<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Continental Assurance Company Separate Account (B)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
CONTINENTAL ASSURANCE COMPANY
SEPARATE ACCOUNT (B)
CNA PLAZA, CHICAGO, ILLINOIS 60685
------------------
NOTICE OF ANNUAL MEETING -- MAY 2, 1997
TO THE PARTICIPANTS OF
CONTINENTAL ASSURANCE COMPANY SEPARATE ACCOUNT (B)
You are hereby notified that, pursuant to the regulations for government of
Continental Assurance Company Separate Account (B) (the "Account"), the 1997
Annual Meeting of its Participants will be held in Room 305, CNA Plaza, 333
South Wabash Avenue, Chicago, Illinois, on May 2, 1997, at 10:00 A.M., Chicago
Time, for the following purposes:
(1) To elect five Committee Members;
(2) To approve the continuation of the Investment Advisory Agreement with
Continental Assurance Company;
(3) To ratify the selection of Deloitte & Touche LLP as independent
certified public accountants for the Account for the fiscal year ending
December 31, 1997; and
(4) To transact such other business as may properly come before the
meeting.
Only Participants of record at the close of business on both March 3, 1997
and on the date of the meeting are entitled to notice of and to vote at the
meeting.
It is important that as many Participants as practicable be represented at
the meeting. Consequently, whether or not you expect to be present, you are
requested to date and sign the enclosed Proxy and return it promptly.
By Order of the Committee,
LYNNE GUGENHEIM
Secretary
March 14, 1997
<PAGE> 3
CONTINENTAL ASSURANCE COMPANY
SEPARATE ACCOUNT (B)
CNA PLAZA
CHICAGO, ILLINOIS 60685
(800) 351-3001
ANNUAL MEETING--MAY 2, 1997
PROXY STATEMENT
The accompanying Proxy is solicited on behalf of the Committee of
Continental Assurance Company Separate Account (B) (the "Account") to be voted
at the 1997 Annual Meeting of Participants (the "Annual Meeting") to be held on
May 2, 1997, at 10:00 A.M., Chicago Time, in Room 305, CNA Plaza, 333 South
Wabash Avenue, Chicago, Illinois, and at any and all adjournments thereof.
PROXIES WILL BE VOTED AS SPECIFIED. HOWEVER, IF NO CONTRARY SPECIFICATIONS ARE
MADE IN A PROXY, IT WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 HEREINAFTER SET
FORTH. Abstentions are considered as shares present and entitled to vote and
therefore have the same legal effect as a vote against a matter presented at the
meeting. Each Proxy may be revoked at any time before its exercise by the
execution of a subsequent Proxy and the delivery thereof to the Secretary of the
Committee at the above address or by written notice to the Secretary of the
Committee at the above address, and any Participant attending the meeting may
vote in person whether or not he has previously executed a Proxy.
This Proxy Statement and the Proxy were first sent to the Participants of
the Account on or about March 14, 1997. This solicitation is being made by use
of the mails, but further solicitations may be made by mail, telephone,
telecopier or personal interview. The cost of soliciting Proxies will be paid by
the investment adviser to the Account, Continental Assurance Company, CNA Plaza,
Chicago, Illinois 60685 (the "Company"), as one of the items of expense for
which the Company receives a monthly service fee (at the annual rate of 0.33% of
the average daily net asset value of the Account) from the Account pursuant to
the Company's Investment Advisory Agreement with the Account. See "Approval of
the Continuation of the Investment Advisory Agreement with Continental Assurance
Company".
There are 8,809,521 votes eligible to be cast by the Participants. Each
Participant who is a Participant on both March 3, 1997 (at the close of
business) and on the date of the Annual Meeting is entitled to vote. A
Participant is entitled to cast the number of votes equal to (1) if not retired,
the number of accumulation units held by such Participant under the particular
contract concerned, or (2) if retired, a number equal to the monetary value of
the actuarial reserve maintained by the Company in the Account for the annuity
of that Participant divided by the monetary value of an accumulation unit.
The Account's 1996 annual report has heretofore been mailed to
Participants. Any Participant who desires additional copies may obtain them upon
written request to the Secretary of the Committee at the above address.
PARTICIPANT PROPOSALS
Participant proposals for inclusion in Proxy Material for the 1998 Annual
Meeting of Participants should be addressed to the Secretary of the Committee at
the above address, and must be received by November 13, 1997.
1. ELECTION OF COMMITTEE MEMBERS
The regulations for government of the Account provide for a Committee of
five members, to be elected annually by ballot at the Annual Meeting of
Participants to serve until the next Annual Meeting of Participants and until
their successors have been elected and qualified. The persons named on the
enclosed
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<PAGE> 4
Proxy are committed to cast the votes represented by the proxies given to them
for the five nominees hereinafter named, all of whom are now serving as
Committee Members, if no contrary instruction is indicated in the Proxy. In
order for such nominees to be elected, they must receive the affirmative votes
of Participants eligible to cast at least a majority of the votes which may be
cast by Participants present at the Annual Meeting in person or by proxy. All of
the nominees listed below have consented to serve if elected. The Committee
presently knows of no reason why any of the nominees listed below will be unable
to serve if elected. If any of the nominees become unavailable to serve as
Committee Members, the persons named in the Proxy will vote for such persons as
the present Committee may select. At the 1996 Annual Meeting of Participants,
five Committee Members were elected, all of whom are standing for re-election.
The following information is furnished with respect to the five persons
nominated for election as Committee Members, none of whom is a Participant in
the Account:
<TABLE>
<CAPTION>
Committee
Principal Occupation for the Last Five Years Member
Name and Address of Nominee and Other Directorships Held Age Since
--------------------------- -------------------------------------------- --- ---------
<S> <C> <C> <C>
Richard W. Dubberke*................. Vice President and Manager of Corporate Bond 59 1992
CNA Plaza Investments of the Company and Continental
Chicago, Illinois 60685 Casualty Company ("Casualty")(1); Vice
President, Treasurer and Director of CNA
Income Shares, Inc. (closed-end investment
company) ("CIS")
Richard T. Fox....................... Consultant to 21st Century Environmental 59 1986
661 Sheridan Road Management, Inc. (Environmental recycling
Winnetka, Illinois 60093 company) ("21EMI") since October 1995; Chief
Executive Officer of 21EMI from August 1994
to September 1995(2); President of 21EMI
from 1993 to August 1994; Chairman and Chief
Executive Officer of 115 Corp. (formerly
Curbmaster, Inc.) (heavy equipment
manufacturer) from 1990 to 1993
Lew H. Nathan*....................... Group Vice President of the Company and 47 1996
CNA Plaza Casualty since January 1996; Prior thereto,
Chicago, Illinois 60685 Vice President of the Company and Casualty;
Chairman of the Committee; Chairman of the
Board of Directors and President of CIS
since October, 1996.
William W. Tongue.................... Professor Emeritus of Economics and Finance, 81 1971
212 Shoreline Drive University of Illinois at Chicago
Park Ridge, Illinois 60068
Peter J. Wrenn....................... President of Hudson Technology, Inc. 61 1987
915 Columbian Avenue (tooling and manufacturing)
Oak Park, Illinois 60302
</TABLE>
- ---------------
* An "interested person" within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940, as amended ("1940 Act"), by virtue of his
employment by the Company.
(1) CNA Financial Corporation ("CNA Financial"), CNA Plaza, Chicago, Illinois
60685, owns all of the outstanding stock of Casualty, CNA Plaza, Chicago,
Illinois 60685, which, in turn, owns all of the outstanding stock of the
Company. See "Approval of the Continuation of the Investment Advisory
Agreement with Continental Assurance Company".
(2) Prior to December 27, 1996 CLE, Inc., a wholly owned indirect subsidiary of
Casualty, owned 63% of the non-voting preferred stock of 21EMI. On December
27, 1996, CLE, Inc. sold all of the 21EMI stock that it owned to a third
party unaffiliated with Casualty. Since December 27, 1996, CLE, Inc. has had
no interest in 21EMI.
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ADDITIONAL INFORMATION REGARDING THE COMMITTEE
STANDING COMMITTEES
The Committee for the Account does not have a standing Audit Committee,
Nominating Committee or Compensation Committee.
MEETINGS
The Committee for the Account held four meetings in 1996. Each Committee
Member attended all of such meetings.
CERTAIN MATERIAL RELATIONSHIPS OF NOMINEES FOR COMMITTEE MEMBER
No nominee to serve as a Committee Member has served as an officer of the
Account or the Company or had any other material interest in or relationship
with the Account, the Company or any of their respective affiliates during the
past five years, except as noted above in the table listing the nominees for
election as Committee Members of the Account.
REMUNERATION OF COMMITTEE MEMBERS AND OFFICERS
No Committee Member or officer receives any remuneration from the Account.
The Company pays Committee Members a fee for their service. The Committee
Member's fee is currently $10,000 per annum. The Company also reimburses
Committee Members for expenses incurred in attending meetings of the Committee.
However, no payments of fees or expenses are made to any Committee Member who is
an officer or employee of or special consultant to the Company, CNA Financial or
any of their affiliated companies. Therefore, neither Mr. Dubberke nor Mr.
Nathan has received or will receive any such payments. During 1996, there was no
reimbursement payable for expenses incurred by Committee Members.
The payment of fees to Committee Members is one of the items of expense for
which the Company receives a monthly investment advisory fee (at the annual rate
of 0.5% of the average daily net asset value of the Account) from the Account
pursuant to the Company's Investment Advisory Agreement with the Account. See
"Approval of the Continuation of the Investment Advisory Agreement with
Continental Assurance Company".
The following table sets forth information regarding the compensation of
all Committee Members of the Account for services rendered in 1996 to the
Account and to funds deemed to be included in the same fund complex as the
Account. A "fund complex" for this purpose means any two or more funds that hold
themselves out to investors as related companies or that have a common or
related investment adviser.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Aggregate Pension or retirement Total compensation from
compensation benefits accrued as part Estimated Annual fund and fund complex
Name of person, position from fund of fund expenses benefits upon retirement paid to directors
- ------------------------ ------------ ------------------------ ------------------------ -----------------------
<S> <C> <C> <C> <C>
Richard W. Dubberke,
Committee Member*..... None None None None
Richard T. Fox,
Committee Member...... $10,000 None None $10,000
Lew H. Nathan,
Committee Member*..... None None None None
William W. Tongue,
Committee Member...... $10,000 None None $10,000
Peter J. Wrenn,
Committee Member...... $10,000 None None $10,000
</TABLE>
- ---------------
* An "interested person" (as defined in Section 2(a)(19) of the 1940 Act).
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EXECUTIVE OFFICERS
The Account has three executive officers: Richard W. Dubberke, Lynne
Gugenheim and Lew H. Nathan. Ms. Gugenheim is 37 years old and has been
Secretary of the Committee and CIS since April 1995. Since January 1996, she has
been a Vice President and Associate General Counsel of the Company and Casualty.
From November 1994 to December 1995, she was an Assistant Vice President and
Assistant General Counsel of the Company and Casualty. From 1991 to November
1994, Ms. Gugenheim was Counsel of the Company and Casualty. Information
regarding Mr. Dubberke and Mr. Nathan is contained in the table on page 2 of
this Proxy Statement. The officers of the Account are elected annually for terms
of one year and until their respective successors are elected and qualified.
2. APPROVAL OF THE CONTINUATION OF THE INVESTMENT
ADVISORY AGREEMENT WITH CONTINENTAL ASSURANCE COMPANY
At a meeting held for such purpose on January 31, 1997, the Committee,
including a majority of the members who are not "interested persons" (as defined
in the 1940 Act) of the Account or the Company, by votes cast in person,
approved the continuation of the Restated and Amended Investment Advisory
Agreement, dated May 1, 1981, between the Company and the Account (the "Advisory
Agreement") for the current year and decided, as a matter of policy, to submit
such continuation to a vote of the Participants. The Participants approved the
continuation of the Advisory Agreement during 1996 at the 1996 Annual Meeting of
Participants on May 3, 1996.
In order for the Advisory Agreement to remain in effect, it must be
approved by a majority of the outstanding voting securities of the Account. A
majority, for such purposes, means the lesser of (a) 67% of the votes which may
be cast by the Participants of the Account present at a meeting in person or by
proxy if Participants holding more than 50% of the votes which may be cast by
all Participants are present in person or by proxy, or (b) more than 50% of the
votes which may be cast by all Participants.
A copy of the Advisory Agreement is attached hereto as Exhibit A. If
approved by a majority (as defined above) at the Annual Meeting, the Advisory
Agreement will continue from year to year thereafter so long as such continuance
is specifically approved at least annually by (1) the Committee or the vote of a
majority (as defined above) of the outstanding voting securities of the Account
and (2) the vote of a majority of the Committee Members who are not "interested
persons" (as defined in the 1940 Act) of the Company cast in person at a meeting
called for the purpose of voting upon such approval.
The Advisory Agreement, by law, will terminate automatically in the event
of its assignment. In addition, it is terminable at any time, without penalty,
by the Committee or by the vote of a majority (as defined above) of the
outstanding voting securities of the Account on 60 days' written notice to the
Company or by the Company on 60 days' written notice to the Account.
The Company is a wholly-owned subsidiary of Casualty, which, in turn, is a
wholly-owned subsidiary of CNA Financial. The Company is a stock life insurance
company organized under the Illinois Insurance Code in 1911 and is an investment
adviser registered under the Investment Advisers Act of 1940. As of December 31,
1996, the Company reported in its consolidated financial statements total assets
of approximately $13.9 billion and equity of approximately $2.0 billion. The
Company operates four other separate accounts which had total assets aggregating
approximately $6.0 billion as of December 31, 1996.
Loews Corporation, a Delaware corporation, 667 Madison Avenue, New York,
New York 10021-8087, with interests in insurance, hotels, watches and other
timing devices, drilling rigs and tobacco, owned approximately 84% of the
outstanding voting stock of CNA Financial as of December 31, 1996.
Pursuant to the Advisory Agreement, the Company provides the Account with
an investment program. The investment program complies with the investment
objectives, policies and restrictions of the Account and, in carrying out such
program, the Company makes the investment decisions of the Account and is
responsible for the investment and reinvestment of the Account's assets. The
Company performs research, statistical analysis and continuous supervision of
the Account's investment portfolio, and the Company also furnishes
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<PAGE> 7
office space for the Account and pays the salaries and fees of the Account's
officers and Committee Members. In return for its advisory services, the Account
pays the Company a fee at an annual rate of 0.5% of the average daily net asset
value of the Account. Fees were accrued to the Company from the Account during
the past three years as follows: 1996; $562,628 1995, $462,018; and 1994,
$415,070. Although the fee is payable monthly, to date the Company has, with its
consent, been paid quarterly. The Account's net assets on December 31, 1996,
1995 and 1994 were $120,191,642 $102,845,084, and $82,264,430, respectively. The
Advisory Agreement does not require employees of the Company to devote their
exclusive efforts to the Account's business, and it is expected that they will
provide investment management services for the Company's other accounts and for
CNA Financial and its affiliates.
The Company performs various services for the Account in addition to those
described above related to the Account's investment program (as set forth in
Section 2 of the Advisory Agreement). As partial compensation for such services,
a service fee is paid by the Account to the Company. Under the Advisory
Agreement, the service fee is paid at the annual rate of 0.33% of the average
daily net asset value of the Account. The service fee is payable at the
established rate regardless of the actual amount of such expenses incurred;
therefore, if such expenses are less than the fee, the difference accrues to the
Company as a profit and if such expenses are more than the fee, the difference
accrues to the Company as a loss. For 1996, 1995 and 1994, the total service
fees were $371,335, $304,932, and $273,945, respectively. Although the fee is
payable monthly, to date the Company has, with its consent, been paid quarterly.
If the continuation of the Advisory Agreement is approved by the
Participants of the Account, the Advisory Agreement will continue in effect. If
the continuation of the Advisory Agreement is not approved by the Participants
of the Account, the assets of the Account will be liquidated.
COMMITTEE'S REVIEW OF THE INVESTMENT ADVISORY AGREEMENT
Before approving the continuation of the Advisory Agreement, the Committee
Members of the Account reviewed the material factors relating to its evaluation
of the Company and the Advisory Agreement. The Committee Members examined the
performance of the Account in relation to its unit value over various periods of
time and in comparison to other comparable separate accounts and the Standard &
Poor's 500 composite index (with dividend reinvestment). In addition, the
Committee Members reviewed the list of and cost for services provided by the
Company and compared them to services and costs of investment advisers of other
separate accounts of various sizes. The Committee Members also noted that the
Company receives research services from brokerage firms at no additional cost to
the Company or the Account. These services are available to be used by the
Company in its management of the Account's portfolio as well as the Company's
other accounts. At the conclusion of its review of these factors, the Committee
Members approved the continuation of the Advisory Agreement on its present terms
and conditions. The Committee Members recommend that the Participants of the
Account vote FOR approval of this proposal.
GENERAL INFORMATION
The rate of portfolio turnover for the Account during the past three years
has been as follows: 1996, 53%; 1995, 46%; and 1994, 52%. The Account paid
brokerage fees and commissions in connection with portfolio transactions in the
following aggregate amounts during the past three years: 1996, $149,181; 1995,
$109,661 and 1994, $237,209. In selecting brokers to execute portfolio
transactions, the Company's primary criterion is the expected ability of such
brokers to make the best possible execution on orders. If several brokers are
expected to be able to provide equally good execution, preference is given to
those brokers who provide statistical research, assistance in pricing portfolio
securities, or other services. Commissions on all transactions are negotiated,
and the primary basis of the commission agreed to by the Company is the quality
of execution. Research services, to the extent provided to the Company, may be
used by the Company in servicing its other accounts, and not all such services
are used in connection with the Account.
In connection with the purchase and sale of portfolio securities for the
Account, the Company does not bunch orders for such transactions with orders for
other accounts under the management of the Company, CNA Financial or other
subsidiaries of CNA Financial unless such other accounts are registered
investment companies and unless such bunching would not have adverse
consequences for the Account and such other
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<PAGE> 8
accounts. Under no circumstances are orders bunched with orders for the
Company's own account or for the account of Loews, CNA Financial or other
subsidiaries of CNA Financial. No bunching of orders occurred during 1996.
Under separate agreements with the Account, the Company acts as principal
underwriter and performs all sales and administrative functions relative to the
Account and the variable annuity contracts of the Account. The amounts earned by
the Company for sales and administrative functions rendered to the Account for
each of the years 1996, 1995 and 1994 were $12,704, $13,563, and $65,144,
respectively. The agreement covering sales and administrative services does not
cover the services covered by the Advisory Agreement.
The Company has an affiliate, CNA Investors Services, Inc. (the successor
by merger to CNA Securities Corp.), which is a member of the National
Association of Securities Dealers, Inc. The Company and the Account are parties
to an agreement under which the Account receives a credit from the Company in
the form of a reduction of the investment advisory fee to the extent that
services of CNA Investors Services, Inc. are utilized in connection with the
Account's portfolio transactions. In 1975, the securities laws were amended to
abolish fixed brokerage commissions on securities transactions. Prior to such
changes, it was mutually advantageous to the Account and to CNA Securities Corp.
for the services of CNA Securities Corp. to be utilized in connection with
certain of the Account's portfolio transactions. The advantage of such
arrangement was reduced significantly by the abovementioned changes in the
securities laws. There was no such utilization in 1996, 1995 or 1994.
The Chase Manhattan Trust Company of Illinois acts as custodian for the
Account. The custodian performs no managerial or policy making functions for the
Account.
The names, addresses and principal occupations of the directors of the
Company are as follows:
<TABLE>
<CAPTION>
Name and Address Principal Occupation Director Since
---------------- -------------------- --------------
<S> <C> <C>
Dennis H. Chookaszian.................. Chairman and Chief Executive Officer of the Company 1990
CNA Plaza and Casualty
Chicago, Illinois 60685
Philip L. Engel........................ President of the Company and Casualty 1992
CNA Plaza
Chicago, Illinois 60685
Michael C. Garner...................... Senior Vice President of the Company and Casualty 1996
CNA Plaza
Chicago, Illinois 60685
Peter E. Jokiel........................ Senior Vice President and Chief Financial 1993
CNA Plaza Officer of the Company and Casualty
Chicago, Illinois 60685
Donald M. Lowry........................ Senior Vice President, Secretary and General Counsel 1993
CNA Plaza of the Company and Casualty
Chicago, Illinois 60685
William H. Sharkey, Jr. ............... Senior Vice President of the Company and Casualty 1994
CNA Plaza
Chicago, Illinois 60685
</TABLE>
3. RATIFICATION OF
SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
At a meeting held on January 31, 1997, the Committee, including a majority
of the Committee Members who are not "interested persons" (as defined in the
1940 Act) of the Company, selected Deloitte & Touche LLP as auditors for the
Account for the fiscal year ending December 31, 1997. Pursuant to the 1940 Act,
such selection must be submitted to the Participants for ratification or
rejection at the Annual Meeting. Ratification requires the affirmative votes of
Participants eligible to cast at least a majority of the votes which may be cast
by Participants present at the meeting in person or by proxy. Deloitte & Touche
LLP
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<PAGE> 9
also served as auditors for the Account for the fiscal year of the Account ended
December 31, 1996. Deloitte & Touche LLP are the auditors for the Company and
for CNA Financial and Loews. They have no other relationship, financial or
otherwise, with the Account or the Company. Representatives of Deloitte & Touche
LLP are expected to be present at the Annual Meeting with the opportunity to
make a statement if they desire to do so, and such representatives will be
available to respond to appropriate questions.
4. OTHER BUSINESS
As of the date of this Proxy Statement, the Committee does not know of any
other business to come before the meeting. However, if any matters other than
those referred to above come before the meeting, the persons named in the Proxy
will vote thereon in accordance with their best judgment.
By Order of the Committee,
LYNNE GUGENHEIM
Secretary
March 14, 1997
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<PAGE> 10
EXHIBIT A
RESTATED AND AMENDED INVESTMENT ADVISORY AGREEMENT
RESTATED AND AMENDED AGREEMENT made this 1st day of May, 1981 by and
between CONTINENTAL ASSURANCE COMPANY SEPARATE ACCOUNT (B) (the "Separate
Account") and CONTINENTAL ASSURANCE COMPANY (the "Company").
1. The Company will furnish the Separate Account with investment advisory
services, statistical services, research facilities and services, will supervise
the composition of the Separate Account's portfolio continuously and will effect
such changes therein as the Company deems advisable, including the nature,
timing and manner of effectuating such changes. The Company, at its own expense,
shall furnish office space to the Separate Account and shall pay the salaries
and fees of Officers and Committee Members of the Separate Account. The
compensation for those services shall be an investment advisory fee payable
monthly, computed at the annual rate of 1/2 of 1% of the average daily net asset
value of the Separate Account.
2. The Company shall bear the following expenses of the Separate Account
and shall be compensated as provided below:
(a) All costs and expenses incident to compliance with federal and
state regulations applicable to any public offering of Investment Units of
the Separate Account, for cash or otherwise, including those relating to
the registration of Investment Units under the Securities Act of 1933, as
amended, the qualification of Investment Units under state securities laws,
the printing or other reproduction and distribution of any registration
statement (and all amendments thereto) under the Securities Act of 1933, as
amended, the preliminary and final prospectuses included therein (to the
extent such prospectuses are distributed to persons who, at the time of the
distribution of such prospectuses, are participants in the Separate
Account) and any other necessary documents required by federal and state
regulations applicable to any such public offering;
(b) All fees involved in registering and maintaining registrations of
the Separate Account and of its Investment Units with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended;
(c) All charges and expenses of any custodian appointed by the
Separate Account for the safekeeping of its cash, portfolio securities and
other property, other than fees and expenses relating to the lending of
portfolio securities;
(d) All charges and expenses of independent auditors;
(e) All expenses of meetings of the participants and of the Committee
and of preparing, printing and mailing proxy statements and quarterly,
semi-annual and annual reports to participants;
(f) All charges and expenses of legal counsel in connection with
matters relating to the Separate Account, including without limitation,
legal services rendered in connection with the Separate Account's
registrations and qualifications of securities under federal, state and
other laws;
(g) All the expenses of keeping the general accounts and records of
the Separate Account; and
(h) All postage expenses of the Separate Account (other than those
relating to the mailing of prospectuses to persons who, at the time of such
mailing, are not participants in the Separate Account and to the mailing of
sales literature).
As compensation for bearing the expenses set forth in this paragraph, the
Company shall be paid a monthly service fee by the Separate Account, computed at
the annual rate of 0.33 of 1% of the average daily net asset value of the
Separate Account.
A-1
<PAGE> 11
3. The Company shall bear, without compensation, the following expenses of
the Separate Account:
(a) All costs and expenses relating to the printing or other
reproduction and distribution of preliminary and final prospectuses to
persons who, at the time of the distribution of such prospectuses, are not
participants in the Separate Account;
(b) All costs and expenses relating to the advertising of Investment
Units of the Separate Account, including without limitation, the overhead
allocated to the supervision of brokers and dealers selling Investment
Units and the printing and mailing of sales literature;
(c) All costs and expenses relating to the printing or other
reproduction and distribution of any underwriting documents incident to a
public offering of Investment Units of the Separate Account, and review by
the National Association of Securities Dealers, Inc. of any underwriting
arrangement; and
(d) All other expenses primarily intended to result in the sale of
Investment Units of the Separate Account.
4. Notwithstanding the provisions of Section 1 hereof, the Separate Account
shall pay all fees and expenses attributable to the lending of its portfolio
securities.
5. This Agreement shall not be materially amended without the affirmative
vote or written consent of the holders of a majority of the outstanding
Investment Units of the Separate Account.
6. This Agreement may be terminated at any time by either party, without
the payment of any penalty, on sixty days written notice. Such action may be
taken by the Company or by either the Committee of the Separate Account or the
holders of a majority of its outstanding Investment Units.
7. This Agreement shall terminate automatically in the event of its
assignment.
8. This Agreement shall become effective at the close of business on May 1,
1981 and shall continue in force for one year from such date and indefinitely
thereafter, but only so long as the continuance after such year shall be
specifically approved at least annually by the vote of a majority of the members
of the Committee of the Separate Account who are not parties to the Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
IN WITNESS WHEREOF, the Separate Account and the Company have caused this
Agreement to be duly executed the day and year above written.
<TABLE>
<CAPTION>
CONTINENTAL ASSURANCE COMPANY
SEPARATE ACCOUNT (B)
<S> <C> <C>
By: DONALD C. RYCROFT
Chairman
ATTEST: ROBERT E. WETZEL
Secretary
CONTINENTAL ASSURANCE COMPANY
By: DONALD C. RYCROFT
Vice President
ATTEST: THOMAS R. IGLESKI
Corporate Secretary
</TABLE>
A-2
<PAGE> 12
IF YOU HAVE RECENTLY RETURNED YOUR SIGNED PROXY
PLEASE IGNORE THIS NOTICE.
April 10, 1997
To The Participants in
CONTINENTAL ASSURANCE COMPANY SEPARATE ACCOUNT (B)
To date, a signed proxy card has not been received from you for the
Annual Meeting of Participants to be held on May 2, 1997. As it is important
that as many Participants as possible cast their votes, a duplicate proxy card
and return envelope are enclosed.
If you would like a duplicate copy of the proxy statement, please call
(800) 351-3001.
LYNNE GUGENHEIM
Secretary
Continental Assurance Company
Separate Account (B)
<PAGE> 13
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CONTINENTAL ASSURANCE COMPANY SEPARATE ACCOUNT (B)
PROXY SOLICITED BY THE COMMITTEE FOR THE ANNUAL MEETING OF
PARTICIPANTS, MAY 2, 1997
Lynne Gugenheim, Richard T. Fox, and Lew H. Nathan or any of them,
with full power of substitution, are hereby authorized to represent
the undersigned and cast the votes of the undersigned as fully as the
undersigned could do if personally present at the 1997 Annual Meeting
of Participants of Continental Assurance Company Separate Account (B)
(the "Account") to be held in Room 305, CNA Plaza, 333 South Wabash
Avenue, Chicago, Illinois at 10:00 A.M. Chicago Time on May 2, 1997
and at any and all adjournments thereof, upon the following matters:
1. ELECTION OF COMMITTEE MEMBERS
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
R. Dubberke, R. Fox, L. Nathan, W. Tongue and P. Wrenn
(INSTRUCTION: To withhold authority to vote for an individual nominee,
write the nominee's name on the line provided below)
----------------------------------------------------------------------
2. TO APPROVE THE CONTINUATION OF THE INVESTMENT ADVISORY AGREEMENT
WITH CONTINENTAL ASSURANCE COMPANY
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR THE ACCOUNT
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2 AND 3.
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<PAGE> 14
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DATED , 1997 Please sign exactly as
--------------------------- name appears below. When
-------------------------------- ownership is by joint tenants,
PLEASE MARK, SIGN, DATE AND both should sign. When signing
RETURN THIS PROXY as attorney, executor,
CARD PROMPTLY, USING THE administrator, trustee or
ENCLOSED ENVELOPE. gaurdian, please give full
-------------------------------- title as such. If a
corporation, please sign in
full corporate name by
President or other
authorized officer. If a
partnership, please sign
in partnership name by
authorized person.
----------------------------
Signature
----------------------------
Signature, if owned jointly
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