As filed with the Securities and Exchange Commission on February 25, 1999
Registration Nos. 333-60337
and 811-08911
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 1 /x/
And
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 /x/
GLENBROOK LIFE SCUDDER
VARIABLE ACCOUNT (A)
(Exact Name of Registrant)
Glenbrook Life and Annuity Company
(Name of Depositor)
Michael J. Velotta
Vice President, Secretary and General Counsel
Glenbrook Life and Annuity Company
3100 Sanders Road, Northbrook, Illinois 60062
(847) 402-2400
( Name and Address of Agent of Service)
Copies to:
Terry R. Young, Esq. Stephen E. Roth, Esq.
Allstate Life Financial Service, Inc. Sutherland Asbill & Brennan LLP
3100 Sanders Road 1275 Pennsylvania Avenue, N.W.
Northbrook, Illinois 60062 Washington, D.C. 20004-2415
Approximate Date of Proposed Public Offering:
As soon as practicable after effectiveness of the Registration Statement
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It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b) of Rule 485
/ / On ____________, pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a) of Rule 485
/x/ On May 1, 1999, pursuant to paragraph (a) of Rule 485
Title of Securities Being Registered:
Units of Interest in the Separate Account
under flexible payment deferred variable annuity contracts.
<PAGE>
Scudder Horizon Advantage Variable Annuity
Prospectus
May 1, 1999
Please read this prospectus carefully before investing, and keep it for future
reference. It contains important information about the Scudder Horizon Advantage
variable annuity contract.
To learn more about the contract, you may want to read the Statement of
Additional Information ("SAI"), dated May 1, 1999. For a free copy of the SAI,
contact us at:
Glenbrook Life and Annuity Company
Customer Service Center
8301 Maryland Avenue
St. Louis, Missouri 63105
1-(800)242-4402
We have filed the SAI with the U.S. Securities and Exchange Commission ("SEC")
and have incorporated it by reference into this prospectus. The SAI's table of
contents appears at the end of this Prospectus.
The SEC maintains an Internet website (http://www.sec.gov) that contains the
SAI, material incorporated by reference, and other information.
This Prospectus is valid only when accompanied by a current prospectus for the
Scudder Variable Life Investment Fund.
The SEC has not approved or disapproved these securities or passed upon the
adequacy of the prospectus. Any representation to the contrary is a criminal
offense.
Individual and Group Flexible Premium Deferred
Variable Annuity Contracts
offered by
Glenbrook Life and Annuity Company
through
Glenbrook Life Scudder Variable Account (A)
The Contract has 9 funding choices - a standard fixed account and a dollar cost
averaging fixed account (both pay a guaranteed minimum rate of interest), and 7
subaccounts of the Glenbrook Life Scudder Variable Account (A). Money you direct
to a subaccount is invested exclusively in a single portfolio of the Scudder
Variable Life Investment Fund. The 7 Scudder portfolios we offer through the
subaccounts under this Contract are:
Scudder Variable Life Investment Fund
o Money Market Portfolio
o Bond Portfolio
o Capital Growth Portfolio
o Balanced Portfolio
o International Portfolio
o Growth and Income Portfolio
o Global Discovery Portfolio
The Contract is available to individuals, as well as to certain group and
individual retirement plans. You may also purchase the Contract for use as an
Individual Retirement Annuity that qualifies for special federal income tax
treatment ("IRA").
Variable annuity policies involve certain risks, including possible loss of
principal.
o The investment performance of the portfolios is which the subaccounts
invest will vary.
o We do not guarantee how any of the portfolios will perform.
o The Contract is not a deposit or obligation of any bank, and no bank
endorses or guarantees the Contract.
o Neither the U.S. Government nor any federal agency insures your investment
in the Contract.
<PAGE>
Table of Contents
Glossary................................................................1
Highlights..............................................................2
The Contract.........................................................2
Free-Look............................................................2
How to Invest........................................................3
Investment Alternatives..............................................3
Fixed Account Options................................................3
Transfers Among Investment Alternatives..............................3
Charges and Deductions...............................................4
Access to Your Money.................................................4
Death Benefit........................................................4
Income Payments......................................................4
Inquiries............................................................5
Fee Table...............................................................6
Example..............................................................7
Condensed Financial Information......................................7
Calculation of Yield and Total Returns..................................8
Yields and Standard Total Return.....................................8
Other Performance Data...............................................8
Glenbrook Life and the Variable Account.................................9
Glenbrook Life and Annuity Company...................................9
The Variable Account................................................10
The Fund...............................................................10
Scudder Variable Life Investment Fund...............................10
Investment Adviser for the Funds....................................11
The Fixed Account Options..............................................12
General Description.................................................12
Standard Fixed Account Option.......................................12
The Dollar Cost Averaging Fixed Account.............................12
Purchasing the Contract................................................13
Limits on Purchase Payments.........................................13
Free-Look Period....................................................13
Crediting Your Initial Purchase Payment.............................13
Allocating Your Purchase Payments...................................13
Accumulation Units..................................................14
Accumulation Unit Value.............................................14
Transfers..............................................................14
Telephone Transfers.................................................15
Dollar Cost Averaging...............................................15
Automatic Portfolio Rebalancing.....................................15
Access to Your Money...................................................16
Withdrawals.........................................................16
Annuity Income Payments................................................17
Payout Start Date for Income Payments...............................17
Variable Income Payments............................................17
Fixed Income Payments...............................................18
Annuity Transfers...................................................18
Income Plans........................................................18
Death Benefits.........................................................19
Death Benefit Payment Provisions....................................19
Death Benefit Amount................................................19
Enhanced Death Benefit Rider........................................20
Charges and Other Deductions...........................................20
Deductions from Purchase Payments...................................20
Withdrawal Charge...................................................21
Contract Maintenance Charge.........................................21
Administrative Expense Charge.......................................21
Mortality and Expense Risk Charge...................................21
Taxes...............................................................21
Transfer Charges....................................................22
Fund Expenses.......................................................22
Federal Tax Matters....................................................22
Introduction........................................................22
Taxation of Annuities in General....................................22
Tax Deferral......................................................22
NonNatural Owners.................................................22
Diversification Requirements......................................22
Ownership Treatment...............................................23
Delayed Maturity Dates............................................23
Taxation of Partial and Full Withdrawals..........................23
Taxation of Annuity Payments......................................24
Taxation of Death Benefits........................................24
Penalty Tax on Premature Distributions............................24
Aggregation of Annuity Contracts..................................24
Tax Qualified Contracts...........................................24
Restrictions Under Section 403(b) Plans...........................25
Roth Individual Retirement Annuities..............................25
Income Tax Withholding............................................25
General Matters........................................................26
Owner...............................................................26
Beneficiary.........................................................26
Assignments.........................................................26
Delay of Payments...................................................26
Modification........................................................27
Customer Inquiries..................................................27
Distribution of the Contracts..........................................27
Voting Rights..........................................................27
General Provisions.....................................................28
Legal Proceedings...................................................28
Financial Statements................................................28
Legal Matters.......................................................28
Year 2000...........................................................28
Statement of Additional Information Table of Contents..................29
Order Form..........................................................29
Condensed Financial Information........................................30
<PAGE>
Glossary
For your convenience, we are providing a glossary of the special terms we use
in this prospectus.
accumulation period: The period that begins when we issue your Contract and ends
when you receive annuity income payments. During the accumulation period,
earnings accumulate on a tax-deferred basis.
accumulation unit: The measurement we use to calculate the value of each
subaccount at the end of each Valuation Period.
annuitant: The person(s) you identify whose life we use to determine the amount
and duration of annuity income payments. You may choose joint annuitants in some
cases.
beneficiary: The person(s) you select to receive the benefits of the Contract if
no Owner is living.
Contract Anniversary: The same date in each year as the issue date.
Contract Value: The total value of your Contract. It is equal to the value you
have under the Contract in the subaccounts of the Variable Account plus your
value in the fixed account options.
Contract Year: A period of 12 months that starts on the issue date of your
Contract or on any 12 month anniversary of that date.
fixed account options: Two options to which you can direct your money under the
Contract that provide a guarantee of principal and minimum interest. The fixed
account options are the dollar cost averaging fixed account ("DCA Account") and
the standard fixed account. Fixed account assets are our general account assets.
Fund: The Scudder Variable Life Investment Fund, an open-end diversified
management investment company composed of portfolios in which the subaccounts
invest.
income plan: The plan you choose under which we will pay annuity payments to you
after the Payout Start Date based on the money you accumulate in the Contract.
You can choose whether the dollar amount of the payments you receive will be
fixed or will vary with the investment results of the subaccounts in which you
are invested at that time, or whether you receive a combination of fixed and
variable payments.
investment alternatives: The subaccounts of the Variable Account, the dollar
cost averaging fixed account and the standard fixed account.
issue date: The date we issue your Contract. We measure Contract years and
Contract Anniversaries from the issue date.
Payout Start Date: The date on which we begin to pay you annuity income
payments.
portfolio: A separate investment portfolio of the Fund in which a subaccount of
the Variable Account invests.
Qualified Contracts: Contracts issued under plans that qualify for special
federal income tax treatment under Sections 401(a), 403(a), 403(b), 403A, 408
and 408A of the Internal Revenue Code.
subaccount: A subdivision of the Variable Account that invests exclusively in
shares of a single portfolio of the Fund. The investment performance of each
subaccount is linked directly to the investment performance of the portfolio in
which it invests.
Valuation Date: Each day on which we value the assets in the subaccounts. This
is generally each day that the New York Stock Exchange ("NYSE") is open for
trading.
Valuation Period: The period between Valuation Dates that begins as of the close
of regular trading on the NYSE (usually 4:00 pm Eastern Time) on one Valuation
Date and ends as of the close of regular trading on the next Valuation Date.
Variable Account: Glenbrook Life Scudder Variable Account (A), a separate
investment account composed of subaccounts that we established to receive and
invest purchase payments paid under the Contract.
We, us, our, Glenbrook Life, the Company: Glenbrook Life and Annuity Company.
you, your, the Owner: The person having the privileges of ownership stated in
the Contract.
<PAGE>
Highlights
These highlights provide only a brief overview of the more important
features of the Contract. More detailed information about the Contract appears
later in this Prospectus. Please read this Prospectus carefully.
The Contract
The Contract provides a way for you to invest on a "tax-deferred" basis in
the fixed account options and in the Scudder portfolios through the subaccounts
of the Variable Account. "Tax-deferred" means that the earnings and appreciation
on the money in your Contract are not taxed until either you take money out by a
full or partial cash withdrawal or annuitizing the Contract, or until we pay the
death benefit.
The Contract is designed for people seeking long-term tax-deferred
accumulation of assets, generally for retirement. The tax-deferral feature is
most attractive to people in high federal and state tax brackets. You should not
buy this Contract if you are looking for a short-term investment or if you
cannot take the risk of getting back less money than you put in.
Like all deferred annuity contracts, the Contract has two phases: the
"accumulation period" and the "income period." During the accumulation period,
you can allocate money to any combination of investment alternatives; any
earnings are tax-deferred. The income period begins once you start receiving
regular income payments from your Contract Value. The money you can accumulate
during the accumulation period, as well as the annuity income option you choose,
will determine the dollar amount of any income payments you receive.
The Contract is a "variable" annuity because the value of your Contract
will go up or down depending on the investment performance of the subaccounts in
which you invest. If you select a variable income plan, the amount of your
annuity payments in the variable plan will depend on the investment performance
of the subaccounts in which you invest. You bear the entire investment risk for
your investments in the subaccounts.
You can also direct money to the fixed account options. We guarantee
interest, as well as principal, on money placed in the fixed account options.
Free-Look
You may return your Contract for a refund within 20 days after you receive
it. The amount of the refund will generally be the total purchase payments you
paid, plus or minus and gains or losses on the amounts you invested in the
subaccounts. We determine the value of the refund as of the date we receive the
refunded Contract. We will pay the refund within 7 days after we receive the
Contract. The Contract will then be deemed void. In some states you may have
more than 10 days, or receive a different refund amount.
How to Invest
You can purchase a Contract for $2,500 or more ($2,000 for Qualified
Contracts). You may make additional payments at any time during the accumulation
period. Send your payments to the Customer Service Center at the address on the
cover.
Investment Alternatives
You can invest your money in any of the following portfolios of the Scudder
Variable Life Investment Fund by directing your payments into the corresponding
subaccounts:
Money Market Bond
Capital Growth Balanced
International Growth and Income
Global Discovery
Each subaccount invests exclusively in shares of one portfolio of the Fund.
Each portfolio's assets are held separately from the other portfolios and each
portfolio has separate investment objectives and policies. The attached
prospectus for the Fund more fully describes the portfolios. Scudder Kemper
Investments, Inc. is the investment adviser for the portfolios.
The value of your investment in the subaccounts will fluctuate daily based
on the investment results of the portfolios in which you invest, and on the fees
and charges deducted.
Fixed Account Options
You may also direct your money to the standard fixed account and the dollar
cost averaging fixed account ("DCA Account") and receive a guaranteed rate of
return. Money you place in the standard fixed account will earn interest for one
year periods at a fixed rate that is guaranteed by us never to be less than
3.0%.
Purchase payments you place in the DCA Account will earn interest at an
annual rate of at least 3.5%. The payments, plus interest, will be transferred
out of the DCA Account within a year in equal monthly installments and placed in
the subaccounts and standard fixed account in the percentages you designate. You
may not transfer money into the DCA Account from another investment alternative.
Transfers Among Investment Alternatives
You have the flexibility to transfer assets within your Contract. At any
time during the accumulation period, you may transfer amounts among the
subaccounts and between the standard fixed account and any subaccount at any
time. Transfers cannot be made into the DCA Account.
We do not impose a charge for any transfers. In the future, we may impose a
$10 charge after the twelfth transfer in a Contract year. We may restrict fixed
account transfers. You may want to enroll in the dollar cost averaging program
or in the Automatic Portfolio Rebalancing program.
Charges and Deductions
We do not take any deductions from purchase payments at the time you buy
the Contract. You invest the full amount of each purchase payment in one or more
of the investment alternatives.
We deduct daily a mortality and expense risk charge of 0.40% and an
administrative expense charge of 0.30% each year from the money you have
invested in the subaccounts. If you select the Enhanced Death Benefit Rider, the
daily mortality and expense risk charge is 0.50% annually.
We will deduct state premium taxes, which currently range from 0% to 3.5%,
if you fully withdraw all of your Contract's value, if we pay out death benefit
proceeds, or when you begin to receive annuity payments. We only charge you
premium taxes in those states that require us to pay premium taxes.
The portfolios deduct investment charges from the amounts you have invested
in the portfolios. These charges range from 0.__% to 1.__%, depending on the
portfolio. See the Fee Table in this Prospectus and the prospectus for the Fund.
Access to Your Money
You may withdraw all or part of your Contract Value at any time during the
accumulation period. The minimum amount you can withdraw is $50.
We do not deduct any withdrawal charges. For Qualified Contracts issued
under Internal Revenue Code Section 403(b), certain restrictions apply. You may
also have to pay federal income taxes and a penalty tax on any money you take
out of the Contract.
Death Benefit
We will pay a death benefit before the Payout Start Date on any Owner's
death or, if the Owner is not a natural person, on the annuitant's death.
The death benefit amount will be the greater of:
o The total value of your Contract on the date we determine the death
benefit; and
o The total purchase payments you make to the Contract, less any prior
withdrawals and premium taxes.
If you select the enhanced death benefit rider, then the death benefit will
be the greater of:
o The death benefit amount, as stated above, or
o The value of the Enhanced Death Benefit, described later in this
Prospectus.
If you do not take any withdrawals or make any purchase payments, the
Enhanced Death Benefit will be the greatest value of your Contract on any
Contract Anniversary.
Income Payments
The Contract allows you to receive periodic income payments beginning on
the Payout Start Date you select. You may choose among several income plans to
fit your needs. You may receive income payments for a specific period of time or
for life (either single or joint life), with or without a guaranteed number of
payments.
You may choose to have income payments come from the fixed account, one or
more of the subaccounts, or both. If you choose to have any part of the payments
come from the subaccounts, the dollar amount of the income payments may go up or
down, depending on the investment performance of the portfolios you invest in at
that time.
Inquiries
If you need additional information, please contract us at:
Customer Service
8301 Maryland Avenue
St. Louis, Missouri 63105
1-(800) 242-4402
Fee Table
The Fee Table illustrates the current expenses and fees under the Contract,
as well as the Fund's fees and expenses for the 1998 calendar year. The purpose
of this table is to help you understand the various costs and expenses that you
will pay directly and indirectly. The Fund has provided the information on the
Fund's expenses.
Contract Owner Transaction Expenses
Sales Load Imposed on Purchases None
Deferred Sales Charge None
Surrender Fee None
Transfer Fee (1)
Annual Contract Fee None
Variable Account Annual Expenses
(as a percentage of your average net assets in the Variable Account)
With the Enhanced Death Benefit
Mortality and Expense Risk Charge (2) 0.50%
Administrative Expense Charge 0.30%
-----
Total Variable Account Annual Expenses 0.80%
Without the Enhanced Death Benefit
Mortality and Expense Risk Charge (2) 0.40%
Administrative Expense Charge 0.30%
-----
Total Variable Account Annual Expenses 0.70%
Scudder Variable Life Investment Fund Annual Expenses
(as a percentage of average net assets for the 1998 calendar year)
<TABLE>
<CAPTION>
Management Fees Total Expenses
Portfolio after Fee Waiver* Other Expenses after Fee Waiver*
- --------- ----------------- -------------- -----------------
<S> <C> <C> <C>
Money Market
Bond
Capital Growth
Balanced
International
Growth and Income
Global Discovery
</TABLE>
* [Information on fee waivers and reimbursements]
(1) We do not impose a transfer charge. We may in the future assess a $10 charge
after the 12th transfer in a Contract Year. We do not count Dollar cost
averaging and Automatic portfolio Rebalancing as transfers.
(2) If you receive variable annuity payments, we will assess the mortality and
expense risk charge during the payout phase of the Contract.
<PAGE>
Example
The following example illustrates the expenses you would pay on a $1,000
investment, assuming a 5% annual return, if you continued the Contract,
surrendered or annuitized at the end of each period.
(With the Enhanced Death Benefit (1))
Fund portfolio 1 Year 3 Years
- -------------- ------ -------
Money Market $ $
Bond $ $
Capital Growth $ $
Balanced $ $
International $ $
Growth and Income $ $
Global Discovery $ $
(Without the Enhanced Death Benefit (2))
Fund portfolio 1 Year 3 Years
- -------------- ------ -------
Money Market $ $
Bond $ $
Capital Growth $ $
Balanced $ $
International $ $
Growth and Income $ $
Global Discovery $ $
(1) Total Variable Account Annual Expenses of 0.80%
(2) Total Variable Account Annual Expenses of 0.70%
You should not consider the example above to represent past or future
expenses, performance or return. The assumed 5% return is hypothetical. Actual
expenses and returns may be greater or less than those shown.
Neither the fee table nor the examples reflects the deduction of any
premium taxes.
Condensed Financial Information
Condensed financial information for the subaccounts is included at the end
of this Prospectus.
<PAGE>
Calculation of Yield and Total Returns
Yields and Standard Total Return
We may advertise the yields and standard average annual total returns for
the subaccounts. These figures will be based on historical earnings and are not
intended to indicate future performance.
Yields and standard total returns include all charges and expenses you
would pay under the Contract -- the mortality and expense risk charge (0.40% for
Contracts with the standard death benefit; 0.50% for Contracts with the enhanced
death benefit) and an administrative expense charge of 0.30%.
The yield of the Money Market Subaccount refers to the annualized
investment income that an investment in the Subaccount generates over a
specified seven-day period. The effective yield of the Money Market Subaccount
is calculated in a similar way but, when annualized, we assume that the income
earned by the investment has been reinvested. The effective yield will be
slightly higher than the yield because of the compounding effect of the assumed
reinvestment.
The yield of a subaccount (except the Money Market Subaccount) refers to
the annualized income that an investment in the subaccount generates over a
specified thirty day period.
The average annual total return of a subaccount assumes that an investment
has been held in the subaccount for certain periods of time including the period
measured from the date the subaccount began operations. We will provide the
average annual total return for each subaccount that has been in operation for
1, 5, and 10 years. The total return quotations will represent the average
annual compounded rates of return that an initial investment of $1,000 would
earn as of the last day of the 1, 5 and 10 year periods.
The yield and total return calculations are not reduced by any premium
taxes. Applying premium taxes will reduce the yield and total return of a
Contract.
For additional information regarding yield and total return calculations,
please refer to the SAI.
Other Performance Data
We may disclose average annual total return in nonstandard formats and
cumulative total return.
We may also present historic performance data for the portfolios since
their inception reduced by all fees and charges you would pay under the Contract
- -- the mortality and expense risk charge (0.40% for Contracts with the standard
death benefit; 0.50% for Contracts with the enhanced death benefit) and an
administrative expense charge of 0.30%.
Such adjusted historic performance includes data that precedes the
inception dates of the subaccounts, but is designed to show the performance that
would have resulted if the Contract had been available during that time.
We will only disclose non-standard performance data if we also disclose the
standard performance data. For additional information regarding the calculation
of other performance data, please refer to the SAI.
Advertising, sales literature, and other communications may compare the
expense and performance data for the Contract and each subaccount with other
variable annuities tracked by independent services such as Lipper Analytical
Services, Inc., Morningstar and the Variable Annuity Research Data Service.
These services monitor and rank the performance and expenses of variable annuity
issuers on an industry-wide basis. We may also make comparisons using other
indices that measure performance, such as Standard & Poor's 500 Composite or the
Dow Jones Industrial Average. Unmanaged indices may assume reinvestment of
dividends but do not deduct administrative and management costs and expenses.
We may report other information including the effect of tax-deferred
compounding on a subaccount's returns, illustrated by tables, graphs, or charts.
Tax-deferred compounding can lead to substantial long-term accumulation of
assets, if the portfolio's investment experience is positive. Sales literature,
advertisements or other reports may refer to A.M. Best's rating of Glenbrook
Life as an insurance company.
Glenbrook Life and the Variable Account
Glenbrook Life and Annuity Company
Glenbrook Life and Annuity Company (we, us, Glenbrook Life) issues the
Contract. We are a stock life insurance company organized under the laws of
Illinois in 1992 that was redomesticated as a corporation under the laws of
Arizona on December 28, 1998. We were originally organized under the laws of
Indiana in 1965. From 1965 to 1983 we were known as "United Standard Life
Assurance Company" and from 1983 to 1992 we were known as "William Penn Life
Assurance Company of America." We are licensed to operate in Puerto Rico, the
District of Columbia and all states except New York. We intend to market the
Contract in those jurisdictions in which we are licensed to operate. Our home
office is located at 3100 Sanders Road, Northbrook, Illinois 60062.
We are a wholly owned subsidiary of Allstate Life Insurance Company
("Allstate Life"), a stock life insurance company incorporated under the laws of
Illinois. Allstate Life is a wholly owned subsidiary of Allstate Insurance
Company ("Allstate"), a stock property-liability insurance company incorporated
under the laws of Illinois. The Allstate Corporation ("Corporation") owns all of
the outstanding capital stock of Allstate. On June 30, 1995, Sears Roebuck and
Co. ("Sears") distributed its 80.3% ownership in the Corporation to Sears common
shareholders through a tax-free dividend.
We entered into a reinsurance agreement with Allstate Life, effective June
5, 1992. Under the reinsurance agreement, fixed account purchase payments are
automatically transferred to Allstate Life and become invested with the assets
of Allstate Life. Allstate Life accepts 100% of the liability under such
contracts. However, the obligations of Allstate Life under the reinsurance
agreement are to us. We remain the sole obligor under the Contract to the
Owners.
We are engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other entities
competing in the sale of insurance and annuities. There are approximately 1,700
stock, mutual and other types of insurers in business in the United States.
Several independent rating agencies regularly evaluate life insurer's
claims-paying ability, quality of investments and overall stability. A.M. Best
Company assigns A+r for financial strength to Allstate Life which automatically
reinsures all our net business. Standard & Poor's Insurance Rating Services
assigns us an AA+ (very strong) for financial strength rating and Moody's
assigns us an Aa2 (Excellent) for financial strength rating. These ratings do
not relate to the investment performance of the Variable Account.
The Variable Account
We established the Glenbrook Life Scudder Variable Account (A) as a
separate investment account on August 26, 1998. The Variable Account receives
and invests purchase payments made under the Contracts. We may offer other
variable annuities for which the Variable Account may receive and invest
payments.
Under Illinois law, the assets of the Variable Account are held separately
from our other assets. The assets are not chargeable with liabilities incurred
in our other business operations. The income, capital gains and losses, realized
or unrealized, incurred on the assets of the Variable Account are credited to or
charged against the assets of the Variable Account, without regard to the
income, capital gains or capital losses arising out of any other business that
we may conduct. The obligations under the Contracts are obligations of Glenbrook
Life.
The Variable Account is divided into subaccounts. Each subaccount invests
exclusively in shares of one of the portfolios of the Scudder Variable Life
Investment Fund. We may add additional subaccounts in the future, some of which
may be available under other variable annuity contracts.
The Variable Account is registered with the Securities and Exchange
Commission ("SEC") as a unit investment trust under the Investment Company Act
of 1940 (the "1940 Act") and meets the definition of a "separate account" under
the federal securities laws. Registration with the SEC does not involve
supervision of the management or investment practices or policies of the
Variable Account, the Fund, or Glenbrook Life by the SEC.
The Fund
The Variable Account invests exclusively in shares of the Scudder Variable
Life Investment Fund (the "Fund"). The Fund is registered with the SEC under the
1940 Act as an open-end, diversified management investment company.
The Fund is designed to provide an investment vehicle for variable annuity
contracts and variable life insurance policies.
The general public may not purchase shares of the underlying portfolios.
The investment objectives and policies of the underlying portfolios may be
similar to those of other portfolios and mutual funds managed by the same
investment adviser that are sold directly to the public. You should not expect
that the investment results of other portfolios would be similar to those of the
underlying portfolios.
Scudder Variable Life Investment Fund
The subaccounts invest exclusively in Class A shares of the following
Scudder portfolios:
Money Market Bond
Capital Growth Balanced
International Growth and Income
Global Discovery
Each portfolio represents, in effect, a separate mutual fund with its own
distinct investment objectives and policies. The gains or losses of one
portfolio generally have no effect on another portfolio's investment
performance.
The investment objectives and policies of the portfolios available under
the Contract are summarized below:
Portfolio Investment Objective
MoneyMarket This portfolio seeks to maintain stability of
capital, and consistent therewith, to maintain liquidity of
capital and to provide current income. This portfolio seeks
to maintain a constant net asset value of $1.00 per share.
It will invest in money market securities such as U.S.
Treasury obligations, commercial paper, and certificates of
deposit and bankers' acceptances of domestic and foreign
banks, including foreign branches of domestic banks, and
will enter into repurchase agreements.
Bond This portfolio pursues a policy of investing for a high
level of income consistent with a high quality portfolio of
debt securities. It primarily invests in U.S. Government,
corporate, and other notes and bonds.
Capital Growth This portfolio seeks long-term capital
appreciation and, consistent therewith, current income
through a broad and flexible investment program. The
portfolio seeks to achieve these objectives by investing
primarily in income-producing publicly traded equity
securities, including common stocks and securities
convertible into common stocks.
Balanced This portfolio seeks a balance of growth and income
from a diversified portfolio of equity and fixed income
securities. The portfolio also seeks long-term preservation
of capital through a quality-oriented investment approach
that is designed to reduce risk.
International This portfolio seeks long-term growth of
capital primarily through diversified holdings of marketable
foreign equity investments. It invests in companies,
wherever organized, which do business primarily outside the
United States. The portfolio intends to diversify
investments among several countries and not to concentrate
investments in any particular industry.
Growth and Income This portfolio seeks long-term growth of
capital, current income and growth of income. It primarily
invests in common stocks, preferred stocks, and securities
convertible into common stocks of companies which offer the
prospect for growth of earnings while paying higher than
average current dividends.
Global Discovery This portfolio seeks above-average capital
appreciation over the long term. It primarily invests in
equity securities of small companies around the world.
There can be no assurance that any portfolio will achieve its objective.
The Scudder Variable Life Investment Fund prospectus contains more complete
information about the portfolios, including a description of the risks involved
in investing in each portfolio. You should read the Fund's prospectus carefully
before you invest.
Investment Adviser for the Funds
Scudder Kemper Investments, Inc. (the "Adviser") is an investment adviser
registered with the SEC under the Investment Advisers Act of 1940, as amended.
The Adviser manages daily investments and business affairs of the Fund, subject
to the policies established by the Trustees of the Fund.
The Fixed Account Options
Purchase payments you allocate or transfer to the fixed account options
become part of our general account. Because of exemptive and exclusionary
provisions, we have not registered interests in the general account under either
the Securities Act of 1933 ("1933 Act") or the 1940 Act. Neither the general
account nor any interests in it are generally subject to the provisions of the
1933 or 1940 Acts, and, as a result, the staff of the SEC has not reviewed the
disclosures in this prospectus relating to the fixed account. However,
disclosures regarding the fixed account may be subject to the provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
The general account includes all of our general assets, except those assets
segregated in separate accounts such as the Variable Account. Unlike in the
Variable Account, all assets in the general account are subject to the general
liabilities of our business operations. We bear the full investment risk for all
amounts contributed to the general account. We have the sole discretion to
invest the general account's assets, subject to applicable law. Amounts you
direct into the fixed account options do not share in the investment experience
of our general account.
General Description
We guarantee that we will credit daily interest to the money you direct to
the fixed account. The daily interest will equal or exceed the minimum
guaranteed rate found in the Contract. We may declare higher or lower interest
rates in the future. We determine interest rates at our sole discretion. We have
no specific formula for determining fixed account interest rates.
Standard Fixed Account Option
Money you direct to the standard fixed account earns interest at a declared
rate for one year. The declared rate is the current rate in effect at the time
of your allocation or transfer. Once declared, the rate is guaranteed for 12
months. As each one year period expires, we will declare a renewal rate. On or
about the end of each one year period, we will notify you of the new interest
rate(s). It will not be less than the guaranteed rate found in the Contract. We
may declare more than one interest rate for different monies you have in the
standard fixed account option based upon the date of your allocation or transfer
into the standard fixed account.
You may allocate all or a portion of your premium payment to the standard
fixed account option. You may withdraw or transfer your money from the standard
fixed account option at any time on a first-in, first-out basis. If you withdraw
money from the standard fixed account, you will receive the amount you
requested, minus any applicable premium taxes and tax withholding.
The Dollar Cost Averaging Fixed Account
You may allocate all or a portion your purchase payments to the dollar cost
averaging fixed account (the "DCA Account"). Each purchase payment you place in
the DCA Account will earn interest for one year at a declared rate of interest.
The declared rate will be the current rate in effect at the time you direct your
purchase payment into the DCA Account. The rate will never be less than 3.5%.
Each purchase payment you direct into the DCA Account, and interest earned
on that payment, will be transferred out of the DCA Account in equal monthly
installments within one year. You can select fewer than 12 monthly transfers,
but you may not select more than 12. At the end of 12 months from the date of
your allocation to the DCA Account, we will transfer any remaining portion of
the purchase payment and interest in the DCA Account to the Money Market
Subaccount.
You must specify the investment alternatives that will receive the monthly
installments. You must also specify the percentage (whole percentages only,
totaling 100%) of each monthly installment that each investment alternative
should receive.
You can only put money into the DCA Account when you make a purchase
payments. You may not transfer funds into the DCA Account from other investment
alternatives.
Purchasing the Contract
Limits on Purchase Payments
Your first purchase payment must be at least $2,500 ($2,000 for a Qualified
Contract). The initial payment is the only payment we require you to make under
the Contract. There are no requirements on how much to pay or how many payments
to make. You decide the amount of each payments. You may add money to your
Contract automatically through Automatic Additions.
We may limit the amount of purchase payments we will accept in the future.
Free-Look Period
You may return your Contract to us for a refund within 20 days after you
receive it. The amount of the refund will generally be the total purchase
payments you paid, plus or minus and gains or losses on the amounts you invested
in the subaccounts. You will receive a full refund of the amounts you allocated
to the fixed account options. We determine the value of the refund as of the
date we receive the refunded Contract. We will pay the refund within 7 days
after we receive the Contract. The Contract will then be deemed void. In some
states you may have more than 10 days, or receive a different refund amount.
Crediting Your Initial Purchase Payment
If we receive a properly completed application with the initial payment,
then we will credit that payment to the Contract within two business days of
receiving the payment. We may deduct premium taxes from the payment before we
credit it to the Contract. If we receive an incomplete application, then we will
credit the payment within two business days of receiving the completed
application. If, for any reason, we do not credit the payment to your account
within five business days, then we will immediately return the payment to you.
You may, after receiving notice of our delay, specifically request that we do
not return the payment. We reserve the right to reject any application.
We will credit all additional payments to your Contract at the close of the
Valuation Period in which we receive the payment.
Allocating Your Purchase Payments
On the application, you instruct us how to allocate the purchase payment
among the investment alternatives. You must allocate your payments to the
investment alternative either in whole percentages (from 1% to 100% totaling
100%) or in whole dollars (totaling the entire dollar amount of your payment).
Unless you send us written notice of a change, we will allocate each additional
payment you make according to the instructions for the previous purchase
payment. Any change in allocation instructions will be effective at the time we
receive the notice in good order.
Accumulation Units
Each purchase payment you allocate to the subaccounts will be credited to
the Contract as accumulation units. For example, if you make a $10,000 purchase
payment to the Money Market Subaccount when its accumulation unit value equals
$10, then we will 1,000 accumulation units for the Money Market Subaccount to
your Contract. The Variable Account, in turn, will purchase $10,000 worth of
shares of the Money Market Portfolio of the Fund.
Accumulation Unit Value
Each subaccount values its accumulation units separately. The value of
accumulation units will change for each Valuation Period according to the
investment performance of the shares of the portfolio held by each subaccount
and the deduction of certain expenses and charges.
The value of an accumulation unit in a subaccount for any Valuation Period
equals the value of the accumulation unit as of the immediately preceding
Valuation Period, multiplied by the Net Investment Factor for that subaccount
for the current Valuation Period. The Net Investment Factor for a Valuation
Period is a number representing the change, since the last Valuation Date in the
value of subaccount assets per accumulation unit due to investment income,
realized or unrealized capital gain or loss, deductions for taxes, if any, and
deductions for the mortality and expense risk charge and administrative expense
charge.
You should expect the value of your Contract to change daily to reflect the
investment experience of the portfolios in which you are invested through the
subaccounts, any interest earned on the fixed account options, and the deduction
of certain expenses and charges.
Transfers
You may transfer amounts among investment alternatives before the Payout
Start Date, subject to the following restrictions. You may make transfers among
all the investment alternatives at any time, except that you may not make
transfers into the DCA Account. Transfers from the standard fixed account option
are taken out on a first-in, first-out basis.
We reserve the right to assess a $10 charge on each transfer after the
twelfth transfer in a Contract Year. We presently waive this charge. We reserve
the right to waive transfer restrictions. Transfers to or from more than one
investment alternative on the same day are treated as one transfer. Transfers
through dollar cost averaging and automatic portfolio rebalancing do not count
as transfers.
After the Payout Start Date, transfers among subaccounts or from a variable
amount income payment to a fixed amount income payment may be made only once
every six months and may not be made during the first six months following the
Payout Start Date. After the Payout Start Date, transfers out of a fixed amount
income payment are not permitted.
Telephone Transfers
We accept telephone transfer requests at (800)242-4402, if we receive them
by 3:00 p.m., Central Time. We will not accept telephone transfer requests
received at any other telephone number or after 3:00 p.m., Central Time.
Telephone transfer requests received before 3:00 p.m., Central Time are
effected at the next computed accumulation unit value for the subaccounts
involved. If the NYSE closes early (i.e. before 3:00 p.m. Central Time), or if
it closes for a period of time, but then reopens for trading on the same day, we
will process telephone transfer requests at the close of the NYSE on that
particular day.
We use procedures that we believe provide reasonable assurance that
telephone transfers are authorized by the proper persons. We may tape of
telephone conversations with persons who claim to authorize the transfer and we
may request identifying information from such persons. We disclaim any liability
for losses resulting from telephone transfers if the claim is that the transfer
was not properly authorized. However, if we do not take reasonable steps to help
ensure that such authorizations are valid, then we may be liable for such
losses.
Dollar Cost Averaging
Before the Payout Start Date, you may make transfers automatically through
dollar cost averaging (DCA). DCA permits you to transfer a specified amount in
equal monthly installments from the one year fixed DCA Account or any subaccount
to any of the subaccounts. DCA may not be used to transfer amounts to the fixed
account. There is no charge for participating in the DCA program. DCA transfers
do not count towards the twelve free transfers allowed during each Contract
year.
By transferring a set amount on a regular schedule, instead of transferring
the total amount at one particular time, you may reduce the risk of investment
in the underlying portfolio only when the price is high. Participating in the
DCA program does not a profit and it does not protect against a loss if market
prices decline.
Automatic Portfolio Rebalancing
Transfers may be made automatically through Automatic Portfolio Rebalancing
before the Payout Start Date. If you elect Automatic Portfolio Rebalancing, then
we will rebalance all of your money allocated to the subaccounts to your desired
allocations on a quarterly basis. Each quarter, money will be transferred among
subaccounts to achieve the desired allocation.
Unless you send us written notice of a change, the desired allocation will
be the allocation you initially selected. The new allocation will be effective
with the first rebalancing that occurs after we receive the written request. We
are not responsible for rebalancing that occurs before our receipt of your
written request.
Transfers made though Automatic Portfolio Rebalancing are not counted
toward the twelve free transfers permitted per Contract Year. Any money you have
allocated to the fixed account options will not be included in the rebalancing.
Access to Your Money
Withdrawals
You may withdraw all or part of your Contract Value at any time before the
Payout Start Date and before the Owner's death (or the annuitant's death if the
Owner is not a natural person).
The amount you may withdraw is the full Contract Value next computed after
we receive the request for a withdrawal, minus any applicable federal
withholding or premium taxes. We do not deduct any withdrawal charges from a
full or partial withdrawal.
We will pay withdrawals from the Variable Account within seven days of
receiving the request, subject to postponement in certain circumstances.
To complete a partial withdrawal from the Variable Account, we will redeem
accumulation units in an amount equal to the withdrawal and any applicable
premium taxes. You must name the investment alternatives from which you want to
make the withdrawal. If you do not name an investment alternative, we will not
honor the incomplete withdrawal request.
If any portion of the withdrawal is to be taken from the standard fixed
account option, then the amount requested will be deducted on a first-in,
first-out basis.
The minimum amount you may withdraw is $50. If your Contract Value after a
partial withdrawal would be less than $1,000, then we will treat the request as
a request for a full withdrawal and we will pay out the entire Contract Value,
minus any charges and premium taxes. We may waive these withdrawal restrictions.
You may take partial withdrawals automatically through Systematic
Withdrawals on a monthly, quarterly, semi-annual or annual basis. You may
request Systematic Withdrawals of $50 or more at any time before the Payout
Start Date. We may prohibit Systematic Withdrawals if you also elect Dollar Cost
Averaging.
If you have a valid telephone transfer request form on file with us, then
you may make a partial withdrawal by telephone. We calculate the Contract Value
we will pay you at the price next computed after we receive your withdrawal
request. We will pay you the amount you request within seven days of when we
receive your request. Unless you elect in writing not to have federal income
taxes withheld, we, by law, must withhold taxes from the taxable portion of the
withdrawal.
Partial and full withdrawals may be subject to federal income tax and a 10%
tax penalty.
After the Payout Start Date, we will permit withdrawal only when annuity
payments are being made from the Variable Account for a specified number of
payments only (i.e., Income Plan 3). In that case, you may terminate the
Variable Account portion of the income payments at any time and receive a lump
sum equal to the commuted balance of the remaining variable payments due.
Annuity Income Payments
Payout Start Date for Income Payments
The Payout Start Date is the day that we will start paying income payments
under the Contract. You may change the Payout Start Date at any time by sending
us written notice at least 30 days before the scheduled Payout Start Date. The
Payout Start Date must be:
o at least one month after the issue date and
o no later than the day the annuitant reaches age 90, or the
10th anniversary of the issue date, if later.
The dollar amount of the income payments may be variable, fixed, or both.
The method of calculating the initial payment is different for the two types of
payments.
Variable Income Payments
The dollar amount of variable income payments depends upon:
o the investment experience of the subaccounts you select,
o any premium taxes due,
o the age and sex of the annuitant, and
o the income plan you chose.
We guarantee that the amount of the income payment will not be affected by
actual mortality experience and the amount of our administration expenses. Your
Contract contains income payment tables that provide for different benefit
payments to men and women of the same age (except in states which require unisex
annuity tables). Nevertheless, in accordance with the U.S. Supreme Court's
decision in Arizona Governing Committee v. Norris, in certain employment-related
situations, annuity tables that do not vary on the basis of sex will be used.
The total income payments we will pay to you may be more or less than the
total of the purchase payments you paid to us because:
o variable income payments will vary with the investment results of the
underlying portfolios, and
o annuitants may live longer than, or not as long as, expected.
The income plan option selected will affect the dollar amount of each
annuity payment.
Income payments are determined based on an assumed investment rate, the
investment performance of the portfolios in which the subaccounts you select
invest, and the deduction of certain fees and charges. If the actual net
investment experience of the subaccounts is less than the assumed investment
rate, then the dollar amount of the income payments will decrease. If the net
investment experience equals the assumed investment rate, then the dollar amount
of the income payments will stay level. If the net investment experience exceeds
the assumed investment rate, then the dollar amount of the income payments will
increase. The assumed investment rate under the Contract is 3%. For more
information on how variable income payments are determined, see the SAI.
Fixed Income Payments
If you choose to have any portion of your annuity income payment come from
the fixed account, the payment amount will be fixed for the duration of the
income plan and guaranteed by us. We calculate the dollar amount of the fixed
income payment by applying the portion of the Contract Value in the fixed
account on the Payout Start Date minus any applicable premium tax, to the value
from the income payment table in your Contract. We will pay you a higher amount
if we are offering it at that time.
Annuity Transfers
After the Payout Start Date, you may not make any transfers from the fixed
account. You may transfers amounts between subaccounts, or from the variable
income payment to the fixed income payment starting six months after the Payout
Start Date. Transfers may be made once every six months thereafter.
Income Plans
The income plans include:
Income Plan 1 - Life Income with Guaranteed Payments:
We will make payments for as long as the annuitant lives. If the annuitant
dies before the selected number of guaranteed payments have been made, then we
will continue to pay the remainder of the guaranteed payments.
Income Plan 2 - Joint and Survivor Life Income with Guaranteed
Payments:
We will make payments for as long as either the annuitant or joint
annuitant, named at the time of income plan selection, lives. If both the
annuitant and the joint annuitant die before the selected number of guaranteed
payments have been made, then we will continue to pay the remainder of the
guaranteed payments.
Income Plan 3 - Guaranteed Number of Payments:
We will make payments for a specified number of months beginning on the
Payout Start Date. These payments do not depend on the annuitant's life. The
guaranteed number of months may range from 60 to 360. The mortality and expense
risk charge will be deducted from Variable Account assets supporting these
payments even though we do not bear any mortality risk.
You may change the income plan until 30 days before the Payout Start Date.
If you chose an income plan which depends on the annuitant or joint annuitant's
life, then we will require proof of age before income payments begin. Applicable
premium taxes will be assessed.
If you do not select an income plan, then we will make income payments in
accordance with Income Plan 1 Life Income with Guaranteed Payments for 120
Months. Other income plans may be available upon request at our discretion. We
currently use sex-distinct annuity tables. However, if Congress or the states
pass legislation, then we reserve the right to use income payment tables that do
not distinguish on the basis of sex. Special rules and limitations may apply to
certain Qualified Contracts.
If the Contract Value to be applied to an income plan is less than $2,000
or the monthly payments determined under the income plan are less than $20, then
we may pay the Contract Value, minus any applicable taxes, in a lump sum or we
may change the payment frequency to an interval that results in income payments
of at least $20.
Death Benefits
Death Benefit Payment Provisions
A death benefit may be paid to the Owner determined immediately after the
death if, before the Payout Start Date:
o any Owner dies; or
o the annuitant dies and the Owner is not a natural person.
If the Owner eligible to receive the death benefit is not a natural person,
then the Owner may elect to receive it in one or more payments. Otherwise, if
the Owner is a natural person, then the Owner may elect to receive the death
benefit in one or more payments or in periodic payments through an annuity
income plan.
The entire death benefit must be paid within five years after the date of
death unless an income plan is selected or a surviving spouse continues the
Contract in accordance with the following:
If an income plan is elected, payments from the income plan must begin
within one year of the date of death and must be payable throughout:
o the Owner's life; or
o a period not to exceed the Owner's life expectancy; or
o the Owner's life with payments guaranteed for a period not to exceed
the Owner's life expectancy.
If the deceased owner's surviving spouse is the new Owner, then the spouse
may elect one of the options listed above or may continue the Contract in the
accumulation phase as if the death had not occurred. We will only permit the
Contract to be continued once.
Death Benefit Amount
Before the Payout Start Date, the death benefit amount is equal to the
greater of:
o the Contract Value on the date we determine the death benefit, or
o the sum of all purchase payments, minus any prior withdrawals and
premium taxes.
We will determine the value of the death benefit at the end of the
Valuation Period during which we receive a complete request for payment of the
death benefit. A complete request includes proof of death, and such other
documentation as we may require in our discretion. In addition to the above
alternatives, upon purchase of the Contract, if the Owner is age 75 or younger,
then the Owner can select the Enhanced Death Benefit Rider.
Enhanced Death Benefit Rider
If the Owner is a living individual, then the enhanced death benefit
applies only for the death of the Owner. If the Owner is not a living
individual, then the enhanced death benefit applies only for the annuitant's
death.
If you select this rider, then the death benefit will be the greater of:
o the death benefit amount, as stated above, or
o the value of the Enhanced Death Benefit.
On the issue date, the Enhanced Death Benefit is the initial purchase
payment. After the issue date, the Enhanced Death Benefit is recalculated
whenever you make a purchase payment, take a withdrawal, or on the Contract
Anniversary as follows:
o For purchase payments, the Enhanced Death Benefit equals the most
recently calculated Enhanced Death Benefit plus the purchase payment.
o For withdrawals, the Enhanced Death Benefit equals the most recently
calculated Enhanced Death Benefit reduced by the amount of the withdrawal.
o On each Contract Anniversary, the Enhanced Death Benefit equals the
greater of the Contract Value or the most recently calculated Enhanced
Death Benefit.
If you do not take any withdrawals or make any purchase payments, the
Enhanced Death Benefit will be the greatest value of your Contract on any
Contract Anniversary on or before the date we calculate the death benefit.
We will recalculate the Enhanced Death Benefit for purchase payments,
withdrawals and on Contract anniversaries until the oldest Owner, or the
annuitant if the Owner is not a living individual, reaches age 80. After age 80,
the Enhanced Death Benefit will be recalculated only for purchase payments and
withdrawals.
We will determine the value of the death benefit at the end of the
Valuation Period during which we receive a complete request for payment,
including proof of death. We will not settle any death claim until we receive
proof of death.
Charges and Other Deductions
Deductions from Purchase Payments
We do not take any deductions from your purchase payments. Therefore, the
full amount of every purchase payment is invested in the investment alternatives
you select.
Withdrawal Charge
We do not take withdrawal charges when you request a full or partial
withdrawal. You may withdraw all or part of your Contract Value at any time
before the earlier of the Payout Start Date or an Owner's death (if the Owner is
not a natural person, the annuitant's death).
We may withhold federal and state income tax from withdrawal amounts.
Certain terminations may also be subject to a federal tax penalty.
Contract Maintenance Charge
There is no Contract maintenance charge. We bear the maintenance costs.
Maintenance costs include, but are not limited to, expenses incurred in billing
and collecting purchase payments; keeping records; processing death claims, cash
withdrawals, and Contract changes; calculating accumulation unit and annuity
unit values; and issuing reports to Owners and regulatory agencies.
Administrative Expense Charge
We deduct a daily administrative expense charge that equals, on an annual
basis, 0.30% of the daily net assets you have allocated to the subaccounts. This
charge is designed to cover actual administrative expenses. The administrative
charge does not necessarily equal the expenses we incur.
Mortality and Expense Risk Charge
We deduct a daily mortality and expense risk charge that equals, on an
annual basis, 0.40% of the daily net assets you have allocated to the
subaccounts. We guarantee that the amount of this charge will not increase over
the Contract's life.
The mortality risk arises from our guarantee to cover all death benefits
and to make income payments in accordance with the income plan you select. The
expense risk arises from the possibility that the contract maintenance and
administrative expense charges, both of which are guaranteed not to increase,
will not be enough to cover actual administrative expenses.
If you select the Enhanced Death Benefit Rider, then we will deduct an
additional mortality and expense risk charge equal, on an annual basis, to 0.10%
of the daily net assets you have allocated to the subaccounts. This results in a
total charge of 0.50% of daily net assets in the subaccounts.
We guarantee that the amount of this charge will not increase over your
Contract's life. For amounts allocated to the Variable Account, we deduct the
mortality and expense risk charge during the accumulation and payout phases of
the Contract.
Taxes
We deduct applicable state premium taxes or other taxes relative to the
Contract (collectively referred to as "premium taxes") either at the Payout
Start Date, when a total withdrawal occurs, or when we distribute the death
benefit. Current premium tax rates range from 0 to 3.5%. We reserve the right to
deduct premium taxes from the purchase payments even where the premium taxes are
assessed at the Payout Start Date or upon total withdrawal.
At the Payout Start Date, we will deduct the charge for premium taxes from
each investment alternative in the proportion that your value in that investment
alternative bears to your total Contract Value.
Transfer Charges
We do not deduct transfer charges. However, in the future, we may assess a
$10 charge on each transfer after the twelfth transfer in a Contract Year. This
excludes transfers through dollar cost averaging and Automatic Portfolio
Rebalancing. We presently waive this charge.
Fund Expenses
The portfolios deduct investment charges from the amounts you have invested
in the portfolios. A complete description of the expenses and deductions from
the portfolios may be found in the Fund's prospectus. The Fund's prospectus
accompanies this Prospectus.
Federal Tax Matters
Introduction
The following discussion is general and is not intended as tax advice. We
make no guarantee regarding the tax treatment of any contract or transaction
involving a contract.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on the each individual's
circumstances. If you are concerned about any tax consequences with regard to
your individual circumstances, then you should consult a competent tax adviser.
Taxation of Annuities in General
Tax Deferral
Generally, an annuity contract owner is not taxed on increases in the
Contract Value until a distribution occurs. This rule applies only where (1) the
owner is a "natural person" (see "NonNatural Owners" below), (2) the investments
of the Variable Account are "adequately diversified" in accordance with Treasury
Department Regulations, and (3) the issuing insurance company, instead of the
annuity owner, is considered the owner for federal income tax purposes of any
separate account assets funding the contract.
NonNatural Owners
As a general rule, annuity contracts owned by nonnatural persons such as
corporations, trusts, or other entities are not treated as annuity contracts for
federal income tax purposes. Income on such contract is taxed as ordinary income
received or accrued by the owner during the taxable year. There are several
exceptions to the general rule for contracts owned by nonnatural persons that
are discussed in the SAI.
Diversification Requirements
For a Contract to be treated as an annuity for federal Income tax purposes,
the investments in the Variable Account must be "adequately diversified" in
accordance with the standards provided in the Treasury regulations. If the
investments in the Variable Account are not adequately diversified, then the
Contract will not be treated as an annuity contract for federal Income tax
purposes and the Owner will be taxed on the excess of the Contract Value over
the investment in the Contract. Although we do not have control over the Funds
or their investments, we expect the Funds to meet the diversification
requirements.
Ownership Treatment
In connection with the issuance of the regulations on the adequate
diversification standards, the Department of the Treasury announced that the
regulations do not provide guidance concerning the extent to which contract
owners may direct their investments among subaccounts of a variable account. The
Internal Revenue Service ("IRS") has previously stated in published rulings that
a variable contract owner will be considered the owner of the separate account
assets if the owner possesses incidents of ownership in those assets such as the
ability to exercise investment control over the assets. At the time the
diversification regulations were issued, Treasury announced that guidance would
be issued in the future regarding the extent that owners could direct their
investments among subaccounts without being treated as owners of the underlying
assets of the variable account.
The ownership rights under this Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the Owner of this Contract has the choice of more investment options to
which to allocate premiums and Contract Values, and may be able to transfer
among investment options more frequently than in such rulings. These differences
could result in the Contract Owner being treated as the owner of the assets of
the Variable Account. In those circumstances, income and gains from the Variable
Account assets would be includible in the Contract Owners' gross income. In
addition, we do not know what standards will be set forth in the regulations or
rulings that the Treasury Department has stated it expects to issue. It is
possible that the Treasury's position, when announced, may adversely affect the
tax treatment of existing contracts. We reserve the right to modify the Contract
as necessary to attempt to prevent the Owner from being considered the federal
tax owner of a pro rata share of the assets of the Variable Account. However, we
make no guarantee that such modification to the Contract will be successful.
Delayed Maturity Dates
If a contract's scheduled maturity date is at a time when the annuitant has
reached an advanced age, then it is possible that the contract would not be
treated as an annuity. In that event, the income and gains under the contract
could be included in the owner's income.
Taxation of Partial and Full Withdrawals
In the case of a partial withdrawal under a non-qualified contract, amounts
received are taxable to the extent the contract value exceeds the investment in
the contract. The contract value is the sum of all account values. No matter
which account a withdrawal is made from, all account values are combined and the
total contract value is used to determine the amount of taxable income. The
investment in the contract is the gross premium or other consideration paid for
the contract reduced by any amounts previously received from the contract to the
extent such amounts were properly excluded from the owner's gross income.
In the case of a partial withdrawal under a qualified contract, the portion
of the payment that bears the same ratio to the total payment as the investment
in the contract (i.e., nondeductible IRA contributions, after tax contributions
to qualified plans) bears to the contract value, can be excluded from income. In
the case of a full withdrawal under a non-qualified contract and a qualified
contract, the amount received will be taxable only to the extent it exceeds the
investment in the contract. If an individual transfers an annuity contract,
without full and adequate consideration, to a person other than the individual's
spouse (or to a former spouse incident to a divorce), then the owner will be
taxed on the difference between the contract value and the investment in the
contract at the time of transfer. Other than in the case of certain qualified
contracts, any amount received as a loan under a contract, and any assignment or
pledge (or agreement to assign or pledge) of the contract value is treated as a
withdrawal of such amount or portion.
Taxation of Annuity Payments
Generally, the rule for income taxation of payments received from an
annuity contract provides for the return of the owner's investment in the
contract in equal tax-free amounts over the payment period. The balance of each
payment received is taxable. In the case of variable annuity payments, the
amount excluded from taxable income is determined by dividing the investment in
the contract by the total number of expected payments. In the case of fixed
annuity payments, the amount excluded from income is determined by multiplying
the payment by the ratio of the investment in the contract (adjusted for any
refund feature or period certain) to the total expected value of annuity
payments for the term of the contract. Once the total amount of the investment
in the contract is excluded using these ratios, the annuity payments will be
fully taxable. If annuity payments cease because of the death of the annuitant
before the total amount of the investment in the contract is recovered, the
unrecovered amount generally will be allowed as a deduction to the annuitant for
his last taxable year.
Taxation of Death Benefits
Amounts may be distributed from an annuity contract because of the death of
an owner or annuitant. Generally, such amounts are includible in income as
follows: if distributed in a lump sum, then the amounts are taxed in the same
manner as a full withdrawal or if distributed under an annuity option, then the
amounts are taxed in the same manner as an annuity payment.
Penalty Tax on Premature Distributions
There is a 10% penalty tax on the taxable amount of any premature
distribution from a non-qualified annuity contract. The penalty tax generally
applies to any distribution made before the date the owner attains age 59 1/2.
However, there should be no penalty tax on distributions to owners:
o made on or after the date the owner attains age 59 1/2,
o made as a result of an owner's death or disability,
o made in substantially equal periodic payments over life or life expectancy,
o made under an immediate annuity, or
o attributable to an investment in the contract before August 14, 1982.
Similar rules apply for distributions from certain qualified contracts. A
competent tax advisor should be consulted to determine if any other exceptions
to the penalty apply to your specific circumstances.
Aggregation of Annuity Contracts
All non-qualified deferred annuity contracts that we (or our affiliates)
issue to the same owner during any calendar year will be aggregated and treated
as one annuity contract for purposes of determining the taxable amount of a
distribution.
Tax Qualified Contracts
Annuity contracts may be used as investments with certain tax qualified
plans such as:
o Individual Retirement Annuities under Section 408(b) of the Internal
Revenue Code;
o Roth Individual Retirement Annuities under Section 408A of the Internal
Revenue Code;
o Simplified Employee Pension Plans under Section 408(k) of the Internal
Revenue Code;
o Savings Incentive Match Plans for Employees (SIMPLE) Plans under Section
408(p) of the Internal Revenue Code;
o Tax Sheltered Annuities under Section 403(b) of the Internal Revenue
Code;
o Corporate and Self Employed Pension and Profit Sharing Plans; and
o State and Local Government and Tax-Exempt Organization Deferred
Compensation Plans.
In the case of certain tax qualified plans, the terms of the plans may govern
the right to benefits, regardless of the terms of the contract.
Restrictions Under Section 403(b) Plans
Section 403(b) of the Internal Revenue Code provides for tax-deferred
retirement savings plans for employees of certain non-profit and educational
organizations. In accordance with the requirements of Section 403(b), any
annuity contract used for a 403(b) plan must provide that distributions
attributable to salary reduction contributions made after 12/31/88, and all
earnings on salary reduction contributions, may be made only after the employee
attains age 59 1/2, after the employee separates from service, after the
employee dies, after the employee becomes disabled, or on account of hardship
(earnings on salary reduction contributions may not be distributed on account of
hardship).
These limitations do not apply to withdrawals where we are directed to
transfer some or all of the Contract Value to another Section 403(b) plan.
Roth Individual Retirement Annuities
Section 408A of the Internal Revenue Code permits eligible individuals to
make nondeductible contributions to an individual retirement program known as a
Roth Individual Retirement Annuity. Roth Individual Retirement Annuities are
subject to limitations on the amount that can be contributed and on the time
when distributions may commence. "Qualified distributions" from Roth Individual
Retirement Annuities are not includible in gross income. "Qualified
distributions" are any distributions made more than 5 taxable years after the
taxable year of the first contribution to the Roth Individual Retirement
Annuity, and that are: made on or after the date the individual attains age 59
1/2, made to a beneficiary after the owner's death, attributable to the owner
being disabled or for a first time home purchase (first time home purchases are
subject to a lifetime limit of $10,000).
"Nonqualified distributions" are treated as made from contributions first
and are includible in gross income to the extent such distributions exceed the
contributions made to the Roth Individual Retirement Annuity. The taxable
portion of a "nonqualified distribution" may be subject to the 10% penalty tax
on premature distributions. Subject to certain limitations, a traditional
Individual Retirement Account or Annuity may be converted or "rolled over" to a
Roth Individual Retirement Annuity. The taxable portion of a conversion or
rollover distribution is includible in gross income, but is exempted from the
10% penalty tax on premature distributions.
Income Tax Withholding
We are required to withhold federal income tax at a rate of 20% on all
"eligible rollover distributions" unless an individual elects to make a "direct
rollover" of such amounts to another qualified plan or Individual Retirement
Account or Annuity (IRA). Eligible rollover distributions generally include all
distributions from qualified contracts, excluding IRAs, with the exception of
required minimum distributions, or a series of substantially equal periodic
payments made over a period of at least 10 years, or the life (joint lives) of
the participant (and beneficiary). For any distributions from non-qualified
annuity contracts, or distributions from qualified contracts which are not
considered eligible rollover distributions, we may be required to withhold
federal and state income taxes unless the recipient elects not to have taxes
withheld and properly notifies us of such election.
General Matters
Owner
The Owner ("you") has the sole right to exercise all rights and privileges
under the Contract, except as otherwise provided in the Contract. Both a
nonnatural and natural person cannot jointly own the Contract.
Beneficiary
Subject to the terms of any irrevocable beneficiary designation, you may
change the beneficiary at any time by sending us written notice. Any change will
be effective at the time you signs the notice, whether or not the annuitant is
living when we receive the change. We will not be liable for any payment or
settlement made before we receive the written notice.
Unless otherwise provided in the beneficiary designation, if a beneficiary
predeceases the Owner and there are no other surviving beneficiaries, then the
new beneficiary will be the Owner's spouse. If deceased then, the Owner's
children (in equal shares). If deceased, then the Owner's estate.
Multiple beneficiaries may be named. Unless otherwise provided in the
beneficiary designation, if more than one beneficiary survives the Owner, then
the surviving beneficiaries will share equally in any amounts due.
Assignments
We will not honor an assignment of an interest in a Contract as collateral
or security for a loan. The Owner may assign other benefits under the Contract
before the Payout Start Date. No beneficiary may assign benefits under the
Contract until they are due. We will not be bound by an assignment unless it is
signed by the Owner and filed us. We are not responsible for the validity of an
assignment. Federal law prohibits or restricts the assignment of benefits under
many types of retirement plans and the terms of such plans may themselves
contain restrictions on assignments.
Delay of Payments
Payment of any amounts due from the Variable Account under the Contract
will occur within seven days, unless: o The NYSE is closed for other than usual
weekends or holidays, or trading on the NYSE is otherwise restricted; o An
emergency exists as defined by the SEC; or o The SEC permits delay for the
protection of the Owners.
Payments or transfers from the fixed account may be delayed for up to 6
months.
Modification
We cannot modify the Contract without your consent, except:
o to make the Contract meet the requirements of the 1940 Act;
o to make the Contract comply with any changes in the Internal
Revenue Code; or
o to make any changes required by the Internal Revenue Code or by any
other applicable law.
Customer Inquiries
If you would like additional information, please contract a representative
of the Company or call us at:
Glenbrook Life and Annuity Company
Customer Service
8301 Maryland Avenue
St. Louis, Missouri 63105
1- (800) 242-4402
Distribution of the Contracts
Allstate Life Financial Services, Inc. ("ALFS"), 3100 Sanders Road,
Northbrook, Illinois, a wholly owned subsidiary of Allstate Life Insurance
Company, acts as the principal underwriter of the Contracts. ALFS is registered
with the SEC as a broker-dealer under the Securities Exchange Act of 1934 and is
a member of the National Association of Securities Dealers, Inc. ("NASD"). ALFS
is also registered with the SEC as an investment adviser under the Investment
Advisers Act of 1940.
ALFS has contracted with Scudder Investors Services, Inc. ("Scudder") for
Scudder's services in connection with the distribution of the Contract. Scudder
is registered with the SEC as a broker-dealer under the 1934 Act and is a member
of the NASD. Individuals directly involved in the sale of the Contract are
registered representatives of Scudder and our appointed licensed agents. The
principal address of Scudder is Two International Place, Boston, Massachusetts
02110-4103.
The underwriting agreement with ALFS provides for indemnification of ALFS
by us for liability to Owners arising out of services rendered or Contracts
issued.
Voting Rights
The Owner or anyone with a voting interest in a subaccount may instruct us
on how to vote at the Fund's shareholder meetings. We will solicit and cast each
vote according to the procedures set up by the Fund and to the extent required
by law. We reserve the right to vote the eligible shares in our own right, if
subsequently permitted by the 1940 Act, its regulations or interpretations
thereof.
We will vote Fund shares that no timely instructions were received in
proportion to the voting instructions which we receive with respect to all
Contracts participating in that subaccount. We will apply voting instructions to
abstain on a pro-rata basis to reduce the votes eligible to be cast.
Before the Payout Start Date, you hold the voting interest in the
subaccount. We will determine the number of your votes by dividing your
Contract's value in the subaccount by the net asset value per share of the
applicable portfolio.
After the Payout Start Date, the person receiving variable income payments
has the voting interest and the votes decrease as income payments are made and
the reserves for the Contract decrease. That person's number of votes will be
determined by dividing the reserve for such Contract allocated to the applicable
subaccount by the net asset value per share of the corresponding eligible
portfolio.
General Provisions
Legal Proceedings
From time to time we are involved in pending and threatened litigation in
the normal course of our business in which claims for monetary damages are
asserted. Management, after consultation with legal counsel, does not anticipate
the ultimate liability arising from such pending or threatened litigation to
have a material effect on our financial condition.
Financial Statements
Our financial statements and the financial statements of the Variable
Account are included in the SAI.
Legal Matters
Sutherland Asbill & Brennan LLP has provided advice on certain legal
matters relating to the federal securities laws applicable to the issue and sale
of the Contracts. Michael J. Velotta, General Counsel of the Company, has passed
upon all matters of Illinois law pertaining to the Contracts, including the
validity of the Contracts and our right to issue such Contracts under Illinois
insurance law.
Year 2000
We are heavily dependent upon complex computer systems for all phases of
our operations, including customer service, and contract administration. Since
many of our older computer software programs recognize only the last two digits
of the year in any date, some software may fail to operate properly in or after
the year 1999, if software is not reprogrammed, remedied or replaced, ("Year
2000 Issue"). We believe that many of our counterparties and suppliers also have
Year 2000 Issues that could affect us. In 1995, Allstate commenced a plan
intended to mitigate and/or prevent the adverse effects of Year 2000 Issues.
These strategies include normal development and enhancement of new and existing
systems, upgrades to operating systems already covered by maintenance agreements
and modifications to existing systems to make them Year 2000 compliant. The plan
also includes us actively working with our major external counterparties and
suppliers to assess their compliance efforts and our exposure to them. We
presently believe that we will resolve the Year 2000 Issue in a timely manner,
and the financial impact will not materially affect its results of operations,
liquidity or financial position. Year 2000 costs are and will be expensed as
incurred.
<PAGE>
Statement of Additional Information Table of Contents
Additions, Deletions or Substitutions of Investments
Reinvestment
The Contract
Purchase of Contracts
Performance Data
Money Market Subaccount Yields
Other Subaccount Yields
Standardized Total Returns
Without the Enhanced Death Benefit
With the Enhanced Death Benefit
Other Performance Data
Cumulative Total Returns
Adjusted Historical Portfolio Total Return
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers)
Premium Taxes
Tax Reserves
Income Payments
Calculation of Variable Annuity Unit Values
General Matters
Incontestability
Settlements
Safekeeping of the Variable Account's Assets
Federal Tax Matters
Introduction
Taxation of Glenbrook Life and Annuity Company
Exceptions to the NonNatural Owner Rule
IRS Required Distribution at Death Rules
Qualified Plans
Types of Qualified Plans
Legal Matters
Independent Accountants
Financial Statements
Order Form
Please send me a copy of the most recent Statement of Additional
Information for the Glenbrook Life Scudder Variable Account (A).
- ------------------ -----------------------------
(Date) (Name)
-----------------------------
(Street Address)
-----------------------------
(City) (State) (Zip Code)
Send to: Glenbrook Life and Annuity Company
PO Box 94039
Palatine, IL 60094-4039
Attn: Annuity Services
<PAGE>
Condensed Financial Information
The following condensed financial information shows accumulation unit
values for each subaccount for each year since the subaccount started operation.
Accumulation unit value is the unit we use to calculate the value of your
interest in a subaccount. Accumulation unit value does not reflect the deduction
of certain charges that we subtract from your Contract Value. The data is
obtained from the audited financial statement of the Variable Account that can
be found in the SAI.
<TABLE>
<CAPTION>
Money Market subaccount
<S> <C> <C> <C>
- ------------------- ------------------------------- -------------------------------- -------------------------------
Accumulation unit value at Accumulation unit value at the Number of accumulation units
beginning of year end of the year outstanding at the end of the
year
- ------------------- ------------------------------- -------------------------------- -------------------------------
- ------------------- ------------------------------- -------------------------------- -------------------------------
1998*
- ------------------- ------------------------------- -------------------------------- -------------------------------
Bond subaccount
- ------------------- ------------------------------- -------------------------------- -------------------------------
Accumulation unit value at Accumulation unit value at the Number of accumulation units
beginning of year end of the year outstanding at the end of the
year
- ------------------- ------------------------------- -------------------------------- -------------------------------
- ------------------- ------------------------------- -------------------------------- -------------------------------
1998*
- ------------------- ------------------------------- -------------------------------- -------------------------------
Capital Growth subaccount
- ------------------- ------------------------------- -------------------------------- -------------------------------
Accumulation unit value at Accumulation unit value at the Number of accumulation units
beginning of year end of the year outstanding at the end of the
year
- ------------------- ------------------------------- -------------------------------- -------------------------------
- ------------------- ------------------------------- -------------------------------- -------------------------------
1998*
- ------------------- ------------------------------- -------------------------------- -------------------------------
Balanced subaccount
- ------------------- ------------------------------- -------------------------------- -------------------------------
Accumulation unit value at Accumulation unit value at the Number of accumulation units
beginning of year end of the year outstanding at the end of the
year
- ------------------- ------------------------------- -------------------------------- -------------------------------
- ------------------- ------------------------------- -------------------------------- -------------------------------
1998*
- ------------------- ------------------------------- -------------------------------- -------------------------------
International subaccount
- ------------------- ------------------------------- -------------------------------- -------------------------------
Accumulation unit value at Accumulation unit value at the Number of accumulation units
beginning of year end of the year outstanding at the end of the
year
- ------------------- ------------------------------- -------------------------------- -------------------------------
- ------------------- ------------------------------- -------------------------------- -------------------------------
1998*
- ------------------- ------------------------------- -------------------------------- -------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Growth and Income subaccount
<S> <C> <C> <C>
- ------------------- ------------------------------- -------------------------------- -------------------------------
Accumulation unit value at Accumulation unit value at the Number of accumulation units
beginning of year end of the year outstanding at the end of the
year
- ------------------- ------------------------------- -------------------------------- -------------------------------
- ------------------- ------------------------------- -------------------------------- -------------------------------
1998*
- ------------------- ------------------------------- -------------------------------- -------------------------------
Global Discovery subaccount
- ------------------- ------------------------------- -------------------------------- -------------------------------
Accumulation unit value at Accumulation unit value at the Number of accumulation units
beginning of year end of the year outstanding at the end of the
year
- ------------------- ------------------------------- -------------------------------- -------------------------------
- ------------------- ------------------------------- -------------------------------- -------------------------------
1998*
- ------------------- ------------------------------- -------------------------------- -------------------------------
</TABLE>
* From commencement of each subaccount on November __, 1998.
<PAGE>
Statement of Additional Information
For the
Scudder Horizon Advantage
Individual and Group Flexible Premium Variable Deferred Annuity Contracts
Issued Through
Glenbrook Life Scudder Variable Account (A)
Offered by
Glenbrook Life and Annuity Company
Post Office Box 94039
Palatine, IL 60094-4039
1 (800) 776 - 6978
-----------
This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the Scudder Horizon Advantage, a flexible premium
variable deferred annuity (the "Contract") offered by Glenbrook Life and Annuity
Company ("Company", "we," "us"). We are a wholly owned subsidiary of Allstate
Life Insurance Company.
You may obtain a copy of the Prospectus dated May 1, 1999, by calling (800)
776-6978 or writing to us at the address listed above.
This Statement of Additional Information is not a prospectus and should be
read only in conjunction with the Prospectus for the Contract.
Dated May 1, 1999
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Additions, Deletions or Substitutions of Investments............................................1
Reinvestment....................................................................................1
The Contract....................................................................................1
Purchase of Contracts........................................................................1
Performance Data................................................................................2
Money Market Subaccount Yields...............................................................2
Other Subaccount Yields......................................................................3
Standardized Total Returns......................................................................4
Without the Enhanced Death Benefit...........................................................4
With the Enhanced Death Benefit..............................................................5
Other Performance Data..........................................................................6
Cumulative Total Returns.....................................................................6
Adjusted Historical Portfolio Total Returns..................................................6
Without the Enhanced Death Benefit...........................................................7
With the Enhanced Death Benefit..............................................................7
Tax-Free Exchanges (1035 Exchanges, Rollovers and Transfers)....................................7
Premium Taxes...................................................................................8
Tax Reserves....................................................................................8
Income Payments.................................................................................8
Calculation of Variable Annuity Unit Values..................................................8
General Matters.................................................................................9
Incontestability.............................................................................9
Settlements..................................................................................9
Safekeeping of the Variable Account's Assets.................................................9
Federal Tax Matters.............................................................................9
Introduction.................................................................................9
Taxation of Glenbrook Life and Annuity Company...............................................9
Exceptions to the Nonnatural Owner Rule.....................................................10
IRS Required Distribution at Death Rules....................................................10
Qualified Plans.............................................................................11
Types of Qualified Plans....................................................................11
Individual Retirement Annuities..........................................................11
Roth Individual Retirement Annuities.....................................................11
Simplified Employee Pension Plans........................................................12
Savings Incentive Match Plans for Employees (SIMPLE Plans)...............................12
Tax Sheltered Annuities..................................................................12
Corporate and Self-Employed Pension and Profit Sharing Plans.............................13
State and Local Government and Tax-Exempt Organization Deferred Compensation Plans.......13
Legal Matters..................................................................................13
Independent Accountants........................................................................13
Financial Statements...........................................................................14
</TABLE>
<PAGE>
Additions, Deletions or Substitutions of Investments
We retain the right, subject to any applicable law, to make additions to,
deletions from or substitutions for the Fund shares held by any subaccount. We
also reserve the right to eliminate the shares of any of the Funds and to
substitute shares of another portfolio of the Fund, or of another open-end,
registered investment company, if the shares of the portfolio are no longer
available for investment, or if, in our judgment, investment in any portfolio
would become inappropriate in view of the purposes of the Variable Account.
Substitutions of shares in a subaccount will not be made until you has been
notified of the change, and until the Securities and Exchange Commission has
approved the change, to the extent such notification and approval are required
by the Investment Company Act of 1940 (the "Act"). Nothing contained in this
Statement of Additional Information shall prevent the Variable Account from
purchasing other securities for other series or classes of contracts, or from
effecting a conversion between series or classes of contracts on the basis of
requests made by Owners.
We may also establish additional subaccounts of the Variable Account. Each
additional subaccount would purchase shares in a new portfolio of the Fund or in
another mutual fund. New subaccounts may be established when, in our sole
discretion, marketing needs or investment conditions warrant. Any new
subaccounts offered in conjunction with the Contract will be made available to
existing Owners as determined by the Company. We may also eliminate one or more
subaccounts if, in its sole discretion, marketing, tax or investment conditions
so warrant.
In the event of any such substitution or change, we may, by appropriate
endorsement, make such changes in the Contract as may be necessary or
appropriate to reflect such substitution or change. If deemed to be in the best
interests of persons having voting rights under the policies, the Variable
Account may be operated as a management company under the Act or it may be
deregistered under the Act in the event registration is no longer required.
Reinvestment
All dividends and capital gains distributions from the portfolios are
automatically reinvested in shares of the distributing portfolio at its net
asset value.
The Contract
Purchase of Contracts
We offer the Contracts to the public through brokers licensed under the
federal securities laws and state insurance laws. The Contracts are distributed
through the principal underwriter for the Variable Account, Allstate Life
Financial Services, Inc., an affiliate of Glenbrook Life and Annuity Company.
The offering of the Contracts is continuous and we do not anticipate
discontinuing the offering of the Contracts. However, we reserve the right to
discontinue the offering of the Contracts.
Performance Data
From time to time the Variable Account may publish advertisements
containing performance data relating to its subaccounts. The performance data
for the Subaccounts (other than for the Scudder Money Market Subaccount) will
always be accompanied by total return quotations. Performance figures used by
the Variable Account are based on actual historical performance of its
subaccounts for specific periods, and the figures are not intended to indicate
future performance.
Money Market Subaccount Yields
Based on the method of calculation described below, the Current Yield and
Effective Yield on amounts held in the Money Market Subaccount for the seven-day
period ending December 31, 1998, were as follows:
Money Market Without Enhanced With Enhanced
Subaccount Death Benefit Death Benefit
Current Yield _____% _____%
Effective Yield _____% _____%
The Current Yield is computed by determining the net change (exclusive of
realized gains and losses on the sale of securities and unrealized appreciation
and depreciation) at the end of the seven-day period in the value of a
hypothetical account under a Contract having a balance of 1 unit of the Money
Market Subaccount at the beginning of the period, dividing such net change in
account value by the value of the account at the beginning of the period to
determine the base period return, and annualizing this quotient on a 365-day
basis. The net change in account value reflects (i) net income from the
Portfolio attributable to the hypothetical account and (ii) charges and
deductions imposed under the Contract that are attributable to the hypothetical
account. The charges and deductions include the per unit charges for the
hypothetical account for the Mortality and Expense Risk Charge (0.40% for
Contracts with the standard Death Benefit and 0.50% for Contracts with the
Enhanced Death Benefit) and an Administrative Expense Charge of 0.30%.
Current Yield is calculated according to the following formula:
Current Yield = ((NCS - ES) / W) x (365 / 7)
We may also disclose the Effective Yield of the Money Market Variable Account
for the same seven-day period, determined on a compounded basis. The seven-day
Effective Yield is calculated by compounding the unannualized base period return
according to the following formula:
Effective Yield = (1 + ((NCS - ES)/UV))(365 / 7) -1
Where, for both formulas:
NCS = The net change in the value of the Portfolio (exclusive of realized gains
and losses on the sale of securities and unrealized appreciation and
depreciation and exclusive of income other than investment income) for the
seven-day period attributable to a hypothetical account having a balance of one
Subaccount unit under a Contract.
ES = Per unit expenses of the Subaccount for the Contracts for the seven-day
period.
UV = The unit value for a Contract on the first day of the seven-day period.
The Current and Effective Yield on amounts held in the Money Market
Subaccount normally will fluctuate on a daily basis. Therefore, the disclosed
yield for any given past period is not an indication or representation of future
yields or rates of return. The Money Market Subaccount's actual yield is
affected by changes in interest rates on money market securities, average
portfolio maturity, the types and quality of portfolio securities held, and the
operating expenses.
Other Subaccount Yields
Based on the method of calculation described below, for the thirty-day
period ending December 31, 1998, the Yield for the Bond Subaccount was as
follows:
Bond Subaccount Without Enhanced With Enhanced
Death Benefit Death Benefit
Current Yield ___% ___%
The 30-Day Yield refers to income generated by the Bond Subaccount over a
specific 30-day period. Because the yield is annualized, the yield generated
during the 30-day period is assumed to be generated each 30-day period over a
12-month period. The yield is computed by: (i) dividing the net investment
income of the Portfolio attributable to the Subaccount units less Subaccount
expenses attributable to the Contracts for the period, by (ii) the maximum
offering price per unit on the last day of the period times the daily average
number of units outstanding for the period, by (iii) compounding that yield for
a 6-month period, and by (iv) multiplying that result by 2. Expenses
attributable to the Bond Subaccount for the Contracts include the Mortality and
Expense Risk Charge (0.40% for Contracts with the standard Death Benefit and
0.50% for Contracts with the Enhanced Death Benefit) and an Administrative
Expense Charge of 0.30%.
The 30-Day Yield is calculated according to the following formula:
30-Day Yield = 2 x ((((NI -ES) / (U x UV)) + 1)(to the power of 6)- 1)
Where:
NI = Net income of the portfolio for the 30-day period attributable to the
Subaccount's units.
ES = Expenses of the Subaccount for the Contracts for the 30-day period.
U = The average daily number of units outstanding attributable to the
Contracts.
UV = The unit value for a Contract at the close (highest) of the last day in
the 30-day period.
The 30-Day Yield on amounts held in the Bond Subaccount normally will
fluctuate over time. Therefore, the disclosed yield for any given past period is
not an indication or representation of future yields or rates of return. The
Bond Subaccount's actual yield is affected by the types and quality of portfolio
securities held by the Portfolio, and its operating expenses.
Standardized Total Returns
We may disclose Total Returns for one or more of the Subaccounts for
various periods of time. One of the periods of time will include the period
measured from the date the Subaccount commenced operations. When a Subaccount
has been in operation for 1, 5 and 10 years, respectively, the Total Return for
these periods will be provided. Total Returns for other periods of time may,
from time to time, also be disclosed.
Based on the method of calculation described below, the Average Annual
Total Returns for the Subaccounts for the periods ending December 31, 1998, were
as follows:
Without the Enhanced Death Benefit
Inception of Inception of One Year
Subaccount to Portfolio to Period Ending
Subaccount 12/31/98 12/31/98 12/31/98
- ---------- ------------- ------------ -------------
Money Market*
Bond
Balanced
Capital Growth
International
Growth and Income
Global Discovery
With the Enhanced Death Benefit
Inception of Inception of One Year
Subaccount to Portfolio to Period Ending
Subaccount 12/31/98 12/31/98 12/31/98
- ---------- ------------- ------------ -------------
Money Market*
Bond
Balanced
Capital Growth
International
Growth and Income
Global Discovery
* The Yield quotations for the Money Market Subaccount quoted above more closely
reflect the current earnings of this subaccount than the total return
quotations.
Total Returns for a Contract represent the average annual compounded rates
of return that would equate a single investment of $1,000 to the redemption
value of that investment as of the last day of each of the periods. The ending
date for each period for which Total Return quotations are provided will be for
the most recent month end practicable, considering the type and media of the
communication, and will be stated in the communication.
Total Returns will be calculated using Subaccount Unit Values which
Glenbrook calculates on each Valuation Date based on the performance of the
Subaccount's underlying Portfolio, and are reduced by all fees and charges under
the Contract, including the Mortality and Expense Risk Charge (0.40% for
Contracts with the standard Death Benefit and 0.50% for Contracts with the
Enhanced Death Benefit) and an Administrative Expense Charge of 0.30%.
The Total Return is calculated according to the following formula:
TR = (ERV / P)(to the power of 1/N) - 1
Where:
TR = The average annual total return net of Subaccount recurring charges for
the Contracts.
ERV = The ending redeemable value of the hypothetical account at the end of the
period.
P = A hypothetical single payment of $1,000.
N = The number of years in the period.
Other Performance Data
Cumulative Total Returns
Based on the method of calculation described below, the Cumulative Total
Returns for the subaccounts for the periods ending December 31, 1998, were as
follows:
Inception of Inception of One Year
Subaccount to Portfolio to Period Ending
Subaccount 12/31/98 12/31/98 12/31/98
- ---------- ------------- ------------ -------------
Money Market
Bond
Balanced
Capital Growth
International
Growth and Income
Global Discovery
We may disclose Cumulative Total Returns in conjunction with the standard
format described above. The Cumulative Total Returns will be calculated using
the following formula:
CTR = (ERV / P) - 1
Where:
CTR = The Cumulative Total Return net of Subaccount recurring charges for the
period.
ERV = The ending redeemable value of the hypothetical investment at the end of
the period.
P = A hypothetical single payment of $1,000.
Adjusted Historical Portfolio Total Returns
We may also disclose yield and total return for the Fund's portfolios,
including for periods before the date that the Variable Account began
operations. For periods prior to the date the Variable Account commenced
operations, adjusted historical portfolio performance information will be
calculated based on the performance of the underlying portfolios and the
assumption that the subaccounts were in existence for the same periods as those
of the underlying Funds, with some or all of the charges equal to those
currently assessed against the subaccounts.
In the tables below, average annual total returns for the Portfolios were
reduced by all fees and charges under the Contract, including the Mortality and
Expense Risk Charge (0.40% for Contracts without the Enhanced Death Benefit and
0.50% for Contracts with the Enhanced Death Benefit) and an Administrative
Expense Charge of 0.30%.
Without the Enhanced Death Benefit
<TABLE>
<CAPTION>
Ten Year Period
One Year Period Five Year Period Ending 12/31/98 or Portfolio
Portfolio Ending 12/31/98 Ending 12/31/98 Since Inception Inception Dates
- --------- --------------- ----------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Money Market 7/16/85
Bond 7/16/85
Capital Growth 7/16/85
Balanced 7/16/85
International 5/1/87
Growth and Income 5/2/94
Global Discovery 5/1/96
</TABLE>
With the Enhanced Death Benefit
<TABLE>
<CAPTION>
Ten Year Period
One Year Period Five Year Period Ending 12/31/98 or Portfolio
Portfolio Ending 12/31/98 Ending 12/31/98 Since Inception Inception Dates
- --------- --------------- ---------------- ------------------- ---------------
<S> <C> <C> <C> <C>
Money Market 7/16/85
Bond 7/16/85
Capital Growth 7/16/85
Balanced 7/16/85
International 5/1/87
Growth and Income 5/2/94
Global Discovery 5/1/96
</TABLE>
The Variable Account may also advertise the performance of the subaccounts
relative to certain performance rankings and indices compiled by independent
organizations, such as: (a) Lipper Analytical Services, Inc.; (b) the Standard &
Poor's 500 Composite Stock Price Index ("S & P 500"); (c) A.M. Best Company; (d)
Bank Rate Monitor; and (e) Morningstar.
Tax-Free Exchanges (1035 Exchanges, Rollovers and Transfers)
We accept purchase payments that are the proceeds of a contract in a
transaction qualifying for a tax-free exchange under Section 1035 of the
Internal Revenue Code. Except as required by federal law in calculating the
basis of the contract, we do not differentiate between Section 1035 purchase
payments and non-Section 1035 purchase payments.
We also accept "rollovers" and transfers from contracts qualifying as
tax-sheltered annuities ("TSAs"), individual retirement annuities or accounts
("IRAs"), or any other Qualified Contract that is eligible to "rollover" into an
IRA. We differentiate among Non-Qualified Contracts, TSAs, IRAs and other
Qualified Contracts to the extent necessary to comply with federal tax laws. For
example, we restrict the assignment, transfer or pledge of TSAs and IRAs so the
contracts will continue to qualify for special tax treatment. You contemplating
any such exchange, rollover or transfer of a contract should contact a competent
tax adviser with respect to the potential effects of such a transaction.
Premium Taxes
Applicable premium tax rates depend on your state of residency and the
insurance laws and status of the Company in those states where premium taxes are
incurred. Premium tax rates may be changed by legislation, administrative
interpretations or judicial acts.
Tax Reserves
We do not establish capital gains tax reserves for the subaccount or deduct
charges for tax reserves because we believe that capital gains attributable to
the Variable Account will not be taxable. However, we reserve the right to
deduct charges to establish tax reserves for potential taxes on realized or
unrealized capital gains.
Income Payments
Calculation of Variable Annuity Unit Values
We calculate the amount of the first income payment by applying your
Contract Value allocated to each subaccount less any applicable premium tax
charge deducted at this time, to the income payment tables in the Contract. The
first Variable Annuity Income Payment is divided by the subaccount's then
current annuity unit value to determine the number of annuity units upon which
later income payments will be based. Unless transfers are made among
subaccounts, each variable income payment after the first will be equal to the
sum of the number of annuity units determined in this manner for each subaccount
times the then current annuity unit value for each respective subaccount.
Annuity units in each subaccount are valued separately and annuity unit
values will depend upon the investment experience of the particular underlying
portfolio in which the subaccount invests. The value of the annuity unit for
each subaccount at the end of any Valuation Period is calculated by: (a)
multiplying the annuity unit value at the end of the immediately preceding
Valuation Period by the subaccount's Net Investment Factor during the period;
and then (b) dividing the product by the sum of 1.0 plus the assumed investment
rate for the period. The assumed investment rate adjusts for the interest rate
assumed in the Income Payment tables used to determine the dollar amount of the
first variable annuity Income Payment, and is at an effective annual rate which
is disclosed in the Contract.
We determine the amount of the first Income Payment paid under an income
plan using the interest rate and mortality table disclosed in the Contract. Due
to judicial or legislative developments regarding the use of tables that do not
differentiate on the basis of sex, different annuity tables may be used.
General Matters
Incontestability
We will not contest the Contract after it is issued.
Settlements
Due proof of you(s) death (or Annuitant's death if there is a nonnatural
Owner) must be received prior to settlement of a death claim.
Safekeeping of the Variable Account's Assets
We hold title to the assets of the Variable Account. The assets are kept
physically segregated and held separate and apart from our general corporate
assets. Records are maintained of all purchases and redemptions of the portfolio
shares held by each of the subaccounts.
The Fund does not issue certificates and, therefore, we hold the Variable
Account's assets in open account in lieu of stock certificates. See the Fund's
prospectus for a more complete description of the custodian of the Fund.
Federal Tax Matters
Introduction
The following discussion is general and is not intended as tax advice. The
company makes no guarantee regarding the tax treatment of any contract or
transaction involving a contract. Federal, state, local and other tax
consequences of ownership or receipt of distributions under an annuity contract
depend on the individual circumstances of each person. If you are concerned
about any tax consequences with regard to your individual circumstances, you
should consult a competent tax adviser.
Taxation of Glenbrook Life and Annuity Company
We are taxed as a life insurance company under Part I of Subchapter L of
the Internal Revenue Code. Since the Variable Account is not an entity separate
from the Company, and its operations form a part of the Company, it will not be
taxed separately as a "Regulated Investment Company" under Subchapter M of the
Code. Investment income and realized capital gains of the Variable Account are
automatically applied to increase reserves under the contract. Under existing
federal income tax law, we believe that the Variable Account investment income
and capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the contract. Accordingly, we do not
anticipate that it will incur any federal income tax liability attributable to
the Variable Account, and therefore we do not intend to make provisions for any
such taxes. If we are taxed on investment income or capital gains of the
Variable Account, then the Company may impose a charge against the Variable
Account in order to make provision for such taxes.
Exceptions to the Nonnatural Owner Rule
There are several exceptions to the general rule that contracts held by a
nonnatural owner are not treated as annuity contracts for federal income tax
purposes. Contracts will generally be treated as held by a natural person if the
nominal owner is a trust or other entity which holds the contract as agent for a
natural person. However, this special exception will not apply in the case of an
employer who is the nominal owner of an annuity contract under a non-qualified
deferred compensation arrangement for its employees. Other exceptions to the
nonnatural owner rule are: (1) contracts acquired by an estate of a decedent by
reason of the death of the decedent; (2) certain qualified contracts; (3)
contracts purchased by employers upon the termination of certain qualified
plans; (4) certain contracts used in connection with structured settlement
agreements, and (5) contracts purchased with a single premium when the annuity
starting date is no later than a year from purchase of the annuity and
substantially equal periodic payments are made, not less frequently than
annually, during the annuity period.
IRS Required Distribution at Death Rules
In order to be considered an annuity contract for federal income tax
purposes, an annuity contract must provide: (1) if any owner dies on or after
the annuity start date but before the entire interest in the contract has been
distributed, the remaining portion of such interest must be distributed at least
as rapidly as under the method of distribution being used as of the date of your
death; (2) if any owner dies prior to the annuity start date, the entire
interest in the contract will be distributed within five years after the date of
your death. These requirements are satisfied if any portion of your interest
which is payable to (or for the benefit of) a designated beneficiary is
distributed over the life of such beneficiary (or over a period not extending
beyond the life expectancy of the beneficiary) and the distributions begin
within one year of your death. If your designated beneficiary is the surviving
spouse of you, the contract may be continued with the surviving spouse as the
new owner. If you are a nonnatural person, then the annuitant will be treated as
you for purposes of applying the distribution at death rules. In addition, a
change in the annuitant on a contract owned by a nonnatural person will be
treated as your death.
Qualified Plans
This annuity contract may be used with several types of qualified plans.
The tax rules applicable to participants in such qualified plans vary according
to the type of plan and the terms and conditions of the plan itself. Adverse tax
consequences may result from excess contributions, premature distributions,
distributions that do not conform to specified commencement and minimum
distribution rules, excess distributions and in other circumstances. Owners and
participants under the plan and annuitants and beneficiaries under the contract
may be subject to the terms and conditions of the plan regardless of the terms
of the contract.
Types of Qualified Plans
Individual Retirement Annuities
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity (IRA).
Individual Retirement Annuities are subject to limitations on the amount that
can be contributed and on the time when distributions may commence. Certain
distributions from other types of qualified plans may be "rolled over" on a
tax-deferred basis into an Individual Retirement Annuity. An IRA generally may
not provide life insurance, but it may provide a death benefit that equals the
greater of the premiums paid and the contract's cash value. The contract
provides a death benefit that in certain circumstances may exceed the greater of
the payments and the contract value. It is possible that the Death Benefit could
be viewed as violating the prohibition on investment in life insurance contracts
with the result that the Contract would not be viewed as satisfying the
requirements of an IRA.
Roth Individual Retirement Annuities
Section 408A of the Code permits eligible individuals to make nondeductible
contributions to an individual retirement program known as a Roth Individual
Retirement Annuity (Roth IRA). Roth IRAs are subject to limitations on the
amount that can be contributed and on the time when distributions may commence.
"Qualified distributions" from Roth IRAs are not includible in gross income.
"Qualified distributions" are any distributions made more than five taxable
years after the taxable year of the first contribution to the Roth IRA, and
which are made on or after the date the individual attains age 59 1/2, made to a
beneficiary after your death, attributable to you being disabled or for a first
time home purchase (first time home purchases are subject to a lifetime limit of
$10,000). "Nonqualified distributions" are treated as made from contributions
first and are includible in gross income to the extent such distributions exceed
the contributions made to the Roth IRA. The taxable portion of a "nonqualified
distribution" may be subject to the 10% penalty tax on premature distributions.
Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. The taxable portion of a conversion or rollover distribution is
includible in gross income, but is exempted from the 10% penalty tax on
premature distributions.
Simplified Employee Pension Plans
Section 408(k) of the Code allows employers to establish simplified
employee pension plans for their employees using the employees' individual
retirement annuities if certain criteria are met. Under these plans the employer
may, within specified limits, make deductible contributions on behalf of the
employees to their individual retirement annuities. Employers intending to use
the contract in connection with such plans should seek competent advice. In
particular, employers should consider that an IRA generally may not provide life
insurance, but it may provide a death benefit that equals the greater of the
premiums paid and the contract's cash value. The contract provides a death
benefit that in certain circumstances may exceed the greater of the payments and
the contract value. It is possible that the death benefit could be viewed as
violating the prohibition on investment in life insurance contracts with the
result that the Contract would not be viewed as satisfying the requirements of
an IRA.
Savings Incentive Match Plans for Employees (SIMPLE Plans)
Sections 408(p) and 401(k) of the Code allow employers with 100 or fewer
employees to establish SIMPLE retirement plans for their employees. SIMPLE plans
may be structured as a SIMPLE retirement account using an employee's IRA to hold
the assets or as a Section 401(k) qualified cash or deferred arrangement. In
general, a SIMPLE plan consists of a salary deferral program for eligible
employees and matching or nonelective contributions made by employers. Employers
intending to use the contract in conjunction with SIMPLE plans should seek
competent tax and legal advice.
Tax Sheltered Annuities
Section 403(b) of the Code permits public school employees and employees of
certain types of tax-exempt organizations (specified in Section 501(c)(3) of the
Code) to have their employers purchase annuity contracts for them, and subject
to certain limitations, to exclude the purchase payments from the employees'
gross income. An annuity contract used for a Section 403(b) plan must provide
that distributions attributable to salary reduction contributions made after
12/31/88, and all earnings on salary reduction contributions, may be made only
on or after the date the employee attains age 59 1/2, separates from service,
dies, becomes disabled or on the account of hardship (earnings on salary
reduction contributions may not be distributed for hardship). These limitations
do not apply to withdrawals where the Company is directed to transfer some or
all of the contract value to another 403(b) plan.
Corporate and Self-Employed Pension and Profit Sharing Plans
Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of tax favored retirement plans for employees. The
Self-Employed Individuals Retirement Act of 1962, as amended, (commonly referred
to as "H.R. 10" or "Keogh") permits self-employed individuals to establish tax
favored retirement plans for themselves and their employees. Such retirement
plans may permit the purchase of annuity contracts in order to provide benefits
under the plans.
State and Local Government and Tax-Exempt Organization Deferred Compensation
Plans
Section 457 of the Code permits employees of state and local governments
and tax-exempt organizations to defer a portion of their compensation without
paying current taxes. The employees must be participants in an eligible deferred
compensation plan. To the extent the contracts are used in connection with an
eligible plan, employees are considered general creditors of the employer and
the employer as owner of the contract has the sole right to the proceeds of the
contract. Generally, under the nonnatural owner rules, such contracts are not
treated as annuity contracts for federal income tax purposes. Under these plans,
contributions made for the benefit of the employees will not be includible in
the employees' gross income until distributed from the plan. However, under a
457 plan all the compensation deferred under the plan must remain solely the
property of the employer, subject only to the claims of the employer's general
creditors, until such time as made available to the employee or a beneficiary.
Legal Matters
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to the federal securities laws. All matters of
Illinois law pertaining to the Contracts, including the validity of the Contract
and Glenbrook's authority to issue the Contract under Illinois Insurance Law,
have been passed upon by Michael J. Velotta, General Counsel of Glenbrook Life
and Annuity Company.
Independent Accountants
The consolidated financial statements of Glenbrook Life and Annuity Company
and Subsidiaries as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998 and the financial statements of the
Glenbrook Life Scudder Variable Account (A) as of December 31, 1998 and for the
year in the period ended December 31, 1998 included in this Registration
Statement have been included herein in reliance on the reports of Deloitte &
Touche LLP, independent accountants, given on the authority of said firm as
experts in accounting and auditing.
Financial Statements
The financial statements of Glenbrook, which are included in this Statement
of Additional Information, should be considered only as bearing on the ability
of Glenbrook to meet its obligation under the Contract. They should not be
considered as bearing on the investment performance of the assets held in the
Variable Account.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
(1) Form of Resolution of the Board of Directors of Glenbrook Life and
Annuity Company authorizing establishment of the Glenbrook Life
Scudder Variable Account (A). 1/
(2) Not Applicable.
(3) Form of Underwriting Agreement. 1/
(4) Glenbrook Life and Annuity Company Flexible Premium Deferred Variable
Annuity Contract.1/
(5) Glenbrook Life and Annuity Company Flexible Premium Deferred Variable
Annuity Contract Application. 1/
(6)
(a)(i) Articles of Incorporation of Glenbrook Life and Annuity
Company.2/
(ii) Amended and Restated Articles of Incorporation and Articles
of Redomestication of Glenbrook Life and Annuity Company.4/
(b)(i) By-laws of Glenbrook Life and Annuity Company.2/
(ii) Amended and Restated Bylaws of Glenbrook Life and Annuity
Company.4/
(7) Form of Reinsurance Agreement between Glenbrook Life and Annuity
Company and Allstate Life Insurance Company.3/
(8) Form of Participation Agreement.5/
(9) Opinion and Consent of Michael J. Velotta, Vice President, Secretary
and General Counsel of Glenbrook Life and Annuity Company.5/
(10)
(a) Consent of Independent Certified Public Accountants.5/
(b) Consent of Sutherland Asbill & Brennan LLP.5/
(11) Not Applicable.
(12) Not Applicable.
(13) Computation of Performance Quotations.1/
(14) Not Applicable.
(15) Powers of Attorney.1/ 4/
1/ Incorporated herein by reference to Registrant's initial filing of this Form
N-4 Registration Statement filed with the SEC via EDGARLINK on July 31, 1998
(File No. 333-60337).
2/ Incorporated herein by reference to Depositor's Form S-1 Registration
Statement filed with the SEC via EDGARLINK on June 28, 1996 (File No.
333-07275).
3/ Incorporated herein by reference to Depositor's Pre-Effective Amendment No. 1
to Form N-4 Registration Statement filed with the SEC via EDGARLINK on November
22, 1995 (File No. 033-62203).
4/ Filed herewith.
5/ To be filed by subsequent post-effective amendment.
25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR
Louis G. Lower, II Chairman of the Board and Chief Executive Officer
Michael J. Velotta Vice President, Secretary, General Counsel
and Director
Peter H. Heckman President, Chief Operating Officer and Director
Brent H. Hamann Director
John R. Hunter Director
Thomas J. Wilson, II Director and Vice Chairman
Marla G. Friedman Vice President
Kevin R. Slawin Vice President and Director
G. Craig Whitehead Assistant Vice President and Director
Timothy N. Vander Pas Assistant Vice President and Director
A. Sales Miller Vice President, Operations
James P. Zils Treasurer
Casey J. Sylla Chief Investment Officer
Sarah R. Donahue Assistant Vice President and Director
Emma M. Kalaidjian Assistant Secretary
Paul N. Kierig Assistant Secretary
Mary J. McGinn Assistant Secretary
Keith A. Hauschildt Assistant Vice President and Controller
Barry S. Paul Assistant Vice President
Robert N. Roeters Assistant Vice President
C. Nelson Strom Assistant Vice President and Corporate Actuary
Kathleen Urbanowicz Assistant Vice President, Operations
Brenda D. Sneed Assistant Secretary and Assistant General Counsel
Nancy M. Bufalino Assistant Treasurer
Patricia W. Wilson Assistant Treasurer
Gregory C. Sernett Assistant Secretary
Joanne M. Derrig Assistant Secretary and Chief Compliance Officer
The principal business address of the foregoing officers and directors is 3100
Sanders Road, Northbrook, Illinois 60062.
26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR REGISTRANT
Incorporated herein by reference to the Form 10-K Report, Commission File
#1-11840, The Allstate Corporation.
27. NUMBER OF CONTRACT OWNERS
As of December 31, 1998, there were [1] qualified and [2] non-qualified
contracts in force.
28. INDEMNIFICATION
The by-laws of both Glenbrook Life and Annuity Company (Depositor) and Allstate
Life Financial Services, Inc. (Principal Underwriter), provide for the
indemnification of its Directors, Officers and Controlling Persons, against
expenses, judgments, fines and amounts paid in settlement as incurred by such
person, if such person acted properly. No indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of a duty
to the Company, unless a court determines such person is entitled to such
indemnity.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Directors, Officers and Controlling Persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
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 registrant of expenses incurred
or paid by a Director, Officer or Controlling Person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted such
Director, Officer or Controlling Person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
29. RELATIONSHIP OF PRINCIPAL UNDERWRITER TO OTHER INVESTMENT COMPANIES
(a) The Fund's principal underwriter, Allstate Life Financial Services, Inc.,
currently acts as a principal underwriter, depositor, sponsor, or investment
adviser for the following entities:
- Glenbrook Life and Annuity Company Variable Annuity Account
- Glenbrook Life Multi-Manager Variable Account
- Allstate Life of New York Separate Account A
- Glenbrook Life Variable Life Separate Account A
- Glenbrook Life and Annuity Company Separate Account A
- Glenbrook Life AIM Variable Life Separate Account A
- Glenbrook Life Variable Life Separate Account B
(b) Following are the names, business addresses, positions, and offices, of each
director, officer, or partner of the principal underwriter:
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION OR OFFICE
Louis G. Lower, II Director
Kevin R. Slawin Director
Michael J. Velotta Director and Secretary
Thomas J. Wilson, II Director
John R. Hunter President, Chief Executive Officer and Director
Diane Bellas Vice President and Controller
Brent H. Hamann Vice President
Andrea J. Schur Vice President
Terry Young General Counsel and Assistant Secretary
James P. Zils Treasurer
Lisa A. Burnell Assistant Vice President and Compliance Officer
Robert N. Roeters Assistant Vice President
Emma M. Kalaidjian Assistant Secretary
Brenda D. Sneed Assistant Secretary
Nancy M. Bufalino Assistant Treasurer
Gregory C. Sernett Assistant Secretary
The principal address of Allstate Life Financial Services, Inc. is 3100 Sanders
Road, Northbrook, Illinois 60062.
<PAGE>
(c) Underwriter Compensation during fiscal year ended December 31, 1998:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(1) (2) (3) (4) (5)
NET UNDERWRITING
NAME OF PRINCIPAL DISCOUNTS AND
UNDERWRITER COMMISSIONS COMPENSATION ON BROKERAGE
REDEMPTION COMMISSION COMPENSATION
Allstate Life _______ None None None
Financial Services, Inc.
</TABLE>
30. LOCATION OF ACCOUNTS AND RECORDS
The Depositor, Glenbrook Life and Annuity Company, is located at 3100 Sanders
Road, Northbrook, Illinois 60062.
The Principal Underwriter, Allstate Life Financial Services, Inc., is located at
3100 Sanders Road, Northbrook, Illinois 60062.
Each company maintains physical possession of each account, book, or other
document required to be maintained by Section 31(a) of the 1940 Act and the
Rules under it.
31. MANAGEMENT SERVICES
None.
32. UNDERTAKINGS
The Registrant promises to file a post-effective amendment to this Registration
Statement as frequently as is necessary to ensure that the audited financial
statements in the Registration Statement are never more than 16 months old for
so long as payments under the variable annuity contracts may be accepted.
Registrant furthermore agrees to include either as part of any application to
purchase a contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information or a post card or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information. Finally,
the Registrant agrees to deliver any Statement of Additional Information and any
Financial Statements required to be made available under this Form N-4 promptly
upon written or oral request.
Representations Pursuant to Section 403(b) of the Internal Revenue Code
The Depositor, Glenbrook Life and Annuity Company ("Glenbrook Life"), represents
that it is relying upon a November 28, 1988 Securities and Exchange Commission
no-action letter issued to the American Council of Life Insurance ("ACLI") and
that the provisions of paragraphs 1-4 of the no-action letter have been complied
with.
Representations Regarding Contract Expense
The Depositor, Glenbrook Life, represents that the fees and charges deducted
under the Individual and Group Flexible Premium Deferred Variable Annuity
contracts hereby registered by this Registration Statement, in the aggregate,
are reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Glenbrook Life.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Glenbrook Life Scudder Variable Account (A), certifies
that it has duly caused this Post-Effective Amendment No. 1 to be signed on its
behalf, in the Township of Northfield, and the State of Illinois, on this 25th
day of February, 1999.
GLENBROOK LIFE SCUDDER VARIABLE ACCOUNT (A)
(REGISTRANT)
BY: GLENBROOK LIFE AND ANNUITY COMPANY
(DEPOSITOR)
(SEAL)
Attest: /s/ BRENDA D. SNEED By: /s/ MICHAEL J. VELOTTA
------------------- ----------------------
Brenda D. Sneed Michael J. Velotta
Assistant Secretary Vice President, Secretary and
and Assistant General Counsel General Counsel
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registration Statement has been duly signed below by
the following Directors and Officers of Glenbrook Life and Annuity Company on
the 25th day of February, 1999.
<TABLE>
<CAPTION>
<S> <C>
* LOUIS G. LOWER, II Chairman of the Board of Directors and Chief Executive Officer
- -------------------- (Principal Executive Officer)
Louis G. Lower, II
/s/ MICHAEL J. VELOTTA Vice President, Secretary, General Counsel and Director
- ----------------------
Michael J. Velotta
* PETER H. HECKMAN President, Chief Operating Officer and Director
- ------------------
Peter H. Heckman
* JOHN R. HUNTER Director
- ----------------
John R. Hunter
* BRENT H. HAMANN Director
- -----------------
Brent H. Hamann
* TIMOTHY N. VANDER PAS Director
- -----------------------
Timothy N. Vander Pas
Vice Chairman and Director
- ---------------------
Thomas J. Wilson II
* KEVIN R. SLAWIN Vice President and Director
- ----------------- (Principal Financial Officer)
Kevin R. Slawin
Director, Assistant Vice President
- ------------------
Sarah R. Donahue
* G. CRAIG WHITEHEAD Senior Vice President and Director
- --------------------
G. Craig Whitehead
* JAMES P. ZILS Treasurer
- ---------------
James P. Zils
* CASEY J. SYLLA Chief Investment Officer
- ----------------
Casey J. Sylla
* KEITH A. HAUSCHILDT Assistant Vice President and Controller
- --------------------- (Principal Accounting Officer)
Keith A. Hauschildt
</TABLE>
*By: /s/ MICHAEL J. VELOTTA pursuant to Power of Attorney previously filed
----------------------- and filed herewith.
Michael J. Velotta
<PAGE>
Exhibit Index
Exhibit 6(a)(ii) Amended and Restated Articles of Incorporation and Articles of
Redomestication of Glenbrook Life and Annuity Company.
Exhibit 6(b)(ii) Amended Restated Bylaws of Glenbrook Life and Annuity Company.
Exhibit 15 Powers of Attorney
Exhibit 6(a)(ii)
AMENDED AND RESTATED ARTICLES OF INCORPORATION
AND ARTICLES OF REDOMESTICATION
OF
GLENBROOK LIFE AND ANNUITY INSURANCE COMPANY
We, the undersigned, acting as incorporators for the purpose of
redomesticating Glenbrook Life and Annuity Company, an Illinois corporation,
which intends to continue its existence, without interruption, as a corporation
organized under the laws of the State of Arizona pursuant to Arizona Revised
Statutes ss. 20-231.A, do hereby adopt the following Amended and Restated
Articles of Incorporation and Articles of Redomestication for said corporation.
ARTICLE I
The name of the corporation shall be Glenbrook Life and Annuity Company
ARTICLE II
The corporation was incorporated in the State of Indiana on August 25,
1965, and subsequently reorganized under the laws of the State of Illinois on
April 17, 1992.
ARTICLE III
The existence of the corporation shall be perpetual.
ARTICLE IV
Upon the approval of these Amended and Restated Articles of Incorporation
and Articles of Redomestication by the necessary regulatory authorities,
Glenbrook Life and Annuity Company shall be and continue to be possessed of all
privileges, franchises and powers to the same extent as if it had been
originally incorporated under the laws of the State of Arizona; and all
privileges, franchises and powers belonging to said corporation, and all
property, real, personal and mixed, and all debts due on whatever account, all
Certificates of Authority, agent appointments, and all chooses in action, shall
be and the same are hereby ratified, approved, confirmed and assured to
Glenbrook Life and Annuity Company with like effect and to all intents and
purposes as if it had been originally incorporated under the laws of the State
of Arizona. Said corporation shall be given recognition as a domestic
corporation of the State of Arizona from and after August 25, 1965, and as a
domestic insurer of the State of Arizona from and after August 25, 1965, the
dates of its initial incorporation and authorization to transact insurance
business under the laws of the State of Indiana, effective the date of filing
with the Arizona Corporation Commission.
ARTICLE V
The nature of the business to be transacted and the objects and purposes
for which this corporation is organized include the transaction of any and all
lawful business for which insurance corporations may be incorporated under the
laws of the State of Arizona without limitation, and as said laws may be amended
from time to time, and specifically said corporation shall be authorized to
transact disability insurance, life insurance, annuities, variable life
insurance and variable annuities as defined pursuant to A.R.S. ss.ss. 20-253,
20-254, 20-254.01, 20-2601 and 20-2632 respectively, together with such other
kinds of insurance as the corporation may from time to time be authorized to
transact, and to act as a reinsurer of business for which it is duly authorized
consistent with the applicable federal and state requirements.
ARTICLE VI
The authorized capital of the corporation shall be $2,100,000, and shall
consist of 4,200 shares of voting common stock with a par value of $500.00 per
share. No holders of stock of the corporation shall have any preferential right
to subscription to any shares securities convertible into shares of stock of the
corporation, nor any right of subscription to any thereof other than such, if
any, as the Board of Directors in its discretion may determine, and at such
price as the Board of Directors in its discretion may fix; and any shares or
convertible securities which the Board of Directors may determine to offer for
subscription to the holders of stock at the time existing.
Nothing herein contained shall be construed as prohibiting the corporation
from issuing any shares of authorized but unissued common stock for such
consideration as the Board of Directors may determine, provided such issuance is
approved by the shareholders of the corporation by a majority of the votes
entitled to be cast at any annual or special meeting of shareholders called for
that purpose. No such authorized but unissued stock may, however, be issued to
the shareholders of the corporation by way of a stock dividend, split-up or in
any other manner of distribution unless the same ratable stock dividend, stock
split-up or other distribution be declared or made in voting common stock to the
holder of such voting common stock at the time outstanding. Each holder of
common stock shall be entitled to participate share for share in any cash
dividends which may be declared from time to time on the common stock of the
corporation by the Board of Directors and to receive pro rata the net assets of
the corporation on liquidation.
ARTICLE VII
The affairs of the corporation shall be conducted by a Board of Directors
consisting of not less than five (5) nor more than fifteen (15) directors as
fixed by the bylaws, and such officers as said directors may at any time elect
or appoint. No officer or director need be a shareholder of this corporation.
Ten (10) directors shall constitute the initial Board of Directors. The names
and addresses of the persons who are to serve as directors until the next annual
meeting of shareholders or until their successors are elected and qualified, and
of the persons who are to serve as officers until the next annual meeting of the
directors or until their successors are elected and qualify, are:
Board of Directors
Louis Gordon Lower, II., Chairman
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Peter Hall Heckman
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Michael Joseph Velotta
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
George Craig Whitehead
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
John Roger Hunter
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Brent Herman Hamann
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Sarah Romans Donahue
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Kevin Rourke Slawin
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Timothy Nicholas Vander Pas
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Thomas Joseph Wilson, II.
Allstate Plaza North
2775 Sanders Road
Northbrook, Illinois 60062-7154
Officers
Louis Gordon Lower, II, Chief Executive Officer
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Pete Hall Heckman - President and Chief Operating Officer
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Michael Joseph Velotta - Vice President, Secretary and General Counsel
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
James Philip Zils - Treasurer
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Marla Gay Friedman - Vice President
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Kevin Rourke Slawin - Vice President
Allstate Plaza West
3100 Sanders Road
Northbrook, Illinois 60062-7154
Casey Joseph Sylla - Chief Investment Officer
Allstate Plaza North
2775 Sanders Road
Northbrook, Illinois 60062-7154
The directors shall have the power to adopt, amend, alter and repeal the
Bylaws, to manage the corporate affairs and make all rules and regulations
expedient for the management of the affairs of the corporation, to remove any
officer and to fill all vacancies occurring in the Board of Directors and
offices for any cause, and to appoint from their own number an executive
committee and other committees and vest said committees with all the powers
permitted by the Bylaws.
ARTICLE VIII
The Corporation may indemnify any person as permitted by the laws of the
State of Arizona, and as further specified in its Bylaws, including the power to
purchase and maintain insurance to indemnify the corporation for any obligation
which it may incur as a result of such indemnification.
ARTICLE IX
All directors of the corporation shall be elected at the annual meeting of
the shareholders, which shall be held on the third Tuesday of February of each
year or such other date and time as may be determined by the Board of Directors,
unless such day falls on a holiday, in which event the regular annual meeting
shall be held on the next succeeding business day.
ARTICLE X
The registered office of business of the corporation shall be located in
the City of Phoenix, Maricopa County, Arizona, but it may have other places of
business and transact business, and its Board of Directors or shareholders may
meet for the transaction of business, at such other place or places within or
without the State of Arizona which its Board of Directors may designate.
ARTICLE XI
The fiscal year of the corporation shall be the calendar year.
ARTICLE XII
In no event shall the corporation incur indebtedness in excess of the
amount authorized by law.
ARTICLE XIII
The shares of the corporation, when issued, shall be non-assessable, except
to the extent required by the Constitution, specifically, but not in limitation
thereof, as provided by Article XIV, Section 11 of the Constitution of the State
of Arizona and the laws of the State of Arizona.
ARTICLE XIV
The private property of the shareholders, directors and officers of the
corporation shall be forever exempt from debts and obligations of the
corporation.
ARTICLE XV
The Bylaws of the corporation may be repealed, altered amended, or
substitute Bylaws may be adopted, by the directors or the shareholders, in
accordance with the provisions contained in said Bylaws.
ARTICLE XVI
J. Michael Low of 2999 North 44th Street, Suite 250, Phoenix, Arizona,
85018, having been a bona fide resident of Arizona for at least three (3) years,
is hereby appointed the statutory agent of this corporation in the State of
Arizona, upon whom notices and processes, including service of summons, may be
served, and which, when so served shall have lawful personal service on the
corporation. The Board of Directors may revoke this appointment at any time, and
shall fill the vacancy in such position whenever one exists.
ARTICLE XVII
The names and addresses of the incorporators of the corporation are:
J. Michael Low
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
S. David Childers
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
Steven R. Henry
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
Kathleen T. Newcomb
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
Charles R. Bassett
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
All individual incorporators are eighteen (18) years of age or older.
All powers, duties and responsibilities of the incorporators shall cease at
the time of delivery of these Amended and Restated Articles of Incorporation and
Articles of Redomestication to the Arizona Corporation Commission for filing.
IN WITNESS WHEREOF, we hereunto affix our signatures as of the ____ day of
, 199 .
- ---------------------------- -----------------------------
J. Michael Low S. David Childers
- ---------------------------- -----------------------------
Steven R. Henry Kathleen T. Newcomb
- ----------------------------
Charles R. Bassett
Subscribed, sworn to and acknowledged before me this _______ day of , 199 .
- ---------------------
-------------------------
Notary Public
My Commission Expires:
- -------------------------
<PAGE>
APPOINTMENT OF STATUTORY AGENT
I, J. Michael Low, being a resident of the State of Arizona for at least
three (3) years preceding this appointment, do hereby accept appointment as
Statutory Agent for Glenbrook Life and Annuity Company in accordance with the
Arizona Revised Statutes until appointment of a successor Statutory Agent and
removal.
DATED, this ____ day of , 199 .
------------------------------
J. Michael Low, Esq.
Low & Childers, P.C.
<PAGE>
APPOINTMENT OF STATUTORY AGENT
I, J. Michael Low, being a resident of the State of Arizona for at least
three (3) years preceding this appointment, do hereby accept appointment as
Statutory Agent for Glenbrook Life and Annuity Company in accordance with the
Arizona Revised Statutes until appointment of a successor Statutory Agent and
removal.
DATED, this ____ day of , 199 .
------------------------------
J. Michael Low, Esq.
Low & Childers, P.C.
RECEP/ALLSTATE/
ART OF INC
GLENBROOK
February 22, 1999
10005-004
Exhibit 6(b)(ii)
AMENDED AND RESTATED BYLAWS
OF
GLENBROOK LIFE AND ANNUITY COMPANY
ARTICLE I
Meetings of Stockholders
Section 1. Annual Meeting. The annual meeting of the stockholders of the
corporation shall be held at the principal office of the corporation, or at such
other place as shall be set forth in the notice of meeting, on the third Tuesday
in February, or on such other date as the Board of Directors or the Chief
Executive Officer and/or President may determine, for the purpose of electing
directors and for the transaction of such other business as may be brought
before the meeting.
Section 2. Notice of Annual Meeting. Notice of the time and place of
holding such annual meeting shall be given by the Secretary by mailing a copy
thereof to each stockholder entitled to vote thereat at his address as it
appears on the books of the corporation, or by delivering it to him in person,
not less than ten days nor more than sixty days before such meeting. The officer
or agent having charge of the stock transfer books for shares of the corporation
shall make a complete record of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each. Such record shall be produced
and kept open at the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the meeting for the
purposes thereof.
Section 3. Special Meetings. Special meetings of the stockholders, to be
held at the principal office of the corporation or elsewhere, shall be called by
the Chief Executive Officer and/or President, and must be called by him, or in
his absence by the Vice President, on receipt of a written request from the
holders of a majority of the outstanding stock of the corporation or from a
majority of the directors of the corporation.
Section 4. Notice of Special Meetings. Notice of the time, place, and
purpose of each special meeting shall be given by the Secretary by mailing a
copy thereof to each stockholder entitled to vote thereat at his address as it
appears on the books of the corporation, or by delivering it to him in person,
at least ten days and not more than sixty days prior to the date of such
meeting.
Section 5. Waiver of Notice of Meeting. Notice of any meeting of
stockholders, annual or special, shall not be required to be given to any
stockholder entitled to vote thereat who shall attend such meeting in person or
by proxy, or who shall before or after such meeting, in person or by proxy
thereunto authorized, waive notice of such meeting in writing or by telegraph or
cable.
Section 6. Quorum; Adjournments of Meetings. At all meetings of the
stockholders, except as otherwise provided by law, the holders of a majority of
the outstanding stock of the corporation, present in person or by proxy and
entitled to vote thereat, shall constitute a quorum for the transaction of
business, unless the representation of a larger number shall be required by law,
in which event such number shall constitute a quorum. In the absence of a
quorum, a majority in interest of the stockholders so present or represented may
adjourn the meeting from time to time until a quorum is obtained. No notice
shall be necessary for any such adjourned meeting except the statement at the
meeting which is adjourned. At any such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally called. If the adjournment is for more than thirty days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 7. Organization. Except where otherwise provided by statute, the
Chief Executive Officer and/or President of the corporation, shall call meetings
of the stockholders and shall act as chairman of such meetings. In the absence
of the Chief Executive Officer and/or President and Vice President, a chairman
shall be chosen by the stockholders present. The Secretary of the corporation
shall act as secretary at all meetings of the stockholders, but in the absence
of the Secretary the presiding officer may appoint any person to act as
secretary of the meeting.
Section 8. Voting. At each meeting of the stockholders, every stockholder
entitled to vote thereat shall be entitled to vote in person or by proxy
appointed by an instrument in writing, subscribed by such stockholder or his
duly authorized attorney, and delivered to the secretary of the meeting, and he
shall have one vote for each share of the voting stock outstanding in his name,
except that the cumulative system of voting as required by the laws of Arizona
shall govern the election of directors. Upon demand of any stockholder, the
votes for directors or upon any question before the meeting shall be by ballot.
Section 9. Consents. Whenever the vote of stockholders is required or
permitted to be taken at a meeting thereof in connection with any corporate
action, the meeting and the vote of stockholders may be dispensed with if all
the stockholders who would have been entitled to vote upon the actions, if such
meeting were held, shall consent in writing to such corporate actions being
taken.
<PAGE>
ARTICLE II
Board of Directors
Section 1. Number, Qualifications, Election, and Term of Office. The number
of directors shall be not less than five (5) no more than fifteen (15) which
number may be altered from time to time as provided by the Arizona General
Corporation Law, Title 10, Chapter 8, Section 10-803, et seq. No director need
be a holder of capital stock of the corporation. The directors shall be elected
annually, and each shall continue in office until the next annual meeting held
after his election and until his successor shall have been elected and
qualified, except that a director may be removed with or without cause, and his
successor elected and qualified, in advance of an annual meeting, at a special
meeting of stockholders called for that purpose, by vote of a majority of the
outstanding stock of the corporation. A director whose removal is thus proposed
shall be given written notice of the meeting not less than seven days prior
thereto.
Section 2. Vacancies and Resignation. In case of any vacancy in the Board
of Directors through death, resignation, disqualification, increase in number,
or other cause, the remaining director or directors, although less than a
quorum, by affirmative vote of a majority thereof may elect a successor or
successors to hold office for the unexpired portion of the term of the director
whose place shall be vacant, and until the election and qualification of his
successor or successors. Any director of the corporation may resign by giving
written notice to the Chief Executive Officer and/or President or Secretary,
which resignation shall be effective on the date specified in the notice, or, if
no date is specified, upon its acceptance by the Board of Directors.
Section 3. Powers and Duties. The Board of Directors shall have general
power to manage and control the business and property of the corporation.
Section 4. Place of Meeting. The Board of Directors may hold its meetings
at such place or places within or without the State of Arizona as the Board may
from time to time determine.
Section 5. Annual Meeting. After each annual meeting of stockholders for
the election of directors, the newly elected Board of Directors shall meet for
the purpose of organization and the transaction of such other business as may
properly come before the meeting. Such an annual meeting shall be held at the
place where the annual meeting of stockholders was held at which they were
elected, or at such other place as the new Board shall determine. Notice of such
annual meeting need not be given.
Section 6. Regular Meetings: Notice. Regular meetings of the Board of
Directors may be held at such time and place as may be determined by the Board,
and thereupon no notice of such regular meetings need be given.
Section 7. Special Meetings: Notice. Special meetings of the Board of
Directors shall be held at any time and place upon the call of the Chief
Executive Officer and/or President, or any two (2) Directors. Notice of the
time, place, and purpose of every special meeting of the Board shall be given to
each director by the Chief Executive Officer and/or President or Secretary
either by mail, personally, telegram or telephone at least two day's before the
meeting.
Section 8. Waiver of Notice of Meeting. Notice of any special meeting of
the Board of Directors need not be given to any director who shall attend such
meeting in person or shall participate in such meeting by telephone, or who
shall before or after such meeting waive notice in writing, by telegraph or by
cable.
Section 9. Quorum. A majority of the directors in office present in person
or by participation by telephone shall constitute a quorum for the transaction
of business, but if at any meeting of the Board there shall be less than such
quorum, the directors present may adjourn the meeting from time to time until a
quorum is obtained. No notice shall be necessary for any such adjourned meeting
except the statement at the meeting which is adjourned.
Section 10. Organization. Every meeting of the Board of Directors shall be
presided over by the Chairman of the Board, or in his absence the Chief
Executive Officer and/or President. In the absence of the Chairman and the Chief
Executive Officer and/or President, a presiding officer shall be chosen by the
directors present. The Secretary of the corporation shall act as secretary of
the meeting, but in his absence the presiding officer may appoint any person to
act as secretary of the meeting.
Section 11. Consents. Whenever the vote of directors is required or
permitted to be taken at a meeting thereof in connection with any corporate
action, the meeting and the vote of directors may be dispensed with if all the
directors shall consent in writing to such corporate actions being taken.
Section 12. Action Without Meeting. Unless otherwise restricted by the
articles of incorporation or these bylaws, any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
Section 13. Compensation. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors, and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated salary
as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
such meetings. The amount or rate of such compensation of members of the Board
of Directors or of committees shall be established by the Board of Directors and
shall be set forth in the minutes of the Board.
Section 14. Distributions From Capital Surplus. The Board of Directors of
the corporation may, from time to time, distribute on a pro rata basis to its
stockholders out of the capital surplus of the corporation a portion of its
assets, in cash or property.
Section 15. Repurchase of Shares. The Board of Directors of the corporation
may from time to time cause the corporation to purchase its own shares to the
extent of the unreserved and unrestricted earned and capital surplus of the
corporation.
Section 16. Chairman of the Board. If the Board of Directors appoints a
Chairman of the Board, he shall, notwithstanding any other provision in these
bylaws to the contrary, preside at all meetings of stockholders and the Board of
Directors. He shall have such powers and perform such other duties as may be
prescribed by the Board of Directors.
ARTICLE III
Officers
Section 1. Number. The officers of the corporation shall be Chief Executive
Officer and/or President, one or more Vice Presidents, a Secretary, a Treasurer,
and such other officers as may be appointed from time to time by the Board of
Directors. One person may hold more than one office in the corporation.
Section 2. Election, Qualification and Term of Office. The officers of the
corporation shall be chosen annually at the first meeting of the newly elected
Board of Directors held immediately following the annual meeting of
stockholders.
Section 3. Other Officers and Agents. The Board of Directors may appoint
from time to time such other officers or agents as it shall deem necessary, each
of whom shall hold office during the pleasure of the Board and have such
authority and perform such duties as the Board of Directors may from time to
time determine.
Section 4. Removal and Resignation. Any officer, agent or employee of the
corporation may be removed, with or without cause, by the Board of Directors,
and may resign by giving written notice to the Chief Executive Officer and/or
President or Secretary, which resignation shall be effective on the date
specified in the notice, or, if no date is specified, upon its acceptance by the
Board of Directors.
Section 5. Chief Executive Officer and/or President: Powers and Duties. The
Chief Executive Officer and/or President shall, subject to the control of the
Board of Directors, have general charge of the business of the corporation. He
shall keep the Board of Directors fully informed, shall freely consult with them
concerning the business of the corporation, and shall perform such other duties
as may be assigned to him by the Board of Directors. They may sign, in the name
of the corporation, all authorized contracts, documents, checks, and bonds, or
other obligations.
Section 6. Vice President: Powers and Duties. In the absence of the Chief
Executive Officer and/or President, the Vice President (and if there be more
than one, then the First Vice President, and in his absence then the Second Vice
President, and so on) shall assume and exercise all the powers of the Chief
Executive Officer and/or President. The Vice President or Vice Presidents shall
perform such other duties and have such other powers as the Board of Directors
may prescribe.
Section 7. Secretary: Powers and Duties. The Secretary shall keep the
minutes of all meetings in the books proper for that purpose. He shall attend to
the giving and serving of all notices of the corporation. He may sign, if
authorized by the Board of Directors, in the name of the corporation all
authorized contracts, documents, checks, bonds, or other obligations, and he
shall affix the seal of the corporation thereto. He shall have charge of the
certificate books, stock books, and such other books and papers as the Board of
Directors may direct. He shall make all such corporate records available for
inspection as required by law.
Section 8. Assistant Secretary. The Board of Directors may appoint one or
more Assistant Secretaries who shall have such powers and perform such duties as
may be prescribed by the Board of Directors.
Section 9. Treasurer: Powers and Duties. The Treasurer shall have the
custody of all of the funds and securities of the corporation. He shall endorse
on behalf of the corporation, for collection, checks, notes, and other
obligations, and shall deposit the same to the credit of the corporation in such
bank or banks as the Board of Directors may designate. He shall sign all
receipts and vouchers for payments made to the corporation. He may sign in the
name of the corporation, if authorized by the Board of Directors, all authorized
contract, documents, checks, bonds, and other obligations. He shall keep books
of account of the financial business and affairs of the corporation, and shall
render a statement of his accounts and records to the Board of Directors or to
the stockholders at a meeting thereof whenever so required. He shall exhibit all
accounts and records to any director upon reasonable request. He shall make all
such records available for inspection as required by law.
Section 10. Assistant Treasurer. The Board of Directors may appoint one or
more Assistant Treasurers who shall have such powers and perform such duties as
may be prescribed by the Board of Directors.
ARTICLE IV
Contracts, Checks, Drafts, Bank Accounts, Etc.
Section 1. Contracts. Any contract or instrument necessary for the business
of the corporation may be signed by the Chief Executive Officer and/or President
or by any other officers thereunto authorized by the Board of Directors, or any
of the Board Members, and attested by the Secretary, who may affix thereto the
seal of the corporation.
Section 2. Bank Accounts. All funds of the corporation shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies, or other depositories as the Board of Directors may select, or as may
be selected by any officer or officers, agent or agents, of the corporation to
whom such power may from time to time be delegated by the Board of Directors.
Section 3. Checks, Drafts, Etc. All checks, drafts, or orders for the
payment of money, and all notes and other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers, or
person or persons, as shall from time to time be authorized so to do by
resolution of the Board of Directors.
ARTICLE V
Shares and Their Transfer: Dividends
Section 1. Certificates of Stock. Certificates for the shares of the
respective classes of capital stock of the corporation shall be numbered in the
order of their issue, and shall be signed by the Chief Executive Officer and/or
President or the Vice President and by the Secretary or Treasurer, and the seal
of the corporation shall be thereunto affixed.
Section 2. Transfer of Stock. Transfers of the shares of the capital stock
of the corporation shall be made on the books of the corporation only by the
holder thereof or by his attorney thereunto authorized by a power of attorney
duly executed by the stockholder and filed with the Secretary of the
corporation, and on surrender of the certificate or certificates for such
shares. Every certificate surrendered to the corporation shall be marked
"Cancelled", and no new certificate shall be issued in exchange therefor until
the old certificate has been surrendered and cancelled. A person in whose name
shares of stock stand on the books of the corporation shall be deemed the sole
owner thereof as regards the corporation. The Board of Directors may, by
resolution, close the share transfer books of the corporation for a period not
exceeding ten (10) days before the holding of any annual or special meeting of
the shareholders. The Board of Directors may, by resolution, also close the
transfer books of the corporation for a period not exceeding ten (10) days
before payment of any dividends which may be declared upon the shares of the
corporation.
Section 3. Lost, Destroyed and Mutilated Certificates. The holder of any
stock of the corporation shall immediately notify the corporation of any loss,
destruction or mutilation of the certificate thereof, and the Board of Directors
may in its discretion cause a new certificate or certificates to be issued to
him upon the surrender of the mutilated certificates or, in case of loss or
destruction of the certificate, upon satisfactory proof of such loss or
destruction, and, if the Board shall so require, upon the delivery to the
corporation of a bond in such form and amount and with such surety or sureties
as the Board may require.
Section 4. Dividends. The Board of Directors shall have the power to
authorize dividends to the maximum and fullest extent permitted by Title 10,
Chapter 6, Article 4, Section 10-640, et seq. of the Arizona Revised Statues
ARTICLE VI
Indemnification
Subject to the further provisions hereof, the corporation shall indemnify
any and all of its existing and former directors, officers, employees, and
agents to the fullest extent permissible pursuant to Title 10, Chapter 8,
Article 5, Section 10-850, et seq.
ARTICLE VII
Seal
The corporate seal of the corporation shall be circular in form with the
name of the corporation and the state and year of incorporation appearing
therein.
ARTICLE VIII
Amendments
The stockholders or the Board of Directors may amend or change the bylaws
of the corporation at any annual, regular or special meeting when the notice or
waiver of notice of the meeting contains the amendments or changes proposed.
ARTICLE IX
Committees
Section 1. Committees of Directors. The Board of Directors may, by
resolution adopted by a majority of the authorized number of directors,
designate an executive committee and one (1) or more other committees, each
consisting of one or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the authorized number of directors. A committee, to the extent
provided in the resolution of the board, shall have all the authority of the
board, except with respect to:
(a) authorize distributions;
(b) approve or submit to shareholders any action that requires the
shareholders' approval under this chapter;
(c) fill vacancies on the board of directors or on any of its committees;
(d) amend articles of incorporation pursuant to section 10-002;
(e) adopt, amend or repeal bylaws;
(f) approval a plan of merger not requiring shareholder approval;
(g) authorize or approve reacquisition of shares, except according to a
formula or method prescribed by the board of directors;
(h) authorize or approve the issuance, sale or contract for sale of shares
or determine the designation and relative rights, preferences and limitations of
a class or series of shares, except that the board of directors may authorize a
committee or an executive officer of the corporation to do so within limits
specifically prescribed by the board of directors;
(i) fix the compensation of directors for serving on the board or any
committee of the board of directors.
The Board of Directors, with or without cause, may dissolve any such
committee or remove any member thereof at any time. The designation of any such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed by
laws. Section 2. Meetings and Action of Committees. Meetings and actions of
committees shall be governed by, and held and taken in accordance with, the
provisions of Article II of these bylaws, Section 4 (place of meetings), Section
6 (regular meetings and notice), Section 7 (special meetings and notice),
Section 8 (waiver of notice of meeting), Section 9 (quorum), and Section 12
(action without a meeting), with such changes in the context of those bylaws as
are necessary to substitute the committee and its members for the Board of
Directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the Board of Directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the Board of Directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The Board of Directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
ARTICLE X
Miscellaneous
Section 1.
(a) As used in this Article:
(i) "acted properly" as to any employee shall mean that such person
(A) acted in good faith;
(B) acted in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the corporation;
and
(C) with respect to any criminal action or proceeding, had no
reasonable cause to believe that his or her conduct was
unlawful.
The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
itself, create a presumption that the person did not act properly.
(ii) "covered person" shall mean an Indemnitee (as defined below) or
an Employee Indemnitee (as defined below).
(iii)"Employee Indemnitee" shall mean any non-officer employee of the
corporation (but not subsidiaries of the corporation).
(iv) "expenses" shall include attorneys' fees and expenses and any
attorneys' fees and expenses of establishing a right to
indemnification under this Section.
(v) "Indemnitee" shall mean any person who is or was:
(A) a director or officer of the Corporation and/or any
subsidiary;
(B) a trustee or a fiduciary under any employee pension, profit
sharing, welfare or similar plan or trust of the Corporation
and/or any subsidiary; or
(C) serving at the request of the Corporation as a director or
officer of or in a similar capacity in another corporation,
partnership, joint venture, trust or other enterprise,
(which shall, for the purpose of this Section be deemed to
include not-for-profit or for-profit entities of any type),
whether acting in such capacity or in any other capacity
including, without limitation, as a trustee or fiduciary
under any employee pension, profit sharing, welfare or
similar plan of trust.
(vi) "proceeding" shall mean any threatened, pending or completed
action or proceeding, whether civil or criminal, and whether
judicial, legislative or administrative and shall include
investigative action by any person or body.
(vii)"subsidiary" shall mean a corporation, 50% or more of the shares
of which at the time outstanding having voting power for the
election of directors are owned directly or indirectly by the
Company or by one or more subsidiaries or by the Company and one
or more subsidiaries.
(b) The Corporation shall indemnify any Indemnitee to the
fullest extent permitted under law (as the same now or
thereafter exists), who was or is a party or is threatened
to be made a party to any proceeding by reason of the fact
that such person is or was an Indemnitee against
liabilities, expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her.
(c) The Corporation shall indemnify any Employee Indemnitee who
was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of the
corporation) by reason of the fact that such person is or
was an employee against liabilities, expenses, judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such proceeding if
such person acted properly.
(d) The Company shall indemnify any Employee Indemnitee who was
or is a party or is threatened to be made a party to any
proceeding by or in the right of the Company to procure a
judgment in its favor by reason of the fact that such person
is or was an employee against amounts paid in settlement and
against expenses actually and reasonably incurred by him or
her in connection with the defense or settlement of such
proceeding if he or she acted properly, except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged
to be liable for negligence or misconduct in the performance
of his or her duty to the Corporation unless and only to the
extent that the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication or liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnify for such expenses which
such court shall deem proper.
(e) Expense incurred in defending a proceeding shall be paid by
the Corporation to or on behalf of a covered person in
advance of the final disposition of such proceeding if the
Corporation shall have received an undertaking by or on
behalf of such person to repay such amounts unless it shall
ultimately be determined that he or she is entitled to be
indemnified by the Corporation as authorized in this
Section.
(f) Any indemnification or advance under this Section (unless
ordered by a court) shall be made by the Company only as
authorized in the specific proceeding upon a determination
that indemnification or advancement to a covered person is
proper in the circumstances. Such determination shall be
made:
(i) by the Board of Directors, by a majority vote of a
quorum consisting of directors who were not made
parties to such proceedings, or
(ii) if such a quorum is not obtainable, or, even if
obtainable and a quorum of disinterested directors so
directs, by independent legal counsel in a written
opinion, or
(iii)in the absence of a determination made under (i) or
(ii), by the stockholders.
(g) The Corporation shall indemnify or advance funds to any
Indemnitee described in Section (a)(v)(C), only after such
person shall have sought indemnification or an advance from
the corporation, partnership, joint venture, trust or other
enterprise in which he or she was serving at the Company's
request, shall have failed to receive such indemnification
or advance and shall have assigned irrevocably to the
Corporation any right to receive indemnification which he or
she might be entitled to assert against such other
corporation, partnership, joint venture, trust or other
enterprise.
(h) The indemnification provided to a covered person by this
Section:
(i) shall not be deemed exclusive of any other rights to
which such person may be entitled by law or under any
articles of incorporation, bylaw agreement, vote of
shareholders or disinterested directors or otherwise;
(ii) shall inure to the benefit of the legal representatives
of such person or his or her estate, whether such
representatives are court appointed or otherwise
designated, and to the benefit of the heirs of such
person; and
(iii)shall be contract right between the Corporation and
each such person who serves in any such capacity at any
time while this Section 1 of Article VII is in effect,
and any repeal or modification of this Section shall
not affect any rights or obligations then existing with
respect to any state of facts or any proceedings then
existing.
(i) The indemnifications and advances provided to a covered
person by this Section shall extend to and include
claims for such payments arising out of any proceeding
commenced or based on actions of such person taken
prior to the effective date of this Section; provided
that payment of such claims had not been agreed to or
denied by the Corporation at the effective date.
(j) The Corporation shall have power to purchase and maintain
insurance on behalf of any covered person against any
liability asserted against him or her and incurred by him or
her as a covered person or arising out of his or her status
of such, whether or not the Corporation would have the power
to indemnify him or her against such liability under the
provisions of this Section. The Corporation shall also have
power to purchase and maintain insurance to indemnify the
Corporation for any obligation which it may incur as a
result of the indemnification of covered persons under the
provisions of this Section.
(k) The invalidity or unenforceability of any provision in this
Section shall not affect the validity or enforceability of
the remaining provisions of this Section.
Section 2. The Fiscal year of the Corporation shall begin in each year on
the first day of January, and end on the thirty-first day of the December
following.
Section 3. The common seal of the Corporation shall be circular in form and
shall contain the name of the Company and the words: "CORPORATE SEAL" and
"ARIZONA".
Section 4. These Bylaws may be amended or repealed by the vote of a
majority of the Directors present at any meeting at which a quorum is present.
SEAL Filed this day of , 19
-------- ---------------------- ------
<PAGE>
CERTIFICATION OF BYLAWS
I, Michael J. Velotta, the duly elected and acting Secretary of Glenbrook
Life and Annuity Company, an Arizona corporation, hereby certify that annexed
hereto are true, correct, complete and current copies of the duly adopted Bylaws
of the Corporation.
IN WITNESS WHEREOF, I have executed this Certification this ____ day of
January, 1999.
---------------------------------
Michael J. Velotta, Secretary
O:/APPS/KATHY/ALLSTATE
BYLAWS/BYLAWS2
10005-004
Power of Attorney
With Respect to the Glenbrook Life and Annuity Company Filing on Form N-4 for
The Glenbrook Life Scudder Variable Account (A)
Know all men by these presents that Brent H. Hamann whose signature appears
below, constitutes and appoints Louis G. Lower, II, and Michael J. Velotta, and
each of them, his attorney-in-fact, with power of substitution, and herein any
and all capacities, to sign any reports and amendments thereto for the Form N-4
for Glenbrook Life Scudder Variable Account (A) and to file the same, with
exhibits thereto and other documents, in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: February 23, 1999
/s/ BRENT H. HAMANN
- -------------------
Brent H. Hamann
<PAGE>
Power of Attorney
With Respect to the Glenbrook Life and Annuity Company Filing on Form N-4 for
The Glenbrook Life Scudder Variable Account (A)
Know all men by these presents that Timothy N. Vander Pas whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution, and
herein any and all capacities, to sign any reports and amendments thereto for
the Form N-4 for Glenbrook Life Scudder Variable Account (A) and to file the
same, with exhibits thereto and other documents, in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: February 23, 1999
/s/ TIMOTHY N. VANDER PAS
- -------------------------
Timothy N. Vander Pas
