for property held hereunder.
4
<PAGE>
8. CONTRACTUAL INCOME AND SETTLEMENT
---------------------------------
a. Contractual Income. The Custodian shall credit the Account with income
------------------
and maturity proceeds on securities on contractual payment date net of any taxes
or upon actual receipt as agreed between the Custodian and the Client. To the
extent the Client and the Custodian have agreed to credit income on contractual
payment date, the Custodian may reverse such accounting entries with back value
to the contractual payment date if the Custodian reasonably believes that it
will not receive such amount.
b. Contractual Settlement. The Custodian will attend to the settlement of
----------------------
securities transactions on the basis of either contractual settlement date
accounting or actual settlement date accounting as agreed between the Client and
the Custodian. To the extent the Client and the Custodian have agreed to settle
certain securities transactions on the basis of contractual settlement date
accounting, the Custodian may reverse with back value to the contractual
settlement date any entry relating to such contractual settlement where the
related transaction remains unsettled in accordance with established procedures.
9. TAX LAW.
-------
a. The Custodian shall use reasonable efforts to assist the Authorized
Party, to the extent the Authorized Party has provided necessary information,
with respect to any tax obligations, including responsibility for taxes,
withholding, certification and reporting requirements, claims for exemptions or
refund, interest, penalties and other expenses ("Tax Obligations"). The Client
shall cause the Authorized Party to notify the Custodian in writing of any such
Tax Obligations. The Custodian shall have no responsibility or liability for
any Tax Obligations now or hereafter imposed on the Client or the Account by any
taxing authorities, domestic or foreign.
b. To the extent the Custodian is responsible under any applicable law for
any Tax Obligation, the Client shall cause the Authorized Party to inform the
Custodian of all Tax Obligations, shall direct the Custodian with respect to the
performance of such Tax Obligations and shall provide the Custodian with the
necessary funds and all information required by the Custodian to meet such Tax
Obligations.
10. NON-ACCOUNT ASSETS
------------------
The Client may request the Custodian to perform a recordkeeping function
with respect to property held by others and not otherwise subject to the terms
of this Agreement. To the extent the Custodian shall agree to perform this
service, its sole responsibility shall be to accurately reflect information on
its books which it has received from an Authorized Party.
5
<PAGE>
11. REPORTING AND RECORDKEEPING
---------------------------
If, within ninety (90) days after the Custodian mails to the Client a
statement with respect to the Account, the Client has not given the Custodian
written notice of any exception or objection thereto, the statement shall be
deemed to have been approved, and in such case, the Custodian shall not be
liable for any matters in such statements. The Client shall have the right, at
its own expense and with prior written notice to the Custodian, to inspect the
Custodian's books and records directly relating to the Account during normal
business hours or to designate an accountant to make such inspection.
12. STANDARD OF CARE
----------------
In performing its duties under this Agreement, the Custodian shall exercise
the same care and diligence that it would devote to its own property in like
circumstances. The duties of the Custodian shall only be those specifically
undertaken pursuant to this Agreement. The Custodian shall not be responsible
or liable for any losses or damages suffered by the Client arising as a result
of the insolvency of any subcustodian, except to the extent the Custodian was
negligent in its selection or continued retention of such subcustodian.
The Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, direction, instruction, consent, certification or
other instrument believed by it to be genuine and delivered by an Authorized
Party. The Custodian shall not be liable for any act or omission of any other
person in carrying out any responsibility imposed upon such person and under no
circumstances shall the Custodian be liable for any indirect, consequential or
special damages with respect to the role as Custodian.
13. FORCE MAJEURE
-------------
Notwithstanding anything in this Agreement to the contrary contained
herein, the Custodian shall not be responsible or liable for its failure to
perform under this Agreement or for any losses to the Account resulting from any
event beyond the reasonable control of the Custodian, its agents or
subcustodians, including but not limited to nationalization, strikes,
expropriation, devaluation, seizure, or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, levies or other charges affecting the Account's property; or
the breakdown, failure or malfunction of any utilities or telecommunications
systems; or any order or regulation of any banking or securities industry
including changes in market rules and market conditions affecting the execution
or settlement of transactions; or acts of war, terrorism, insurrection or
revolution; or acts of God; or any other similar or third-party event. This
Section shall survive the termination of this Agreement.
6
<PAGE>
14. COMPENSATION AND EXPENSES
-------------------------
The Custodian shall be entitled to compensation for services under this
Agreement as mutually agreed. The Client acknowledges that, as part of the
Custodian's compensation, the Custodian may earn interest on balances, including
disbursement balances and balances arising from purchase and sale transactions.
The Custodian shall also be entitled to reimbursement for reasonable expenses
incurred by it in the discharge of its duties under this Agreement. The
Custodian is authorized to charge and collect from the Account any and all fees
and expenses earned unless such fees and expenses are paid directly by the
Client. To the extent the Custodian advances funds to the Account for
disbursements or to effect the settlement of purchase transactions, the
Custodian shall be entitled to collect from the Account either (i) with respect
to domestic assets, an amount equal to what would have been earned on the sums
advanced (an amount approximating the "federal funds" interest rate) or (ii)
with respect to non-domestic assets, the rate applicable to the appropriate
foreign market.
15. INDEMNIFICATION
---------------
The Client shall indemnify and hold harmless the Custodian from all
liability and expense, including reasonable counsel fees and expenses, arising
out of the performance of its obligations under this Agreement, except as a
result of the Custodian's own negligence or willful misconduct. This
indemnification shall survive the termination of this Agreement.
16. AMENDMENT OR TERMINATION
------------------------
This Agreement may be amended by written agreement of the Client and the
Custodian and may be terminated by either party upon ninety (90) days' notice in
writing to the other party.
17. GOVERNING LAW AND LEGAL PROCEEDINGS
-----------------------------------
This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts. The parties hereby expressly waive,
to the full extent permitted by applicable law, any right to trial by jury with
respect to any judicial proceeding arising from or related to this Agreement.
18. REPRESENTATIONS
---------------
The Client and the Custodian hereby each represent and warrant to the other
that it has full authority to enter into this Agreement upon the terms and
conditions hereof and that the individual executing this Agreement on its behalf
has the requisite authority to bind the Client or the Custodian to this
Agreement.
7
<PAGE>
19. NECESSARY PARTIES
-----------------
All of the understandings, agreements, representations and warranties
contained herein are solely for the benefit of the Client and the Custodian and
there are no other parties who are intended to be benefited, in any way
whatsoever, by this Agreement.
20. EXECUTION IN COUNTERPARTS
-------------------------
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and said counterparts shall constitute but one and
the same instrument and may be sufficiently evidenced by one counterpart.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
AUTHORIZED SIGNER OF: AUTHORIZED OFFICER OF:
THE TARGET ACCOUNT BOSTON SAFE DEPOSIT
AND TRUST COMPANY
By: Vincent J. Mcguinness By: Christopher Healy
----------------------- -------------------------
Name: Vincent J. McGuinness, Jr. Name: Christopher Healy
Title: President Title: Vice President
Date: June 11,1998 Date: 6-30-98
--------------------- -----------------------
ADDRESS FOR NOTICE: ADDRESS FOR NOTICE:
_________________________ One Cabot Road
_________________________ Medford, MA 02155
_________________________ Attention: _____________________
Taxable: ________________
or
Tax Exempt: ____________
(Under IRC Section: ______)
_______________________
Fiscal Year
9
<PAGE>
TAXPAYER IDENTIFICATION NUMBER CERTIFICATION
--------------------------------------------
By signing below the Client hereby certifies under penalties of perjury that the
taxpayer identification number provided below is correct and that the Client is
not subject to back-up withholding on reportable payments credited to the
Client's Account by the Custodian. The Client may not be subject to back-up
withholding either because (a) the Client is exempt from back-up withholding
because it is an "exempt recipient", (b) the Client has not been notified by the
Internal Revenue Service that it is subject to back-up withholding for failure
to report all interest or dividends, or (c) the IRS has notified the Client that
it is no longer subject to back-up withholding. (If (a), (b), or (c) do not
apply, please cross out.) FAILURE TO SIGN BELOW AND PROVIDE A VALID TAXPAYER
IDENTIFICATION NUMBER MAY REQUIRE THAT THE CUSTODIAN APPLY FEDERAL INCOME TAX
WITHHOLDING AT THE RATE OF 31% (OR THE RATE AS REQUIRED BY LAW) ON ALL
REPORTABLE PAYMENTS MADE TO THE ACCOUNT ESTABLISHED UNDER THIS AGREEMENT.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION
OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
THE TARGET ACCOUNT
BY: Vincent J. McGuinness
-------------------------------
NAME: Vincent J. McGuinness, Jr.
TITLE: President
_____________________________
TAXPAYER IDENTIFICATION NUMBER
10
<PAGE>
EXHIBIT (4)(A)
--------------
MANAGEMENT AGREEMENT BETWEEN
THE TARGET ACCOUNT AND ENDEAVOR INVESTMENT ADVISERS
<PAGE>
MANAGEMENT AGREEMENT
June 15, 1998
Endeavor Management Co., Managing Partner
Endeavor Investment Advisers
Suite 300
2101 East Coast Highway
Corona del Mar, CA 92660
Dear Sirs:
PFL Endeavor Target Account (the "Account"), a managed separate account
created under the laws of the State of Iowa, herewith confirms its agreement
with Endeavor Investment Advisers, a California general partnership, (the
"Manager") as follows:
1. Investment Description; Appointment
-----------------------------------
The Account desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Rules and Regulations as amended from time to time, and in its registration
statement filed with the Securities and Exchange Commission ("SEC") on Form N-3,
as amended from time to time (the "Registration Statement"), and in such manner
and to such extent as may from time to time be approved by the Board of Managers
of the Account. The Account is currently divided into two subaccounts: The Dow
Target 10 Subaccount and The Dow Target 5 Subaccount. The Account may in the
future be divided into additional subaccounts. Such existing and future
subaccounts are hereinafter referred to as the "Subaccounts." Copies of the
Registration Statement and the Accounts's Rules and Regulations have been or
will be submitted to the Manager. The Account desires to employ the Manager to
act as its investment manager. The Account acknowledges and agrees that the
Manager intends to appoint a person to act as investment adviser ("Adviser") to
render investment advice to each of the Subaccounts. Such Adviser shall make
all determinations with respect to the Subaccount's assets for which it has
responsibility. The Manager accepts this appointment and agrees to furnish the
services for the compensation set forth below.
2. Services as Investment Manager
------------------------------
(a) Subject to the supervision and direction of the Board of Managers of the
Account, the Manager will have (i) overall supervisory responsibility for the
general management and investment of the Subaccounts' assets, and (ii) full
investment discretion to make all determinations with respect to the investment
of a Subaccount's assets not then managed by an Adviser. In connection with
its responsibilities set forth under (i) above, the Account acknowledges and
agrees that the Manager will select an Adviser to render investment advice to
<PAGE>
-2-
each of the Subaccounts. Each such Adviser shall make all determinations with
respect to the Subaccount's assets for which it has responsibility. In addition,
the Manager will conduct a program of evaluations of the Advisers' performance,
review the activities of the Advisers for compliance with the Subaccounts'
investment objectives and policies and will keep the Account informed of
developments materially affecting the Subaccounts and shall, on its own
initiative, furnish, or cause the Adviser to furnish, to the Account from time
to time whatever information the Manager believes appropriate for this purpose.
(b) The Manager will also furnish to the Account, at its own expense and
without renumeration from or other cost to the Account, the following:
(i) Office Space. The Manager will provide office space in the
------------
offices of the Manager or in such other place as may be agreed upon by the
parties hereto from time to time, and all necessary office facilities and
equipment;
(ii) Personnel. The Manager will provide necessary executive and
---------
other personnel, including personnel for the performance of clerical and other
office functions, exclusive of those functions: (A) related to and to be
performed under the Account's contract or contracts for administration,
custodial, accounting, bookkeeping, transfer or similar services by the entity
selected to perform such services; and (B) related to the investment advisory
services to be provided by the Adviser pursuant to an investment advisory
agreement; and
(iii) Preparation of Prospectus and Other Documents. The Manager will
provide other information and services, other than services of outside counsel
or independent accountants or investment advisory services to be provided by the
Adviser under an investment advisory agreement, required in connection with the
preparation of all registration statements and prospectuses, prospectus
supplements, statements of additional information, all annual, semiannual, and
periodic reports to policy owners of the Account, regulatory authorities, or
others, and all notices and proxy solicitation materials, furnished to policy
owners of the Account or regulatory authorities, and all tax returns.
(c) The records relating to the services provided under the Agreement shall
be the property of the Account and shall be under its control; however, the
Account shall furnish to the Manager such records and permit it to retain such
records (either in original or in duplicate form) as it shall reasonably require
an order to carry out its duties or to satisfy applicable regulatory
requirements. In the event of the termination of this Agreement, such records
shall promptly be returned to the Account by the Manager free from any claim or
retention of rights therein.
(d) The services of the Manager to the Account hereunder are not to be
deemed exclusive, and the Manager shall be free to render similar services to
others and to engage in other activities, so long as the services rendered to
the Account are not impaired.
3. Compensation
------------
In consideration of services rendered pursuant to this Agreement, the
Account will pay the Manager a fee at the respective annual rates of the value
of each Subaccount's average daily net asset set forth in Schedule A hereto as
such schedule may be amended from time to time. Such
<PAGE>
-3-
fees shall be accrued daily and paid monthly as soon as practicable after the
end of each month. If the Manager shall serve for less than the whole of any
month, the foregoing compensation shall be prorated. For the purpose of
determining fees payable to the Manager, the value of the Subaccounts' net
assets shall be computed at the times and in the manner specified in the
Registration Statement.
4. Expenses
--------
The Account shall pay all expenses other than those expressly assumed by the
Manager herein, which expenses payable by the Account shall include, but are not
limited to:
a. Fees to the Manager;
b. Legal and audit expenses;
c. Fees and expenses related to the registration and qualification of the
Account and its shares for distribution under federal and state securities laws;
d. Expenses of the Account's transfer agent, custodian and administrator;
e. Salaries, fees and expenses of members of the Board of Managers and
executive officers of the Account who are not "affiliated persons" of the
Manager or the Advisers within the meaning of the 1940 Act;
f. Taxes (including the expenses related to preparation of tax returns)
and corporate or other fees levied against the Account;
g. Brokerage commissions and other expenses associated with the purchase
and sale of portfolio securities for the Account;
h. Expenses, including interest, of borrowing money;
i. Expenses incidental to meetings of the Account's policy owners, Board
of Managers and the maintenance of the Account's organizational existence;
j. Expenses of preparing, printing and mailing notices, proxy material,
reports to regulatory bodies and reports to policy owners of the Account;
k. Expenses of preparing and typesetting of prospectuses of the Account;
l. Expenses of printing and distributing prospectuses to policy owners of
the Account;
m. Association membership dues;
n. Premiums for fidelity insurance, directors and officers liability
insurance and other coverage;
<PAGE>
-4-
o. Charges of an independent pricing service to value the Subaccount's
assets;
p. Expenses related to the purchase or redemption of the Account's units;
and
q. Such nonrecurring expenses as may arise, including those associated
with actions, suits, or proceedings to which the Account is a party and arising
from any legal obligation which the Account may have to indemnify its officers
and members of the Board of Managers with respect thereto.
5. Standard of Care
----------------
The Manager shall exercise its best judgment in rendering the services
hereunder. The Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Account in connection with the matters to
which this Agreement relates, provided that nothing herein shall be deemed to
protect or purport to protect the Manager against liability to the Account or to
the policy owners of the Account to which the Manager would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or by reason of the Manager's reckless disregard
of its obligations and duties under this Agreement. Any person, even though an
officer, director, employee or agent of the Manager, who may be or become an
officer, member of the Board of Managers, employee or agent of the Account,
shall be deemed, when rendering services to the Account to be rendering such
services to or to be acting solely for the Account and not as an officer,
director, employee or agent, or one under the control or direction of the
Manager, even though paid by it.
6. Term
----
This Agreement shall continue in effect, unless sooner terminated as
hereinafter provided, for a period of two years from the date hereof and
indefinitely thereafter provided that its continuance after such two year period
as to each Subaccount shall be specifically approved at least annually by vote
of a majority of the outstanding voting securities of such Subaccount or by vote
of a majority of the Account's Board of Managers; and further provided that such
continuance is also approved annually by the vote of a majority of the Board of
Managers who are not parties to this Agreement or interested persons of the
Account or the Manager, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to any Subaccount
at any time, without payment of any penalty, by the Account's Board of Managers
or by a vote of a majority of the outstanding voting securities of such
Subaccount upon 60 days' prior written notice to the Manager, or by the Manager
upon 90 days' prior written notice to the Account, or upon such shorter notice
as may be mutually agreed upon. This Agreement may be amended at any time by the
Manager and the Account, subject to approval by the Account's Board of Managers
and, if required by applicable SEC rules and regulations, a vote of a majority
of the Account's outstanding voting securities. This Agreement shall terminate
automatically and immediately in the event of its assignment. The terms
"assignment" and "vote of a majority of the outstanding voting securities" shall
have the meaning set forth for such terms in the 1940 Act.
7. Limitation of Account's Liability
----------------------------------
<PAGE>
-5-
The Manager agrees that the Account's obligations hereunder in any case
shall be limited to the Account and to its assets and that the Manager shall not
seek satisfaction of any such obligation from the policy owners of the Account
nor from any member of its Board of Managers, officer, employee or agent of the
Account.
8. Force Majeure
-------------
The Manager shall not be liable for delays or errors occurring by reason of
circumstances beyond its control, including but not limited to acts of civil or
military authority, national emergencies, work stoppages, fire, flood,
catastrophe, acts of God, insurrection, war, riot, or failure of communication
or power supply. In the event of equipment breakdowns beyond its control, the
Manager shall take reasonable steps to minimize service interruptions but shall
have no liability with respect thereto.
9. Severability
------------
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
10. Miscellaneous
-------------
This Agreement constitutes the full and complete agreement of the parties
hereto with respect to the subject matter hereof. Each party agrees to perform
such further actions and execute such further documents as are necessary to
effectuate the purposes hereof. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the State of California. The
captions in this Agreement are included for convenience only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all the parties.
<PAGE>
-6-
If the foregoing is in accordance with your understanding, kindly indicate
your acceptance hereof by signing and returning to us the enclosed copy hereof.
Very truly yours,
PFL ENDEAVOR TARGET ACCOUNT
By /s/ SIGNATURE ILLEGIBLE
----------------------------
Authorized Officer
Accepted:
ENDEAVOR INVESTMENT ADVISERS
By: Endeavor Management Co.,
Managing Partner
By /s/ SIGNATURE ILLEGIBLE
----------------------------
Authorized Officer
<PAGE>
-7-
SCHEDULE A
The Dow Target 10 Subaccount 0.75% of average daily net assets
The Dow Target 5 Subaccount 0.75% of average daily net assets
<PAGE>
EXHIBIT (4)(B)(1)
-----------------
INVESTMENT ADVISORY AGREEMENT BETWEEN
ENDEAVOR INVESTMENT ADVISERS AND
FIRST TRUST ADVISERS L.P.
(THE DOW TARGET 5)
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 15th day of June, 1998, by and between First Trust
Advisers L.P., an Illinois limited partnership (the "Adviser"), and Endeavor
Investment Advisers, a California general partnership (the "Manager").
WHEREAS, the Manager serves as investment manager of the PFL Endeavor
Target Account (the "Account"), which is a managed separate account established
by PFL Life Insurance Company, and has filed a registration statement under the
Investment Company Act of 1940, as amended (the "1940 Act") and the Securities
Act of 1933 (the "Registration Statement"); and
WHEREAS, the Account is divided into two subaccounts, one of which is The
Dow Target 5 Subaccount (the "Subaccount"); and
WHEREAS, the Manager desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser to assist the Manager
in performing services for the Subaccount; and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended, and is engaged in the business of rendering investment
advisory services to investment companies and other institutional clients and
desires to provide such services to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
-------------------------
manage the investment and reinvestment of the assets of the Subaccount, subject
to the control and direction of the Account's Board of Managers, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the
Subaccount or the Account in any way.
2. Obligations of and Services to be Provided by the Adviser. The Adviser
---------------------------------------------------------
undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and reinvestment of the
portfolio assets of the Subaccount, all without prior consultation with the
Manager, subject to and in accordance with the investment objective and policies
of the
<PAGE>
-2-
Subaccount set forth in the Account's Registration Statement, as such
Registration Statement may be amended from time to time, and any written
instructions which the Manager or the Account's Board of Managers may issue from
time-to-time in accordance therewith. In pursuance of the foregoing, the Adviser
shall make all determinations with respect to the purchase and sale of portfolio
securities and shall take such action necessary to implement the same. The
Adviser shall render regular reports to the Account's Board of Managers and the
Manager concerning the investment activities of the Subaccount.
b. To the extent provided in the Account's Registration Statement, as
such Registration Statement may be amended from time to time, the Adviser shall,
in the name of the Subaccount, place orders for the execution of portfolio
transactions with or through such brokers, dealers or banks as it may select
including affiliates of the Adviser and, complying with Section 28(e) of the
Securities Exchange Act of 1934, may pay a commission on transactions in excess
of the amount of commission another broker-dealer would have charged.
c. In connection with the placement of orders for the execution of the
portfolio transactions of the Subaccount, the Adviser shall create and maintain
all necessary records pertaining to the purchase and sale of securities by the
Adviser on behalf of the Subaccount in accordance with all applicable laws,
rules and regulations, including but not limited to records required by Section
31(a) of the 1940 Act. All records shall be the property of the Account and
shall be available for inspection and use by the Securities and Exchange
Commission ("SEC"), the Account, the Manager or any person retained by the
Account. Where applicable, such records shall be maintained by the Adviser for
the periods and in the places required by Rule 31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services pursuant
to this Agreement.
3. Compensation of the Adviser. In consideration of services rendered
---------------------------
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Subaccount's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Subaccount's net assets shall be computed at the times and in the manner
specified in the Account's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
-------------------------
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in other activities, so long as the services
rendered hereunder are not impaired.
<PAGE>
-3-
5. Use of Names. The Adviser hereby consents to the Subaccount being
------------
named the "The Dow Target 5 Subaccount." The Manager shall not use the name of
the Adviser or any of its affiliates in any prospectus, sales literature or
other material relating to the Account in any manner not approved prior thereto
by the Adviser; provided, however, that the Adviser shall approve all uses of
its name and that of its affiliates which merely refer in accurate terms to its
appointment hereunder or which are required by the SEC or a state securities
commission; and, provided, further, that in no event shall such approval be
unreasonably withheld. The Adviser shall not use the name of the Account or the
Manager in any material relating to the Adviser in any manner not approved prior
thereto by the Manager; provided, however, that the Manager shall approve all
uses of its or the Account's name which merely refer in accurate terms to the
appointment of the Adviser hereunder or which are required by the SEC or a state
securities commission; and, provided further, that in no event shall such
approval be unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "Target," "First Trust" or Special Situations" as part of their
name, and that the Adviser or its affiliates may enter into investment advisory,
administration or other agreements with such other entities. If the Adviser
ceases to act as the Subaccount's investment adviser pursuant to this Agreement,
the Manager agrees, at the Adviser's request that it will cause the Account to
take all necessary action to change the name of the Subaccount to a name not
including "Target" in any form or confirmation of words.
The Manager and the Adviser recognize that the Subaccount is not sponsored,
endorsed, sold or promoted by Dow Jones & Company, Inc. ("Dow Jones"). Dow
Jones makes no representation or warranty, express or implied, to the policy
owners of the Account or any member of the public regarding the advisability of
purchasing interest in the Subaccount. Dow Jones' only relationship to the
Adviser is the licensing of certain copyrights, trademarks, servicemarks and
service names of Dow Jones. Dow Jones has no obligation to take the needs of
the Adviser or the policy owners of the Account into consideration in
determining, composing or calculating the Dow Jones Industrial Average/SM/. Dow
Jones is not responsible for and has not participated in the determination of
the terms and conditions of the Account, including the pricing or the amount
payable under contracts issued to policy owners. Dow Jones has no obligation or
liability in connection with the administration or marketing of the Subaccount.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOW JONES INDUSTRIAL AVERAGE/SM/ OR ANY DATA INCLUDED THEREIN AND DOW JONES
SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY
THE ADVISER, POLICY OWNERS OF THE ACCOUNT, OR ANY OTHER PERSON OR
<PAGE>
-4-
ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL AVERAGE/SM/ OR ANY DATA INCLUDED
THEREIN. DOW JONES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE DOW JONES INDUSTRIAL AVERAGE/SM/ OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY
AGREEMENTS OR ARRANGEMENTS BETWEEN DOW JONES AND THE ADVISER.
6. Liability of the Adviser. Absent willful misfeasance, bad faith, gross
------------------------
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be liable for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security. Nothing
herein shall constitute a waiver of any rights or remedies which the Account may
have under any federal or state securities laws.
7. Limitation of Account's Liability. The Adviser agrees that any of the
---------------------------------
Account's obligations shall be limited to the assets of the Subaccount and that
the Adviser shall not seek satisfaction of any such obligation from the policy
owners of the Account or from any Account officer, employee or agent of the
Account.
8. Renewal, Termination and Amendment. This Agreement shall continue in
----------------------------------
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Subaccount is specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Subaccount or by vote of a majority of the Account's Board of Managers; and
further provided that such continuance is also approved annually by the vote of
a majority of the Board of Managers who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. This Agreement may be terminated as to the
Subaccount at any time, without payment of any penalty, by the Account's Board
of Managers, by the Manager, or by a vote of the majority of the outstanding
voting securities of the Account upon 60 days' prior written notice to the
Adviser, or by the Adviser upon 90 days' prior written notice to the Manager, or
upon such shorter notice as may be mutually agreed upon. This Agreement shall
terminate automatically and immediately upon termination of the Management
Agreement dated June 15, 1998 between the Manager and the Account. This
Agreement shall terminate automatically and immediately in the event of its
assignment. The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth for such terms in the 1940
Act. This Agreement may be amended at any time by the Adviser and the Manager,
subject to approval by
<PAGE>
-5-
the Account's Board of Managers and, if required by applicable SEC rules and
regulations, a vote of a majority of the Subaccount's outstanding voting
securities.
9. Confidential Relationship. Any information and advice furnished by
-------------------------
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties except as required by law.
10. Severability. If any provision of this Agreement shall be held or
------------
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Miscellaneous. This Agreement constitutes the full and complete
-------------
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
<PAGE>
-6-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
ENDEAVOR INVESTMENT ADVISERS
BY: Endeavor Management Co.,
Managing Partner
BY: /s/ [ILLEGIBLE]
---------------------------
Authorized Officer
FIRST TRUST ADVISERS L.P.
BY: /s/ [ILLEGIBLE]
---------------------------
Authorized Officer
<PAGE>
-7-
SCHEDULE A
The Dow Target 5 Subaccount 0.35% of average daily net assets
<PAGE>
EXHIBIT (4)(B)(2)
-----------------
INVESTMENT ADVISORY AGREEMENT BETWEEN
ENDEAVOR INVESTMENT ADVISERS AND
FIRST TRUST ADVISERS L.P.
(THE DOW TARGET 10)
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 15th day of June, 1998, by and between First Trust
Advisers L.P., an Illinois limited partnership (the "Adviser"), and Endeavor
Investment Advisers, a California general partnership (the "Manager").
WHEREAS, the Manager serves as investment manager of the PFL Endeavor
Target Account (the "Account"), which is a managed separate account established
by PFL Life Insurance Company, and has filed a registration statement under the
Investment Company Act of 1940, as amended (the "1940 Act") and the Securities
Act of 1933 (the "Registration Statement"); and
WHEREAS, the Account is divided into two subaccounts, one of which is The
Dow Target 10 Subaccount (the "Subaccount"); and
WHEREAS, the Manager desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser to assist the Manager
in performing services for the Subaccount; and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended, and is engaged in the business of rendering investment
advisory services to investment companies and other institutional clients and
desires to provide such services to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
-------------------------
manage the investment and reinvestment of the assets of the Subaccount, subject
to the control and direction of the Account's Board of Managers, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the
Subaccount or the Account in any way.
2. Obligations of and Services to be Provided by the Adviser. The Adviser
---------------------------------------------------------
undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and reinvestment of the
portfolio assets of the Subaccount, all without prior consultation with the
Manager, subject to and in accordance with the investment objective and policies
of the
<PAGE>
-2-
Subaccount set forth in the Account's Registration Statement, as such
Registration Statement may be amended from time to time, and any written
instructions which the Manager or the Account's Board of Managers may issue from
time-to-time in accordance therewith. In pursuance of the foregoing, the Adviser
shall make all determinations with respect to the purchase and sale of portfolio
securities and shall take such action necessary to implement the same. The
Adviser shall render regular reports to the Account's Board of Managers and the
Manager concerning the investment activities of the Subaccount.
b. To the extent provided in the Account's Registration Statement, as
such Registration Statement may be amended from time to time, the Adviser shall,
in the name of the Subaccount, place orders for the execution of portfolio
transactions with or through such brokers, dealers or banks as it may select
including affiliates of the Adviser and, complying with Section 28(e) of the
Securities Exchange Act of 1934, may pay a commission on transactions in excess
of the amount of commission another broker-dealer would have charged.
c. In connection with the placement of orders for the execution of the
portfolio transactions of the Subaccount, the Adviser shall create and maintain
all necessary records pertaining to the purchase and sale of securities by the
Adviser on behalf of the Subaccount in accordance with all applicable laws,
rules and regulations, including but not limited to records required by Section
31(a) of the 1940 Act. All records shall be the property of the Account and
shall be available for inspection and use by the Securities and Exchange
Commission ("SEC"), the Account, the Manager or any person retained by the
Account. Where applicable, such records shall be maintained by the Adviser for
the periods and in the places required by Rule 31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services pursuant
to this Agreement.
3. Compensation of the Adviser. In consideration of services rendered
---------------------------
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Subaccount's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Subaccount's net assets shall be computed at the times and in the manner
specified in the Account's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
-------------------------
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in other activities, so long as the services
rendered hereunder are not impaired.
<PAGE>
-3-
5. Use of Names. The Adviser hereby consents to the Subaccount being
------------
named the "The Dow Target 10 Subaccount." The Manager shall not use the name of
the Adviser or any of its affiliates in any prospectus, sales literature or
other material relating to the Account in any manner not approved prior thereto
by the Adviser; provided, however, that the Adviser shall approve all uses of
its name and that of its affiliates which merely refer in accurate terms to its
appointment hereunder or which are required by the SEC or a state securities
commission; and, provided, further, that in no event shall such approval be
unreasonably withheld. The Adviser shall not use the name of the Account or the
Manager in any material relating to the Adviser in any manner not approved prior
thereto by the Manager; provided, however, that the Manager shall approve all
uses of its or the Account's name which merely refer in accurate terms to the
appointment of the Adviser hereunder or which are required by the SEC or a state
securities commission; and, provided further, that in no event shall such
approval be unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "Target," "First Trust" or Special Situations" as part of their
name, and that the Adviser or its affiliates may enter into investment advisory,
administration or other agreements with such other entities. If the Adviser
ceases to act as the Subaccount's investment adviser pursuant to this Agreement,
the Manager agrees, at the Adviser's request that it will cause the Account to
take all necessary action to change the name of the Subaccount to a name not
including "Target" in any form or confirmation of words.
The Manager and the Adviser recognize that the Subaccount is not sponsored,
endorsed, sold or promoted by Dow Jones & Company, Inc. ("Dow Jones"). Dow
Jones makes no representation or warranty, express or implied, to the policy
owners of the Account or any member of the public regarding the advisability of
purchasing interest in the Subaccount. Dow Jones' only relationship to the
Adviser is the licensing of certain copyrights, trademarks, servicemarks and
service names of Dow Jones. Dow Jones has no obligation to take the needs of
the Adviser or the policy owners of the Account into consideration in
determining, composing or calculating the Dow Jones Industrial Average/SM/. Dow
Jones is not responsible for and has not participated in the determination of
the terms and conditions of the Account, including the pricing or the amount
payable under contracts issued to policy owners. Dow Jones has no obligation or
liability in connection with the administration or marketing of the Subaccount.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOW JONES INDUSTRIAL AVERAGE/SM/ OR ANY DATA INCLUDED THEREIN AND DOW JONES
SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY
THE ADVISER, POLICY OWNERS OF THE ACCOUNT, OR ANY OTHER PERSON OR
<PAGE>
-4-
ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL AVERAGE/SM/ OR ANY DATA INCLUDED
THEREIN. DOW JONES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE DOW JONES INDUSTRIAL AVERAGE/SM/ OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY
AGREEMENTS OR ARRANGEMENTS BETWEEN DOW JONES AND THE ADVISER.
6. Liability of the Adviser. Absent willful misfeasance, bad faith, gross
------------------------
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be liable for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security. Nothing
herein shall constitute a waiver of any rights or remedies which the Account may
have under any federal or state securities laws.
7. Limitation of Account's Liability. The Adviser agrees that any of the
---------------------------------
Account's obligations shall be limited to the assets of the Subaccount and that
the Adviser shall not seek satisfaction of any such obligation from the policy
owners of the Account or from any Account officer, employee or agent of the
Account.
8. Renewal, Termination and Amendment. This Agreement shall continue in
----------------------------------
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Subaccount is specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Subaccount or by vote of a majority of the Account's Board of Managers; and
further provided that such continuance is also approved annually by the vote of
a majority of the Board of Managers who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. This Agreement may be terminated as to the
Subaccount at any time, without payment of any penalty, by the Account's Board
of Managers, by the Manager, or by a vote of the majority of the outstanding
voting securities of the Account upon 60 days' prior written notice to the
Adviser, or by the Adviser upon 90 days' prior written notice to the Manager, or
upon such shorter notice as may be mutually agreed upon. This Agreement shall
terminate automatically and immediately upon termination of the Management
Agreement dated June 15, 1998 between the Manager and the Account. This
Agreement shall terminate automatically and immediately in the event of its
assignment. The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth for such terms in the 1940
Act. This Agreement may be amended at any time by the Adviser and the Manager,
subject to approval by
<PAGE>
-5-
the Account's Board of Managers and, if required by applicable SEC rules and
regulations, a vote of a majority of the Subaccount's outstanding voting
securities.
9. Confidential Relationship. Any information and advice furnished by
-------------------------
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties except as required by law.
10. Severability. If any provision of this Agreement shall be held or
------------
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Miscellaneous. This Agreement constitutes the full and complete
-------------
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
<PAGE>
-6-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
ENDEAVOR INVESTMENT ADVISERS
BY: Endeavor Management Co.,
Managing Partner
BY: /s/ [ILLEGIBLE]
-----------------------------
Authorized Officer
FIRST TRUST ADVISERS L.P.
BY: /s/ [ILLEGIBLE]
-----------------------------
Authorized Officer
<PAGE>
-7-
SCHEDULE A
The Dow Target 10 Subaccount 0.35% of average daily
net assets
<PAGE>
EXHIBIT (5)(A)(2)
-----------------
TERMINATION OF PRINCIPAL UNDERWRITING AGREEMENT BY AND
BETWEEN AEGON USA SECURITIES, INC., FORMERLY KNOWN AS
MIDAMERICA MANAGEMENT CORPORATION, AND PFL LIFE
INSURANCE COMPANY ON ITS OWN BEHALF AND ON THE BEHALF OF
PFL ENDEAVOR VARIABLE ANNUITY ACCOUNT.
<PAGE>
TERMINATION OF
PRINCIPAL UNDERWRITING AGREEMENT
BY AND BETWEEN
AEGON USA SECURITIES, INC.,
FORMERLY KNOWN AS,
MIDAMERICA MANAGEMENT CORPORATION,
AND PFL LIFE INSURANCE COMPANY
ON ITS OWN BEHALF AND ON THE BEHALF OF
PFL ENDEAVOR VARIABLE ANNUITY ACCOUNT.
WHEREAS, All underwriting and primary distribution activities for variable
annuity or variable life insurance products for the insurance company and the
separate accounts have been assigned effective as of the close of business April
30, 1998, to AFSG Securities Corporation.
THEREFORE, The undersigned parties to the Principal Underwriting Agreement dated
January 18, 1990, hereby mutually agree to terminate such Agreement as of the
close of business April 30, 1998.
WITNESSETH:
[SIGNATURE ILLEGIBLE] APRIL 29, 1998
- -------------------------- ---------------------
PFL Life Insurance Company Date Signed
[SIGNATURE ILLEGIBLE] April 29, 1998
- -------------------------- ---------------------
AEGON USA Securities, Inc. Date Signed
<PAGE>
EXHIBIT (6)(m)
--------------
FORM OF POLICY ENDORSEMENT FOR
THE PFL ENDEAVOR VARIABLE ANNUITY
AND THE PFL ENDEAVOR ML VARIABLE ANNUITY (GMIB)
1
<PAGE>
[LOGO] PFL Life Insurance Company
A Stock Company
Home Office located at: 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499
(Hereafter called the Company, we, our or us.) (319) 398-8511
GUARANTEED MINIMUM INCOME BENEFIT RIDER
This rider provides your variable annuity with a Minimum Annuitization Value
which can only be used with the Annuity Factors shown in Schedule I of this
rider. This Minimum Annuitization Value is guaranteed by Us, regardless of the
performance of the variable annuity's investments.
This rider is attached to and made part of your variable annuity policy as of
the Rider Date. This rider may only be terminated as provided herein. This rider
is subject to all of the provisions in the policy that do not conflict with the
provisions of this rider. The Rider Payment Options provide for variable annuity
payments. Subsequent payments may fluctuate with the investment performance of
Your annuity Subaccounts, but will never be less than the initial payment.
Policy Number: 123456
Rider Date: 07-15-1998 Last Date to Upgrade: 07-15-2037
Annual Growth Rate: 3.00% Guaranteed Minimum Income Benefit:
Rider Fee Percentage: 0.50% First Date to Elect Benefit: 07-15-2008
Rider Fee Waiver Threshold: 250% Last Date to Elect Benefit: 12-31-2047
Mortality and Expense Risk Fee and Administrative Charge after the Election
Date: 3.50%
Rider Date Age Minimum Annuitization Guaranteed Minimum Monthly
Value* Payment**
---------- --- --------------------- --------------------------
07/15/1998 35 $ 100,000.00 N/A
Election
Date
07/15/2008 45 $ 134,391.64 $ 479.78
07/15/2009 46 $ 138,423.39 $ 501.09
07/15/2010 47 $ 142,576.09 $ 523.25
07/15/2011 48 $ 146,853.37 $ 547.76
07/15/2012 49 $ 151,258.97 $ 571.76
07/15/2013 50 $ 155,796.74 $ 598.26
07/15/2014 51 $ 160,470.64 $ 625.84
07/15/2015 52 $ 165,284.76 $ 656.18
07/15/2016 53 $ 170,243.31 $ 687.78
07/15/2017 54 $ 175,350.61 $ 720.69
*Assumes no further payments, no premium tax, and no withdrawals. This amount
may only be used for annuitization with the Rider Payment Options provided in
this rider.
**Assumes the Minimum Annuitization Value shown is applied to a life with 10
year certain Rider Payment Option with monthly payments.
1
<PAGE>
DEFINITIONS
The following definitions used in this Rider are for reference only.
ANNUITANT:
The Annuitant is designated on the Policy Specifications Page. The variable
annuity payments are paid to the Annuitant (or surviving Joint Annuitant).
ANNUITY FACTOR:
A factor for the applicable Annuitant age, sex and Rider Payment Option shown in
Schedule I or Schedule II of this rider. For the Rider Payment Option chosen,
the Annuity Factor from Schedule I and the Minimum Annuitization Value will be
used to determine the applicable annuity payments. For Annuitants age 85 or
older at the time of annuitization, the age 85 Annuity Factor will be used for
Schedule I. Factors not shown are available from Us upon request. Schedule I and
Schedule II are based on the "1983 Table a" mortality table, improved to the
year 2000 with projection scale G.
ELECTION DATE:
A date that You elect to begin Guaranteed Minimum Income Benefit payments. The
Election Date must be within 30 days following a Policy Anniversary. The first
and last dates to elect a Rider Payment Option are shown on page one of this
rider.
MINIMUM ANNUITIZATION VALUE:
The amount we will use to determine the Guaranteed Minimum Income Benefit
payments.
RIDER DATE:
The date that this rider is added to the policy. This date may only be the issue
date of the policy or a policy anniversary date. This is also the Policy
Anniversary that You most recently elected to upgrade the Minimum Annuitization
Value, if applicable.
SUPPORTABLE PAYMENT:
The Supportable Payment is equal to the number of variable annuity units in the
selected Subaccounts multiplied by the variable annuity unit values in those
Subaccounts on the date the payment is made.
GUARANTEED MINIMUM INCOME BENEFIT
On the Election Date, you may use the Minimum Annuitization Value and the
applicable Annuity Factor to provide variable payments to the Annuitant. The
first variable payment is determined by multiplying each $1,000 of Minimum
Annuitization Value by the Annuity Factor on Schedule I. Each subsequent payment
will be calculated as described in the policy, using a 5% Assumed Investment
Return.
For subsequent payments, an annual Mortality and Expense Risk Fee and
Administrative Charge will be charged. This fee may be different than the
Mortality and Expense Risk Fee and Administrative Charge in effect prior to the
Election Date. It may also be different than the Mortality and Expense Risk Fee
and Administrative Charge for the settlement options shown in the policy.
The subsequent payments may fluctuate in accordance with the investment
performance of your annuity Subaccounts. However, such payments will never be
less than the initial payment.
MINIMUM ANNUITIZATION VALUE
The Minimum Annuitization Value is used to determine your Guaranteed Minimum
Income Benefit payments.
On the Rider Date, the Minimum Annuitization Value is the value of your policy.
Thereafter, based upon the effective Annual Growth Rate (shown on page one of
this rider), it will be the value of your policy on the Rider Date, plus any
additional payments made after the Rider Date, minus policy withdrawals
(adjusted as described below), minus any premium taxes.
WITHDRAWALS:
In any policy year, the Minimum Annuitization Value will only be reduced by the
actual amount of a policy withdrawal as long as the withdrawal does not exceed a
maximum annual free amount. Withdrawals in excess of the maximum annual free
amount will reduce the Minimum Annuitization Value by an amount equal to (A)
divided by (B) multiplied by (C) where:
(A) is the amount of the excess withdrawal;
(B) is the value of your policy after the current policy year maximum
annual free amount has been withdrawn, but prior to the withdrawal of
the excess portion; and
(C) is the Minimum Annuitization Value after the current policy year
maximum annual free amount has been withdrawn, but prior to withdrawal
of the excess portion.
For each policy year, the maximum annual free amount is equal to the Minimum
Annuitization Value, as of the beginning of the policy year, multiplied by the
effective Annual Growth Rate as shown on page one of this rider. Withdrawals
during a policy year will reduce the available maximum annual free amount by the
amount of the withdrawal.
RIDER FEE
We will deduct a fee from the value of the policy on each Policy Anniversary and
on the termination date of this rider. The Rider Fee is the Minimum
Annuitization Value at the time the fee is deducted, multiplied by the Rider Fee
Percentage shown on the first page of this rider. The fee will be deducted from
each Subaccount in proportion to the amount of value of the policy in each
account. This fee will not be deducted after the Election Date.
2
<PAGE>
WAIVER OF RIDER FEE
If the value of the policy, on a particular Policy Anniversary, exceeds an
amount equal to the Rider Fee Waiver Threshold (shown on page one of this rider)
multiplied by the Minimum Annuitization Value, the Rider Fee will be waived for
that Policy Anniversary.
MINIMUM ANNUITIZATION VALUE UPGRADE
The owner may elect, in writing, to upgrade the Minimum Annuitization Value to
the value of the policy on a Policy Anniversary. This may be done within 30 days
immediately following any Policy Anniversary, and prior to the Last Date to
Upgrade shown on page one of this rider.
If an upgrade is elected, this rider will terminate and a new rider will be
issued with a new Rider Date, Election Date and its own guaranteed benefits. The
new annual Rider Fee Percentage may be different than this rider's, but it will
never be greater than 0.50%.
RIDER PAYMENT OPTIONS
The Minimum Annuitization Value and applicable Annuity Factors from Schedule I
may be applied to the following payment options:
Life Income - An election may be made for "No Period Certain" or "10 Years
Certain". In the event of the death of the person receiving payments prior
to the end of the chosen period certain, the remaining period certain
payments will be continued to the beneficiary.
Joint and Full Survivor - An election may be made for "No Period Certain"
or "10 Years Certain". Payments will be made as long as either the
Annuitant or Joint Annuitant is living. In the event of the death of both
the Annuitant and the Joint Annuitant prior to the end of the chosen period
certain, the remaining period certain payments will be continued to the
beneficiary.
GUARANTEED MINIMUM PAYMENT
On the Election Date, the owner will receive guaranteed minimum payments. The
annual Mortality and Expense Risk Fee and Administration Charge for these
payments is shown on page one of this rider.
The first payment is based on the Annuity Factors in Schedule I. We guarantee
that each subsequent payment will be equal to or greater than Your initial
payment.
During the first policy year following annuitization, each payment will be
stabilized to equal the initial payment. On each policy anniversary following
annuitization, the stabilized payment will be increased or decreased (but never
below the initial payment) and held level for that Policy Year. One each Policy
Anniversary following annuitization, the stabilized payment will equal the
greater of the initial payment or the Supportable payment at that time.
If the Supportable Payment (at any payment date) is greater than the stabilized
payment for that year, the excess will be used to purchase additional annuity
units as described below. If the Supportable Payment (at any payment date) is
less than the stabilized payment for that year, annuity units will be redeemed
as described below to fund the deficiency.
PURCHASE/REDEMPTION OF ANNUITY UNITS:
The number of annuity units purchased or redeemed is equal to the
annuity income purchased or redeemed, respectively, divided by the
annuity unit value for each respective Subaccount. Purchases and
redemptions of annuity income will be allocated to each Subaccount on a
proportionate basis. The amount of annuity income purchased or redeemed
is the difference between the Supportable Payment and the stabilized
payment, times the attained age nearest birthday annuity factors shown
in Schedule II, divided by $1000.
The Company bears the risk that it will need to make payments if all annuity
units have been redeemed in an attempt to maintain the stabilized payment at the
initial payment level. In such an event, the Company will make all future
payments equal to the initial payment.
ASSIGNMENT
Payments made under this rider may not be pledged or assigned. Payments will
only be made to the Annuitant or Joint Annuitant named in the policy.
TERMINATION
This rider will be terminated upon the earliest of:
a. the Election Date;
b. 30 days after the Last Date to Elect Benefit shown on the first page of
this rider;
c. the date the policy terminates;
d. the date you elect to apply the value of the policy to annuitize this
policy; and
e. the date you elect to upgrade your Minimum Annuitization Value.
This rider cannot be terminated prior to the earliest of the above dates.
Signed for us at our home office.
/s/Craig D. Vermie /s/William L. Busler
SECRETARY PRESIDENT
3
<PAGE>
SCHEDULE 1 - ANNUITY FACTORS
The amounts shown in these tables are the Annuity Factors for each $1,000 of the
minimum annuitization value and assume a 3% Assumed Investment Return.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Monthly Annuity Monthly Annuity Factor
Factor For Life With For Life With
No Period Certain 10 Years Certain
- -------------------------------------------------------------------------------
Age * Male Female Unisex Male Female Unisex
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $3.87 $3.55 $3.71 $3.84 $3.54 $3.70
51 3.93 3.60 3.77 3.90 3.59 3.75
52 4.00 3.65 3.83 3.97 3.64 3.81
53 4.07 3.71 3.90 4.04 3.70 3.87
54 4.15 3.77 3.97 4.11 3.75 3.94
55 4.23 3.83 4.04 4.19 3.82 4.01
56 4.32 3.90 4.11 4.27 3.88 4.08
57 4.41 3.97 4.19 4.35 3.95 4.15
58 4.50 4.05 4.28 4.44 4.02 4.24
59 4.61 4.13 4.37 4.53 4.10 4.32
60 4.72 4.21 4.47 4.63 4.18 4.41
61 4.84 4.30 4.57 4.74 4.26 4.51
62 4.96 4.40 4.68 4.85 4.35 4.61
63 5.10 4.50 4.80 4.97 4.45 4.71
64 5.24 4.61 4.93 5.09 4.55 4.83
65 5.40 4.73 5.06 5.22 4.66 4.95
66 5.56 4.85 5.21 5.36 4.77 5.07
67 5.74 4.99 5.36 5.50 4.89 5.20
68 5.93 5.13 5.53 5.65 5.02 5.34
69 6.13 5.29 5.71 5.80 5.15 5.49
70 6.34 5.45 5.90 5.96 5.30 5.64
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MONTHLY ANNUITY FACTOR FOR JOINT AND FULL SURVIVOR
- -----------------------------------------------------------------------------------------------------------------------
Age of Age of Female Annuitant *
--------------------------------------------------------------------------------------------------
Male 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
Annuitant * Male Male Male Male Male Male Male
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $2.99 $3.05 $3.11 $3.18 $3.25 $3.32 $3.39
55 3.11 3.19 3.27 3.35 3.44 3.53 3.63
60 3.27 3.37 3.47 3.58 3.70 3.82 3.95
65 3.47 3.60 3.74 3.89 4.05 4.22 4.39
70 3.74 3.91 4.10 4.31 4.53 4.77 5.02
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
MONTHLY ANNUITY FACTOR FOR JOINT AND FULL SURVIVOR WITH 10 YEAR PERIOD CERTAIN
- -----------------------------------------------------------------------------------------------------------------------
Age of Age of Female Annuitant *
--------------------------------------------------------------------------------------------------
Male 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
Annuitant * Male Male Male Male Male Male Male
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $2.99 $3.05 $3.11 $3.18 $3.24 $3.31 $3.38
55 3.11 3.19 3.27 3.35 3.44 3.53 3.63
60 3.27 3.37 3.47 3.58 3.70 3.82 3.95
65 3.47 3.60 3.74 3.89 4.05 4.22 4.39
70 3.74 3.91 4.10 4.30 4.52 4.76 4.99
- -----------------------------------------------------------------------------------------------------------------------
* Age nearest birthday
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The annual, semi-annual or quarterly Annuity Factor shall be the monthly Annuity
Factor shown multiplied by 11.70, 5.73 or 2.99 respectively.
- --------------------------------------------------------------------------------
Annuity Factors not shown in the above tables will be calculated on the same
basis as those shown and may be obtained from the Company.
4
<PAGE>
SCHEDULE II - ANNUITY FACTORS
The amounts shown in these tables are the Annuity Factors for each $1,000 of the
Minimum Value and assumed a 5.0% Assumed Investment Return.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Monthly Annuity Monthly Annuity Factor
Factor For Life With For Life With
No Period Certain 10 Years Certain
- -------------------------------------------------------------------------------
Age * Male Female Unisex Male Female Unisex
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $5.14 $4.83 $4.99 $5.09 $4.80 $4.95
51 5.20 4.87 5.04 5.15 4.85 5.00
52 5.27 4.92 5.10 5.21 4.89 5.05
53 5.34 4.98 5.16 5.27 4.94 5.11
54 5.41 5.03 5.22 5.34 4.99 5.17
55 5.49 5.09 5.29 5.41 5.05 5.23
56 5.57 5.15 5.36 5.48 5.11 5.30
57 5.66 5.22 5.44 5.56 5.17 5.37
58 5.75 5.29 5.52 5.65 5.24 5.45
59 5.85 5.37 5.61 5.74 5.31 5.53
60 5.96 5.45 5.71 5.83 5.38 5.61
61 6.08 5.53 5.81 5.93 5.46 5.70
62 6.20 5.63 5.92 6.04 5.55 5.80
63 6.34 5.73 6.04 6.15 5.64 5.90
64 6.48 5.83 6.16 6.27 5.75 6.01
65 6.64 5.95 6.30 6.39 5.84 6.12
66 6.81 6.07 6.44 6.52 5.94 6.24
67 6.99 6.21 6.60 6.66 6.06 6.37
68 7.18 6.35 6.77 6.80 6.18 6.50
69 7.39 6.51 6.95 6.94 6.31 6.64
70 7.61 6.68 7.14 7.09 6.45 6.78
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MONTHLY ANNUITY FACTOR FOR JOINT AND FULL SURVIVOR
- -----------------------------------------------------------------------------------------------------------------------
Age of Age of Female Annuitant *
--------------------------------------------------------------------------------------------------
Male 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
Annuitant * Male Male Male Male Male Male Male
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.34 $4.38 $4.43 $4.48 $4.53 $4.59 $4.65
55 4.43 4.49 4.55 4.62 4.70 4.77 4.85
60 4.56 4.64 4.73 4.82 4.92 5.03 5.15
65 4.74 4.84 4.96 5.10 5.24 5.40 5.56
70 4.98 5.13 5.30 5.49 5.70 5.93 6.17
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
MONTHLY ANNUITY FACTOR FOR JOINT AND FULL SURVIVOR WITH 10 YEAR PERIOD CERTAIN
- -----------------------------------------------------------------------------------------------------------------------
Age of Age of Female Annuitant *
--------------------------------------------------------------------------------------------------
Male 15 Years 12 Years 9 Years 6 Years 3 Years 3 Years
Less Than Less Than Less Than Less Than Less Than Same As More Than
Annuitant * Male Male Male Male Male Male Male
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50 $4.34 $4.38 $4.43 $4.48 $4.53 $4.59 $4.65
55 4.43 4.49 4.55 4.62 4.70 4.77 4.85
60 4.56 4.64 4.72 4.82 4.92 5.03 5.14
65 4.73 4.84 4.96 5.09 5.24 5.39 5.55
70 4.97 5.12 5.29 5.48 5.69 5.91 6.14
- -----------------------------------------------------------------------------------------------------------------------
* Age nearest birthday
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The annual, semi-annual or quarterly Annuity Factor shall be the monthly Annuity
Factor shown multiplied by 11.80, 5.95 or 2.99 respectively.
- --------------------------------------------------------------------------------
Annuity Factors not shown in the above tables will be calculated on the same
basis as those shown and may be obtained from the Company.
5
<PAGE>
EXHIBIT (7)(E)
--------------
FORM OF APPLICATION
FOR THE ENDEAVOR VARIABLE ANNUITY
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] PFL Life Insurance Company APPLICATION FOR
4333 EDGEWOOD ROAD NE VARIABLE ANNUITY POLICY
CEDAR RAPIDS, IOWA 52499
1. DESIGNATED ANNUITANT
- --------------------------------------------------------------------------------
NAME:
- --------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------
CITY, STATE:
- --------------------------------------------------------------------------------
ZIP: TELEPHONE: ( ) -
- --------------------------------------------------------------------------------
DATE OF BIRTH: AGE: SEX: [_] FEMALE [_] MALE
- --------------------------------------------------------------------------------
SS#: CITIZENSHIP: [_] U.S. [_] OTHER
- --------------------------------------------------------------------------------
2. POLICY OWNER (IF OTHER THAN ABOVE)
In the event the owner is a trust, please provide verification of trustees.
- --------------------------------------------------------------------------------
NAME:
- --------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------
CITY, STATE:
- --------------------------------------------------------------------------------
ZIP: TELEPHONE: ( ) -
- --------------------------------------------------------------------------------
DATE OF BIRTH: AGE: SEX: [_] FEMALE [_] MALE
- --------------------------------------------------------------------------------
SS#: CITIZENSHIP: [_] U.S. [_] OTHER
- --------------------------------------------------------------------------------
3. [_] JOINT POLICY OWNER [_] SUCCESSOR POLICY OWNER
In the event the owner is a trust, please provide verification of trustees.
- --------------------------------------------------------------------------------
NAME:
- --------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------
CITY, STATE:
- --------------------------------------------------------------------------------
ZIP: TELEPHONE: ( ) -
- --------------------------------------------------------------------------------
DATE OF BIRTH: AGE: SEX: [_] FEMALE [_] MALE
- --------------------------------------------------------------------------------
SS#: CITIZENSHIP: [_] U.S. [_] OTHER
- --------------------------------------------------------------------------------
4. BENEFICIARY DESIGNATION (INCLUDE RELATIONSHIP TO ANNUITANT)
- --------------------------------------------------------------------------------
PRIMARY: _________________________ / __________________
Relationship
PRIMARY: _________________________ / __________________
Relationship
CONTINGENT: _____________________ / __________________
Relationship
CONTINGENT: _____________________ / __________________
Relationship
- --------------------------------------------------------------------------------
5. TYPE OF ANNUITY
- --------------------------------------------------------------------------------
[_] NON-QUALIFIED [_] IRA (Also complete Box 6)
[_] HR - 10 [_] 403 (b) [_] SEP (Also complete Box 6)
[_] OTHER _______________ [_] ROTH IRA (Also complete Box 6)
[_] ROTH CONVERSION IRA (Also complete Box 6)
- --------------------------------------------------------------------------------
6. IRA/SEP/ROTH IRA INFORMATION
- --------------------------------------------------------------------------------
$ __________ CONTRIBUTION FOR TAX YEAR _______________
$ __________ TRUSTEE TO TRUSTEE TRANSFER
$ __________ ROLLOVER FROM: (Check one)
[_] 403(b) [_] Pension [_] HR - 10 [_] IRA [_]Other:
FOR ROTH IRA ROLLOVERS
___ / ___ / ___ Date first Established or date of Conversion
$ ___________ Portion Previously Taxed in Conversion or
Original Contribution
- --------------------------------------------------------------------------------
7. WILL THIS ANNUITY REPLACE ANY EXISTING ANNUITY OR LIFE INSURANCE?
- --------------------------------------------------------------------------------
[_] NO [_] YES - Please state Policy No. and Company
Name: ________________________________________________
- --------------------------------------------------------------------------------
8. FAMILY INCOME PROTECTOR RIDER
- --------------------------------------------------------------------------------
[_] I wish to select the Family Income Protector.
- --------------------------------------------------------------------------------
9. MINIMUM DEATH BENEFIT OPTION (SELECT ONLY ONE)
- --------------------------------------------------------------------------------
This selection cannot be changed after the policy has been issued. If no
option has been specified, the policy will be issued with the Return of Premium
Death Benefit (Option C below).
[_] Option A: 5% Annually Compounding Death Benefit: (Only available if owner(s)
and the annuitant are under age 75 at time of purchase.) Annual Mortality
and Expense (M&E) Risk Fee and Admin. Charge 1.40%
[_] Option B: Double Enhanced Death Benefit: (Only available if owner(s) and the
annuitant are under age 81 at time of purchase.) Annual M & E Risk Fee and
Admin. Charge 1.40%
[_] Option C: Return of Premium Death Benefit:
Annual M & E Risk Fee and Admin. Charge 1.25%
- --------------------------------------------------------------------------------
10. PURCHASE PAYMENT (MAKE CHECK PAYABLE TO PFL LIFE INSURANCE COMPANY)
- --------------------------------------------------------------------------------
INITIAL PREMIUM AMOUNT $ _____________________________
- --------------------------------------------------------------------------------
11. ALLOCATION OF PREMIUM PAYMENTS (WHOLE PERCENTAGES ONLY)
- --------------------------------------------------------------------------------
.0%
DREYFUS SMALL CAP VALUE PORTFOLIO -------------
DREYFUS U.S. GOVERNMENT SECURITIES PORTFOLIO .0%
-------------
ADVISED BY THE DREYFUS CORPORATION
- --------------------------------------------------------------------------------
THE DOW(SM) TARGET 10 SUBACCOUNT .0%
-------------
THE DOW(SM) TARGET 5 SUBACCOUNT .0%
-------------
ADVISED BY FIRST TRUST ADVISORS L.P.
- --------------------------------------------------------------------------------
ENDEAVOR ENHANCED INDEX PORTFOLIO .0%
-------------
ADVISED BY JP MORGAN INVESTMENT MANAGEMENT, INC.
- --------------------------------------------------------------------------------
ENDEAVOR HIGH YIELD PORTFOLIO .0%
-------------
ADVISED BY MFS INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------------
ENDEAVOR SELECT 50 PORTFOLIO .0%
-------------
ADVISED BY MONTGOMERY ASSET MANAGEMENT LLC
- --------------------------------------------------------------------------------
ENDEAVOR ASSET ALLOCATION PORTFOLIO .0%
-------------
ENDEAVOR MONEY MARKET PORTFOLIO .0%
-------------
ADVISED BY MORGAN STANLEY ASSET MANAGEMENT, INC.
- --------------------------------------------------------------------------------
ENDEAVOR OPPORTUNITY VALUE PORTFOLIO .0%
-------------
ENDEAVOR VALUE EQUITY PORTFOLIO .0%
-------------
ADVISED BY OPCAP ADVISORS
- --------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO .0%
-------------
ADVISED BY ROWE PRICE-FLEMING INTERNATIONAL, INC.
T. ROWE PRICE EQUITY INCOME PORTFOLIO .0%
-------------
T. ROWE PRICE GROWTH STOCK PORTFOLIO .0%
-------------
ADVISED BY T. ROWE PRICE ASSOCIATES, INC.
- --------------------------------------------------------------------------------
WRL GROWTH PORTFOLIO .0%
-------------
ADVISED BY JANUS CAPITAL CORPORATION
- --------------------------------------------------------------------------------
PFL LIFE INSURANCE COMPANY - FIXED ACCOUNT OPTIONS
Dollar Cost Averaging (DCA) Fixed Account: .0%
-------------
(You must complete Box 12 to initiate DCA via the telephone).
- --------------------------------------------------------------------------------
Guaranteed Periods (with Excess Interest Adjustment):
1 YEAR .0% 3 YEARS .0% 5 YEARS .0%
------------- ------------- -------------
7 YEARS .0%
-------------
- --------------------------------------------------------------------------------
Additional: ___________________________________________ .0%
-------------
_______________________________________________________ .0%
-------------
_______________________________________________________ .0%
-------------
_______________________________________________________ .0%
-------------
INVESTMENT ALLOCATIONS MUST TOTAL 100%
- --------------------------------------------------------------------------------
YOUR SIGNATURE IS REQUIRED ON THE BACK PAGE
VA-APP R798 (CONTINUED ON THE BACK PAGE)
<PAGE>
- --------------------------------------------------------------------------------
APPLICATION FOR VARIABLE ANNUITY POLICY
- --------------------------------------------------------------------------------
12. TELEPHONE TRANSFER/REALLOCATION AUTHORIZATION
BY CHECKING ONE OF THE FOLLOWING BOXES, I AUTHORIZE THE COMPANY TO ACCEPT
TELEPHONE TRANSFERS/REALLOCATION INSTRUCTIONS FROM:
ONLY MYSELF [_] MYSELF & MY ACCOUNT EXECUTIVE [_]
Acct. Exec. Name: ___________________________
To change the allocation of any purchase payments and/or to transfer funds
among my investment choices based on my telephone instructions and/or the
telephone instructions of my account executive (if indicated above), I
agree to the established conditions and requirements stated in the
prospectus. I am aware that telephone instructions will be recorded to
protect me and the company and will be put into effect when proper
identification is provided.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13. If the annuitant is not the owner, You, the owner, may elect the following
regarding payment of the death benefit. IF THIS ELECTION IS NOT MADE, THE
OWNER WILL BECOME THE ANNUITANT AND THE DEATH BENEFIT WILL NOT BE PAYABLE
UNTIL THE DEATH OF THE OWNER.
[_] At the Annuitant's death, I wish to have the death benefit paid to the
named beneficiary. (Policy Owner Initials required for this option)
______________________________
Policy Owner(s) Initials
- --------------------------------------------------------------------------------
To the best of my knowledge and belief, my answers to the questions on this
application are correct and true, and I agree that this application shall be a
part of any annuity policy issued to me. I also understand that the Company
reserves the right to reject any application or purchase payment. If this
application is declined, there shall be not liability on the part of the Company
and any purchase payments submitted shall be returned.
I UNDERSTAND THAT ANNUITY PAYMENTS AND TERMINATION VALUES, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT OF THE COMPANY, ARE VARIABLE AND ARE
NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
Receipt of a current prospectus of the PFL Endeavor Variable Annuity
Account, Endeavor Series Trust , and WRL Series Fund, Inc. is hereby
acknowledged.
[_] Please check if you wish to receive the Statement of Additional
Information.
I HAVE REVIEWED MY EXISTING ANNUITY COVERAGE AND FIND THIS POLICY IS
SUITABLE FOR MY NEEDS.
Unless we have been notified of a community or partial property interest in this
policy, we will rely on our good faith belief that no such interest exists and
will assume no responsibility for inquiry.
WHEN FUNDS ARE ALLOCATED TO THE GUARANTEED PERIODS OF THE FIXED ACCOUNT, CASH
VALUES UNDER THE POLICY MAY INCREASE OR DECREASE IN ACCORDANCE WITH THE EXCESS
INTEREST ADJUSTMENT PRIOR TO THE END OF ANY GUARANTEED PERIOD.
<TABLE>
<S> <C>
ADDITIONAL FORMS ARE REQUIRED FOR SYSTEMATIC PAYOUT OPTION.
- -----------------------------------------------------------------------------------------------------------------------------
14. BE SURE TO COMPLETE THIS SECTION
Signed at _______________________________________ this ________ day of ____________________, 19_______
(City, State)
__________________________________ _________________________________________ _______________________________________
Annuitant Signature Owner Signature (if different from Joint Owner (successor owner
Annuitant) signature)
- -----------------------------------------------------------------------------------------------------------------------------
15A. SELLING AGENT USE ONLY - NOT TO BE FILLED IN BY APPLICANT
I HAVE REVIEWED THE APPLICANT'S EXISTING ANNUITY COVERAGE AND FIND THIS POLICY IS SUITABLE FOR HIS/HER NEEDS.
/ /
__________________________ (____)____-_______ --------------------------------------- ---------------
Agent Name (Please Print) Agent Telephone Licensed Agent Signature Date
________________________________________________________________ ____________________________________________________
Branch Address Broker/Dealer Client Account No.
_________________________________________ ___________________ ____________________________________________________
Agent Firm PFL Life Agent No. If Applicable) Florida Agent License I.D. No.
</TABLE>
15b. [_] Option A [_] Option B [_] Option C [_] Option D
Your firm may limit the above options. If no option is selected, the
default option preselected by your firm will be applied to this policy and
may not be changed.
15c. DO YOU HAVE REASON TO BELIEVE THE POLICY APPLIED FOR IS TO REPLACE ANY
EXISTING ANNUITY OR INSURANCE OWNED BY APPLICANT?
[_] No [_] Yes, Company Name ___________________________________________
- --------------------------------------------------------------------------------
Please make check payable to PFL LIFE INSURANCE COMPANY (Use following address
for mail, Fed. Express, etc.)
SEND CHECK WITH APPLICATION TO PFL Life Insurance Company, Attn: Annuity
Department, 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499-0001
VA-APP R798 B
PLEASE FILL OUT THE FRONT PAGE
<PAGE>
EXHIBIT (7)(F)
--------------
FORM OF APPLICATION
FOR THE ENDEAVOR ML VARIABLE ANNUITY
<PAGE>
- --------------------------------------------------------------------------------
[LOGO] PFL Life Insurance Company APPLICATION FOR
4333 EDGEWOOD ROAD NE VARIABLE ANNUITY POLICY
CEDAR RAPIDS, IOWA 52499
1. DESIGNATED ANNUITANT
- --------------------------------------------------------------------------------
NAME:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CITY, STATE:
- --------------------------------------------------------------------------------
- --------------------- ---------------------------------------------------------
ZIP: TELEPHONE: ( ) -
- --------------------- ---------------------------------------------------------
- ------------------------ -------- -------------------------------------------
DATE OF BIRTH: AGE: SEX: [_] FEMALE [_] MALE
- ------------------------ -------- -------------------------------------------
- -------------------------- ----------------------------------------------------
SS#: CITIZENSHIP: [_] U.S. [_] OTHER
- -------------------------- ----------------------------------------------------
2. POLICY OWNER (IF OTHER THAN ABOVE)
In the event the owner is a trust, please provide verification of trustees.
- --------------------------------------------------------------------------------
NAME:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CITY, STATE:
- --------------------------------------------------------------------------------
- --------------------- ---------------------------------------------------------
ZIP: TELEPHONE: ( ) -
- --------------------- ---------------------------------------------------------
- ----------------------- -------- -------------------------------------------
DATE OF BIRTH: AGE: SEX: [_] FEMALE [_] MALE
- ----------------------- -------- -------------------------------------------
- ------------------------- ----------------------------------------------------
SS#: CITIZENSHIP: [_] U.S. [_] OTHER
- ------------------------- ----------------------------------------------------
3. [_] JOINT POLICY OWNER [_] SUCCESSOR POLICY OWNER
In the event the owner is a trust, please provide verification of trustees.
- --------------------------------------------------------------------------------
NAME:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CITY, STATE:
- --------------------------------------------------------------------------------
- --------------------- ---------------------------------------------------------
ZIP: TELEPHONE: ( ) -
- --------------------- ---------------------------------------------------------
- ----------------------- -------- -------------------------------------------
DATE OF BIRTH: AGE: SEX: [_] FEMALE [_] MALE
- ----------------------- -------- -------------------------------------------
- ------------------------- ----------------------------------------------------
SS#: CITIZENSHIP: [_] U.S. [_] OTHER
- ------------------------- ----------------------------------------------------
4. BENEFICIARY DESIGNATION (INCLUDE RELATIONSHIP TO ANNUITANT)
- --------------------------------------------------------------------------------
PRIMARY: _________________________ / __________________
Relationship
PRIMARY: _________________________ / __________________
Relationship
CONTINGENT: _____________________ / ___________________
Relationship
CONTINGENT: _____________________ / ___________________
Relationship
- --------------------------------------------------------------------------------
5. TYPE OF ANNUITY
- --------------------------------------------------------------------------------
[_] NON-QUALIFIED [_] IRA (Also complete Box 6)
[_] HR - 10 [_] 403 (b) [_] SEP (Also complete Box 6)
[_] OTHER _______________ [_] ROTH IRA (Also complete Box 6)
[_] ROTH CONVERSION IRA (Also complete Box 6)
- --------------------------------------------------------------------------------
6. IRA/SEP/ROTH IRA INFORMATION
- --------------------------------------------------------------------------------
$ __________ CONTRIBUTION FOR TAX YEAR _______________
$ __________ TRUSTEE TO TRUSTEE TRANSFER
$ __________ ROLLOVER FROM: (Check one)
[_] 403(b) [_] Pension [_] HR-10 [_] IRA [_] Other:
FOR ROTH IRA ROLLOVERS
___/___/___ Date first Established or date of Conversion
$ ___________ Portion Previously Taxed in Conversion or
Original Contribution
- --------------------------------------------------------------------------------
7. WILL THIS ANNUITY REPLACE ANY EXISTING ANNUITY OR LIFE INSURANCE?
- --------------------------------------------------------------------------------
[_] NO [_] YES - Please state Policy No. and Company
Name: _________________________________________________
- --------------------------------------------------------------------------------
8. FAMILY INCOME PROTECTOR RIDER
- --------------------------------------------------------------------------------
[_] I wish to select the Family Income Protector.
- --------------------------------------------------------------------------------
9. MINIMUM DEATH BENEFIT OPTION (SELECT ONLY ONE)
- --------------------------------------------------------------------------------
This selection cannot be changed after the policy has been issued. If no
option has been specified, the policy will be issued with the Return of Premium
Death Benefit (Option C below).
[_] OPTION A: 5% Annually Compounding Death Benefit: (Only available if
owner(s) and the annuitant are under age 75 at time of purchase.) Annual
Mortality and Expense (M&E) Risk Fee and Admin. Charge 1.40%
[_] OPTION B: Double Enhanced Death Benefit: (Only available if owner(s) and
the annuitant are under age 81 at time of purchase.) Annual M & E Risk Fee
and Admin. Charge 1.40%
[_] OPTION C: Return of Premium Death Benefit: Annual M & E Risk Fee and
Admin. Charge 1.25%
- --------------------------------------------------------------------------------
10. PURCHASE PAYMENT (MAKE CHECK PAYABLE TO PFL LIFE INSURANCE COMPANY)
- --------------------------------------------------------------------------------
INITIAL PREMIUM AMOUNT $ _____________________________
- --------------------------------------------------------------------------------
11. ALLOCATION OF PREMIUM PAYMENTS (Whole percentages only)
- --------------------------------------------------------------------------------
BASIC VALUE FOCUS FUND __________.0%
DEVELOPING CAPITAL MARKETS FOCUS FUNDS __________.0%
HIGH CURRENT INCOME FUNDS __________.0%
ADVISED BY MERRILL LYNCH ASSET MANAGEMENT, L.P.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DREYFUS SMALL CAP VALUE PORTFOLIO __________.0%
DREYFUS U.S. GOVERNMENT SECURITIES PORTFOLIO __________.0%
ADVISED BY THE DREYFUS CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE DOW/SM/ TARGET 10 SUBACCOUNT __________.0%
THE DOW/SM/ TARGET 5 SUBACCOUNT __________.0%
ADVISED BY FIRST TRUST ADVISORS L.P.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ENDEAVOR ENHANCED INDEX PORTFOLIO __________.0%
ADVISED BY JP MORGAN INVESTMENT MANAGEMENT, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ENDEAVOR HIGH YIELD PORTFOLIO __________.0%
ADVISED BY MFS INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ENDEAVOR SELECT 50 PORTFOLIO __________.0%
ADVISED BY MONTGOMERY ASSET MANAGEMENT LLC
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ENDEAVOR ASSET ALLOCATION PORTFOLIO __________.0%
ENDEAVOR MONEY MARKET PORTFOLIO __________.0%
ADVISED BY MORGAN STANLEY ASSET MANAGEMENT, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ENDEAVOR OPPORTUNITY VALUE PORTFOLIO __________.0%
ENDEAVOR VALUE EQUITY PORTFOLIO __________.0%
ADVISED BY OPCAP ADVISORS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO __________.0%
ADVISED BY ROWE PRICE-FLEMING INTERNATIONAL, INC.
T. ROWE PRICE EQUITY INCOME PORTFOLIO __________.0%
T. ROWE PRICE GROWTH STOCK PORTFOLIO __________.0%
ADVISED BY T. ROWE PRICE ASSOCIATES, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRL GROWTH PORTFOLIO __________.0%
ADVISED BY JANUS CAPITAL CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PFL LIFE INSURANCE COMPANY - FIXED ACCOUNT OPTIONS
Dollar Cost Averaging (DCA) Fixed Account: __________.0%
(You must complete Box 12 to initiate DCA via the telephone).
-------------------------------------------------------------------------------
Guaranteed Periods (with Excess Interest Adjustment):
1 YEAR ________.0% 3 YEARS ________.0% 5 YEARS __________.0%
7 YEARS ___________.0%
- --------------------------------------------------------------------------------
- --------------------------------------------- --------------------------------
Additional: _________________________________ __________.0%
____________________________________________ __________.0%
INVESTMENT ALLOCATIONS MUST TOTAL 100%
- --------------------------------------------------------------------------------
YOUR SIGNATURE IS REQUIRED ON THE BACK PAGE
VA-APP R798 (CONTINUED ON THE BACK PAGE)
<PAGE>
- --------------------------------------------------------------------------------
APPLICATION FOR VARIABLE ANNUITY POLICY
- --------------------------------------------------------------------------------
12. TELEPHONE TRANSFER/REALLOCATION AUTHORIZATION
BY CHECKING ONE OF THE FOLLOWING BOXES, I AUTHORIZE THE COMPANY TO ACCEPT
TELEPHONE TRANSFERS/REALLOCATION INSTRUCTIONS FROM:
ONLY MYSELF [_] MYSELF & MY ACCOUNT EXECUTIVE [_]
Acct. Exec. Name: ___________________________
To change the allocation of any purchase payments and/or to transfer funds
among my investment choices based on my telephone instructions and/or the
telephone instructions of my account executive (if indicated above), I agree
to the established conditions and requirements stated in the prospectus.
I am aware that telephone instructions will be recorded to protect me and
the company and will be put into effect when proper identification is
provided.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13. If the annuitant is not the owner. You, the owner, may elect the following
regarding payment of the death benefit. IF THIS ELECTION IS NOT MADE, THE
OWNER WILL BECOME THE ANNUITANT AND THE DEATH BENEFIT WILL NOT BE PAYABLE
UNTIL THE DEATH OF THE OWNER.
[_] At the Annuitant's death, I wish to have the death benefit paid to the
named beneficiary. (Policy Owner Initials required for this option)
__________________________________
Policy Owner(s) Initials
- --------------------------------------------------------------------------------
To the best of my knowledge and belief, my answers to the questions on this
application are correct and true, and I agree that this application shall be a
part of any annuity policy issued to me. I also understand that the Company
reserves the right to reject any application or purchase payment. If this
application is declined, there shall be not liability on the part of the Company
and any purchase payments submitted shall be returned.
I UNDERSTAND THAT ANNUITY PAYMENTS AND TERMINATION VALUES, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT OF THE COMPANY, ARE VARIABLE AND ARE
NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
Receipt of a current prospectus of the PFL Endeavor Variable Annuity
Account, Endeavor Series Trust , and WRL Series Fund, Inc. is hereby
acknowledged.
[_] Please check if you wish to receive the Statement of Additional
Information.
I HAVE REVIEWED MY EXISTING ANNUITY COVERAGE AND FIND THIS POLICY IS
SUITABLE FOR MY NEEDS.
Unless we have been notified of a community or partial property interest in this
policy, we will rely on our good faith belief that no such interest exists and
will assume no repsonsibility for inquiry.
WHEN FUNDS ARE ALLOCATED TO THE GUARANTEED PERIODS OF THE FIXED ACCOUNT, CASH
VALUES UNDER THE POLICY MAY INCREASE OR DECREASE IN ACCORDANCE WITH THE EXCESS
INTEREST ADJUSTMENT PRIOR TO THE END OF ANY GUARANTEED PERIOD.
<TABLE>
<S> <C>
ADDITIONAL FORMS ARE REQUIRED FOR SYSTEMATIC PAYOUT OPTION.
- -----------------------------------------------------------------------------------------------------------------------------------
14. BE SURE TO COMPLETE THIS SECTION
Signed at ________________________________________ this ________ day of ____________________, 19_______
(City, State)
________________________________ ___________________________________________ ___________________________________________
Annuitant Signature Owner Signature (if different from Joint Owner (successor owner
Annuitant) signature)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
15A. SELLING AGENT USE ONLY - NOT TO BE FILLED IN BY APPLICANT
I HAVE REVIEWED THE APPLICANT'S EXISTING ANNUITY COVERAGE AND FIND THIS POLICY IS SUITABLE FOR HIS/HER NEEDS.
__________________________ (____)____-_______ ____________________________________ _____/_____/_____
Agent Name (Please Print) Agent Telephone Licensed Agent Signature Date
_________________________________________________________________________________ ____________________________________________
Branch Address Broker/Dealer Client Account No.
____________________________________________ _________________________ __________________________________________________
Agent Firm PFL Life Agent No. (If Applicable) Florida Agent License I.D. No.
</TABLE>
15b. [_] OPTION A [_] OPTION B [_] OPTION C [_] OPTION D
Your firm may limit the above options. If no option is selected, the
default option preselected by your firm will be applied to this policy
and may not be changed.
15c. DO YOU HAVE REASON TO BELIEVE THE POLICY APPLIED FOR IS TO REPLACE ANY
EXISTING ANNUITY OR INSURANCE OWNED BY APPLICANT?
[_] No [_] Yes, Company Name ________________________________________
- --------------------------------------------------------------------------------
PLEASE MAKE CHECK PAYABLE TO PFL LIFE INSURANCE COMPANY (Use following address
for mail, Fed. Express, etc.)
SEND CHECK WITH APPLICATION TO PFL Life Insurance Company, Attn: Annuity
Department, 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499-0001
VA-APP R798 B
PLEASE FILL OUT THE FRONT PAGE
<PAGE>
EXHIBIT (11)(A)
---------------
DISTRIBUTION PLAN
<PAGE>
PFL ENDEAVOR TARGET ACCOUNT
PLAN OF DISTRIBUTION PURSUANT TO
RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
June, 1998
WHEREAS, PFL Endeavor Target Account (the "Target Account") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end management investment company and meets the definition of a separate
account under federal securities laws, the subaccounts of which are offered as
investment options under certain variable annuities (the "Policies") offered by
the PFL Life Insurance Company ("PFL"); and
WHEREAS, the Target Account desires to adopt a Plan of Distribution
pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plan") applicable to the
subaccounts of the Target Account as now in existence or hereinafter created
from time to time (the "Subaccounts"); and
WHEREAS, PFL has entered into a Principal Underwriting Agreement, on its
own behalf and on behalf of the Target Account, with AFSG Securities, Inc.
("AFSG"), pursuant to which AFSG has agreed to serve as principal underwriter of
the Policies; and
WHEREAS, AFSG has entered into agreements with broker-dealers for the
distribution of the Policies;
NOW, THEREFORE, the Target Account hereby adopts this 12b-1 Plan with
respect to the Subaccounts of the Target Account in accordance with Rule 12b-1
under the 1940 Act.
I. COMPENSATION
The Target Account is authorized to pay to PFL, as partial compensation for
the costs of distribution of the Policies, a distribution fee at a rate on an
annualized basis as a percentage of each Subaccount's average daily net assets
as specified on Schedule A attached hereto. Such fee shall be calculated and
accrued daily and paid monthly or at such other intervals as the Target Account
and PFL agree.
The amount of the fees payable by each Subaccount to PFL under this 12b-1
Plan is not related directly to expenses incurred by PFL on behalf of each
Subaccount for distribution of the Policies. This 12b-1 Plan does not obligate
the Target Account to reimburse PFL for such expenses. If PFL's expenses with
respect to each Subaccount exceed the fee set forth in this 12b-1 Plan, the
Target Account will not pay PFL any additional fee. Conversely, if such
expenses of PFL are less than the fee set forth above, PFL shall be entitled to
keep the excess fee.
<PAGE>
The fee set forth in this 12b-1 Plan will be paid by the Target Account to
PFL for each Subaccount unless and until either the 12b-1 Plan is terminated or
not renewed with respect to a Subaccount. If the 12b-1 Plan is terminated or
not renewed with respect to a Subaccount, any distribution expenses incurred by
PFL on behalf of that Subaccount in excess of the payments of the fees specified
herein which PFL has received or accrued through the termination date are the
sole responsibility and liability of PFL, and are not obligations of the Target
Account.
II. EXPENDITURES OF PFL
In distributing the Policies, PFL may spend such amounts as it deems
appropriate on any activities or expenses primarily intended to result in the
sale of the Policies including, but not limited to: (a) compensation to
employees of PFL and/or the underwriter; (b) commissions paid on sales of the
Policies; (c) the costs of training sales personnel regarding the sale of the
Policies; (d) compensation to and expenses, including overhead and telephone
expenses, of broker-dealers who engage in or support the distribution of the
Policies; (e) the costs of printing and distributing prospectuses, statements of
additional information and annual and interim reports of the Target Account for
other than existing shareholders; (f) the costs of preparing, printing and
distributing sales literature and advertising materials; (g) expenses relating
to the formulation and implementation of marketing strategies and promotional
activities such as direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising; (h) the costs of obtaining such
information, analyses and reports with respect to marketing and promotional
activities and investor accounts as PFL may, from time to time, deem advisable;
and (i) the costs of any other activity that the Board of Managers of the Target
Account (the "Board") determines is primarily intended to result in the sale of
Policies.
III. REPORTS
PFL shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended by PFL with respect to each
Subaccount under this 12b-1 Plan and the purposes for which such expenditures
were made.
IV. TERM
This 12b-1 Plan shall not become effective with respect to a Subaccount
unless it first has been approved by votes of a majority of both: (a) the Board;
and (b) those Managers of the Target Account who are not "interested persons" of
the Target Account and have no direct or indirect financial interest in the
operation of this 12b-1 Plan or any agreements related thereto (the "Independent
Managers"), cast in person at a meeting called for the purpose of voting on such
approval; and until the Managers who approve the 12b-1 Plan's taking effect with
respect to each Subaccount have concluded that there
2
<PAGE>
is a reasonable likelihood that this 12b-1 Plan will benefit the variable
annuity policy owners and the Target Account.
If approved as set forth above, this Plan shall continue thereafter in
full force and effect with respect to each Subaccount for so long as such
continuance is specifically approved at least annually in the manner provided
for approval herein .
V. RELATED AGREEMENTS
Any agreement related to this Plan shall be in writing and shall provide
in substance that: (a) such agreement, with respect to any Subaccount, may be
terminated at any time, without the payment of any penalty, by vote of a
majority of the Independent Managers or by vote of a majority of the outstanding
voting securities of that Subaccount, on not more than 60 days written notice to
any other party to the agreement; and (b) such agreement shall terminate
automatically in the event of its assignment.
VI. TERMINATION
This 12b-1 Plan may be terminated at any time without penalty by vote of a
majority of the Independent Managers or, by vote of a majority of the
outstanding voting securities of the applicable Subaccount.
VII. AMENDMENTS
This 12b-1 Plan may not be amended to increase materially the amount of
fees provided for herein unless such amendment is approved by a vote of a
majority of the outstanding voting securities of each Subaccount, and may not be
amended in any other material respect unless approved in the manner provided for
approval and annual renewal in Section IV hereof.
VIII. INDEPENDENT MANAGERS
While this 12b-1 Plan is in effect, the selection and nomination of the
Independent Managers shall be committed to the discretion of the Independent
Managers.
IX. DEFINITIONS
As used in this 12b-1 Plan, the terms "majority of the outstanding voting
securities" and "interested person" shall have the same meaning as those terms
have in the 1940 Act.
X. RECORDS
The Target Account shall preserve copies of this 12b-1 Plan (including any
amendments thereto) and any related agreements and all reports made pursuant to
Section
3
<PAGE>
III hereof for a period of not less than six (6) years, the first two years in
an easily accessible place.
XI. SEVERABILITY
If any provision of this 12b-1 Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this 12b-1 Plan
shall not be affected thereby.
IN WITNESS WHEREOF, the Target Account has executed this 12b-1 Plan on the
day and year set forth below.
Date: _____________________
PFL ENDEAVOR TARGET ACCOUNT
By: ______________________________
Title: ______________________________
4
<PAGE>
SCHEDULE A
Rate (as a percentage
Policy of daily net assets)
------ --------------------
Older Endeavor None
Endeavor Variable Annuity 0.15% first 7 policy years
Endeavor Platinum Variable Annuity 0.25% first 10 policy years
PFL ENDEAVOR TARGET ACCOUNT
Date: ___________________________ By: ______________________________
Title: ______________________________
A-1
<PAGE>
EXHIBIT (11)(B)
---------------
ADMINISTRATIVE SERVICES AGREEMENT
WITH FIRST DATA INVESTORS SERVICES GROUP
-1-
<PAGE>
ADMINISTRATION AGREEMENT
The ADMINISTRATION AGREEMENT by and between FIRST DATA INVESTOR SERVICES
GROUP, INC., a Massachusetts corporation ("Investor Services Group"), and PFL
LIFE INSURANCE COMPANY ("PFL") on behalf of the PFL ENDEAVOR TARGET ACCOUNT, a
managed separate account created under the laws of the State of Iowa (the
"Account") dated as of July 1, 1998 (the "Agreement").
WHEREAS, the Account desires to retain Investor Services Group to render
certain administrative services with respect to each subaccount of the Account
listed in Schedule A hereto, as the same may be amended from time to time by the
parties hereto (collectively, the "Subaccounts"), and Investor Services Group is
willing to render such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Account hereby appoints Investor Services Group to
-----------
provide certain administrative services required by the Account on the terms set
forth in this Agreement. Investor Services Group accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided. In the event that the Account decides to retain Investor Services
Group to provide the administrative services hereunder with respect to one or
more subaccounts other than the Subaccounts, the Account shall notify Investor
Services Group in writing. If Investor Services Group is willing to render such
services, it shall notify the Account in writing whereupon such subaccount shall
become a Subaccount hereunder.
2. Delivery of Documents. The Account has furnished Investor Services
---------------------
Group with copies properly certified or authenticated of each of the following:
(a) Resolutions of the Account's Board of Managers authorizing the
appointment of Investor Services Group to provide certain administrative
services required by the Account for each Subaccount and approving this
Agreement;
(b) Each investment advisory agreement or management agreement between
the Account and an investment adviser or investment manager (the "Advisers")
with respect to the Subaccounts (the "Advisory Agreements");
(c) The Custody Agreement between _______________ (the "Custodian") and
the Account dated as of _______________ and all amendments thereto (the "Custody
Agreement");
(d) The Account's Registration Statement on Form N-3 (the "Registration
Statement") under the Securities Act of 1933 (the "1933 Act") and under the
Investment
-1-
<PAGE>
Company Act of 1940 (the "1940 Act") (File Nos. ________ and ________), as
declared effective by the Securities and Exchange Commission ("SEC") on
____________, relating to units of beneficial interest of the Account (the
"Units"), and all amendments thereto; and
(e) Each Subaccount's most recent prospectus and Statement of Additional
Information and all amendments and supplements thereto (collectively, the
"Prospectuses").
The Account will furnish Investor Services Group from time to time with
copies, properly certified or authenticated, of all amendments of or supplements
to the foregoing. Furthermore, the Account will provide Investor Services Group
with any other documents that Investor Services Group may reasonably request and
will notify Investor Services Group as soon as possible of any matter materially
affecting the performance of Investor Services Group of its services under this
Agreement.
3. Duties as Administrator. Subject to the overall supervision and
-----------------------
direction of the Board of Managers of the Account, Investor Services Group will
assist in supervising various aspects of the Account's administrative operations
and undertakes to perform the following specific services:
(a) Maintaining office facilities (which may be in the offices of
Investor Services Group or a corporate affiliate) and furnishing corporate
officers for the Account;
(b) Performing the functions ordinarily performed by a mutual fund
group's internal legal department as described in Schedule D to this Agreement,
furnishing data processing services, clerical services, and executive and
administrative services and standard stationery and office supplies in
connection with the foregoing;
(c) Accounting and bookkeeping services (including the maintenance of
such accounts, books and records of the Account as may be required by Section
31(a) of the 1940 Act and the rules thereunder);
(d) Internal auditing;
(e) Performing all functions ordinarily performed by the office of a
corporate treasurer, and furnishing the services and facilities ordinarily
incident thereto, including calculating the accumulation unit value of the Units
in conformity with the Subaccount's prospectus;
(f) Assisting in the preparation of reports to the Account's unitholders
of record (i.e. variable contract owners) and the SEC including, but not
necessarily limited to, Annual Reports and Semi-Annual Reports on Form N-SAR;
(g) Preparing various reports or other documents required by federal,
state and other applicable laws and regulations, other than those filed or
required to be filed by the Custodian or Adviser;
-2-
<PAGE>
(h) Assisting in preparing the Account's tax returns;
(i) Assisting each Adviser, at the Adviser's request, in monitoring and
developing compliance procedures for the Account which will include, among other
matters, procedures to assist the Advisers in monitoring compliance with each
Subaccount's investment objective, policies, restrictions, tax matters and
applicable laws and regulations;
(j) Performing all functions ordinarily performed by the office of a
corporate secretary, and furnishing the services and facilities incident
thereto, including preparation for, conduct of, and recording Managers' meetings
and unitholder meetings;
(k) Furnishing all other services identified on Schedule D annexed
hereto and incorporated herein which are not otherwise specifically set forth
above.
In performing its duties under this Agreement, Investor Services Group: (a)
will act in accordance with the Prospectuses and with the instructions and
directions of the Account and will conform to and comply with the requirements
of the 1940 Act and all other applicable federal or state laws and regulations;
and (b) will consult with legal counsel to the Account and PFL, as necessary and
appropriate. Furthermore, Investor Services Group shall not have or be required
to have any authority to supervise the investment or reinvestment of the
securities or other properties which comprise the assets of the Account or any
of its Subaccounts and shall not provide any investment advisory services to the
Account or any of its Subaccounts.
4. Compensation and Allocation of Expenses. Investor Services Group shall
---------------------------------------
bear all expenses in connection with the performance of its services under this
Agreement, except as indicated below.
(a) Investor Services Group will from time to time employ or associate
with itself such person or persons as Investor Services Group may believe to be
particularly suited to assist it in performing services under this Agreement.
Such person or persons may be officers and employees who are employed by both
Investor Services Group and the Account. The compensation of such person or
persons shall be paid by Investor Services Group and no obligation shall be
incurred on behalf of the Account in such respect.
(b) Investor Services Group shall not be required to pay any of the
following expenses incurred by the Account: membership dues in the Investment
Company Institute or any similar organization; investment advisory expenses;
costs of printing and mailing stock certificates, prospectuses, reports and
notices; interest on borrowed money; brokerage commissions; stock exchange
listing fees; taxes and fees payable to Federal, state and other governmental
agencies; fees of Managers of the Account who are not affiliated with Investor
Services Group; outside auditing expenses; outside legal expenses; or other
expenses not specified in this Section 4 which may be properly payable by the
Account or a Subaccount.
-3-
<PAGE>
(c) The Account will compensate Investor Services Group for the
performance of its obligations hereunder in accordance with the fees set forth
in the written Fee Schedule annexed hereto as Schedule B and incorporated
herein. Schedule B may be amended to add fee schedules for any additional
Subaccounts for which Investor Services Group has been retained as
Administrator.
(d) The Account will compensate Investor Services Group for its services
rendered pursuant to this Agreement in accordance with the fees set forth above.
Such fees do not include reasonable out-of-pocket disbursements of Investor
Services Group for which Investor Services Group shall be entitled to bill
separately. The types of out-of-pocket disbursements shall include, but shall
not be limited to, the items specified in Schedule C, annexed hereto and
incorporated herein, which schedule may be modified by Investor Services Group
upon not less than thirty days' prior written notice to the Account and the
Special Projects outlined in Schedule D hereto.
(e) Investor Services Group will bill the Account as soon as practicable
after the end of each calendar month, and said billings will be detailed in
accordance with the out-of-pocket schedule. The Account will pay to Investor
Services Group the amount of such billing by Federal Subaccounts Wire within
fifteen (15) business days after the Account's receipt of said bill. In
addition, Investor Services Group may charge a service fee equal to the lesser
of (i) one and one half percent (1-1/2%) per month or (ii) the highest interest
rate legally permitted on any past due billed amount.
(f) The Account acknowledges that the fees that Investor Services Group
charges the Account under this Agreement reflect the allocation of risk between
the parties, including the disclaimer of warranties in Section 7 and the
limitations on liability in Section 5. Modifying the allocation of risk from
what is stated here would affect the fees that Investor Services Group charges,
and in consideration of those fees, the Account agrees to the stated allocation
of risk.
5. Limitation of Liability.
-----------------------
(a) Investor Services Group shall not be liable for any reasonable error of
judgment or mistake of law or for any loss suffered by the Account or the
Subaccounts in connection with the performance of its obligations and duties
under this Agreement, except a loss resulting from Investor Services Group's
willful misfeasance, bad faith or negligence in the performance of such
obligations and duties, or by reason of its reckless disregard thereof.
(b) Neither party may assert any cause of action against the other party
under this Agreement that accrued more than two (2) years prior to the filing of
the suit (or commencement of arbitration proceedings) alleging such cause of
action.
(c) Each party shall have the duty to mitigate damages for which the other
party may become responsible.
-4-
<PAGE>
(d) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL INVESTOR SERVICES GROUP, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF
TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST
PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL
DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS
OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6. Indemnification.
----------------
(a) The Account shall indemnify and hold Investor Services Group
harmless from and against any and all claims, costs, expenses (including
reasonable attorneys' fees), losses, damages, charges, payments and liabilities
of any sort or kind which may be asserted against Investor Services Group or for
which Investor Services Group may be held to be liable in connection with this
Agreement or Investor Services Group's performance hereunder (a "Claim"), unless
such Claim resulted from a negligent act or omission to act or bad faith, or
willful misfeasance or reckless disregard by Investor Services Group in the
performance of its duties hereunder.
(b) Investor Services Group shall indemnify and hold the Account
harmless from and against any and all claims, costs, expenses (including
reasonable attorneys' fees), losses, damages, charges, payments and liabilities
of any sort or kind which may be asserted against the Account or for which the
Account may be held to be liable in connection with this Agreement (a "Claim"),
provided that such Claim resulted from a negligent act or omission to act, bad
faith, willful misfeasance or reckless disregard by Investor Services Group in
the performance of its duties hereunder.
(c) In any case in which one party (the "Indemnifying Party") may be
asked to indemnify or hold the other party (the "Indemnified Party") harmless,
the Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party although the
failure to do so shall not prevent recovery by the Indemnified Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Section 6 shall survive the termination of this
Agreement.
-5-
<PAGE>
7. EXCLUSION OF WARRANTIES. THIS IS A SERVICE AGREEMENT. EXCEPT AS
------------------------
EXPRESSLY PROVIDED IN THIS AGREEMENT, WITH RESPECT TO ANY SERVICES OR ANY GOODS
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT, INVESTOR SERVICES
GROUP DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
MADE TO THE ACCOUNT OR ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES REGARDING QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM
OR USAGE OF TRADE). INVESTOR SERVICES GROUP DISCLAIMS ANY WARRANTY OF TITLE OR
NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT.
8. Termination of Agreement.
------------------------
(a) This Agreement shall be effective on the date first written above
and shall continue for a period of two (2) years (the "Initial Term"), unless
earlier terminated pursuant to the terms of this Agreement. Thereafter, this
Agreement shall automatically be renewed for successive terms of two (2) years
("Renewal Terms") each.
(b) Either party may terminate this Agreement at the end of the Initial
Term or at the end of any subsequent Renewal Term upon not than less than ninety
(90) days or more than one hundred-eighty (180) days prior written notice to the
other party.
(c) In the event a termination notice is given by either Party, all
reasonable expenses associated with movement of records and materials and
conversion thereof will be borne by the non-terminating party.
(d) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") resulting in a material
loss to the other party, such other party (the "Non-Defaulting Party") may give
written notice thereof to the Defaulting Party, and if such material breach
shall not have been remedied within thirty (30) days after such written notice
is given, then the Non-Defaulting Party may terminate this Agreement by giving
thirty (30) days written notice of such termination to the Defaulting Party. If
Investor Services Group is the Non-Defaulting Party, its termination of this
Agreement shall not constitute a waiver of any other rights or remedies of
Investor Services Group with respect to services performed prior to such
termination or rights of Investor Services Group to be reimbursed for out-of-
pocket expenses. In all cases, termination by the Non-Defaulting Party shall
not constitute a waiver by the Non-Defaulting Party of any other rights it might
have under this Agreement or otherwise against the Defaulting Party.
9. Modifications and Waivers. No change, termination, modification, or
--------------------------
waiver of any term or condition of the Agreement shall be valid unless in
writing signed by each party. No such writing shall be effective as against
Investor Services Group unless said writing is executed by a Senior Vice
President, Executive Vice President or President of Investor Services Group. A
-6-
<PAGE>
party's waiver of a breach of any term or condition in the Agreement shall not
be deemed a waiver of any subsequent breach of the same or another term or
condition.
10. No Presumption Against Drafter. Investor Services Group and the Account
-------------------------------
have jointly participated in the negotiation and drafting of this Agreement.
The Agreement shall be construed as if drafted jointly by the Account and
Investor Services Group, and no presumptions arise favoring any party by virtue
of the authorship of any provision of this Agreement.
11. Publicity. Neither Investor Services Group nor the Account shall
----------
release or publish news releases, public announcements, advertising or other
publicity relating to this Agreement or to the transactions contemplated by it
without prior review and written approval of the other party; provided, however,
that either party may make such disclosures as are required by legal, accounting
or regulatory requirements after making reasonable efforts in the circumstances
to consult in advance with the other party.
12. Severability. The parties intend every provision of this Agreement to
-------------
be severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of
this paragraph, if a court determines that any remedy stated in this Agreement
has failed of its essential purpose, then all other provisions of this
Agreement, including the limitations on liability and exclusion of damages,
shall remain fully effective.
13. Miscellaneous.
-------------
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Account, or Investor Services Group
shall be sufficiently given if addressed to the party and received by it at its
office set forth below or at such other place as it may from time to time
designate in writing.
To the Account:
PFL Endeavor Target Account
c/o Endeavor Investment Advisers
2101 East Coast Highway, Suite 300
Corona del Mar, California 92625
Attn: Vincent J. McGuinnes, Jr.
With copy to:
Frederick R. Bellany, Esq.
Sutherland, Asbill and Brennan
-7-
<PAGE>
PFL Life Insurance Company
Attention: Financial Markets Division
Legal Department
To Investor Services Group:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
Attention: President
with a copy to Investor Services Group's General Counsel
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns and is
not intended to confer upon any other person any rights or remedies hereunder.
This Agreement may not be assigned or otherwise transferred by either party
hereto, without the prior written consent of the other party, which consent
shall not be unreasonably withheld; provided, however, that Investor Services
Group may, in its sole discretion, assign all its right, title and interest in
this Agreement to an affiliate, parent or subsidiary. Investor Services Group
may, in its sole discretion, engage subcontractors to perform any of the
obligations contained in this Agreement to be performed by Investor Services
Group. Any subcontracting shall be subject to the approval of the Account,
which shall not be unreasonably withheld.
(c) The laws of the Commonwealth of Massachusetts, excluding the laws
on conflicts of laws, shall govern the interpretation, validity, and enforcement
of this Agreement. All actions arising from or related to this Agreement shall
be brought in the state and federal courts sitting in the City of Boston, and
Investor Services Group and the Account hereby submit themselves to the
exclusive jurisdiction of those courts.
(d) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
14. Confidentiality.
---------------
(a) The parties agree that the Proprietary Information (defined below)
and the contents of this Agreement (collectively "Confidential Information") are
confidential information
-8-
<PAGE>
of the parties and their respective licensers. The Account and Investor Services
Group shall exercise reasonable care to safeguard the confidentiality of the
Confidential Information of the other. The Account and Investor Services Group
may each use the Confidential Information only to exercise its rights or perform
its duties under this Agreement. The Account and Investor Services Group shall
not duplicate, sell or disclose to others the Confidential Information of the
other, in whole or in part, without the prior written permission of the other
party. The Account and Investor Services Group may, however, disclose
Confidential Information to its employees who have a need to know the
Confidential Information to perform work for the other, provided that each shall
use reasonable efforts to ensure that the Confidential Information is not
duplicated or disclosed by its employees in breach of this Agreement. The
Account and Investor Services Group may also disclose the Confidential
Information to independent contractors, auditors and professional advisors,
provided they first agree in writing to be bound by the confidentiality
obligations substantially similar to this Section 14. Notwithstanding the
previous sentence, in no event shall either the Account or Investor Services
Group disclose the Confidential Information to any competitor of the other
without specific, prior written consent.
(b) Proprietary Information means:
(i) any data or information that is completely sensitive material,
and not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance, operations,
customer relationships, customer profiles, sales estimates, business plans, and
internal performance results relating to the past, present or future business
activities of the parties, their respective subsidiaries and affiliated
companies and the customers, clients and suppliers of any of them;
(ii) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and secret in
the sense that its confidentiality affords the parties a competitive advantage
over its competitors; and
(iii) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, show-how and trade secrets, whether or
not patentable or copyrightable.
(c) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
(d) The parties acknowledge that breach of the restrictions on use,
dissemination or disclosure of any Confidential Information would result in
immediate and irreparable harm, and money damages would be inadequate to
compensate the non-breaching party for that harm. the non-breaching party shall
be entitled to equitable relief, in addition to all other available remedies, to
redress any such breach.
-9-
<PAGE>
15. Force Majeure. No party shall be liable for any default or delay in the
--------------
performance of its obligations under this Agreement if and to the extent such
default or delay is caused, directly or indirectly, by (i) fire, flood, elements
of nature or other acts of God; (ii) any outbreak or escalation of hostilities,
war, riots or civil disorders in any country, (iii) any act or omission of the
other party or any governmental authority; (iv) any labor disputes (whether or
not the employees' demands are reasonable or within the party's power to
satisfy); or (v) nonperformance by a third party or any similar cause beyond the
reasonable control of such party, including without limitation, failures or
fluctuations in telecommunications or other equipment. In any such event, the
non-performing party shall be excused from any further performance and
observance of the obligations so affected only for so long as such circumstances
prevail and such party continues to use commercially reasonable efforts to
recommence performance or observance as soon as practicable.
16. Year 2000. Investor Services Group represents and warrants to the
---------
Account that: all equipment and software provided or used by Investor Services
Group or any of its subsidiaries or divisions in connection with rendering
services to the Account under the terms of this Agreement, include or shall
include design and performance capabilities so that prior to, during, and after
December 31, 1999 (the "Millennium Date Change") they will not malfunction,
produce invalid or incorrect results, cause an interruption in or diminish the
quality of the services provided to the Account, or abnormally cease to function
due to the Millennium Date Change. Such design and performance capabilities
shall include without limitation the ability to recognize and process the year
2000 and thereafter and to manage and manipulate data involving dates, including
without limitation, (i) single century and multi-century formulas and date
values without resulting in the generation of incorrect values involving such
dates or causing an abnormal ending, (ii) date data interfaces with
functionalities and data fields that indicate the century, and (iii) date-
related functions that indicate the century.
17. Entire Agreement. This Agreement, including all Schedules hereto,
-----------------
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed and delivered by their duly authorized officers as of the date first
written above.
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Barbara L. Worthen
---------------------------------------
Name: Barbara L. Worthen
-------------------------------------
Executive Vice President &
Title: General Counsel
------------------------------------
PFL Life Insurance Company, on behalf of the
PFL ENDEAVOR TARGET ACCOUNT
By: /s/ William L. Busler
---------------------------------------
Name: WILLIAM L. BUSLER
-------------------------------------
Title: PRESIDENT, PFLLIFE INSURANCE COMPANY
-----------------------------------
-11-
<PAGE>
SCHEDULE A
Target 5 Subaccount
Target 10 Subaccount
-12-
<PAGE>
SCHEDULE B
----------
FEE SCHEDULE
The Account shall pay Investor Services Group the following fees:
. a flat fee of $10,000 per annum per Subaccount.
. Investor Services Group shall be entitled to collect all out-of-pocket
fees described in Schedule C.
-13-
<PAGE>
SCHEDULE C
----------
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses include, but are not limited to, the following:
- Courier services
- Pricing services used by the Account
- Customized programming requests at $100 per hour
- Telephone, telecommunications and fax
- Travel and lodging for Board, Policyholder and Operations meetings
- Independent Auditor's Report (SAS 70)
- Forms and supplies for the preparation of Board meetings and other
materials for the Account
- Duplicating charges with respect to filings with Federal and state
authorities and Board meeting materials
- Postage of Board meetings materials and other materials to the Account's
Board members and service providers (including overnight or other
courier services)
- Such other expenses as are agreed to by Investor Services Group and the
Account
-14-
<PAGE>
SCHEDULE D
----------
ACCOUNTING AND ADMINISTRATIVE SERVICES
ROUTINE PROJECTS
. Daily, Weekly, and Monthly Reporting
. Portfolio and General Ledger Accounting
. Daily Pricing of all Securities
. Daily Valuation and NAV Calculation
. Comparison of NAV to market movement
. Review of price tolerance/fluctuation report
. Research items appearing on the price exception report
. Preparation of monthly ex-dividend monitor
. Daily cash reconciliation with the custodian bank
. Daily support and report delivery to Portfolio Management
. Daily calculation of advisor fees and waivers
. Daily calculation of distribution rates
. Daily maintenance of each Subaccount's general ledger including expense
accruals
. Daily price notification to other vendors as required
. Calculation of 30-day adjusted SEC yields
. Income Reconciliation
. Internal reconciliation
. Sending all trades and trade instructions to the Custodian for settlement
. Monitor corporate actions
. Provide cash availability to Adviser
. Preparation of month-end reconciliation package
. Monthly reconciliation of Subaccount expense records
. Preparation of monthly pay down gain/loss summaries
. Preparation of all annual and semi-annual audit work papers
. Preparation and Printing of Financial Statements
. Providing Policyholder Tax Information to Adviser
. Producing Drafts of IRS and State Tax Returns
. Treasury Services including:
Provide Officer for the Account
Expense Accrual Monitoring
Determination of Dividends
Prepare materials for review by the Board, e.g., 2a-7, 10f-3, 17a-7, 17e-1,
Rule 144a
. Tax and Financial Counsel
. Monthly Compliance Testing including Section 817H
-15-
<PAGE>
LEGAL, REGULATORY AND BOARD OF TRUSTEES SUPPORT
ROUTINE LEGAL SERVICES
CORPORATE SECRETARIAL
- ---------------------
. Provide Secretary/Assistant Secretary for Account
. Develop and maintain calendar of annual and quarterly board approvals and
. regulatory filings
. Prepare notice, agenda, memoranda, resolutions and background materials for
legal approval (including additional Subaccounts of the Account) at quarterly
board meetings; attend meetings; make presentations where appropriate;
prepare minutes; follow up on issues
. Provide support for one special board meeting per year and written consent
votes where needed
. Provide support for one unitholder meeting per year including preparation of
proxy materials
REGULATORY/FILINGS
- ------------------
. Review Post-Effective Amendments
. Prepare Rule 24f-2 Notice
. Review Form N-SAR
. Review Annual and Semi-Annual Financial Reports
. Prepare prospectus supplements as needed
. Review proxy materials for special unitholder meetings
MISCELLANEOUS ROUTINE LEGAL SERVICES
- ------------------------------------
. Communicate significant regulatory or legislative developments to Account
management and Managers and provide related planning assistance where needed
. Consult with Account management regarding portfolio compliance and corporate
and regulatory issues as needed
. Maintain effective communication with outside counsel and review legal bills
of outside counsel
. Coordinate the printing and mailing process with outside printers for all
unitholder publications
. Arrange D&O/E&O insurance and fidelity bond coverage for Account
Assist in monitoring Code of Ethics reporting and provide such reports to
Adviser
SPECIAL LEGAL SERVICES (BILLED SEPARATELY)*
. Assist in managing SEC audits of Subaccounts
. Review sales material and advertising for Subaccounts, SEC and NASD
compliance Assist in conversion
Coordinate time and responsibility schedules
-16-
<PAGE>
Draft notice, agenda, memoranda, resolutions and background materials for
board approval
. Assist in new investment Subaccount start-up (to the extent requested)
Coordinate time and responsibility schedules
Draft/file registration statement (including investment objectives/policies
and prospectuses)
Respond to and negotiate SEC comments
Draft notice, agenda and resolutions for organizational meeting; attend
board meeting;
make presentations where appropriate; prepare minutes and follow up on
issues
. Develop compliance manual for Subaccounts
. Prepare notice, agenda, memoranda and background materials for special board
meetings, make presentations where appropriate, prepare minutes and follow up
on issues (in excess of one per year)
. Prepare proxy material for special unitholder meetings (in excess of one per
year)
. Prepare PEA for special purposes (e.g., new Subaccounts or classes, changes
-----
in advisory relationships, mergers, restructurings)
. Assist in extraordinary non-recurring projects, including consultative legal
services as needed, e.g.:
Arrange CDSC financial programs
Prospectus simplification
Profile prospectuses
Exemptive order applications
* SPECIAL LEGAL SERVICES SHALL BE BILLED AT A RATE OF $185 PER HOUR SUBJECT TO
CERTAIN PROJECT CAPS AS MAY BE AGREED TO BY INVESTOR SERVICES GROUP AND THE
ACCOUNT. NO SPECIAL LEGAL SERVICES SHALL BE UNDERTAKEN BY INVESTOR SERVICES
GROUP WITHOUT THE PRIOR WRITTEN CONSENT OF THE ACCOUNT.
-17-
<PAGE>
EXHIBIT (11)(C)
---------------
BROKERAGE ENHANCEMENT PLAN
<PAGE>
BROKERAGE ENHANCEMENT PLAN
OF
PFL ENDEAVOR TARGET ACCOUNT
SECTION 1. PFL Endeavor Target Account (the "Account") is a managed separate
account created by PFL Life Insurance Company (the "Life Company") under the
laws of the State of Iowa, the accumulation or annuity units ("Units") of the
sub-accounts of which may from time to time be offered for the purpose of
funding variable annuity contracts and variable life policies (collectively
referred to herein as "Variable Contracts").
SECTION 2. The Account currently offers Units in two sub-accounts, The Dow
Target 10 Subaccount and The Dow Target 5 Subaccount (the "Existing
Subaccounts"- such Subaccounts, together with all other Subaccounts subsequently
established by the Account, being referred to herein collectively as the
"Subaccounts").
SECTION 3. In order to provide for the implementation of the payments provided
for pursuant to this Brokerage Enhancement Plan (the "Plan"), the Account may
enter into a Distribution Agreement (the "Agreement") with Endeavor Group
pursuant to which Endeavor Group will engage in promotional and marketing of the
Account's Units, and pursuant to which each Subaccount participating in this
Plan will authorize payments to Endeavor Group, as provided in Section 4 hereof,
for various costs incurred or paid by Endeavor Group in connection with the
distribution of Units of that Subaccount. Such Agreement, or any modification
thereof, shall become effective with respect to the Units of any Subaccount in
compliance with Section 12(b) of the Investment Company Act of 1940, as amended
(the "1940 Act"), and Rule 12b-1 thereunder as the same may be amended from time
to time.
SECTION 4. The Account may expend amounts consisting solely of that portion of
brokerage commissions paid by the Subaccounts in connection with their portfolio
transactions and made available to Endeavor Group or other introducing brokers
by broker-dealers executing such portfolio transactions for the benefit of the
Subaccounts to finance activities principally intended to result in the sale of
Units of the Subaccounts. Expenses permitted to be paid pursuant to this Plan
shall include, but not necessarily be limited to, the following costs:
<PAGE>
A. printing and mailing of Account prospectuses, statements of additional
information, any supplements thereto and Unitholder reports for existing and
prospective Variable Contract owners;
B. development, preparation, printing and mailing of Account
advertisements, sale literature and other promotional materials describing
and/or relating to the Subaccounts and including materials intended for use
within the Life Company, or for broker-dealer only use or retail use;
C. holding or participating in seminars and sales meetings designed to
promote the distribution of Account Units;
D. marketing fees requested by broker-dealers who sell Variable Contracts;
E. obtaining information and providing explanations to Variable Contract
owners regarding Account investment objectives and policies and other
information about the Account and the Subaccounts, including the performance of
the Subaccounts;
F. training sales personnel regarding sales of Variable Contracts and
underlying Units of the Account;
G. compensating broker-dealers and/or their registered representatives in
connection with the allocation of cash values and premiums of the Variable
Contracts to the Account;
H. personal service and/or maintenance of Variable Contract owner accounts
with respect to Account Units attributable to such accounts; and
I. financing any other activity that the Account's Board of Managers
determines is primarily intended to result in the sale of Units.
SECTION 5. This Plan shall not take effect with respect to any Existing
Subaccount until it has been approved by votes of a majority of (a) the
outstanding Units of such Subaccount, (b) the Managers of the Account, and (c)
those Managers of the Account who are not "interested persons" of the Account
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of this Plan or any agreements of the Account related
hereto or any other person related to this Plan ("Disinterested Managers") cast
in person at a meeting called for the purpose of voting on this Plan. As
additional Subaccounts of the Account are established, this Plan shall become
effective with respect to each such Subaccount upon the initial public offering
of such new Subaccount's Units, provided that this Plan with respect to such
Subaccount has been approved by votes of a majority of both (a) the Managers of
the Account and (b) the Disinterested Managers cast in person at a meeting
called for the purpose of voting on such approval and by the initial Unitholder
of the Subaccount so long as such initial Unitholder's approval is required
under the 1940 Act and the rules
<PAGE>
thereunder. In addition, any agreement related to this Plan and entered into by
any Subaccount in connection therewith shall not take effect until it has been
approved by votes of a majority of (a) the Board of Managers of the Account, and
(b) the Disinterested Managers of the Account.
SECTION 6. Unless sooner terminated pursuant to Section 8, this Plan shall
continue in effect for a period of one year from the date it takes effect and
thereafter shall continue in effect so long as such continuance is specifically
approved annually by votes of a majority of both (a) the Board of Managers of
the Account and (b) the Disinterested Managers of the Account, cast in person at
a meeting called for the purpose of voting on this Plan.
SECTION 7. Any person authorized to direct the disposition of monies paid or
payable pursuant to this Plan or any related agreement shall provide to the
Account's Board of Managers and the Board shall review at least quarterly a
written report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 8. This Plan may be terminated at any time with respect to any
Subaccount by vote of a majority of the Disinterested Managers, or by vote of a
majority of the Units of the Subaccount.
SECTION 9. Any agreement of the Account, with respect to any Subaccount, related
to this Plan shall be in writing and shall provide:
A. That such agreement may be terminated with respect to a Subaccount at
any time without payment of any penalty, by vote of a majority of the
Disinterested Managers or by a vote of a majority of the outstanding Units of
such Subaccount on not more than sixty days' written notice to any other party
to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
SECTION 10. This Plan may not be amended in any material respect, including, but
not limited to, changing the sources of monies from which distribution expenses
are paid provided for in Section 3 with respect to a Subaccount unless such
amendment is approved by a vote of at least a majority (as defined in the 1940
Act) of the outstanding Units of such Subaccount, and no material amendment to
this Plan shall be made unless approved by votes of a majority of (a) the Board
of Managers of the Account, and (b) the Disinterested Managers, cast in person
at a meeting called for the purpose of voting on such amendment.
SECTION 11. While this Plan is in effect with respect to any Subaccount, the
selection and nomination of the Disinterested Managers of the Account shall be
committed to the discretion of the existing Disinterested Managers of the
Account.
<PAGE>
EXHIBIT (11)(E)
---------------
DISTRIBUTION AGREEMENT
<PAGE>
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made this 1st day of July, 1998, between PFL Endeavor Target
Account (the "Account") and Endeavor Group, a California corporation (the
"Distributor") each with offices at 2101 East Coast Highway, Suite 300, Corona
del Mar, California 92625.
WHEREAS, the Account was organized to act as the funding vehicle for
certain individual variable life insurance policies and individual and group
variable annuity contracts (collectively referred to herein as "Variable
Contracts") offered by PFL Life Insurance Company ("PFL");
WHEREAS, the Account is a registered managed separate account, which
currently offers Variable Contracts funded in whole or in part by two sub-
accounts, each as set forth on Schedule A hereto (the "Existing Sub-Accounts"),
and the Account may offer one or more additional Sub-Accounts in the future; and
WHEREAS, it is contemplated that, in addition to entering into sales
agreements with PFL, the Distributor shall engage in certain promotional and
marketing efforts on behalf of the Account, as described in the Brokerage
Enhancement Plan pursuant to Rule 12b-1 adopted by the Account.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. (a) In the event that the Account from time to time designates one or
more Sub-Accounts in addition to the Existing Sub-Accounts ("Additional Sub-
Accounts"), it shall notify the Distributor. If the Distributor is willing to
perform services hereunder for the Additional Sub-Accounts, it shall so notify
the Account. Thereafter, the Account and the Distributor shall mutually agree
to amend Schedule A to this Agreement in writing to add the Additional Sub-
Accounts and the Additional Sub-Accounts shall be subject to this Agreement,
subject to the approval of the Board of Managers as set forth in Section 6.(a)
below. ThE Existing Sub-Accounts and all Additional Sub-Accounts subject to
this Agreement are referred to collectively as "Sub-Accounts."
2. (a) All sales literature and advertisements used by the Distributor in
connection with the promotion and marketing of Variable Contracts shall be
subject to approval by the Account. The Account authorizes the Distributor, in
connection with the promotion and marketing of Variable Contracts, to provide
only such information and to make only such statements or representations as are
contained in the Account's then-current Prospectus or in sales literature or
advertisements approved by the Account or in such financial and other statements
which are furnished in writing to the Distributor pursuant to the next
paragraph. The Account shall not be responsible in any way for any information
provided or statements or representations made by the Distributor or its
<PAGE>
representatives or agents other than the information, statements and
representations described in the preceding sentence. The Distributor shall
review all materials submitted to it by PFL that describe the Account, the
Variable Contracts or the Account's investment manager and investment advisers.
The Distributor shall not be responsible for any information provided or
statements or representations made by PFL, its representatives or agents, or any
other persons or entities other than the Distributor's representatives or
agents.
(b) The Account shall keep the Distributor fully informed with regard
to its affairs, shall furnish the Distributor with a certified copy of all
financial statements and a signed copy of each report prepared by its
independent certified public accountants, and shall cooperate fully in the
efforts of the Distributor to promote and market the Variable Contracts and in
the performance by the Distributor of all its duties under this Agreement.
3. (a) The Account will pay or cause to be paid:
(i) registration fees for registering its shares under the
Securities Act of 1933 (the "1933 Act") as required;
(ii) the expenses, including counsel fees, of preparing
registration statements and such other documents as the Account
believes are necessary for registering the Variable Contracts
with the Securities and Exchange Commission (the "SEC") and such
states as are deemed necessary or appropriate;
(iii) expenses incident to preparing amendments to registration
statements of the Account under the 1933 Act and the Investment
Company Act of 1940, as amended (the "1940 Act");
(iv) expenses for preparing and setting in type all prospectuses
and the expense of supplying them to the then existing Variable
Contract owners or beneficial owners of Variable Contracts
(including owners of Variable Contracts whose Contracts use one
or more Sub-Accounts as their funding vehicle);
(v) expenses incident to the issuance of its Variable Contracts
such as the cost of certificates, if any, taxes and fees of the
transfer agent for establishing Variable Contract owner record
accounts and confirmations.
(b) The Distributor shall pay all of its own costs and expenses
connected with the promotion and marketing of Variable Contracts
("Distribution Expenses"), except that certain Distribution
Expenses
-2-
<PAGE>
may be reimbursed to the Distributor as provided in Section 4
hereof.
4. (a) Pursuant to a Brokerage Enhancement Plan (the "Plan") adopted by
the Board of Managers of the Account in accordance with Section 12(b) of the
1940 Act, Rule 12b-1 and other rules and regulations promulgated thereunder, as
the same may be, from time to time, issued or amended, the Account, on behalf of
a Sub-Account that has approved the Plan pursuant to Section 5 thereof, may
reimburse the Distributor, for Distribution Expenses as described in Section
4(b) hereof. Reimbursements shall be payable only from brokerage commissions
paid by the Sub-Account in connection with its portfolio transactions which have
been made available for use by the Sub-Account as described in the Plan.
Reimbursements to the Distributor shall be payable on a monthly basis. Such
reimbursement may be made only for the one year period commencing on the date
hereof and for each twelve month period (or portion thereof) thereafter, in
which the Plan is in effect for that Sub-Account.
(b) Distribution Expenses reimbursable hereunder shall include, but
not necessarily be limited to, the following costs:
(i) printing and mailing of Account prospectuses, statements of
additional information, any supplements thereto and shareholder
reports for existing and prospective Variable Contract owners;
(ii) development, preparation, printing and mailing of Account
advertisements, sale literature and other promotional materials
describing and/or relating to the Sub-Accounts and including
materials intended for use within the PFL, or for broker-dealer
only use or retail use;
(iii) holding or participating in seminars and sales meetings
designed to promote the distribution of Variable Contracts;
(iv) marketing fees requested by broker-dealers who sell
Variable Contracts;
(v) obtaining information and providing explanations to
Variable Contract owners regarding Account investment
objectives and policies and other information about the Account
and the Sub-Accounts, including the performance of the Sub-
Accounts;
(vi) training sales personnel regarding sales of Variable
Contracts;
(vii) compensating broker-dealers and/or their registered
representatives in connection with the allocation of cash values
and premiums of the Variable Contracts to the Account;
-3-
<PAGE>
(viii) personal service and/or maintenance of Variable Contract
owner accounts; and
(ix) financing any other activity that the Account's Board of
Managers determines is primarily intended to result in the sale
of Variable Contracts.
(c) The Distributor shall submit annual reimbursable Distribution
Expense budgets to the Board of Managers of the Account. As soon as practicable
after the end of each calendar quarter, the Distributor shall submit to the
Board of Managers for ratification reports of Distribution Expenses reimbursed
as to each Sub-Account for that quarter. The Board of Managers will consider
each report at its next regular meeting after such report is submitted, and the
Distributor shall only retain those reimbursements that are approved by the
Board of Managers, including a majority of the "Disinterested Managers" (as that
term is defined in Section 6 hereof).
5. (a) The Account shall maintain a currently effective Registration
Statement on Form N-3 and shall file with the SEC such reports and other
documents as may be required under the 1933 Act and the 1940 Act or by the rule
and regulations of the SEC thereunder.
(b) The Account represents and warrants that its Registration
Statement, post-effective amendments, Prospectus and Statement of Additional
Information (excluding statements based upon written information furnished by
the Distributor expressly for inclusion therein) shall not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that all statements or information furnished to the Distributor, pursuant to
Section 2(b) hereof shall be true and correct in all material respects.
6. (a) This Agreement shall take effect on the date set forth above,
provided it has been approved by a vote of the majority of the Managers of the
Account and those Managers of the Account who are not "interested persons" of
the Account and who have no direct or indirect financial interest in the
operation of the Plan or this Agreement (the "Disinterested Managers"), cast in
person at a meeting called for the purpose of voting on this Agreement. This
Agreement shall remain in full force and effect until July 1, 1999, and may be
continued for twelve month periods (or portions thereof) thereafter; provided
that such continuance shall be specifically approved annually by a majority of
the Board of Managers of the Account and by a majority of the Disinterested
Managers. This Agreement may be amended, with respect to any Sub-Account, with
the approval of a majority of the Board of Managers and by a majority of the
Disinterested Managers.
(b) This Agreement, with respect to any Sub-Account, may be
terminated, at any time without payment of any penalty, by vote of a majority of
the
-4-
<PAGE>
Disinterested Managers or by vote of a majority of the outstanding voting
securities of that Sub-Account, or may be terminated by the Distributor, in
either case on not more than 60 days' written notice delivered personally by
registered mail, postage prepaid, to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment.
(d) The terms "interested persons," "assignment" and "vote of a
majority of the outstanding voting securities" as used herein shall have the
meanings given to them in the 1940 Act.
7. In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties ("disabling conduct") hereunder on
the part of the Distributor (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity affiliated with
the Distributor or retained by it to perform or assist in the performance of its
obligations under this Agreement) the Distributor shall not be subject to
liability to the Account or to any Variable Contract owner of the Sub-Accounts
of the Account for any act or omission in the course of, or connected with,
rendering services hereunder, or for any loss suffered by any of them in
connection with the matters to which this Agreement relates.
8. (a) The account shall indemnify and hold harmless the Distributor and
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damage or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damage or expense and reasonable counsel fees incurred in
connection therewith), which the Distributor or such controlling person may
incur under the 1933 Act or under common law or otherwise, arising out of or
based upon any untrue statement, or alleged untrue statement, of a material fact
contained in the Registration Statement, as from time to time amended or
supplemented, any prospectus or annual or interim report to Variable Contract
owners of the Account, or arising out of or based upon any omission, or alleged
omission, to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, unless such statement or omission was made
in reliance upon, and in conformity with, information furnished to the Account
in connection therewith by or on behalf of the Distributor; provided, however,
that in no case (i) is the indemnity of the Account in favor of the Distributor
and any such controlling persons to be deemed to protect such Distributor or any
such controlling persons thereof against any liability to the Account or its
security holders to which the Distributor or any such controlling persons would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of the reckless
disregard of their obligations and duties under this Agreement; or (ii) is the
Account to be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Distributor or any such controlling
persons, unless the
-5-
<PAGE>
Distributor or such controlling persons, as the case may be, shall have notified
the Account in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Distributor or such controlling persons (or after the
Distributor or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Account of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Account will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the
Account elects to assume the defense, such defense shall be conducted by counsel
chosen by it and satisfactory to the Distributor or such controlling person or
persons, defendant or defendants in the suit. In the event the Account elects to
assume the defense of any such suit and retain such counsel, the Distributor or
such controlling person or persons, defendant or defendants in the suit, shall
bear the fees and expenses of any additional counsel retained by them, but, in
case the Account does not elect to assume the defense of any such suit, it will
reimburse the Distributor or such controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The account shall promptly notify the Distributor of the
commencement of any litigation or proceeding against it or any of its officers
or directors in connection with the issuance or sale of any of the Variable
Contracts.
(b) The Distributor shall indemnify and hold harmless the Account and
each of its Managers and officers and each person, if any, who controls the
Account against any loss, liability, claim, damage or expense described in the
foregoing indemnity contained in Section 8(a), but only with respect to
statements or omissions made in reliance upon, and in conformity with,
information furnished to the Account in writing by or on behalf of the
Distributor for use in connection with the Registration Statement, as from time
to time amended, or the annual or interim reports to Variable Contract owners.
In case any action shall be brought against the Account or any persons so
indemnified, in respect of which indemnity may be sought against the
Distributor, the Distributor shall have the rights and duties given to the
Account, and the Account and each person so indemnified shall have the rights
and duties given to the Distributor by the provisions of Section 8(a).
9. This Agreement is made by the Account, on behalf of each Sub-Account,
pursuant to authority granted by the Board of Managers, and the obligations
created hereby are not binding on any of the Managers or Variable Contract
owners of the Account individually, but bind only the property of the Account.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed by their duly authorized officers and under their respective seals
on the day and year first above written.
PFL ENDEAVOR TARGET ACCOUNT
Attest:
/s/ Pamela Shelton By: /s/ Vincent J. McGuinness Jr
- ----------------------------- --------------------------------------
Secretary Vincent J. McGuinness, Jr., President
ENDEAVOR GROUP
Attest:
/s/ Pamela Shelton By: /s/ Vincent J. McGuinness
- ----------------------------- --------------------------------------
Secretary Vincent J. McGuinness,
Chief Executive Officer
-7-
<PAGE>
SCHEDULE A
The Dow Target 5 Sub-Account
The Dow Target 10 Sub-Account
-8-
<PAGE>
EXHIBIT (13)(A)
---------------
OPINION AND CONSENT OF ACTUARY
<PAGE>
September 15, 1998
PFL Life Insurance Company
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499-0001
RE: PFL ENDEAVOR TARGET ACCOUNT REGISTRATION ON FORM N-3
SEC FILE NO. 333-47027
Dear Sir/Madam:
With regard to the above registration statement, I have examined such documents
and made such inquiries as I have deemed necessary and appropriate, and on the
basis of such examination, have the following opinions:
Fees and charges deducted under the Endeavor Variable Annuity policies are those
deemed necessary to appropriately reflect:
(1) the expenses incurred in the acquisition and distribution of the Policies,
(2) the expenses associated with the development and servicing of the
policies,
(3) the assumption of certain risks arising from the operation and management
of the Policies and/or riders to the Policy and that provides for a
reasonable margin of profit.
Fees and charges assessed against the policy values in the Variable Account
include:
(i) Service Charge and Administrative Charge
(ii) Contingent Deferred Sales Charge (Surrender Charge)
(iii) Mortality and Expense Risk Fee (M&E)
(iv) Distribution Financing Charge
(v) Taxes (including Premium and other Taxes if applicable)
(vi) A fee for the Guaranteed Minimum Income Benefit Rider, if purchased as a
rider to the Policy.
The magnitude of each of the individual charges listed above in (i) through (vi)
is established in the pricing of the Endeavor Variable Annuity, to achieve a
reasonable Return on Investment
<PAGE>
PFL Life Insurance Company
September 15, 1998
Page 2
(ROI), which is within the range of industry practice with respect to comparable
variable annuity products. To maintain a reasonable ROI, certain fees and
charges may be increased in order to support increased expense levels, enhanced
death benefit options, and income benefits.
In the process of determining the reasonable ROI, each individual charge is also
established within the reasonable range of industry practice. For example, in
conjunction with the pricing process the company has analyzed publicly available
information pertaining to similar industry products, taking into consideration
such factors as current charge levels, the existence of charge level guarantees,
guaranteed death benefits, and guaranteed annuity rates. The methodology and
results of the comparative surveys included in this analysis are maintained at
the company's administrative offices.
Except by coincidence, it is not expected that actual charges assessed in a
given year would exactly offset actual expenses incurred. Acquisition expenses
(as well as major product and/or systems development expenses) are incurred "up
front" and recovered, with a reasonable profit margin, through future years'
charges. In addition, the company cannot increase certain charges under the
Policies in the pricing process.
Therefore, in my opinion, the fees and charges deducted under the Policies, in
the aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the company.
I hereby consent to the use of this opinion, which is included as an Exhibit to
the Registration Statement.
/s/ Calvin R. Birkey
- --------------------
Calvin R. Birkey, FSA, MAAA
Managing Actuary
PFL Life Insurance Company
