AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1999
Registration No. 811-1737
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 [ ] Pre-Effective Amendment No.
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 24
(Check appropriate box or boxes)
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GREAT-WEST VARIABLE ANNUITY ACCOUNT A
(Exact name of registrant)
8515 E. Orchard Road
Englewood, Colorado 80111
(303) 689-3000
(Address and telephone number of registrant's principal executive office)
RUTH B. LURIE
Vice-President and Counsel
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
(Name and address of agent for service)
Copy to:
KIMBERLY J. SMITH
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Ave., NW
Washington, DC 20004-2404
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GREAT-WEST VARIABLE ANNUITY ACCOUNT A
CROSS-REFERENCE SHEET
Showing Location in Prospectus of Information Required by Form N-1
Form N-1 Item Caption in Prospectus
1. Cover Page.....................................Cover Page
2. Synopsis.......................................Summary of Prospectus
3. Condensed Financials...........................Not Applicable
4. General Information and History................Description of GWL&A and Variable Annuity Account A
5. Investment Objectives and......................Description of GWL&A and
Policies Variable Annuity Account A
6. Tax Status.....................................Federal Tax Status, Taxation of GWL&A and Section 403(b)
Tax Sheltered Annuities
7. Brokerage Allocation...........................Allocation of Portfolio Brokerage
8. Pending Legal Proceedings......................Legal Proceedings
9. Control Persons and Principal..................Management
Holders of Securities
10. Directors, Officers, and Advisory..............Management
Board Members
11. Compensation of Directors and .................Management
Others
12. Custodian, Transfer Agent and..................Trustee for Assets of Variable
Dividend-Paying Agent Annuity Account A
13. Investment Advisory and Other..................The Variable Annuity Contract-
Services Charges and Experience Rating, Description of GWL&A and
Variable Annuity Account A
14. Capital Stock and Other........................The Variable Annuity Contract,
Securities Voting Rights, Investment Objectives and Policies
15. Pricing of Registrant's........................Not Applicable
Securities
16. General Information as to Plan.................The Variable Annuity Contract,
of Distribution Distribution of Variable Annuity Contracts
17. Yield Quotation for Money Market Funds.........Not Applicable
18. Financial Statements..........................Financial Statement of Variable Annuity Account A
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GREAT-WEST VARIABLE ANNUITY ACCOUNT A
OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Group Variable Annuity Contracts
Distributed by
BENEFITSCORP EQUITIES, INC.
8515 E. ORCHARD ROAD, ENGLEWOOD, COLORADO, 80111
TELEPHONE (303) 689-3000
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The group variable annuity contract described by this Prospectus ("Variable
Annuity Contract") is no longer being offered. Effective on May 1, 1989, no
additional contributions under any existing variable annuity contract are being
accepted.
The Variable Annuity Contract was designed for annuity purchase plans
adopted by public school systems and certain tax-exempt organizations, whose
Participating Employees may obtain certain federal income tax benefits under
Section 403(b) of the Internal Revenue Code.
Under a variable annuity the variable annuitant assumes the risk of
investment gain or loss in that the value of his individual account (before his
Annuity Commencement Date) and his monthly annuity payments (after his Annuity
Commencement Date) vary with the investment income and gains or losses on the
assets in a variable annuity account. In a variable annuity, the insurance
company assumes the mortality risk and expense risk under the Contract.
The basic objective of the Variable Annuity Contract is to provide the
variable annuitant with lifetime variable annuity payments under the selected
annuity option (see "Annuity Period") which will tend to reflect changes in the
cost of living and the size of the economy both during the years prior to his
Annuity Commencement Date and the years thereafter. Great-West Life & Annuity
Insurance Company ("GWL&A") seeks to accomplish this basic objective through
Variable Annuity Account A as a medium for relating annuity payments to the net
investment experience of a selected portfolio of equity investments, which are
deemed to provide long-term growth of capital, primarily common stocks (see
"Investment Objectives and Policies"), accompanied by a contractual obligation
to make annuity payments for life.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this prospectus is May 1, 1999.
This prospectus should be read carefully and retained for
future reference.
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GREAT-WEST VARIABLE ANNUITY ACCOUNT A
OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Group Variable Annuity Contracts
Distributed by
BENEFITSCORP EQUITIES, INC.
SUMMARY OF PROSPECTUS
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Description of the Securities
The group variable annuity contract described by this Prospectus ("Variable
Annuity Contract" or "Contract") is designed for annuity purchase plans adopted
by public school systems and certain tax-exempt organizations. The Policyholder
will have to meet underwriting qualifications related to the number of
Participating Employees and the aggregate annual premiums for the variable and
fixed annuity contracts issued (see "Transfer From or To Companion Contract" for
a description of the fixed annuity). Participating Employees may obtain certain
federal income tax benefits under Section 403(b) of the Internal Revenue Code
("Code") if the plan is carried to completion.
Effective April 16, 1984, The Great-West Life Assurance Company
("Great-West") ceased issuing new variable annuity contracts. On May 1, 1987,
Great-West announced that it would not permit new participants to be enrolled
under existing variable annuity contracts and, with respect to any variable
annuity contracts for which there are fewer than 25 participants, would not
accept additional contributions. On May 1, 1989, Great-West announced that it
would not accept additional contributions on any variable annuity contract. On
December 31, 1991, Great-West Variable Annuity Account A was transferred to and
the Variable Annuity Contracts were reinsured by Great-West Life & Annuity
Insurance Company ("GWL&A.") On December 31, 1996, Great-West ceased operations
as a broker-dealer and all of its distribution related activities were
transferred to BenefitsCorp Equities, Inc. ("BCE"), a wholly-owned subsidiary of
GWL&A.
Variable Annuity Account A is a separate and distinct fund established for
the purpose of funding the Variable Annuity Contracts and is registered as an
open-end diversified management company under the Investment Company Act of
1940, as amended ("the 1940 Act".)
The significant difference between a regular or fixed annuity and a variable
annuity is that under a fixed annuity the insurance company assumes the risk of
investment gain or loss by undertaking to credit a specified minimum interest
rate and by undertaking to pay a specified minimum monthly annuity payment,
whereas under a variable annuity the variable annuitant assumes the risk of
investment gain or loss in that the value of his individual account (before his
Annuity Commencement Date) and his monthly annuity payments (after his Annuity
Commencement Date) vary with the investment income and gains or losses on the
assets in a variable annuity account. In both a fixed annuity and a variable
annuity the insurance company assumes the mortality risk and expense risk under
the Contract.
The Variable Annuity Contract includes a contractual undertaking that,
commencing on the selected annuity date, GWL&A will make variable payments for
the lifetime of the variable annuitant based upon mortality assumption contained
in the Contract at the time the purchase payment to provide such annuity was
received, regardless of the actual mortality experience among its annuitants.
The Contract also provides that in the event of the death of a Participating
Employee prior to his Annuity Commencement Date, the benefits payable will be
the greater of (a) the value of the employee's individual account or (b) the sum
of 100% of purchase payments made on behalf of the Participating Employee prior
to his 65th birthday and 75% of such purchase payments made thereafter.
Investment Advisor and Underwriter
Effective November 1, 1996, GW Capital Management, LLC, ("GW Capital") a
wholly-owned subsidiary of GWL&A, succeeded Great-West as the investment advisor
in connection with the Variable Annuity Contracts, and Variable Annuity Account
A. This succession involved no change in control, as defined in the 1940 Act.
Great-West was also the distributor of the Contracts. Any further reference to
the underwriter is made with regard to BCE unless otherwise specifically noted.
As previously indicated these Contracts are no longer sold and Contributions are
no longer accepted. GWL&A performs all administrative functions relative to the
Contracts, provides the minimum death benefit, and assumes the mortality and
expense risks under the Contract (see " Charges and Experience Rating.")
Investment Required
The minimum amount of purchase payments which previously could be made on
behalf of any Participating Employee was $180 in any contract year and the
minimum amount of any one purchase payment was $15.
The amount of each purchase payment authorized by a Participating Employee
less deductions for sales expenses, administrative expenses, minimum death
benefits, and applicable premium taxes, if any, was credited to such employee's
individual account in the form of Accumulation Units (see Paragraph 2(i) under
"Charges and Experience Rating"). In determining the net investment experience
of Variable Annuity Account A for a valuation period, certain deductions from
the gross investment experience for the valuation period are made (see Paragraph
2(ii) under "Charges and Experience Rating.")
Purchase Payment Charges and Deductions
A deduction of 3.75% plus any applicable premium taxes (see "Table of
Premium Taxes"), was made from each purchase payment when received for sales and
administrative expenses, and for the minimum death benefit. An additional
deduction of $9 for sales expenses was made from the first purchase payment in
respect of a Participating Employee in each contract year (see "Charges and
Experience Rating.")
A daily deduction of .003285% (an effective annual rate of 1.2064%) is made
from the gross investment rate of Variable Annuity Account A for administrative
expenses, mortality risks, and for investment, management, and advisory services
(see "Charges and Experience Rating.")
Investment Objectives
The basic objective of the Variable Annuity Contract is to provide the
variable annuitant with lifetime variable annuity payments under the selected
annuity option (see "Annuity Period") which will tend to reflect changes in the
cost of living and the size of the economy both during the years prior to his
Annuity Commencement Date and the years thereafter. GWL&A seeks to accomplish
this basic objective through Variable Annuity Account A as a medium for relating
annuity payments to the net investment experience of a selected portfolio of
equity investments, primarily common stocks (see "Investment Objectives and
Policies"), accompanied by a contractual obligation to make annuity payments for
life. Although there is no assurance that this objective will be attained,
historically the value of a diversified portfolio of common stocks held for an
extended period of time has tended to rise during periods of inflation. There
has, however, been no exact correlation, and for some period the prices of
securities have declined while the cost of living was rising. The value of the
investments in Variable Annuity Account A fluctuates. There is no assurance that
the value of an employee's individual account during the years prior to the
Annuity Commencement Date or the total amount of the variable annuity payments
made thereafter, will equal or exceed the purchase payments made on behalf of a
Participating Employee.
Withdrawal and Transfer Privileges
A Participating Employee has (a) certain withdrawal privileges for 45 days
after GWL&A gives the required notice of such right, and (b) the right to
receive within 18 months of acceptance of his first purchase payment, the value
of his account and, in some cases, a portion of the sales charges paid prior to
this withdrawal (see "Accumulation Period: Surrender Rights-Redemption.")
The Variable Annuity Contract was issued as a supplement to a fixed-dollar
annuity contract (the "Companion Contract") and provides for transfers from and
to such Companion Contract under specified circumstances and conditions (see
"Transfer From or To Companion Contract.")
Other Pertinent Information
The Variable Annuity Contract provides that GWL&A may modify the charges,
the tables used in determining the first monthly annuity payment and the benefit
payable in case of death prior to the Annuity Commencement Date provided that
such modification shall apply only with respect to purchase payments received
after the effective date of the modification. Such modification may materially
affect the value of the Variable Annuity Contract to a Participating Employee
and the risk borne by said Participating Employee (see "Modifications of the
Variable Annuity Contract by GWL&A.")
The foregoing Summary of information should be read in conjunction with the
detailed information appearing elsewhere in this Prospectus.
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TABLE OF CONTENTS
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Summary of Prospectus........................................................................2
Special Terms................................................................................5
Description of GWL&A and Variable Annuity Account A..........................................6
The Variable Annuity Contract................................................................6
A. General ..............................................................................6
B. Accumulation Period...................................................................7
C. Annuity Period.......................................................................10
D. Charges and Experience Rating........................................................12
E. Modifications of the Variable Annuity Contract by GWL&A..............................14
F. Transfer From or To Companion Contract...............................................14
Federal Tax Status..........................................................................15
Taxation of GWL&A...........................................................................15
Section 403(b) Tax Sheltered Annuities......................................................15
Investment Objectives and Policies..........................................................18
Allocation of Portfolio Brokerage...........................................................19
Portfolio Turnover Rate.....................................................................20
Voting Rights...............................................................................20
Management..................................................................................21
Distribution of Variable Annuity Contracts..................................................22
Regulation..................................................................................23
Trustee for Assets of Variable Annuity Account A............................................23
Preparing for Year 2000.....................................................................23
Legal Proceedings...........................................................................23
Legal Advice................................................................................23
Independent Auditors........................................................................24
Other Variable Annuity Contracts............................................................24
Table of Premium Taxes......................................................................24
Appendix....................................................................................25
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SPECIAL TERMS
Variable Annuity -- An annuity providing for payments varying in amount in
accordance with the investment experience of a variable annuity account.
Fixed Dollar Annuity -- An annuity providing for payments which remain fixed
throughout the payment period and which do not vary with investment experience.
Variable Annuitant -- Any person receiving or who will receive annuity payments
under the Variable Annuity Contract.
Annuity -- A series of payments for life or for a designated period.
Annuity Commencement Date -- The date on which annuity payments are to commence
under the Variable Annuity Contract.
Accumulation Unit -- An accounting unit of measure used to calculate the value
of a contract before annuity payments begin.
Annuity Unit -- An accounting unit of measure used to calculate the amount of
annuity payments.
Contract Anniversary -- An anniversary of the date shown as the register date in
the Variable Annuity Contract.
Contract Year -- A twelve-month period from the date shown as the register date
in the Variable Annuity Contract.
Participating Employee -- An employee participating in the annuity purchase plan
pursuant to which the Variable Annuity Contract is issued and in respect of whom
purchase payments have been made under the Variable Annuity Contract.
Employee's Individual Account -- The sum of the Accumulation Units credited to a
Participating Employee.
Participants -- Participating Employees and others credited with Accumulation
Units or Annuity Units under variable annuity contracts funded by Variable
Annuity Account A.
Policyholder -- The entity to which the Variable Annuity Contract has been
issued, which is normally an employer or a trust established by an employer or
an employee association.
Purchase Payment -- The total amount paid periodically to purchase an annuity
under the Variable Annuity Contract.
Net Purchase Payment -- The amount applied to the purchase of Accumulation
Units, which was equal to the purchase payment less deductions for sales and
administrative expenses, minimum death benefits and applicable premium taxes.
Register Date -- The date shown as the register date in the Variable Annuity
Contract, which was generally a date selected by the Policyholder to coincide
with his administrative or accounting year.
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DESCRIPTION OF GWL&A
GWL&A is a stock life insurance company originally organized under the laws
of the State of Kansas as the National Interment Association. Its name was
changed to Ranger National Life Insurance Company in 1963 and to Insuramerica
Corporation prior to changing to its current name in February of 1982. In
September of 1990, GWL&A redomesticated and is now organized under the laws of
the State of Colorado.
GWL&A is authorized to engage in the sale of life insurance, accident and
health insurance and annuities. It is qualified to do business in Puerto Rico,
the District of Columbia, Guam, the U.S. Virgin Islands and 49 states in the
United States.
GWL&A is an indirect wholly-owned subsidiary of The Great-West Life
Assurance Company. The Great-West Life Assurance Company is a subsidiary of
Great-West LifeCo Inc., a holding company. Great-West LifeCo Inc. is in turn a
subsidiary of Power Financial Corporation, a financial services company. Power
Corporation of Canada, a holding and management company, has voting control of
Power Financial Corporation. Mr. Paul Desmarais, through a group of private
holding companies, which he controls, has voting control of Power Corporation of
Canada.
On January 17, 1968, by duly adopted resolution the Board of Directors of
Great-West established within Great-West, in accordance with applicable law, a
separate and distinct fund designated Great-West Variable Annuity Account A. On
December 17, 1991, by duly adopted resolution, the Board of Directors of GWL&A
established a separate account within GWL&A in accordance with Colorado law to
facilitate the transfer of Variable Annuity Account A from Great-West to GWL&A.
Variable Annuity Account A was subsequently transferred on December 31, 1991.
Under the provisions of Colorado law, the assets of Variable Annuity Account A
are not chargeable with liabilities arising out of any other business GWL&A may
conduct. A Variable Annuity Account Committee for Variable Annuity Account A
("Committee") is elected by Participants under contracts funded by Variable
Annuity Account A (see "Management.")
VARIABLE ANNUITY ACCOUNT A
Variable Annuity Account A, although an integral part of GWL&A, is
registered as an open-end diversified management company under the 1940 Act. The
Securities and Exchange Commission (the "Commission") has issued an order under
Section 7(d) of the 1940 Act permitting such registration and permitting the
sale of Variable Annuities funded by Variable Annuity Account A. The order was
issued on terms and conditions designed to provide adequate means to enforce
compliance with the 1940 Act.
Registration with the Commission does not involve supervision of the
management or investment practices or policies of Variable Annuity Account A or
GWL&A by the Commission. However, GWL&A, which includes Variable Annuity Account
A as an integral part thereof, is subject to supervision and regulation by the
Department of Insurance of the State of Colorado, and the Departments of
Insurance of each state in which it is licensed to do business (see
"Regulation.")
THE VARIABLE ANNUITY CONTRACT
A. General
The Variable Annuity Contract, which has been issued to the Policyholder who
owns the Contract, is a master group Contract which provides benefits for all
Participating Employees, each of whom received a certificate which summarized
the provisions of the master Contract and evidenced his participation in the
annuity purchase plan adopted by the Policyholder. Certain significant
provisions of the Variable Annuity Contract are discussed below.
1. ANNUITY PAYMENTS
Variable annuity payments are determined on the basis of (a) a mortality
table specified in the Variable Annuity Contract (see, however, "Modifications
of the Variable Annuity Contract by GWL&A,") which reflects the age of the
variable annuitant and the type of annuity payment option selected, and (b) the
net investment experience of Variable Annuity Account A. The variable annuitant
will receive the value of a fixed number of Annuity Units each month. The value
of such units, and thus the amounts of the monthly annuity payments, will
reflect investment gains and losses and investment income occurring both before
and after retirement, and thus the payments will vary with the net investment
experience of the assets of Variable Annuity Account A. Sex was a factor in the
determination of variable annuity payments prior to August 1, 1983. For
contracts issued before that date no such payments shall be less than those
guaranteed under those contracts.
2. ASSIGNMENT
Assignment of the Variable Annuity Contract or a Participating Employee's
individual account is prohibited by the terms of the Contract.
3. PURCHASE LIMITS
The Variable Annuity Contract provides that the amount of any purchase
payments that previously could be made in respect of any employee could not be
less than $180 annually, and the amount of any one monthly purchase payment in
respect of an employee could not be less than $15.
4. CESSATION OF PURCHASE PAYMENTS
GWL&A reserved the right to refuse to receive further purchase payments
under the Variable Annuity Contract as from the date stated in written notice to
the Policyholder if the Policyholder failed to comply with any of the terms or
conditions of the Contract or if the number of employees covered under the
Variable Annuity Contract in a contract year was less than 25. The Policyholder
could give written notice to GWL&A that from the date stated in the notice no
further purchase payments would be made. Upon cessation of purchase payments in
respect of an employee for any reason prior to his Annuity Commencement Date no
further purchase payments would be accepted by GWL&A, and each Participating
Employee could exercise one of the following options:
(a) If the Participating Employee was at least 50 years of age, he could
elect to have his individual account applied to provide variable annuity
payments commencing immediately under the selected annuity option (see
"Annuity Period.")
(b) He could surrender his individual account as explained under the caption
"Accumulation Period, " paragraph 7.
(c) He could elect to leave his individual account in force under the
Variable Annuity Contract, and the account would continue to reflect the
net investment experience of Variable Annuity Account A. At the selected
Annuity Commencement Date, the Participating Employee will begin to
receive annuity payments under the selected option (see "Annuity
Period.") At any time in the interim, the Participating Employee could
surrender his individual account in accordance with (b) above.
B. Accumulation Period
1. CREDITING ACCUMULATION UNITS: DEDUCTION FOR SALES AND ADMINISTRATIVE EXPENSES
AND MINIMUM DEATH BENEFIT
During the accumulation period -- the period before the commencement of
annuity payments -- GWL&A deducted from purchase payments the deductions
described in Paragraph 2(i) under "Charges and Experience Rating." The net
purchase payment remaining after such deductions was credited to the individual
account of the Participating Employee in the form of Accumulation Units. The
number of Accumulation Units credited to an employee's individual account was
determined as of the valuation period in which any purchase payment, including
the initial payment, was received. The number of Accumulation Units so
determined remains constant, but the dollar value of an Accumulation Unit may
vary depending upon the net investment experience of Variable Annuity Account A.
2. VALUE OF AN EMPLOYEE'S INDIVIDUAL ACCOUNT
The value of an employee's individual account at any time prior to his
Annuity Commencement Date can be determined by multiplying the total number of
Accumulation Units credited to his account by the current Accumulation Unit
value. There is no assurance that the value of an employee's individual account
will equal or exceed total purchase payments made on his behalf. Each
Participating Employee will be advised periodically of the number of
Accumulation Units credited to his individual account, the current Accumulation
Unit value, and the total value of his account. A Participating Employee may at
any time obtain, from the Head Office of GWL&A, the current value of an
Accumulation Unit.
3. VALUE OF AN ACCUMULATION UNIT
Accumulation units are valued each day during which the New York Stock
Exchange is open for trading ("valuation date.") A valuation period is the
period beginning immediately after the close of business of the New York Stock
Exchange on a valuation date and ending at the close of business of the New York
Stock Exchange on the immediately succeeding valuation date. The value of an
Accumulation Unit was set at $1.00 for the valuation period ending January 3,
1969. The value of an Accumulation Unit for any subsequent valuation period is
determined by multiplying the value of an Accumulation Unit for the preceding
period by the net investment factor (described below) for the current valuation
period. (See "Appendix" for an historical record of the values of an
Accumulation Unit as of the last valuation date of each quarter to December 31,
1998.)
4. NET INVESTMENT FACTOR FOR EACH VALUATION PERIOD
At the end of each valuation period a gross investment rate for the
valuation period is determined from the investment experience of Variable
Annuity Account A for the valuation period. Such rate is (a) the investment
income for the valuation period, plus capital gains and minus capital losses for
the period, whether realized or unrealized, less a deduction for any taxes
chargeable to Participating Employees or Variable Annuity Account A (under
current tax laws there are no such federal income taxes) divided by (b) the
value of Variable Annuity Account A at the beginning of the valuation period.
The gross investment rate may be positive or negative.
In order to determine the net investment rate, the gross investment rate is
reduced by a deduction of the product obtained by multiplying a daily deduction
of .003285% (an effective annual rate of 1.2064%) by the number of days in a
valuation period. This deduction is made by GWL&A for administrative expenses,
investment management and advisory services, and mortality and expense risks
assumed under the Contract (see Paragraph 2(ii) under "Charges and Experience
Rating.")
The net investment rate is added to 1 to determine the net investment
factor. Since the net investment rate may be negative, the net investment factor
may be less than 1, and the value of an Accumulation Unit for the valuation
period may be less than the value for the previous valuation period. (See
"Appendix" for a hypothetical illustration of the above computations.)
5. VALUE OF VARIABLE ANNUITY ACCOUNT A
The value of Variable Annuity Account A for purposes of the preceding
paragraph shall be the aggregate, in United States dollars, of the following:
(a) the face amount of cash; plus (b) the total market value for securities
listed on an organized exchange determined (i) by the last board lot sale
reported on the valuation date on the primary trading market, or, (ii) if no
such sale is reported, by the mean between the closing bid and ask prices on
such day, or, (iii) if prices in neither (i) nor (ii) are reported, then by
either (A) the last board lot sale price, or (B) the mean between the closing
bid and ask prices on the last preceding day on which both bid and ask prices
were reported, whichever is the later; plus (c) the fair market value of any
other asset as determined in good faith by the Committee, which, in the case of
securities actively traded over-the-counter is the closing bid price; minus (d)
an amount for taxes attributable to Variable Annuity Account A; and minus (e)
accrued and unpaid liabilities of Variable Annuity Account A other than Variable
Annuity Contract liabilities.
6. BENEFITS PAYABLE ON DEATH PRIOR TO THE ANNUITY COMMENCEMENT DATE
The Variable Annuity Contracts provide that, upon receipt of due proof of
the death of a Participating Employee prior to his Annuity Commencement Date,
GWL&A will pay to the beneficiary a death benefit equal in amount to the greater
of (a) the value of the Participating Employee's individual account determined
for the valuation period in which written notice of death is received by GWL&A,
or (b) the sum of 100% of the total purchase payments made on behalf of the
Participating Employee prior to his 65th birthday and 75% of the total purchase
payments made thereafter on his behalf (see below, for the effect of partial
withdrawals on calculation of purchase payment.)
For providing the minimum death benefit described in (b) of the preceding
paragraph, GWL&A deducted .25% from each purchase payment (see Paragraph 2(i)
under "Charges and Experience Rating"). In lieu of payment of the death benefit
in one sum, a beneficiary over 50 years old may elect variable annuity payments
under any of the options available to a Participating Employee except the joint
and last survivor annuity, or a beneficiary regardless of his age may elect to
take variable annuity payments for a specified period not exceeding 25 years.
Where the beneficiary takes the payment in one sum, payment will be made within
seven days of receipt of proof of death, unless subject to postponement for a
reason described in Paragraph 7 below.
7. SURRENDER RIGHTS-REDEMPTION
Within 60 days of acceptance by GWL&A of a Participating Employee's first
purchase payment, GWL&A mailed to such Participating Employee a statement of
charges to be deducted under the Variable Annuity Contract and a notice of his
right of withdrawal and refund under such contract. A Participating Employee
could, within 45 days of the mailing of such notice, elect to terminate his
participation under the Variable Annuity Contract and receive in cash the sum of
(1) the value of his individual account and (2) an amount equal to the
difference between the gross purchase payments made and the net purchase
payments credited to the individual account of the Participating Employee.
A Participating Employee, within 18 months of acceptance by GWL&A of his
first purchase payment, could elect to terminate his participation under the
Variable Annuity Contract and receive in cash the sum of (1) the value of his
individual account and (2) an amount, if any, equal to that part of the sales
charges which exceeds 15% of the gross purchase payments which he has made.
Any Participating Employee who did not so elect to terminate his
participation within the above described periods, may at any time after the
expiration of 18 months of acceptance of his first purchase payment, surrender a
portion or all of his individual account prior to his Annuity Commencement Date
and receive the value thereof (see "Federal Tax Status.") Without the consent of
GWL&A, purchase payments may not be made in respect of a Participating Employee
after he has surrendered all of his individual account.
If a state or local premium tax was imposed at the time a purchase payment
was made, surrender of a portion or all of an individual's account may result in
a reduction of GWL&A's premium tax liability to that jurisdiction. In such
event, there will be paid by GWL&A, in addition to any amounts described in the
preceding three paragraphs, an amount equal to the lesser of: (1) the amount by
which GWL&A's premium tax liability is reduced, or (2) the amount previously
deducted from purchase payments for premium taxes. No representation can be made
to any Participating Employee that upon surrender of his individual account any
such payment would be made, inasmuch as the state or locality of residence and
their premium tax laws at the time of surrender would be determinative.
The full amount of surrender benefits received by an employee who elects to
surrender a portion or all of his individual account will be taxed as ordinary
income over and above income otherwise realized in that year. This could result
in the imposition of a higher rate of tax on amounts received from the Variable
Annuity Contract than would result if the amounts were to be taken in the form
of an annuity after retirement, when Participating Employees will generally be
in a lower tax bracket due to lower income and larger deductions.
Payment of any surrender benefit will be made within seven days after the
date of surrender (the date the request for surrender is received at the Head
Office of GWL&A.) Payment may be subject to postponement: (A) for any period
during which the New York Stock Exchange is closed other than customary weekend
and holiday closing or during which trading on such exchanges is restricted; (B)
for any period during which an emergency exists as a result of which (i)
disposal of securities in Variable Annuity Account A is not reasonably practical
or (ii) it is not reasonably practical for the value of the assets of Variable
Annuity Account A to be fairly determined; or (C) for such periods as the
Securities and Exchange Commission may by order permit. The conditions under
which trading shall be deemed to be restricted or an emergency shall be deemed
to exist shall be determined by rules and regulations of the Securities and
Exchange Commission.
If a Participating Employee surrenders a portion or all of his individual
account, total purchase payments deemed made on his behalf for purposes of his
death benefit (see "Accumulation Period" paragraph 6) shall be reduced in the
proportion that the number of surrendered Accumulation Units bear to the total
number of Accumulation Units in his individual account immediately prior to such
surrender.
<PAGE>
C. Annuity Period
1. ELECTING THE ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
A Participating Employee selects, in accordance with the annuity purchase
plan, an Annuity Commencement Date between ages 50 and 75 (or date of
termination of employment, if later) and an annuity option. Subsequent changes
in either may be made up to 30 days prior to the date variable annuity payments
are to commence. Unless otherwise elected, the Annuity Commencement Date will be
the first day of the month on or immediately after the employee's 65th birthday.
The Contract provides various optional annuity forms referred to below, which
may be elected by a Participating Employee. If the Participating Employee does
not elect otherwise, the option with 120 monthly payments guaranteed will be
effective.
If, at any time an annuity payment is or becomes less than $20, GWL&A has
the right to make payments: quarterly, semi-annually, or annually, as it may
elect. If at the Annuity Commencement Date the amount to be applied to provide
an annuity is less than $1,000, then an election of an annuity option is not
available; otherwise a Participating Employee may elect either an annuity
payable monthly during the joint lifetime of the variable annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor or an annuity in the form of a life annuity with 120 monthly payments
guaranteed. Special provisions relating to the form of annuity apply to
employees of certain tax-exempt organizations.
Once annuity payments have commenced, the variable annuitant cannot
surrender his annuity benefit and receive a lump sum settlement in lieu thereof,
except that GWL&A has undertaken, as an administrative practice, to permit a
beneficiary entitled to variable annuity payments not involving a life
contingencies (annuity for a period certain) to elect to receive a commuted lump
sum payment in lieu of receiving further variable annuity payments.
2. SPECIAL PROVISIONS RELATING TO FORM OF ANNUITY
The following special provisions pertaining to the form of annuity apply to
employees of tax-exempt organizations described in Section 501(c)(3) of the
Code.
If variable annuity payments commence before the employee has attained his
65th birthday, at any time at least 30 days prior to his variable Annuity
Commencement Date, the employee may elect a qualified joint and survivor
variable life annuity. A qualified joint and survivor variable life annuity is a
variable annuity for the life of the employee with a survivor variable annuity
for the life of his spouse equal to one-half of the amount of the variable
annuity payable during the joint lives of the employee and his spouse.
If payments commence after the employee has attained his 65th birthday, the
form of variable annuity will be the qualified joint and survivor variable life
annuity for an employee who has been married throughout the one year period
ending on the employee's variable Annuity Commencement Date. The last payment
under this option will be made in respect of the annuity payment date occurring
immediately preceding the death of the surviving joint annuitant. At any time 30
days prior to his variable Annuity Commencement Date, such employee may elect
not to take a qualified joint and survivor variable life annuity and, in lieu
thereof, may elect any other form of annuity provided under the contract.
3. OPTIONAL ANNUITY FORMS
Life Annuity. An annuity payable monthly during the lifetime of the variable
annuitant and terminating with the last monthly payment preceding the death of
the variable annuitant. This option offers the maximum level of monthly payments
since there is no assurance of minimum number of payments or provision for a
death benefit payable to a beneficiary.
Life Annuity with 60, 120, 180, or 240 Monthly Payments Certain. An annuity
payable monthly during the lifetime of the variable annuitant with the promise
that if, at the death of the variable annuitant, payments have been made for
less than 60, 120, 180, or 240 months as elected, annuity payments will be
continued during the remainder of such period to the beneficiary.
Joint and Last Survivor Annuity. An annuity payable monthly during the joint
lifetime of the variable annuitant and a designated second person, and
thereafter during the remaining lifetime of the survivor.
Other forms of options which a Participating Employee may elect are an
installment unit refund life annuity, a cash unit refund life annuity, or any
other form of variable annuity which involves life contingencies and is
satisfactory to GWL&A.
Under the Life Annuity Option and the Joint and Last Survivor Annuity Option
it would be possible that only one annuity payment would be made where the
annuitant or, in the case of the Joint and Last Survivor Annuity, the annuitant
and the designated second person died prior to the due date of the second
annuity payment, two (2) payments if he (they) died before the third annuity
payment, etc.
4. VALUE OF AN ANNUITY UNIT
The value of an Annuity Unit was set at $1.00 for the valuation period
ending January 31, 1969. All annuity payments are made as of the first of the
month and therefore Annuity Units are valued only once a month. The value of an
Annuity Unit is determined by multiplying the value of an Annuity Unit for the
preceding month by the annuity change factor (described below) for the current
month.
5. ANNUITY CHANGE FACTOR
The annuity change factor for a month means the product obtained by
multiplying (a) the ratio of the value of an Accumulation Unit on the first
valuation date in the month preceding such month to the value of an Accumulation
Unit on the first valuation date in the second month preceding such month by (b)
.99713732 (a factor to neutralize the assumed net investment rate, discussed
below, of 3.5% per annum which is built into the annuity tables contained in the
Contract and which is not applicable because actual net investment experience is
credited instead.) The ratio of the value of an Accumulation Unit on the first
valuation date in the preceding month to the value of an Accumulation Unit on
the first valuation date in the second preceding month is used in order that
annuity payments reflect the net investment experience of Variable Annuity
Account A up to one month prior to the due date of annuity payments. The net
investment experience of Variable Annuity Account A up to one month prior to the
due date is used in order to permit calculation of amounts of annuity payments
and mailing of checks in advance of their due dates.
6. DETERMINATION OF AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT
When annuity payments commence, the value of the employee's individual
account is determined by multiplying the value of an Accumulation Unit on the
first valuation date in the month immediately preceding the variable Annuity
Commencement Date by the number of Accumulation Units credited to the employee's
individual account as of the Annuity Commencement Date.
The Contract contains tables indicating the dollar amount of the first
monthly payment under each form of variable annuity for each $10,000 applied
under the option (see, however, "Modifications of the Variable Annuity Contract
by GWL&A.") The amount of the first monthly payment depends on the form of
annuity and adjusted age of the annuitant. A formula for determining the
adjusted age is contained in the Contract. The tables are determined from the
Progressive Annuity Table assuming births in the year 1900 and an interest rate
of 3.5% per annum. The total first monthly annuity payment is determined by
multiplying the benefits per $10,000 of value shown in the tables in the
Contract by the number of tens of thousands of dollars of value of the
employee's individual account (less any applicable premium tax not deducted when
the purchase payment was received) (see "Table of Premium Taxes.")
A 3.5% interest rate is assumed in the tables and would produce level
annuity payments if the net investment rate remained constant at 3.5%. In fact,
as the net investment rate varies up or down from 3.5%, annuity payments will
vary up or down. A higher interest rate assumption would mean a higher initial
payment but a more slowly rising series of subsequent payments in the event of
favorable investment results (or a more rapidly falling series of subsequent
payments in the event of unfavorable investment results.) A lower assumption
would have the opposite effect.
If a greater first monthly payment would result, GWL&A will compute the
first monthly payment on such mortality basis as GWL&A may determine as being
applicable to this class of annuitants.
7. AMOUNTS OF SECOND AND SUBSEQUENT MONTHLY ANNUITY PAYMENTS
The dollar amount of the first monthly annuity payment, determined as
described above, is translated into Annuity Units by dividing that amount by the
value of an Annuity Unit on the Annuity Commencement Date. This number of
Annuity Units remains fixed during the annuity period, and in each subsequent
month the dollar amount of the annuity payment is determined by multiplying this
fixed number of Annuity Units by the then current value of an Annuity Unit. (See
"Appendix" for a hypothetical illustration of the above computations.)
D. Charges and Experience Rating
1. SERVICES AND FUNCTIONS FOR WHICH CHARGES ARE MADE
GW Capital, 8515 E. Orchard Road, Englewood, Colorado 80111, acts as
investment advisor in connection with the Variable Annuity Contracts and
Variable Annuity Account A. GW Capital became the investment advisor effective
November 1, 1996 when it succeeded Great-West in that capacity. This succession
involved no change of control, as defined in the 1940 Act. GWL&A performs all
administrative functions relative to the contracts and Variable Annuity Account
A, provides the minimum death benefit, and assumes the mortality and expense
risks under the Contract.
(i) In performing investment advisory services, GW Capital continually
provides the Committee with an investment program for its consideration.
Upon approval of such an investment program by the Committee, GW Capital
executes the program by placing orders for the purchase or sale of
investments. Direct costs of acquisition or disposition of investments
of Variable Annuity Account A, including brokerage charges, will be
borne by Variable Annuity Account A.
(ii)In performing all administrative functions in connection with the
Variable Annuity Contract and Variable Annuity Account A, GWL&A bears
all administrative expenses involved therewith, including, but not
limited to, payment of expenses for salaries, rent, postage, telephone,
travel, legal, actuarial and accounting services, office equipment and
stationery, fees and expenses of audit of Variable Annuity Account A and
fees and expenses of the Committee.
(iii) GWL&A provides a minimum death benefit by undertaking to make a
payment on the death of a Participating Employee prior to his Annuity
Commencement Date, which may be in an amount exceeding the value of his
individual account at the time of his death (see Paragraph 6 under
"Accumulation Period.")
(iv)GWL&A assumes an "expense risk" by undertaking never to change the
deductions provided for in the Variable Annuity Contract for sales and
administrative expenses and investment advisory services with respect to
purchase payments made prior to the effective date of a modification of
the Contract, even though such deductions may be insufficient to cover
the actual cost of such items.
(v) GWL&A assumes a "mortality risk" by its contractual undertaking, with
respect to purchase payments made prior to the effective date of a
modification of the Contract, to continue to make monthly life annuity
payments, determined in accordance with the annuity tables and other
provisions contained in the Contract, to each variable annuitant
regardless of how long he lives and regardless of how long annuitants as
a group live. This undertaking assures a variable annuitant that neither
his own longevity nor an improvement in life expectancy generally will
have an adverse effect on the monthly annuity payments he will receive
under the Contract and relieves the variable annuitant from the risk
that he will outlive the funds which he has accumulated for retirement.
For the extent to which the "expense risk" and the "mortality risk" borne by
GWL&A is limited by the modification provisions of the Contract see,
"Modifications of the Variable Annuity Contract by GWL&A."
<PAGE>
2. CHARGES
The charges for the services and functions described above are assessed in
two ways: as a deduction from purchase payments, and as a deduction from the
gross investment rate of Variable Annuity Account A. GWL&A deducts the charges
described below to cover costs and expenses, services provided, and risks
assumed under the Contracts. The amount of a charge may not necessarily
correspond to the costs associated with providing the services or benefits
indicated by the designation of the charge or associated with the particular
Contract. For example, deductions for sales expense may not fully cover all of
the sales charges and distribution expenses actually incurred by GWL&A, and
proceeds from other charges, including the mortality risk and expense charges,
may be used in part to cover such expenses.
(i) Deduction from purchase payments
GWL&A deducted from each purchase payment in respect of a Participating
Employee 3.75% of such purchase payment, consisting of 3.0% for sales expenses,
.5% for administrative expenses, and .25% for the minimum death benefit plus
premium taxes if imposed at the time payment was received by GWL&A (see "Table
of Premium Taxes.") In addition, GWL&A deducted a charge of $9 for sales
expenses from the first purchase payment in each contract year in respect of a
Participating Employee. In the case of a $180 minimum purchase payment, the
deduction for sales expenses, administrative expenses and the minimum death
benefit amounted to 8.75% (9.59% of amount invested), consisting of 3%, .5% and
.25%, respectively (3.29%, .55% and .27% of the amount invested), plus the
additional deduction of $9 (which was the equivalent of 5% of the $180 minimum).
As the amount of the purchase payment increased, the $9 additional deduction
represented a smaller percentage of the purchase payment, so the total deduction
for sales expenses, expressed as a percentage, would decrease to a minimum
approaching 3%. Example: assuming a $1,000 annual purchase payment: 3% x $1,000
= $30.00; $30.00 + $9.00 = $39.00, which is 3.9% of $1,000. During 1996, 1997,
and 1998 GWL&A's total deductions from purchase payments for sales expenses were
$0, $0 and $0, respectively.
During 1996, 1997, and 1998 GWL&A's total deductions from purchase payments
for administrative expenses were: $100.00, $100.00 and $100.00, respectively.
During 1996, 1997 and 1998 GWL&A's total deductions from purchase payments for
the minimum death benefit were $0, $0 and $0, respectively.
(ii) Deduction from the Gross Investment Rate of Variable Annuity Account A.
For each day in a valuation period, GWL&A will make a deduction of .003285%
(an effective annual rate of 1.2064%) from the gross investment rate of Variable
Annuity Account A. This deduction expressed on an annual basis, consists of
.2857% for administrative expenses, .3863% for mortality risks under the
Contract, .0688% for expense risks under the Contract, and .4656% for investment
advisory services. The advisory fees are paid to GW Capital. The deductions for
mortality risks and expense risks represent GWL&A's present best judgment of the
apportionment of the total risk charges under the Contract between the mortality
risks and the expense risks and includes an anticipated profit element to be
retained by GWL&A. Such profit is available, if needed, to make up for any
deficiency in any other charges under the Contract. During 1996, 1997 and 1998
GWL&A's total deductions from the gross investment rate for investment advisory
services were $33,525, $37,297 and $40,494, respectively. During 1996, 1997 and
1998 GWL&A's total deductions from the gross investment rate for administrative
expenses were $20,791, $22,884 and $24,846, respectively. During 1996, 1997 and
1998 GWL&A's total deductions from the gross investment rate for mortality risks
under the Contract were $27,814, $30,944 and $33,597, respectively. During 1996,
1997 and 1998 GWL&A's total deductions from the gross investment rate for
expense risks were $4,944, $5,501 and $5,972, respectively.
The deductions from purchase payments and the deductions from the gross
investment rate of Variable Annuity Account A were and are made pursuant to the
terms of the Variable Annuity Contract and also, in the case of the deductions
from purchase payments for sales expenses and the deductions from the gross
investment rate for investment management and advisory services, were and are
made pursuant to written agreements approved by the Committee; the agreement for
investment advisory services has also been ratified by a majority of the votes
available to Participants. Each of these agreements will continue in full force
and effect from year to year until terminated by GWL&A in accordance with the
terms of the Variable Annuity Contracts (see "Modifications of the Variable
Annuity Contract by GWL&A"), or by the Committee. The agreement for investment
advisory services may also be terminated by a majority of the votes available to
Participants. Any such termination may be done on 60 days written notice without
payment of any penalty.
Either agreement will terminate automatically:
(a) unless its continuance is specifically approved, at least annually,
either (i) by the affirmative vote of a majority of the Committee, or
(ii) by a majority of the votes available to Participants; or
(b) upon any assignment thereof.
In addition, each annual renewal of these agreements must be approved by the
vote of a majority of the Members of the Committee who are not parties to the
agreements or interested persons of any such party, cast in person at a meeting
of the Committee called for the purpose of voting on such approval.
3. EXPERIENCE RATING
Each Variable Annuity Contract provides for experience rating at the
discretion of GWL&A. If the charges made by GWL&A exceed the expenses incurred,
GWL&A in its discretion may allocate all, a portion, or none of such excess as
an experience rating credit. The experience rating credit, if any, which accrues
to any Variable Annuity Contract will be determined annually upon each Contract
Anniversary by GWL&A. Application of the credit accruing to any Variable Annuity
Contract will be applied by the crediting of a number of additional Accumulation
Units or Annuity Units, as applicable, equal in value to the amount of the
credit due (such additional units shall be credited without the deduction
imposed on purchase payments.) To date, there have been no experience rating
credits allocated by GWL&A pursuant to the provisions of any Variable Annuity
Contract.
E. Modifications of the Variable Annuity Contract by GWL&A
The Variable Annuity Contract provides that GWL&A could modify the charges
(see Paragraph 2 under "Charges and Experience Rating"), the tables used in
determining the first monthly annuity payment, and the benefit payable in the
case of death prior to the Annuity Commencement Date (see Paragraph 6 under
"Accumulation Period") provided that such modification would apply only with
respect to purchase payments received after the effective date of the
modification. To exercise its modification rights, GWL&A was required to notify
the Policyholder of such modification in writing. In the case of an employee
covered under the Contract at the time of the notice, or an employee whose
coverage commenced on a date no later than six months after such notice, such
modification would be effective five years after the Contract Anniversary on or
immediately following the day of such notice (or at such earlier time as the
amount of the purchase payments made after such notice equaled ten times the
purchase payments made on behalf of such Participating Employee in the contract
year ending on or immediately before such notice.) In the case of an employer
whose coverage commenced more than six months after such notice, such
modification would be effective as of the date he commenced participation. All
of the charges, the annuity tables, and the benefit payable in the case of death
prior to the Annuity Commencement Date which were provided in the Contract prior
to the notice of a modification would remain permanently in effect with respect
to purchase payments made prior to the effective date of such modification.
Thus, some purchase payments on behalf of a Participating Employee may have been
made long before an annuity is effected for him. Since annuity payments may
continue long after that date, the provisions of the Contract in effect before a
notice of modification may extend many years into the future.
While the Variable Annuity Contract may be modified at any time by agreement
between GWL&A and the Policyholder, no such change shall be applicable to
benefits provided by purchase payments made prior to the effective date of such
change unless the change is made to conform to the Contract, or to give the
Policyholder or Participating Employees the benefit of Section 403 of the Code
or such section or sections as may from time to time revise or replace said
Section 403, or any rules or regulations applicable thereto.
F. Transfer From or to Companion Contract
The Variable Annuity Contract was issued as a supplement to a fixed-dollar
annuity contract providing fixed annuity payments, and containing investment,
mortality and expense commitments as specified therein (the "Companion
Contract"). The Variable Annuity Contract permitted the transfer, subject to the
rules of GWL&A, to the Variable Annuity Contract of sums accumulated under the
Companion Contract, without the imposition of any surrender charge under the
Companion Contract. The deductions described in Paragraph 2(i) under "Charges
and Experience Rating," were made from any amount so transferred and the net
amount credited to the employee's individual account. Under the Companion
Contract, no charges were deducted at the time a premium was paid, and
accordingly the imposition of such charges under the Variable Annuity Contract
did not result in the duplication of charges. Such a transfer could be effected
(1) during a 9 month period commencing with the register date of the Variable
Annuity Contract in which event the amount so transferred in respect of the
employee shall be limited to the amount paid under the Companion Contract as
premiums in respect of such employee since the date 12 months immediately prior
to such register date, or (2) during the 30-day period commencing on any
anniversary of the register date of the Variable Annuity Contract in which event
the amount so transferred in respect of the employee is limited to the amount
paid under the Companion Contract as premiums in respect of such employee since
the date 12 months immediately prior to such anniversary. In addition, in order
to purchase a variable annuity, sums accumulated under the Companion Contract
could be transferred to the Variable Annuity Contract, in one sum or a series of
semi-annual installments, during a period of no longer than 3 years which could
commence no earlier than the employee's 50th birthday and end no later than the
employee's variable Annuity Commencement Date.
The Variable Annuity Contract also provides for the transfer, subject to the
rules of GWL&A, of sums accumulated under the Variable Annuity Contract to the
Companion Contract in order to purchase a fixed annuity with the amounts
accumulated under the Variable Annuity Contract. Such a transfer could only be
effected in one sum or a series of semi-annual installments during a period of
no longer than 3 years which could commence no earlier than the employee's 50th
birthday and end no later than the employee's variable Annuity Commencement
Date.
Contributions under the Companion Contract (the fixed-dollar annuity
contract) and transfers to the Companion Contract become part of GWL&A's general
account which supports insurance and annuity obligations. Because of exemptive
and exclusionary provisions, and other interpretations, interests in the general
account have not been registered under the Securities Act of 1933 ("1933 Act")
nor is the general account registered as an investment company under the
Investment Company Act of 1940 ("1940 Act.") Accordingly, neither the general
account nor any interests therein are generally subject to the provisions of the
1933 or 1940 Acts and GWL&A has been advised that the staff of the Securities
and Exchange Commission has not reviewed the disclosures in this prospectus
which relate to the Companion Contract. Disclosures regarding the Companion
Contract and the general account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
FEDERAL TAX STATUS
Introduction
The ultimate effect of federal income taxes on the Annuity Value, on annuity
payments and on the economic benefit to the employee or beneficiary depends upon
GWL&A's tax status, on the type of retirement program for which the Contract is
purchased, and upon the tax and employment status of the individual concerned.
Variable Annuity Account A is taxed as a part of GWL&A; not as a "regulated
investment company" under Part I of Subchapter M of the Code. GWL&A is taxed as
a life insurance company as described below.
TAXATION OF GWL&A
GWL&A is taxed on its insurance business in the United States as a life
insurance company in accordance with Part I of Subchapter L of the Code.
Investment income and realized capital gains on the assets of Variable Annuity
Account A are reinvested and are taken into account in determining the value of
the Accumulation Unit and the value of the Annuity Unit (see page 8 of the
Variable Annuity Contract.) Under existing federal income tax law, such amounts
do not result in any tax on GWL&A which will be chargeable to Participating
Employees or Variable Annuity Account A. GWL&A reserves the right to make a
deduction from the Participant Annuity Account for taxes, if any, imposed with
respect to such items in the future.
SECTION 403(b) TAX-SHELTERED ANNUITIES
Set forth below are some general comments concerning tax-sheltered annuities
under Section 72 and Section 403(b) of the Code. It should be understood that
the following discussion is not exhaustive, and that special rules may apply to
certain situations not discussed here. The discussion is based upon GWL&A's
understanding of current federal income tax law and no representation is made
regarding the likelihood of continuation of current law or of the current
interpretations by the Internal Revenue Service. No attempt is made to consider
state or other tax laws. The policyholder, Participating Employees and
beneficiaries are responsible for determining that Contributions, distributions
and other transactions with respect to the Contract comply with applicable laws.
FOR FURTHER INFORMATION, CONSULT A QUALIFIED TAX ADVISER.
Eligible Employers
Tax-exempt organizations described in Section 501(c)(3) and public
educational organizations are permitted to purchase Section 403(b) tax-sheltered
annuities for employees. Amounts contributed toward the purchase of such
annuities are excluded from the gross income of the employee in the year
contributed to the extent that the contributions do not exceed three separate,
yet interrelated contribution limitations.
Federal Tax Treatment of Contributions
Federal income tax is deferred on contributions to the extent that the
aggregate amount contributed to an annuity per year for an employee does not
exceed: (1) the exclusion allowance described in Section 403(b)(2); (2) the
contribution limit in Section 415; and (3) the elective deferral limitation in
Section 402(g) of the Code. Additionally, the amount which a highly compensated
employee may contribute may be further reduced to enable the plan to meet the
discrimination testing requirements. Amounts contributed to a Section 403(b)
annuity contract may be subject to FICA and FUTA tax when contributed.
The net investment gain, if any, reflected in the employee's individual
account is not taxable until received by the Participating Employee or his
beneficiary.
Amounts contributed in excess of the above described limits, and the
earnings thereon, must be distributed from the plan and included in the
participant's gross income in accordance with IRS rules and regulations. Excess
amounts which are not properly corrected can have severe adverse consequences to
the plan and may result in additional taxes and penalties to the participant.
Portability
Revenue Ruling 90-24 allows participants to transfer funds from one Section
403(b) annuity or custodial account to another Section 403(b) annuity contract
or custodial account with the same or more stringent restrictions without
incurring current taxation. If the Section 403(b) plan is employer-sponsored,
transfers under Rev. Rul. 90-24 may be restricted to 403(b) providers approved
by the plan sponsor.
When the participant is eligible to take a distribution from the plan,
eligible rollover distributions may be rolled over to an IRA or another Section
403(b) annuity contract or custodial account as provided in the Code. Amounts
properly rolled over will not be included in gross income until a distribution
is taken from the IRA or new Section 403(b) vehicle.
Distribution Restrictions
Pre-1989 contributions to a Section 403(b) annuity contract may be
distributed to an employee at any time, subject to a 10% penalty on withdrawals
prior to age 59 1/2, unless an exception applies under Section 72(t). Amounts
transferred into the annuity contract from a Section 403(b)(7) custodial
account, as well as post-1988 contributions and earnings, and the earnings on
the December 31, 1988, account balance, may not be distributed prior to age 59
1/2, unless the employee dies, becomes disabled, separates from service or
suffers a genuine financial hardship meeting the requirements of the Code.
Restrictions apply to the amount which may be distributed for financial
hardship.
Required Beginning Date/Required Minimum Distributions
Distributions generally, must commence no later than the later of April 1 of
the Calendar year following the Calendar year in which the employee (i) attains
the age of 70 1/2, or (ii) retires, and must be made in a specified form and
manner. If the employee is a "5 percent owner", as defined in the Code,
distributions generally must begin no later than the date described in (i).
Amounts accruing after December 31, 1986, under tax sheltered annuities must
be distributed in compliance with minimum distribution requirements. In
addition, distributions, regardless of when the amounts accrued, must satisfy
the "incidental benefit" or "minimum distribution incidental benefit" rule, IRC
Section 403(b)(10). If the amount distributed does not meet the minimum
requirements, a 50% penalty tax on the amount which was required to be, but was
not, distributed may be imposed upon the employee by the IRS under Section 4974.
These rules are extremely complex, and the employee should seek the advise of a
competent tax adviser.
Federal Taxation of Distributions
All payments received from a Section 403(b) annuity contract are normally
taxable in full as ordinary income to the employee. Since premiums derived from
salary reduction previously have not been taxed to the employee, they cannot be
treated as a cost basis for the contract, IRC Section 403(b)(1). The employee
will have a cost basis for the contract only when after-tax contributions have
been made.
If the employee takes the entire value in the contract in a single sum cash
payment, the full amount received will be ordinary income in the year of receipt
unless after-tax contributions were made. If the distribution includes after-tax
contributions, the amount in excess of the cost basis will be ordinary income,
Section 72(e)(5). No special averaging treatment is currently available for lump
sum distributions.
Amounts received before the annuity starting date by an employee who has
made after-tax contributions are taxed under a rule that provides for pro rata
recovery of cost, Section 72(e)(8). If an employee who has a cost basis for his
contract receives life annuity or installment payments, the cost basis will be
recovered from the payments under the annuity rules of Section 72. Typically,
however, there is no cost basis and the full amount received is taxed as
ordinary income in the year distributed.
Premature Withdrawals
Penalty taxes may apply to certain distributions from Section 403(b)
annuities. Distributions made before the employee attains age 59 1/2 are
premature distributions and subject to an additional tax equal to 10% of the
amount of the distributions which is includable in gross income in the tax year.
However, under Code Section 72(t), the penalty tax may not apply to
distributions: (1) made to a beneficiary on or after the death of the employee;
(2) attributable to the employee's being disabled within the meaning of Code
Section 72(m)(7); (3) made as a part of a series of substantially equal periodic
payments (at least annually) for the life or life expectancy of the employee or
the joint lives or life expectancies of the employee and his designated
beneficiary; (4) made to an employee on account of separation from service after
attaining age 55; (5) properly made to an alternate payee under a qualified
domestic relations order; (6) made to an employee for medical care, but not in
excess of the amount allowable as a medical expense deduction to the employee
for amounts paid during the taxable year for medical care; (7) timely made to
correct an excess aggregate contribution; or (8) timely made to reduce an excess
elective deferral.
If exception (3) above is applicable at the time of the distribution but the
series of payments is later modified or discontinued (other than because of
death or disability), before the Contract Owner reaches age 59 1/2 or, within
five years of the date of the first payment, whichever is later, the Contract
Owner is liable for the 10% penalty plus interest on all payments received
before age 59 1/2. This penalty is imposed in the year the modification or
discontinuance occurs.
Distributions on Death of Employee
Distributions made to a beneficiary upon the employee's death must be made
pursuant to the rules contained in Section 401(a)(9) of the Code and the
regulations thereunder. Generally, if the employee dies while receiving annuity
payments or other required minimum distributions under the plan and before the
entire interest in the account has been distributed, the remainder of his
interest must be distributed to the beneficiary at least as rapidly as under the
method in effect as of the employee's date of death.
If the employee dies before payments have begun, his entire interest must
generally be distributed in full on or before December 31st of the calendar year
that contains the fifth anniversary of the date of the employee's death. This
five-year rule applies to all non-individual beneficiaries. However, if an
individual other than the surviving spouse has been designated as beneficiary,
payments may be made over the life of that individual or over a period not
extending beyond the life expectancy of the beneficiary so long as payments
begin on or before December 31 of the year following the year of death. If the
beneficiary is the employee's spouse, distributions are not required to begin
until the date the employee would have attained age 70 1/2. If the spouse dies
before distributions begin, the rules discussed above will apply as if the
spouse were the employee. Participants and beneficiaries should seek competent
tax or legal advice about the tax consequences of distributions.
Federal Income Tax Withholding
Effective January 1, 1993, certain distributions are defined as "eligible
rollover distributions." Generally, any eligible rollover distribution is
subject to mandatory income tax withholding at the rate of 20% unless the
employee elects to have the distribution paid as a direct rollover to an IRA or
to another Section 403(b) annuity contract or custodial account. With respect to
distributions other than eligible rollover distributions, amounts will be
withheld from annuity (periodic) payments at the rates applicable to wage
payments and from other distributions at a flat 10% rate, unless the employee
elects not to have federal income tax withheld from these payments.
Possible Tax Law Changes
Although the likelihood of legislative changes is uncertain, there is always
the possibility that the tax treatment of the Contract could change by
legislation or otherwise. Consult a tax adviser with respect to legislative
developments and their effect on the Contract.
We have the right to modify the Contract in response to legislative changes
that could otherwise diminish the favorable tax treatment that annuity contract
owners currently receive. We make no guarantee regarding the tax status of any
contract and do not intend the above discussion as tax advice.
INVESTMENT OBJECTIVES AND POLICIES
The objectives and policies in making investments for Variable Annuity
Account A are set forth below:
1. The principal investment objective will be the selection of investments
which are deemed to provide long-term growth of capital. However,
occasional investments, up to a maximum of 15% of the value of the
assets of Variable Annuity Account A at the time such an investment is
made, may be made for the purpose of seeking short-term profits. It is
intended to seek the maximum growth of capital which is not inconsistent
with an investment policy intended to be sufficiently conservative to
achieve at least enough long-term growth of capital to offset
anticipated decreases in the purchasing power of the dollar. There is no
assurance that this objective will be attained.
2. The assets of Variable Annuity Account A will be invested primarily in
common stocks. A relatively small percentage of such assets may be invested
in preferred stocks, bonds, debentures, notes and other evidences of
indebtedness of a character customarily acquired by institutional
investors, whether or not publicly distributed. These may or may not be
convertible into common stock or accompanied by warrants to acquire common
stock. There may be times, however, when economic conditions or general
levels of common stock prices are such that, on the basis of combined
considerations of risk, income and capital gains, a larger than usual
portion of the assets of Variable Annuity Account A will be held in such
investments. It is contemplated that investments will be primarily in
securities issued in the United States, but the right is reserved to invest
in securities issued in Canada up to a maximum of 25% of the value of the
assets in Variable Annuity Account A at the time an investment is made.
3. The assets of Variable Annuity Account A will be kept fully invested,
except that:
(a) sufficient cash will be kept on hand to meet variable annuity contract
payments, and
(b) reasonable amounts of cash and/or United States government securities,
or other short term securities may be held for temporary periods pending
investment.
4. No investment in the securities of any one issuer may exceed 5% of the
value of the assets of Variable Annuity Account A at the time the
investment is made except obligations of the United States government
and instrumentalities thereof.
5. No investment in the voting securities of any one issuer may exceed 5%
of its outstanding voting securities.
6. Borrowing is not contemplated, but the right is reserved to borrow from
banks for temporary purposes up to a maximum of 5% of the value of the
assets of Variable Annuity Account A at the date of borrowing.
7. Securities of other issuers will not be underwritten.
8. Investments in Variable Annuity Account A will not be concentrated in
any particular industry, or groups of industries, but the right is
reserved to invest not more than 25% of the value of the assets of
Variable Annuity Account A at the time of the investment in any one
industry.
9. Investments in real estate will not be a principal activity, but the
right is reserved to invest in real estate or interests in real estate
up to 10% of the value of the assets of Variable Annuity Account A at
the time any such investment is made.
10. No purchases will be made of commodities or commodity contracts.
11. Loans may be made through the acquisition of bonds, debentures, notes,
or other evidences of indebtedness, of a type customarily purchased by
institutional investors, whether publicly distributed or not. Except for
such acquisitions, loans will not be made.
12. Investments in securities which cannot be sold to the public without
registration of such securities with the Securities and Exchange
Commission and which have not been so registered will be limited to 10%
of the value of the assets of Variable Annuity Account A at the time any
such investment is made.
13. Short sales, purchases on margin or purchases of put or call options or
combinations thereof, will not be made.
14. Income and realized capital gains derived from the assets of Variable
Annuity Account A will be reinvested.
15. In addition to conforming to the investment policies described herein,
all investments of the assets of Variable Annuity Account A must be
permissible investments under the Colorado Insurance Code. Pertinent
provisions of that Act, not otherwise reflected in the specific
statements of objectives and policies include, in summary style:
(a) investment is permitted:
(i) in the common shares of a corporation which has, in each of the five
years immediately preceding the investment, paid a dividend, or had
earnings available for the payment of a dividend, of at least 4% of the
average value at which the shares were carried in the capital account of
the corporation during the year in which the dividend was paid, or in
which the earnings were available for payment (the value at which the
shares are carried in the capital account of the corporation does not
necessarily bear any relationship to the market value of that stock);
(ii)in the preferred shares of a corporation which has, in each of the five
years immediately preceding the investment; paid a dividend at least
equal to the specified annual rate on all its preferred shares, or in
the preferred shares of a corporation whose common shares are a
permitted investment.
(b) Investment in specified bonds, debentures or other evidences of
indebtedness is permitted, including investment in specified government
securities, municipal securities, revenue bonds, bonds secured by
mortgage, and equipment trust certificates.
16. Variable Annuity Account A will not issue any senior securities as that
term is defined in the Investment Company Act of 1940.
17. No investments in the securities of a company will be made for the
purpose of exercising control or management over such company.
18. Investments in securities of other investment companies are not
contemplated, but the right is reserved to purchase such securities
other than from the issuer, up to a maximum of 10% of the value of the
assets of Variable Annuity Account A at the time any such investment is
made, provided that not more than 3% of the total outstanding voting
stock of any one investment company may be held.
The investment objectives and policies shown in Items 1 through 16 are
fundamental, and may not be changed without approval of a majority of the votes
available to Participants.
ALLOCATION OF PORTFOLIO BROKERAGE
GW Capital continually provides the Variable Annuity Account Committee with
an investment program for its consideration. Upon approval of such an investment
program by the Committee, GW Capital executes the program by placing orders for
the purchase or sale of investments, GW Capital is responsible for making
Variable Annuity Account A's portfolio decisions once approval of an investment
program by the Committee has been obtained, and assumes responsibility for
placing Variable Annuity Account A's brokerage business and, where applicable,
negotiating the amount of the commission rate paid. If orders for the purchase
or sale of investments at any one time are made by GW Capital on its own behalf
and on behalf of Variable Annuity Account A, then the over-all brokerage
commissions are allocated between GW Capital and Variable Annuity Account A on a
basis directly proportionate to the size of the respective orders of Variable
Annuity Account A and GW Capital.
GW Capital has no set formula for the distribution of brokerage business in
connection with the placing of orders for the purchase and sale of approved
investments; it being the intention of GW Capital to place such orders with the
objective of obtaining the best price, execution and available data. Brokerage
commissions are negotiated as there are no standard rates. All brokerage firms
provide the service of execution of the order made; some brokerage firms also
provide research and statistical data which can be of value. In negotiating
commissions, GW Capital is permitted under the Investment Advisory Services
Agreement to give consideration to the use and value of such data and to the
quality of execution supplied. In placing orders for the purchase or sale of
approved investments GW Capital has not placed portfolio transactions with any
particular brokers, it being GW Capital's intention to place such orders with
the objectives of obtaining the most favorable prices, competent execution and
pertinent research and statistical data. To the extent that GW Capital uses
research and statistical data services so obtained, its expenses may be reduced
and such data has therefore been and is one of the factors considered by GW
Capital in determining its fee for investment advisory services. When purchasing
or selling securities trading on the over-the-counter market, GW Capital will
generally execute the transaction with a broker engaged in making a market for
such securities. The amount of commission paid to brokers in connection with the
purchases and sales of investment assets for Variable Annuity Account A during
1996, 1997 and 1998 aggregate $13,683, $31,682 and $11,346, respectively. During
1998, 90% of the Variable Annuity Account A's brokerage commissions were paid to
brokers who furnish statistical data and research.
PORTFOLIO TURNOVER RATE
During periods of relatively stable market and economic conditions, it is
anticipated that the annual portfolio turnover rate of Variable Annuity Account
A will not exceed 50%. However, any particular security will be sold and the
proceeds re-invested whenever such action is deemed prudent from the viewpoint
of Variable Annuity Account A's investment objectives, regardless of the holding
period of such security. During any period when changing economic or market
conditions are anticipated, resulting shifts in portfolio emphasis may
significantly increase the rate of portfolio turnover. High turnover involves
correspondingly heavier brokerage commission expenses which Variable Annuity
Account A must pay. The rate of portfolio turnover for Variable Annuity Account
A for the calendar years 1996, 1997 and 1998 was: 64.4%, 151.4% and 51.93%,
respectively.
VOTING RIGHTS
Participants will be entitled to vote at the annual meetings of the
Participants as required by the 1940 Act. Under current requirements
Participants are entitled to vote on:
(1) Any change in the fundamental investment objectives or policies of
Variable Annuity Account A (see "Investment Objectives and Policies"
numbers 1 through 16.)
(2) Election of the Members of the Committee.
(3) Ratification of independent auditors for Variable Annuity Account A.
(4) Any other business which may properly come before the meeting.
A Participant who had Accumulation Units credited to his account under a
Variable Annuity Contract on the record date may cast one vote for each such
Accumulation Unit. A Participant receiving annuity payments under a variable
Annuity Contract on the record date may cast a number of votes equal to the
dollar amount of the assets maintained in Variable Annuity Account A on the
record date to meet the annuity obligations relating to such Participant divided
by the value of an Accumulation Unit on the record date. As a Participant
receives annuity payments, the number of votes to which he will be entitled will
decrease.
The record date for determining the number of votes which a Participant may
cast at an annual meeting shall be the last valuation date in February in each
year. Each Participant shall be sent a notice of the meeting of Participants.
MANAGEMENT
GWL&A is managed by its Board of Directors, at least one third of whom are
elected by its participating policyholders and the remainder of whom are elected
by its shareholders. The operation of Variable Annuity Account A is subject to
the direction and approval of a Variable Annuity Account Committee, in
accordance with Rules and Regulations adopted by the Committee. Members of the
Committee are elected by Participants at annual meetings. Such Members are
elected for a one year term. A majority of the Members of the Committee must be
persons who are not otherwise "interested persons" of GWL&A as that term is
defined in the 1940 Act. Furthermore, a majority of the Members of the Committee
must be citizens of the United States and a majority of such Members who are
United States citizens must be resident in the United States.
<PAGE>
A. Members and Officers of the Variable Annuity Account Committee
Name & Business Address Position Present Position and Principal
Occupation During The Last Five Years
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
James Motz Chairman Great-West Life & Annuity Insurance Company: Executive Vice 8515
E. Orchard Road President, Employee Benefits (since 1997); Senior Vice Englewood,
CO 80111 President, Employee Benefits, (1991-1997); Maxim Series
Fund, Inc. Director (since 1994); Orchard Series Fund Trustee (since 1997)
Rex Jennings Member President Emeritus, Denver Metro Chamber of Commerce
6508 Hollytree Circle (since 1987); Maxim Series Fund, Inc. Director (since
Tyler, TX 75703 1988); Orchard Series Fund Trustee (since 1997)
Douglas L Wooden Member Great-West Life & Annuity Insurance Company: Executive Vice 8515
E. Orchard Road President, Financial Services (Since 1998); Senior Vice,
Englewood, CO 80111 President, Financial Services (1996-1998), Senior Vice President,
Chief Financial Officer (1991-1996); Maxim Series Fund, Inc. Director (since
1996); Orchard Series Fund Trustee (since 1997)
Sanford Zisman Member Attorney, Zisman & Ingraham, P.C.;
Suite 250 Maxim Series Fund, Inc. Director (since 1982);
3773 Cherry Creek Dr. N Orchard Series Fund Trustee (since 1997)
Denver, CO 80209
Richard P. Koeppe, Ph.D. Member Retired Superintendent, Denver Public Schools;
8679 E. Kenyon Ave. Maxim Series Fund, Inc. Director (since 1987); Orchard Series
Englewood, CO 80017 Fund Trustee (since 1997)
Beverly A. Byrne Secretary Assistant Vice President and Associate Counsel,
8515 E. Orchard Road of GWL&A (since 1997); Associate Counsel of GWL&A (1993-Englewood,
CO 80111 1997)
David G. McLeod Principal Great-West Life & Annuity Insurance Company: Vice President
Accounting Investment Administration (since 1998); Assistant Vice
8515 E. Orchard Road Officer President, Investment Administration 1994 (1994-1998)
Englewood, CO 80111
Messrs. Motz and Wooden are considered to be "interested persons" of Great-West Life & Annuity Insurance
Company and Variable Annuity Account A, as that term is defined in Section 2(a)(19) of the 1940 Act. Mr. Motz
is Executive Vice-President Employee Benefits (U.S.) of GWL&A. Mr. Wooden is Executive Vice-President,
Financial Services (U.S.) of GWL&A.
Ms. Byrne and Mr. D.G. McLeod are considered to be "affiliated persons" of Great-West Life & Annuity
Insurance Company and Variable Annuity Account A, as that term is defined in Section 2(a)(3) of the 1940 Act.
Ms. Byrne is Secretary to the Variable Annuity Account Committee and is Assistant Vice President and
Associate Counsel of Great-West Life & Annuity Insurance Company. Mr. McLeod is Principal Accounting
Officer of Variable Annuity Account A and is Vice-President, Investment Administration of Great-West Life &
Annuity Insurance Company.
</TABLE>
<PAGE>
B. Directors and Officers of BenefitsCorp Equities, Inc.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Position and Offices
Name Principal Business Address with Underwriter
Charles P. Nelson 8515 E. Orchard Road President and Director
Englewood, Colorado 80111
Robert K. Shaw 8515 E. Orchard Road Director
Englewood, Colorado 80111
Road Director
Englewood, Colorado 80111
Gregg E. Seller 8515 E. Orchard Road Director and Vice President,
Englewood, Colorado 80111 Major Accounts
John Brown 8515 E. Orchard Road Director
Englewood, Colorado 80111
Englewood, Colorado 80111
Doug L. Wooden 8515 E. Orchard Road Director
Englewood, Colorado 80111
Jack Baker 8515 E. Orchard Road Vice President, Licensing
Englewood, Colorado 80111 and Contracts
Glen R. Derback 8515 E. Orchard Road Treasurer
Englewood, Colorado 80111
Beverly A. Byrne 8515 E. Orchard Road Secretary
Englewood, Colorado 80111
</TABLE>
<PAGE>
C. Compensation of Members of Variable Annuity Account Committee
No officer or Member of the Committee and no officer or Director of GWL&A
receives any compensation from Variable Annuity Account A. GWL&A pays all
expenses relative to Variable Annuity Account A's operations, for which GWL&A
deducts certain amounts. (see Paragraph 2 under "Charges and Experience
Rating.") The Members of the Committee who are not active employees of GWL&A are
not paid for their services rendered to Variable Annuity Account A.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Variable Annuity Contracts were sold only in the United States by life
insurance salesmen who represented Great-West and who were licensed by the state
insurance departments, and by certain employees of Great-West. Effective April
16, 1984, however, Great-West ceased issuing new variable annuity contracts.
Furthermore, effective May 1, 1987, Great-West ceased permitting new
participants to be enrolled under existing variable annuity contracts, and with
respect to any variable annuity contracts for which there were fewer than 25
participants, ceased accepting additional contributions. Effective May 1, 1989,
GWL&A announced that it would not accept additional contributions on any
variable annuity.
Great-West was registered under the Securities Exchange Act of 1934 as a
broker-dealer. It has been succeeded in its role as underwriter by BCE which is
registered under the Securities Exchange Act of 1934 as a broker-dealer. All
persons engaged in selling Variable Annuity Contracts were required to
successfully complete a securities examination required by the Securities and
Exchange Commission. Where state law required, such persons were also trained or
registered as securities salesmen.
REGULATION
As a life insurance company organized and operated under the laws of
Colorado, GWL&A is subject to provisions governing such companies and to
supervision and regulation by the Department of Insurance of Colorado. GWL&A
must also comply with the laws of the states in which it is licensed to transact
business.
The laws of Colorado and of other states in which GWL&A is licensed to
transact business provide for regulation and supervision of the variable annuity
activities of life insurance companies. Included in such regulation are
requirements relating to mandatory contract provisions, examination and approval
of contract forms and the administration and maintenance of variable annuity
accounts. Such state regulation does not involve any supervision or control over
the investment policy of Variable Annuity Account A or the selection of
investments thereof, except for verification that any such investments are
permissible under applicable law.
An annual statement in the form prescribed by the National Association of
Insurance Commissioners ("N.A.I.C.") relating to GWL&A's assets, transactions
and affairs with respect to its business for the preceding year must be filed by
GWL&A with the State of Colorado and with each of the other states in which it
does business on or before March 1 of each year. The books and records of
GWL&A's business are subject to review and examination by the Colorado Insurance
Department, and by the insurance departments of the other states in which it
does business, at all times. At least once every three years, a full examination
of GWL&A's operations is conducted, under the auspices of the N.A.I.C.
TRUSTEE FOR ASSETS OF VARIABLE ANNUITY ACCOUNT A
The Bank of New York, 48 Wall Street, New York, NY 10015, is the trustee of
the assets of Variable Annuity Account A under a written trust agreement
complying with the requirements imposed by the insurance laws of various states
in which GWL&A conducts business.
PREPARING FOR YEAR 2000
We have a number of existing computer programs that use only two digits to
identify a year in the date field, which creates a problem with the upcoming
change in the century. We have developed detailed plans that we expect to
rectify the year 2000 problem. The resources that are being devoted to this
effort are substantial. Management estimates that the total cost to implement
these plans will not be material, and has budgeted the expense as part of its
computer systems operating costs through the year 2000. These plans include
modifying programs where necessary, replacing certain programs with year 2000
compliant software, and working with vendors and business partners, including
banks, custodians and investment managers, who need to become year 2000
compliant. We completed this process during the first quarter of 1999 with
respect to the recordkeeping system used for Variable Annuity Account A and will
conduct system testing with third parties throughout 1999. However, there can be
no assurance that we will be successful, or that interaction with other service
providers will not impair our services at that time.
A year 2000 failure could also have a negative impact on the handling of
securities trades, pricing, account services and on the companies in which
Variable Annuity Account A invests. Any of these factors could have an adverse
effect on the performance of Variable Annuity Account A. GW Capital Management
has been actively working on necessary changes to its computer systems to deal
with the year 2000 and to obtain assurances from our service providers that they
are taking similar steps. GW Capital Management is working to avoid problems
associated with the Year 2000 computer-related problems, but cannot provide
absolute assurance that this problem will not have an adverse affect on Variable
Annuity Account A.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which Variable Annuity
Account A or GWL&A is a party.
LEGAL ADVICE
Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Avenue., N.W.,
Washington, D.C. 20004 has provided advice on certain matters relating to the
federal securities laws.
INDEPENDENT AUDITORS
The statement of assets and liabilities of the Great-West Variable Annuity
Account A, including the schedule of investments, as of December 31, 1998, the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period ended December 31,
1998, included in this prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
OTHER VARIABLE ANNUITY CONTRACTS
It is contemplated that other forms of group or individual variable annuity
contracts of GWL&A may be sold in the future, providing benefits which vary in
accordance with the net investment experience of Variable Annuity Account A.
<PAGE>
TABLE OF PREMIUM TAXES
State or local premium taxes, if any, may have been imposed at the time a
purchase payment was made or, as is generally the case, at the Annuity
Commencement Date. (see "Accumulation Period," paragraph 7, as to possible
refunds of premium taxes.) For plans qualifying under Section 403(b) of the
Code, such premium taxes in the states in which GWL&A does business are as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Alabama None Kansas None North Carolina None
Alaska None Kentucky 2.00% North Dakota None
Arizona None Louisiana None Ohio None
Arkansas None Maine None Oklahoma None
California .50% Maryland None Oregon None
Colorado None Massachusetts None Pennsylvania None
Connecticut None Michigan None South Carolina None
Delaware None Minnesota None South Dakota None
District of Columbia None Mississippi None Tennessee None
Florida 1.00% Missouri None Texas None
Georgia None Montana None Utah None
Hawaii None Nebraska None Vermont None
Idaho None Nevada None Virginia None
Illinois None New Hampshire None Washington None
Indiana None New Jersey None West Virginia 1.00%
Iowa None New Mexico None Wisconsin None
Wyoming None
</TABLE>
NOTE: The foregoing rates are subject to amendment by legislative act and, in
cases where the rates shown are different from those applicable to non-tax
benefited contracts, the applicability of the stated rates may be subject to
administrative interpretation.
<PAGE>
APPENDIX
Computation of Accumulation Unit Value
The following hypothetical example illustrates the computation of the
Accumulation Unit value on each valuation date. (see Paragraphs 3 and 4 under
"Accumulation Period")
Assume that the value of the assets of Variable Annuity Account A at the end
of the valuation date of May 15th of some year was $5,000,000; that the value of
an Accumulation Unit for such valuation date was $1.13500000; and that during
the valuation period terminating at the end of the valuation date of May 16th
the investment income was $1,000, the net realized capital gains were $6,000 and
the net unrealized capital losses were $5,000. The gross investment rate for the
valuation period would thus be equal to (a) $2,000 ($1,000, plus $6,000, less
$5,000) divided by (b) $5,000,000 which produces .0400% (.00040000.) The net
investment rate for the valuation period is determined by deducting .003285%
(.00003285) from the gross investment rate, which results in a net investment
rate of .036715% (.00036715.) The net investment factor for the valuation period
would be determined as the net investment rate plus 1.00000000 or 1.00036715.
The value of the Accumulation Unit for the valuation date of May 16th would
be equal to the value for the preceding period ($1.13500000) multiplied by the
net investments factor for the current period (1.00036715) which produces
$1.13541672.
Computation of Annuity Unit Value
The following hypothetical example illustrates the computation of the
Annuity Unit value and the amount of the first and subsequent monthly annuity
payments. (see Paragraphs 3 through 6 under "Annuity Period.")
Assume that an employee at the Annuity Commencement Date has credited to his
individual account 30,000 Accumulation Units, and that the value of an
Accumulation Unit on the first valuation date in the month preceding the Annuity
Commencement Date was $1.15000000, producing a total value of his individual
account of $34,500. Assume also that the employee elects an option for which the
table in the Variable Annuity Contract indicates the first monthly payment is
$65.65 per $10,000 of value applied; the first monthly annuity payment would
thus be 3.4500 multiplied by $65.65 or $226.49.
Assume that the Annuity Unit value on the Annuity Commencement Date was
$1.10000000. When this is divided into the first monthly payment, the number of
Annuity Units represented by that payment is determined to be 205.900000. The
value of this same number of Annuity Units will be paid in each subsequent
month.
Assume further that the Accumulation Unit value on the first valuation date
in the month preceding the month in which the next annuity payment is due was
$1.15600000. The annuity change factor for the month in which the next annuity
payment is due will be the product obtained by multiplying (a) the ratio of
$1.15600000 to $1.15000000 (the Accumulation Unit value on the first valuation
date of the second preceding month, which was the Accumulation Unit value used
to value the employee's individual account) by (b) .99713732 (the factor to
neutralize the assumed rate of 3.5% per annum already taken into account in
determining the number of Annuity Units as described above), producing an
annuity change factor of 1.00233978. This is then multiplied by the Annuity Unit
value for the preceding month ($1.10000000) to produce an Annuity Unit value of
$1.10257376.
The current monthly payment is then determined by multiplying the fixed
number of Annuity Units by the current Annuity Unit value, or 205.900000 times
$1.10257376, which produces a current monthly payment of $227.02.
<PAGE>
Historical Record of Accumulation Units
The following is an historical record of the values of an Accumulation Unit
as of the last valuation date of each quarter to December 31, 1998.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Date Value Date Value Date Value
- ---- ----- ---- ----- ---- -----
January 3, 1969 $1.00000000 December 31, 1978 $ .94566769 December 31, 1988 $3.24632490
March 28, 1969 $1.07468400 March 31, 1979 $1.03700469 March 31, 1989 $3.40048089
June 27, 1969 $1.07583259 June 30, 1979 $1.03384794 June 30, 1989 $3.66057985
September 30, 1969 $1.04319336 September 30, 1979 $1.07966980 September 30, 1989 $4.03595925
December 31, 1969 $1.05956294 December 31, 1979 $1.09861144 December 31, 1989 $4.16667314
March 31, 1970 $1.05322327 March 31, 1980 $1.02778990 March 31, 1990 $4.10420565
June 30, 1970 $ .86337212 June 30, 1980 $1.15888482 June 30, 1990 $4.40575331
September 30, 1970 $ .98057690 September 30, 1980 $1.24125856 September 30, 1990 $3.95067300
December 31, 1970 $1.08416020 December 31, 1980 $1.34937658 December 31, 1990 $4.09586804
March 31, 1971 $1.28783953 March 31, 1981 $1.34420316 March 31, 1991 $4.67731834
June 30, 1971 $1.31417688 June 30, 1981 $1.31151501 June 30, 1991 $4.46997251
September 30, 1971 $1.34600160 September 30, 1981 $1.21957549 September 30, 1991 $4.70629835
December 31, 1971 $1.40624309 December 31, 1981 $1.34034823 December 31, 1991 $5.17489662
March 31, 1972 $1.50937876 March 31, 1982 $1.22060069 March 31, 1992 $5.00089395
June 30, 1972 $1.46441659 June 30, 1982 $1.21747890 June 30, 1992 $4.90045709
September 29, 1972 $1.41141921 September 30, 1982 $1.32107048 September 30, 1992 $4.94334533
December 31, 1972 $1.43641768 December 31, 1982 $1.54829628 December 31, 1992 $5.39680799
March 30, 1973 $1.14518173 March 31, 1983 $1.72492408 March 31, 1993 $5.68645911
June 29, 1973 $ .94975920 June 30, 1983 $1.88999803 June 30, 1993 $5.89355715
September 28, 1973 $1.12752636 September 30, 1983 $1.85391985 September 30, 1993 $6.20352631
December 31, 1973 $ .98798465 December 31, 1983 $1.86959830 December 31, 1993 $6.22231381
March 29, 1974 $ .92504974 March 31, 1984 $1.77987261 March 31, 1994 $6.07099873
June 28, 1974 $ .84636772 June 30, 1984 $1.74123169 June 30, 1994 $5.98373289
September 30, 1974 $ .69582357 September 30, 1984 $1.89436321 September 30, 1994 $6.21184797
December 31, 1974 $ .76438983 December 31, 1984 $1.94021457 December 31, 1994 $6.07070336
March 31, 1975 $ .85484991 March 31, 1985 $2.11639231 March 31, 1995 $6.43386353
June 30, 1975 $ .94523691 June 30, 1985 $2.31593116 June 30, 1995 $6.93539739
September 30, 1975 $ .86720026 September 30, 1985 $2.17502453 September 30, 1995 $7.34349110
December 31, 1975 $ .89703274 December 31, 1985 $2.50415588 December 31, 1995 $7.50058268
March 31, 1976 $1.02654318 March 31, 1986 $2.92575544 March 31, 1996 $7.97167430
June 30, 1976 $1.04254066 June 30, 1986 $3.12894373 June 30, 1996 $8.16277408
September 30, 1976 $1.02175714 September 30, 1986 $2.79849885 September 30, 1996 $8.36088935
December 31, 1976 $1.06312535 December 31, 1986 $2.50415588 December 31, 1996 $8.76699327
March 31, 1977 $ .96668709 March 31, 1987 $3.45357315 March 31, 1997 $9.10319430
June 30, 1977 $ .97779837 June 30, 1987 $3.47692861 June 30, 1997 $9.87479147
September 30, 1977 $ .91543186 September 30, 1987 $3.58107036 September 30, 1997 $10.11055595
December 31, 1977 $ .91330430 December 31, 1987 $2.90927633 December 31, 1997 $10.66148379
March 31, 1978 $ .88025820 March 31, 1988 $3.03211290 March 31, 1998 $10.99141808
June 30, 1978 $ .94981303 June 30, 1988 $3.14170371 June 30, 1998 $11.46520474
September 30, 1978 $1.02175412 September 30, 1988 $3.19555027 September 30, 1998
$9.63105524
December 31, 1998
$11.95317612
</TABLE>
These Historical Accumulation
Units are Unaudited.
<PAGE>
II-2
FINANCIAL
STATEMENTS OF
VARIABLE ANNUITY
ACCOUNT A
The following audited financial statements of Variable Annuity Account A cover
the financial position as of December 31, 1998, the results of operations for
the year ended December 31, 1998, and the changes in net assets for each of the
years ended December 31, 1997, and 1998 and financial highlights for each of the
five years in the period ended December 31, 1998.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
Financial Statements for the Years Ended December 31,
1998 and 1997 and Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Variable Annuity Account Committee
and the Participants of Great-West Variable Annuity Account A:
We have audited the accompanying statement of assets and liabilities of the
Great-West Variable Annuity Account A, including the schedule of investments, as
of December 31, 1998, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period ended December 31, 1998. These financial statements and financial
highlights are the responsibility of Great-West Variable Annuity Account A's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Great-West
Variable Annuity Account A at December 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for the
respective stated periods in conformity with generally accepted accounting
principles.
February 16, 1999
<PAGE>
9
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
================================================================================
Assets:
Investments, at value:
Common stock (cost - $7,356,360) 9,191,453
Short-term investments (cost - $298,065) 298,065
Investment income due and accrued 17,148
Cash 70,748
----------------
Total Assets 9,577,414
Liabilities:
Due to Great-West Life & Annuity Insurance Company 21,026
Contract benefits payable (Note 3) 320,458
----------------
Total Liabilities 341,484
----------------
Net Assets 9,235,930
================
Net Assets Represented By:
Accumulation units - 717,490 (units at $11.953) 8,576,279
Reserves for annuities in course of payment 659,651
----------------
Net Assets 9,235,930
================
See notes to financial statements.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
================================================================================
Investment Income:
Dividends 158,834
Interest 24,565
---------------
183,399
Expenses:
Administration 24,846
Mortality risks 33,597
Investment management and advisory services 40,494
Expense risks 5,972
---------------
104,909
---------------
Net Investment Income 78,490
---------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments 392,795
Net change in unrealized appreciation on investments 713,634
---------------
Net Realized and Unrealized Gain on Investments 1,106,429
---------------
Net Increase in Net Assets Resulting from Operations 1,184,919
===============
See notes to financial statements.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===============================================================================================================
From Operations: 1998 1997
------------- --------------
Net investment income $ 78,490 $ 131,736
Net realized gains 392,795 1,823,734
Net change in unrealized appreciation 713,634 (476,166)
------------- --------------
Increase in net assets resulting
from operations 1,184,919 1,479,304
From Unit Share Transactions:
Surrenders (293,653) (460,010)
Annuity payments (127,977) (120,602)
Death payments (28,572) (215,036)
Transfer in respect of mortality guarantees 28,054 49,642
------------- --------------
Decrease in net assets derived from unit
share transactions (422,148) (746,006)
------------- --------------
Net increase in net assets 762,771 733,298
Net Assets:
Beginning of period 8,473,159 7,739,861
------------- --------------
=============
End of period $ 9,235,930 $ 8,473,159
============= ==============
</TABLE>
See notes to financial statements.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
FINANCIAL HIGHLIGHTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===============================================================================================================
Selected data for an accumulation unit for the years ended December 31, 1998, 1997, 1996, 1995 and 1994, were
as follows:
Years Ended December 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ---------- ---------- ---------- ----------
Unit Value, Beginning of Period $ 10.661 $ 8.767 $ 7.501 $ 6.070 $ 6.245
Income From Investment Operations:
Net investment income .084 .167 .053 .089 .073
Net realized and unrealized gains
(losses) on investments 1.208 1.727 1.213 1.342 (.248)
----------- ---------- ---------- ---------- ----------
Total From Investment
Operations (Note A) 1.292 1.894 1.266 1.431 (.175)
----------- ---------- ---------- ---------- ----------
Unit Value, End of Period $ 11.953 $ 10.661 $ 8.767 $ 7.501 $ 6.070
=========== ========== ========== ========== ==========
Total Return 12.12% 20.27% 15.90% 23.56% (2.80)%
Net Assets, End of Period $ 9,235,930 $ 8,473,159 $ 7,739,861 $6,990,140 $ 6,076,943
Average broker commission paid
per share bought or sold $ .0560 $ 0.0600 $ 0.0692
Ratio of Expenses to Average
Net Assets 1.03% 1.27% 1.25% 1.18% 1.24%
Ratio of Net Investment Income
to Average Net Assets .77% 1.74% 1.89% 2.49% 2.42%
Portfolio Turnover Rate 51.93% 151.4% 64.4% 62.2% 30.2%
</TABLE>
Note A - Net investment income and realized and unrealized gains (losses) are
reflected in the value of the accumulation units. Dividends are not declared
from income and capital gains are not distributed.
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
================================================================================
NOTE 1 - HISTORY
Great-West Variable Annuity Account A (Variable Annuity Account A) is a separate
and distinct investment fund established by The Great-West Life Assurance
Company (Great-West Life). On December 31, 1991, Variable Annuity Account A was
transferred to and the variable annuity contracts were reinsured by Great-West
Life & Annuity Insurance Company (GWL&A), a wholly-owned subsidiary of
Great-West Life. Variable Annuity Account A is registered as an open-end
diversified management investment company under the Investment Company Act of
1940, and the registration under the Securities Act of 1933 of the group
variable annuity contracts funded by Variable Annuity Account A became effective
on November 27, 1968. Purchase payments were first placed in Variable Annuity
Account A on January 3, 1969.
Effective April 16, 1984, Great-West Life ceased issuing new variable annuity
contracts. Effective May 1, 1987, Great-West Life has not allowed new
participants to be enrolled under existing variable annuity contracts and,
effective May 1, 1989, no additional contributions under existing variable
annuity contracts are being accepted.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
The cost of securities sold is determined on the basis of specific
identification.
Securities traded on national exchanges are valued daily at the closing price of
the securities on these exchanges, and securities traded on over-the-counter
markets are valued daily at the average between bid and asked prices. Short-term
securities are valued at amortized cost which approximates market value.
Security transactions are recorded at the earlier of trade date or the date a
commitment is made to buy or sell the related investment.
Dividend income is accrued as of the ex-dividend date and interest income is
recorded daily.
<PAGE>
NOTE 3 - RELATED-PARTY TRANSACTIONS
GWL&A provides administrative, investment management, and advisory services to
Variable Annuity Account A and has assumed mortality and expense risks of the
contracts. A daily deduction of .003285% (an effective annual rate of 1.2064%)
is made from the gross investment income of Variable Annuity Account A. This
deduction, expressed on an annual basis, is broken down as follows: 0.2857% for
administrative expenses, 0.3863% for mortality risks, 0.0688% for expense risks,
and 0.4656% for investment management and advisory services. Effective November
1, 1996 a wholly-owned subsidiary of Great-West Life & Annuity Insurance
Company, GW Capital Management, LLC, serves as investment advisor.
Contract benefit payments are advanced by GWL&A to contract holders on behalf of
Variable Annuity Account A. Variable Annuity Account A reimburses GWL&A for
these payments periodically.
NOTE 4 - INVESTMENTS
The aggregate purchases of investments and the aggregate proceeds from sales of
investments were (excluding short-term securities) as follows:
Common Stock 1998 1997
-------------- -------------
Purchases 4,642,927 11,046,651
Proceeds from sales 4,034,420 11,673,390
NOTE 5 - FEDERAL INCOME TAXES
The Variable Annuity Account A investment income is applied to increase
accumulation unit values. Under existing federal income tax law, Variable
Annuity Account A investment income is not taxed to the extent that it is
applied to increase accumulation unit values. GWL&A reserves the right to charge
the Variable Annuity Account A if such taxes are imposed in the future.
NOTE 6 - ACCUMULATION UNITS
A summary of the transactions in accumulation units follows:
1998 1997
---------- ----------
Outstanding - January 1 746,562 819,044
Redeemed during the year:
Surrender (26,596) (49,689)
Death (2,476) (22,793)
---------- ----------
---------- ----------
(29,072) (72,482)
---------- ----------
========== ==========
Outstanding - December 31 717,490 746,562
========== ==========
Net investment income and realized and unrealized gains are reflected in the
value of the accumulation units. Dividends are not declared from income and
gains are not distributed.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE 7 - ACCUMULATION UNIT VALUES - (Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
===============================================================================================================
ACCUMULATION ACCUMULATION
VALUATION DATE UNIT VALUE VALUATION DATE UNIT VALUE
- ------------------------- ----------------------- ---------------------- --------------------
January 3, 1969 $ 1.00000000 September 30, 1980 $ 1.24125856
March 28, 1969 $ 1.07468400 December 31, 1980 $ 1.34937658
June 27, 1969 $ 1.07583259 March 31, 1981 $ 1.34420316
September 30, 1969 $ 1.04319336 June 30, 1981 $ 1.31151501
December 31, 1969 $ 1.05956294 September 30, 1981 $ 1.21957549
March 31, 1970 $ 1.05322327 December 31, 1981 $ 1.34034823
June 30, 1970 $ .86337212 March 31, 1982 $ 1.22060069
September 30, 1970 $ .98057690 June 30, 1982 $ 1.21747890
December 31, 1970 $ 1.08416020 September 30, 1982 $ 1.32107048
March 31, 1971 $ 1.28783953 December 31, 1982 $ 1.54829628
June 30, 1971 $ 1.31417688 March 31, 1983 $ 1.72492408
September 30, 1971 $ 1.34600160 June 30, 1983 $ 1.88999803
December 31, 1971 $ 1.40624309 September 30, 1983 $ 1.85391985
March 31, 1972 $ 1.50937876 December 31, 1983 $ 1.86959830
June 30, 1972 $ 1.46441659 March 31, 1984 $ 1.77987261
September 29, 1972 $ 1.41141921 June 30, 1984 $ 1.74123169
December 31, 1972 $ 1.43641768 September 30, 1984 $ 1.89436321
March 30, 1973 $ 1.14518173 December 31, 1984 $ 1.94021457
June 29, 1973 $ .94975920 March 31, 1985 $ 2.11639231
September 28, 1973 $ 1.12752636 June 30, 1985 $ 2.31593116
December 31, 1973 $ .98798465 September 30, 1985 $ 2.17502453
March 29, 1974 $ .92504974 December 31, 1985 $ 2.50415588
June 28, 1974 $ .84636772 March 31, 1986 $ 2.92575544
September 30, 1974 $ .69582357 June 30, 1986 $ 3.12894373
December 31, 1974 $ .76438983 September 30, 1986 $ 2.79849885
March 31, 1975 $ .85484991 December 31, 1986 $ 2.92996949
June 30, 1975 $ .94523691 March 31, 1987 $ 3.45357315
September 30, 1975 $ .86720026 June 30, 1987 $ 3.47692861
December 31, 1975 $ .89703274 September 30, 1987 $ 3.58107036
March 31, 1976 $ 1.02654318 December 31, 1987 $ 2.90927633
June 30, 1976 $ 1.04254066 March 31, 1988 $ 3.03211290
September 30, 1976 $ 1.02175714 June 30, 1988 $ 3.14170371
December 31, 1976 $ 1.06312535 September 30, 1988 $ 3.19555027
March 31, 1977 $ .96668709 December 31, 1988 $ 3.24632490
June 30, 1977 $ .97779837 March 31, 1989 $ 3.40048089
September 30, 1977 $ .91543186 June 30, 1989 $ 3.66057985
December 31, 1977 $ .91330430 September 30, 1989 $ 4.03595925
March 31, 1978 $ .88025820 December 31, 1989 $ 4.16667314
June 30, 1978 $ .94981303 March 31, 1990 $ 4.10420565
September 30, 1978 $ 1.02175412 June 30, 1990 $ 4.40575331
December 31, 1978 $ .94566769 September 30, 1990 $ 3.95067300
March 31, 1979 $ 1.03700469 December 31, 1990 $ 4.09586804
June 30, 1979 $ 1.03384794 March 31, 1991 $ 4.67731834
September 30, 1979 $ 1.07966980 June 30, 1991 $ 4.46997251
December 31, 1979 $ 1.09861144 September 30, 1991 $ 4.70629835
March 31, 1980 $ 1.02778990 December 31, 1991 $ 5.17489662
June 30, 1980 $ 1.15888482
</TABLE>
<PAGE>
ACCUMULATION UNIT VALUES - (Unaudited) - Concluded
================================================================================
ACCUMULATION
VALUATION DATE UNIT VALUE
- ------------------------- -----------------------
March 31, 1992 $ 5.00089395
June 30, 1992 $ 4.90045709
September 30, 1992 $ 4.94334533
December 31, 1992 $ 5.39680799
March 31, 1993 $ 5.70268053
June 30, 1993 $ 5.91443136
September 30, 1993 $ 6.20352631
December 31, 1993 $ 6.24551098
March 31, 1994 $ 6.07099873
June 30, 1994 $ 5.98373289
September 30, 1994 $ 6.21184797
December 31, 1994 $ 6.07070336
March 31, 1995 $ 6.43386353
June 30, 1995 $ 6.93539739
September 30, 1995 $ 7.34349110
December 31, 1995 $ 7.50058268
March 31, 1996 $ 7.97167430
June 30, 1996 $ 8.16277408
September 30, 1996 $ 8.36088935
December 31, 1996 $ 8.76699327
March 31, 1997 $ 9.10319430
June 30, 1997 $ 9.87479147
September 30, 1997 $ 10.11055595
December 31, 1997 $ 10.66148379
March 31, 1998 $ 10.99141808
June 30, 1998 $ 11.46520474
September 30, 1998 $ 9.63105524
December 31, 1998 $ 11.95317612
<PAGE>
GREAT-WEST VARIABLE ANNUITY ACCOUNT A
COMMON STOCK
COMMUNICATIONS --- 2.2%
2,800 AT&T Corp 210,700
$210,700
CONSUMER SERVICES --- 9.7%
4,000 Bausch & Lomb Inc 240,000
1,300 Bristol-Myers Squibb Co 173,956
3,500 CR Bard Inc 173,250
1,900 Johnson & Johnson 159,363
1,200 Merck & Co Inc 177,224
$923,793
CREDIT INSTITUTIONS --- 6.9%
1,500 American Express Co 153,375
3,100 Bancwest Corp 148,800
3,400 Bankamerica Corp 204,425
2,200 Mellon Bank Corp 151,250
$657,850
ELECTRIC --- 3.1%
3,800 Baltimore Gas & Electric Co 117,325
3,300 Consolidated Edison Inc 174,488
$291,813
ELECTRONICS - HIGH TECH --- 18.2%
4,500 Adobe Systems Inc 210,375
5,700 Compaq Computer Corp 239,041
2,000 Eastman Kodak Co 144,000
1,700 Emerson Electric Co 102,850
2,000 General Electric Co 204,124
2,300 Hewlett-Packard Co 157,118
2,700 Johnson Controls Inc 159,300
3,800 Motorola Inc 232,036
8,000 Scientific-Atlanta Inc 182,496
2,100 Thomas & Betts Corp 90,955
$1,722,295
HOLDING & INVEST. OFFICES --- 7.9%
4,040 Bank One Corp 206,290
4,400 S & P 500 Depositary Receipt 542,573
$748,863
INDUSTRIAL SERVICES --- 2.7%
5,000 Electronic Data Systems Corp 251,250
$251,250
INSURANCE --- 4.5%
3,200 Allstate Corp 123,600
1,800 American International Group Inc 173,925
3,000 Arthur J Gallagher & Co 132,375
$429,900
MFTG - CONSUMER PRODS. --- 8.3%
3,300 Anheuser-Busch Companies Inc 216,563
5,300 International Flavors & Fragrances Inc 234,191
4,700 Lancaster Colony Corp 150,987
8,400 Leggett & Platt Inc 184,800
$786,541
MFTG - INDUSTRIAL PRODS --- 15.0%
5,300 3Com Corp* 237,504
3,200 Armstrong World Industries Inc 192,998
4,100 Kimberly-Clark Corp 223,450
3,500 PPG Industries Inc 203,875
2,900 Pharmacia & Upjohn Inc 164,212
4,200 Rockwell International Corp 203,960
8,400 USX-US Steel Group 193,200
$1,419,199
OIL & GAS --- 6.7%
2,800 Atlantic Richfield Co 182,700
4,200 Coastal Corp 146,735
5,700 Halliburton Co 168,863
1,600 Mobil Corp 139,400
$637,698
RETAIL TRADE --- 4.7%
3,300 Albertson's Inc 210,167
8,200 Brinker International Inc* 236,775
$446,942
TELEPHONE --- 3.8%
3,400 Bell Atlantic Corp 180,200
3,400 SBC Communications Inc 182,325
$362,525
TRANSPORTATION EQUIPMENT --- 1.3%
2,200 TRW Inc 123,611
$123,611
WHOLESALE TRADE -CONSUMER --- 1.9%
4,400 Nike Inc Class B 178,473
$178,473
TOTAL COMMON STOCK --- 96.7% $9,191,453
(Cost $7,356,360)
SHORT-TERM INVESTMENTS
CREDIT INSTITUTIONS --- 1.5%
145,000 Ford Motor Credit Co 144,620
(Interest Rate - 5.998%; Maturity Date - 1/8/99) $144,620
SECURITIES & COMMODITIES --- 1.6%
154,000 Merrill Lynch & Co Inc 153,445
(Interest Rate - 5.495%; Maturity Date - 1/8/99) $153,445
TOTAL SHORT-TERM INVESTMENTS --- 3.1% $298,065
(Cost $298,065)
TOTAL GREAT-WEST VARIABLE ANNUITY ACCOUNT A --- 100.0% 9,489,518
(Cost $7,654,425)
* Non-Income Producing
<PAGE>
PART II
OTHER INFORMATION
Item 1. Financial Statements and Exhibits
(a)
Financial
Statements:
Financial Statements of Great-West Variable Annuity Account A are
contained in the prospectus.
(b)
Exhibits:
Exhibit Numbers 1, 2, 4, 8, 10 and 11 are filed herewith.
Exhibit Numbers 3, 6, 7, 9, 12, 13, 14 and 15 are not applicable to the
Registrant.
Exhibit Number 5 is incorporated herein by reference to Registrant's
Post-Effective Amendment No. 38 filed with the Commission on April 24,
1998.
Exhibit Number 16: Financial Data Schedule is filed herewith.
Item 2. Persons
Controlled by or
under Common
Control by the
Registrant.
The Registrant is subject to the direction and approval of the Variable
Annuity Account A Committee. GW Capital Management, LLC a Colorado limited
liability company, is the investment adviser of the Registrant. GW Capital
Management, LLC is a wholly-owned subsidiary of Great-West Life & Annuity
Insurance Company, a Colorado life insurance corporation.
Item 3. Number
of Holders of
Securities
As of December 31, 1998, the Registrant had the following number of
record holders of each class of securities:
Title of Class Number of Record Holders
Active Participants
15015
Vested Participants
37
Total Participants
187
Item 4.
Indemnification
Provisions exist under the Colorado General Corporation Code and the Bylaws of
Great-West Life & Annuity Insurance Company whereby Great-West Life & Annuity
Insurance Company may indemnify a director, officer, or controlling person of
Great-West Life & Annuity Insurance Company against liabilities arising under
the Securities Act of 1933. The following excerpts contain the substance of
these provisions:
<PAGE>
Colorado General
Corporation Code
Article 109 -
INDEMNIFICATION
Section 7-109-101. Definitions. As used in this Article:
(1) "Corporation" includes any domestic or foreign entity that is
a predecessor of the corporation by reason of a merger or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a
corporation, is or was serving at the corporation's request as a
director, an officer, a partner, a trustee of, an employee, a
fiduciary or an agent of another domestic or foreign corporation
or other person or of an employee benefit plan.
A director is considered to be serving an employee benefit plan
at the corporation's request if his or her duties to the
corporation also impose duties on or otherwise involve services
by, the director to the plan or to participants in or
beneficiaries of the plan. "Director" includes, unless the
context requires otherwise, the estate or personal representative
of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine,
including an excise tax assessed with respect to an employee
benefit plan, or reasonable expenses.
(5) "Official capacity" means, when used with respect to a
director, the office of director in the corporation and, when
used with respect to a person other than a director as
contemplated in Section 7-109-107, means the office in the
corporation held by the officer or the employment, fiduciary, or
agency relationship undertaken by the employee, fiduciary, or
agent on behalf of the corporation. "Official capacity" does not
include service for any other domestic or foreign corporation or
other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to the proceeding
because the person is or was a director against liability
incurred in any proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed: (I) In the case of conduct in an official
capacity with the corporation, that his or her conduct was in the
corporation's best interests; or
(II) In all other cases, that his or her conduct
was at least not opposed to the corporation's best
interests; and
(c) In the case of any criminal proceeding, the person had no reasonable cause
to believe his or her conduct was unlawful.
(2)
A director's conduct with respect to an employee benefit plan for
a purpose the director reasonably believed to be in the interests
of the participants in or beneficiaries of the plan is conduct
that satisfies the requirements of subparagraph (II) of paragraph
(b) of subsection (1) of this section.
A director's conduct with respect to an employee benefit plan for
a purpose that the director did not reasonably believe to be in
the interests of the participants in or beneficiaries of the plan
shall be deemed not to satisfy the requirements of subparagraph
(a) of subsection (1) of this section.
(3)
The termination of any proceeding by judgment, order, settlement,
or conviction, or upon a plea of nolo contendere or its
equivalent, is not, of itself, determinative that the director
did not meet the standard of conduct described in this section.
(4) A corporation may not indemnify a director under this
section:
(a) In connection with a proceeding by or in the right of the corporation in
which the director was adjudged liable to the corporation; or
(b) In connection with any proceeding charging that the
director derived an improper personal benefit, whether or
not involving action in his official capacity, in which
proceeding the director was adjudged liable on the basis
that he or she derived an improper personal benefit.
(5) Indemnification permitted under this section in connection
with a proceeding by or in the right of a corporation is limited
to reasonable expenses incurred in connection with the
proceeding.
Section 7-109-103. Mandatory Indemnification of Directors.
Unless limited by its articles of incorporation, a corporation shall indemnify a
person who is or was a director of the corporation and who was wholly
successful, on the merits or otherwise, in defense of any proceeding to
which he was a party, against reasonable expenses incurred by him in
connection with the proceeding.
Section 7-109-104. Advance of Expenses to Directors.
(1)
A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance
of the final disposition of the proceeding if:
(a) The director furnishes the corporation a written affirmation of his
good-faith belief that he has met the standard of conduct described in
Section 7-109-102;
(b) The director furnishes the corporation a written undertaking, executed
personally or on the director's behalf, to repay the advance if it is
ultimately determined that he or she did not meet such standard of conduct;
and
(c)
A determination is made that the facts then known to those
making the determination would not preclude
indemnification under this article.
(2) The undertaking required by paragraph (b) of subsection (1) of this section
shall be an unlimited general obligation of the director, but need not be
secured and may be accepted without reference to financial ability to make
repayment.
(3) Determinations and authorizations of payments under this
section shall be made in the manner specified in Section
7-109-106.
Section 7-109-105. Court-Ordered Indemnification of Directors. (1) Unless
otherwise provided in the articles of incorporation, a director who is or
was a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction. On
receipt of an application, the court, after giving any notice the court
considers necessary, may order indemnification in the following manner:
(a) If it determines the director is entitled to mandatory indemnification
under section 7-109-103, the court shall order indemnification, in which case
the court shall also order the corporation to pay the director's reasonable
expenses incurred to obtain court-ordered indemnification.
(b) If it determines that the director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances,
whether or not the director met the standard of conduct
set forth in section 7-109-102 (1) or was adjudged liable
in the circumstances described in Section 7-109-102 (4),
the court may order such indemnification as the court
deems proper; except that the indemnification with respect
to any proceeding in which liability shall have been
adjudged in the circumstances described Section 7-109-102
(4) is limited to reasonable expenses incurred in
connection with the proceeding and reasonable expenses
incurred to obtain court-ordered indemnification.
Section 7-109-106. Determination and Authorization of Indemnification of
Directors.
(1)
A corporation may not indemnify a director under Section
7-109-102 unless authorized in the specific case after a
determination has been made that indemnification of the director
is permissible in the circumstances because he has met the
standard of conduct set forth in Section 7-109-102.
A corporation shall not advance expenses to a director under
Section 7-109-104 unless authorized in the specific case after
the written affirmation and undertaking required by Section
7-109-104(1)(a) and (1)(b) are received and the determination
required by Section 7-109-104(1)(c) has been made.
(2) The determinations required to be made subsection (1) of this section shall
be made:
(a) By the board of directors by a majority vote of those
present at a meeting at which a quorum is present, and
only those directors not parties to the proceeding shall
be counted in satisfying the quorum; or
(b) If a quorum cannot be obtained, by a majority vote of
a committee of the board of directors designated by the
board of directors, which committee shall consist of two
or more directors not parties to the
proceeding; except that directors who are parties to the
proceeding may participate in the designation of directors
for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a) of
subsection (2) of this section, and the committee cannot be established
under paragraph (b) of subsection (2) of this section, or even if a quorum
is obtained or a committee designated, if a majority of the directors
constituting such quorum or such committee so directs, the determination
required to be made by subsection (1) of this section shall be made:
(a)
By
independent legal counsel selected by a vote of the board
of directors or the committee in the manner specified in
paragraph (a) or (b) of subsection (2) of this section or,
if a quorum of the full board cannot be obtained and a
committee cannot be established, by independent legal
counsel selected by a majority vote of the full board of
directors; or
(b) By the shareholders.
(4)
Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as
the determination that indemnification or advance of expenses
is permissible; except that, if the determination that
indemnification or advance of expenses is permissible is made
by independent legal counsel, authorization of indemnification
and advance of expenses shall be made by the body that
selected such counsel.
Section 7-109-107. Indemnification of Officers, Employees, Fiduciaries, and
Agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under section 7-109-103,
and is entitled to apply for court-ordered indemnification under section
7-109-105, in each case to the same extent as a director;
(b) A corporation may indemnify and advance expenses to an officer, employee,
fiduciary, or agent of the corporation to the same extent as a director; and
(c) A corporation may also indemnify and advance expenses to an officer,
employee, fiduciary, or agent who is not a director to a greater extent, if not
inconsistent with public policy, and if provided for by its bylaws, general or
specific action of its board of directors or shareholders, or contract.
Section 7-109-108. Insurance.
A corporation may purchase and maintain insurance on behalf of a person
who is or was a director, officer, employee, fiduciary, or agent of the
corporation and who, while a director, officer, employee, fiduciary, or agent of
the corporation, is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, fiduciary, or agent of any other
domestic or foreign corporation or other person or of an employee benefit plan
against any liability asserted against or incurred by the person in that
capacity or arising out of his or her status as a director, officer, employee,
fiduciary, or agent whether or not the corporation would have the power to
indemnify the person against such liability under the Section 7-109-102,
7-109-103 or 7-109-107. Any such insurance may be procured from any insurance
company designated by the board of directors, whether such insurance company is
formed under the laws of this state or any other jurisdiction of the United
States or elsewhere, including any insurance company in which the corporation
has an equity or any other interest through stock ownership or otherwise.
<PAGE>
Section 7-109-109. Limitation of Indemnification of Directors.
(1)
A provision concerning a corporation's indemnification of, or
advance of expenses to, directors that is contained in its
articles of incorporation or bylaws, in a resolution of its
shareholders or board of directors, or in a contract, except for
an insurance policy or otherwise, is valid only to the extent the
provision is not inconsistent with Sections 7-109-101 to
7-109-108. If the articles of incorporation limit indemnification
or advance of expenses, indemnification or advance of expenses
are valid only to the extent not inconsistent with the articles
of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's
power to pay or reimburse expenses incurred by a director in
connection with an appearance as a witness in a proceeding at a
time when he or she has not been made a named defendant or
respondent in the proceeding.
Section 7-109-110. Notice to Shareholders of Indemnification of Director.
If a corporation indemnifies or advances expenses to a director under this
article in connection with a proceeding by or in the right of the
corporation, the corporation shall give written notice of the
indemnification or advance to the shareholders with or before the notice of
the next shareholders' meeting. If the next shareholder action is taken
without a meeting at the instigation of the board of directors, such notice
shall be given to the shareholders at or before the time the first
shareholder signs a writing consenting to such action.
Bylaws of Great-West Life & Annuity Insurance Company
Article II, Section 11. Indemnification of Directors.
(1) In this section, the following terms shall have the following meanings:
(a)
"expenses" means reasonable expenses incurred in a legal
proceeding, including expenses of investigation and
preparation, expenses in connection with an appearance as a
witness, and fees and disbursement of counsel, accountants or
other experts;
(b) "liability" means an obligation incurred with respect to a proceeding
to pay a judgment, settlement, penalty or fine;
(c) "party" includes a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding;
(d)
"proceeding" means any threatened, pending or completed
action, suit, or proceeding whether civil, criminal,
administrative or investigative, and whether formal or
informal.
(2) Subject
to
applicable law, if any person who is a director, officer or employee
of the corporation is made a party to a proceeding because the person
is or was a director, officer or employee of the corporation, the
corporation shall indemnify the person, or the estate or personal
representative of the person, from and against all liability and
expenses incurred by the person in the proceeding (and advance to the
person expenses incurred in the proceeding) if, with respect to the
matter(s) giving rise to the proceeding:
(a) the person conducted himself or herself in good faith; and
(b) the person reasonably believed that his or her conduct was in the
corporation's best interests; and
(c) in the case of any criminal proceeding, the person had no reasonable
cause to believe that his or her conduct was unlawful; and
(d) if the person is or was an employee of the corporation, the person
acted in the ordinary course of the person's employment with the
corporation.
(3) Subject
to
applicable law, if any person who is or was serving as a director,
officer or employee of another company or entity at the request of
the corporation is made a party to a proceeding because the person is
or was serving as a director, officer or employee of the other
company or entity, the corporation shall indemnify the person, or the
estate or personal representative of the person, from and against all
liability and expenses incurred by the person in the proceeding (and
advance to the person expenses incurred in the proceeding) if:
(i) the person is or was appointed to serve at the request of the
corporation as a director, officer or employee of the other company or
entity in accordance with Indemnification Procedures approved by the Board
of Directors of the corporation; and
(ii) with respect to the matter(s) giving rise to the proceeding:
(a) the person conducted himself or herself in good faith; and
(b) the person reasonably believed that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) in the case of any criminal proceeding, the person had no reasonable
cause to believe that his or her conduct was unlawful; and
(d) if the person is or was an employee of the other company or entity, the
person acted in the ordinary course of the person's employment with the
other company or entity.
Item 5. Business and Other Connections of Investment Adviser
GW
Capital Management, LLC (the "Adviser") is a Colorado limited liability company.
Its principal business is the provision of investment advice to open-end
management investment companies.
The Adviser serves as the Investment Adviser to the Registrant. Reference
is made to the Adviser's Form ADV (particularly Schedule F), effective June
28, 1996 (as amended), on file with the Commission (File No. 801-52309),
for a fuller description of the Adviser's business and other connections.
Substantial business and other connections of the Directors and Officers of
the Adviser other than with the Registrant are set forth in the Adviser's
Form ADV (particularly the Schedule D's) effective June 28, 1996 (as
amended), on file with the Commission (File No. 801-52309), which is
incorporated by reference herein.
Item 6. Principal Underwriters
(a) None (b) See Part I (c) None
Item 7. Location of Accounts and Records
Registrant maintains the records required to be maintained by it under Section
31 (a), and the Rules promulgated thereunder, of the Investment Company Act of
1940, at the principle office of Great-West Life & Annuity Insurance Company,
8515 E. Orchard Road, Englewood, Colorado 80111.
Item 8. Management Services
None
Item 9.
Distribution
Expenses
Not
Applicable.
Item 10.
Undertakings
Registrant represents that it is relying on a no-action letter dated November
28, 1988, to the American Council of Life Insurance (Ref. IP-6-88) regarding
Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, in
connection with redeemability restrictions on Section 403(b) policies, and that
paragraphs number (1) through (4) of that letter will be complied with.
GWL&A represents that the fees and charges deducted under the Contracts,
in aggregate, are reasonable in relation to the services rendered, the expenses
to be incurred, and the risks assumed by the GWL&A.
Consents:
Consents ofMessrs. Sutherland Asbill & Brennan LLP and Deloitte & Touche
LLP to the use of their names in the Prospectus to be filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Englewood,
Colorado on the 28th day of April, 1999.
GREAT-WEST VARIABLE ANNUITY
ACCOUNT A
By: /s/ J.D.
Motz__D.
J.D. Motz
Chairman of the
Committee
<PAGE>
April 27, 1999
Great-West Life &
Annuity
Insurance Company
8515 E. Orchard
Road
Englewood, CO
80111
Re: Great-West
Variable Annuity
Account A
File No.
811-1737
Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Prospectus filed as part of Post Effective Amendment No. 24 to
the Form N-1 Registration Statement for the Variable Annuity Account A. In
giving this consent, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND ASBILL
& BRENNAN LLP
By: /s/ Kimberly
J. Smith
Kimberly J. Smith
<PAGE>
INDEPENDENT
AUDITORS' CONSENT
We consent to the use in this Amendment No. 24 to Registration Statement No.
811-1737 of Great-West Variable Annuity Account A of our report dated February
16, 1999 appearing in the Prospectus, which is a part of such Registration
Statement, and to the reference to us under the heading "Independent Auditors"
in such Prospectus.
/s/ DELOITTE &
TOUCHE LLP
Denver, Colorado
April 29, 1999
<PAGE>
Exhibit 1
<PAGE>
ARTICLES OF
REDOMESTICATION
OF
GREAT-WEST LIFE
& ANNUITY
INSURANCE COMPANY
ARTICLE I
NAME The name of the corporation is Great-West Life & Annuity
Insurance Company.
ARTICLE II STATE OF ORIGINAL INCORPORATION
The corporation was originally incorporated as the National Interment
Association on March 28, 1907, in the State of Kansas. The corporation was
authorized to do business as an insurance company in the State of Kansas on
April 24, 1907. On April 19, 1910, the name of the corporation was changed to
the National Industrial Insurance Company. On September 14, 1956, the name of
the corporation was changed to Liberty Life & Casualty Company, Inc. On February
15, 1963, the name of the corporation was changed to Ranger National Life
Insurance Company. On May 29, 1980, the name of the corporation was changed to
Insuramerica Corporation. On April 6, 1982, the name of the corporation was
changed to Great-West Life & Annuity Insurance Company.
ARTICLE III PERPETUAL DURATION The corporation shall have perpetual duration.
ARTICLE IV PURPOSES
A. The business of the corporation is serving as an insurance company
relating to life, accident, and health insurance formerly under the laws of the
State of Kansas and, upon redomestication to Colorado, under the laws of the
State of Colorado.
B. The corporation shall have the power to issue both participating and
nonparticipating insurance policies.
C. The corporation may engage in any lawful act or activity for which
corporations may be organized under the Colorado Corporation Code which are not
in conflict with the laws of the State of Colorado applicable to insurance
companies or with the Regulations of the Colorado Commissioner of Insurance.
D. The purpose for which the corporation is being redomesticated is to
carry on, under the laws of the State of Colorado, the business for which it was
incorporated under the laws of the State of Kansas.
ARTICLE V REGISTERED OFFICE AND REGISTERED AGENT
The registered office is at 8515 E. Orchard Road, Englewood, Colorado
80111. The registered agent is Ruth B. Lurie at said address.
ARTICLE VI NAMES AND ADDRESSES OF DIRECTORS AND OFFICERS
The following persons shall serve as the directors on the date of the
redomestication of the corporation.
Frank J. Becker
2818 West Central
El Dorado, Kansas 67042
Martin B. Dickinson, Jr.
1211 Massachusetts
Lawrence, Kansas 66044
George R. Dinney
2232 Ridge Plaza
Castle Rock, Colorado 80104
Dawn H. Grohs
225 N. Market, Suite 200
Wichita, Kansas 67201
Nelson L. Hartman
520 West 27th
Topeka, Kansas 66601
Kevin P. Kavanagh
100 Osborne North
Winnipeg, Manitoba
Canada R3C 3A5
William T. McCallum
8515 E. Orchard Road
Englewood, Colorado 80111
The following persons shall serve as officers on the date of the
redomestication of the corporation.
William T. McCallum
President and Chief Executive Officer
8515 E. Orchard Road
Englewood, Colorado 80111
David E. Morrison
Senior Vice President and Actuary
100 Osborne North
Winnipeg, Manitoba,
Canada R3C 3A5
Glen R. Derback
Senior Vice President and Treasurer
8515 E. Orchard Road
Englewood, Colorado 80111
John T. Hughes
Sr. V.P., Chief Investment Officer
8515 E. Orchard Road
Englewood, Colorado 80111
D. Craig Lennox
Sr. V. P., General Counsel and Secretary
100 Osborne Street North
Winnipeg, Manitoba,
Canada R3C 3A5
Dennis Low
Senior Vice President, Individual
8515 E. Orchard Road
Englewood, Colorado 80111
Graham R. McDonald
Senior Vice President
8505 E. Orchard Road
Englewood, Colorado 80111
<PAGE>
Edward J. Ransby
Senior Vice President, Capital Markets
& Pension Investments
100 Osborne Street North
Winnipeg, Manitoba
Canada R3C 3A5
ARTICLE VII CUMULATIVE VOTING IN THE ELECTION OF DIRECTORS Cumulative voting is
not allowed in the election of Directors.
ARTICLE VIII
PREEMPTIVE RIGHTS
FOR SHAREHOLDERS
Ownership of shares of any class of the capital stock of the corporation
shall not entitle the holders thereof to any preemptive right to subscribe for
or purchase or to have offered to them for subscription or purchase any
additional shares of capital stock of any class of the corporation or any
securities convertible into any class of capital stock of the corporation,
however acquired, issued, or sold by the corporation, it being the purpose and
the intent that the Board of Directors shall have full right, power, and
authority to offer for subscription or sale or to make any disposal of any or
all unissued shares of the capital stock of the corporation or any securities
convertible into stock or any or all shares of stock or convertible securities
issued and thereafter acquired by the corporation, for such consideration, not
less than the par value of shares having a par value, in money or property, as
the Board of Directors shall determine.
ARTICLE IX AUTHORIZED CAPITAL STOCK
The corporation is authorized to issue 5,000,000 shares of common stock
of a par value of $1 (one dollar) per share.
ARTICLE X PERSONAL LIABILITY OF DIRECTORS
No director of this corporation shall have any personal liability for
monetary damages to the corporation or its shareholders for breach of his/her
fiduciary duty as a director except that this provision shall not eliminate or
limit the liability of a director to the corporation or its shareholders for
monetary damages for (i) any breach of the director's duty of loyalty to the
corporation or its shareholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
payment of a dividend or approval of a stock repurchase in contravention of
C.R.S. ss.7-5-114, or (iv) any transaction from which the director derives an
improper personal benefit.
ARTICLE XI
GOVERNING LAW
Upon redomestication of the corporation to the State of Colorado, the
corporation accepts and will be subject to the laws of the State of Colorado.
ARTICLE XII EFFECTIVE DATE, AMENDMENT AND RESTATEMENT
These Articles of Redomestication become effective immediately upon the
redomestication of the corporation to the State of Colorado. They thereafter
constitute an amendment and restatement of all prior Articles of Incorporation
of Great West Life & Annuity Insurance Company under the laws of the State of
Kansas.
ARTICLE XIII SIGNATURES
These Articles of Redomestication are executed on behalf of the
corporation by its President and its Secretary as evidenced by their signatures
appearing below.
Dated: August 23,
1990
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By: /s/
W.T.
McCallum
William T.
McCallum,
President*
ATTEST:
/s/ D.C.
Lennox
D. Craig Lennox,
Secretary*
*These Articles of Redomestication are verified by the signatures of the
President and Secretary of the Corporation as provided in the Colorado
Corporation Code.
<PAGE>
ARTICLES OF AMENDMENT TO ARTICLES OF REDOMESTICATION
Pursuant to the provisions of the Colorado Corporation Code, Great-West
Life & Annuity Insurance Company (the "Corporation") hereby adopts the following
Articles of Amendment to its Articles of Redomestication:
FIRST: the name of the Corporation is Great-West Life & Annuity Insurance
Company.
SECOND: the amendment set forth on Exhibit A attached hereto was adopted by a
vote of the sole shareholder of the Corporation on December 6, 1990. The
number of shares voted for the Amendment was sufficient for approval.
THIRD: the amendment does not effect an exchange, reclassification, or
cancellation of issued shares of the Corporation.
FOURTH: the amendment does not effect a change in the amount of stated capital
of the Corporation.
GREAT-WEST LIFE &
ANNUITY
INSURANCE COMPANY
Dated: December
6, 1990
By: /s/ W.T.
McCallum
William T.
McCallum, its
Presi-
dent & Chief
Executive Officer
By: /s/ D.C.
Lennox
Craig Lennox, its
Senior Vice
President,
General Counsel
and
Secretary
<PAGE>
Great-West Life & Annuity Insurance Company hereby amends and restates ARTICLE
IX of its Articles of Redomestication to read in its entirety as follows:
ARTICLE IX
AUTHORIZED
CAPITAL STOCK
The total number of shares of all classes of capital stock which the
corporation is authorized to issue is 100,000,000 shares, of which 50,000,000
shares shall be Common Stock, of a par value of $1 (one dollar) per share (the
"Common Stock"), and 50,000,000 shares shall be Preferred Stock, of a par value
of $1 (one dollar) per share (the "Preferred Stock").
A.
COMMON STOCK
The
powers,
designations,
preferences and relative, participating, optional or other special rights (and
the qualifications, limitations or restrictions thereof) in respect of the
Common Stock are as follows:
1. Rank. The Common Stock shall rank junior to the Preferred Stock with
respect to payment of dividends and distributions on liquidation or dissolution
and shall have such other qualifications, limitations or restrictions as
provided in this Article IX.
2. Voting Rights. Except as otherwise expressly provided by law or as
provided for any series of Preferred Stock by the board of directors of the
corporation in accordance with this Article IX, all voting rights shall be
vested in the holders shares of the Common Stock, and at every meeting of
stockholders of the corporation (or with respect to any action by consent in
lieu of a meeting of stockholders), each share of Common Stock shall be entitled
to one vote (whether voted in person by the holder thereof or by proxy or
pursuant to a stockholders' consent) on all matters to come before such meeting
of the stockholders of the corporation.
3. Dividend and Liquidation Preference as between the Common Stock and the
Preferred Stock. For so long as any shares of Preferred Stock are
outstanding, the corporation shall not declare, pay or set apart for
payment any dividend or other distribution (other than any dividend or
distribution payable solely in shares of Common Stock or any other stock of
the corporation ranking junior to the shares of Preferred Stock as to
dividends and liquidation) in respect of the Common Stock or any other
stock of the corporation ranking junior to the shares of Preferred Stock as
to dividends or upon liquidation, or call for redemption, redeem, purchase
or otherwise acquire for consideration any shares of the Common Stock or
any other stock of the corporation ranking junior to the shares of
Preferred Stock as to dividends or upon liquidation, unless (i) full
cumulative dividends on all shares of Preferred Stock for all past dividend
periods have been (a) paid or (b) declared and a sum sufficient irrevocably
deposited with the paying agent for the payment of such dividends, and (ii)
the corporation has redeemed the full number of shares of Preferred Stock,
if any, it is then obligated to redeem in accordance with the terms of any
series of Preferred Stock as fixed by the board of directors of the
corporation in accordance with this Article IX.
4. Assets Remaining After Liquidation. In the event of the dissolution,
liquidation or winding up of the corporation, whether voluntary or involuntary,
after payment in full of the amounts, if any, required to be paid to the holders
of the Preferred Stock, the holders of shares of the Common Stock shall be
entitled, to the exclusion of the holders of shares of the Preferred Stock, to
share ratably in all remaining assets of the corporation.
B.
PREFERRED
STOCK
1. The Preferred Stock may be divided into and issued in series. The board of
directors of the corporation is authorized to divide the authorized shares
of Preferred Stock into one or more series, each of which shall be so
designated as to distinguish the shares thereof from the shares of all
other series and classes. The board of directors of the corporation is
authorized, within any limitations prescribed by law and this Article IX,
to fix and determine the designations, rights, qualifications, preferences,
limitations and terms of the shares of any series of Preferred Stock
including but not limited to the following:
(a) The rate of dividend, the time of payment of dividends,
whether dividends are cumulative, and the date from which any dividends
shall accrue;
(b) Whether shares may be redeemed, and, if so, the redemption price and the
terms and conditions of redemption;
(c) The amount payable upon shares in event of involuntary liquidation;
(d) The amount payable upon shares in event of voluntary liquidation;
(e) Sinking fund or other provisions, if any, for the redemption or purchase of
shares;
(f) The terms and conditions on which shares may be converted, if the shares of
any series are issued with the privilege of conversion;
(g) Voting powers, if any; and
(h) Such other terms, qualifications, privileges, limitations,
options, restrictions, and special or relative rights and preferences,
if any, of shares of such series as the board of directors of the
corporation may, at the time so acting, lawfully fix and determine under
the laws of the State of Colorado.
2. No Dividend Preference Between Series of Preferred Stock. No
dividends shall be declared on shares of any series of Preferred Stock for any
dividend period or part thereof unless full cumulative dividends have been or
contemporaneously are declared on the shares of each other series of Preferred
Stock through the most recent dividend payment date for each such other series.
If at any time any accrued dividends on shares of any series of Preferred Stock
have not been paid in full, then the corporation will, if paying any dividends
on any shares of any series of Preferred Stock, pay dividends on shares of all
series of Preferred Stock pro rata in proportion to the sums which would be
payable on such series if all accrued but unpaid dividends, if any, were
declared and paid in full. Dividends on any series of Preferred Stock shall be
cumulative only to the extent provided in the terms of that series.
3.
Liquidation Preference. (a) In the event of any liquidation, dissolution or
winding up of the affairs of the corporation, whether voluntary or involuntary,
holders of shares of any series of Preferred Stock shall be entitled to receive,
out of the assets of the corporation available for distribution to stockholders
after satisfying claims of creditors but before any payment or distribution on
the Common Stock or on any other class of stock ranking junior to the shares of
Preferred Stock upon liquidation, a liquidation distribution per share in the
amount of the liquidation preference fixed or determined in accordance with the
terms of the shares of such series of Preferred Stock plus, if so provided in
such terms, an amount equal to accumulated and unpaid dividends on each share of
such series (whether or not earned or declared) to the date of such
distribution. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the corporation, the assets of the corporation are insufficient to
pay in full the holders of shares of any series of Preferred Stock the
preferential amount to which they are entitled, holders of shares of all series
of Preferred Stock will share ratably in any such distribution of such assets in
accordance with the respective amounts which would be payable on such shares if
all amounts payable thereon were paid in full. Unless and until payment in full
has been made to holders of shares of all series of Preferred Stock of the
liquidation distributions to which they are entitled as provided in this Article
IX, no dividends or distributions will be made to holders of the Common Stock or
any other stock ranking junior to the shares of any series of Preferred Stock on
liquidation and no purchase redemption or other acquisition for any
consideration by the corporation will be made in respect of the Common Stock or
any stock ranking junior to the shares of any series of Preferred Stock upon
liquidation. After the payment to all holders of series of Preferred Stock of
the full amount of the liquidation distributions to which they are entitled
pursuant to the preceding sentences, such holders (in their capacity as such
holders) shall have no right or claim to any of the remaining assets of the
corporation.
(b) Neither the sale, lease or exchange (for cash, stock, securities or
other consideration) of all or substantially all of the property and assets of
the corporation, nor the consolidation or merger of the corporation with or into
any other entity, nor the merger or consolidation of any other entity with or
into the corporation, shall be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, for the purposes of this Article IX.
4.
Conversion Rights. Preferred Stock of any series may be convertible into shares
of any other class or into shares of any series of the same or any other class,
except as may otherwise be limited by law, if the terms and conditions of such
conversion are fixed and determined by the board of directors of the corporation
in establishing such series of Preferred Stock.
5. Dividend Rate Periods of the Preferred Stock. The periods during
which a dividend rate would be applicable for
any series of the Preferred Stock shall be determined in accordance with the
terms of that series. Such terms may provide that the board of directors of the
corporation shall have the discretion to establish the duration of the period
during which a dividend rate would be applicable. Such terms may provide that a
dividend rate may be applicable during all or part of the time any shares of
such series are outstanding. If a dividend rate is applicable during only part
of the time any shares of a series are outstanding, such terms may provide that
the board of directors of the corporation may select, from time to time, one or
more subsequent time periods of the same or varying lengths during which a
dividend rate will be applicable; provided, that the board of directors of the
corporation at the time of establishing such series shall state in the terms of
such series a minimum and a maximum length for such time periods.
6.
Redemption Provisions. (a) Shares of any series of the Preferred Stock shall be
subject to the right of the corporation to redeem any of such shares if so
provided in the terms of such series. Such terms may provide that the board of
directors of the corporation may change from time to time, the redemption terms
and conditions, including the redemption price, for shares of such series,
provided, that the board of directors of the corporation at the time of
establishing such series state in the terms of such series a minimum and a
maximum redemption price.
(b) The corporation shall not purchase or otherwise acquire any shares
of any series of Preferred Stock while any accumulated and unpaid dividends
exist with respect to such series or any other series of Preferred Stock, unless
contemporaneously with such purchase or acquisition such accumulated and unpaid
dividends are (i) paid or (ii) declared and a sum sufficient irrevocably
deposited with the paying agent for payment of such dividends; provided,
however, that (a) the corporation may redeem shares of any series of Preferred
Stock in accordance with the terms of such series, and (b) the corporation may
purchase or otherwise acquire shares pursuant to a voluntary purchase or
exchange offer made on an equal basis to all holders of shares of all series of
Preferred Stock.
<PAGE>
ARTICLES OF AMENDMENT TO ARTICLES OF REDOMESTICATION
Pursuant to the provisions of the Colorado Corporation Code, Great-West
Life & Annuity Insurance Company (the "Corporation") hereby adopts the following
Articles of Amendment to its Articles of Redomestication:
FIRST: the name of the Corporation is Great-West Life & Annuity Insurance
Company.
SECOND: the amendment set forth on Exhibit 1 attached hereto was adopted by a
vote of the sole shareholder of the Corporation on September 18, 1991. The
number of shares voted for the Amendment was sufficient for approval.
THIRD: the amendment does not effect an exchange, reclassification, or
cancellation of issued shares of the Corporation.
FOURTH: the amendment does not effect a change in the amount of stated
capital of the Corporation.
GREAT-WEST LIFE &
ANNUITY
INSURANCE COMPANY
Dated: September
18, 1991
By: /s/ W.T.
McCallum
William T.
McCallum, its
Presi-
dent & Chief
Executive Officer
By: /s/ D.
Craig Lennox
D. Craig Lennox,
its Senior Vice
President,
General Counsel
and
Secretary
<PAGE>
Great-West Life & Annuity Insurance Company hereby amends and restates ARTICLE
IX of its Articles of Redomestication to read in its entirety as follows:
ARTICLE IX
AUTHORIZED
CAPITAL STOCK
The total number of shares of all classes of capital stock which the
corporation is authorized to issue is 100,000,000 shares, of which 50,000,000
shares shall be Common Stock, of a par value of $1 (one dollar) per share (the
"Common Stock"), and 50,000,000 shares shall be Preferred Stock, of a par value
of $1 (one dollar) per share (the "Preferred Stock").
A.
COMMON STOCK
The
powers,
designations,
preferences and relative, participating, optional or other special rights (and
the qualifications, limitations or restrictions thereof) in respect of the
Common Stock are as follows:
1. Rank. The Common Stock shall rank junior to the Preferred Stock with
respect to payment of dividends and distributions on liquidation or dissolution
and shall have such other qualifications, limitations or restrictions as
provided in this Article IX.
2. Voting Rights. Except as otherwise expressly provided by law or as
provided for any series of Preferred Stock by the board of directors of the
corporation in accordance with this Article IX, all voting rights shall be
vested in the holders of shares of the Common Stock, and at every meeting of
stockholders of the corporation (or with respect to any action by written
consent in lieu of a meeting of stockholders), each share of Common Stock shall
be entitled to one vote (whether voted in person by the holder thereof or by
proxy or pursuant to a stock- holders' consent) on all matters to come before
such meeting of the stockholders of the corporation.
3. Dividend and Liquidation Preference as between the Common Stock and the
Preferred Stock. For so long as any shares of Preferred Stock are outstanding,
the corporation shall not declare, pay or set apart for payment any dividend or
other distribution (other than any dividend or distribution payable solely in
shares of Common Stock or any other stock of the corporation ranking junior to
the shares of Preferred Stock as to dividends and liquidation) in respect of the
Common Stock or any other stock of the corporation ranking junior to the shares
of Preferred Stock as to dividends or upon liquidation, or call for redemption,
redeem, purchase or otherwise acquire for consideration any shares of the Common
Stock or any other stock of the corporation ranking junior to the shares of
Preferred Stock as to dividends or upon liquidation, unless (i) full cumulative
dividends on all shares of Preferred Stock for all past dividend periods have
been (a) paid or (b) declared and a sum sufficient irrevocably deposited with
the paying agent for the payment of such dividends, and (ii) the corporation has
redeemed the full number of shares of Preferred Stock, if any, it is then
obligated to redeem in accordance with the terms of any series of Preferred
Stock as fixed by the board of directors of the corporation in accordance with
this Article IX.
4. Assets Remaining After Liquidation. In the event of the dissolution,
liquidation or winding up of the corporation, whether voluntary or involuntary,
after payment in full of the amounts, if any, required to be paid to the holders
of the Preferred Stock, the holders of shares of the Common Stock shall be
entitled, to the exclusion of the holders of shares of the Preferred Stock, to
share ratably in all remaining assets of the corporation.
B.
PREFERRED STOCK
1. The Preferred Stock may be divided into and issued in series. The board
of directors of the corporation is authorized to divide the authorized shares of
Preferred Stock into one or more series, each of which shall be so designated as
to distinguish the shares thereof from the shares of all other series and
classes. The board of directors of the corporation is authorized, within any
limitations prescribed by law and this Article IX, to fix and determine the
designations, rights, qualifications, preferences, limitations and terms of the
shares of any series of Preferred Stock including but not limited to the
following:
(a) The rate of dividend, the time of payment of dividends,
whether dividends are cumulative, and the date from which any dividends
shall accrue;
(b) Whether shares may be redeemed, and, if so, the redemption price and
the terms and conditions of redemption;
(c) The amount payable upon shares in event of involuntary liquidation;
(d) The amount payable upon shares in event of voluntary liquidation;
(e) Sinking fund or other provisions, if any, for the redemption or
purchase of shares;
(f) The terms and conditions on which shares may be converted, if
the shares of any series are issued with the privilege of conversion;
(g)
Voting
powers,
if any;
and
(h) Such other terms, qualifications, privileges, limitations,
options, restrictions, and special or relative rights and preferences,
if any, of shares of such series as the board of directors of the
corporation may, at the time so acting, lawfully fix and determine under
the laws of the State of Colorado.
2. No Dividend Preference Between Series of Preferred Stock. No
dividends shall be declared on shares of any series of Preferred Stock for any
dividend period or part thereof unless full cumulative dividends have been or
contemporaneously are declared on the shares of each other series of Preferred
Stock through the most recent dividend payment date for each such other series.
If at any time any accrued dividends on shares of any series of Preferred Stock
have not been paid in full, then the corporation will, if paying any dividends
on any shares of any series of Preferred Stock, pay dividends on shares of all
series of Preferred Stock pro rata in proportion to the sums which would be
payable on such series if all accrued but unpaid dividends, if any, were
declared and paid in full. Dividends on any series of Preferred Stock shall be
cumulative only to the extent provided in the terms of that series.
3.
Liquidation Preference. (a) In the event of any liquidation, dissolution or
winding up of the affairs of the corporation, whether voluntary or involuntary,
holders of shares of any series of Preferred Stock shall be entitled to receive,
out of the assets of the corporation available for distribution to stockholders
after satisfying claims of creditors but before any payment or distribution on
the Common Stock or on any other class of stock ranking junior to the shares of
Preferred Stock upon liquidation, a liquidation distribution per share in the
amount of the liquidation preference fixed or determined in accordance with the
terms of the shares of such series of Preferred Stock plus, if so provided in
such terms, an amount equal to accumulated and unpaid dividends on each share of
such series (whether or not earned or declared) to the date of such
distribution. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the corporation, the assets of the corporation are insufficient to
pay in full the holders of shares of any series of Preferred Stock the
preferential amount to which they are entitled, holders of shares of all series
of Preferred Stock will share ratably in any such distribution of such assets in
accordance with the respective amounts which would be payable on such shares if
all amounts payable thereon were paid in full. Unless and until payment in full
has been made to holders of shares of all series of Preferred Stock of the
liquidation distributions to which they are entitled as provided in this Article
IX, no dividends or distributions will be made to holders of the Common Stock or
any other stock ranking junior to the shares of any series of Preferred Stock on
liquidation and no purchase, redemption or other acquisition for any
consideration by the corporation will be made in respect of the Common Stock or
any stock ranking junior to the shares of any series of Preferred Stock upon
liquidation. After the payment to all holders of series of Preferred Stock of
the full amount of the liquidation distributions to which they are entitled
pursuant to the preceding sentences, such holders (in their capacity as such
holders) shall have no right or claim to any of the remaining assets of the
corporation.
(b) Neither the sale, lease or exchange (for cash, stock, securities or
other consideration) of all or substantially all of the property and assets of
the corporation, nor the consolidation or merger of the corporation with or into
any other entity, nor the merger or consolidation of any other entity with or
into the corporation, shall be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, for the purposes of this Article IX.
4.
Conversion Rights. Preferred Stock of any series may be convertible into shares
of any other class or into shares of any series of the same or any other class,
except as may otherwise be limited by law, if the terms and conditions of such
conversion are fixed and determined by the board of directors of the corporation
in establishing such series of Preferred Stock.
5. Dividend Rate Periods of the Preferred Stock. The periods during
which a dividend rate would be applicable for
any series of the Preferred Stock shall be determined in accordance with the
terms of that series. Such terms may provide that the board of directors of the
corporation shall have the discretion to establish the duration of the period
during which a dividend rate would be applicable. Such terms may provide that a
dividend rate may be applicable during all or part of the time any shares of
such series are outstanding. If a dividend rate is applicable during only part
of the time any shares of a series are outstanding, such terms may provide that
the board of directors of the corporation may select, from time to time, one or
more subsequent time periods of the same or varying lengths during which a
dividend rate will be applicable; provided, that the board of directors of the
corporation at the time of establishing such series shall state in the terms of
such series a minimum and a maximum length for such time periods.
6.
Redemption Provisions. (a) Shares of any series of the Preferred Stock shall be
subject to the right of the corporation to redeem any of such shares if so
provided in the terms of such series. Such terms may provide that the board of
directors of the corporation may change from time to time, the redemption terms
and conditions, including the redemption price, for shares of such series,
provided, that the board of directors of the corporation at the time of
establishing such series shall state in the terms of such series a minimum and a
maximum redemption price.
(b) The corporation shall not purchase or otherwise acquire any shares
of any series of Preferred Stock while any accumulated and unpaid dividends
exist with respect to such series or any other series of Preferred Stock, unless
contemporaneously with such purchase or acquisition such accumulated and unpaid
dividends are (i) paid or (ii) declared and a sum sufficient irrevocably
deposited with the paying agent for payment of such dividends; provided,
however, that (a) the corporation may redeem shares of any series of Preferred
Stock in accordance with the terms of such series, and (b) the corporation may
purchase or otherwise acquire shares pursuant to a voluntary purchase or
exchange offer made on an equal basis to all holders of shares of all series of
Preferred Stock.
<PAGE>
STATEMENT OF
RESOLUTION
ESTABLISHING FOUR
SERIES OF
PREFERRED STOCK
Pursuant to Section 7-4-102 of the Colorado Corporation Code, Great-West
Life & Annuity Insurance Company, a Colorado corporation (the "Corporation"),
hereby submits the following statement for the purpose of establishing and
designating four series of preferred stock and fixing and determining the
relative rights and preferences thereof.
1. The name of the Corporation is Great-West Life & Annuity Insurance
Company.
2. On September 18, 1991, the following resolution establishing and
designating four series of shares of the Corporation's preferred stock was duly
adopted by the Board of Directors of the Corporation pursuant to authority
conferred upon the Board by the Corporation's Articles of Redomestication:
RESOLVED, that the Board of Directors hereby creates and establishes
four series of Stated Rate Auction Preferred Stock in accordance
with the terms set forth in Exhibit A attached hereto [a copy of
which is attached to this Statement of Resolution and is
incorporated herein by this reference], and authorized the
officers of the Corporation to file this resolution with the
Colorado Secretary of State in accordance with the Colorado
Corporation Code.
GREAT-WEST LIFE &
ANNUITY
INSURANCE COMPANY
Dated: September
18, 1991
By: /s/ W.T.
McCallum
William T.
McCallum,
President
and Chief
Executive Officer
By: /s/ D.C.
Lennox
D. Craig Lennox,
Senior Vice
President,
General Counsel
and Secretary
<PAGE>
1.
Creation and
Designation of
Series.
The Board of Directors of Great-West Life & Annuity Insurance Company
(the "Corporation") hereby creates four series of Stated Rate Auction Preferred
Stock ("STRAPS"). The four series are designated as follows: "Stated Rate
Auction Preferred Stock, Series A," consisting of 1,500 shares ("Series A
STRAPS"), "Stated Rate Auction Preferred Stock, Series B," consisting of 1,500
shares ("Series B STRAPS"), "Stated Rate Auction Preferred Stock, Series C,"
consisting of 1,500 shares ("Series C STRAPS") and "Stated Rate Auction
Preferred Stock, Series D," consisting of 1,500 shares ("Series D STRAPS"). Each
share of Series A STRAPS shall be identical and equal in all respects to every
other share of Series A STRAPS, each share of Series B STRAPS, shall be
identical and equal in all respects to every other share of Series B STRAPS,
each share of Series C STRAPS shall be identical and equal in all respects to
every other share of Series C STRAPS, each share of Series D STRAPS shall be
identical and equal in all respects to every other share of Series D STRAPS, and
the shares of Series A STRAPS, Series B STRAPS, Series C STRAPS and Series D
STRAPS shall, except as expressly provided in this Statement of Designation, be
identical and equal in all respects. The Series A STRAPS, Series B STRAPS,
Series C STRAPS and Series D STRAPS shall be subject to and governed by the
provisions of the Articles of Redomestication of the Corporation as amended from
time to time in accordance with applicable law (including, but not limited to,
the provisions of the Articles of Redomestication concerning dividend and
liquidation preferences).
2.
Definitions.
Unless the context or use indicates another or different meaning, the
following terms shall have the following meanings, whether used in the singular
or plural:
"Affiliate", as used in paragraphs 1 through 7, means any entity other than the
Corporation (i) which owns beneficially, directly or indirectly, 10% or more of
the outstanding shares of the Common Stock, (ii) which is in control of the
Corporation, as "control" is defined under Section 230.405 of the Rules and
Regulations of the Securities and Exchange Commission, 17 C.F.R. S 230.405, as
in effect on the date of this Statement of Designation, (iii) of which 10% of
more of the outstanding shares of Common Stock, or in which a 10% or greater
general partnership or joint venture interest, is owned beneficially, directly
or indirectly, by any entity described in clause (i) or (ii) above, or (iv)
which is controlled by any entity described in clause (i) or (ii) above, as
"controlled by" is defined under such Section 230.405.
"Applicable Rate"
has the meaning
specified in
paragraph 3(c)(i)
below.
"Applicable Treasury Rate" on any date, with respect to any series of STRAPS
with a Long-Term Dividend Period, means the interest equivalent of the rate for
direct obligations of the United States Treasury having an original maturity
which is equal to, or next lower than, the length of such Long-Term Dividend
Period, as published weekly by the Federal Reserve Board in "Federal Reserve
Statistical Release H.15 (519) Selected Interest Rates," or any successor
publication by the Federal Reserve Board within five Business Days preceding
such date. In the event that the Federal Reserve Board does not publish such
weekly per annum interest rate, or if the release is not yet available, the
Applicable Treasury Rate will be the arithmetic mean of the secondary market bid
rates as of approximately 3:30 p.m., New York City time, on the Business Day
next preceding such date of the U.S. Government Securities Dealers obtained by
the Auction Agent (in the case of a determination of the Applicable Treasury
Rate on any Auction Date) or the Corporation (in the case of a determination of
such rate on any other day) for the issue of United States Treasury Bills with a
remaining maturity equal to, or next lower than, the length of such Long-Term
Dividend Period.
If any U.S.
Government
Securities Dealer
does not quote a
rate required to
determine the
Applicable
Treasury Rate,
the Applicable
Treasury Rate
shall be
determined on the
basis of the
quotation or
quotations
furnished by the
remaining U.S.
Government
Securities Dealer
or U.S.
Government
Securities
Dealers and any Substitute U.S. Government Securities Dealer or Substitute U.S.
Government Securities Dealers selected by the Corporation to provide such rate
or rates not being supplied by any U.S. Government Securities Dealer or
Government Securities Dealers, as the case may be, or, if the Corporation does
not select any such Substitute U.S. Government Securities Dealer or Substitute
U.S. Government Securities Dealers, by the remaining U.S. Government Securities
Dealer or U.S. Government Securities Dealers; provided that, in the event the
Corporation is unable to cause such quotations to be furnished to the Auction
Agent, (or, if applicable, to the Corporation) by such sources, the Corporation
may cause the Applicable Treasury Rate to be furnished to the Auction Agent (or,
if applicable, the Corporation) by such alternative source or sources as the
Corporation in good faith deems to be reliable. For purposes of this definition,
the "interest equivalent" of a rate stated on a discount basis shall be equal to
the quotient of (A) the discount rate divided by (B) the difference between 1.00
and the discount rate.
"Auction"
means each
periodic
operation of the
Auction
Procedures.
"Auction Agent" means the bank or trust company appointed as auction
agent by a resolution of the Board of Directors.
"Auction
Date" has the
meaning specified
in paragraph 8(a)
below.
"Auction
Procedures" means
the procedures
set forth in
paragraph 8 below.
"Board of
Directors" means
the Board of
Directors of the
Corporation.
"Business Day" means a day on which the New York Stock Exchange is open
for trading and which is not a Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to close.
"Code"
means the
Internal Revenue
Code of 1986, as
amended.
"Commercial Paper Dealers" means Goldman, Sachs & Co., Shearson Lehman Brothers
Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, or in lieu of any
thereof, their respective affiliates or successors, provided that such entity is
then a commercial paper dealer.
"Common
Stock" means the
common stock, par
value $1.00, of
the Corporation.
"Cut-Off Date" means the last day of the first taxable year of the
Corporation as of which the accumulated earnings and profits of the Corporation,
as calculated for federal income tax purposes, exceed three times the aggregate
amount of all distributions on the STRAPS for such taxable year.
"Date of Original Issue" means the date on which the Corporation
originally issues the shares of STRAPS.
"Default in Preferred Stock Dividends" has the meaning specified in
paragraph 6(c) below.
"Dividend Payment Date" has the meaning specified in paragraph 3 (b) (vi)
below.
"Dividend Period" has the meaning specified in paragraph 3 (b) (vii) below.
"Dividend
Period Days" has the meaning specified in paragraph 3 (b) (ix) below.
"Dividend Quarter" has the meaning specified in paragraph 3 (b) (vi) below.
"Dividends Received Deduction" means, with respect to any share of STRAPS
and any dividend paid thereon to the Holder of such share, the deduction
generally allowed to a corporate holder of stock in a taxable domestic business
corporation in computing such Holder's taxable income for purposes of the
regular federal corporate income tax under section 243(a)(1) of the Code, or any
successor provision, equal to a percentage rate multiplied by the dividends (as
defined in section 316(a) of the Code) received on such stock, determined (1)
without regard to the amount of the issuer's stock owned by such Holder and (2)
assuming that any limitations on such deduction based on the facts or
circumstances relating to particular Holders (such as limitations based on a
minimum holding period, the allocation of interest expense or debt to the
purchase of stock, or the Holder's taxable income or status as a taxpayer) do
not apply.
"Eight-Year Dividend Period" has the meaning specified in paragraph 3 (b)
(vii) below.
"Failure to Deposit" means the failure by the Corporation to pay to the
Paying Agent, not later than noon (A) on the Business Day next preceding any
Dividend Payment Date in funds available on such Dividend Payment Date in the
City of New York, New York, the full amount of any dividend (whether or not
earned or declared) to be paid on such Dividend Payment Date on any shares of
STRAPS or (B) on the Business Day next preceding any redemption date in funds
available on such redemption date in the City of New York, New York, the
Redemption Price of any shares of STRAPS to be redeemed on such redemption date,
plus accumulated and unpaid dividends thereon to the redemption date. In the
event that the Corporation is acting as the Paying Agent, Failure to Deposit
shall mean that the Corporation has not, on the applicable Dividend Payment Date
for any Series of STRAPS, deposited with the United States Postal Service for
delivery by first class mail, postage prepaid, to the registered holders of the
STRAPS, the dividend payment checks with respect to such Dividend Payment Date.
"Five-Year Dividend Period" has the meaning specified in paragraph 3 (b)
(vii) below.
"Four-Year Dividend Period" has the meaning specified in paragraph 3 (b)
(vii) below.
"Gross-Up Payment" means a payment to a Qualified Investor of an amount
which, when taken together with the aggregate Non-Qualifying Distributions paid
to such Qualified Investor during any taxable year ending on or before the
Cut-Off Date, would cause such Qualified Investor's net yield in dollars (after
federal income tax consequences and treating, for purposes of calculating net
yield in dollars, that portion of the Non-Qualifying Distributions otherwise
treated as a return of capital as capital gain received upon the taxable sales
of shares of STRAPS at the time of such Non-Qualifying Distributions) from the
aggregate of both the Non-Qualifying Distribution and the Gross-Up Payment to be
equal to the net yield in dollars (after federal income tax consequences) which
would have been received by such Qualified Investor if the amount of the
aggregate Non-Qualifying Distributions treated as a return of capital had
instead been treated as a dividend for federal income tax purposes. Such
Gross-Up Payments shall be calculated (1) without consideration being given to
the time value of money, (2) assuming that no federal minimum tax or similar tax
is imposed with respect to dividends received from the Corporation, and (3)
assuming that the Qualified Investor is taxable at all times at the maximum
marginal regular federal income tax rate applicable to corporations in effect
during the taxable year in question on the Non-Qualifying Distributions and the
Gross-Up Payment and is able to take full advantage of the Dividends Received
Deduction with respect to dividends received from the Corporation.
"Holder" means an individual or entity in whose name an outstanding
share of STRAPS is registered on the Stock Books.
"Holders' Dividend Period Notice" has the meaning specified in paragraph
3 (b) (viii) (B) below.
"Initial Long-Term Dividend Period" means, with respect to each of the
Series A STRAPS, the Series B STRAPS, the Series C STRAPS and the Series D
STRAPS, the period from and including the Date of Original Issue to and
excluding December 31, 1993.
"Long-Term Dividend Period" has the meaning specified in paragraph 3 (b)
(vii) below.
"Maximum Rate" has the meaning specified in paragraph 8(a) below.
"Minimum Holding Period" has the meaning specified in paragraph 3(b)(ix)
below. "Moody's"
meansMoody' 8 Investors Service or any successor thereto. "Nine-Year
Dividend Period" has the meaning specified in paragraph 3 (b) (vii)
below.
"Non-Qualifying Distribution" means a distribution on the shares of STRAPS with
respect to any fiscal year of the Corporation ended on or before the Cut-Off
Date that constitutes, in whole or in part, a return of capital.
"Normal Dividend Payment Date" has the meaning specified in paragraph 3
(b) (ii) below.
"Notice of Dividend Period" has the meaning specified in paragraph 3 (b)
(viii) below. "Notice of Redemption" has the meaning specified in
paragraph 5(e) below.
"Notice of Revocation" has the meaning specified in paragraph 3 (b) (viii)
below. "One-Year Dividend Period" has the meaning specified in
paragraph 3 (b) (vii) below.
"Paying Agent" means the bank or trust company that has been appointed
as paying agent by a resolution of the Board of Directors, or, if the
Corporation shall have elected not to appoint a bank or trust company as Paying
Agent for the initial Dividend Period with respect to any series of STRAPS, the
Corporation.
"Qualified Investor" means a Holder that is or was a Holder of the shares of
STRAPS of any Series on the record date for a Non-Qualifying Distribution.
"Rating Agencies," on any date of determination, means (i) each of Moody's
and Standard & Poor's, or (ii) if only one of such rating agencies is then
rating the shares of STRAPS, such rating agency, or (iii) if neither of such
rating agencies is then rating the shares of STRAPS, any nationally recognized
statistical rating organization designated by the Corporation with the consent
of Goldman, Sachs & Co. provided such consent is not unreasonably withheld.
"Securities Depository" has the meaning specified in paragraph 8(a) below.
"Seven-Year Dividend Period" has the meaning specified in paragraph 3 (b)
(vii ) below. "Short-Term Dividend Period" has the meaning specified
in paragraph 3 (b) (vii) below.
"Six-Year Dividend Period" has the meaning specified in paragraph 3 (b)
(vii) below.
"Standard & Poor's" means Standard & Poor's Corporation or any successor
thereto.
"Stock Books" means the stock transfer books of the Corporation
maintained by the Paying Agent with respect to the shares of STRAPS.
"Substitute Commercial Paper Dealers" means The First Boston Corporation or
Morgan Stanley & Co. Incorporated, or in lieu thereof, their respective
affiliates or successors, provided that such entity is then a commercial paper
dealer.
"Substitute U.S. Government Securities Dealers" means The First Boston
Corporation and Morgan Stanley & Co. Incorporated, or in lieu thereof, their
respective affiliates or successors, provided that such entity is then a U.S.
government securities dealer.
Ten-Year Dividend Period" has the meaning specified in paragraph 3 (b)
(vii) below.
"Thirty-Year Dividend Period" has the meaning specified in paragraph 3 (b)
(vii) below. "Three-year Dividend Period" has the meaning specified in paragraph
3 (b) (vii ) below. "Twenty-year Dividend Period" has the meaning specified in
paragraph 3 (b) (vii) below. "Two-Year Dividend Period" has the meaning
specified in paragraph 3 (b) (vii) below. "U.S. Government Securities Dealers"
means Goldman, Sachs & Co., Shearson Lehman Government Securities Incorporated,
Salomon Brothers Inc. and Morgan Guaranty Trust Company of New York, or in lieu
of any thereof, their respective affiliates or successors, provided that such
entity is then a government securities dealer. "Voting Parity Preferred Stock"
has the meaning specified in paragraph 6(c) below.
"Voting Period" has the meaning specified in paragraph 60-day "AA"
Composite Commercial Paper Rate," on any date, means (i) the interest equivalent
of the 60-day rate on commercial paper placed on behalf of issuers whose
corporate bonds are rated AA by Standard & Poor's, or the equivalent of such
rating by another nationally recognized statistical rating organization, as such
60-day rate is made available on a discount basis or otherwise by the Federal
Reserve Bank of New York for the Business Day immediately preceding such date,
or (ii) in the event that the Federal Reserve Bank of New York does not make
available such a rate, then the arithmetic average of the interest equivalent of
the 60-day rate on commercial paper placed on behalf of such issuers, as quoted
on a discount basis or otherwise by the Commercial Paper Dealers to the Auction
Agent (in the case of determination of the 60-day "AA" Composite Commercial
Paper Rate on any Auction Date) or the Corporation (in the case of determination
of such rate on any other day) as of the close of business on the Business Day
immediately preceding such date. If any of the Commercial Paper Dealers do not
quote a rate required to determine the 60-day "AA" Composite Commercial Paper
Rate, such 60-day "AA" Composite Commercial Paper Rate shall be determined on
the basis of the quotations or quotations furnished by the remaining Commercial
Paper Dealers or Commercial Paper Dealer and any Substitute Commercial Paper
Dealers or Substitute Commercial Paper Dealer selected by the Corporation to
provide such quotation not being supplied by any Commercial Paper Dealer or, if
the Corporation does not select any such Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers, by the remaining Commercial Paper Dealers
or Commercial Paper Dealer; provided that, in the event the Corporation is
unable to cause such quotations to be furnished to the Auction Agent (or, if
applicable, to the Corporation) by such sources, the Corporation may cause the
60-day "AA" Composite Commercial Paper Rate to be furnished to the Auction Agent
(or, if applicable, to the Corporation) by such alternative source or sources as
the Corporation in good faith deems to be reliable. If the Board of Directors
shall adjust the number of days in a Short-Term Dividend Period pursuant to
paragraph (3)(b)(ix) below, then (i) if the number of days in a Short-Term
Dividend Period after such adjustment shall be fewer than 70 days, such rate
shall be the interest equivalent of the 60-day rate on such commercial paper,
(ii) if the number of days in a Short-Term Dividend Period after such adjustment
shall be 70 or more days but fewer than 85 days, such rate shall be the
arithmetic average of the interest equivalent of the 60-day and 90-day rates on
such commercial paper, (iii) if the number of days in a Short-Term Dividend
Period shall be 85 or more days but fewer than 99 days, such rate shall be the
interest equivalent of the 90-day rate on such commercial paper, and (iv) if the
number of days in a Short-Term Dividend Period after such adjustment shall be 99
or more days, such rate shall be determined on the basis of the interest
equivalent of such commercial paper with a maturity (or an average maturity of
such commercial paper with different maturities) as nearly as practicable equal
to such number of days in a Short-Term Dividend Period, as determined by the
Corporation in good faith. For purposes of this definition, the "interest
equivalent" of a rate stated on a discount basis shall be equal to the quotient
of (A) the discount rate divided by (B) the difference between (x) 1.00 and (y)
a fraction the numerator of which shall be the product of the discount rate
times the number of days in which such commercial paper matures and the
denominator of which shall be 360.
3.
Dividends.
(a) Holders of shares of STRAPS shall be entitled to receive,
when, as and if declared by the Board of Directors, out of funds legally
available therefor, cumulative cash dividends at the applicable dividend
rate determined as set forth in paragraph 3(c)(i) below, and no more,
payable on the respective dates set forth below. Accrued and unpaid
dividends shall not bear interest.
(b) (i) Dividends on the shares of each series of STRAPS shall accumulate
at the respective Applicable Rates for such series (whether or not declared)
from the Date of Original Issue.
(ii) During the Initial Long Term Dividend Period, dividends on
the shares of each series of STRAPS shall be payable quarterly on
the last day of each March, June, September and December of each
year, commencing December 31, 1991, and the last dividend during
this Period will be payable on December 30, 1993, unless any such
date is not a Business Day, in which case, dividends on the
STRAPS will be payable on the next succeeding Business Day.
Thereafter, dividends on the shares of each series of STRAPS with
a Short-Term Dividend Period shall be payable, except as provided
below in this paragraph 3(b), on the seventh Thursday following
the immediately preceding Dividend Payment Date for such series,
and dividends on the shares of each series of STRAPS with a
Long-Term Dividend Period shall be payable, except as provided
below in this paragraph 3(b), on the first day of the fourth
month after the commencement of such Long-Term Dividend Period,
on the first day of each succeeding third month thereafter and on
the 49th (in the case of a One-Year Dividend Period), 102nd (in
the case of a Two-Year Dividend Period), 158th (in the case of a
Three-Year Dividend Period), 206th (in the case of a Four-Year
Dividend Period), 259th (in the case of a Five-Year Dividend
Period), 310th (in the case of a Six-Year Dividend Period), 364th
(in the case of a Seven-Year Dividend Period), 416th (in the case
of an Eight-Year Dividend Period), 468th (in the case of a
Nine-Year Dividend Period), 520th (in the case of a Ten-Year
Dividend Period), 1040th (in the case of a Twenty-Year Dividend
Period), or 1560th (in the case of a Thirty-Year Dividend Period)
Thursday after the commencement of such Long-Term Dividend
Period. Each day on which dividends on shares of a series of
STRAPS would be payable as determined as set forth in this clause
(ii) but for the provisions set forth below in this paragraph
3(b) is referred to herein as a "Normal Dividend Payment Date."
(iii) In the case of dividends payable on the shares of a series
of STRAPS with a Short-Term Dividend Period, if:
(A) (I) The Securities Depository shall make available to
its members and
participants the amounts due as dividends on the shares of
such series of STRAPS in next-day funds on the dates on
which such dividends are payable and (II) a Normal
Dividend Payment Date for such series is not a Business
Day or the day next succeeding such Normal Dividend
Payment Date is not a Business Day, then dividends shall
be payable on the first Business Day preceding such Normal
Dividend Payment Date that is next succeeded by a Business
Day; or
(B) (I) The Securities Depository shall make available to
its members and
participants the amounts due as dividends on the shares of
such series of STRAPS in immediately available funds on
the dates on which such dividends are payable (and the
Securities Depository shall have so advised the Auction
Agent) and (II) a Normal Dividend Payment Date for such
series is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal
Dividend Payment Date.
(iv) In the case of dividends payable on the shares of a series
of STRAPS with a Long-Term Dividend Period (other than the
Initial Long-Term Dividend Period), if:
(A) (I) The Securities Depository shall make available to
its members and
participants the amounts due as dividends on the shares of
such series of STRAPS in next-day funds on the dates on
which such dividends are payable and (II) a Normal
Dividend Payment Date for such series is not a Business
Day or the day next succeeding such Normal Dividend
Payment Date is not a Business Day, then dividends shall
be payable on the first Business Day following such Normal
Dividend Payment Date that is next succeeded by a Business
Day; or
(B) (I) The Securities Depository shall make available to
its members and
participants the amounts due as dividends on the shares of
such series of STRAPS in immediately available funds on
the dates on which such dividends are payable (and the
Securities Depository shall have so advised the Auction
Agent) and (II) a Normal Dividend Payment Date for such
series is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal
Dividend Payment Date.
(v) Notwithstanding the foregoing, if the date on which the
dividends on the shares of any Series of STRAPS would be payable
as determined as set forth in clauses (ii), (iii) or (iv) above
is a day that would result in the number of days between
successive Auction Dates for such series (determined by excluding
the first Auction Date and including the second Auction Date) not
being at least equal to the then-current Minimum Holding Period,
then dividends on such shares shall be payable, if either of
clauses (iii)(A) or (iv)(A) above would be applicable to such
series, on the first Business Day following such date on which
dividends would be so payable that is next succeeded by a
Business Day or, if either of clauses (iii)(B) or (iv)(B) above
would be applicable to such series, on the first Business Day
following such day on which dividends would be so payable, that
in either case results in the number of days between such
successive Auction Dates for such series (determined as set forth
above) being at least equal to the then-current Minimum Holding
Period.
(vi) Each date on which dividends on the shares of a series of
STRAPS shall be payable as
determined as set forth above shall be referred to herein as a
"Dividend Payment Date" for such series. The period from the
preceding Dividend Payment Date to the next Dividend Payment Date
for any series of STRAPS with a Long-Term Dividend Period is
herein referred to as "Dividend Quarter." Although any particular
Dividend Payment Date for a series of STRAPS may not occur on the
originally scheduled Normal Dividend Payment Date for such series
because of the foregoing provisions, each succeeding Dividend
Payment Date for such series shall be, subject to such provision,
the date determined as set forth in clause (ii) above as if all
preceding Dividend Payment Dates had occurred on their respective
originally scheduled Normal Dividend Payment Dates.
(vii) After the Initial Long-Term Dividend Period for each series
of STRAPS, each subsequent Dividend Period for such series will
be, at the option of the Corporation by action of its Board of
Directors, a period of 49 days (each such 49-day period, subject
to any adjustment as a result of a change in law lengthening the
Minimum Holding Period as provided in clause (ix) below, being
referred to herein as a "Short-Term Dividend Period"), 49 weeks
(a "One-Year 11 Dividend Period"), 102 weeks (a "Two-Year
Dividend Period"), 158 weeks (a "Three-Year Dividend Period"),
206 weeks (a "Four-Year Dividend Period"), 259 weeks (a
"Five-Year Dividend Period"), 310 weeks (a "Six-Year Dividend
Period"), 364 weeks (a "Seven-Year Dividend Period"), 416 weeks
(an "Eight-Year Dividend Period"), 468 weeks (a "Nine-Year
Dividend Period"), 520 weeks (a "Ten-Year Dividend Period"), 1040
weeks (a
"Twenty-Year Dividend Period") or 1560 weeks (a "Thirty-Year
Dividend Period") (each such One-Year Dividend Period, Two-Year
Dividend Period, Three-Year Dividend Period, Four-Year Dividend
Period, Five-Year Dividend Period, Six-Year Dividend Period,
Seven-Year Dividend Period, Eight-Year Dividend Period, Nine-Year
Dividend Period, Ten-Year Dividend Period, Twenty-Year Dividend
Period and Thirty-Year Dividend Period, together with the Initial
Long-Term Dividend Periods being referred to herein as a
"Long-Term Dividend Period," and each such Short-Term Dividend
Period and Long-Term Dividend Period, being referred to herein as
a "Dividend Period"). After the Initial Long-Term Dividend Period
for a series of STRAPS, each successive Dividend Period for such
series will commence on the Dividend Payment Date ending the
preceding Dividend Period and will end (i) in the case of any
series of STRAPS with a Short-Term Dividend Period, on the next
Dividend Payment Date for such series and (ii) in the case of any
series of STRAPS with a Long-Term Dividend Period, on the 49th
(in the case of a One-Year Dividend Period), 102nd (in the case
of a Two-Year Dividend Period), 158th (in the case of a
Three-Year Dividend Period), 206th (in the case of a Four-Year
Dividend Period), 259th (in the case of a Five- Year Dividend
Period), 310th (in the case of a Six-Year Dividend Period, 364th
(in the case of a Seven-Year Dividend Period, 416th (in the case
of an Eight-Year Dividend Period, 468th (in the case of a
Nine-Year Dividend Period, 520th (in the case of a Ten-Year
Dividend Period), 1040th (in the case of a Twenty-Year Dividend
Period), or 1560th (in the case of a Thirty-Year Dividend Period)
Thursday thereafter.
(viii) (A) On or prior to the 10th day but not more than 30 days
prior to an Auction Date for any series of STRAPS, the
Corporation shall, in accordance with the action of its Board of
Directors, by telephonic and written notice (a "Notice of
Dividend Period") to the Auction Agent and the Securities
Depository, specify the length of the next succeeding Dividend
Period for such series and, in accordance with Section 5(b)
hereof, the redemption provisions that will apply to the series
of STRAPS for such Dividend Period; provided, that, with respect
to any Auction Date for any series of STRAPS occurring during a
Short-Term Dividend Period, the Corporation may not select a
Long-Term Dividend Period for such series (and any such notice
shall be null and void) unless Sufficient Clearing Bids were made
in the last occurring Auction for such series and full cumulative
dividends for all series of STRAPS payable prior to such date
have been paid in full. Any Notice of Dividend Period may be
revoked by the Corporation by action of its Board of Directors by
giving telephonic or written notice (a "Notice of Revocation") to
the Auction Agent and the Securities Depository not less than two
hours prior to the Submission Deadline (as defined in paragraph 8
hereof) on the related Auction Date, in which case the next
Dividend Period shall be a Short-Term Dividend Period. If the
Corporation does not give a Notice of Dividend Period with
respect to the next succeeding Dividend Period for any series of
STRAPS by the 10th day prior to the Auction Date for such series,
or gives a Notice of Revocation with respect thereto, such next
succeeding Dividend Period will be a Short-Term Dividend Period.
In addition, in the event the Corporation has selected a
Long-Term Dividend Period in any Notice of Dividend Period with
respect to the next succeeding Dividend Period for any series of
STRAPS, but Sufficient Clearing Bids are not made in the related
Auction for such series or such Auction is not held for any
reason, such next succeeding Dividend Period will,
notwithstanding such Notice of Dividend Period, be a Short-Term
Dividend Period and the Corporation may not again select a
Long-Term Dividend Period (and any such Notice of Dividend Period
shall be null and void) for such series until Sufficient Clearing
Bids have been made in an Auction with respect to a Short-Term
Dividend Period for such series.
(B) At least 30 days prior to the initial Auction Date with
respect to any series of STRAPS, the
Corporation shall cause to be mailed by first-class mail, postage
prepaid, to each Holder of shares of such series as its name and
address appears on the Stock Books, a written notice of the
commencement of the next succeeding Dividend Period (a "Holders'
Dividend Period Notice"). The Holders' Dividend Period Notice
shall set forth, among other things:
(1) the date and day of the week of the initial Auction
Date, and, if then known, the length of the next
succeeding Dividend Period and the redemption provisions
applicable to such series of STRAPS for such Dividend
Period;
(2) the then-current credit ratings of the STRAPS;
(3) the name and address of the initial Broker-Dealer or
Broker-Dealers who will solicit bids for the Auction for such series of
STRAPS;
(4) the name and address of the Auction Agent;
(5) the name and address of the Securities Depository;
(6) the names and addresses of members of or participants in the
Securities Depository who have consented to be appointed to act on
behalf of the Holders of the STRAPS;
(7) that each Holder must deposit the certificates representing the
shares of STRAPS of such series in exchange for evidence of such shares of
STRAPS thereafter to be held in book entry form by the Securities
Depository;
(8) that unless a Holder submits a Bid or a Hold Order
with respect to each share of STRAPS of such series held
by such Holder, the Auction Agent will deem a Sell Order
to have been submitted by such Holder with respect to any
shares of STRAPS of such series not covered by a Bid or
Hold Order; and
(9) that each Holder must appoint a member of or
participant in the Securities Depository in order (x) to
submit Bids in the initial Auction and (y) to receive
payment for any shares of STRAPS such Holder sells in the
initial Auction.
(ix) Notwithstanding the foregoing, in the event of a change in
law altering the minimum holding period (the "Minimum Holding
Period") required for corporate taxpayers generally to be
entitled to the dividends received deduction for federal income
tax purposes in respect of dividends (other than extraordinary
dividends) paid on preferred stock held by non-affiliated
corporations, the Board of Directors shall adjust the number of
days in a Short-Term Dividend Period commencing after the
effective date of such change in law such that the number of days
(such number of days without giving effect to the exceptions
referred to above being hereinafter referred to as "Dividend
Period Days") in a Short-Term Dividend Period shall equal or
exceed the Minimum Holding Period; provided that the number of
Dividend Period Days shall not exceed by more than nine days the
length of such Minimum Holding Period and in no event shall be
less than 15 days, and will be evenly divisible by seven. Upon
any such change in the number of days in a Short-Term Dividend
Period as a result of a change in law, the Corporation shall
cause to be mailed notice of such change by first-class mail,
postage prepaid, to the Auction Agent, the Paying Agent and each
Holder at such Holder's address as it appears on the Stock Books,
and to the Rating Agencies.
(x) Not later than noon on the Business Day immediately preceding each
Dividend Payment Date with respect to which dividends on any shares of
STRAPS have been declared, the Corporation shall irrevocably deposit with
the Paying Agent sufficient funds for the payment of such dividends and
shall give the Paying Agent irrevocable instructions to apply such funds
and, if applicable, the income and proceeds therefrom, to the payment of
such dividends.
(xi) Each dividend on the shares of any series of STRAPS declared
by the Board of Directors shall be paid to Holders of such shares
as such Holders' names appear on the Stock Books on the related
record date, which shall be (A) during the Initial Long-Term
Dividend Period for each series of STRAPS, the opening of
business on the fifteenth day of the calendar month which next
precedes the Dividend Payment Date for such dividend, or if such
day is not a Business Day, on the next
succeeding Business Day, and (B) thereafter, the opening of
business on the Business Day immediately preceding the Dividend
Payment Date for such dividend. Subject to paragraph 3(d)(i)
below, dividends on the shares of any series of STRAPS in arrears
for any past Dividend Period (and for any Dividend Quarter during
a Long-Term Dividend Period) may be declared by the Board of
Directors and paid on any date fixed by the Board of Directors,
on a regular Dividend Payment Date or otherwise, to Holders of
such shares as such Holders' names appear on the Stock Books on
the related record date fixed by the Board of Directors, which
shall not be more than 15 days before the date fixed for the
payment of such dividends.
(c) (i) Subject to paragraph 3 (c) ( ii), (I) during the Initial Long Term
Dividend Period, the dividend rate per annum applicable to each series
of STRAPS shall be 8.0%, and (II) the dividend rate on the shares of
each series of STRAPS (the "Applicable Rate") for each subsequent
Dividend Period shall be the rate per annum determined for such series
pursuant to the operation of the Auction Procedures set forth in
paragraph 8 below. Notwithstanding the foregoing, in the event (A)
that an Auction with respect to any Dividend Period for any series is
not held for any reason (including the existence of a Failure to
Deposit on the Auction Date with respect to such Dividend Period),
then the next succeeding Dividend Period shall be a Short-Term
Dividend Period, and the dividend rate on the shares of such series
for such Dividend Period shall be equal to the Maximum Rate on the
Auction Date with respect to such Dividend Period, provided that if an
Auction is not held due to the existence of a Failure to Deposit which
is not cured within three Business Days, the dividend rate will be as
provided in the immediately following clause (B), or (B) any Failure
to Deposit shall have occurred and the amounts to be paid by the
Corporation to the Paying Agent shall not been paid within three
Business Days following the Failure to Deposit (or, in the event that
the Corporation shall act as the Paying Agent, the checks for such
amounts shall not have been deposited with the United States Postal
Service for delivery to the registered holders within three Business
Days following the Failure to Deposit), (w) Auctions for all series of
STRAPS will be suspended, (x) each Dividend Period for each series of
STRAPS commencing after the occurrence of a Failure to Deposit shall
be a Short-Term Dividend Period, (y) the dividend rate on the shares
of each series of STRAPS for each Short-Term Dividend Period or part
thereof commencing thereafter shall be equal to 250% of the 60-day
"AA" Composite Commercial Paper Rate on the first day of each such
Dividend Period and (z) if such Failure to Deposit occurs during a
Long-Term Dividend Period with respect to any series of STRAPS, then,
for each series of STRAPS for which a Long-Term Dividend Period is
then applicable, the dividend rate on the shares of such series of
STRAPS for each Dividend Quarter or part thereof commencing thereafter
until the Dividend Quarter within such Dividend Period commencing
after such Failure to Deposit has been cured will be equal to 250% of
the Applicable Treasury Rate on the Auction Date for such Series (or,
in the case of the Initial Long-Term Dividend Period, on the date of
issuance of such Series). Any Failure to Deposit shall be deemed cured
if the Corporation shall have paid to the Paying Agent (or, in the
event that the Corporation shall act as the Paying Agent, have
deposited checks for such amounts with the United States Postal
Service for delivery by first class mail, postage prepaid, to the
registered holders) (i) all accumulated and unpaid dividends on the
shares of STRAPS of each series to but excluding the immediately
preceding Dividend Payment Date therefor, including the full amount of
any dividends to be paid in respect of the Dividend Period (or
Dividend Quarter) with respect to which such failure occurred and (ii)
without duplication, the redemption price, plus accumulated and unpaid
dividends thereon to the redemption date, of any shares of STRAPS
called for redemption. Notwithstanding the foregoing, if the Company
shall have cured a Failure to Deposit by making the aforedescribed
payment to the Paying Agent, the Paying Agent will give notice of such
cure to the holders of the STRAPS and (i) Auctions will resume, (ii)
the Applicable Rate for each Series for each Dividend Period
commencing thereafter will be determined thereafter as if such Failure
to Deposit had not occurred and (iii) in the case of each Series with
a Long-Term Dividend Period, the Applicable Rate for each Dividend
Quarter therefor commencing thereafter will equal the Applicable Rate
for such Series in effect prior to the occurrence of such Failure to
Deposit
(ii) The amount of dividends per share of any series of STRAPS
during any Long-Term Dividend Period
(including the Initial Long-Term Dividend Period) shall be
computed on the basis of a year consisting of twelve 30-day
months. The amount of dividends per share of any series of STRAPS
payable for each Short-Term Dividend Period for such series will
be computed by multiplying the Applicable Rate for such series
for such Dividend Period by a fraction, the numerator of which
shall be the number of days in such Dividend Period (determined
by including the first day thereof and excluding the last day
thereof) during which such share was outstanding and the
denominator of which shall be 360, and multiplying the result by
$100,000.
Provisions regarding the dividend preferences and rights of the
Holders of STRAPS are set forth in Article IX of the Articles of
Redomestication of the Corporation.
(d) If any notice given by the Corporation pursuant to paragraph
7(c) states that any distributions made by the Corporation to Holders as
dividends during any taxable year were Non-Qualifying Distributions, the
Corporation shall, within 30 days of the date of such notice make a
Gross-Up Payment to each Qualified Investor.
4.
Liquidation
Rights.
(a) In the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary,
Holders shall be entitled to receive, out of the assets of the
Corporation available for distribution to stockholders after satisfying
claims of creditors but before any payment or distribution on the Common
Stock or on any other class of stock ranking junior to the shares of
STRAPS upon liquidation, a liquidation distribution in the amount of
$100,000 per share plus an amount equal to accumulated and unpaid
dividends on each share (whether or not earned or declared) to the date
of such distribution. Additional provisions regarding the preferences
and rights of the Holders of STRAPS to receive liquidating distributions
are set forth in Article IX of the Articles of Redomestication of the
Corporation.
(b) Neither the sale, lease or exchange (for cash, stock,
securities or other consideration) of all or substantially all of the
property and assets of the Corporation, nor the consolidation or merger
of the Corporation with or into any other entity, nor the merger or
consolidation of any other entity with or into the Corporation, shall be
deemed to be a liquidation, dissolution, or winding up of the affairs of
the Corporation, either voluntary or involuntary, for purposes of this
paragraph 4.
5.
Redemption.
Shares of STRAPS shall be redeemable by the Corporation as provided
below:
(a) The Corporation may, at its option, out of funds legally
available therefor, upon at least 15 but not more than 45 days' notice
pursuant to a Notice of Redemption, redeem the shares of any series of
STRAPS, as a whole or in part (I) during the Initial Long-Term Dividend
Period for such series, on the second Business Day preceding the last
Dividend Payment for such Initial Long-Term Dividend Period, (II) during
a Short-Term Dividend Period for such series, on the second Business Day
preceding any Dividend Payment Date for such series and (III) during any
Long-Term Dividend Period other than the Initial Long-Term Dividend
Period for such series, on the second Business Day preceding the last
Dividend Payment Date for such Long-Term Dividend Period, in each case
at a redemption price equal to $100,000 per share plus an amount equal
to the accumulated and unpaid dividends on such shares (whether or not
earned or declared) to the redemption date.
(b) In addition, the Corporation may, at its option, out of funds
legally available therefor, during any Long-Term Dividend Period with
respect to any series of STRAPS other than an Initial Long-Term Dividend
Period, upon at least 15 but not more than 45 days' notice pursuant to a
Notice of Redemption, redeem the shares of such series as a whole or
from time to time in part, pursuant to redemption provisions applicable
to such Long-Term Dividend Period selected by the Corporation by action
of its Board of Directors and specified in the Notice of Dividend Period
with respect to such Long-Term Dividend Period pursuant to paragraph
3(b)(viii); Provided, that the redemption price so selected by the
Corporation shall be at least $100,000 per share, and no more than
$250,000 per share, plus any accumulated and unpaid dividends thereon.
<PAGE>
(c) In the event that fewer than all of the outstanding shares of
STRAPS are to be redeemed, the Corporation may, at its option, determine
to redeem all or a portion of the shares of one series of STRAPS without
redeeming shares of another series, and/or may select by lot or other
such method as the Corporation shall deem to be fair and equitable the
shares of
(d) Notwithstanding the other provisions of this paragraph 5, the
Corporation shall not redeem any shares of STRAPS unless all accumulated
and unpaid dividends on all outstanding shares of STRAPS for all
applicable past Dividend Periods (and all past Dividend Quarters during
any Long-Term Dividend Period) shall have been or are contemporaneously
paid or declared and a sum sufficient irrevocably deposited with the
Paying Agent for payment of such dividends.
(e) Whenever shares of STRAPS are to be redeemed, the Corporation
shall cause to be mailed, within the time period specified in paragraphs
5(a) or 5(b) above, a written notice of redemption (a "Notice of
Redemption") by first-class mail, postage prepaid, to each Holder of
shares of STRAPS to be redeemed as its name and address appear on the
Stock Books and to the Paying Agent. Each Notice of Redemption shall
state (A) the redemption date, (B) the redemption price, (C) the series
and number of shares of such series of STRAPS to be redeemed and, in the
event of redemption of less than all of the outstanding shares of STRAPS
of a series, identification (by certificate number or otherwise) of the
shares of STRAPS to be redeemed, (D) the place or places where shares of
STRAPS to be redeemed are to be surrendered for payment of the
redemption price, (E) that dividends on the shares of STRAPS to be
redeemed will cease to accumulate on such redemption date and (F) if
applicable, that the Holders of shares of STRAPS being called for
redemption will not be entitled to participate, with respect to such
shares, in any Auction held subsequent to the date of such Notice of
Redemption. No defect in the Notice of Redemption or in the mailing or
publication thereof shall affect the validity of the redemption
proceedings, except as required by applicable law. A Notice of
Redemption shall be deemed given on the day that it is mailed in
accordance with the first sentence of this paragraph 5(e).
(f) On or after the redemption date, each Holder of shares of
STRAPS that were called for redemption shall surrender the certificate
or other instrument evidencing such shares properly endorsed in blank
for transfer or accompanied by proper instruments of assignment or
transfer in blank, and bearing all necessary transfer tax stamps thereto
affixed and canceled, to the Corporation at the place designated in the
Notice of Redemption and shall then be entitled to receive payment of
the redemption price for such shares. If less than all of the shares
represented by one share certificate or other instrument are to be
redeemed, the Corporation shall issue a new share certificate for the
shares not redeemed.
(g) Not later than the close of business on the Business Day
immediately preceding the redemption date, the Corporation shall
irrevocably deposit with the Paying Agent sufficient funds to redeem the
shares of STRAPS to be redeemed and shall give the Paying Agent
irrevocable instructions to apply such funds and, if applicable, the
income and proceeds therefrom, to the payment of the redemption price.
(h) If the Corporation shall have given or caused to be given a
Notice of Redemption as aforesaid, shall have irrevocably deposited with
the Paying Agent a sum sufficient to redeem the shares of STRAPS as to
which such Notice of Redemption was given and shall have given the
Paying Agent irrevocable instructions and authority to pay the
redemption price to the Holders of such shares, then on the date of such
deposit (or, if no such deposit shall have been made, then on the date
fixed for redemption, unless the Corporation shall have defaulted in
making payment of the redemption price), all rights of the Holders of
such shares by reason of their ownership of such shares (except their
right to receive the redemption price thereof, but without interest)
shall terminate, and such shares shall no longer be deemed outstanding
for any purpose, including, without limitation, the right of the Holders
of such shares to vote on any matter or to participate in any subsequent
Auctions. In addition, any shares of STRAPS as to which a Notice of
Redemption has been given by the Corporation will be deemed to be not
outstanding for purposes of any Auction held subsequent to the date of
such Notice of Redemption. The Corporation shall be entitled to receive,
from time to time, from the Paying Agent, the income, if any, derived
from the investment of monies and/or other assets deposited with it (to
the extent that such income is not required to pay the redemption price
of the shares to be redeemed), and the Holders of shares to be redeemed
shall have no claim to any such income. In case the Holder of any shares
called for redemption shall not claim the redemption price for his
shares within two years after the redemption date, the Paying Agent
shall, upon demand, pay over to the Corporation such amount remaining on
deposit and the Paying Agent shall thereupon be relieved of all
responsibility to the Holder with respect to such shares, and such
Holder shall thereafter look only to the Corporation for payment of the
redemption price of such shares.
(i) Nothing in this paragraph 5 shall limit any right of the
Corporation to purchase or otherwise acquire outside of any Auction any
shares of any series of Preferred Stock from any holder thereof who
consents to such purchase or other acquisition, except as provided in
Article IX of the Articles of Redomestication of the Corporation.
(j) The Corporation shall not give a Notice of Redemption unless
at the time of giving of such notice the Corporation shall in good faith
believe that it will have sufficient funds to effect the redemption of
all of the shares of STRAPS to be redeemed pursuant to such notice. The
giving of a Notice of Redemption shall obligate the Corporation to
redeem the shares of STRAPS specified in such Notice of Redemption on
the terms and conditions specified therein.
6.
Voting Rights.
(a)
General.
Holders shall have no voting rights, either general or special, except
as provided by applicable law or specified in this paragraph 6.
(b) Right to Vote in Certain Events. In addition to any other
vote or consent of Shareholders of the Corporation then required by
applicable law or by the Articles of Redomestication of the Corporation,
so long as any shares of a series of STRAPS remain outstanding, the
Corporation shall not, without the affirmative vote or consent of the
holders of at least two-thirds of the shares of such series of the
STRAPS outstanding at that time, given in person or by proxy, either in
writing or at a meeting (i) authorize, create or issue, or increase the
authorized or issued amount, of any class or series of stock ranking
prior to such series of STRAPS with respect to payment of dividends or
the distribution of assets on liquidation, dissolution or winding up of
the Corporation, or reclassify any authorized stock of the Corporation
into any such shares, or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such
shares, or (ii) amend, alter or repeal any of the provisions of the
Corporation's Articles of Redomestication of the Corporation or this
Statement of Designation so as to adversely affect any right,
preference, privilege or voting power of such series of the STRAPS;
provided, however, that any increase in the amount of the authorized
preferred stock or the creation or issuance of any series of preferred
stock or any increase in the amount of authorized shares of such series
or of any other series of preferred stock, in each case ranking on a
parity with or junior to each series of the STRAPS with regard to
dividends, or upon liquidation, dissolution or winding up of the
Corporation, shall not be deemed to adversely affect such rights,
preferences, privileges or voting powers.
(c) During any period (a "Voting Period") when a "Default in
Preferred Dividends" (as hereinafter defined) shall exist on the shares
of any series of the STRAPS, or any series of preferred stock ranking on
a parity with the shares of the STRAPS as to dividends or upon
liquidation, dissolution or winding up of the Corporation and the terms
of which expressly provide that such shares are "Voting Parity Preferred
Stock" within the meaning of this paragraph and voting rights thereunder
are then exercisable (all such shares, and all shares of each series of
the STRAPS, being hereinafter referred to collectively as the "Voting
Parity Preferred Stock"), the authorized number of members of the Board
of Directors shall automatically be increased by two. The two vacancies
so created shall be filled by the vote of the holders of the Voting
Parity Preferred Stock, voting together as a single class without regard
to series, to the exclusion of the holders of the Common Stock of the
Corporation and any other class or series of stock other than Voting
Parity Preferred Stock. A "Default in Preferred Stock Dividends" shall
be deemed to have occurred whenever the amount of unpaid accumulated
dividends upon any series of the Voting Parity Preferred Stock through
the last preceding dividend period therefor shall be equivalent to six
quarterly dividends (which with respect to any series of the STRAPS or
any other series of Voting Parity Preferred Stock, shall be deemed to be
dividends with respect to a number of dividend periods containing not
less than 540 days) or more, and, having so occurred, such default shall
be deemed to exist thereafter until, but only until, all accumulated and
unpaid dividends (whether or not earned or declared) on all shares of
all Voting Parity Preferred Stock of each and every series then
outstanding shall have been paid to the end of the last preceding
dividend period. Upon the termination of a Voting Period, the voting
rights described in this paragraph 6(c) shall cease, subject always,
however, to revesting of such voting rights in the holders of Voting
Parity Preferred Stock upon the further occurrence of a Default in
Preferred Dividends. If any Voting Period shall have terminated before
the holders of Voting Parity Preferred Stock shall have exercised the
voting rights provided in this paragraph 6(c), the holders of such
Voting Parity Preferred Stock shall be deemed not to have acquired such
voting rights.
(d) Voting Procedures.
(i) As soon as practicable after the commencement of a Voting Period, the
Corporation shall call or cause to be called a special meeting of the
holders of the Voting Parity Preferred Stock by mailing or causing to
be mailed a notice of such special meeting to such holders not less
than 10 nor more than 45 days after the date such notice is given. If
the Corporation does not call or cause to be called such a special
meeting, it may be called by any of such holders on like notice. The
record date for determining the holders of Voting Parity Preferred
Stock entitled to notice of and to vote at such meeting shall be the
close of business on the Business Day preceding the day on which such
notice is mailed. At any such special meeting and at each meeting of
stockholders held during a Voting Period at which directors are to be
elected, removed or replaced, the holders of the Voting Parity
Preferred Stock of all series, voting together as a single class (to
the exclusion of the holders of all other securities and classes of
capital stock of the Corporation), voting by a majority of the votes
of shares present in person or by proxy, shall be entitled to elect
two directors. In regard to such elections, each share of STRAPS, and
each share of any other Voting Parity Preferred Stock, shall be
entitled to one vote on the basis of each $100,000 of liquidation
preference (excluding amounts in respect of accumulated and unpaid
dividends). Cumulative voting in such elections shall not be
permitted. Shares of Voting Parity Preferred Stock then outstanding,
present in person or represented by proxy, representing one-third of
the votes of the Voting Parity Preferred Stock, will constitute a
quorum for the election of directors. Notice of all meetings at which
holders of the Voting Parity Preferred Stock of any series shall be
entitled to vote will be given to such holders at their addresses as
they appear on the Stock Books. At any such meeting or adjournment
thereof in the absence of a quorum, holders of shares of Voting Parity
Preferred Stock representing a majority of the votes present in person
or represented by proxy shall have the power to adjourn the meeting
for the election of directors without notice, other than an
announcement at the meeting, until a quorum is present. If any Voting
Period shall terminate after the notice of special meeting provided
for in this paragraph 6(d)(i) has been given but before the special
meeting shall have been held, the Corporation shall, as soon as
practicable after such termination, mail or cause to be mailed to the
holders of the Voting Parity Preferred Stock a notice of cancellation
of such special meeting.
(ii) The term of office of all persons who are directors of the Corporation
at the time of a special meeting of the holders of the Voting Parity
Preferred Stock to elect directors shall continue, notwithstanding the
election at such meeting by such holders of the two additional
directors. The persons elected by holders of the Voting Parity
Preferred Stock, together with the incumbent directors elected by the
holders of the Common Stock, shall constitute the duly elected
directors of the Corporation.
(iii) Simultaneously with the expiration of a Voting Period, the
term of office of the directors elected by the holders of the
Voting Parity Preferred Stock shall terminate, the persons who
shall have been elected by the holders of the Common Stock (or by
the Board of Directors prior to the beginning of the Voting
Period) and who are incumbent shall constitute the directors of
the Corporation, and the voting rights of the holders of the
Voting Parity Preferred Stock to elect directors shall cease.
(iv) For so long as a Voting Period continues, the directors elected by the
holders of the Voting Parity Preferred Stock may be removed without
cause by, and shall not be removed without cause except by, the vote
of the holders of record of the outstanding shares of Voting Parity
Preferred Stock, voting together as a single class without regard to
series, at a meeting of the stockholders, or of the holders of shares
of Voting Parity Preferred Stock, called for such purpose. So long as
a Voting Period continues, (A) any vacancy in the office of a director
elected by the holders of the Voting Parity Preferred Stock may be
filled (except as provided in the following clause (B)) by the person
appointed by an instrument in writing signed by the remaining director
elected by the holders of the Voting Parity Preferred Stock and filed
with the Corporation or, in the event there is no remaining director
elected by the holders of the Voting Parity Preferred Stock, by vote
of the holders of the outstanding shares of Voting Parity Preferred
Stock, voting together as a single class without regard to series, at
a meeting of the stockholders or at a meeting of the holders of shares
of Voting Parity Preferred Stock called for such purpose, and (B) in
the case of the removal of any director elected by the holders of the
Voting Parity Preferred Stock, the vacancy may be filled by the person
elected by the vote of the holders of the outstanding shares of Voting
Parity Preferred Stock, voting together as a single class without
regard to series, at the same meeting at which such removal shall be
voted or at any subsequent meeting.
(e) Additional Vote. If any matter (including, without
limitation, election, removal or replacement of directors) requires the
consent or affirmative vote of shares of any series of STRAPS, of all
series of STRAPS, or of all Preferred Stock of the Corporation, whether
pursuant to the provisions of such series, all such series or such
Preferred Stock or pursuant to the provisions of the Articles of
Redomestication of the Corporation or pursuant to applicable law, and if
any shares of any series of STRAPS entitled to vote are held by the
Corporation or by any of its Affiliates, then the following additional
consent or vote will be required: the same consent or affirmative vote
of shares otherwise required, except that shares of STRAPS held by the
Corporation and/or its Affiliates shall be deemed not to be outstanding
for purposes of such additional consent or vote; provided, such
additional consent or vote will not be applicable if all outstanding
shares of the STRAPS of such series (in the case of a class vote of such
series) or of all series of STRAPS (in the case of a vote of all series
of STRAPS) are held by the Corporation and/or its Affiliates.
7. Miscellaneous Provisions Relating to Dividends.
(a) Maintaining Shares of STRAPS in Book Entry Form. Promptly
after receiving the Holders' Dividend Period Notice specified in
paragraph 3(b)(viii), each Holder of shares of the related series of
STRAPS shall take such actions and shall execute and deliver such
documents and agreements as the Corporation shall have reasonably
requested in such Holders' Dividend Period Notice, which actions,
documents and/or agreements may include but shall not be limited to the
following:
(i) appointing a participant in or agent member of the Securities
Depository to act on its behalf;
(ii) delivering an executed copy of the Purchaser's Letter, as
described in paragraph 8(a), to the Auction Agent; and
(iii)if the customary procedures of the Securities Depository shall so
require, surrendering the certificates representing the shares of
STRAPS of such series to the Corporation, the Auction Agent, the
Paying Agent or the Securities Depository, as described in the
Holders' Dividend Period Notice.
(b) Initial Auctions.
(i) At least 30 days prior to the initial Auction for Series A STRAPS, the
Corporation will:
(A) appoint a bank or trust company to act as the Auction
Agent and enter into an Auction Agency Agreement with such
bank or trust company to conduct Auctions for the STRAPS
pursuant to the Auction procedures set forth in paragraph
8 hereof; and
(B) request one or more broker-dealers to enter into
Broker-Dealer Agreements with the Auction Agent and to
solicit bids for the shares of STRAPS in the initial
Auction for each series and each subsequent Auction
therefor.
(ii) At least 30 days prior to the initial Auction any series of STRAPS,
the Corporation will:
(A) request The Depository Trust Company (HDTC") to act as the Securities
Depository to maintain the shares of STRAPS of such series in book
entry form for the account of each Holder's agent member which in turn
will maintain records of the Holder's beneficial ownership and, if DTC
declines to act as the Securities Depository, use its best efforts to
appoint another securities depository or bank or trust company to act
in such capacity; and
(B) if the Corporation theretofore has acted as the Paying Agent with
respect to such series, appoint a bank or trust company to act as the
Paying Agent and enter into a Paying Agency Agreement with such bank
or trust company to make dividend and redemption payments in
accordance with the provisions of this Statement of Designation.
(c) (i) Annual Notice Concerning Return of Capital. The Corporation shall,
on or before January 31 of each year prior to the Cut-Off Date, cause
to be mailed by first-class mail, postage prepaid, to each Holder a
written notice stating whether, to the best of its knowledge, based
upon information then available to the Corporation, any distributions
made as dividends on the shares of STRAPS during the previous taxable
year constituted Non-Qualifying Distributions. In issuing such notice
and making such determination, the Corporation shall be entitled to
rely conclusively on the advice of its legal counsel and independent
public accountants. The Corporation may correct any information in
such notice that it determines to be inaccurate by mailing in the same
manner a corrected notice, in which case such corrected notice shall
be the notice delivered under this provision.
(ii)
The
Corporation shall, promptly after the occurrence thereof, cause
to be mailed, by first-class mail, postage prepaid, to the Paying
Agent and each registered Holder of shares of STRAPS, a written
notice stating that it has determined that the Cut-Off Date has
occurred.
8.
Auction
Procedures.
(a) Certain Definitions. Capitalized terms not defined in this
paragraph 8 shall have the respective meanings specified in paragraph 1
through paragraph 7 above. As used in this paragraph 8, the following
terms shall have the following meanings, unless the context otherwise
requires, and all defined terms, unless the context otherwise requires,
shall be deemed to refer to Series A STRAPS, Series B STRAPS, Series C
STRAPS or Series D STRAPS, as the case may be:
"Affiliate" means any Person known to the Auction Agent to be controlled
by, in control of, or under common control with, the Corporation.
"Agent Member" means the member of the Securities Depository that will
act on behalf of a Bidder and/or an Existing Holder.
"Auction" means the periodic operation of the procedures set forth in this
paragraph 8.
"Auction Date" means the Business Day next preceding the first day of a
Dividend Period.
"Available STRAPS" has the meaning specified in paragraph 8(d)(i) below.
"Bid" has the meaning specified in paragraph 8(b)(i) below.
"Bidder" has the meaning specified in paragraph 8(b)(i) below.
"Broker-Dealer" means any broker-dealer, or other entity permitted by
law to perform the functions required of a Broker-Dealer in this
paragraph 8, that is a member of, or a participant in, the Securities
Depository, that has been selected by the Corporation and that has
entered into a Broker-Dealer Agreement with the Auction Agent that
remains effective.
"Broker-Dealer Agreement" means an agreement between the Auction Agent
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to
follow the procedures specified in this paragraph 8.
"Existing Holder", when used with respect to shares of STRAPS, means a
Person who has executed a Purchaser's Letter and is listed as the
Existing Holder of such shares of STRAPS in the records of the Auction
Agent.
"Hold Order" has the meaning specified in paragraph 8(b)(i) below.
"Maximum
Rate", means, on any date of determination, with respect to a series of
STRAPS with a Short-Term Dividend Period, the percentage of the 60-day
"AA" Composite Commercial Paper Rate in effect on such date, and with
respect to a series of the STRAPS with a Long-Term Dividend Period, the
percentage of the Applicable Treasury Rate in effect on such date,
determined as set forth below based on the Prevailing Credit Ratings of
the STRAPS on the Business Day immediately preceding such date of
determination:
Prevailing Credit Ratings of STRAPS Percentage
AA/ aa or Above 125%
A/a 150%
BBB / baa 175%
BB/ba 200%
Below BB/ba 250
Unless the context otherwise requires, "Maximum Rate," when used in this
paragraph 8, shall mean the Maximum Rate on the Auction Date.
"Order" has the meaning specified in paragraph 8(b)(i) below.
"Outstanding," with respect to shares of STRAPS, means, as of any
date, shares of STRAPS theretofore issued by the Corporation except,
without duplication, (A) any shares of STRAPS theretofore canceled or
delivered to the Auction Agent for cancellation, or redeemed by the
Corporation, (B) except as provided in paragraph 5 above, any shares of
STRAPS as to which a Notice of Redemption shall have been given by the
Corporation, (C) any shares of STRAPS as to which the Corporation or any
Affiliate shall be an Existing Holder and (D) any shares of STRAPS
represented by any certificate which has been replaced by a new
certificate executed and delivered by the Corporation.
"Person" means and includes an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or
other entity or a government or an agency or political subdivision
thereof.
"Potential Holder" means any Person, including any Existing
Holder, (A) who shall have executed a Purchaser's Letter and (B) who may
be interested in acquiring shares of STRAPS (or, in the case of an
Existing Holder, additional shares of STRAPS).
"Prevailing Credit Ratings" means (A) AA/aa or above if the
shares of STRAPS have ratings of AA- or better by Standard & Poor's and
"aa3 n or better by Moody's or the equivalent of either or both of such
ratings by the applicable Rating Agencies, (B) if not AA/aa or above,
then A/a if the shares of STRAPS have a rating of A- or better by
Standard & Poors and "a3" or better by Moody's or the equivalent of
either or both of such ratings by the applicable Rating Agencies, (C) if
not AA/aa or above or A/a, then BBB/baa, if the shares of STRAPS have
ratings of BBB- or better by Standard & Poor's and "baa3" or better by
Moody's or the equivalent of either or both of such ratings by the
applicable Rating Agencies, (D) if not AA/aa or above, A/a, or BBB/baa,
then BB/ba if the shares of STRAPS have a rating of BB- or better by
Standard & Poor's and Hba3 H or better by Moody's or the equivalent of
either or both of such ratings by the applicable Rating Agencies, and
(E) if not AA/aa or above, A/a, BBB/baa or BB/ba, then below BB/ba. In
the event of credit ratings in different categories, the lower credit
rating shall control.
"Purchaser's Letter" means a purchaser's letter in which a Person
agrees, among other things, to offer to purchase, purchase, offer to
sell and/or sell shares of STRAPS as set forth in this paragraph 8.
"Securities Depository" means the securities depository appointed
as such by the Corporation pursuant to paragraph 7(b) that agrees to
follow the procedures required to be followed by such securities
depository in connection with shares of STRAPS.
"Sell Order" has the meaning specified in paragraph 8(b)(i) below.
"STRAPS" means Series A STRAPS, Series B STRAPS, Series C STRAPS
or Series D STRAPS, as the case may be.
"Submission Deadline" means 1:00 p.m., New York City Time, on any
Auction Date or such other time on any Auction Date by which
Broker-Dealers are required to submit Orders to the Auction Agent as
from time to time specified by the Auction Agent, with the consent of
the Corporation, which consent shall not be unreasonably withheld.
<TABLE>
<S> <C>
"Submitted Bid" has the meaning specified in paragraph 8(d)(i) below.
"Submitted Hold Order" has the meaning specified in paragraph 8(d)(i) below.
"Submitted Order" has the meaning specified in paragraph 8(d)(i) below.
"Submitted Sell Order" has the meaning specified in paragraph 8(d)(i) below.
"Sufficient Clearing Bids" has the meaning specified in paragraph 8(d)(i) below.
"Winning Bid Rate" has the meaning specified in paragraph 8(d)(i) below.
</TABLE>
<PAGE>
(b) Orders by Existing Holders and Potential Holders.
(i) On or prior to the Submission Deadline on each Auction Date:
(A) each Existing Holder may submit to a Broker-Dealer
information as to:
(1) the number of Outstanding shares, if any, of
STRAPS held by such Existing Holder which such
Existing Holder desires to continue to hold without
regard to the Applicable Rate for the next
succeeding Dividend Period;
(2) the number of Outstanding shares, if any, of
STRAPS held by such Existing Holder which such
Existing Holder desires to continue to hold,
provided that the Applicable Rate for the next
succeeding Dividend Period shall not be less than
the rate per annum specified by such Existing
Holder; and/or
(3) the number of Outstanding shares, if any, of
STRAPS held by such Existing Holder which such
Existing Holder offers to sell without regard to
the Applicable Rate for the next succeeding
Dividend Period; and
(B) each Broker-Dealer, using a list of Potential
Holders that shall be maintained by such Broker-Dealer in
good faith for the purpose of conducting a competitive
Auction, shall contact Potential Holders, including
Persons who are not Existing Holders, on such list to
determine the number of Outstanding shares, if any, of
STRAPS which each such Potential Holder offers to
purchase, provided that the Applicable Rate for the next
succeeding Dividend Period shall not be less than the rate
per annum specified by such Potential Holder.
For the purposes hereof, the communication to a Broker-Dealer of the information
referred to in clause (A) or (B) of this paragraph 8(b)(i) is hereinafter
referred to as an "Order" and each Existing Holder and each Potential Holder
placing an Order is hereinafter referred to as a "Bidder"; an Order containing
the information referred to in clause (A)(1) of this paragraph 8(b)(i) is
hereinafter referred to as a "Hold Order"; an Order containing the information
referred to in clause (A)(2) or (B) of this paragraph 8(b)(i) is hereinafter
referred to as a "Bid"; and an Order containing the information referred to in
clause (A)(3) of this paragraph 8(b)(i) is hereinafter referred to as a "Sell
Order".
(ii) (A) A Bid by an Existing Holder shall constitute an
irrevocable offer to sell:
(1) the number of Outstanding shares of STRAPS
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be less than
the rate specified in such Bid; or
(2) such number or a lesser number of Outstanding
shares of STRAPS determined as set forth in
paragraph 8(e)(i)(D) if the Applicable Rate
determined on such Auction Date shall be equal to
the rate specified in such Bid; or
(3) such number or a lesser number of Outstanding
shares of STRAPS to be determined as set forth in
paragraph 8(e)(ii)(C) if the rate specified in such
Bid shall be higher than the Maximum Rate and
Sufficient Clearing Bids have not been made.
(B) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(1) the number of Outstanding shares of STRAPS specified in such Sell
Order; or
(2) such number or a lesser number of Outstanding
shares of STRAPS as set forth in paragraph
8(e)(ii)(C) if Sufficient Clearing Bids have not
been made.
(C) A Bid by a Potential Holder shall constitute an
irrevocable offer to purchase:
(1) the number of Outstanding shares of STRAPS
specified in such Bid if the Applicable Rate
determined on such Auction Date shall be higher
than the rate specified in such Bid; or
(2) such number or a lesser number of Outstanding
shares of STRAPS as set forth in paragraph
8(e)(i)(E) if the Applicable Rate determined on
such Auction Date shall be equal to the rate
specified in such Bid.
(c) Submission of Orders by Broker-Dealers to Auction Agent.
(i) Each Broker-Dealer shall submit in writing to the
Auction Agent prior to the Submission Deadline on each Auction
Date all Orders obtained by such Broker-Dealer and shall specify
with respect to each Order;
(A) the name of the Bidder placing such Order;
(B) the aggregate number of Outstanding shares of STRAPS
that are the subject of such Order;
(C) to the extent that such Bidder is an Existing
Holder:
(1) the number of Outstanding shares, if any, of STRAPS
subject to any Hold Order placed by such Existing
Holder; and
(2) the number of Outstanding shares, if any, of STRAPS
subject to any Bid placed by such Existing Holder
and the rate specified in such Bid; and
(3) the number of Outstanding shares, if any, of STRAPS
subject to any Sell Order placed by such Existing
Holder; and
(D) to the extent that such Bidder is a Potential Holder,
the rate specified in such Potential Holder's Bid.
(ii) If any rate specified in any Bid contains more than
three digits to the right of the decimal point, the Auction Agent
shall round such rate up to the next highest one-thousandth
(.001) of 1%.
(iii) (A) With respect to an Auction for a Dividend Period
immediately succeeding a Long-Term Dividend Period and for each
Auction thereafter until an Auction occurs at which Sufficient
Clearing Bids exist, if a Bid or a Hold Order covering all of the
Outstanding shares of STRAPS held by an Existing Holder is not
submitted to the Auction Agent prior to the Submission Deadline,
the Auction Agent shall deem a Sell Order to have been submitted
on behalf of such Existing Holder covering the number of
Outstanding shares of STRAPS held by such Existing Holder not
subject to a Bid or Hold Order submitted to the Auction Agent and
(B) with respect to any other Auction, if an Order or Orders
covering all of the Outstanding shares of STRAPS held by an
Existing Holder is not submitted to the Auction Agent prior to
the Submission Deadline, the Auction Agent shall deem a Hold
Order to have been submitted on behalf of such Existing Holder
covering the number of Outstanding shares of STRAPS held by such
Existing Holder and not subject to Orders submitted to the
Auction Agent.
(iv) If one or more Orders covering in the aggregate more
than the number of Outstanding shares of STRAPS held by an
Existing Holder are submitted to the Auction Agent, such Order or
Orders shall be considered valid as follows and in the following
order of priority:
(A) any Hold Order submitted on behalf of such Existing
Holder shall be considered valid up to and including the
number of Outstanding shares of STRAPS held by such
Existing Holder; provided that if more than one Hold Order
is submitted on behalf of such Existing Holder and the
number of shares of STRAPS subject to such Hold Orders
exceeds the number of Outstanding shares of STRAPS held by
such Existing Holder, the number of shares of STRAPS
subject to such Hold Orders shall be reduced pro rata so
that such Hold Orders shall cover the number of
Outstanding shares of STRAPS held by such Existing Holder;
(B) (1) any Bid shall be considered valid up to and
including the excess of the number of Outstanding
shares of STRAPS held by such Existing Holder over
the number of shares of STRAPS subject to Hold
Orders referred to in paragraph 8(c)(iv)(A),
(2) subject to subclause (1) above, if more than
one Bid specifying the same rate is submitted on
behalf of such Existing Holder and the number of
Outstanding shares of STRAPS subject to such Bids
is greater than such excess, the number of shares
of STRAPS subject to such Bids shall be reduced pro
rata so that such Bids shall cover the number of
shares of STRAPS equal to such excess, and
(3) subject to subclause (1) above, if more than
one Bid specifying different rates is submitted on
behalf of such Existing Holder, such Bids shall be
considered valid in the ascending order of their
respective rates and in any such event the number,
if any, of such Outstanding shares subject to Bids
not valid under this clause (B) shall be treated as
the subject of a Bid by a Potential Holder; and
<PAGE>
(C) any Sell Order shall be considered valid up to and
including the excess of the number of Outstanding shares
of STRAPS held by such Existing Holder over the number of
shares of STRAPS subject to Hold Orders referred to in
paragraph 8(c)(iv)(A) and Bids referred to in paragraph
8(c)(iv)(B).
(v) If more than one Bid is submitted on behalf of any Potential
Holder, each Bid submitted shall be a separate Bid with the rate
and the number of shares of STRAPS therein specified.
(d) Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(i) The Auction Agent shall assemble all Orders submitted
or deemed submitted to it by the Broker-Dealers (each such Order
as submitted or deemed submitted by a Broker-Dealer being
hereinafter referred to individually as a "Submitted Hold Order,"
a "Submitted Bid" or a "Submitted Sell Order," as the case may
be, or as a "Submitted Order") and shall, after the Submission
Deadline on each Auction Date, determine:
(A) the excess of the total number of Outstanding
shares of STRAPS over the number of Outstanding shares of
STRAPS that are the subject of Submitted Hold Orders (such
excess being hereinafter to as the "Available STRAPS");
(B) from the Submitted Orders whether:
(1) the number of Outstanding shares of STRAPS that are
the subject of Submitted Bids by Potential Holders
specifying one or more rates equal to or lower than
the Maximum Rate exceeds or is equal to:
(2) the sum of (x) the number of Outstanding shares of
STRAPS that are the subject of Submitted Bids by
Existing Holders specifying one or more rates
higher than the Maximum Rate and (y) the number of
Outstanding shares of STRAPS that are the subject
of Submitted Sell Orders (if such excess or such
equality exists (other than because the number of
shares of STRAPS in subclauses (x) and (y) above
are each zero because all of the Outstanding shares
of STRAPS are the subject of Submitted Hold
Orders), such Submitted Bids in subclause (1) above
being hereinafter referred to collectively as
"Sufficient Clearing Bids"); and
(C) If Sufficient Clearing Bids have been made, the
lowest rate specified in the Submitted Bids (the "Winning
Bid Rate") that, if:
(1) each Submitted Bid from Existing Holders specifying
such lowest rate and all other Submitted Bids from
Existing Holders specifying lower rates were
rejected, thus entitling such Existing Holders to
continue to hold the shares of STRAPS that are the
subject of such Submitted Bids, and
(2) each Submitted Bid from Potential Holders
specifying such lowest rate and all other Submitted
Bids from Potential Holders specifying lower rates
were accepted, thus requiring such Potential
Holders to purchase the shares of STRAPS that are
the subject of such Submitted Bids,
would result in the number of shares subject to all Submitted
Bids specifying such lowest rate or such lower rates being
not less than the Available STRAPS.
(ii) Promptly after the Auction Agent has made the
determinations pursuant to paragraph 8(d)(i), the Auction Agent
shall advise the Corporation of the Maximum Rate and the
Applicable Rate for the next succeeding Dividend Period, which
shall be determined as follows:
(A) If Sufficient Clearing Bids have been made, the
Applicable Rate for the next succeeding Dividend Period
shall be equal to the Winning Bid Rate so determined;
(B) If Sufficient Clearing Bids have not been made (other
than because all the Outstanding shares of STRAPS are the
subject of Submitted Hold Orders), in an Auction for a
Short-Term Dividend Period (regardless of whether such
Dividend Period is a Short- Term Dividend Period because
the Corporation did not submit a Notice of Dividend
Period, selected a Short- Term Dividend Period in its
Notice of Dividend Period or submitted a Notice of
Revocation earlier than two hours prior to the Submission
Deadline or because Sufficient Clearing Bids did not exist
at the previous Auction) or if the Auction is not held for
any reason, (i) notwithstanding any Notice of Dividend
Period submitted with respect thereto, such next
succeeding Dividend Period will be a Short-Term Dividend
Period and (ii) the Applicable Rate for the next
succeeding Dividend Period will be the Maximum Rate on the
Auction Date for a Short-Term Dividend Period;
(C) If Sufficient Clearing Bids have not been made (other
than because all of the Outstanding shares of STRAPS are
the subject of Submitted Hold Orders) in an Auction for a
Long-Term Dividend Period or if the Auction is not held
for any reason, then (i) notwithstanding any Notice of
Dividend Period submitted with respect thereto, such next
succeeding Dividend Period will be a Short-Term Dividend
Period, (ii) the Applicable Rate for the next succeeding
Dividend Period will be the Maximum Rate on the Auction
Date for a Short-Term Dividend Period and (iii) the
Corporation may not again give a Notice of Dividend Period
selecting a Long-Term Dividend Period until Sufficient
Clearing Bids have been made with respect to a Short- Term
Dividend Period; or
(D) if all of the Outstanding shares of STRAPS are the
subject of Submitted Hold Orders, the Applicable Rate for
the next succeeding Dividend Period shall be equal to (i)
for a Short-Term Dividend Period, 59% of the 60-day "AA"
Composite Commercial Paper Rate on the date of such
Auction or (ii) for a Long-Term Dividend Period, 50% of
the Applicable Treasury Rate on the date of such Auction.
(e) Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Shares. Based on the determinations made
pursuant to paragraph 8(d)(i), the Submitted Bids and Submitted Sell
Orders shall be accepted or rejected and the Auction Agent shall take
such other action as set forth below:
(i) If Sufficient Clearing Bids have been made, subject to
the provisions of paragraph 8(e)(iv) and paragraph 8(e)(v),
Submitted Bids and Submitted Sell Orders shall be accepted or
rejected in the following order of priority and all Submitted
Bids to the extent not accepted as provided in this clause (i)
shall be rejected:
(A) the Submitted Sell Orders of Existing Holders shall be
accepted and the Submitted Bid of each of the Existing
Holders specifying any rate that is higher than the
Winning Bid Rate shall be accepted, thus requiring each
such Existing Holder to sell the Outstanding shares of
STRAPS that are the subject of such Submitted Bid;
(B) the Submitted Bid of each of the Existing Holders
specifying any rate that is lower than the Winning Bid
Rate shall be rejected, thus entitling each such Existing
Holder to continue to hold the Outstanding shares of
STRAPS that are the subject of such Submitted Bid;
(C) the Submitted Bid of each of the Potential Holders
specifying any rate that is lower than the Winning Bid
Rate shall be accepted, thus requiring each such Potential
Holder to purchase the Outstanding shares of STRAPS that
are the subject of such Submitted Bid;
(D) the Submitted Bid of each of the Existing Holders
specifying a rate that is equal to the Winning Bid Rate
shall be rejected, thus entitling each such Existing
Holder to continue to hold the Outstanding shares of
STRAPS that are the subject of such Submitted Bid, unless
the number of Outstanding shares of STRAPS that are the
subject of such Submitted Bids shall be greater than the
number of shares of STRAPS ("remaining shares") equal to
the excess of the Available STRAPS over the number of
shares of STRAPS subject to Submitted Bids described in
paragraph 8(e)(i)(B) and paragraph 8(e)(i)(C), in which
event the Submitted Bids of each such Existing Holder
shall be accepted, and each such Existing Holder shall be
required to sell Outstanding shares of STRAPS, but only in
an amount equal to the difference between (1) the number
of Outstanding shares of STRAPS then held by such Existing
Holder subject to such Submitted Bid and (2) the number of
shares of STRAPS obtained by multiplying (x) the number of
the remaining shares by (y) a fraction, the numerator of
which shall be the number of Outstanding shares of STRAPS
held by such Existing Holder subject to such Submitted Bid
and the denominator of which shall be the sum of the
number of Outstanding shares of STRAPS subject to such
Submitted Bids made by all such Existing Holders that
specified a rate equal to the Winning Bid Rate; and
(E) the Submitted Bid of each of the Potential Holders
specifying a rate that is equal to the Winning Bid Rate
shall be accepted but only in an amount equal to the
number of Outstanding shares of STRAPS obtained by
multiplying (x) the difference between the Available
STRAPS and the number of Outstanding shares of STRAPS
subject to Submitted Bids described in paragraph
8(e)(i)(B), paragraph 8(e)(i)(C) and paragraph 8(e)(i)(D)
by (y) a fraction, the numerator of which shall be the
number of Outstanding shares of STRAPS subject to such
Submitted Bid and the denominator of which shall be the
sum of the number of Outstanding shares of STRAPS subject
to such Submitted Bids made by all such Potential Holders
that specified rates equal to the Winning Bid Rate.
(ii) If Sufficient Clearing Bids have not been made (other
than because all of the Outstanding shares of STRAPS are subject
to Submitted Hold Orders) in an Auction for a Short-Term Dividend
Period (regardless of whether such Dividend Period is a
Short-Term Period because the Corporation did not submit a Notice
of Dividend Period, selected a Short-Term Dividend Period in its
Notice of Dividend Period or submitted a Notice of Revocation
earlier than two hours prior to the Submission Deadline or
because Sufficient Clearing Bids did not exist at the previous
Auction), subject to the provisions of paragraph 8(e)(iv),
Submitted Orders shall be accepted or rejected as follows in the
following order of priority and all Submitted Bids to the extent
not accepted as provided in this clause (ii) shall be rejected:
(A) the Submitted Bid of each Existing Holder specifying
any rate that is equal to or lower than the Maximum Rate
shall be rejected, thus entitling such Existing Holder to
continue to hold the shares of STRAPS that are the subject
of such Submitted Bid;
(B) the Submitted Bid of each Potential Holder specifying
any rate that is equal to or lower than the Maximum Rate
shall be accepted, thus requiring such Potential Holder to
purchase the shares of STRAPS that are the subject of such
Submitted Bid; and
(C) the Submitted Bid of each Existing Holder specifying
any rate that is higher than the Maximum Rate shall be
accepted, thus requiring each such Existing Holder to sell
the Outstanding shares of STRAPS that are the subject of
such Submitted Bid, and the Submitted Sell Order of each
Existing Holder shall be accepted, in both cases only in
an amount equal to the difference between (1) the number
of Outstanding shares of STRAPS then held by such Existing
Holder subject to such Submitted Bid or Submitted Sell
Order and (2) the number of shares of STRAPS obtained by
multiplying (x) the difference between the Available
STRAPS and the aggregate number of shares of STRAPS
subject to Submitted Bids described in paragraph 8(e)
(ii)(A) and paragraph 8(e) (ii) (B) by (y) a fraction, the
numerator of which shall be the number of Outstanding
shares of STRAPS held by such Existing Holder subject to
such Submitted Bid or Submitted Sell Order and the
denominator of which shall be the number of Outstanding
shares of STRAPS subject to all such Submitted Bids and
Submitted Sell Orders.
(iii) If Sufficient Clearing Bids have not been made
(other than because all of the Outstanding shares of STRAPS are
subject to Submitted Hold Orders) in an Auction for a Long-Term
Dividend Period:
(A) Each Existing Holder that placed a Submitted Bid or a
Submitted Hold Order (regardless of the rate specified
therein) will continue to hold all Outstanding shares of
STRAPS held by such Existing Holder immediately prior to
the applicable Auction;
(B) Each Submitted Bid placed by a Potential Holder will
be rejected;
(C) The next succeeding Dividend Period will be a
Short-Term Dividend Period; and
(D) The Corporation may not again give a Notice of
Dividend Period selecting a Long-Term Dividend Period (and
any such notice shall be null and void) until Sufficient
Clearing Bids have been made in an Auction with respect to
a Short-Term Dividend Period.
(iv) If, as a result of the procedures described in
paragraph 8(e)(i) and paragraph 8(e)(ii), any Existing Holder
would be entitled or required to sell, or any Potential Holder
would be entitled or required to purchase, a fraction of a share
of STRAPS on any Auction Date, the Auction Agent shall, in such
manner as, in its sole discretion, it shall determine, round up
or down the number of shares of STRAPS to be purchased or sold by
any Existing Holder or Potential Holder on such Auction Date so
that the number of shares purchased or sold by each Existing
Holder or Potential Holder on such Auction Date shall be whole
shares of STRAPS.
(v) If, as a result of the procedures described in
paragraph 8(e)(i), any Potential Holder would be entitled or
required to purchase less than a whole share of STRAPS on any
Auction Date, the Auction Agent shall, in such manner as, in its
sole discretion, it shall determine, allocate shares for purchase
among Potential Holders so that only whole shares of STRAPS are
purchased on such Auction Date by any Potential Holder, even if
such allocation results in one or more of such Potential Holders
not purchasing shares of STRAPS on such Auction Date.
(vi) Based on the results of each Auction, the Auction
Agent shall determine the number of shares of STRAPS to be
purchased and the aggregate number of shares of STRAPS to be sold
by Potential Holders and Existing Holders on whose behalf each
Broker-Dealer submitted Bids or Sell Orders, and, with respect to
each Broker-Dealer, to the extent that such aggregate number of
shares to be purchased and such aggregate number of shares to be
sold differ, determine to which other Broker-Dealer or
Broker-Dealers acting for one or more purchasers such Broker
Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers such Broker-Dealer
shall receive, as the case may be, Outstanding shares of STRAPS.
(vii) In no circumstance shall an Existing Holder be
required to sell shares of STRAPS that are subject to a Hold
Order submitted (or deemed to be submitted) by such Existing
Holder.
(f) Miscellaneous. The Board of Directors may interpret the
provisions of this paragraph 8 to resolve any inconsistency or
ambiguity. Neither the Corporation nor any Affiliate shall submit any
Order in any Auction. At the time of the initial Auction for any Series
of STRAPS, all of the Outstanding shares of such series of STRAPS shall,
to the extent then required by the Securities Depository, be represented
by a single certificate, registered in the name of the nominee of the
Securities Depository. Neither the Corporation nor any of its agents,
including, without limitation, the Auction Agent, shall have any
liability with respect to the failure of a Potential Holder, Existing
Holder or Agent Member to deliver, or to pay for, shares of STRAPS sold
or purchased in an Auction or otherwise.
(g) Headings of Subdivisions. The headings of the various
subdivisions of this paragraph 8 are for convenience of reference only
and shall not affect the interpretation of any of the provisions hereof.
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
ARTICLES OF MERGER
Pursuant to the Provisions of the Colorado Corporation Code, Great-West
Life & Annuity Insurance Company (the "Corporation") hereby adopts the following
Articles of Merger:
FIRST: Pursuant to C.R.S. Section 7-7-106, the plan of merger, attached
as Exhibit A, and incorporated into and made a part of these Articles of Merger,
was approved by unanimous vote of the Board of Directors of the Corporation on
October 22, 1991.
SECOND: The plan of merger was approved by unanimous vote of the Board
of Directors of Great-West Life Financial Corp. ("Financial Corp."), the parent
corporation and holder of 6,468,217 shares of the Corporation's common stock
prior to the merger, which stock (1) constitutes more than ninety percent (90%)
of the outstanding shares of common stock of the Corporation, (2) is the only
class of stock eligible to vote on this issue, and (3) the vote of which is
sufficient to approve the plan of merger.
THIRD: The Great-West Life Assurance Company ("Great- West Life"), is
the owner of 613,965 shares of the common stock of Financial Corp., which number
represents all of the issued and outstanding shares of Financial Corp. The Board
of Directors of Great-West Life, acting on its behalf as sole shareholder of
Financial Corp., has (1) waived prior mailing of the plan of merger, and (2)
voted unanimously to approve the plan of merger on October 24, 1991.
FOURTH: The plan of merger was delivered to Financial Corp., the
parent corporation and shareholder of the Corporation, on October
21, 1991.
FIFTH: The Articles of Redomestication of the Corporation, as amended,
to the extent that they are not affected by these Articles of
Merger, remain unchanged.
SIXTH: These Articles of Merger are to become effective on December 13,
1991, unless sooner withdrawn by a proper filing of a certificate of withdrawal
prior to or on such date.
SEVENTH: After the effective date of the merger, the surviving
corporation is Great-West Life & Annuity Insurance Company.
<PAGE>
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Dated: November 22, 1991 By: /s/ W.T. McCallum
--------------------
William T. McCallum, its President
& Chief Executive Officer
By: /s/ D.C. Lennox
D. Craig Lennox, its Senior Vice-
President, General Counsel
and Secretary
</TABLE>
<PAGE>
PLAN AND AGREEMENT OF MERGER
This PLAN AND AGREEMENT OF MERGER ("Agreement") is to be effective as of
December 13, 1991, by and between GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY, a
Colorado domestic insurance company ("GWL&A"), and GREAT-WEST LIFE FINANCIAL
CORP., a Colorado holding company ("Financial Corp."). GWL&A and Financial Corp.
shall sometimes be referred to collectively as the "Constituent Corporations."
RECITALS
A. GWL&A is a wholly-owned subsidiary of Financial Corp. As of the date
hereof, GWL&A has 50,000,000 shares of stock authorized, $1.00 par value, of
which 6,468,217 shares are currently issued and outstanding.
B. Financial Corp. is an insurance holding company wholly owned by The
Great-West Life Assurance Company, a Canadian corporation ("GWL"), with
100,000,000 shares of stock authorized, no par value, with 613,965 shares
currently issued and outstanding.
C. The purpose of this Agreement is to reposition certain United States
operating subsidiaries of GWL as directly owned subsidiaries of GWL&A.
D. In order to accomplish this, the Boards of Directors of the
Constituent Corporations deem it advisable and in the best interests of both
such corporations and their stockholders that Financial Corp.
merge with and into GWL&A. The surviving corporation shall be GWL&A.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, and for the purpose of stating
the terms and conditions of the merger, it is agreed, subject to the terms and
conditions hereinafter set forth, as follows:
1. MERGER AND EFFECTIVE DATE. In accordance with the provisions of the
laws of Colorado and subject to the terms and conditions of this Agreement,
Financial Corp. shall be merged with and into GWL&A. The effect of the merger
shall be as prescribed by Colorado law, and the effective date of the merger
shall be December 13, 1991. The merger shall take place pursuant to the
requirements of Colorado Revised Statutes, _10-3-801, et seq., titled Insurance
Holding Company Systems, C.R.S. ss.10-3-101, and Article 7 of the Colorado
Corporate Code.
<PAGE>
2. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
2.1 Directors. The directors of GWL&A in office on the effective date of
the merger shall be the directors of GWL&A and shall hold office for the terms
for which they have been elected until their successors are duly elected and
qualified pursuant to the bylaws of GWL&A.
2.2 Officers and Committees. All persons who, on the effective date of
the merger, are officers or members of any committee of GWL&A shall, after the
effective date, hold the same office in GWL&A as they theretofore held in GWL&A,
subject to the provisions of the bylaws of GWL&A.
3. CONDITIONS PRECEDENT TO MERGER. The merger shall not be effective
unless and until the following conditions have been fulfilled:
3.1 Compliance with Holding Company Requirements. The requirements of
C.R.S. ss.10-3-801, et seq., have been complied with and approval of the
Colorado Division of Insurance has been obtained or an exemption therefrom under
C.R.S. ss.10-3-803(8)(C) has been obtained.
3.2 Shareholder Approval. The merger has been submitted to and duly
approved by The Great-West Life Assurance Company ("GWL") as the shareholder of
Financial Corp.
3.3 Procedure. The procedure established in C.R.S. ss.7-7-106 for
merging a parent and corporation, including adopting Articles of Merger, has
been complied with.
3.4 State Regulatory Matters. When all necessary corporate and other
consents, authorizations and approvals of this Agreement have been obtained and
provided that this Agreement has not been terminated, the Constituent
Corporations will each cause a copy of this Agreement, with officers'
certificates of each Constituent Corporation along with Articles of Merger
pursuant to C.R.S. ss.7-7- 106, to be filed with the Colorado Insurance
Department in accordance with C.R.S. ss.10-3-101. Upon attaining approval of the
Colorado Department, the Articles of Merger along with the Plan and Agreement of
Merger shall be filed with the Secretary of State of Colorado. The filing of
such documents will be coordinated and accomplished on the same date. Thereafter
and without any further act or deed, Financial Corp. shall be merged into GWL&A,
which shall continue its corporate existence under the laws of the State of
Colorado.
3.5 Tax Matters. The merger will qualify as a reorganization within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"). GWL&A shall continue the same business and operations in which it is
currently engaged, without substantial modifications.
4. CONVERSION OF SECURITIES UPON MERGER. On the effective date, GWL&A
will transfer ownership of the 6,468,217 shares of GWL&A owned by Financial
Corp. to GWL in consideration of the surrender by GWL to GWL&A of the 613,965
shares representing all of the issued and outstanding shares of stock in
Financial Corp.
5. EFFECT OF MERGER. On the effective date, Financial Corp. and GWL&A
shall be a single corporation, the separate existence of Financial Corp. shall
cease and, in accordance with the terms of this Agreement, GWL&A shall possess
all of the rights, privileges, powers, immunities and franchises, of both a
public and a private nature, all property, real, personal and mixed, and all and
every other interest of each of the Constituent Corporations, as effectually as
did the respective Constituent Corporations. All debts due to either of the
Constituent Corporations on whatever account, including stock subscriptions and
all other things in action belonging to each Constituent Corporation shall be
vested in GWL&A without further act or deed. The title to any real estate or
interest therein, vested by deed or otherwise in either of the Constituent
Corporations, shall not revert or be in any way impaired by reason of the
merger. Neither the rights of creditors nor any liens upon the property of
either of the Constituent Corporations shall be impaired by the merger, and all
debts, liabilities, obligations, restrictions, disabilities and duties of each
of said Constituent Corporations shall thenceforth attach to GWL&A and may be
enforced against it to the same extent as if the same had been incurred or
contracted by it. Any claim existing or action or proceeding pending by or
against either of said Constituent Corporations may be prosecuted as if the
merger had not taken place or GWL&A may be substituted in its place.
6. TERMINATION OR P0STPONMENT OF MERGER. Notwithstanding any of the
provisions of this Agreement, at any time prior to the effective date, and
notwithstanding the approval hereof by GWL as the sole shareholder of the
Financial Corp., the Board of Directors of either of the Constituent
Corporations may cause the merger and all transactions contemplated by this
Agreement to be abandoned or delayed for any reason that such Board may deem
sufficient and proper.
7. GENERAL PROVISIONS.
7.1 Further Instruments. Each party shall execute and deliver all
further instruments, documents and papers, and shall perform any and all acts
necessary, to give full force and effect to all of the terms and provisions of
this Agreement
7.2 Severability. If any provision of this Agreement, as applied to any
party or to any circumstance, shall be found by a court of competent
jurisdiction to be void, invalid or unenforceable, the same shall in no way
affect any other provision of this Agreement, the application of any such
provision in any other circumstance, or the validity or enforceability of this
Agreement.
7.3 Notices. All notices, statements or demands shall be in writing and
shall be served in person, by telegraph, by express mail, by certified mail or
by private overnight delivery. Service shall be deemed conclusively made (a) at
time of service, if personally served, (b) at the time (as confirmed in writing
by the telegraphic agency) of delivery thereof to the addressee, if served
telegraphically, (c) twenty-four (24) hours after deposit in the United States
mail, properly addressed and postage prepaid, if served by express mail, (d)
five (5) days after deposit in the United States mail, properly addressed and
postage prepaid, return receipt requested, if served by certified mail and (e)
twenty-four (24) hours after delivery by the party giving the notice, statement
or demand to the private overnight deliverer, if served by private overnight
delivery.
Any notice or demand to either of the Constituent Corporations
shall be given to:
Great-West Life & Annuity Insurance Company
Attn.: William T. McCallum, President
and Chief Executive Officer
8515 E. Orchard Road
Englewood, Colorado 80112
Great-West Life Financial Corp.
Attn.: D. Craig Lennox, Sr. Vice President
and Secretary
8515 E. Orchard Road
Englewood, Colorado 80112
Any party may, by virtue of written notice in compliance with this Paragraph,
alter or change the address or the identity of the person to whom any notice, or
copy thereof, is to be sent.
7.4 Waivers. A waiver by any party of any of the terms and conditions of
this Agreement in any one instance shall not be deemed or construed to be a
waiver of such term or condition for the future, or of any subsequent breach
thereof, nor shall it be deemed a waiver of performance of any other obligation
hereunder.
7.5 Entire Agreement. This Agreement contains the entire understanding
of the parties hereto relating to the subject matter hereof and supersedes all
prior and collateral agreements, understandings, statements and negotiations of
the parties. Each party acknowledges that no representations, inducements,
promises, or agreements, oral or written, with reference to the matter hereof
have been made other than as expressly set forth herein.
7.6 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective estates,
successors, legal or personal representatives, heirs, distributees, designees
and assigns.
7.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
7.8 Gender and Number. In all matters of interpretation, whenever
necessary to give effect to any provision of this Agreement, each gender shall
include the other, the singular shall include the plural, and the plural shall
include the singular.
7.9 Paragraph and Subparagraph Headings. The titles of the paragraphs of
this Agreement are for convenience only and shall not in any way affect the
interpretation of any provision or condition of this Agreement.
7.10 Third Parties. Except as may be expressly set forth herein, the
parties hereto do not intend to confer any rights or remedies upon any person
other than the parties hereto.
7.11 Legal Action. In the event of any litigation between or among the
parties hereto respecting or arising out of this Agreement, the prevailing party
or parties shall be entitled to recover reasonable attorneys' fees and costs,
whether or not such litigation proceeds to final judgment or determination.
7.12 Counterparts. This Agreement may be executed in counterparts which,
taken together, shall constitute the whole of the Agreement as between the
parties.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY, a Colorado
corporation
By: /s/ W.T. McCallum
Title: President and Chief Executive Officer
By: /s/ Douglas L. Wooden
Title: Senior Vice-President, Chief
Financial Officer and Treasurer
GREAT-WEST LIFE FINANCIAL
CORP., a Colorado corporation
By: /s/ W.T. McCallum
Title: Executive Vice-President and
Chief Operating Officer
By: /s/ D.C. Lennox
Title: Senior Vice-President and
Secretary
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
ARTICLES OF AMENDMENT
TO ARTICLES OF REDOMESTICATION
Pursuant to the provisions of the Colorado Corporation Code, Great-West
Life & Annuity Insurance Company (the "Corporation") hereby adopts the following
Articles of Amendment to its Articles of Redomestication:
FIRST: The name of the Corporation is Great-West Life & Annuity Insurance Company.
SECOND: The Amendment set forth on Exhibit 1 attached hereto was adopted
by a vote of the sole shareholder of the Corporation on June 16, 1992. The
number of shares voted for the amendments was sufficient for approval.
THIRD: The Amendment does not effect an exchange, reclassification, or cancellation of issued shares
of the Corporation.
FOURTH: The Amendment does not effect a change in the amount of stated capital of the Corporation.
</TABLE>
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
Dated: June 16, 1992 By: /s/ William T. McCallum
----------------------------------
William T. McCallum, President
and Chief Executive Officer
By: /s/ D.C. Lennox
D. Craig Lennox, Senior Vice-
President, General Counsel
and Secretary
<PAGE>
Great-West Life & Annuity Insurance Company hereby amends parts of its
Articles of Redomestication consisting of the Statement of Resolution
Establishing Four Series of Preferred Stock dated as of September 18, 1991 and
filed with the Secretary of State of Colorado on September 30, 1991 (the
"Statement") as follows:
1. The definition of "Initial Long-Term Dividend Period" contained in
paragraph 2 of the Statement is hereby amended to read in its entirety as
follows:
"Initial Long-Term Dividend Period" means (i) with respect to the
Series A STRAPS, Series C STRAPS and Series D STRAPS, the period
from and including the respective Dates of Original Issues for
such series to and excluding December 31, 1993, and (ii) with
respect to the Series B STRAPS, the period from and including the
Date of Original Issue for such series to and excluding December
31, 1995.
2. The first sentence of paragraph 3(b)(ii) of the Statement is hereby
amended to read as follows:
(ii) During the Initial Long-Term Dividend Period, dividends on
the shares of each series of STRAPS shall be payable quarterly on
the last day of each March, June, September and December of each
year, and the last dividend during this Period will be payable on
the last day of the Initial Long-Term Dividend Period for such
series, unless any such date is not a Business Day, in which case
dividends on the STRAPS will be payable on the next succeeding
Business Day.
3. The first sentence of paragraph 3(c)(i) of the Statement is hereby
amended to read as follows:
(c) (i) Subject to paragraph 3(c)(ii), (I) during the Initial
Long-Term Dividend Period for each series of STRAPS, the
respective dividend rates per annum applicable to such series
shall be as follows: Series A, Series C and Series D, 8% and
Series B, 7%; and (II) the respective dividend rates on the
shares of each series of STRAPS (the "Applicable Rate") for each
subsequent Dividend Period shall be the rate per annum determined
for such series pursuant to the operation of the Auction
Procedures set forth in paragraph 8 below.
<PAGE>
ARTICLES OF AMENDMENT
TO ARTICLES OF REDOMESTICATION
Pursuant to the provisions of the Colorado Corporation Code, Great-West
Life & Annuity Insurance Company (the "Corporation") hereby adopts the following
Articles of Amendment to its Articles of Redomestication:
FIRST: The name of the Corporation is Great-West Life & Annuity
Insurance Company.
SECOND: The Amendments set forth on Exhibit 1 and Exhibit 2 attached
hereto were adopted by a vote of the sole shareholder of the Corporation on
September 15, 1992. The number of shares voted for the Amendments was sufficient
for approval.
THIRD: The amendments do not effect an exchange, reclassification, or
cancellation of issued shares of the Corporation.
FOURTH: The amendments do not effect a change in the amount of stated
capital of the Corporation.
Dated: September 15, 1992 THE GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
By: /s/ W.T. McCallum
William T. McCallum, President
and Chief Executive Officer
By: /s/ D.C. Lennox
D. Craig Lennox, Senior Vice
President, General Counsel
and Secretary
<PAGE>
Great-West Life & Annuity Insurance Company hereby amends the following
parts of the terms for four series of Stated Rate Option Preferred Stock as set
forth in the Statement of Resolution Establishing Four Series of Preferred Stock
dated as of September 18, 1991 and filed with the Secretary of State of Colorado
on September 30, 1991:
Paragraphs 6(c), 6(d) and 6(e) are hereby amended to read in their
entirety as follows:
(c) Default in Dividend.
(i) During any period (a "Voting Period") when a "Default in
Preferred Dividends" (as hereinafter defined) shall exist on the shares
of any series of the STRAPS, or any class or series of preferred stock
ranking on a parity with the shares of the STRAPS as to dividends or
upon liquidation, dissolution or winding up of the Corporation and the
terms of which expressly provide that such shares are "Voting Parity
Preferred Stock" within the meaning of this paragraph and voting rights
thereunder are then exercisable (all such shares, and all shares of each
series of the STRAPS, being hereinafter referred to collectively as the
"Voting Parity Preferred Stock"), the authorized number of members of
the Board of Directors shall automatically be increased by two. The two
vacancies so created shall be filled by the vote of the holders of the
"Defaulted Voting Parity Preferred Stock" as hereinbelow defined, voting
together as a single class without regard to class or series, to the
exclusion of the holders of the Common Stock of the Corporation and any
other class or series of stock other than such shares of Defaulted
Voting Parity Preferred Stock. A "Default in Preferred Dividends" means
any default or event specified in the terms of any class of preferred
stock or series of preferred stock by reason of which the holders of
such preferred stock are entitled to elect directors of the Corporation.
A "Default in Preferred Dividends" with respect to any series of STRAPS
shall be deemed to have occurred whenever the amount of unpaid
accumulated dividends upon such series through the last preceding
dividend period therefor shall be equivalent to six quarterly dividends
(which, with respect to any series of the STRAPS, shall be deemed to be
dividends with respect to a number of dividend periods containing not
less than 540 days) or more, and, having so occurred, such default shall
be deemed to exist thereafter until, but only until, all accumulated and
unpaid dividends (whether or not earned or declared) on all shares of
all STRAPS of each and every series then outstanding shall have been
paid to the end of the last preceding dividend period. "Defaulted Voting
Parity Preferred Stock" at any time shall mean those classes and series
of Voting Parity Preferred Stock in respect of which, at or prior to
such time, a Default in Preferred Dividends has occurred and of which
the holders are entitled at that time by the terms of such Voting Parity
Preferred Stock to elect directors of the Corporation. Upon the
termination of a Voting Period with respect to any class or series of
Defaulted Voting Parity Preferred Stock, the voting rights described in
this paragraph (c) shall cease for such class or series of Defaulted
Voting Parity Preferred Stock, subject always, however, to revesting of
such voting rights in the holders of such Voting Parity Preferred Stock
upon the further occurrence of a Default in Preferred Dividends. If any
Voting Period shall have terminated before the holders of a class or
series of Voting Parity Preferred Stock shall have exercised the voting
rights provided in this paragraph 6(c), the holders of such class or
series of Voting Parity Preferred Stock shall be deemed not to have
acquired such voting rights.
(ii) If the holders of any class or series of Defaulted Voting
Parity Preferred Stock (the "first Defaulted Voting Parity Preferred
Stock") have elected one or more directors prior to the happening of the
default or event permitting the holders of any other class or series of
Defaulted Voting Parity Preferred Stock to elect directors, then the
directors so previously elected will be deemed to have been elected by
and on behalf of the holders of such other class or series of Defaulted
Voting Parity Preferred Stock as well as the first Defaulted Voting
Parity Preferred Stock, without prejudice to the right of the holders of
such other class or series to vote for directors if such previously
elected directors shall resign, cease to serve or stand for reelection
while the holders of such other class or series are entitled to vote. If
the holders of any first Defaulted Voting Parity Preferred Stock are
entitled to elect in excess of two directors, the holders of such other
class or series shall not participate in the election of more than two
such directors.
(iii) No shares of any Defaulted Voting Parity Preferred Stock
held by the Corporation or any of the Corporation's Affiliates shall be
voted, or counted in determining a quorum, for the election, removal or
replacement of any director elected by any Defaulted Voting Parity
Preferred Stock.
(d) Voting Procedures.
(i) As soon as practicable after the commencement of a Voting
Period, the Corporation shall call or cause to be called a special
meeting of the holders of Defaulted Voting Parity Preferred Stock by
mailing or causing to be mailed a notice of such special meeting to such
holders not less than 10 nor more than 45 days after the date such
notice is given. If the Corporation does not call or cause to be called
such a special meeting, it may be called by any of such holders on like
notice. The record date for determining the holders of Defaulted Voting
Parity Preferred Stock entitled to notice of and to vote at such meeting
shall be the close of business on the Business Day preceding the day on
which such notice is mailed. At any such special meeting and at each
meeting of stockholders held during a Voting Period at which directors
are to be elected, removed or replaced, the holders of Defaulted Voting
Parity Preferred Stock, voting together as a single class (to the
exclusion of the holders of all other securities, series and classes of
capital stock of the Corporation), voting by a majority of the votes of
shares present in person or by proxy, shall be entitled to elect two
directors. In regard to such elections, holders of shares of Defaulted
Voting Parity Preferred Stock shall be entitled to one or more votes
and/or a fractional vote on the basis of one vote for each $100,000 of
liquidation preference (excluding amounts in respect of accumulated and
unpaid dividends) attributable to such shares. Cumulative voting in such
elections shall not be permitted. Shares of Defaulted Voting Parity
Preferred Stock then outstanding, present in person or represented by
proxy, representing one-third of the votes of the Defaulted Voting
Parity Preferred Stock, will constitute a quorum for the election of
directors. Notice of all meetings at which holders of Defaulted Voting
Parity Preferred Stock of any series shall be entitled to vote will be
given to such holders at their addresses as they appear on the Stock
Books. At any such meeting or adjournment thereof in the absence of a
quorum, holders of shares of Defaulted Voting Parity Preferred Stock
representing a majority of the votes present in person or represented by
proxy shall have the power to adjourn the meeting for the election of
directors without notice, other than an announcement at the meeting,
until a quorum is present. If any Voting Period shall terminate after
the notice of special meeting provided for in this paragraph 6(d)(i) has
been given but before the special meeting shall have held, the
Corporation shall, as soon as practicable after such termination, mail
or cause to be mailed to the holders of Defaulted Voting Parity
Preferred Stock a notice of cancellation of such special meeting.
(ii) The term of office of all persons who are directors of the
Corporation at the time of a special meeting of the holders of Defaulted
Voting Parity Preferred Stock to elect directors shall continue,
notwithstanding the election at such meeting by such holders of the two
additional directors.
(iii) Simultaneously with the expiration of a Voting Period for
all classes and series of Defaulted Voting Parity Preferred Stock, the
term of office of the directors elected by the holders of Defaulted
Voting Parity Preferred Stock shall terminate, the other persons who
shall have been elected by the holders of stock of the Corporation (or
by the Board of Directors prior to the beginning of the Voting Period)
and who are incumbent shall constitute the directors of the Corporation,
and the voting rights of the holders of Voting Parity Preferred Stock to
elect directors shall cease.
(iv) For so long as a Voting Period continues, the directors
elected at any time by the holders of Defaulted Voting Parity Preferred
Stock may be removed without cause by, and shall not be removed without
cause except by, the vote of the holders of record of the outstanding
shares of Defaulted Voting Parity Preferred Stock at any subsequent
time, voting together as a single class without regard to class or
series, at a meeting of the stockholders, or of the holders of shares of
Defaulted Voting Parity Preferred Stock, called for such purpose. So
long as a Voting Period continues, (A) any vacancy in the office of a
director elected by the holders of Defaulted Voting Parity Preferred
Stock may be filled (except as provided in the following clause (B)) by
the person appointed by an instrument in writing signed by the remaining
director elected by the holders of Defaulted Voting Parity Preferred
Stock and filed with the Corporation or, in the event there is no
remaining director elected by the holders of Defaulted Voting Parity
Preferred Stock, by vote of the holders of the outstanding shares of
Defaulted Voting Parity Preferred Stock, voting together as a single
class without regard to class or series, at a meeting of the
stockholders or at a meeting of the then holders of shares of Defaulted
Voting Parity Preferred Stock called for such purpose, and (B) in the
case of the removal of any director elected by the holders of Defaulted
Voting Parity Preferred Stock, the vacancy may be filled by the person
elected by the vote of the holders of the outstanding shares of
Defaulted Voting Parity Preferred Stock, voting together as a single
class without regard to class or series, at the same meeting at which
such removal shall be voted or at any subsequent meeting.
(e) Additional Vote. If any matter (excluding the election,
removal or replacement of directors) requires the consent or affirmative
vote of shares of any series of STRAPS, of all series of STRAPS, or of
all Preferred Stock of the Corporation, whether pursuant to the
provisions of such series, all such series or such Preferred Stock or
pursuant to the provisions of the Articles of Redomestication of the
Corporation or pursuant to applicable law, and if any shares of any
series of STRAPS entitled to vote are held by the Corporation or by any
of its Affiliates, then the following additional consent or vote will be
required: the same consent or affirmative vote of shares otherwise
required, except that shares of STRAPS held by the Corporation and/or
its Affiliates shall be deemed not to be outstanding for purposes of
such additional consent or vote: provided, such additional consent or
vote will not be applicable if all outstanding shares of the STRAPS of
such series (in the case of a class vote of such series) or of all
series STRAPS (in the case of a vote of all series of STRAPS) are held
by the Corporation and/or its Affiliates.
<PAGE>
Great-West Life & Annuity Insurance Company hereby amends parts of
ARTICLE IX of its Articles of Redomestication as follows:
1. Article IX, Section A, paragraph 3 is hereby amended to read in
its entirety as follows:
3. Dividend and Liquidation Preference as between the Common
Stock and the Preferred Stock. For so long as any shares of Preferred
Stock are outstanding, the corporation shall not declare, pay or set
apart for payment any dividend or other distribution (other than any
dividend or distribution payable solely in shares of Common Stock or any
other stock of the corporation ranking junior to the shares of Preferred
Stock as to dividends and liquidation) in respect of the Common Stock or
any other stock of the corporation ranking junior to the shares of
Preferred Stock as to dividends or upon liquidation, or call for
redemption, redeem, purchase or otherwise acquire for consideration any
shares of the Common Stock or any other stock of the corporation ranking
junior to the shares of Preferred Stock as to dividends or upon
liquidation, unless (i) full cumulative dividends on all shares of
Preferred Stock as to which dividends are cumulative for all past
dividend periods have been (a) paid or (b) declared and a sum sufficient
irrevocably deposited with the paying agent for the payment of such
dividends, and (ii) the corporation has redeemed the full number of
shares of Preferred Stock, if any, it is then obligated to redeem in
accordance with the terms of any series of Preferred Stock as fixed by
the board of directors of the corporation in accordance with this
Article IX.
2. Article IX, Section B, paragraph 2 is hereby amended to read in
its entirety as follows:
2. No Dividend Preference Between Series of Preferred Stock. No
dividends shall be declared on shares of any series of Preferred Stock
for any dividend period or part thereof unless full cumulative dividends
have been or contemporaneously are declared on the shares of each other
series of Preferred Stock as to which dividends are cumulative through
the most recent dividend payment date for each such other series. If at
any time any accrued dividends on shares of any series of Preferred
Stock as to which dividends are cumulative (a "cumulative series") have
not been paid in full, then the corporation will, if paying any
dividends on any shares of any cumulative series of Preferred Stock, pay
dividends on shares of all cumulative series of Preferred Stock pro rata
in proportion to the sums which would be payable on such cumulative
series if all accrued but unpaid dividends, if any, through the most
recent dividend payment date were declared and paid in full. Dividends
on any series of Preferred Stock shall be cumulative only to the extent
provided in the terms of that series .
<PAGE>
STATEMENT OF RESOLUTION
ESTABLISHING SERIES E PREFERRED STOCK
Pursuant to Section 7-4-102 of the Colorado Corporation Code, Great-West
Life & Annuity Insurance Company, a Colorado corporation (the "Corporation"),
hereby submits the following statement for the purpose of establishing and
designating one series of preferred stock and fixing and determining the
relative rights and preferences thereof.
1. The name of the Corporation is Great-West Life & Annuity
Insurance Company.
2. On September 15, 1992, the following resolution establishing and
designating one series of shares of the Corporation's preferred stock was duly
adopted by the Board of Directors of the Corporation pursuant to authority
conferred upon the Board by the Corporation's Articles of Redomestication:
RESOLVED, that the Board of Directors hereby creates and
establishes a series of Non-Cumulative Perpetual Preferred
Stock, Series E, in accordance with the terms set forth in
Exhibit A attached hereto [a copy of which is attached to
this Statement of Resolution and is incorporated herein by
this reference], and authorizes the officers of the
Corporation to file this resolution with the Colorado
Secretary of State in accordance with the Colorado
Corporation Code.
Dated: September 15, 1992 GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
By: /s/ W.T. McCallum
William T. McCallum, President
and Chief Executive Officer
By: /s/ D.C. Lennox
D. Craig Lennox, Senior Vice
President, General Counsel
and Secretary
<PAGE>
STATEMENT OF RESOLUTIONS ESTABLISHING
A SERIES OF PREFERRED STOCK
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
PREFERRED STOCK, SERIES E
RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS
The Board of Directors of Great-West Life & Annuity Insurance Company
(the "Corporation") hereby creates a fifth series of Preferred Stock, designated
as the Non-Cumulative Perpetual Preferred Stock, Series E (hereinafter referred
to as the "Series E Preferred Stock") consisting of 2,000,000 shares of
Preferred Stock The Series E Preferred Stock shall be subject to and governed by
the provisions of the Articles of Redomestication of the Corporation as amended
from time to time in accordance with applicable law (including, but not limited
to, the provisions of the Articles of Redomestication concerning dividend and
liquidation preferences) and shall, in addition to the rights, privileges,
restrictions and conditions stated in such Articles of Redomestication for the
Preferred Stock as a class, have the following rights, privileges, restrictions
and conditions
ARTICLE 1
INTERPRETATION AND APPLICATION
1.1 Definitions
(a) "Affiliate," as used herein, means any entity other than the
Corporation (i) which owns beneficially, directly or indirectly, 10% or
more of the outstanding shares of the Common Stock, (ii) which is in
control of the Corporation, as "control" is defined under Section 230.405
of the Rules and Regulations of the Securities and Exchange Commission, 17
C.F.R.ss. 230.405, as in effect on the date of this Statement, (iii) of
which 10% or more of the outstanding shares of common stock, or in which a
10% or greater general partnership or joint venture interest, is owned
beneficially, directly or indirectly, by any entity described in clause (i)
or (ii) above, or (iv) which is controlled by any entity described in
clause (i) or (ii) above, as "controlled by" is defined under such Section
230.405.
(b) "Common Stock" shall mean the shares of common stock, par value
$1.00, in the capital of the Corporation;
(c) "Corporation's Conversion Notice" shall have the meaning ascribed
thereto in subsection 3.2(b) hereof;
<PAGE>
(d) "Conversion Number" shall mean the number of shares of Common
Stock which are to be issued on a conversion of one share of the
Series E Preferred Stock, which shall be either the Negotiated
Conversion Number or the Formula Conversion Number;
(e) "Formula Conversion Number" shall mean the number of shares of
Common Stock used in connection with the conversion of Series E
Preferred Stock into Common Stock determined in accordance with
the provisions of section 4.6 hereof;
(f) "Holder's Conversion Notice" shall have the meaning ascribed
thereto in subsection 4.2(a) hereof; and
(g) "Negotiated Conversion Number" shall mean that number of shares
of Common Stock used in connection with the conversion of Series
E Preferred Stock into Common Stock determined in accordance with
the provisions of section 4.5 hereof.
1.2 Regulatory Approvals
Notwithstanding anything to the contrary contained herein, the
Corporation shall not redeem, purchase for cancellation or otherwise retire,
reduce or make any return of capital in respect of any Series E Preferred Stock
or exercise its option to convert the Series E Preferred Stock into shares of
common stock or modify the rights, privileges, restrictions or conditions of the
Series E Preferred Stock unless the same is in accordance with the Colorado law
and all the necessary or appropriate consents of the Colorado Insurance Division
and other regulatory authorities having jurisdiction have been obtained prior
thereto.
ARTICLE 2
DIVIDENDS
2.1 Dividend Payment Dates and Dividend Periods
The dividend payment dates (the "Dividend Payment Dates") in respect of
the dividends payable on the Series E Preferred Stock shall be the last day of
each of the months of March, June, September and December in each year. A
Dividend Period shall mean the period from and including the date of issue of
the Series E Preferred Stock to but excluding the first Dividend Payment Date
and, thereafter, the period from including each Dividend Payment Date to but
excluding the next succeeding Dividend Payment Date.
<PAGE>
2.2 Payment of Dividends
The holders of Series E Preferred Stock shall be entitled to receive,
and the Corporation shall pay thereon, as and when declared by the board of
directors of the Corporation, out of moneys of the Corporation properly
applicable to the payment of dividends, non-cumulative cash dividends (the
"Quarterly Dividends") payable, with respect to each Dividend Period, on the
Dividend Payment Date immediately following the end of such Dividend Period, the
first of such dividends to be payable on December 31, 1992 and to be in an
amount per share determined in accordance with section 2.3 hereof. For all
subsequent Dividend Periods, dividends, subject to section 2.3 hereof, as and
when declared by the board of directors of the Corporation, out of moneys of the
Corporation properly applicable to the payment of dividends, shall be paid in an
amount per share of Series E Preferred Stock equal to $0.39188.
2.3 Dividend for other than a Full Dividend Period
The holders of Series E Preferred Stock shall be entitled to receive,
and the Corporation shall pay thereon, as and when declared by the board of
directors, out of moneys of the Corporation properly applicable to the payment
of dividends, non-cumulative cash dividends for any period which is less than a
full Dividend Period as follows:
(a) an initial dividend per share in respect of the period from and
including the date of the initial issue of the Series E Preferred
Stock to but excluding December 31, 1992 (the "Initial Dividend
Period") equal to $0.57976; and
(b) a dividend in an amount per share with respect to any Series E
Preferred Stock:
(i) which is issued, redeemed or purchased by the Corporation or
converted during any Dividend Period; or
(ii) where the assets of the Corporation are distributed in the
liquidation, dissolution or winding up of the Corporation
to the holders of the Series E Preferred Stock with an
effective date during any Dividend Period;
equal to the amount obtained (rounded to five decimal places) when
$1.5675 is multiplied by a fraction of which the numerator is the number
of days in such Dividend Period that such share has been outstanding
(excluding the date of issue, redemption, purchase or conversion or the
effective date for the distribution of assets) and the denominator of
which is the number of days in the year in which such Dividend Period
falls.
<PAGE>
2.4 Payment Procedure
The Corporation shall pay the dividends on the Series E Preferred Stock
to the holders of record thereof at the close of business on the second business
day immediately preceding the relevant Dividend Payment Date (less any tax
required to be deducted or withheld by the Corporation) by check drawn on a bank
or trust company and payable in lawful money of the United States at any branch
of such bank or trust company in the United States. The delivery or mailing of
any check to a holder of Series E Preferred Stock shall be a full and complete
discharge of the Corporation's obligation to pay the dividends to such holder
(plus any tax required to be and in fact deducted and withheld therefrom and
remitted to the proper taxing authority) unless such check is not honored when
presented for payment. Dividends which are represented by a check which has not
been presented to the Corporation's bankers for payment or that otherwise remain
unclaimed for a period of two years from the date on which they were declared to
be payable may be reclaimed (including without limitation by cancellation of any
check) and after such reclaiming the holders of Series E Preferred Stock
entitled to the funds so reclaimed shall look only to the Corporation for such
payment, without interest.
ARTICLE 3
REDEMPTION, CONVERSION AND PURCHASE
3.1 General
(a) Subject to the Articles of Redomestication and to the extent
permitted by applicable law, the Series E Preferred Stock may be
redeemed, converted or purchased by the Corporation as provided
in this Article 3 and Article 4 but not otherwise.
(b) For the purposes hereof, the Common Stock of the Corporation (the
"Common Stock") shall mean (i) such common stock as currently
constituted and (ii) any shares attributable to such common stock
and resulting from a reclassification of the common stock of the
Corporation or from a capital reorganization of the Corporation
or a consolidation or merger of the Corporation with or into any
other corporation (other than a capital reorganization,
consolidation or merger which does not result in any
reclassification of the common stock or a change of the common
stock into other stock, shares or securities).
3.2 Redemption and Conversion Rights
(a) The Series E Preferred Stock shall not be redeemable prior to
April 1, 1999. The Corporation may, upon giving notice as
hereinafter provided, redeem on or after April 1, 1999 at any
time the whole or from time to time any part of the then
outstanding Series E Preferred Stock, by the payment of an amount
in cash for each share of Series E Preferred Stock so redeemed
equal to the sum of $20.90 plus an amount equal to all declared
and unpaid dividends thereon up to but excluding the date fixed
for redemption (the "Redemption Price").
(b) The Series E Preferred Stock shall not be convertible at the
option of the Corporation prior to April 1, 1999. Subject to
compliance with the rights, privileges, restrictions and
conditions of the Common Stock and receipt of any required
regulatory approval, the Corporation may, by giving notice as
hereinafter provided (the "Corporation's Conversion Notice"),
convert the whole or from time to time any part of the then
outstanding Series E Preferred Stock into fully paid and
non-assessable shares of Common Stock on the basis that the
Series E Preferred Stock of each holder called for conversion by
the Corporation will be converted into (subject to that exception
as to fractions contained in section 3.7 hereof) that number (the
"Conversion Number") of shares of Common Stock determined
pursuant to Article 4 and that the Formula Conversion Number as
provided in section 4.6 shall be used for this purpose.
(c) If less than all of the outstanding Series E Preferred Stock are
to be redeemed or converted, the shares to be redeemed or
converted shall be selected by lot, pro rata (disregarding
fractions) or in such other manner as the board of directors or a
committee thereof in its sole discretion shall by resolution
determine.
3.3 Manner of Redemption or Conversion
(a) Notice of redemption or conversion of Series E Preferred Stock
shall be given by the Corporation not less than 25 nor more than
60 calendar days prior to the date fixed for redemption and not
less than 35 nor more than 60 calendar days prior to the date
fixed for conversion, to each holder of Series E Preferred Stock
to be redeemed or converted, as the case may be. Such notice
shall set out (i) the date (the "Redemption Date" or the
"Conversion Date", as the case may be) on which the redemption or
conversion is to take place; (ii) unless all the Series E
Preferred Stock held by the holder to whom it is addressed is to
be redeemed or converted, the number of shares of Series E
Preferred Stock so held which are to be redeemed or converted:
(iii) whether the Corporation shall redeem or convert such Series
E Preferred stock; (iv) the Redemption Price or the method of
determining the Conversion Number, as the case may be; and (v)
where the Series E Preferred Stock is to be converted into Common
Stock, the advice that such Common Stock will be registered in
the name of the registered holder of the Series E Preferred Stock
to be converted unless the Corporation receives from such holder,
on or before the tenth calendar day prior to the Conversion Date
(the "Transferee Notice Date"), at the head office of the
Corporation, written notice in a form and executed in a manner
satisfactory to the Corporation directing the Corporation to
register such Common Stock in some other name or names (the
"Transferee") and stating the name or names (with addresses)
accompanied by payment to the Corporation of any transfer tax
that may be payable by reason thereof and a written declaration
of such matters as may be required by law in order to determine
the entitlement of such Transferee to hold such Common Stock.
(b) In the case of a redemption, on and after the Redemption Date the
Corporation shall pay or cause to be paid to the holders of the
Series E Preferred Stock so called for redemption the Redemption
Price therefor on presentation and delivery at the head office of
the Corporation or such other place or places in the United
States designated in the notice referred to in subsection 3.3(a),
of the certificate or certificates representing the Series E
Preferred Stock so called for redemption. Such payment shall be
made by check and shall be a full and complete discharge of the
Corporation's obligation to pay the Redemption Price owed to the
holders of Series E Preferred Stock so called for redemption
unless the check is not honored when presented for payment. From
and after the Redemption Date, the holders of Series E Preferred
Stock called for redemption shall cease to be entitled to
dividends or to exercise any of the rights of holders of Series E
Preferred Stock in respect of such shares except the right to
receive therefor the Redemption Price, provided that if payment
of such Redemption Price is not duly made in accordance with the
provisions hereof, then the rights of such holders shall remain
unimpaired.
(c) In the case of a redemption, the Corporation shall have the right
at any time after mailing a notice of redemption to deposit
irrevocably (subject to the repayment right set forth below in
this subsection) the aggregate Redemption Price of the Series E
Preferred Stock thereby called for redemption, or such part
thereof as at the time of deposit has not been claimed by the
holders entitled thereto, in a special account with a bank or
trust company designated by the Corporation for the holders of
such shares, and upon such deposit being made or upon the date
fixed for redemption, whichever is the later, the Series E
Preferred Stock in respect of which such deposit shall have been
made shall be deemed to be redeemed and the rights of each holder
thereof shall be limited to receiving, without interest, his
proportionate part of the Redemption Price so deposited upon
presentation and surrender of the certificates representing the
Series E Preferred Stock so redeemed. Any interest on any such
deposit shall belong to the Corporation. Redemption moneys which
remain unclaimed for a period of two years from the Redemption
Date shall be repaid to the Corporation, and after such
repayment, the holders of Series E Preferred Stock entitled to
the funds so repaid to the Corporation shall look only to the
Corporation for such payment, without interest.
(d) In the case of a conversion of Series E Preferred Stock into
Common Stock, on and after the Conversion Date the Corporation
shall deliver the Conversion Number of Common Stock on
presentation and delivery by the holders at the head office of
the Corporation or such other place or places in the United
States designated in the notice referred to in subsection 3.3(a),
of the certificate or certificates representing the Series E
Preferred Stock so called for conversion. The Corporation shall
deliver or cause to be delivered certificates representing such
Common Stock registered in the name of the holders of Series E
Preferred Stock to be converted, or as such holders shall have
directed as aforesaid. Series E Preferred Stock so converted
shall be converted effective on the Conversion Date. From and
after the Conversion Date, the holders of Series E Preferred
stock so converted who have not presented and delivered the
certificate or certificates representing such shares as herein
required shall cease to be entitled to dividends on such Series E
Preferred Stock or to exercise any of the rights of holders of
Series E Preferred Stock in respect of such shares except the
right to receive a certificate for the Conversion Number of
Common Stock and any payment with respect to a fraction of a
share of Series E Preferred Stock.
(e) If less than all the Series E Preferred Stock represented by any
certificate shall be redeemed or converted, a new certificate for
the balance shall be issued without cost to the holder.
3.4 Purchase
The Corporation may purchase at any time all or from time to time any
part of the outstanding Series E Preferred Stock in the open
market (including purchases through or from an investment dealer
or firm holding membership on a stock exchange) or pursuant to
tenders received by the Corporation upon an invitation for
tenders addressed to all holders of the Series E Preferred Stock,
at a price per share in each case not exceeding the applicable
Redemption Price at the time of purchase plus costs of purchase.
If upon any invitation for tenders the Corporation receives
tenders for Series E Preferred Stock at the same price in an
aggregate number greater than the number for which the
Corporation is prepared to accept tenders, the shares to be
purchased shall be selected from the shares offered at such price
as nearly as may be pro rata (to the nearest 10 shares) according
to the number of shares of Series E Preferred Stock offered in
each such tender, in such manner as the board of directors or a
committee thereof in its sole discretion shall by resolution
determine. If part only of the Series E Preferred Stock
represented by any certificate shall be purchased, a new
certificate for the balance of such shares shall be issued
without cost to the holder.
3.5 Conversion into Another Series of Preferred Stock
To the extent permitted by applicable law and the Articles of
Redomestication and by-laws of the corporation, and with any
required approval of the Colorado Insurance Division, the
Corporation may at any time on or after September 30, 1997,
designate a further series of preferred stock of the same class
as the Series E Preferred Stock which qualifies as regulatory
capital for Canadian insurance law purposes (the "New Preferred
Stock") and notify the holders of Series E Preferred Stock that
they have the right pursuant to the terms of the Series E
Preferred Stock, at their option, to convert their Series E
Preferred Stock into fully paid and non-assessable New Preferred
Stock on a share for share basis on a date specified by the
Corporation in such notice (the "Exchange Date"). Such notice
shall provide the details of the terms and conditions of the New
Preferred Stock and instructions on how to convert Series E
Preferred Stock into New Preferred Stock and shall be accompanied
by the proper form of instrument of surrender.
3.6 Manner of Conversion into Another Series of Preferred Stock
Series E Preferred Stock may be converted by the holder of such shares
tendering to the Corporation on or prior to the Exchange Date the certificate or
certificates representing the Series E Preferred Stock to be so converted
accompanied by a written instrument of surrender in form satisfactory to the
Corporation and duly executed by the registered holder of the Series E Preferred
Stock represented by the certificate or certificates so surrendered in which
instrument the holder may elect to convert all or a portion of the Series E
Preferred Stock represented by such certificate or certificates into New
Preferred Stock.
The Corporation shall, on presentation and delivery at the head office
of the Corporation or such other place or places in the United States as the
Corporation may agree of the certificate or certificates representing the Series
E Preferred Stock to be converted, issue and deliver or cause to be delivered as
soon as is reasonably practicable after the Exchange Date a certificate or
certificates representing the New Preferred Stock into which such Series E
Preferred Stock have been converted. Such certificate or certificates shall be
registered in the name of the holder of the Series E Preferred Stock so
converted or in such name or names as the holder may specify in the written
instrument accompanying the Series E Preferred Stock to be converted. The Series
E Preferred Stock so converted shall be converted, and the holder thereof shall
become a holder of record of New Preferred Stock, effective on the Exchange
Date. The provisions of subsection 3.3(e) shall apply, mutatis mutandis, in the
event of a conversion into New Preferred Stock of less than all of the Series E
Preferred Stock represented by a particular share certificate.
3.7 Avoidance of Fractional Shares
In any case where a fraction of a share of Common Stock would otherwise
be issuable on conversion of one or more shares of Series E Preferred Stock, the
Corporation shall adjust such fractional interest by payment by check in an
amount equal to the value of such fractional interest computed on the basis of
$20.90 divided by the Conversion Number determined in respect of the relevant
Conversion Date.
<PAGE>
ARTICLE 4
HOLDER'S CONVERSION RIGHT
4.1 Conversion Right
Subject to the option of the Corporation in section 4.3 hereof and to
the provisions of section 1.2 hereof, each share of Series E Preferred Stock
shall, on and after September 30, 1999, at the option of the holder, be
convertible on the last day of March, June, September and December in each year
(a "permitted conversion date") into (subject to the exception as to fractions
contained in section 4.4) that number of shares of fully paid and non-assessable
Common Stock as is equal to the Conversion Number. The holder of Series E
Preferred Stock to be converted is entitled to receive any dividend which has
been declared and is payable on the date of such conversion.
Not less than 90 nor more than 120 calendar days prior to September 30,
1999, the Corporation shall give to the registered holders of the Series E
Preferred Stock notice of the conversion right containing instructions to such
holders as to the method by which such conversion right may be exercised, as set
out in section 4.2. However, a failure to give such notice shall not affect the
conversion rights of the Series E Preferred Stock.
4.2 Manner of Conversion
(a) Series E Preferred Stock may be converted by the holder of such
shares tendering to the Corporation not less than 55 calendar
days prior to the date (which must be a permitted conversion
date) fixed for conversion by such holder the certificate or
certificates for the Series E Preferred Stock to be converted
with the notice of conversion on the reverse side thereof (the
"Holder's Conversion Notice") duly completed. Subject to section
4.3 and to the right to accept an offer to convert Series E
Preferred Stock into New Preferred Stock under section 3.5, such
Conversion Notice shall be irrevocable and shall set out:
(i) the date (the "Conversion Date") on which the conversion is to
take place;
(ii) unless all the Series E Preferred Stock held by the holder
by whom such notice is given is to be converted, the
number of shares of Series E Preferred Stock so held which
are to be converted; and
(iii)an acknowledgment that the Common Stock into which the Series E
Preferred Stock is to be converted is to be registered in the
name of the registered holder of the Series E Preferred Stock to
be converted unless such holder, on or before the tenth calendar
day prior to the Conversion Date (the "Transferee Notice Date")
provides to the Corporation written notice in the form and
executed in a manner satisfactory to the Corporation directing
the Corporation to register such Common Stock in some other name
or names (the "Transferee") and stating the name or names (with
addresses) accompanied by payment to the Corporation of any
transfer tax that may be payable by reason thereof and a written
declaration of any matters as may be required by law in order to
determine the entitlement of such Transferee to hold such common
Stock.
(b) Subject to section 4.3 hereof, the Corporation shall, on
presentation and delivery at the head office of the corporation
or such other place or places in the United States as the
Corporation may agree of the certificate or certificates
representing the Series E Preferred Stock so surrendered for
conversion, issue and deliver or cause to be delivered
certificates representing the number of whole shares of Common
Stock into which such Series E Preferred Stock is to be
converted, registered in the name of the holder of the Series E
Preferred Stock to be converted, or as such holder shall have
directed as aforesaid, as the case may be, on the Conversion
Date. The Series E Preferred Stock so converted shall be
converted, and the holder thereof shall become a holder of Common
Stock of record, effective on the Conversion Date.
(c) If less than all the Series E Preferred Stock represented by any
certificate shall be converted, a new certificate for the balance
shall be issued without cost to the holder.
4.3 Option of the Corporation
Prior to any Conversion Date, the Corporation may, by notice given not
less than 35 calendar days before such Conversion Date to all holders who have
given a Conversion Notice,
(a) redeem on the Conversion Date all but not less than all of the
Series E Preferred Stock forming the subject matter of the
applicable Conversion Notice at the Redemption Price provided for
in Article 3 hereof; or
(b) request such holders to sell on the Conversion Date such Series E
Preferred Stock to another purchaser or purchasers in the event
that a purchaser or purchasers willing to purchase all but not
less than all of such Series E Preferred Stock at a price equal
to the Redemption Price is or are found by the Corporation and
such holders shall sell such Series E Preferred Stock at a price
equal to the Redemption Price to such purchaser or purchasers.
<PAGE>
Any such redemption or purchase shall be made on the Conversion Date by mailing
a check of the Corporation or the Corporation's causing such purchaser to mail a
check (as the case may be) in an amount equal to the Redemption Price to the
holder of the Series E Preferred Stock entitled thereto. The provisions of
subsection 3.3(e) shall apply, mutatis mutandis, in the event of a redemption or
purchase of less than all the Series E Preferred Stock represented by a
particular share certificate. The Series E Preferred Stock so purchased or
redeemed shall not be converted on the Conversion Date. In the event that for
any reason the redemption or purchase provided for in this section is not
effected in respect of a share or shares of Series E Preferred Stock on the
Conversion Date, the option of the Corporation in respect of such Series E
Preferred Stock shall lapse and such Series E Preferred Stock shall be deemed to
have been converted on the Conversion Date.
4.4 Avoidance of Fractional Shares
In any case where a fraction of a share of Common Stock would otherwise
be issuable on conversion of one or more shares of Series E Preferred Stock
under this Article 4, the Corporation shall adjust such fractional interest by
the payment by check in an amount equal to the value of such fractional interest
computed on the basis of $20.90 divided by the Conversion Number determined in
respect of the relevant Conversion Date.
4.5 Negotiated Conversion Number
(a) No later than 10 days following the receipt of a Holder's
Conversion Notice, the Corporation may notify the holders of the
Series E Preferred Stock, or such holders as have delivered a
Holder's Conversion Notice, of a proposed Conversion Number in
connection with the conversion of the Series E Preferred Stock
into Common Stock. Such notification to holders shall also:
(i) specify a date by which each holder must notify the
Corporation in writing of its acceptance of the proposed
Conversion Number, if such holder intends to accept such
number, which date shall beat least 25 days prior to the
Conversion Date, and
(ii) specify that the proposed Conversion Number shall become
effective for the purposes of determining the number of
Common Stock to be issued upon the conversion of the
Series E Preferred Stock only if all of the holders of
Series E Preferred Stock who have delivered a Holder's
Conversion Notice accept such number.
(b) If, by the time prescribed in clause (a)(i), all of the holders
of Series E Preferred Stock who have delivered a Holder's
Conversion Notice have accepted the proposed Conversion Number,
as evidenced by notice in writing to the Corporation, and at
least 20 days prior to the Conversion Date the Corporation has
notified all of such holders that each of them has agreed with
the Corporation as to such number, then such Conversion Number
(the "Negotiated Conversion Number") shall apply for the purposes
of determining the number of shares of Common Stock to be issued
upon the conversion of the Series E Preferred Stock in respect of
the Holder's Conversion Notice then outstanding in accordance
with the provisions of section 4.7 hereof.
4.6 Formula Conversion Number
(a) Subject to the provisions of subsection (b) hereof, the
Corporation shall determine a Conversion Number (the "Formula
Conversion Number") which shall be equal to the quotient obtained
when (i) an amount equal to the total assets minus all preferred
stock minus undistributed participating policyholder earnings as
shown on the Corporation's balance sheet as at the end of the
most recently completed calendar quarter, prepared in accordance
with U.S. generally accepted accounting principles as in effect
at the time of determination and applicable to the Corporation,
is divided by (ii) the number of shares of Common Stock
outstanding, on a fully diluted basis (excluding any shares
issuable upon conversion of the Series E Preferred Stock), at
such quarter-end.
(b) In the event that the Corporation proposes to utilize the Formula
Conversion Number, it shall so notify all of the holders of
Series E Preferred Stock (in the case of the issuance of a
Corporation's Conversion Notice) or each holder of Series E
Preferred Stock who has submitted a Holder's Conversion Notice,
not less than 5 days prior to the Conversion Date, that the
Corporation intends to use the Formula Conversion Number in
respect of such Conversion Date and notifying such holders of the
basis upon which such Number has been determined. The Corporation
will, if requested by any holder of Series E Preferred Stock
converting the same into Common Stock, provide such holder with a
letter from the auditors of the Corporation stating that: (i) if
the above-referenced quarter-end is not also the end of a fiscal
year of the Corporation, (A) on the basis of a review of such
unaudited quarter-end financial statements, nothing has come to
the attention of the auditors that cause them to believe that the
unaudited financial statements for the completed quarter
referenced above are not in conformity with generally accepted
accounting principles, and (B) in using the numbers contained in
such unaudited quarter-end financial statements and information
provided by the Corporation's management, the auditors have
recalculated the Financial Conversion Number and found it to be
accurate or (ii) if the above-referenced quarter is the end of a
fiscal year of the Corporation, (A) the auditors indicate that
they have issued their opinion on the audited financial statement
for such fiscal year and (B) in using the numbers contained in
such audited financial statements and information provided by the
Corporation's management, the auditors have recalculated the
Financial Conversion Number and found it to be accurate.
4.7 Conversion Ratio
Each share of Series E Preferred Stock shall be convertible into that
number of shares of Common Stock which is equal to the Conversion Number, with
the result of such calculation being rounded down to the nearest share of Common
Stock. For these purposes, the Conversion Number shall be the Negotiated
Conversion Number agreed to in accordance with the provisions of section 4.5
hereof with respect to shares of Series E Preferred Stock subject to a Holder's
Conversion Notice or, if no such number be agreed upon, the Formula Conversion
Number determined pursuant to the provisions of section 4.6 hereof.
4.8 Reservation of Shares
The Corporation shall at all times reserve and keep available, free from
preemptive rights, out of its authorized Common Stock, for the purpose of
effecting the conversion of shares of Series E Preferred Stock, at least the
full number of shares of Common Stock then deliverable upon conversion of all
shares of Series E Preferred Stock then outstanding on the basis of the Formula
Conversion Number.
4.9 Governmental Approvals
If any shares of Common Stock to be reserved for the purpose of
conversion of shares of Series E Preferred Stock require registration with or
approval of any governmental authority under any federal or state law before
such shares may be validly issued or delivered upon conversion, then the
Corporation will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be.
ARTICLE 5
VOTING RIGHTS
5.1 No Voting
Except as required by law and except as otherwise provided herein or in
the Corporation's Articles of Redomestication, the holders of Series E Preferred
Stock shall have no voting rights and shall not be entitled as such to receive
notice of or to attend any meeting of shareholders of the corporation.
5.2 Default in Dividend
(a) The shares of Series E Preferred Stock are intended to be "Voting
Parity Preferred Stock" as that term is used in the Voting Rights
of Stated Rate Auction Preferred Stock, Series A through Series
D, of the Corporation (the " STRAPS n ) . During any period (a
"Voting Period") when a "Default in Preferred Dividends" (as
hereinafter defined) shall exist on the shares of Series E
Preferred Stock, or any class or series of preferred stock
ranking on a parity with the shares of Series E Preferred Stock
as to dividends or upon liquidation, dissolution or winding up of
the Corporation and the terms of which expressly provide that
such shares are "Voting Parity Preferred Stock" within the
meaning of this paragraph or the terms of the STRAPS and voting
rights thereunder are then exercisable (all such shares, and all
shares of Series E Preferred Stock, being hereinafter referred to
collectively as the "Voting Parity Preferred Stock"), the
authorized number of members of the Board of Directors shall
automatically be increased by two. The two vacancies so created
shall be filled by the vote of the holders of the "Defaulted
Voting Parity Preferred Stock" as hereinbelow defined, voting
together as a single class without regard to class or series, to
the exclusion of the holders of the Common Stock of the
Corporation and any other class or series of stock other than
such shares of Defaulted Voting Parity Preferred Stock. A Default
in Preferred Dividends" means any default or event specified in
the terms of any class of preferred stock or series of preferred
stock by reason of which the holders of such preferred stock are
entitled to elect directors of the Corporation. A "Default in
Preferred Dividends" with respect to Series E Preferred Stock
shall be deemed to have occurred whenever the Corporation fails
to declare and pay the whole amount of Quarterly Dividend for any
Dividend Period on or before the last day of such Dividend
Period, and, having so occurred, such default shall be deemed to
exist thereafter until, but only until, the Corporation declares
and pays the full amount of Quarterly Dividend for a Dividend
Period. At such time as the Corporation may again fail to declare
the full amount of any Quarterly Dividend upon any Series E
Preferred Stock for any Dividend Period, a "Default in Preferred
Dividends" shall again have occurred. "Defaulted Voting Parity
Preferred Stock" at any time shall mean those classes and series
of Voting Parity Preferred Stock in respect of which, at or prior
to such time, a Default in Preferred Dividends has occurred and
of which the holders are entitled at that time by the terms of
such Voting Parity Preferred Stock to elect directors of the
Corporation. Upon the termination of a Voting Period with respect
to any class or series of Defaulted Voting Parity Preferred
Stock, the voting rights described in this section 5.2 shall
cease for such class or series of Defaulted Voting Parity
Preferred Stock, subject always, however, to revesting of such
voting rights in the holders of such Voting Parity Preferred
Stock upon the further occurrence of a Default in Preferred
Dividends. If any Voting Period shall have terminated before the
holders of a class or series of Voting Parity Preferred Stock
shall have exercised the voting rights provided in this section
5.2, the holders of such class or series of Voting Parity
Preferred Stock shall be deemed not to have acquired such voting
rights.
(b) If the holders of any class or series of Defaulted Voting Parity
Preferred Stock (the "first Defaulted Voting Parity Preferred
Stock") have elected one or more directors prior to the happening
of the default or event permitting the holders of any other class
or series of Defaulted Voting Parity Preferred Stock to elect
directors, then the directors so previously elected will be
deemed to have been elected by and on behalf of the holders of
such other class or series of Defaulted Voting Parity Preferred
Stock as well as the first Defaulted Voting Parity Preferred
Stock, without prejudice to the right of the holders of such
other class or series to vote for directors if such previously
elected directors shall resign, cease to serve or stand for
reelection while the holders of such other class or series are
entitled to vote. If the holders of any first Defaulted Voting
Parity Preferred Stock are entitled to elect in excess of two
directors, the holders of such other class or series shall not
participate in the election of more than two such directors.
(c) No shares of any Defaulted Voting Parity Preferred Stock held by
the Corporation or any of the Corporation's Affiliates shall be
voted, or counted in determining a quorum, for the election,
removal or replacement of any director elected by any Defaulted
Voting Parity Preferred Stock.
5.3 Voting Procedures
(a) As soon as practicable after the commencement of a Voting Period,
the Corporation shall call or cause to be called a special
meeting of the holders of Defaulted Voting Parity Preferred Stock
by mailing or causing to be mailed a notice of such special
meeting to such holders not less than 10 nor more than 45 days
after the date such notice is given. If the Corporation does not
call or cause to be called such a special meeting, it may be
called by any of such holders on like notice. The record date for
determining the holders of Defaulted Voting Parity Preferred
Stock entitled to notice of and to vote at such meeting shall be
the close of business on the Business Day preceding the day on
which such notice is mailed. At any such special meeting and at
each meeting of stockholders held during a Voting Period at which
directors are to be elected, removed or replaced, the holders of
Defaulted Voting Parity Preferred Stock, voting together as a
single class (to the exclusion of the holders of all other
securities, series and classes of capital stock of the
Corporation), voting by a majority of the votes of shares present
in person or by proxy, shall be entitled to elect two directors.
In regard to such elections, each holder of shares of Defaulted
Voting Parity Preferred Stock shall be entitled to one or more
votes and/or a fractional vote on the basis of one vote for each
$100,000 of liquidation preference (excluding amounts in respect
of accumulated and unpaid dividends) attributable to such shares.
Cumulative voting in such elections shall not be permitted.
Shares of Defaulted Voting Parity Preferred Stock then
outstanding, present in person or represented by proxy,
representing one-third of the votes of the Defaulted Voting
Parity Preferred Stock, will constitute a quorum for the election
of directors. Notice of all meetings at which holders of
Defaulted Voting Parity Preferred Stock of any series shall be
entitled to vote will be given to such holders at their addresses
as they appear on the Stock Books. At any such meeting or
adjournment thereof in the absence of a quorum, holders of shares
of Defaulted Voting Parity Preferred Stock representing a
majority of the votes present in person or represented by proxy
shall have the power to adjourn the meeting for the election of
directors without notice, other than an announcement at the
meeting, until a quorum is present. If any Voting Period shall
terminate after the notice of special meeting provided for in
this section 5.3 has been given but before the special meeting
shall have been held, the Corporation shall, as soon as
practicable after such termination, mail or cause to be mailed to
the holders of Defaulted Voting Parity Preferred Stock a notice
of cancellation of such special meeting.
(b) The term of office of all persons who are directors of the
Corporation at the time of a special meeting of the holders of
Defaulted Voting Parity Preferred Stock to elect directors shall
continue, notwithstanding the election at such meeting by such
holders of the two additional directors.
(c) Simultaneously with the expiration of a Voting Period for all
classes and series of Defaulted Voting Parity Preferred Stock,
the term of office of the directors elected by the holders of
Defaulted Voting Parity Preferred Stock shall terminate, the
other persons who shall have been elected by the holders of stock
of the Corporation (or by the Board of Directors prior to the
beginning of the Voting Period) and who are incumbent shall
constitute the directors of the Corporation, and the voting
rights of the holders of Voting Parity Preferred Stock to elect
directors shall cease.
(d) For so long as a Voting Period continues, the directors elected
at any time by the holders of Defaulted Voting Parity Preferred
Stock may be removed without cause by, and shall not be removed
without cause except by, the vote of the holders of record of the
outstanding shares of Defaulted Voting Parity Preferred Stock at
any subsequent time, voting together as a single class without
regard to class or series, at a meeting of the stockholders, or
of the holders of shares of Defaulted Voting Parity Preferred
Stock, called for such purpose. So long as a Voting Period
continues, (A) any vacancy in the office of a director elected by
the holders of Defaulted Voting Parity Preferred Stock may be
filled (except as provided in the following clause (B)) by the
person appointed by an instrument in writing signed by the
remaining director elected by the holders of Defaulted Voting
Parity Preferred Stock and filed with the Corporation or, in the
event there is no remaining director elected by the holders of
Defaulted Voting Parity Preferred Stock, by vote of the holders
of the outstanding shares of Defaulted Voting Parity Preferred
Stock, voting together as a single class without regard to class
or series, at a meeting of the stockholders or at a meeting of
the then holders of shares of Defaulted Voting Parity Preferred
Stock called for such purpose, and (B) in the case of the removal
of any director elected by the holders of Defaulted Voting Parity
Preferred Stock, the vacancy may be filled by the person elected
by the vote of the holders of the outstanding shares of Defaulted
Voting Parity Preferred Stock, voting together as a single class
without regard to class or series, at the same meeting at which
such removal shall be voted or at any subsequent meeting.
5.4 Additional Vote
If any matter (excluding the election, removal or replacement of
directors) requires the consent or affirmative vote of shares of Series E
Preferred Stock or of all Preferred Stock of the Corporation, whether pursuant
to the provisions of such Series or such Preferred Stock or pursuant to the
provisions of the Articles of Redomestication of the Corporation or pursuant to
applicable law, and if any shares of Series E Preferred Stock entitled to vote
are held by the Corporation or by any of its Affiliates, then the following
additional consent or vote will be required: the same consent or affirmative
vote of shares otherwise required, except that shares of Series E Preferred
Stock held by the Corporation and/or its Affiliates shall be deemed not to be
outstanding for purposes of such additional consent or vote; provided, such
additional consent or vote will not be applicable if all outstanding shares of
Series E Preferred Stock are held by the Corporation and/or its Affiliate.
ARTICLE 6
ISSUE PRICE
The price or consideration for which each share of Series E Preferred
Stock shall be issued is $20.90 and, upon payment of such price, each such share
shall be issued as fully paid and non-assessable.
ARTICLE 7
NOTICE AND INTERPRETATION
7.1 Notices
(a) Any notice, check, invitation for tenders or other Communication
from the Corporation herein provided for shall be sufficiently
given if delivered or if sent by first class unregistered mail,
postage prepaid, to the holders of the Series E Preferred Stock
at their respective addresses appearing on the books of the
Corporation or, in the event of the address of any of such
holders not so appearing, then at the last address of such holder
known to the Corporation. Except for notices required by law,
accidental failure to give such notice, invitation for tenders or
other communication to one or more holders of the Series E
Preferred Stock shall-not affect the validity of the notices,
invitations for tenders or other communications properly given or
any action taken pursuant to such notice, invitation for tenders
or other communication but, upon such failure being discovered,
the notice, invitation for tenders or other communication, as the
case may be, shall be sent forthwith to such holder or holders.
(b) If any notice, check, invitation for tenders or other
communication from the Corporation given to a holder of Series E
Preferred Stock pursuant to paragraph (a) is returned on three
consecutive occasions because he cannot be found, the Corporation
shall not be required to give or mail any further notices,
checks, invitations for tenders or other communications, to such
shareholder until another address for such shareholder is made
known to the Corporation.
7.2 Interpretation
(a) In the event that any day on which any dividend on the Series E
Preferred Stock is payable or on or by which any other action is
required to be taken hereunder is not a business day, then such
dividend shall be payable or such other action shall be required
to be taken on or before the next succeeding day that is a
business day. A "business day" means a day other than a Saturday,
a Sunday or any other day that is a legal holiday on which
banking institutions in the place where the Corporation has its
head office are closed.
(b) All references herein to a holder of Series E Preferred stock
shall be interpreted as referring to a registered holder of the
Series E Preferred Stock.
ARTICLE 8
CERTAIN MODIFICATIONS
In addition to any other vote or consent of shareholders of the
Corporation then required by applicable law or by the Articles of
Redomestication of the Corporation, subject to any regulatory consents referred
to in section 1.2 hereof, so long as any shares of Series E Preferred Stock
remain outstanding, the Corporation shall not, without the prior approval of the
holders of Series E Preferred Stock outstanding at that time, given in
accordance with Article 9 below in person or by proxy, either in writing or at a
meeting (i) authorize, create or issue, or increase the authorized or issued
amount, of any class or series of stock ranking prior to Series E Preferred
Stock with respect to payment of dividends or the distribution of assets on
liquidation, dissolution or winding up of the Corporation, or reclassify any
authorized stock of the Corporation into any such shares, or create, authorize
or issue any obligations or security convertible into or evidencing the right to
purchase any such shares, or (ii) amend, alter or repeal any of the provisions
of the Corporation's Articles of Redomestication of the Corporation or this
Statement of Designation so as to adversely affect any right, preference,
privilege or voting power of Series E Preferred Stock: provided, however, that
any increase in the amount of the authorized preferred stock or the creation or
issuance of any series of preferred stock or any increase in the amount of
authorized shares of such series or of any other series of preferred stock, in
each case ranking on a parity with or junior to Series E Preferred Stock with
regard to dividends, or upon liquidation, dissolution or winding up of the
Corporation (which includes without limitation any shares of the same class of
preferred stock as the Series E Preferred Stock, whether or not providing for
cumulative dividends), shall not be deemed to adversely affect such rights,
preferences, privileges or voting powers.
ARTICES 9
APPROVAL OF SERIES E PREFERRED STOCKHOLDERS
When holders of Series E Preferred Stock are voting separately as a
class, any approval of the holders of Series E Preferred Stock with respect to
any and all matters referred to herein or of any other matters requiring the
consent of the holders of the Series E Preferred Stock may be given in such
manner as may then be required by law, subject to a minimum requirement that
such approval be given by resolution signed by the holders of a majority of the
outstanding Series E Preferred Stock (or, if required at that time by applicable
law, signed by all holders of the outstanding Series E Preferred Stock) or
passed by the affirmative vote of a majority of the votes cast by the holders of
Series E Preferred Stock who voted in respect of the resolution at a general
meeting of the holders of the Series E Preferred Stock duly called for that
purpose and held upon at least 10 days notice at which the holders of at least
one-third of the outstanding Series E Preferred Stock (which shall constitute a
quorum) are present in person or represented by proxy. The proxy rules
applicable to the giving of notice of and the formalities to be observed in
respect of the conduct of, any such meeting or any adjourned meeting shall be
those from time to time prescribed by the Articles of Redomestication and
by-laws of the Corporation with respect to meetings of the holders of Preferred
Stock, or if not so prescribed, as required by the Colorado Corporation Code or
by such other federal or state legislation as may be applicable in the
circumstances. Subject to Article 5 hereof, on every vote taken at every meeting
of holders of Series E Preferred Stock, each holder of Series E Preferred Stock
entitled to vote thereat shall be entitled to one vote for each share of Series
E Preferred Stock held.
ARTICLE 10
RIGHTS ON LIQUIDATION
In the event of the liquidation, dissolution or winding-up of the
affairs of the Corporation, whether voluntary or involuntary, the holders of
Series E Preferred Stock shall be entitled to receive, out of assets of the
Corporation available for distribution to stockholders after satisfying claims
of creditors but before any payment or distribution on the Common Stock or on
any other class of stock ranking junior to the shares of Series E Preferred
Stock upon liquidation, a liquidation distribution in the amount of $20.90 per
share plus an amount equal to all dividends declared and unpaid on each share to
the date of such distribution. Additional provisions regarding the preferences
and rights of holders of Series E Preferred Stock to receive liquidating
distributions are set forth in Article IX of the Articles of Redomestication of
the Corporation. Neither the sale, lease or exchange (for cash, stock,
securities or other consideration) of all or substantially all of the property
and assets of the Corporation, nor the consolidation or merger of the
Corporation with or into any other entity, nor the merger or consolidation of
any other entity with or into the Corporation, shall be deemed to be a
liquidation, dissolution, or winding up of the affairs of the Corporation,
either voluntary or involuntary, for purposes of this Article 10.
<PAGE>
ARTICLES OF AMENDMENT
TO ARTICLES OF REDOMESTICATION
Pursuant to the provisions of the Colorado Business Corporation Act,
Great-West Life & Annuity Insurance Company (the "Corporation") hereby adopts
the following Articles of Amendment to its Articles of Redomestication:
FIRST: The name of the Corporation is Great-West Life & Annuity
Insurance Company.
SECOND: The amendments to the Articles of Redomestication set forth on
Exhibit 1 attached hereto were adopted on January 24, 1995 by the sole
shareholder of the Corporation, as prescribed by the Colorado Business
Corporation Act. The number of shares voted for the amendments was sufficient
for approval. The number of votes cast for the amendments by each voting group
entitled to vote separately on the amendments was sufficient for approval by
that voting group.
THIRD: The amendments do not effect an exchange, reclassification, or
cancellation of issued shares of the Corporation.
Dated: January 24, 1995
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
By /s/ W. McCallum
W.T. McCallum, President and
Chief Executive Officer
By /s/ D.C. Lennox
D.C. Lennox, Senior President, General
Counsel and Secretary
<PAGE>
Great-West Life & Annuity Insurance Company hereby amends, as set forth
below, parts of its Articles of Redomestication consisting of the Statement of
Resolution Establishing Four Series of Preferred Stock dated as of September 18,
1991 and filed with the Secretary of State of Colorado on September 30, 1991, as
amended by Articles of Amendment to Articles of Redomestication dated as of June
16, 1992 and filed with the Secretary of State of Colorado on June 30, 1992, and
by Articles of Amendment to Articles of Redomestication, dated September 15,
1992 and filed with the Secretary of State of Colorado on September 29, 1992 (as
so amended, "the Statement").
1. The definition of "Initial Long-Term Dividend Period" contained in
paragraph 2 of the Statement is hereby amended to read in its entirety as
follows:
"'Initial Long-Term Dividend Period' means (i) with respect to
the Series A STRAPS, Series C STRAPS and Series D STRAPS, the
period from and including the respective Dates of Original Issue
for such series to and excluding December 31, 2002 and (ii) with
respect to Series B STRAPS, the period from and including the
Date of Original Issue for such series to and excluding December
31, 1995."
2. Clause (I) of paragraph 3(c)(i) of the Statement is hereby amended to
read in its entirety as follows:
"(I) during the Initial Long-Term Dividend Period for each series
of STRAPS, the respective dividend rates per annum applicable to
such series shall be as follows: Series A, C and D: 8% to and
excluding December 31, 1993, 4.05% from December 31, 1993 to and
excluding February 18, 1994, 4.29% from February 18, 1994 to and
excluding April 8, 1994, 4.7E% from April 8, 1994 to and
excluding May 27, 1994, 5.46% from May 27, 1994 to and excluding
July 15, 1994, 5.16% from July 15, 1994 to and excluding
September 2, 1994, 6.00% from September 2, 1994 to and excluding
October 21, 1994, 6.29% from October 21, 1994 to and excluding
December 9, 1994, 7.58% from December 9, 1994 to and excluding
January 27, 1995, and 7.30% for the balance of such Period; and
Series B: 7% throughout such Period; and..."
<PAGE>
ARTICLES OF AMENDMENT
TO ARTICLES OF REDOMESTICATION
Pursuant to the provisions of the Colorado Business Corporation Act,
Great-West Life & Annuity Insurance Company (the "Corporation") hereby adopts
the following Articles of Amendment to its Articles of Redomestication:
FIRST: The name of the Corporation is Great-West Life & Annuity
Insurance Company.
SECOND: The amendments to the Articles of Redomestication set forth on
Exhibit 1 attached hereto were adopted on April 22, 1996 by the sole shareholder
of the Corporation, as prescribed by the Colorado Business Corporation Act. The
number of shares voted for the amendments was sufficient for approval. The
number of votes cast for the amendments by each voting group entitled to vote
separately on the amendments was sufficient for approval by that voting group.
THIRD: The amendments do not effect an exchange, reclassification, or
cancellation of issued shares of the Corporation.
Dated: April 22, 1996 GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
By /s/ W. McCallum
W.T. McCallum, President and
Chief Executive Officer
By /s/ D.C. Lennox
D.C. Lennox, Senior President, General
Counsel and Secretary
<PAGE>
Great-West Life & Annuity Insurance Company hereby amends, as set forth
below, parts of its Articles of Redomestication consisting of the Statement of
Resolution Establishing Four Series of Preferred Stock dated as of September 18,
1991 and filed with the Secretary of State of Colorado on September 30, 1991, as
amended by Articles of Amendment to Articles of Redomestication dated as of June
16, 1992, and filed with the Secretary of State of Colorado on June 30, 1996, by
Articles of Amendment to Articles of Redomestication dated September 15, 1992
and filed with the Secretary of State of Colorado on September 29, 1992, and by
Articles of Amendment to Articles of Redomestication dated January 24, 1995 and
filed with the Secretary of State of Colorado on February 7, 1995 (as so
amended, "the Statement").
1. The definition of "Initial Long-Term Dividend Period" contained in
paragraph 2 of the Statement is hereby amended to read in its entirety as
follows:
"'Initial Long-Term Dividend Period' means (i) with respect to
the Series A STRAPS, Series C STRAPS and Series D STRAPS, the
period from and including the respective Dates of Original Issue
for such series to and excluding December 31, 2002 and (ii) with
respect to Series B STRAPS, the period from and including the
Date of Original Issue for such series to and excluding December
31, 1997."
2. Clause (I) of paragraph 3(c)(i) of the Statement is hereby amended to
read in its entirety as follows:
"(I) during the Initial Long-Term Dividend Period for each series
of STRAPS, the respective dividend rates per annum applicable to
such series shall be as follows: Series A, C and D: 8% to and
excluding December 31, 1993, 4.05% from December 31, 1993 to and
excluding February 18, 1994, 4.29% from February 18, 1994 to and
excluding April 8, 1994, 4.75% from April 8, 1994 to and
excluding May 27, 1994, 5.46% from May 27, 1994 to and excluding
July 15, 1994, 5.16% from July 15, 1994 to and excluding
September 2, 1994, 6.00% from September 2, 1994 to and excluding
October 21, 1994, 6.29% from October 21, 1994 to and excluding
December 9, 1994, 7.58% from December 9, 1994 to and excluding
January 27, 1995, and 7.30% for the balance of such Period; and
Series B: 7% to and excluding December 31, 1995, 7.16% from
December 31, 1995 to and excluding February 16, 1996, 6.59% from
February 16, 1996 to and excluding April 5, 1996, 6.79% from
April 5, 1996 to and excluding May 24, 1996, and 5.80% for the
balance of such Period; and..."
<PAGE>
Exhibit 2
<PAGE>
As amended February 7, 1992
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Page
ARTICLE I - GENERAL..........................................................I-1
SectionI.1 Name and Identity I-1
I.2 Offices..........................................................I-1
I.3 Purpose..........................................................I-1
ARTICLE II - DEFINITIONS, INTERPRETATIONS AND
REFERENCES......................................................II-2
SectionII.1 Definitions Incorporated by Reference...........................II-1
II.2 Other Definitions...............................................II-2
II.3 Interpretation..................................................II-3
II.4 Reference to Commission Rules.................................. II-4
II.5 Protection of Action in Reliance on
Commission Rules................................................II-4
ARTICLE III - VARIABLE ANNUITY PARTICIPANTS..................................III-1
SectionIII.1 Annual Meeting.................................................III-1
III.2 Special Meetings...............................................III-1
III.3 Notice of Meeting..............................................III-1
III.4 Voting.........................................................III-1
III.5 Quorum.........................................................III-2
III.6 Proxies........................................................III-3
III.7 Order of Business..............................................III-3
III.8 Inspectors.....................................................III-3
III.9 Requirements as to Proxies.....................................III-3
ARTICLE IV - VARIABLE ANNUITY ACCOUNT COMMITTEE..............................IV-1
SectionIV.1 Composition.....................................................IV-1
IV.2 Terms of Office of Committee Members............................IV-1
IV.3 Qualification of Committee Members..............................IV-2
IV.4 Chairman and Secretary..........................................IV-3
IV.5 Resignations and Removals.......................................IV-3
IV.6 Vacancies.......................................................IV-4
IV.7 Powers of the Committee.........................................IV-4
IV.8 Meetings........................................................IV-5
IV.9 Quorum..........................................................IV-5
IV.10 Committee Action Without Meeting................................IV-6
IV.11 Executive and Other Subcommittees...............................IV-6
IV.12 Indemnification.................................................IV-6
ARTICLE V - VALUE OF ASSETS..................................................V-1
Section V.1 Value of Assets..................................................V-1
V.2 Conversion to United States Dollars..............................V-2
</TABLE>
- i -
<PAGE>
....... Page
----
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
ARTICLE VI - INVESTMENT ADVISORY AND UNDERWRITING
CONTRACTS.......................................................VI-1
Section VI.1.............................................Investment Advisors VI-1
VI.2 Principal Underwriters..........................................VI-1
VI.3 Approval by Independent Committee
Members or by Participants......................................VI-2
VI.4 Provisions Applicable to both
Investment Advisers and Principal
Underwriters....................................................VI-2
VI.5 Exclusion of Advisory Board.....................................VI-3
ARTICLE VII - INVESTMENT POLICY..............................................VII-1
SectionVII.1 Restrictions on Investments....................................VII-1
VII.2 Purchases of Securities of Other
Companies, Insurance Companies or
Broker Dealers........................................................VII-1
VII.3 Changes in Investment Policy...................................VII-3
ARTICLE VIII - TRANSACTIONS WITH AFFILIATES..................................VIII-1
SectionVIII.1 Restrictions on Purchases, Sales
Loans, etc...........................................................VIII-1
VIII.2 Transactions of Certain Affiliated
Persons and Underwriters.............................................VIII-1
VIII.3 Participation with Affiliates.................................VIII-3
ARTICLE IX - DIVIDENDS, WARRANTS OR RIGHTS...................................IX-1
SectionIX.1 Dividends.......................................................IX-1
IX.2 Warrants or Rights..............................................IX-1
ARTICLE X - RIGHT TO BORROW MONEY............................................X-1
Section X.1 Limitations on Borrowing.........................................X-1
X.2 Borrowings for Temporary Purposes................................X-1
X.3 "Asset Coverage".................................................X-2
ARTICLE XI - VOTING TRUSTS, CIRCULAR OWNERSHIP...............................XI-1
SectionXI.1 Voting Trusts...................................................XI-1
Circular Ownership..............................................XI-1
ARTICLE XII - DISTRIBUTION, REDEMPTION, RESTRICTIONS
ON ASSIGNMENT, AND ISSUANCE OF
CONTRACTS FOR OTHER THAN CASH..................................XII-1
SectionXII.1 Distribution of Contracts......................................XII-1
XII.2 Right of Redemption............................................XII-1
.......
</TABLE>
- ii -
<PAGE>
<TABLE>
<S> <C> <C> <C>
XII.3 Restrictions on Assignment....................................XII-2 XII.4
Issuance of Contracts for Other
than Cash.............................................................XII-2
ARTICLE XIII - INELIGIBILITY OF CERTAIN PERSONS..............................XIII-1
SectionXIII.1 Ineligibility for Officer, Member of
Committee, etc................................................XIII-1
XIII.2 Ineligibility for Broker, Principal
Underwriter, Member of the Committee
Officer or Employee...........................................XIII-2
ARTICLE XIV - PERIODIC REPORTS...............................................XIV-1
Section XIV.1 Reports to the Commission......................................XIV-1
XIV.2 Reports to Participants........................................XIV-1
XIV.3 Requirements for Financial Statements
Contained in Annual Reports....................................XIV-3
ARTICLE XV - ACCOUNTS AND RECORDS............................................XV-1
Section XV.1 Maintenance of Records..........................................XV-1
XV.2 Examination by the Commission...................................XV-1
XV.3 Commission Rules as to Uniformity...............................XV-1
ARTICLE XVI - ACCOUNTANTS AND AUDITORS.......................................XVI-1
Section XVI.1 Selection of Accountants and Auditors..........................XVI-1
XVI.2 Participation by Officers and
Employees......................................................XVI-2
ARTICLE XVII - REORGANIZATIONS AND EXCHANGES.................................XVII-1
SectionXVII.1 Reorganizations...............................................XVII-1
XVII.2 Exchange Offers...............................................XVII-1
ARTICLE XVIII - TRUSTEE......................................................XVIII-1
SectionXVIII.1Trustee......................................................XVIII-1
XVIII.2 Bonding Requirements........................................XVIII-1
ARTICLE XIX - AMENDMENTS.....................................................XIX-1
</TABLE>
- iii -
<PAGE>
I - 2
ARTICLE I
GENERAL
Section I.1. Name and Identity. Great-West Variable Annuity Account A
(hereinafter referred to as "Variable Annuity Account A") is a separate and
distinct fund originally established by The Great-West Life Assurance Company
(hereinafter referred to as "Great-West") under the provisions of Section 81 of
the Canadian and British Insurance Companies Act. Effective December 31, 1991,
Variable Annuity Account A was transferred to Great-West Life & Annuity
Insurance Company (hereinafter referred to as "GWL&A") and established as a
separate and distinct account of GWL&A pursuant to Section 10-7-402 of the
Colorado Insurance Code. As such, Variable Annuity Account A is an integral part
of GWL&A, the assets in Variable Annuity Account A are owned by GWL&A and,
unless the context clearly requires otherwise, any reference in these Rules and
Regulations to what Variable annuity Account A may, shall, or shall not do
applies to GWL&A acting for, on behalf of, or in respect of Variable Annuity
Account A.
Section I.2. Offices. The principal offices of Variable Annuity
Account A shall be at 8515 East Orchard Road, Englewood, Colorado.
Section I.3. Purpose. The purpose of Variable Annuity Account A is to
provide in accordance with Section 10-7-402 of the Colorado Insurance Code, a
separate and distinct fund, the assets of which shall be maintained only for the
provision of payments or values, or both, under Contracts (as defined in Section
II.2(d)) sold in the United States by GWL&A.
<PAGE>
II - 3
ARTICLE II
DEFINITIONS, INTERPRETATIONS AND REFERENCES
Section II.1. Definitions Incorporated by Reference. (a) When used in
these Rules and Regulations, the following words or terms, shall
have, except as otherwise provided in these Rules and
Regulations, the meanings assigned to them in Section 2(a) of the
Investment Company act of 1940 of the United States of America:
Advisory board Affiliated company Affiliated person Assignment
Bank Broker Company Control Convicted Dealer Director Exchange
Face amount certificate Insurance company Interstate commerce
Investment adviser Investment banker Issuer Lend; borrow
Majority-owned subsidiary Means or instrumentality of interstate
commerce National securities exchange Periodic payment plan
certificate Person Principal underwriter Promoter Prospectus
Redeemable security Reorganization Sale; sell; offer to sell;
offer for sale Sales load Short term paper State Underwriter
Value Voting security Securities Act of 1933 Securities Exchange
Act of 1934
(Investment Company Act ss. 2(a).)
(b) When used in these Rules and Regulations, the following words or terms
shall have the meaning attributed to them in Sections 4 and 5 of the Investment
Company Act of 1940 of the United States of America:
Face-amount certificate company Unit investment trust Management
company Open-end company Closed-end company Diversified company
Non-diversified company
(Investment Company Act ss.ss. 4 and 5.)
Section II.2. Other Definitions. (a) All references in these Rules and
Regulations to the "Colorado Insurance Code" shall mean the
Colorado Insurance Code (Revised Statutes of Colorado) as amended
from time to time or as replaced. (b) The term "Commission," as
used in these Rules and Regulations, shall mean the Securities
and Exchange Commission of the United States of America or any
official or agency of the United States of America succeeding to
the functions thereof. (c) The term "Committee," as used in these
Rules and Regulations, shall mean the Variable Annuity Account A
Committee holding office as provided in Article IV hereof. (d)
The term "Contract," as used in these Rules and Regulations,
shall mean any annuity policy or contract issued by GWL&A
providing for payments or values, or both, which vary depending
on the investment experience of the assets of Variable Annuity
Account A. (e) The term "governmental body having jurisdiction
over the Company," as used in these Rules and Regulations, shall
include the Commission. (f) The term "Government Security," as
used in these Rules and Regulations, shall mean any security
issued or guaranteed as to principal or interest by the United
States of America or by the Government of Canada or by a person
controlled or supervised by and acting as an instrumentality of
the Government of the United States of America or the Government
of Canada pursuant to authority granted by the Congress of the
United States of America or by the Parliament of Canada, as the
case may be; or any certificate of deposit for any of the
foregoing. (g) The term "Investment Company Act," as used in
these Rules and Regulations, shall mean the Investment Company
Act of 1940 of the United States of America and any amendments
thereof that may hereafter be adopted. (h) The term
"Participant," when used in these Rules and Regulations, shall
mean any person credited with accumulation units or annuity
units, as those terms are defined in Contracts, so long as he
shall continue to be credited with any such units under Contracts
except that in any provision of these Rules and Regulations
relating to voting rights of Participants or meetings of
Participant, the term Participant shall mean any person entitled
to voting rights in accordance with Section III.4. The records of
GWL&A shall be conclusive evidence as to the identity of such
Participants.
Section II.3. Interpretation. Any question of interpretation of any term
or provision of these Rules and Regulations having a counterpart in or otherwise
derived from a term or provision of the Investment Company Act shall be resolved
by reference to Interpretations, if any, of the corresponding term or provision
of the Investment Company Act by the courts of the United States of America or,
in absence of any controlling decision of any such court, by rules, regulations,
orders or interpretations of the Commission validly issued pursuant to said Act.
(Rule 7d-1(b)(8)(B).)
Section II.4. Reference to Commission Rules. To the extent that the laws
of Colorado do not require the contrary, the activities and relations of
Variable Annuity Account A, its officers, Committee members, Contract Owners,
and participants under Group Contracts, the provisions of these Rules and
Regulations and the application thereof shall, so long as Variable Annuity
Account A shall be registered under the Investment Company Act, be governed by
and be subject to such rules, regulations and orders including orders granting
exemptions under ss.6(c) of the Investment Company Act, as the Commission shall,
in the valid exercise of its authority under said Act, make, issue, amend or
rescind as necessary or appropriate to the exercise of the powers conferred upon
the Commission by said Act. (Investment Company Act, ss.6(C).)
Section II.5. Protection of Action in Reliance on Commission Rules.
Irrespective of any provision of these Rules and Regulations, no Committee
member, officer or other employee of Variable Annuity Account A shall be liable
to Variable Annuity Account A or to any Contract Owner or Participant under a
Group Contract for any act done or omitted in good faith in conformity with any
rule, regulation or order of the Commission, notwithstanding that such rule,
regulation or order may, after such act or omission, be amended or rescinded or
be determined by judicial or other authority to be invalid for any reason.
(Investment Company Act, ss.38(C).)
<PAGE>
III - 2
ARTICLE III
VARIABLE ANNUITY PARTICIPANTS
Section III.1. Annual Meeting. There shall be an annual meeting of
Participants at the principal office of Variable Annuity Account A, or such
other place as may be determined by the Committee, on the third Wednesday of May
of each year or on such other date five business days prior to or following this
date as may be designated by the Committee to transact such business as may
properly come before the meeting. If such day in any year is a legal holiday,
the annual meeting shall be held on the preceding business day.
Section III.2. Special Meetings. Special meetings of Participants may be
called by a majority of the Committee. The notice of the meeting shall state the
purpose or purposes of the meeting and no business shall be transacted at the
meeting except matters coming within such purpose or purposes. Special meetings
of Participants shall be held at the principal office of Variable Annuity
Account A or such other place as may be determined by the Committee.
Section III.3. Notice of Meeting. A written or printed notice stating the
place, date and hour of the meeting, and in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given by mailing
such notice, postage prepaid, not more than 120 days nor less than 20 days prior
to the date of the meeting, to each Participant.
Notices shall be addressed to Participants at their addresses carried on
the records of GWL&A. Notice of any adjourned meeting, except a meeting
adjourned for lack of a quorum, shall not be required.
Section III.4. Voting. Participants on the last valuation date of Variable
Annuity Account A in the month of February preceding the annual meeting shall
have voting rights at such annual meeting as provided in this Section. A
Participant who had Variable Annuity Account A accumulation units credited to
his account under a Contract on the last valuation date of Variable Annuity
Account A in the month of February preceding such annual meeting may cast the
number of votes equal to the number of such accumulation units as of that date.
A Participant receiving annuity payments under a Contract on the last valuation
date of Variable Annuity Account A in the month of February preceding such
annual meeting may cast the number of votes determined as of such date, equal to
(i) the dollar amount of the assets then in Variable Annuity Account A to meet
the annuity obligation relating to such Participant divided by (ii) the then
value of a Variable Annuity Account A accumulation unit.
In the case of a special meeting of Participants, the persons entitled to
vote and the number of votes each shall have shall be determined on the same
basis as in the case of an annual meeting, except that such determination shall
be made as of the last valuation date of Variable Annuity Account A in the
second month preceding the month in which the meeting takes place.
Section III.5. Quorum. Twenty-five per cent (25%) of the votes available
to Participants (as determined in accordance with Section III.4) represented
either in person or by proxy shall constitute a quorum for the transaction of
business at any annual or special meeting of Participants. When a quorum is
present, a vote of the majority of the votes available to Participants present,
represented in person or by proxy, shall determine any questions except as may
be otherwise provided by these Rules and Regulations or by law. If a quorum
shall not be present, a majority of the votes available to Participants present,
represented in person or by proxy, may adjourn the meeting until some later
time.
Section III.6. Proxies. Participants may vote either in person or by
proxy duly executed in writing by the Participants. A proxy for
any meeting shall be valid for any adjournment of such meeting.
Section III.7. Order of Business. The order of business at the
meetings of Participants shall be determined by the presiding
officer.
Section III.8. Inspectors. At each meeting of Participants the polls shall
be opened and closed, the proxies and ballots shall be received and be taken in
charge, and all questions touching the qualification of voters or the validity
of proxies and the acceptance or rejection of votes shall be decided by three
inspectors. Such inspectors, who need not be Participants, shall be appointed by
the Committee before the meeting, or if no such appointment shall have been
made, then by the presiding officer of the meeting. In the event of failure,
refusal or inability of any inspector previously appointed to serve, the
presiding officer may appoint any person to fill such vacancy.
Section III.9. Requirements as to Proxies. Neither Variable Annuity
Account A nor any of its Committee members, officers or employees shall by use
of the United States mails or any means or instrumentality of interstate
commerce, or otherwise, solicit or permit the use of its or his name to solicit
any proxy, consent or authorization in respect of any Contract or participation
under a Group Contract in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate in the public interest or
for the protection of Participants. (Investment Company Act ss.20(a).)
<PAGE>
IV - 5
ARTICLE IV
VARIABLE ANNUITY ACCOUNT COMMITTEE
Section IV.1. Composition. The Committee shall consist of five members,
or, after the first annual meeting of Participants, such other number of members
not less than five nor more than fifteen as the Committee may, by resolution,
from time to time authorize. Members of the Committee need not be Participants.
The initial Committee, the Chairman thereof, and the Secretary thereto shall be
appointed by the President of GWL&A. Thereafter, no person shall serve as a
Committee member unless elected to that office by ballot of Participants at an
annual or a special meeting duly called for that purpose; except that vacancies
occurring between such meetings may be filled in any otherwise legal manner if
immediately after filling any such vacancy at least two-thirds of the Committee
members then holding office shall have been elected to such office by
Participants at such an annual or special meeting. In the event that at any time
less than a majority of the Committee members holding office at that time were
so elected by Participants, the Committee or proper officer of Variable Annuity
Account A shall forthwith cause to be held, as promptly as possible and in any
event within sixty days, a meeting of Participants for the purpose of electing
Committee members to fill any existing vacancies in the Committee unless the
Commission shall by order extend such period. The foregoing provision of this
Section IV.1 shall not apply to members of an advisory board.
(Investment Company Act ss.16(a).)
Section IV.2. Terms of Office of Committee Members.
Committee members shall be elected to one year terms. Such elections shall be by
written ballot at the Annual Meeting of Participants or a special meeting held
for that purpose. The term of office of each member shall begin from the time of
his election and qualification until his successor shall have been elected and
shall have qualified, or, if earlier, the death, resignation, or removal as
provided in these Rules and Regulations or as otherwise provided by statute.
Section IV.3. Qualifications of Committee Members. So long as Variable
Annuity Account A shall be registered under the Investment
Company Act: (a) at least a majority of the Committee must be
citizens of the United States of America and not less than a
majority of such Committee who are United States citizens shall
be resident in the United States of America. (Rule
7d-1(b)(8)(D).) (b) not more than sixty percent (60%) of the
members of the Committee shall be persons who are investment
advisers of, affiliated persons of an investment adviser of, or
officers or employees of, Variable Annuity Account A, nor shall a
majority of the Committee consist of persons who are officers or
directors of any one bank (which term shall for the purposes of
this paragraph (b) mean any banking institution). If Variable
Annuity Account A shall at any time have an advisory board, such
board, as a distinct entity, shall be subject to the same
restrictions as to its membership as are imposed upon the
Committee by this paragraph (b). See also Article XIII, relating
to the ineligibility of certain persons. (Investment Company Act,
ss.10(a), ss.10(c) and ss.10(g).)
Section IV.4. Chairman and Secretary. At the first meeting of the
Committee following each annual meeting of Participants, the Committee shall
elect one of its members to act as Chairman of the Committee, and he shall hold
office until his successor is elected and qualified. The Chairman of the
Committee or, in his absence, a member of the Committee designated by the
Committee or, if no such designation is made, a member of the Committee
designated by the Chairman, shall preside at all meetings of the Committee, and
all annual and special meetings of Participants. The Chairman of the Committee,
at the direction of the members of the Committee, shall execute all agreements
or contracts to which the Committee or Variable Annuity Account A is a party.
The Committee may appoint a Secretary to the Committee, who need not be a
member of the Committee. The Secretary shall have the power to certify the
minutes of the proceedings of the Participants and the Committee, or portions
thereof, and shall perform such other duties and have such other powers as the
Committee shall from time to time designate. In the absence of the Secretary, a
temporary Secretary shall perform such duties and have such powers.
Section IV.5. Resignations and Removals. Any member of the Committee, the
Chairman, or the Secretary may resign his membership or office at any time by
mailing or delivering his written resignation to the Chairman of the Committee
or to a meeting of the Committee. By a vote of the majority of votes available
to Participants (determined in accordance with Section III.4), the Participants
may, at any meeting called for that purpose, remove any member of the Committee.
The Committee, by vote of a majority of the members then in office, may remove
the Chairman or the Secretary from his office. No member of the Committee or a
Chairman or Secretary who is removed or resigns shall have any right to any
compensation as such member, Chairman or Secretary, for any period following his
resignation or removal or any right to damages on account of such removal
(except where a right to receive compensation for a definite future period shall
be expressly provided in a written agreement duly approved by the Committee). A
resignation shall take effect at the time specified therein or, if the time be
not specified, upon acceptance by the Committee or the Chairman of the
Committee.
Section IV.6. Vacancies.
(a) Any vacancy in the Committee occurring by reason of death,
resignation, or removal of a member between annual meetings of Participants may
be filled by a majority vote of the remaining members, subject to the provisions
of Section IV.1. The person so selected shall serve until a successor Committee
member is elected at the next annual meeting of Participants to serve for the
remaining unexpired term, if any, or otherwise for a new three year term. The
Committee shall have and may exercise all of its powers notwithstanding the
existence of one or more vacancies in its number, provided there be at least two
members in office.
(b) If by reason of the death, disqualification, or bona fide resignation
of any member of the Committee, the requirements of Section IV.3 or Section
XIII.2 shall not be met, the operation of such requirements shall be suspended
for a period of thirty (30) days if the vacancy or vacancies may be filled by
action of the Committee, and for a period of sixty (60) days if a vote of
Participants is required to fill the vacancy or vacancies, or for such longer
period as the Commission may prescribe, by rules and regulations upon its own
motion or by order upon application, as not inconsistent with the protection of
Participants.
(Investment Company Act, ss.10(e).)
(c) If the office of Chairman or Secretary becomes vacant, the Committee
may elect a successor by vote of a majority of the members then in office. Each
such successor shall hold office for the unexpired term of his predecessor.
Section IV.7. Powers of the Committee. The Committee shall have the
following duties, responsibilities and powers:
(a) To select, in accordance with Section 32 of the Investment Company Act
an independent public accountant, whose employment shall be approved annually by
the Participants.
(b) To cause to be executed an agreement or agreements providing for
sales, services, administrative services and investment management services.
(c) To recommend changes in the fundamental investment policy of Variable
Annuity Account A, and to submit such recommendations to the Participants for
their approval.
(d) To authorize investment programs for Variable Annuity Account A to
carry out the investment objectives and policies of Variable Annuity Account A.
Section IV.8. Meetings. Regular meetings of the Committee shall be held at
such places, and at such times as the Committee, by vote, may determine, and if
so determined, no call or notice thereof need be given, except that a notice
shall be given at least two days prior to the first regular meeting following a
change in the date of regular meetings. Special meetings of the Committee may be
held at any time or place, whenever called by the Chairman of the Committee or
three or more members of the Committee.
Notice thereof shall be given to each member unless all members are
present or those not present shall have waived notice thereof in writing prior
to the meeting and each such waiver is filed with the minutes of the meeting.
Notice of special meetings, stating the time and place thereof, shall be mailed
to each member at his residence or business address at least two days before the
meeting, or by delivering to him personally, or telephoning or telegramming the
same to him at his residence or business address, at least one day before the
meeting; provided, however, that the Chairman may prescribe a shorter notice to
be given personally or by telephone or telegram to each member at his residence
or business address.
Section IV.9. Quorum. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. When a quorum is present at
any meeting, a majority of the members present shall decide any question brought
before such meeting except as otherwise provided by law, or by these Rules and
Regulations.
<PAGE>
Section IV.10. Committee Action Without Meeting. Any action which may be
taken at a meeting of the Committee may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all of the
Committee members.
Section IV.11. Executive and Other Subcommittees.
The Committee may elect, by the vote of a majority of the Committee, two or more
of its members to constitute an Executive Committee which shall have and may
exercise when the Variable Annuity Account Committee is not in session, any or
all of its powers in the management of the business and affairs of Variable
Annuity Account A.
The Variable Annuity Account Committee likewise may appoint from their
number other committees from time to time, and determine the number (not less
than two) composing such committees, the qualifications for membership, and the
functions to be performed.
Each member of a committee shall hold office until the first meeting of
the Variable Annuity Account Committee following the next annual meeting of the
Participants and until his successor is elected and qualified, or until he
sooner dies, resigns, is removed, is replaced by change of membership, becomes
disqualified, or until the Committee is abolished by the Variable Annuity
Account Committee.
Each committee may make rules for the notice, holding and conduct of its
meetings and the keeping of minutes of each meeting and shall report its actions
to the Variable Annuity Account Committee.
Section IV.12. Indemnification. Variable Annuity Account A shall not, in
any manner, protect or attempt to protect, any Committee member or officer of
Variable Annuity Account A against any liability to Variable Annuity Account A,
Contract Owners or Participants under Group Contracts to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. (Investment Company Act, ss.17(h).)
<PAGE>
V - 1
ARTICLE V
VALUE OF ASSETS
Section V.1 Value of Assets. The value of the assets of Variable Annuity
Account A shall be the aggregate, in United States dollars, of the following:
(a) The face amount of cash; plus
(b) The total market value determined as follows, of any securities listed
on an organized exchange:
(i) by the last board lot sale reported on the valuation date, or,
(ii)if no such sale is reported, by the mean between the closing
bid and ask prices on the valuation date, or, (iii)if prices in
neither (i) nor (ii) are reported, then by either-- (A) the last
board lot sale price, or, (B) the mean between the closing bid
and ask prices on the last preceding day on which both bid and
ask prices were reported-- whichever is the later; plus
(c) The fair market value of any other asset as determined in good faith
by the Committee; minus
(d) An amount for taxes, if any, to be deducted in computing the
gross investment rate pursuant to the terms of Contracts; and
minus
(e) Accrued and unpaid liabilities of Variable Annuity Account A other
than Contract liabilities.
Section V.2. Conversion to United States Dollars.
Any amount stated in currency other than United States dollars will be
converted to United States dollars at the mean between the buying and
selling rates of exchange prevailing at the close of business at the Head
Office of GWL&A on the valuation date.
<PAGE>
VI - 2
ARTICLE VI
INVESTMENT ADVISORY AND UNDERWRITING CONTRACTS
Section VI.1. Investment Advisers. So long as Variable Annuity Account A
shall be registered under the Investment Company Act, it shall not engage any
person to serve or act as investment adviser of Variable Annuity Account A,
except pursuant to a written contract which has been approved by a majority of
the votes available to Participants; and which
(a) precisely describes all compensation to be paid thereunder;
(b) shall continue in effect for a period more than two (2) years from the
date of its execution, only so long as such continuance is specifically approved
at least annually by the Committee or by a majority of votes available to
Participants;
(c) provides, in substance, that it may be terminated at any time, without
the payment of any penalty, by the Committee or by a majority of votes available
to Participants on not more than sixty (60) days' written notice to the
investment adviser;
(d) provides, in substance, for its automatic termination in the event of
its assignment by the investment adviser. (Investment Company Act, ss.15(a).)
Section VI.2. Principal Underwriters. So long as Variable Annuity Account
A is registered under the Investment Company Act, it shall not engage any
underwriter to offer for sale, sell, or deliver after sale any Contract, except
pursuant to a written contract, which contract:
(a) shall continue in effect for a period, more than two (2) years from
the date of its execution, only so long as such continuance is specifically
approved at least annually by the Committee or by a majority of votes available
to Participants;
(b) provides, in substance, for its automatic termination in the event of
its assignment by such underwriter. (Investment Company Act, ss.15(b).)
Section VI.3. Approval by Independent Committee Members or by
Participants. In addition to the requirements of Sections VI.1, 2 and 3 hereof
Variable Annuity Account a shall not enter into, renew, or perform any contract
or agreement, written or oral, whereby a person undertakes regularly to serve or
act as investment adviser of or principal underwriter for Variable Annuity
Account A, unless the terms of such contract or agreement and any renewal
thereof have been approved (1) by a majority of the Committee who are not
parties to such contract or agreement or affiliated persons of any such party,
or (2) by a majority of votes available to Participants. (Investment Company
Act, ss.15(c).)
Section VI.4. Provisions Applicable to Both Investment Advisers and
Principal Underwriters. So long as Variable Annuity Account A shall be
registered under the Investment Company Act, any contract entered into pursuant
to Sections VI.1, 2 or 3 above shall:
(a) contain no provision which protects or purports to protect an
investment adviser and/or principal underwriter against any liability to
Variable Annuity Account A or to Contract Owners or Participants under Group
Contracts to which such investment adviser or principal underwriter would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of its duties, or by reason of the reckless
disregard by such investment adviser or principal underwriter of its obligations
and duties under such contract; (Investment Company Act, ss.17(i).)
(b) provide that the investment adviser and/or principal underwriter shall
maintain and preserve for such period or periods as the Commission shall
prescribe by rules and regulations, such accounts, books, and other documents as
are necessary or appropriate to record such person's transactions with Variable
Annuity Account A; (Investment Company Act, ss.31(a).)
(c) provide that such accounts, books, and other records maintained
pursuant to paragraph (b) shall be subject at any time and from time to time to
such reasonable periodic, special and other examinations by the Commission, or
any member or representative thereof, as the Commission may prescribe
(d) provide that the investment adviser and/or principal underwriter shall
furnish to the Commission, within such reasonable time as the Commission may
prescribe, copies of or extracts from such accounts, books and other records
which may be prepared without undue effort, expense, or delay, as the Commission
may by order require. (Investment Company Act, ss.31(b).)
Section VI.5 Exclusion of Advisory Board. Nothing contained in Sections
VI.1, 2 or 3 shall be deemed to require or contemplate any action by an advisory
board, if any, of Variable Annuity Account A or by any of the members of such a
board. (Investment Company Act, ss.15(f).)
<PAGE>
VII - 3
ARTICLE VII
INVESTMENT POLICY
Section VII.1. Restrictions on Investments. So long as Variable
Annuity Account A is registered under the Investment Company Act,
it shall not, in contravention of such rules and regulations or
orders as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of
Participants: (a) purchase any security on margin, except such
short-term credits as are necessary for the clearance of
transactions; (b) participate on a joint or a joint and several
basis in any trading account in securities; (c) effect a short
sale of any security; (d) act as a distributor of securities of
which it is the issuer, except through an underwriter; or (e)
make any commitment as underwriter. (Investment Company Act,
ss.12(a); ss.12(b); ss.12(c).)
Section VII.2. Purchases of Securities of Other Investment Companies,
Insurance Companies or Broker Dealers. So long as Variable Annuity Account A is
registered under the Investment Company Act, Variable Annuity Account A and any
company or companies controlled by Variable Annuity Account A shall not acquire
any security issued by or any other interest in the business of:
(a) any other investment company of which Variable Annuity Account A and
any company or companies controlled by it shall not at the time of such purchase
or acquisition own in the aggregate at least 25 per centum of the total
outstanding voting stock, if Variable Annuity Account A and any company or
companies controlled by it own in the aggregate or as a result of such purchase
or acquisition will own in the aggregate more than 5 per centum of the total
outstanding voting stock of such other investment company if the policy of such
other investment company is the concentration of investments in a particular
industry or group of industries, or more than 3 per centum of the total
outstanding voting stock of such other investment company if the policy of such
other investment company is not the concentration of investments in a particular
industry or group of industries, except (A) a security received as a dividend or
as a result of an offer of exchange approved pursuant to section 11 of the
Investment Company Act or of a plan of reorganization of any company (other than
a plan devised for the purpose of evading the foregoing provisions), or (B) a
security purchased with the proceeds of payments on periodic payment plan
certificates, pursuant to the terms of the trust indenture under which such
certificates are issued; or
(b) any insurance company of which Variable Annuity Account A and any
company or companies controlled by it shall not at the time of such purchase or
acquisition own in the aggregate at least 25 per centum of the total outstanding
voting stock, if Variable Annuity Account A and any company or companies
controlled by it own in the aggregate or as a result of such purchase or
acquisition will own in the aggregate more than 10 per centum of the total
outstanding voting stock of such insurance company, except a security received
as a dividend or as a result of a plan of reorganization of any company (other
than a plan devised for the purpose of evading the foregoing provisions); or
(c) any person who is a broker, a dealer, is engaged in the business of
underwriting, or is either an investment adviser of an investment company or an
investment adviser registered under title II of the Investment Company Act
unless (A) such person is a corporation all the outstanding securities of which
(other than short-term paper, securities representing bank loans and directors'
qualifying shares) are, or after such acquisition will be, owned by one or more
registered investment companies; and (B) such person is primarily engaged in the
business of underwriting and distributing securities issued by other persons,
selling securities to customers, or any one or more of such or related
activities, and the gross income of such person normally is derived principally
from such business or related activities. (Investment Company Act, ss.12(d).)
Section VII.3. Changes in Investment Policy. So long as Variable Annuity
Account A shall be registered under the Investment Company Act, it shall not,
unless authorized by a vote of a majority of the votes available to
Participants:
(a) change its subclassification as defined in section 5(a)(1) and (2) of
the Investment Company Act or its subclassification from a diversified to a
non-diversified company;
(b) borrow money, issue senior securities, underwrite securities issued by
other persons, purchase or sell real estate or commodities or make loans to
other persons, except in each case in accordance with the recitals of policy
contained in its registration statement under the Investment Company Act in
respect thereto;
(c) deviate from its policy in respect of concentration of investments in
any particular industry or group of industries as recited in its registration
statement under the Investment Company Act, or deviate from any fundamental
policy recited in its registration statement pursuant to Section 8(b)(2) of said
Act; or
(d) change the nature of its business so as to cease to be an investment
company. (Investment Company Act, ss.13(a).)
For the purposes of subparagraph (a) of Section VII.3, subject to such
rules and regulations or orders as the Commission may issue pursuant to the
authority of section 2(a)(39) of the Investment Company Act, the term "value"
shall mean:
(i) with respect to securities owned at the end of the last preceding
fiscal quarter for which market quotations are readily available,
the market value at the end of such quarter; (ii) with respect to
other securities and assets owned at the end of the last
preceding fiscal quarter, fair value at the end of such quarter,
as determined in good faith by the Committee; and (iii) with
respect to securities and other assets acquired after the end of
the last preceding fiscal quarter, the cost thereof; provided,
that valuations of securities at cost or other basis, as
permitted by rules and regulations of the Commission, may be made
in cases where it may be more convenient for Variable Annuity
Account A to make its computations on such basis by reason of the
necessity or desirability of complying with the provisions of any
Canadian regulatory or revenue laws or rules or regulations
issued thereunder. (Rule 7d-1(b)(8)(A).)
<PAGE>
VIII - 2
ARTICLE VIII
TRANSACTIONS WITH AFFILIATES
Section VIII.1. Restrictions on Purchases, Sales, Loans, etc.
(a) Except to the extent that the Commission may, by rules and regulations
upon its own motion or by order upon application, have exempted a transaction or
class of transactions from any of the provisions of section 10(f) of the
Investment Company Act, or may otherwise permit, Variable Annuity Account A
shall not, so long as it shall be registered under the Investment Company Act,
knowingly purchase or otherwise acquire, during the existence of any
underwriting or selling syndicate, any security (except a security of which
Variable Annuity Account A is the issuer) a principal underwriter of which is an
officer, Committee member, member of an advisory board, investment adviser, or
employee of Variable Annuity Account A, or is a person (other than a company of
the character described in section 12(d)(3)(A) and (B) of the Investment Company
Act) of which any such officer, Committee member, member of an advisory board,
investment adviser, or employee is an affiliated person. (Investment Company
Act, ss.10(f).)
(b) So long as Variable Annuity Account A shall be registered under the
Investment Company Act, it shall not lend money or property to any person,
directly or indirectly, if--
(1) the investment policies of Variable Annuity Account A, as
recited in its registration statement and reports filed under this title,
do not permit such a loan; or
(2) such person controls or is under common control with Variable
Annuity Account A. (Investment Company Act, ss.21.)
Section VIII.2. Transactions of Certain Affiliated Persons and
Underwriters. (a) Except to the extent permitted by order of
exemption issued by the Commission, Variable Annuity Account A,
so long as it shall be registered under the Investment Company
Act, shall not permit any affiliated person or promoter of or
principal underwriter for Variable Annuity Account A (other than
a company of the character described in section 12(d)(3)(A) and
(B) of the Investment Company Act), or any affiliated person of
such a person, promoter, or principal underwriter, acting as
principal-- (1) knowingly to sell any security or other property
to Variable Annuity Account A or to any company controlled by it
unless such sale involves solely (A) securities of which the
buyer is the issuer, (B) securities of which the seller is the
issuer and which are part of a general offering to the holders of
a class of its securities, or (C) securities deposited with the
trustee of a unit investment trust or periodic payment plan by
the depositor thereof; (2) knowingly to purchase from Variable
Annuity Account A, or from any company controlled by it, any
security or other property (except securities of which the seller
is the issuer); or (3) to borrow money or other property from
Variable Annuity Account A or from any company controlled by it
(unless the borrower is controlled by it (unless the borrower is
controlled by the lender) except as permitted in section 21(b) of
the Investment Company Act. (b) Notwithstanding Section
VIII.2(a), a person may, in the ordinary course of business, sell
to or purchase from any company merchandise or may enter into a
lessor-lessee relationship with any person and furnish the
services incident thereto. (Investment Company Act,
ss.17(a),(b),(c).) (c) So long as Variable Annuity Account A
shall be registered under the Investment Company Act, it shall
not permit any affiliated person of Variable Annuity Account A or
any affiliated person of such person-- (1) acting as agent, to
accept from any source any compensation (other than a regular
salary or wages from such registered company) for the purchase or
sale of any property to or for Variable Annuity Account A or any
controlled company thereof, except in the course of such person's
business as an underwriter or broker; or (2) acting as broker, in
connection with the sale of securities to or by Variable Annuity
Account A or any controlled company thereof, to receive from any
source a commission, fee, or other remuneration for effecting
such transaction which exceeds (A) the usual and customary
broker's commission if the sale is effected on a securities
exchange, or (B) 2 percent of the sales price if the sale is
effected in connection with a secondary distribution of such
securities, or (C) 1 percent of the purchase or sale price of
such securities if the sale is otherwise effected unless the
Commission shall, by rules and regulations or order in the public
interest and consistent with the protection of investors, permit
a larger commission. (Investment Company Act, ss.17(e).)
Section VIII.3. Participation with Affiliates. So long as Variable Annuity
Account A shall be registered under the Investment Company Act, it shall not
permit any affiliated person of or principal underwriter for Variable Annuity
Account A (other than a company of the character described in section
12(d)(3)(A) and (B) of the Investment Company Act), or any affiliated person of
such a person or principal underwriter, acting as principal to effect any
transaction in which Variable Annuity Account A, or a company controlled by it,
is a joint or a joint and several participant with such person, principal
underwriter, or affiliated person, in contravention of such rules and
regulations as the Commission may prescribe for the purpose of limiting or
preventing participation by Variable Annuity Account A or controlled company on
a basis different from or less advantageous than that of such other participant.
Nothing contained in this Section VIII.3 shall be deemed to preclude any
affiliated person from acting as manager of any underwriting syndicate or other
group in which Variable Annuity Account A or controlled company is a participant
and receiving compensation therefor. (Investment Company Act, ss.17(d).)
<PAGE>
IX - 1
ARTICLE IX
DIVIDENDS, WARRANTS OR RIGHTS
Section IX.1. Dividends. No dividend payments will be made from the
assets maintained in Variable Annuity Account A. (Investment
Company Act, ss.19.)
Section IX.2. Warrants or Rights. No Warrants or Rights will be issued
with respect to Contracts. (Investment Company Act, ss.18(d).)
<PAGE>
X - 1
ARTICLE X
RIGHT TO BORROW MONEY
Section X.1. Limitations on Borrowing. So long as Variable Annuity Account
A shall be registered under the Investment Company Act, it shall not issue any
bond, debenture, note or similar obligation or instrument constituting a
security and evidencing indebtedness, or any Contract having priority over any
other Contract as to distribution of assets except that Variable Annuity Account
A shall be permitted to borrow from any bank:
Provided, that immediately after any such borrowing there is an asset
coverage of at least 300 percent for all borrowings of Variable Annuity Account
A: And provided further, that in the event that such asset coverage shall at any
time fall below 300 percent Variable Annuity Account A shall, within three days
thereafter (not including Sundays and holidays) or such longer period as the
Commission may prescribe by rules and regulations, reduce the amount of its
borrowings to an extent that the asset coverage of such borrowings shall be at
least 300 percent. (Investment Company Act, ss.18(f) and (g).)
Section X.2. Borrowings for Temporary Purposes. Notwithstanding Section
X.1 Variable Annuity Account A may borrow for temporary purposes only in an
amount not exceeding 5% of the total assets of Variable Annuity Account A at the
time the loan is made. A loan shall be presumed to be for temporary purposes if
it is repaid within sixty days and it is not extended or renewed; otherwise, the
loan will be presumed not to be for temporary purposes; provided, however, that
any such presumption may be rebutted. (Investment Company Act, ss.18(g).)
Section X.3. "Asset Coverage." "Asset Coverage" as used in Section X.1
shall have the meaning ascribed to it in section 18(h) of the
Investment Company Act. (Investment Company Act, ss.18(h).)
<PAGE>
XI - 1
ARTICLE XI
VOTING TRUSTS, CIRCULAR OWNERSHIP
Section XI.1. Voting Trusts. So long as Variable Annuity Account A shall
be registered under the Investment Company Act it shall not, nor shall it permit
any affiliated person of Variable Annuity Account A to offer for sale, sell, or
deliver after sale, any voting trust certificate relating to any Contract.
(Investment Company Act, ss.20(b).)
Section XI.2. Circular Ownership. (a) So long as Variable Annuity
Account A shall be registered under the Investment Company Act,
it shall not purchase any voting security if, to its knowledge,
cross-ownership or circular ownership exists, or after such
acquisition will exist, between Variable Annuity Account A and
the issuer of such security. Cross-ownership shall be deemed to
exist between two companies when each of such companies
beneficially owns more than three percent (3%) of the outstanding
voting securities of the other company. Circular ownership shall
be deemed to exist between two (2) companies if such companies
are included within a group of three (3) or more companies, each
of which: (1) beneficially owns more than three percent (3%) of
the outstanding voting securities of one or more other companies
of the group; and (2) has more than three percent (3%) of its own
outstanding voting securities beneficially owned by another
company, or by each of two (2) or more other companies, of the
group. (Investment Company Act, ss.20(c).) (b) If such
cross-ownership or circular ownership between Variable Annuity
Account A and any other company or companies shall come into
existence (without Variable Annuity Account A's or GWL&A's
knowledge) upon the purchase for Variable Annuity Account A of
the securities of another company, Variable Annuity Account A
shall, within one year after it first knows of the existence of
such cross-ownership or circular ownership, eliminate the same.
(Investment Company Act, ss.20(d).)
<PAGE>
XII - 2
ARTICLE XII
DISTRIBUTION, REDEMPTION, RESTRICTIONS ON
ASSIGNMENT, AND ISSUANCE OF CONTRACTS FOR
OTHER THAN CASH
Section XII.1. Distribution of Contracts. So long as Variable Annuity
Account A shall be registered under the Investment Company Act, it shall not,
except to the extent permitted by an order of exemption issued by the Commission
pursuant to section 6(c) of the Investment Company Act, sell to any person any
Contract, except either to or through a principal underwriter for distribution,
or at a current public offering price described in the prospectus, and, if such
Contract is being currently offered to the public by or through an underwriter,
no principal underwriter of such Contract and no dealer shall sell any such
Contract to any person except a dealer, a principal underwriter for Variable
Annuity Account A, or Variable Annuity Account A, except at a current public
offering price described in the prospectus: Provided, however, that nothing in
this Section XII.1 shall prevent a sale made (i) pursuant to an offer of
exchange permitted by section 11 of the Investment Company Act including any
offer made pursuant to an offer made solely to all Participants (or to a
particular class of Participant) proportionate to their holdings or
proportionate to any cash distribution made to them by Variable Annuity Account
A (subject to appropriate qualifications designed solely to avoid issuance of
fractional securities); or (iii) in accordance with rules and regulations of the
Commission made pursuant to subsection (b) of section 12 of the Investment
Company Act.
(Investment Company Act, ss.22(d).)
Section XII.2. Right of Redemption. So long as Variable Annuity Account A
shall be registered under the Investment Company Act, it shall not suspend, nor
shall it allow its principal underwriter to suspend, except to the extent
permitted by an order of exemption issued by the Commission pursuant to section
6(c) of the Investment Company Act, the right of redemption or postpone the date
of payment or satisfaction upon redemption of any Contract in accordance with
the terms of such Contract for more than seven days after due surrender of such
Contract except:
(1) for any period (A) during which the New York Stock Exchange
is closed other than customary week-end and holiday closings, or (B)
during which trading on the New York Stock Exchange is restricted;
(2) for any period during which an emergency exists as a result
of which (A) disposal by Variable Annuity Account A of securities owned by
it is not reasonably practicable, or (B) it is not reasonably practicable
for Variable Annuity Account A fairly to determine the value of its net
assets; or
(3) for such other periods as the Commission may by order permit
for the protection of Participants. The Commission's rules and regulations
shall determine the conditions under which (i) trading shall be deemed to
be restricted and (ii) an emergency shall be deemed to exist within the
meaning of this Section XII.2. (Investment Company Act, ss.22(e).)
Section XII.3. Restrictions on Assignment. So long as Variable Annuity
Account A shall be registered under the Investment Company Act, the assignment
of Contracts shall not be restricted except in conformity with the statements
with respect to assignability contained in its registration statement under the
Investment Company Act nor in contravention of such rules and regulations as the
Commission may prescribe in the interests of Participants. (Investment Company
Act, ss.22(f).)
Section XII.4. Issuance of Contracts for Other than Cash. So long as
Variable Annuity Account A shall be registered under the Investment Company Act,
Contracts shall not be issued (1) for services or (2) for property other than
cash or securities (including Contracts) except as a distribution to
Participants or in connection with a reorganization. (Investment Company Act,
ss.22(g).)
<PAGE>
XIII - 2
ARTICLE XIII
INELIGIBILITY OF CERTAIN PERSONS
Section XIII.1. Ineligibility for Officer, Member of Committee, etc.
Except to the extent permitted by an order of exemption of the Commission, the
following persons shall not be eligible to serve or act in the capacity of
officer, member of the Committee, member of an advisory board, investment
adviser, principal underwriter, or depositor of Variable Annuity Account A at
any time while Variable Annuity Account A shall be registered under the
Investment Company Act:
(a) any person who at any time has been convicted of any felony or
misdemeanor involving the purchase or sale of any security or arising out of
such person's conduct as an underwriter, broker, dealer, or investment adviser,
or as an affiliated person, salesman, or employee of any investment company,
banking institution, or insurance company;
(b) any person who, by reason of any misconduct, is permanently or
temporarily enjoined by order, judgment, or decree of any court of competent
jurisdiction from acting as an underwriter, broker, dealer, or investment
adviser, or as an affiliated person, salesman, or employee of any investment
company, banking institution, or insurance company, or from engaging in or
continuing any conduct or practice in connection with any such activity or in
connection with the purchase or sale of any security; or
(c) a company any affiliated person of which is ineligible, by reason of
paragraph (a) or (b) of this Section XIII.1, to serve or act in the foregoing
capacities.
For the purposes of paragraphs (a), (b), and (c) of this Section
XIII.1, the term "investment adviser" shall include an investment adviser
as defined in title II of the Investment Company Act. (Investment Company
Act, ss.9.)
Section XIII.2. Ineligibility for Broker, Principal Underwriter, Member of
the Committee, Officer or Employee. So long as Variable Annuity Account A shall
be registered under the Investment Company Act, it shall not:
(a) employ as a regular broker any member of the Committee, officer or
employee of Variable Annuity Account A, or any person of which such member of
the Committee, officer or employee is an affiliated person unless a majority of
the Committee shall be persons who are not such brokers or affiliated persons of
any such brokers;
(b) use as a principal underwriter of Contracts any member of the
Committee, officer or employee of Variable Annuity Account A or any person of
which any such member of the Committee, officer or employee is an affiliated
person unless a majority of the Committee shall be persons who are not such
principal underwriters or affiliated persons of any such principal underwriters;
or
(c) have as a member of the Committee, officer or employee any investment
banker or any affiliated person of an investment banker unless a majority of the
Committee shall be persons who are not investment bankers or affiliated persons
of any investment banker. For the purposes of this paragraph (c) a person shall
not be deemed an affiliated person of an investment banker solely by reason of
the fact that he is an affiliated person of a company of the character described
in section 12(d)(3)(A) and (B) of the Investment Company Act. (Investment
Company Act, ss.10(b).)
<PAGE>
XIV - 2
ARTICLE XIV
PERIODIC REPORTS
Section XIV.1. Reports to the Commission.
(a) So long as Variable Annuity Account A shall be registered under the
Investment Company Act, it shall file annually with the Commission such
information, documents, and reports as investment companies having securities
registered on a national securities exchange are required to file annually
pursuant to section 13(a) of the Securities Exchange Act of 1934 of the United
States of America and the rules and regulations issued thereunder. (Investment
Company Act, ss.30(a).)
(b) So long as Variable Annuity Account A shall be registered under the
Investment Company act, it shall file with the Commission:
(1) such information and documents (other than financial
statements) as the Commission may require, on a semi-annual or quarterly
basis, to keep reasonably current the information and documents contained
in the registration statement of Variable Annuity Account A under the
Investment Company Act, and
(2) copies of every periodic or interim report or similar
communication containing financial statements and transmitted to
Participants, such copies to be filed no later than ten (10) days after
such transmission; provided, that any information or document contained in
a report or other communication to Participant filed pursuant to
subparagraph (2) of this paragraph (b) may be incorporated by reference in
any report subsequently or concurrently filed pursuant to subparagraph (1)
hereof. (Investment Company Act, ss.30(b).)
Section XIV.2. Reports to Participants. So long as Variable Annuity
Account A shall be registered under the Investment Company Act, it shall
transmit to Participants, at least semi-annually, reports containing such of the
following information and financial statements or their equivalent, as of a
reasonably current date, as the Commission may prescribe by rules and
regulations for the protection of Participants, which reports shall not be
misleading in any material respect in the light of the reports required to be
filed pursuant to Section XIV.1 hereof:
(a) a balance sheet accompanied by a statement of the aggregate value
of investments on the date of
such balance sheet;
(b) a list showing the amounts and values of securities owned on the date
of such balance sheet; (c) a statement of income for the period covered by
the report, which shall be itemized at least
with respect to each category of income and expense representing more than five
percent (5%) of total income or expense;
(d) a statement of surplus, which shall be itemized at least with respect
to each charge or credit to the surplus account which represents more than five
percent (5%) of the total charges or credits during the period covered by the
report;
(e) a statement of the aggregate remuneration paid by Variable Annuity
Account A during the period covered by the report (A) to all Committee members
and to all members of any advisory board for regular compensation; (B) to each
Committee member and to each member of an advisory board for special
compensation; (C) to all officers; and (D) to each person of whom any officer or
Committee member of Variable Annuity Account A is an affiliated person; and
(f) a statement of the aggregate dollar amounts of purchases and sales of
investment securities, other than government securities, made during the period
covered by the report: Provided, that if in the judgment of the Commission any
item required under the Section XIV.2 is inapplicable or inappropriate to
Variable Annuity Account A, the Commission may by rules and regulations permit
in lieu thereof the inclusion of such item of a comparable character as it may
deem applicable or appropriate. (Investment Company Act, ss.30(d).)
Section XIV.3. Requirements for Financial Statements Contained in Annual
Reports. Financial statements contained in annual reports required pursuant to
Sections XIV.1(a) and XIV.2, if required by the rules and regulations of the
Commission, shall be accompanied by a certificate of independent public
accountants. The certificate of such independent public accountants shall be
based upon an audit not less in scope or procedures followed than that which
independent public accountants would ordinarily make for the purpose of
presenting comprehensive and dependable financial statements, and shall contain
such information as the Commission may prescribe, by rules and regulations in
the public interest or for the protection of Participants, as to the nature and
scope of the audit and the findings and opinion of the accountants. Each such
report shall state that such independent public accountants have verified
securities owned, either by actual examination, or by receipt of a certificate
from the trustee provided for in Article XVIII, as the Commission may prescribe
by rules and regulations. (Investment Company Act, ss.30(e).)
<PAGE>
XV - 1
ARTICLE XV
ACCOUNTS AND RECORDS
Section XV.1. Maintenance of Records. So long as Variable Annuity Account
A shall be registered under the Investment Company Act, Variable Annuity Account
A, and every underwriter, broker, dealer, or investment adviser which is a
majority-owned subsidiary of Variable Annuity Account A, shall maintain and
preserve for such period or periods as the Commission may prescribe by rules and
regulations, such accounts, books, and other documents as constitute the record
forming the basis for financial statements required to be filed pursuant to
Section XIV of these Rules and Regulations, and of the auditor's certificates
relating thereto. Every investment adviser not a majority-owned subsidiary of,
every depositor of, and every principal underwriter for Variable Annuity Account
A, shall maintain and preserve for such period or periods as the Commission
shall prescribe by rules and regulations, such accounts, books, and other
documents as are necessary or appropriate to record such person's transactions
with Variable Annuity Account A. (Investment Company Act, ss.31(a).)
Section XV.2. Examination by the Commission. All accounts, books, and
other records, required to be maintained and preserved by any person pursuant to
Section XV.1 shall be subject at any time and from time to time to such
reasonable periodic, special, and other examinations by the Commission, or any
member or representative thereof, as the Commission may prescribe. Any such
person shall furnish to the Commission, within such reasonable time as the
Commission may prescribe, copies of or extracts from such records which may be
prepared without undue effort, expense, or delay, as the Commission may by order
require. (Investment Company Act, ss.31(b).)
Section XV.3. Commission Rules as to Uniformity. Unless exempted by order
of the Commission, Variable Annuity Account A shall, so long as it shall be
registered under the Investment Company Act, maintain its accounting records and
prepare the financial statements required by these Rules and Regulations in
accordance with such rules and regulations as may be issued by the Commission,
in the public interest or for the protection of Participants, providing for a
reasonable degree of uniformity in the accounting policies and principles to be
followed by registered investment companies in the maintenance and preparation
of such records and statements. (Investment Company Act, ss.31(c) and ss.31(d).)
<PAGE>
XVI - 1
ARTICLE XVI
ACCOUNTANTS AND AUDITORS
Section XVI.1. Selection of Accountants and Auditors. So long as Variable
Annuity Account A shall be registered under the Investment Company Act it shall
not, except pursuant to an order of exemption from the Commission, file with the
Commission any financial statement signed or certified by an independent public
accountant, unless--
(a) such accountant shall have been selected at a meeting held within
thirty days before or after the beginning of the fiscal year or before the
annual meeting of Participants in that year by a majority of Committee members
who are not investment advisers of, or affiliated persons of an investment
adviser of, or officers or employees of, Variable Annuity Account A;
(b) such selection shall have been submitted for ratification or rejection
at the next succeeding annual meeting of Participants if such meeting be held,
except that any vacancy occurring between annual meetings, due to the death or
resignation of the accountant, may be filled by the Committee;
(c) the employment of such accountant shall have been conditioned upon the
right of Variable Annuity Account A by vote of a majority of the votes available
to Participants at any meeting called for the purpose to terminate such
employment forthwith without any penalty; and
(d) such certificate or report of such accountant shall be addressed both
to the Committee and to Participants: Provided, that if the selection of an
accountant has been rejected pursuant to paragraph (b) or his employment
terminated pursuant to paragraph (c) the vacancy so occurring may be filled by
vote of a majority of the votes available to Participants, either at the meeting
at which the rejection or termination occurred or if not so filled then at a
subsequent meeting which shall be called for the purpose. (Investment Company
Act, ss.32(a).)
Section XVI.2. Participation by Officers and Employees. The principal
accounting officers and employees of Variable Annuity Account A, if any, who
participate in the preparation of any financial statement of Variable Annuity
Account A to be filed with the Commission shall be selected either by vote of
the Participants at the last annual meeting of Participants or by the Committee.
Any such selection may be general or confined to specific instances or
individuals. (Investment Company Act, ss.32(b).)
<PAGE>
XVII - 1
ARTICLE XVII
REORGANIZATIONS AND EXCHANGES
Section XVII.1. Reorganizations. In the event that, while Variable Annuity
Account A is registered under the Investment Company Act, Variable Annuity
Account A is, or any Contracts are, the subject of or is a participant in any
plan of reorganization, Variable annuity Account A may, prior to any
solicitation of Participants with respect to such plan of reorganization,
request the Commission to render an advisory report in respect of the fairness
of such plan and its effect upon any class of Participants. Variable Annuity
Account A shall mail promptly a copy of such advisory report, if any is so
rendered, to all Participants affected by such plan, provided, that such
advisory report shall have been received by Variable Annuity Account A at least
forty-eight (48) hours (not including Sundays and holidays) before final action
is taken in relation to such plan at any meeting of Participants called to act
in relation thereto, or any adjournment of any such meeting, or if no meeting be
called, then prior to the final date of acceptance of such plan by Participants.
(Investment Company Act, ss.25.)
Section XVII.2. Exchange Offers. Variable Annuity Account A shall not
make exchange offers prohibited by section 11 of the Investment Company
Act. (Investment Company Act, ss.11.)
<PAGE>
XVIII - 1
ARTICLE XVIII
TRUSTEE
Section XVIII.1. Trustee. The assets of Variable Annuity Account A will be
maintained in trust in the United States in a bank having the qualifications
prescribed in paragraph 1 of section 26(a) of the Investment Company Act. The
terms of the trust shall comply with requirements imposed by the insurance laws
of the various states of the United States in which GWL&A conducts business.
(Investment Company Act, ss.17(f).)
Section XVIII.2. Bonding Requirements. Any officer or employee of GWL&A or
any officer of Variable Annuity Account A who may singly, or jointly with
others, have access to the assets of Variable Annuity Account A either directly
or through authority to draw upon such assets or to direct generally the
disposition of such assets shall be bonded by a reputable fidelity insurance
company against larceny and embezzlement in such reasonable minimum amounts as
the Commission by rules, regulations or orders may prescribe. (Investment
Company Act, ss.17(g).)
<PAGE>
XIX - 4
ARTICLE XIX
AMENDMENTS
These Rules and Regulations may be altered, amended or repealed by vote of
a majority of the Committee as is necessary and appropriate to carry out the
purpose of Variable Annuity Account A, provided, that neither Variable Annuity
Account A's Rules and Regulations nor the resolutions of GWL&A establishing
Variable Annuity Account A shall be changed in any manner inconsistent with the
Investment Company Act or any rule issued thereunder unless such change shall be
authorized by the Commission. (Rule ss.7d-1(b)(8)(I).)
<PAGE>
CROSS REFERENCE SHEET
Relating to the Provisions of Sub-Section b(8)(A)
of Rule 7d-1 and the Rules and Regulations of
GWL&A Variable Annuity Account A
Section of 1940 Act Section of Rules & Regulations
- ------------------- ------------------------------
2(a) II.1(a)
2(a)(5) "Bank" II.1(a), IV.3(b),
XIII.1(b)
2(a)(7) "Commission" II.2(b)
2(a)(16) "Government Security" II.2(f)
2(a)(39) "Value" II.1(a), VII.3
4 II.1(b)
5 II.1(b)
6(c) II.4
9 XIII.1
10(a) IV.3(b)
(b) XIII.2
(c) IV.3(b)
(e) IV.6(b)
(f) VIII.(a)
(g) IV.3(b)
11 XVII.2
12(a) VII.1
(b) VII.1
(c) VII.1
(d) VII.2
13(a) VII.3
<PAGE>
Section of 1940 Act Section of Rules & Regulations
- ------------------- ------------------------------
15(a) VI.1
(b) VI.2
(c) VI.3
(f) VI.5
16(a) IV.1
17(a) VIII.2(a) & (b)
(b) VIII.2(a) & (b)
(c) VIII.2(a) & (b)
(d) VIII.3
(e) VIII.2(c)
(f) XVIII.1
(g) XVIII.2
(h) IV.12
(i) VI.4(a)
18(a) N.A.
(b) N.A.
(c) N.A.
(d) IX.2
(e) N.A.
(f) X.1
(g) X.1 & 2
(h) X.3
(i) III.4
(j) N.A.
(k) N.A.
19 IX.1
20(a) III.9
(b) XI.1
(c) XI.2(a)
(d) XI.2(b)
21 VIII.1(b)
22(d) XII.1
(e) XII.2
(f) XII.3
(g) XII.4
<PAGE>
Section of 1940 Act Section of Rules & Regulations
- ------------------- ------------------------------
23 N.A.
25 XVII.1
30(a) XIV.1(a)
(b) XIV.1(b)
(d) XIV.2
(e) XIV.3
(f) N.A.
31(a) VI.4(b), XV.1
(b) VI.4(c) & (d), XV.2
(c) XV.3
(d) XV.3
32(a) XVI.1
(b) XVI.2
38(c) II.5
<PAGE>
Additional Cross Reference Sheet
between Rule 7d-1 and the
Rules and Regulations
Rule 7d-1 Section of Rules & Regulations
7d-1(b)(8)(A) VII.3
7d-1(b)(8)(B) II.3
7d-1(b)(8)(D) IV.3(a)
7d-1(b)(8)(E) XVIII.1
7d-1(b)(8)(H) VI
7d-1(b)(8)(I) XIX
<PAGE>
Exhibit 4
<PAGE>
GREAT-WEST LIFE
(herein called the Insurance Company)
IN CONSIDERATION of the application for this contract by
(herein called the Employer) and of the payment of the premiums from
time to time provided for in this contract
AGREES TO PAY
to the person or persons entitled thereto the variable annuity and other
benefits and payments all as provided herein.
This contract provides for payments or values which vary depending on the
investment experience of a variable annuity account, and supplements Policy No.
which provides for fixed-dollar benefits and which shall hereinafter be referred
to as the "Companion Contract".
All subject to the provisions (including the Schedules) hereinafter on the
following pages set forth which provisions, together with the application for
this contract, form a part of this contract as fully as if the same were stated
over the signatures hereunto set.
IN WITNESS WHEREOF the Insurance Company has caused this contract to
be executed at Denver, Colorado, on
Vice-President and Secretary President
For the Actuary
Group Money-Purchase Variable Annuity Contract
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
Contract No.
Form No. GVA173
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C> <C> <C> <C> <C> <C>
Section Page
1 Definitions and Miscellaneous Provisions 3
2 Commencement of Coverage 4
3 Premium 4
4 Experience Rating 5
5 Valuation 5
6 Variable Annuity Benefits 8
7 Death Benefits 9
8 Surrender Benefits 10
9 Transfers to and from Companion Contract 10
10 Settlement Options 11
11 Authority 14
12 Entire Contract and Incontestability 14
13 Modification 14
14 Age 15
15 Transfer and Assignment 15
16 Beneficiary 16
17 Currency 16
18 Payment and Proof Prerequisite to Payment 16
19 Cessation of Premium Payments 16
20 Relation of this Contract to the Variable Annuity
Account 17
21 Withdrawal and Refund
17
</TABLE>
Contract No. Page 2
GVA173
<PAGE>
Section 1. DEFINITIONS AND MISCELLANEOUS PROVISIONS DEFINITIONS.- In this
contract:
(a) "register date" means
(b) contract year" means a 12-month period beginning on the register
date or on an anniversary of such date;
(c) "employee" means and includes a person in the employment of the
Employer on the date of application for coverage under this contract in
respect of such person;
(d) "Variable Annuity Account" means those assets of the Insurance Company that
form the separate and distinct fund which has been established by the Insurance
Company and designated "Great-West Variable Annuity Account A";
(e) "business day" means a day during which both the New York Stock Exchange and
the Head office of the Insurance Company are open for business;
(f) "valuation period" is a period beginning immediately after the close of
business on the New York Stock Exchange on a business day and ending at the
close of business on the New York Stock Exchange on the immediately succeeding
business day;
(g) it valuation date" means that portion of the last calendar day in a
valuation period that is within the valuation period;
(h) "employee's individual variable account" is the total of the accumulation
units to the credit of the employee;
(i) "variable annuity" is a series of payments under this contract in amounts
which may vary from time to time because of the investment experience of the
Variable Annuity Account;
(j) "variable annuity commencement date" of an employee is the date on which the
first payment under the variable annuity purchased in respect of such employee
is due.
MISCELLANEOUS PROVISIONS
(a) whenever any application, notice, report, proof, request, consent or
election is to be made or given to or filed with the Insurance Company the same
must be in writing and must be so given to or filed with the Insurance Company
at its Head Office, and an election shall be in form satisfactory to the
Insurance Company;
Contract No. Page 3
GVA173
<PAGE>
Section 1. (cont'd)
MISCELLANEOUS PROVISIONS.- (cont'd)
(b) any notice or demand by the Insurance Company to or upon the Employer may be
given or made by delivering the same to the Employer or by mailing the same in a
prepaid envelope addressed to the last known address according to the records of
the Insurance Company of the Employer;
(c) whenever a masculine pronoun is used it shall be deemed in all instances
where appropriate to mean the feminine pronoun as well.
Section 2. COMMENCEMENT OF COVERAGE.-
The Employer may make application for coverage in respect of any employee at any
time.
An employee in respect of whom application is so made shall be deemed to become
covered as of the first day of the contract year in which a premium is paid
under the provisions of Section 3 in respect of such employee.
Section 3. PREMIUM.-
(A) AMOUNT AND DUE DATE OF PREMIUMS.-
The Employer may from time to time as determined by the Employer pay premiums in
respect of any employee up to but not after his variable annuity commencement
date and shall report to the Insurance Company the amount so paid. Such report
shall be conclusive and binding as to such employee and any other person or
corporation claiming interest hereunder in respect of such employee.
The amount of any premium in respect of an employee shall be as determined by
the Employer. However, the sum of such premium in respect of any employee may
not be less than $180 in any contract year. The amount of any one such premium
may not be less than $15.
All premiums are payable at the Head Office of the Insurance Company.
(B) NET PREMIUMS
The Insurance Company shall deduct from each premium paid in a contract year in
respect of an employee any applicable premium tax and 3.75% of such premium, and
shall deduct $9.00 from the first premium paid in respect of such employee in
such contract year. The balance of any premium remaining after these deductions
is referred to as a net premium.
Contract No. Page 4
GVA173
<PAGE>
Section 3. (cont'd)
(C) CREDIT OF ACCUMULATION UNITS.-
Accumulation units shall be credited to an employee's individual variable
account as of the valuation date coinciding with or next after receipt of a
premium at the Head office of the Insurance Company. The number of
accumulation units so credited shall be determined by dividing the applicable
net premium by the dollar value of one accumulation unit in the Variable
Annuity Account on such valuation date. The number of accumulation units so
determined shall not be changed by any subsequent change in the dollar value
of accumulation units in the Variable Annuity Account.
Section 4. EXPERIENCE RATING.-
At the end of any contract year during which this contract is in force the
Insurance Company may apply an experience rating credit to this contract. The
amount of any such credit shall be determined by the Insurance Company and
applied in its discretion by
(a) reducing the deductions provided in paragraph (B) of Section 3
made from any premiums paid in the next succeeding contract year,
or
(b) crediting additional accumulation units to each employee's
individual variable account and increasing the number of any
annuity units determined in accordance with paragraph (A) of
Section 6.
Section 5. VALUATION.-
In this contract:
"Taxes attributable to the Variable Annuity Account" means those taxes,
if any, on realized and unrealized capital gains and any other taxes
based on income of, assets in, or existence of the Variable Annuity
Account, but shall not include any tax attributable to (1) an adjustment
under Section 819 of the Internal Revenue Code of 1954 as in effect on
the register date or any corresponding provision of future law, or, (2)
the maintenance by the Insurance Company of surplus in the United
States.
(A) GROSS INVESTMENT RATE.-
The gross investment rate of the Variable Annuity Account for each valuation
period is equal to (i) the investment income for the valuation period, plus
capital gains and minus capital losses for the period, whether realized or
unrealized, minus taxes attributable to the Variable Annuity Account, divided by
(ii) the value of the Variable Annuity Account at the beginning of the
valuation period. The gross investment rate may be positive or negative.
Contract No. Page 5
GVA173
<PAGE>
Section 5. (cont'd)
(B) NET INVESTMENT RATE.-
For any valuation period the net investment rate is equal to the gross
investment rate expressed in decimal form to eight places less a deduction of
the product obtained by multiplying the number of days in the valuation period
by .00003285.
(C) NET INVESTMENT FACTOR.-
The net investment factor for the Variable Annuity Account is the sum of 1.0 and
the net investment rate.
(D) ACCUMULATION UNIT VALUE.-
The value of an accumulation unit was established at $1.00 on January 3, 1969.
The value of an accumulation unit on any subsequent valuation date is determined
by multiplying the value of an accumulation unit on the immediately preceding
valuation date by the net investment factor for the valuation period. The value
of an accumulation unit as of any date other than a valuation date is equal to
its value on the next succeeding valuation date.
(E) ANNUITY CHANGE FACTOR.-
Annuity change factor for a month means the product obtained by multiplying (a)
the ratio of the value of an accumulation unit on the first valuation date in
the month preceding such month to the value of an accumulation unit on the first
valuation date in the second month preceding such month by (b) .99713732.
(F) ANNUITY UNIT VALUE.-
The value of an annuity unit was established at $1.00 on January 31, 1969. The
value of an annuity unit for a month is determined by multiplying the annuity
change factor for such month by the value of an annuity unit for the immediately
preceding month.
(G) VALUE OF EMPLOYEE'S INDIVIDUAL VARIABLE ACCOUNT.-
The value of an employee's individual variable account as of any date is
determined by multiplying it by the applicable accumulation unit value. The
applicable accumulation unit value is the accumulation unit value for the date
as of which the employee's individual variable account is being valued provided
that, for purposes of determining the first payment of a variable annuity
pursuant to paragraph (D) of Section 6, the applicable accumulation unit value
is the value on the first valuation date in the month preceding the variable
annuity commencement date.
Contract No. Page 6
GVA173
<PAGE>
Section 5. (cont'd)
(H) VALUATION OF ASSETS.-
The value of the assets of the Variable Annuity Account shall be the aggregate,
in United States dollars, of the following:
(a) the face amount of cash, plus
(b) the total market value, determined as follows, of any securities
listed on an organized exchange:
1. by the last board lot sale price reported on the valuation date, or
2. if no such sale is reported, by the mean between the closing bid
and asked prices on the valuation date, or
3. if prices in neither (1) or (2) are reported, by either
I. the last board lot sale price, or
II. the mean between the closing bid and asked prices on the last
preceding day on which both bid and asked prices were reported,
whichever is the later, plus
(c) the fair market value of any other asset as determined in
accordance with the rules and regulations of the Variable Annuity
Account, minus
(d) the amount of taxes attributable to the Variable Annuity Account,
minus
(e) accrued and unpaid liabilities of the Variable Annuity Account
other than liabilities under variable annuity contracts.
Any amounts stated in currency other than United States dollars will be
converted to United States dollars by the mean between the buying and
selling rates of exchange prevailing at the close of business at the
Head Office of the Insurance Company on the valuation date.
(I) MODIFICATION OF ACCUMULATION UNIT VALUE OR ANNUITY UNIT VALUE.-
The Insurance Company reserves the right to split the value of an accumulation
unit or the value of an annuity unit, or both. Such split will have no effect
upon the benefits, provisions or net investment experience of this contract to
the Employer or covered employees or their beneficiaries. A split may be
effected to increase or decrease the number of units.
Contract No. Page 7
GVA173
<PAGE>
Section 6. VARIABLE ANNUITY BENEFITS.-
(A) VARIABLE ANNUITY.-
A variable annuity is a series of payments under this contract in amounts which
may vary from time to time because of the investment experience of the Variable
Annuity Account. The number of annuity units on which each variable annuity
payment after the first is based is determined by dividing the first payment,
determined as described in Paragraph (D) of this Section, by the value of an
annuity unit at the variable annuity commencement date. The number of annuity
units remains fixed during the annuity payment period, subject to the provisions
of Section 4.
(B) FORM OF VARIABLE ANNUITY.-
At any time at least 30 days prior to an employee's variable annuity
commencement date, the employee may elect any one of the options (1) to (9)
inclusive under Section 10. In the absence of such election the form of the
variable annuity will be the 10-year guarantee variable life annuity under which
variable annuity payments shall be made monthly during the lifetime of the
employee and shall cease with the last payment made prior to the death of the
employee except that if the employee shall die before a total of 120 variable
annuity payments have been made the Insurance Company will continue the payments
until in all 120 payments shall have been made. The 10-year guarantee variable
life annuity is hereinafter referred to as the "normal form of variable
annuity".
(C) DATE VARIABLE ANNUITY PAYMENTS COMMENCE.-
Unless some other date is elected as hereinafter provided, payments in respect
of an employee under any form of variable annuity shall commence automatically
on the first day of the month coinciding with or next after the employee's 65th
birthday. Provided that such payments may, upon election of the employee,
commence on the first valuation date coinciding with or next after the first day
of any month which is not earlier than the employee's 50th birthday or later
than the later of his 75th birthday and the date of termination of his
employment with the Employer.
(D) AMOUNT OF VARIABLE ANNUITY PAYMENT.-
Schedules "A", "B", "C" and "D" show the dollar amount of the first monthly
payment which can be purchased with each $10,000 of value of the employee's
individual variable account after deduction of any applicable premium taxes not
previously deducted under the provisions of Section 3.
Contract No. Page 8
GVA173
<PAGE>
Section 6. (cont'd)
The dollar amount of the second and subsequent payments is not
predetermined and may change from month to month. The amount of any
payment after the first is determined by multiplying the number of
annuity units on which each variable annuity payment after the first is
based by the value of one annuity unit, determined as described in
Section 5, for the month in which such payment is due.
Amounts shown in Schedules "A", "B" "C" and "D" are based on the
Progressive Annuity Table with interest at the rate of 3% per annum and
assume births in the year 1900. The amount of first payment under a
variable life annuity depends upon the sex and adjusted age of the
employee, payee, and contingent annuitant (referred to as "annuitants").
The adjusted age is determined from the annuitant's actual age at the
variable annuity commencement date in the following manner:
Calendar Year
of Birth Before 1900 1900-1919 1920-1939 1940-1954 1955-1969
Adjusted Age
is Actual age Plus 1 Plus 0 Minus 1 Minus 2 Minus 3
If it would produce a greater first payment, the first payment will be
determined on such mortality basis as the Insurance Company may
determine as being applicable to this class of annuitant.
Section 7. DEATH BENEFITS
Upon receipt of due proof of death of an employee prior to his variable annuity
commencement date, the Insurance Company will pay to his beneficiary a death
benefit equal in amount to the greater of (a) the value of the employee's
individual variable account determined as of the valuation date coinciding with
or next after receipt of notice of death by the Insurance Company, and (b) the
sum of 100% of the total premiums paid on behalf of the employee prior to his
65th birthday and 75% of the total premiums paid on his behalf on or after his
65th birthday. The death benefit may be taken in one sum or under any of the
settlement options available to a beneficiary under Section 10 except that if
the beneficiary has not then attained his 50th birthday, only Option (10) shall
be available. Where payment is to be made in one sum, payment will be made
within 7 days after the date due proof of the death of the employee is received
by the Insurance Company, except as the Insurance Company may be permitted to
defer such payment under the Investment Company Act of 1940, as from time to
time in effect.
Contract No. Page 9
1 7 3
<PAGE>
Section 8. SURRENDER BENEFITS
At any time prior to his variable annuity commencement date an employee may
surrender any number of accumulation units in his individual variable annuity
account for a payment of the value of the number of surrendered accumulation
units computed as of the valuation date coinciding with or next after receipt of
the request for such surrender by the Insurance Company.
Payment of any surrender benefit will be made in one sum and will be made within
7 days after the date of surrender except as the Insurance Company may be
permitted to defer such payment under the Investment Company Act of 1940, as
from time to time in effect.
Upon a surrender, the Insurance Company will reduce the employee's individual
variable account on a first in, first out basis by the number of accumulation
units surrendered and, for the purposes of Section 7, the premiums paid on
behalf of such employee shall be deemed to have been reduced in the proportion
that the number of surrendered accumulation units is of the total number of
accumulation units in the employee's individual variable account immediately
prior to such surrender. If the employee surrenders all his individual variable
account, premiums may not subsequently be paid in respect of such employee under
this contract without the consent of the Insurance Company.
Section 9. TRANSFERS TO AND FROM COMPANION CONTRACT.-
In order to elect a fixed annuity available under the Companion Contract, an
employee, subject to the rules of the Insurance Company, may elect to transfer a
portion or all of his individual variable account to the Companion Contract.
Such a transfer may be effected only during a period of no longer than 3 years
which commences not earlier than the employee's 50th birthday and ends not later
than the employee's variable annuity commencement date. On (i) the valuation
date coinciding with or next after receipt of such an election by the Insurance
Company, or (ii) any later valuation date or series of valuation dates selected
by the employee, the Insurance Company, subject to its rules, will transfer the
value of the applicable portion of the employee's individual variable account to
the Individual Account of the employee under the Companion Contract. Upon such a
transfer, the Insurance Company will reduce the employee's individual variable
account on a first in, first out basis by the number of accumulation units
transferred and, for the purposes of Section 7, the premiums paid on behalf of
such employee shall be deemed to have been reduced in the proportion that the
number of transferred accumulation units is of the total number of accumulation
units in the employee's individual variable account immediately prior to such
transfer.
Contract No. Page 10
GVA173
<PAGE>
Section 9. (cont'd)
An employee, subject to the rules of the Insurance Company, may elect to
transfer to this contract a portion or all of the amount in his Individual
Account under the Companion Contract. The Insurance Company shall debit the
Individual Account of the employee under the Companion Contract with the
amount so transferred. Such a transfer may be effected only (1) during a 9
month period commencing with the register date of this contract in which event
the amount so transferred in respect of the employee shall be limited to the
amount paid under the Companion Contract as premiums in respect of such
employee since the date 12 months immediately prior to such register date, or
(2) during the 30-day period commencing on any anniversary of the register
date of this contract in which event the amount so transferred in respect of
the employee shall be limited to the amount paid under the Companion Contract
as premiums in respect of such employee since the date 12 months immediately
prior to such anniversary, or (3) during a period of no longer than 3 years
which commences not earlier than the employee's 50th birthday and ends not
later than the employee's variable annuity commencement date. An amount so
transferred shall, for the purposes of this contract, be considered as a
premium payment under this contract on the date of such transfer.
Section 10. SETTLEMENT OPTIONS.-
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Option (1) A variable life annuity under which variable annuity payments shall be made monthly
during the lifetime of the payee and shall cease with the last payment made prior to
the death of the payee.
Option (2) A five-year guarantee variable life annuity under which variable annuity payments
shall be made monthly during the lifetime of the payee and shall cease with the last
payment made prior to the death of the payee except that if the payee shall die before
a total of 60 variable annuity payments have been made the Insurance Company will
continue the payments until in all 60 payments shall have been made.
Option (3) A ten-year guarantee variable life annuity under which variable annuity payments shall
be made monthly during the lifetime of the payee and shall cease with the last payment
made prior to the death of the payee except that if the payee shall die before a total
of 120 variable annuity payments have been made the Insurance Company will continue
the payments until in all 120 payments shall have been made.
Option (4) A fifteen-year guarantee variable life annuity under which variable annuity payments
shall be made monthly during the lifetime of the payee and shall cease with the last
payment made prior to the death of the payee except that if the payee shall die before
a total of 180 variable annuity payments have been made the Insurance Company will
continue the payments until in all 180 payments shall have been made.
</TABLE>
Contract No. Page 11
GVA173
<PAGE>
Section 10. (cont'd)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Option (5) A twenty-year guarantee variable life annuity under which variable annuity payments
shall be made monthly during the lifetime of the payee and shall cease with the last
payment made prior to the death of the payee except that if the payee shall die before
a total of 240 variable annuity payments have been made the Insurance Company will
continue the payments until in all 240 payments shall have been made.
Option (6) An installment unit refund variable life annuity under which variable annuity payments
shall be made monthly during the lifetime of the payee and shall cease with the last
payment made prior to the death of the payee except that if the payee shall die before
the number of the payments which have become due equals the number determined by
dividing the dollar amount that was applied under this option by the amount of the
payee's first monthly variable annuity payment, the Insurance Company will continue the
payments (including a final adjustment payment) until the number of annuity payments
made equals such number.
Option (7) A cash unit refund variable life annuity under which variable annuity payments shall be
made monthly during the lifetime of the payee and shall cease with the last payment
made prior to the death of the payee except that, at the death of the payee, the
Insurance Company will pay an additional payment in an amount equal to the annuity unit
value, as of the date notice of death is given to the Insurance Company multiplied by a
number equal to the excess, if any, of (i) over (ii) where (i) is the dollar amount
that was applied under this option divided by the value of an annuity unit at the
annuity commencement date and (ii) is the product of the number of annuity units
represented by each payment and the number of payments made.
option (8) A last survivor variable life annuity under which variable annuity payments shall be
made monthly during the lifetime of the employee. On the death of the employee the
Insurance Company will, during the lifetime of the contingent annuitant, continue
variable annuity payments to the contingent annuitant named in the election of this
option.
Option (9) Any other form of variable life annuity which involves life contingencies and is
satisfactory to the Insurance Company.
Option (10) Variable installments for a specified period not exceeding 25 years, such installments
being payable annually, semi-annually, quarterly or monthly.
</TABLE>
Contract No. Page 12
GVA173
<PAGE>
Section 10. (cont'd)
The amount of the payments under any of options (1) to (8) inclusive and
Option (10) shall be determined in accordance with Section 6.
The amount of the payments under Option (9) shall be the amount determined by
the Insurance Company on the actuarial basis used in its calculation of the
rates in Schedules "A", "B", "C" and "D".
The settlement options shall be subject to the following conditions:
(a) Election of an option may not be made if the value of the death
benefit or the portion of the individual variable account to be
applied under such option is less than $1,000 or if the payee is
a corporation, partnership, association, assignee or other than a
natural person taking benefit in his or her own right;
(b) Election of either Option (8) or (9) may be made only by an
employee;
(c) Election of Option (9) is subject to the requirement that any
guarantee period under any form of variable life annuity elected
under such option may not exceed the maximum guarantee period
specified in options (2) to (5) inclusive;
(d) Unless otherwise provided, upon the death of the payee any unpaid
installments under Option (10) shall be commuted on the basis of
interest at the rate of 3% per annum, compounded annually, and
shall be paid in a lump sum to the executors or administrators of
such payee;
(e) An election of Option (10) shall specify whether the payee may
commute the payments, and any payee-shall have the right to
commute such payments, except as may be specifically provided in
such election. Any election of Option (10) is subject to the
continuing right of the payee to commute the remaining payments
on the basis of interest at the rate of 3k% per annum, compounded
annually, and direct the Insurance Company to apply such value as
if it were the employee's individual variable account to provide
an annuity under any of Options (1) to (9) inclusive, on the
basis of Schedule "A", "B" or "C" as in effect at the time Option
(10) was elected. Payments under any other option may not be
commuted after commencement of payments thereunder during the
lifetime of the payee or during the lifetime of the contingent
annuitant;
(f) If payments in respect of an employee under any form of variable
annuity commence after the employee's 75th birthday
(i) "the normal form of annuity" will be a variable life
annuity with a guarantee period equal to the life
expectancy of the employee but in no event greater than 10
years, and
Contract No. Page 13
GVA173
<PAGE>
Section 10. (cont'd")
(ii) the optional forms of annuity available to the employee
shall be limited to forms under which payments are not
less than the amount which is calculated to exhaust more
than the value of the employee's individual variable
account as determined in Section 6D within the
anticipated actuarial life expectancy of the employee
calculated on the Progressive Annuity Table on the basis
described in Section 6D.
Section 11. AUTHORITY.-
No provision of this contract may be waived or modified except by written
agreement signed by the President or a Vice-President and by the Secretary or
Actuary of the Insurance Company and no person, except by written authority
signed as aforesaid has power on behalf of the Insurance Company to waive the
Insurance Company's rights or requirements or to bind the Insurance Company by
making any promise respecting any benefits or by accepting any representations
or information not contained in the application herefor or any information
furnished to the Insurance Company as provided in this contract.
Section 12. ENTIRE CONTRACT AND INCONTESTABILITY.-
This contract and the application herefor, a copy of which is attached hereto,
contain and constitute the entire contract between the parties hereto. All
statements made in the application shall in the absence of fraud be deemed
representations and not warranties and shall be accepted as true and
incontestable, except in the case of fraud or error in age, as to any coverage
of an employee after two years from the time such coverage takes effect.
Notwithstanding anything contained in this contract the Insurance Company shall
only be held liable for any amount expressed to be payable to the extent to
which the appropriate premium therefor has actually been received by the
Insurance Company.
Section 13. MODIFICATION.-
This contract may be modified at any time by written agreement between the
Employer and the Insurance Company. No such modification shall, without the
written consent of the affected employees, affect the terms, provisions, or
conditions of this contract which are or may be applicable to premiums paid in
respect of employees prior to the date of such modification. However, the
Insurance Company may at any time upon the request of the Employer and without
the consent of any employee or other person, modify this contract in any respect
if the Employer deems such modification necessary to conform this contract to,
or give the Employer or employees the benefit of, Section 403 of the Federal
Internal Revenue Code or such section or sections as may from time to time
revise or replace said Section 403, or any rules or regulations applicable
thereto, whether established by federal or state authorities.
Contract No. Page 14
GVA173
<PAGE>
Section 13. (cont'd)
The Insurance Company reserves the right, upon previous written notice to the
Employer, from time to time
(1) to modify any or all of the Schedules and the descriptions
thereof as contained in the
contract, and
(2) to modify the basis of computation of any settlement option
available under Section 10, and
(3) to modify any or all deductions from premiums as provided in
Section 3, and
(4) to modify any or all of the deductions from the gross investment
rate for a valuation period as provided in Section 5, and
(5) to modify any or all of the death benefits as provided in Section
7,
in so far as the same are used to determine any benefit from
(a) any premium paid in respect of an employee after the anniversary
of the register date coinciding with or next after the date 60
months after such notice, and
(b) if a premium was paid in respect of an employee in the contract
year ending on the anniversary of the register date coinciding
with or immediately preceding the date of such notice, any
premium paid in respect of such employee after the sum of the
premiums paid in respect of such employee on and after the date
of such notice equals 10 times the premiums paid in respect of
such employee in such contract year, and
(c) any premium paid in respect of an employee whose coverage
commenced later than 6 months after the date of such notice.
Section 14. AGE.-
The Insurance Company shall be entitled to receive proof of the age of an
employee (and of a beneficiary or contingent annuitant or any
C)
other payee where material) before admitting any claim or making any variable
annuity payment in respect of the employee.
Section 15. TRANSFER AND ASSIGNMENT.-
The interest of any employee in this contract or in any benefit, payment or
installment provided hereunder may not be transferred, sold, assigned, pledged,
charged or encumbered or in any way alienated by the employee.
Contract No. Page 15
GVA173
<PAGE>
Section 16. BENEFICIARY.-
An employee in his application for coverage, or by written direction signed by
him and filed with the Insurance Company may designate a beneficiary or
beneficiaries to receive any benefits which may be payable in respect of such
employee upon death and subject to any statutory restriction and to the rights
of any irrevocably appointed beneficiary and to the provisions of this contract,
by like direction from time to time, may change the beneficiary. The interest of
any legally designated beneficiary who shall die during the lifetime of such
employee shall, in the absence of any statutory restriction and if there be no
other legally designated beneficiary thereof, vest in such employee, and if
there be no legally designated beneficiary at the time when any benefits shall
be payable in respect of such employee upon death, then such benefits shall be
payable to the executor or administrator of such employee.
Section 17. CURRENCY.-
All moneys payable to or by the Insurance Company shall be payable in lawful
money of the United States of America.
Section 18. PAYMENT AND PROOF PREREQUISITE TO PAYMENT.-
Payment arising or conditional upon the death of an y person or upon the
continued life of such person or upon the happening of any other event or
contingency upon which a payment becomes payable shall be made only after
receipt by the Insurance Company at its Head Office of due proof of such death
or from time to time of such continued life or of the happening of such event or
contingency, as the case may be.
Where the payments to any payee would be less than $20 each the Insurance
Company shall have the right to make payments quarterly, semi-annually or
annually, as it may elect.
Variable annuity payments as they respectively from time to time become payable
shall, except as otherwise expressly provided in this contract, be made to or to
the order of the employee, if living, and after his death to the beneficiary.
Section 19. CESSATION OF PREMIUM PAYMENTS.-
The Employer may give notice to the Insurance Company that as from the date
stated in the notice (such date being herein referred to as a Date of Cessation
of Premium Payments) no further premium payments will be made.
Contract No. Page 16
GVA173
<PAGE>
Section 19. (cont'd)
Upon any failure of the Employer to comply with any term or condition of this
contract or upon the total number of employees in respect of which premiums are
paid under this contract to the Insurance Company in a contract year becoming
less than 25, the Insurance Company may in its discretion give notice to the
Employer that as from the date stated in the notice (such date being herein
referred to as a Date of - Cessation of Premium Payments) the Insurance Company
will refuse to receive further premiums.
Section 20. RELATION OF THIS CONTRACT TO THE VARIABLE ANNUITY
ACCOUNT.-
The Insurance Company shall have absolute ownership of the assets of the
Variable Annuity Account.
Subject to the rules and regulations of the Variable Annuity Account, persons
credited with accumulation units or annuity units shall be entitled to vote at
meetings of Participants of the Variable Annuity Account.
Section 21 WITHDRAWAL AND REFUND.-
The Insurance Company shall within 60 days of commencement of an employee's
coverage under this contract mail to such employee a statement describing the
charges to be deducted under the contract in accordance with paragraph (B) of
Section 3 and a notice of a right of withdrawal and refund under the contract.
Such employee may within 45 days after the date of mailing of such notice
surrender all the accumulation units in his individual variable account and
receive therefor the benefit it provided under Section 8, together with an
amount equal to the sum of the amounts deducted under the provisions of
paragraph (B) of Section 3 in respect of such employee.
An employee may within 18 months of acceptance by the Insurance Company of his
first premium payment under the provisions of Section 3 surrender all the
accumulation units in his individual variable account and receive therefor the
benefit provided under Section 8, together with an amount equal to the amount by
which the sum of the amounts deducted under the provisions of paragraph (B) of
Section 3 less 3/4 of 1% of premiums paid in respect of such employee exceeds
15% of the total of such premiums.
Contract No. Page 17
GVA173
<PAGE>
SCHEDULE "A"
(Referred to in Sections 6 & 10. Applicable until modified in accordance with
Section 13. If payments under the normal form of variable annuity provided under
Section 6 commence on an employee's birthday the amount of the first monthly
payment shall for each $10,000 of value applied as provided in Section 6 be the
amount set forth in Column 2 below opposite the age stated in Column I below
corresponding to the age of the employee on such date. If such payments commence
on any other date the amount of the first monthly payment shall be determined by
the Insurance Company from the amounts set forth in Column 2 opposite the ages
in Column 1 corresponding to the ages of the employee on his birthdays
immediately preceding and immediately succeeding such date.
Column 1
If Male If Female Column 2
50 $43.87
51 44.58
52 45.33
53 46.11
50 54 46.94
51 55 47.80
52 56 48.72
53 57 49.68
54 58 50.69
55 59 51.76
56 60 52.88
57 61 54.06
58 62 55.29
59 63 56.58
60 64 57.94
61 65 59.36
62 66 60.84
63 67 62.38
64 68 63.99
65 69 65.65
66 70 67.37
67 71 69.15
68 72 70.96
69 73 72.82
70 74 74.70
71 75 76.60
72 78.51
73 80.40
74 82.27
75 84.09
Contract No. Page 18 GVA173
<PAGE>
SCHEDULE "B" (Referred to in Sections 6 & 10. Applicable until
modified in accordance with Section 13, If one of the options
from (1) to (7) be elected and if payments commence on the
payee's birthday the amount of the first monthly payment shall
for each $10,000 of value applied as provided in Section 6 be the
amount set forth in the column below corresponding to the option
elected and opposite the age stated in Column 1 below
corresponding to the age of the payee on such date. If such
payments commence on any other date the amount of the first
monthly payment shall be determined by the Insurance Company from
the amounts set forth in the column below corresponding to the
option elected and opposite the ages in Column 1 corresponding to
the ages of the payee on his birthdays immediately preceding and
immediately succeeding such date.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Column 1 Option
Age
If Male If Female (1) (2) (3) (4) (5) (6) (7)
50 $44.16 $44.09 $43.87 $43.47 $42.84 $42.93 $42.69
51 44.90 44.83 44.58 44.12 43.41 43.55 43.28
52 45.70 45.61 45.33 44.80 43.99 44.20 43.91
53 46.54 46.44 46.11 45.51 44.59 44.89 44.57
50 54 47.43 47.31 46.94 46.25 45.21 45.61 45.26
51 55 48.37 48.24 47.80 47.02 45.84 46.37 45.99
52 56 49.37 49.22 48.72 47.82 46.48 47.16 46.74
53 57 50.44 50.26 49.68 48.65 47.14 47.99 47.54
54 58 51.57 51.36 50.69 49.51 47.80 48.87 48.38
55 59 52.77 52.53 51.76 50.41 48.47 49.80 49.26
56 60 54.05 53.77 52.88 51.33 49.14 50.77 50.18
57 61 55.41 55.09 54.06 52.28 49.81 51-80 51.15
58 62 56.86 56.48 55.29 53.26 50.48 52.87 52.18
59 63 58.41 57-97 56.58 54.26 51.14 54.01 53.25
60 64 60.06 59.55 57.94 55.28 51.78 55.22 54.38
61 65 61.83 61.23 59.36 56.31 52.41 56.48 55.58
62 66 63.72 63-01 60.84 57.36 53.01 57.82 56.83
63 67 65.75 64.91 62.38 58.41 53.59 59.24 58.16
64 68 67.92 66.94 63.99 59.47 54.13 60.73 59.57
65 69 70.25 69.09 65.65 60.51 54.64 62.31 61.03
66 70 72.75 71.37 67.37 61.55 55.10 64.00 62.60
67 71 75.44 73.80 69-15 62.55 55.53 65.76 64.27
68 72 78.33 76.39 70.96 63.53 55.90 67.64 65.99
69 73 81.44 79.13 72.82 64.47 56.23 69.65 67.85
70 74 84.79 82.04 74.70 65.36 56.52 71.75 69.83
71 75 88.41 85.13 76.60 66.19 56.76 74.00 71.88
72 92.32 88.40 78.51 66.95 56.96 76.41 74.09
73 96.55 91.85 80.40 67.65 57.12 78.93 76.46
74 101.12 95.49 82.27 68.28 57.24 81.65 78.91
75 106.08 99.31 84.09 68.83 57.34 84.54 81.58
</TABLE>
Contract No. Page 19
<PAGE>
SCHEDULE "C"
(Referred to in Sections 6 & 10. Applicable until modified in accordance with
Section 13..
If option (8) is elected and if payments commence on a date which is a birthday
of both the employee and contingent annuitant the amount of the first monthly
payment shall for each $10,000 of value applied as provided in Section 6 be the
amount set forth in the column below corresponding to the age of the employee or
contingent annuitant on such date and opposite the age stated in Column 1 below
corresponding to the age of the employee or contingent annuitant on such date.
If such payments commence on any other date the amount of the first monthly
payment shall be determined by the Insurance Company on the actuarial basis used
by the Insurance Company in its calculation of the amounts set forth below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
If employee or
contingent annuitant If employee or contingent annuitant female and age
male and age 57 58 59 60 61 62 63
50 $42.65 $42.94 $43.23 $43.50 $43.77 $44.02 $44.27
51 43.04 43.35 43.66 43.96 44.25 44.53 44.80
52 43.41 43.76 44.09 44.42 44.74 45.05 45.35
53 43.79 44.16 44.52 44.88 45.23 45.57 45.89
54 44.16 44.56 44.95 45.34 45.72 46.09 46.45
55 44.52 44.95 45.38 45.80 46.21 46.61 47.00
56 44.88 45.34 45.80 46.25 46.69 47.13 47.56
57 45.23 45.72 46.21 46.69 47.17 47.65 48.11
58 45-57 46.09 46.61 47.13 47.65 48.16 48.67
59 45.89 46.45 47.00 47.56 48.11 48.67 49.21
60 46.21 46.80 47.39 47.98 48.57 49.16 49.75
61 46.52 47-13 47.76 48.39 49.02 49.65 50.28
62 46.81 47.46 48.11 48-78 49.45 50.13 50.80
63 47.09 47.77 48.46 49.16 49.87 50.59 51.31
64 47.35 48.06 48.79 49.53 50.28 51.04 51.80
65 47.60 48-34 49.10 49-88 50.66 51.47 52.28
66 47.84 48.61 49.40 50.21 51.04 51.88 52.74
67 48.07 48.86 49.68 50.53 51.39 52.28 53.18
68 48.28 49.10 49.95 50.83 51.73 52.66 53.60
69 48.48 49.32 50.20 51.11 52.05 53.01 54.01
70 48.66 49.53 50.44 51.38 52.35 53.35 54.39
71 48.83 49.73 50.66 51.63 52.63 53.67 54.75
72 48.99 49.91 50.86 51.86 52.89 53.97 55.08
73 49.14 50.07 51.05 52.07 53.14 54.25 55.40
74 49.27 50.23 51.23 52.27 53.37 54.51 55.69
75 49.39 50.37 51.39 52.46 53.58 54.75 55.97
</TABLE>
Contract No. Page 21
GVA173
<PAGE>
SCHEDNE "C"
(Referred to in Sections 6 & 10. Applicable until modified in
accordance with Section 13
---------------------------------------------------------------------------
If option (8) is elected and if payments commence on a date which is a birthday
of both the employee and contingent annuitant the amount of the first monthly
payment shall for each $10,000 of value applied as provided in Section 6 be the
amount set forth in the column below corresponding to the age of the employee or
contingent annuitant on such date and opposite the age stated in Column 1 below
corresponding to the age of the employee or contingent annuitant on such date.
If such payments commence on any other date the amount of the first monthly
payment shall be determined by the Insurance Company on the actuarial basis used
by the Insurance Company in its calculation of the amounts set forth below.
If employee or
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
contingent annuitant If employee or contingent annuitant female and age
male and age 50 51 52 53 54 55 56
50 $40.46 $40.79 $41.11 $41.43 $41.74 $42.05 $42.35
51 40.69 41.03 41.37 41.71 42.05 42.38 42.71
52 40.91 41.27 41.63 41.99 42.35 42.71 43.07
53 41.12 41.50 41.88 42.27 42.65 43.04 43.41
54 41.32 41.72 42.13 42.54 42.94 43.35 43.76
55 41.52 41.94 42.36 42.79 43.23 43.66 44.09
56 41.70 42.15 42.59 43.04 43.50 43.96 44.42
57 41.88 42.34 42.81 43.29 43.77 44.25 44.74
58 42.05 42.53 43.02 43.52 44.02 44.53 45.05
59 42.21 42.71 43.22 43.74 44.27 44.80 45.35
60 42.37 42.88 43.41 43.95 44.50 45.06 45.63
61 42.51 43.04 43.59 44.15 44.72 45.31 45.91
62 42.65 43.20 43.76 44.34 44.94 45.55 46.17
63 42.78 43.34 43.92 44.52 45.14 45.77 46.42
64 42.90 43.47 44.07 44.69 45.33 45.98 46.66
65 43.01 43.60 44.21 44.85 45.51 46.19 46.89
66 43.11 43.72 44.35 45.00 45.67 46.37 47.10
67 43.21 43.83 44.47 45.14 45.83 46.55 47.30
68 43-30 43.93 44.58 45.27 45.98 46.72 47.48
69 43.38 44.02 44.69 45.39 46.12 46.87 47.66
70 43.46 44.11 44.79 45.50 46.24 47.02 47.82
71 43.53 44.19 44.88 45.60 46.36 47.15 47.97
72 43.59 44.26 44.96 45.70 46.47 47.27 48.11
73 43.65 44.33 45.04 45.79 46.57 47.38 48.24
74 43.71 44-39 45.11 45.86 46.66 47.49 48.36
75 43-76 44.45 45.17 45.94 46.74 47.58 48.47
</TABLE>
Contract No. Page 20
GVA173
<PAGE>
SCHEDULE "C"
(Referred to in Sections 6 & 10. Applicable until modified in accordance with
Section 13.
If option (8) is elected and if payments commence on a date which is a birthday
of both the employee and contingent annuitant the amount of the first monthly
payment shall for each $10,000 of value applied as provided in Section 6 be the
amount set forth in the column below corresponding to the age of the employee or
contingent annuitant on such date and opposite the age stated in Column 1 below
corresponding to the age of the employee or contingent annuitant on such date.
If such payments commence on any other date the amount of the first monthly
payment shall be determined by the Insurance Company on the actuarial basis used
by the Insurance Company in its calculation of the amounts set forth below.
If employee or
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
contingent annuitant If employee or contingent annuitant female and age
male and age 64 65 66 67 68 69 70
50 $44.50 $44.72 $44.94 $45.14 $45.33 $45.51 $45.67
51 45.06 45.31 45.55 45.77 45.98 46.19 46.37
52 45.63 45-91 46.17 46.42 46.66 46.89 47.10
53 46.21 46-52 46.81 47.09 47.35 47.60 47.84
54 46.80 47.13 47.46 47.77 48.06 48.34 48.61
55 47.39 47.76 48.11 48.46 48.79 49.10 49.40
56 47.98 48-39 48.78 49.16 49.53 49.88 50.21
57 48.57 49.02 49.45 49.87 50.28 50.66 51.04
58 49.16 49.65 50.13 50.59 51.04 51.47 51.88
59 49.75 50.28 50.80 51.31 51.80 52.28 52-74
60 50.34 50.91 51.48 52.04 52.58 53.10 53.61
61 50.91 51.54 52.15 52.76 53.35 53.93 54.50
62 51.48 52.15 52.82 53.48 54.13 54.76 55.38
63 52.04 52.76 53.48 54.20 54.90 55.60 56.28
64 52.58 53.35 54.13 54.90 55.67 56.43 57.17
65 53-10 53.93 54.76 55.60 56.43 57.25 58.06
66 53.61 54.50 55.38 56.28 57.17 58.06 58.94
67 54.10 55.04 55.99 56.94 57.90 58.86 59.82
68 54.57 55.56 56.57 57.58 58.61 59.64 60.67
69 55.02 56.07 57.13 58.21 59.30 60.40 61.51
70 55.45 56.54 57.66 58.80 59.97 61.14 62.33
71 55.86 57.00 58.17 59.38 60.61 61.86 63.12
72 56.24 57.43 58.66 59.92 61.22 62.54 63.89
73 56.60 57.84 59.12 60.44 61.80 63.20 64.62
74 56.93 58.22 59.55 60.93 62.35 63.82 65.33
75 57.24 58.57 59.95 61.39 62.87 64.41 65.99
</TABLE>
Contract No. Page 22
GVA173
<PAGE>
SCHEDULE "C"
(Referred to in Sections 6 & 10. Applicable until modified in accordance with
Section 13.
If option (8) is elected and if payments commence on a date which is a birthday
of both the employee and contingent annuitant the amount of the first monthly
payment shall for each $10,000 of value applied as provided in Section 6 be the
amount set forth in the column below corresponding to the age of the employee or
contingent annuitant on such date and opposite the age stated in Column 1 below
corresponding to the age of the employee or contingent annuitant on such date.
If such payments commence on any other date the amount of the first monthly
payment shall be determined by the Insurance Company on the actuarial basis used
by the Insurance Company in its calculation of the amounts set forth below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
If employee or
contingent annuitant If employee or contingent annuitant female and age
male and age 71 72 73 74 75
50 $45.83 $45.98 $46.12 $46.24 $46.36
51 46.55 46.72 46.87 47.02 47.15
52 47.30 47.48 47.66 47.82 47.97
53 48.07 48.28 48.48 48.66 48.83
54 48.86 49.10 49.32 49.53 49.73
55 49.68 49.95 50.20 50.44 50.66
56 50.53 50.83 51.11 51.38 51.63
57 51.39 51.73 52.05 52.35 52.63
58 52.28 52.66 53.01 53.35 53.67
59 53.18 53.60 54.01 54.39 54.75
60 54.10 54.57 55.02 55.45 55.86
61 55.04 55.56 56.07 56.54 57.00
62 55.99 56.57 57.13 57.66 58.17
63 56.94 57.58 58.21 58.80 59.38
64 57.90 58.61 59.30 59.97 60.61
65 58.86 59.64 60.40 61.14 61.86
66 59.82 60.67 61.51 62.33 63.12
67 60.76 61.70 62.62 63.53 64.41
68 61.70 62.72 63.73 64.73 65.70
69 62.62 63.73 64.83 65.92 66.99
70 63.53 64.73 65.92 67.11 68.28
71 64.41 65.70 66.99 6B.28 69.56
72 65.26 66.64 68.03 69.43 70.82
73 66.08 67.56 69.05 70.56 72.07
74 66.87 68.44 70.04 71.65 73.28
75 67.62 69.28 70.98 72.71 74.46
</TABLE>
Contract No. Page 23
GVA173
<PAGE>
SCHEDULE "D"
(Referred to in Sections 6 & 10. Applicable until modified in accordance with
Section 13.
If option (10) is elected the amount of the first period installment shall for
each $10,00 of the value applied as provided in Section 6 be the amount stated
in the column below corresponding to the frequency of payment and on the line
Corresponding to the number of payments. If the number of payments is other than
a number stated below the amount of the first periodic installment shall be
determined by the Insurance Company on the same actuarial basis as used in the
determination of the amounts stated.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Monthly Quarterly Semi-annual Annual
Installments Installments Installments Installments
Number Amount Number Amount Number Amount Number Amount
12 $846.53 4 $2,532.28 2 $5,042.86
24 430.57 8 1,288.00 4 2,564.76 2 $5,086.47
36 291.95 12 873.29 6 1,739.13 3 3,448.28
48 222.67 16 666.13 8 1,326.61 4 2,630.19
60 181.15 20 541.89 10 1,079.21 5 2,139.95
72 153.49 24 459.18 12 914.41 6 1,813.24
84 133.76 28 400.14 14 796.87 7 1,580.03
96 118.99 32 355.94 16 708.82 8 1,405.48
108 107.51 36 321.61 18 640.45 9 1,270.00
120 98.35 40 294.20 20 585.86 10 1,161.71
132 90.86 44 271.81 22 541.30 11 1,073.31
144 84.64 48 253.20 24 504.21 12 999.80
156 79.39 52 237.48 26 472.93 13 937.82
168 74.90 56 224.04 28 446.17 14 884.72
180 71.02 60 212.44 30 423.05 15 838.86
192 67.63 64 202.31 32 402.88 16 798.91
204 64.65 68 193.39 34 385.13 17 763.71
216 62.01 72 185.50 36 369.41 18 732.55
228 59.66 76 178.46 38 355.40 19 704.72
240 57.55 80 172.15 40 342.83 20 679.81
252 54.42 84 166.46 42 331.50 21 657.38
264 53.93 88 161.32 44 321.24 22 637.02
276 52.36 92 156.64 46 311.92 23 618.54
288 50.93 96 152.36 48 303.43 24 601.68
300 49.63 100 148.45 50 295.63 25 586.24
</TABLE>
Contract No. Page 24
GVA173
<PAGE>
Great-West Life
1675 Broadway
PO Box 1080
Denver, Colorado 80201
(303) 892-3000
I, the undersigned, hereby authorize and direct The Great-West Life Assurance
Company (hereinafter called the Company) to pay all amounts hereafter becoming
payable to me under the provisions of GP as they become due in care of
Name and Address of Institution
for the credit of my account
Number and Type of Account
Name and Social Security Number
and I agree that all payments so made shall discharge the Company to
the extent thereof;
And I further agree that any payment so made subsequent to my death shall not be
held for the benefit of my estate; the annuity option I have chosen is
Type of Option
And I further authorize and direct the said Name of Institution to
refund any such payment to the said Company, and if the same
shall have been credited to my account, or to the account of my
estate, to debit such account accordingly;
I RESERVE the right to revoke or cancel this authorization and direction by
giving written notice thereof to the said Company at its U.S. Headquarters.
Signed at this day of 19
......................................
Witness Signature of Participant
We agree to refund to The Great-West Life Assurance Company any payments which
may be made in pursuance of the above authority subsequent to the death of the
said
Name of Participant
Signed at this day of 19
.......................................
Signature of Institution
THE GREAT-WEST LIFE ASSURANCE COMPANY
U.S. HEADQUARTERS-DENVER. COLORADO
<PAGE>
FOR GWL USE ONLY
POLICY NO.
CERTIFICATE NO.
THE GREAT-WEST LIFE ASSURANCE COMPANY
APPLICATION FOR COVERAGE UNDER A GROUP
ANNUITY CONTRACT AND/OR A GROUP
VARIABLE ANNUITY CONTRACT
PART 1
TO BE COMPLETED BY EMPLOYER
WE, , HEREBY
APPLY, PURSUANT TO THE PROVISIONS OF A GROUP ANNUITY CONTRACT AND/OR A GROUP
VARIABLE ANNUITY CONTRACT ISSUED BY THE GREAT-WEST LIFE ASSURANCE COMPANY TO THE
EMPLOYER, FOR AN ANNUITY OR ANNUITIES ON THE LIFE OF THE EMPLOYEE NAMED IN PART
II. THE COMPANY MAY DECLINE THIS APPLICATION IF SO REQUIRED BY FEDERAL
SECURITIES LAWS.
SIGNATURE OF SIGNING OFFICER OF EMPLOYER
DATE SIGNATURE OF ENROLLING AGENT
PART II
TO BE COMPLETED BY EMPLOYEE
EMPLOYEE'S GIVEN NAMES IN FULL LAST NAME SOCIAL SECURITY NUMBER
RESIDENCE ADDRESS STREET SEX
MALE FEMALE
CITY STATE ZIP CODE DATE OF BIRTH
MONTH DAY YEAR
PERCENTAGE OF TOTAL CONTRIBUTIONS AMOUNT OF TOTAL ANTICIPATED TO BE
ALLOCATED TO THE GROUP VARIABLE ANNUITY
CONTRACT.......................... % ANNUAL DEPOSIT
$......................... *THIS PERCENTAGE WILL REMAIN IN EFFECT
CITIZENSHIP OR NATIONALITY UNTIL NOTICE OF A CHANGE IS RECEIVED BY THE
GREAT-WEST LIFE AT ITS HEAD OFFICE. U.S.
OTHER.......................................................
BENEFICIARY: NOTWITHSTANDING ANY PRIOR BENEFICIARY DESIGNATION MADE BY ME UNDER
ANY GROUP ANNUITY CONTRACT ISSUED TO MY EMPLOYER BY THE GREAT-WEST
LIFE. I HEREBY DESIGNATE AS BENEFICIARY OF ANY BENEFITS PAYABLE
UPON MY DEATH UNDER SUCH CONTRACT OR OTHER CONTRACT UNDER WHICH
COVERAGE IS HEREBY APPLIED FOR:
........................................................................... MY .
(GIVEN NAMES) BENEFICIARY (LAST NAME) RELATIONSHIP
ALL PAYMENTS & VALUES PROVIDED BY THE GROUP VARIABLE ANNUITY CONTRACT
ARE VARIABLE & ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
I ACKNOWLEDGE RECEIPT OF A PROSPECTUS FOR GREAT-WEST VARIABLE ANNUITY ACCOUNT A.
I ALSO CERTIFY THAT I AM NOT ASSOCIATED WITH ANY FIRM IN THE SECURITIES BUSINESS
AS A PARTNER, OFFICER, REGISTERED REPRESENTATIVE OR EMPLOYEE.
PHONE NO.
................................................... .
DATE SIGNATURE OF EMPLOYEE
THE SECURITIES EXCHANGE ACT OF 1934 REQUIRES THAT GREAT-WEST LIFE
INQUIRE INTO THE SUITABILITY OF YOUR PARTICIPATION IN ITS GROUP TAX
SHELTERED ANNUITY PROGRAM. IN THIS CONNECTION, GREAT-WEST MUST HAVE
REASONABLE GROUNDS TO BELIEVE, ON THE BASIS OF INFORMATION FURNISHED
BY YOU, THAT YOUR PARTICIPATION IS NOT UNSUITABLE AFTER REASONABLE
INQUIRY CONCERNING YOUR INVESTMENT OBJECTIVES, FINANCIAL SITUATION AND
NEEDS. SPACE FOR THIS DATA IS INCLUDED BELOW. IF YOU DECLINE TO
FURNISH THIS INFORMATION, SIGN YOUR NAME IN THE SPACE PROVIDED.
PERSONAL AND FINANCIAL DATA OCCUPATION DATE OF MO. DAY YEAR
EMPLOYMENT WITH
CURRENT EMPLOYER:
YOUR MARITAL STATUS NO. OF DEPENDENTS AGES OF DEPENDENTS
YOUR EARNINGS LAST YEAR
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
OTHER INCOME LAST YEAR SOURCES OF OTHER INCOME LIFE INSURANCE
- ---------------------------------------------------------------------------------------------------------------
YOUR TOTAL SAVINGS ACCOUNT MARKET VALUE OF SECURITIES YOU HOLD TOTAL OUTSTANDING DEBT
- ---------------------------------------------------------------------------------------------------------------
OTHER RELEVANT INFORMATION
I DECLINE TO FURNISH ANY PERSONAL AND FINANCIAL
DATA.........................................................................
</TABLE>
Exhibit 8
<PAGE>
THIS AGREEMENT made this 3rd day of July 1968
BETWEEN
THE GREAT-WEST LIFE ASSURANCE COMPANY, a corporation organized
and existing under the laws of Canada, having its principal
office in the City of Winnipeg in Canada, hereinafter called "the
Company"
and
THE BANK OF NEW YORK, a corporation organized and existing under
the laws of the State of New York in the United States of
America, having its principal office in the City of New York in
the State of New York, hereinafter called "the Trustee"
WITNESSETH:
WHEREAS the Company, under the laws of Canada, may issue policies in respect of
which it is required by the said laws to maintain one or more separate and
distinct funds with separate assets for each such fund, which assets shall be
available only to meet the liabilities arising under policies in respect of
which the fund is maintained;
AND WHEREAS the Company has established such a separate and distinct fund,
designated Great-West Variable Annuity Account A;
AND WHEREAS the Company carries on the business of insurance in
certain States of the United States of America;
AND WHEREAS, for the protection of the Company's policyholders in the United
States of America, assets of the Company are required by the statutes of certain
States to be deposited with a State Officer of one of the States wherein the
Company is carrying on business or in trust with corporate trustees in the
United States of America;
AND WHEREAS the Company, pursuant to such requirements, desires that all of the
assets of the Company which are set aside, separate and distinct, in Great-West
Variable Annuity Account A shall be delivered or caused to be delivered by the
Company to the Trustee and shall hereafter be held and administered by the
Trustee pursuant to the terms of this agreement;
NOW THEREFORE the Company hereby appoints the Trustee to be its lawful trustee
upon the terms, trusts and provisions hereinafter set forth.
Article I - In this Agreement the following terms shall have the meanings
specified.
The term "Supervisor of Insurance" shall mean the public official of any State
of the United States of America charged with the supervision of insurance
companies doing business therein.
The term "Variable Account Policy" shall mean any form of contract issued by the
Company in the United States of America which, by its terms, entitles the holder
or individuals covered thereby to payments or values, or both, which vary
depending on the value of the assets of Great-West Variable Annuity Account A,
and shall mean a supplementary contract issued pursuant to the terms of or on
the maturity of any such contract. To the extent that such a contract issued by
the Company includes additional benefits in respect of which the Company's
liabilities are not to be met out of such assets, such additional benefits and
the Company's liabilities in respect thereof, shall for the purposes of this
Agreement be treated as not forming part of such contrast.
The term "Variable Account Policyholder" shall mean the holder of a Variable
Account Policy, the individuals covered by a Variable Account Policy and the
creditors on the obligations arising out of a Variable Account Policy.
The term "Written Request of the Company" shall mean any communication of the
Company signed by such officer or officers of the Company as may from time to
time be designated for that purpose by notice delivered to the Trustee. Such
notice of designation may be signed by any two of the President, a
Vice-President, the Secretary and the Treasurer of the Company.
ARTICLE II - The Trustee shall open and maintain under this Agreement, a
separate and distinct account for Great-West Variable Annuity Account A, such
separate and distinct account being hereinafter called "Account A." The Company
will cause all assets of Great-West Variable Annuity Account A to be delivered
or paid to the Trustee. The Trustee, at the Written Request of the Company, to
the extent that it may lawfully do so, shall receive for deposit in Account A
from the Company, or from any other source, such assets as may be specified in
such Request, and the Trustee, on receipt of such assets, shall hold the same in
trust in Account A under the terms of this Agreement. All such assets which the
Company may cause to be deposited with the Trustee in Account A shall be subject
in all respects to all the conditions of this Agreement as fully as if they had
been deposited by the Company at the present time and had been mentioned in this
Agreement. The Trustee shall not be bound in any way to watch or attend to the
fluctuation in value of the deposited assets, or to review the security therefor
or the financial position of the issuers thereof.
ARTICLE III - Legal title to assets of the Company which may now or hereafter be
deposited with the Trustee under the terms of this Agreement shall vest in the
Trustee, and such assets shall be held by the latter in trust in the United
States of America to secure and carry out the objects and purposes of this
Agreement in the manner and subject to the conditions herein set forth. The
assets of Account A so deposited shall be kept separate from all other assets
deposited with the Trustee so that they may be identified at all times as
belonging solely to Account A.
ARTICLE IV - The Trustee, at the Written Request of the Company and only at such
Request, shall
(1) make payment out of the monies of Account A held hereunder for
the purchase of assets designated in such Request, provided
always that such assets shall be delivered to the Trustee and
held by the Trustee pursuant to the provisions of this agreement;
(2) sell any or all of the assets of Account A in its hands and hold
the proceeds thereof pursuant to the provisions of this
Agreement;
(3) transfer, exchange or deliver assets of Account A which are
called, redeemed, converted or retired or otherwise become
payable and hold the proceeds thereof pursuant to the provisions
of this Agreement;
(4) sell or exercise any subscription rights arising in connection
with the assets of Account A and take such action as may be
directed in such Request regarding any plans of reorganization,
readjustment, recapitalization, merger, consolidation or
liquidation of or affecting the issuer of any assets of Account
A;'
(5) otherwise invest the monies of this trust.
The Trustee shall be under no obligation to pay or allow interest on uninvested
monies of this trust except at such rates and for such periods as may be agreed
upon between the Company and the Trustee from time to time.
ARTICLE V - The Trustee shall be under no obligation to inquire into the
legality or the desirability of investing in, retaining, selling, exchanging or
taking any other similar type of action with respect to any asset deposited with
it hereunder.
ARTICLE VI - The Trustee may receive, transfer to, and hold any assets deposited
hereunder in bearer form or in its own name as Trustee, or in the name of its
nominee or nominees, or, at the Written Request of the Company, in its own name
or in the name of the Company without any words indicating that such assets are
being held by the Trustee in a fiduciary capacity, provided that the obligations
and responsibilities of neither the Company nor the Trustee shall thereby be
affected, and further provided that all such assets shall be held by the Trustee
in transferable form or in such form as will permit their being made
transferable by the Trustee at any time.
In order to facilitate transactions in the assets of this trust, the
Trustee, upon the Written Request of the Company, may employ or retain, as
the agent of the Trustee, such banks or trust companies subject to the
Trustee's direct supervision and control as may be designated by the
Trustee, to receive and hold assets of this trust for the account of and
subject at all times to the order of the Trustee. Any such assets at any
time or from time to time so held by any such agent of the Trustee shall be
and remain assets of this trust and shall at all times be so shown on the
records of the Trustee and shall be subject to all the terms and provisions
hereof.
The Trustee shall forward promptly to the Company all notices and reports which
it may receive with respect to the assets of Account A.
ARTICLE VII - The Trustee, shall make payments out of Account A to the Company
for the payment of
(a) the amount of taxes, if any, attributable to Great-West Variable
Annuity Account A, as specified in Variable Account Policies;
(b) amounts payable to the Company pursuant to the terms of Variable
Account policies, such amounts including without limitation by
reason of enumeration, amounts for
(i) administrative expenses,
(ii) mortality and expenses guarantees,
(iii) investment management and advisory services, and
(iv) surrender charges.
(c ) sums payable to policyholders, annuitants, beneficiaries or
others entitled under the terms of Variable Account Policies,
such payments including without limitation by reason of
enumeration annuity payments, redemption value or cash loans as
applicable;
(d) sums transferable out of Great-West Variable Annuity Account A
for the benefit of annuitants, beneficiaries or other pursuant to
the terms of Variable Account Policies;
(e) sums payable to the Company which represent released annuity
reserves or other actuarial gains;
(f) other proper charges against Account A certified as such to the
Trustee by any two of the President, a Vice-President, the
Secretary and the Treasurer of the Company.
Before making any payment as provided in subsections (a), (b), (c ), (d), (e) or
(f) above, the Trustee shall have first received a Written Request, stating that
the payment requested thereby is for one or more of the purposes specified in
such subsections.
ARTICLE VIII - All income arising from the assets of Account A held by the
Trustee hereunder shall form part of and belong solely to Account A and shall be
subject to the trusts herein contained.
The Trustee shall present promptly for payment all coupons and other income
items, held by it in Account A, which call for payment upon presentation. The
Trustee shall promptly notify the Company of all stock dividends, rights and
similar securities issued in connection with assets of Account A, and of the
terms of any rights received.
ARTICLE IX - The Trustee, at the Written Request of the Company certifying that
the liabilities of the Company under all policies in respect of which Account A
is maintained have been paid off or satisfied, or that all such liabilities have
been transferred in accordance with the relevant laws of the United States and
Canada to another insurance company or companies licensed by one or more of the
States of the United States of America in which the Company does business, and
upon payment of all costs, charges and expenses due to or incurred in connection
with Account A by the Trustee under the terms hereof, shall transfer and deliver
to the Company or to such other insurance company or companies, as applicable,
their assets of Account A, or such part thereof as may remain in its possession,
freed and discharged from the trusts herein contained, and thereupon the Trustee
shall be relieved from all further duties, liabilities or trusts in relation
thereto provided, however, that before the Trustee shall so transfer such assets
as may remain in its possession, freed and discharged from the trusts herein
contained, the Trustee shall have received the approval in writing of the
Supervisor of Insurance of each State of the United States of America in which
the Company has issued a Variable Account Policy, to the release of all or any
of the said assets.
ARTICLE X - The Company reserves the right to remove the Trustee at its
discretion, and the Trustee expressly agrees and binds itself promptly to
transfer, at the Written Request of the Company and after payment of all charges
due it under the terms of this Agreement and receipt from the Company of a full
discharge and release of all its liabilities thereunder, all the assets
deposited with it hereunder, to any other bank or trust company incorporated in
or doing a fiduciary business within the United States of America, and
designated by the Company as Successor Trustee hereunder, upon receiving from
such other bank or trust company a written statement that the assets thus being
transferred are to be held by said other bank or trust company as Successor
Trustee, upon the trusts herein set forth, and thereafter all responsibility and
liability of the present Trustee in connection therewith shall immediately
cease, provided, however, that in chase the Company desires to remove the
Trustee it will be necessary for it to obtain the approval in writing of the
Successor Trustee from the Supervisor of Insurance of the State of Michigan and
that the Successor Trustee be a bank having the qualifications prescribed in
paragraph 1 of section 26 (a) of the Investment Company Act of 1940 of the
United States of America.
In the event that the Trustee shall be dissolved, or shall otherwise become
incapable of acting, or in the event that control of the Trustee shall be taken
over by any public officer or officers, the Company shall remove the Trustee and
designate a Successor Trustee in accordance with and subject to the provisions
of this Article.
Any bank or trust company in or into which the Trustee or any Successor Trustee
may be merged or converted, or with which it or any Successor Trustee may be
consolidated, or any bank or trust company resulting from any merger, conversion
or consolidation to which the Trustee or any Successor Trustee shall be a party,
or any bank or trust company succeeding to the business or the Trustee or any
such Successor Trustee, shall be substituted as Successor Trustee under this
Agreement upon the trusts herein set forth without the execution of any
instrument or any further act on the part of the Company or any such Successor
Trustee provided such bank or trust company shall be a bank having the
qualifications prescribed in paragraph 1 of Section 26(a) of the Investment
Company Act of 1940 of the United States of America.
ARTICLE XI - The trustee shall have the right to resign its trust hereunder and
to relieve itself from all responsibility and liability in connection herewith
by transferring all the assets deposited with it hereunder to such other bank or
trust company as he Company in such case may designate as Successor Trustee
hereunder as in Article X provided, to be held by said bank or trust company
upon the trusts herein set forth, provided, however, that should the Trustee
resign, the appointing of the Successor Trustee shall be subject to the approval
in writing of the Supervisor of Insurance of the State of Michigan, and that the
Successor Trustee be a bank having the qualifications prescribed in paragraph 1
of Section 26(a) of the Investment Company Act of 1940 of the United States of
America.
ARTICLE XII - The Trustee, in relation to this Agreement, may act upon the
opinion or advice of any counsel, attorney or other expert approved by the
Trustee, even through employed by or of counsel for the Company, and shall not
be responsible for any losses occasioned by so doing, provided it has exercised
reasonable care and prudence as to the selection of such persons. The Trustee
shall be responsible for any losses caused by any act of neglect, any willful
default and any failure to act in good faith by the Trustee itself, its servants
and its agents under or subject to its direct supervision or control.
Unless otherwise specifically provided in this Agreement, the Trustee, in acting
or refraining from acting hereunder, may accept a Written Request of the Company
as conclusive evidence of the facts or matters therein stated, and the Trustee
shall be in no wise bound to call for any further evidence, and shall be held
harmless by the Company for any loss that may be occasioned in relying upon such
Request.
The Trustee hereby agrees that, upon the request of the Company or of the
Supervisor of Insurance of any State of the United States of America in which
the Company is authorized to carry on business, it will certify and file, as may
be directed in such request, a statement listing the assets held hereunder in
such form as may be required. Any such statement requested by a Supervisor of
Insurance my be prepared by the Company and certified by the Trustee.
The Trustee hereby agrees that access to the assets of Account A shall be
permitted only to the duly authorized officers and employees of the Trustee, and
also with any duly authorized officers or employees of the Trustee, to an
independent public accountant for the purpose of the examination of the assets
of Account A. Such assets shall at all times be subject to inspection by the
Supervisor of Insurance of the State of Michigan, by the Securities and Exchange
Commission, by the Company, or in accordance with applicable State law, by the
Supervisor of Insurance of any State of the United States of America in which
the Company has issued a Variable Account Policy. Any such inspection shall be
made through the duly authorized employees of agents of the Company or of one of
the aforenamed government authorities or agencies, whichever requires such
inspection, who shall be accompanied by one or more of the duly authorized
officers or employees of the Trustee.
ARTICLE XIII - The Company reserves to itself the right at any time hereafter to
add to, modify or alter the trusts, conditions and powers hereinbefore declared,
imposed or conferred, in such manner as it shall deem fit and as shall be
according to law, provided, however, that any such addition, modification or
alteration shall not increase the duties or responsibilities of the Trustee
without its consent and provided further that the rights of Variable Account
Policyholders shall not thereby be impaired, which fact shall be determined by
the Supervisor of Insurance of the State of Michigan.
ARTICLE XIV - The Trustee shall be entitled to such compensation for its
services as may be agreed upon in writing between the Company and the Trustee
from time to time.
The Company agrees to pay to the Trustee all reasonable costs or expenses,
including counsel's and attorney's fees, which shall be paid or incurred by the
Trustee in the administration of the trusts by this Agreement created, as well
as any costs and expenses of the Trustees and its counsel in connection with any
action or actions brought against the Trustee as such.
ARTICLE XV - The Trustee hereby accepts the trust above created and declared
upon the terms, trusts and provisions above expressed, and signifies its
acceptance thereof by joining in the execution of these presents.
ARTICLE XVI - This Agreement may be executed in any number of counterparts, each
one of which shall be deemed an original, and such counterparts shall constitute
but one and the same instrument.
IN WITNESS WHEREOF The Great-West Life Assurance Company has caused its
Corporate Seal to be affixed hereto, attested by the hands of its duly
authorized officers in that behalf, at the City of Winnipeg in Canada, the 3rd
day of July, 1968, and The Bank of New York has caused its Corporate Seal to be
affixed hereto, attested by the hands of its duly authorized officers in that
behalf, at the City of New York in the State of New York, one of the United
States of America, the 8th day of July, 1968.
THE GREAT-WEST LIFE ASSURANCE COMPANY
President
Vice-President and Secretary
THE BANK OF NEW YORK
ATTEST:
Asst. Trust Officer
Exhibit 10
<PAGE>
SUTHERLAND, ASBILL & BRENNAN Farragut
Building, 900-17th Street., N.W.
Washington, D.C. 20006
(202) 296-4800
November 8, 1968
The Great-West Life Assurance Company
Great-West Variable Annuity Account A
60 Osborne Street North
Winnipeg 1, Manitoba, Canada
Gentlemen:
We have acted as counsel for The Great-West Life Assurance Company
("Great-West") and Great-West Variable Annuity Account A ("Variable Annuity
Account A") in connection with the preparation of the Registration Statement on
Form S-5 (SEC File No. 2-29033) filed by Great-West and Variable Annuity Account
A with the Securities and Exchange Commission under the Securities Act of 1933
and the amendments thereto (the "Registration Statement"), with respect to Group
Variable Annuity Contracts ("Group Contracts").
In so acting, we have made such examination of the law and examined such
records and documents as we have deemed appropriate to render the opinion
expressed below. As to all matters of corporate procedures and all applicable
requirements of Canadian law and all applicable requirements of laws of states
of the United States in which Great-West is licensed to transact business
relating to the Group Contracts, we have relied upon the opinion of D. C.
Bjarnason, Esq., Assistant Legal Officer of Great-West, dated October 31, 1968,
filed as Exhibit 9 to the Registration Statement.
It is our opinion that upon acceptance of purchase payments on behalf of
a Participant pursuant to a Group Contract issued in accordance with the
Prospectus contained in the Registrations Statement, and upon compliance with
applicable local law, such Participant will have a legally issued, fully paid
and non-assessable contractual interest under such Group Contract.
You may use this opinion letter or a copy thereof as an exhibit to the
Registration Statement, and you may use our name as counsel under the caption
"Legal Opinions" in the prospectus.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN
By: /s/ James V. Heffernan
James V. Heffernan
Exhibit 11
The Great-West Life Assurance Company
Winnipeg, Canada
The Great-West Life Assurance Company and October 31, 1968
The Variable Annuity Account Committee of Great-West Variable Annuity Account A
60 Osborne Street N.
Winnipeg, Manitoba
Gentlemen:
In my capacity as Assistant Legal Officer of The Great-West Life Assurance
Company, (the "Assurance Company"), I have acted as counsel for the Assurance
Company in connection with the establishment of Great-West Variable Annuity
Account A ("Variable Annuity Account A"), a separate and distinct fund
established by the Assurance Company in accordance with Section 81 of the
Canadian and British Insurance Companies Act. I have also participated in the
preparation of the Registration Statement on Form S-5 (SEC File No. 2-29033)
filed by the Assurance Company and Variable Annuity Account A with the
Securities and Exchange Commission under the Securities Act of 1933 and
amendments thereto (the "registration statement"), with respect to group
variable annuity contracts ("group contracts"). In so acting, I have made such
examination of the law and examined such records and documents as in my judgment
are necessary or appropriate to enable me to render the opinion expressed below.
I am of the following opinion:
1. The Assurance Company is a valid and subsisiting Canadian Corporation.
2. Variable Annuity Account A is a separate and distinct fund validly
established and maintained by the Assurance Company in accordance
with the provisions of the Canadian and British Insurance Companies
Act.
3. All of the prescribed corporate procedures for the issuance of the
group contract have been followed, and, when such contracts are
issued in accordance with the prospectus contained in the
registration statement, all applicable requirements of Canadian law
and all applicable requirements of laws of states of the United
States of America in which the Assurance Company is licensed to
transact business relating to such group contracts, will have been
complied with.
You may use this opinion or a copy thereof as an exhibit to the registration
statement, and you may use my name under the caption "Legal Opinion" in the
prospectus.
Yours very truly
/s/ D. Bjarnason
Assistant Legal Officer
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Exhibit 16
</LEGEND>
<CIK> 0000043498
<NAME> GREAT-WEST VARIABLE ANNUITY ACCOUNT A
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollar
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
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<INVESTMENTS-AT-VALUE> 9489
<RECEIVABLES> 0
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<TOTAL-ASSETS> 9577
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<OTHER-ITEMS-LIABILITIES> 341
<TOTAL-LIABILITIES> 341
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<SHARES-COMMON-PRIOR> 746562
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<REALIZED-GAINS-CURRENT> 393
<APPREC-INCREASE-CURRENT> 714
<NET-CHANGE-FROM-OPS> 1185
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 422
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 763
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<OVERDISTRIB-NII-PRIOR> 0
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<PER-SHARE-NAV-END> 11.953
<EXPENSE-RATIO> 1.03
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</TABLE>
