File No. 2-27832
As filed with the Securities and Exchange Commission on April 30, 1998
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-3
REGISTRATION STATEMENT UNDER THE
[X] SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.
[X] Post-Effective Amendment No. 42
and/or
REGISTRATION STATEMENT UNDER THE
[X] INVESTMENT COMPANY ACT OF 1940
[X] Amendment No. 42
(Check appropriate box or boxes)
AMERICAN UNITED LIFE POOLED EQUITY FUND B
(Exact Name of Registrant)
AMERICAN UNITED LIFE INSURANCE COMPANY(R)
(Name of Depositor)
One American Square, Indianapolis, Indiana 46282
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number: (317) 263-1877
Richard A. Wacker, One American Square, Indianapolis, Indiana 46282
(Name and Address of Agent for Service)
Title of Securities Being Registered: Interests in group variable annuity
contracts
It is proposed that this filing will become effective (Check appropriate Space)
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1998 pursuant to paragraph (b) of Rule 485
_____ --------------
_____ 60 days after filing pursuant to paragraph (a)(i) of Rule 485
on (date) pursuant to paragraph (a)(1) of Rule 485
_____ 75 days after filing pursuant to paragraph (a)(ii)
_____ on (date) pursuant to paragraph (a) (ii) of Rule 485
_____ this post-effective amendment designates a new effective date
for a previously filed amendment.
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AMERICAN UNITED LIFE POOLED EQUITY FUND B
CROSS REFERENCE SHEET ON FORM N-3
Pursuant to Rule 404(c) and Item 501 of Regulation S-X
Showing Location in Part A (Prospectus) and Part B (Statement of Additional
Information) of Registration Statement of Information Required by Form N-3
Item Number Location Location Location
and Caption in Part A in Part B in Part C
- ----------- --------- --------- ---------
1. Prospectus Cover Page --- ---
2. Definitions 3-4 --- ---
3. Expense Summary and Synopsis 5-6 --- ---
4. Condensed Financial Information 7 --- ---
5. Description of AUL and Fund B 8-10 --- ---
6. Management of Fund B 10 --- ---
7. Condensed Financial Information 7,11 --- ---
8. Deductions and Expenses; Voting and Other
Rights Under the Variable Annuity
Contracts; Table of Contents for the
Statement of Additional Information 11-14, 25 --- ---
9. Definitions; Annuity Period 3-4, 4-16 --- ---
10. Return of Accumulated Value in the
Event of Death 16 --- ---
11. Purchases and Contract Values 16-18 --- ---
12. Redemptions 18-19 --- ---
13. Federal Tax Status 20-23 --- ---
14. Legal Proceedings 23 --- ---
15. Table of Contents for the Statement of
Additional Information 25 2 ---
16. Statement of Additional Information --- Cover Page ---
17. Table of Contents for the Statement of
Additional Information 25 2 ---
18. Not Applicable --- --- ---
19. Description of AUL and Fund B; Investment
Objectives and Policies --- 3 ---
20. Management of Fund B; Investment Advisory
and Other Services --- 3-4 ---
21. Deductions and Expenses; Investment
Advisory and Other Services --- 4-5 ---
22. Brokerage --- 5 ---
23. Purchases and Contract Values; Purchase
and Pricing of Securities Being Offered 16-18 5 ---
24. Investment Advisory and Other Services;
Underwriters --- 4-6 ---
25. Not Applicable --- --- ---
26. Annuity Period; Annuity Payments and
Other Calculations 14-16 6 ---
27. Financial Statements --- 7-23 ---
28. Financial Statements and Exhibits --- --- 1-2
29. Directors and Officers of American
United Life Insurance Company(R) --- --- 2-6
30. Persons Controlled or Under Common Control of
American United Life Insurance Company(R) --- --- 6
31. Number of Contractowners --- --- 6
32. Indemnification of Directors and Officers --- --- 6-7
33. Business and Other Connections of Officers
and Directors of American United Life
Insurance Company(R) --- --- 7
34. Principal Underwriter and Compensation --- --- 7
35. Location of Accounts and Records --- --- 7
36. Management Services --- --- 7
37. Undertakings --- --- 7
<PAGE>
American United Life Pooled Equity Fund B
GROUP VARIABLE ANNUITY CONTRACTS
Sold By
American United Life Insurance Company(R)
One American Square
Indianapolis, Indiana 46282
(317) 263-1877
American United Life Pooled Equity Fund B is primarily a common stock fund.
This Prospectus offers information about American United Life Pooled Equity Fund
B ("Fund B") that a prospective investor should know before investing.
Additional information about Fund B is contained in a Statement of Additional
Information dated May 1, 1998, which has been filed with the Securities and
Exchange Commission ("Commission"). A Statement of Additional Information is
available upon request by mailing the Business Reply Mail card located in the
back of this Prospectus to AUL. A Table of Contents for the Statement of
Additional Information is located on page 25 of this Prospectus.
Group variable contracts described in this Prospectus are offered to (i)
employees of tax exempt or public school organizations with a 403(b) Program
(tax deferred annuities); (ii) employees of employers with 401 Employee Benefit
Plans or 408 Programs (Individual Retirement Annuities); and (iii) employers
that are units of state or local government with 457 deferred compensation
plans.
Participants should read this Prospectus and keep it for future reference.
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.
Dated: May 1, 1998
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Table of Contents
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Page
Definitions................................. 3-4
Expense Summary............................. 5
Synopsis.................................... 5-6
Condensed Financial Information............. 7
Description of AUL and Fund B............... 8-10
American United Life..................... 8
Fund B................................... 8
Investment Objectives and Policies....... 8
Management of Fund B........................ 10-11
Deductions and Expenses..................... 11-13
Sales and Administrative Services........ 11
Investment Management Services........... 11
Mortality and Expense Risk Charges....... 12
Deduction for Premium Taxes.............. 12
Participation............................ 12
Amendments............................... 12
Voting and Other Rights Under
the Variable Annuity Contracts........... 13-14
Annuity Period.............................. 14-16
Variable Retirement Annuity.............. 14
Optional Variable Annuity
Settlements............................ 14
The Annuity Unit......................... 15
Amount of Variable Retirement
Annuity................................ 15
Return of Accumulated Value in the
Event of Death........................... 16
Purchases and Contract Values............... 16-18
Purchase Limits.......................... 16
Accumulation Units....................... 16
Value of Accumulation Unit............... 17
Net Investment Factor.................... 17
Valuation of Assets...................... 17
Redemptions................................. 18-19
Redemption (Withdrawal).................. 18
Constraints on Distributions From
Section 403(b) Annuity
Contracts.............................. 18
Right of Cancellation.................... 19
Texas Optional Retirement
Program................................ 19
Federal Tax Status.......................... 19-22
Introduction............................. 19
Tax Status of the Company and
the Variable Account................... 20
Tax Treatment of Retirement
Programs............................... 20
Employee Benefit Plans................... 21
403(b) Programs.......................... 21
408 Programs............................. 21
457 Programs............................. 22
Tax Penalty.............................. 22
Withholding.............................. 23
Year 2000 Issues and Readiness.............. 23
Legal Proceedings........................... 23
Historical Record........................... 24
Table of Contents for the Statement
of Additional Information................ 25
2
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DEFINITIONS
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Various terms commonly used in this Prospectus are defined as follows:
ACCUMULATION PERIOD - The period before annuity payments begin.
ACCUMULATION UNIT - A share of Fund B expressed in dollars used to measure the
value of a Fund B Participant's account before annuity payments commence.
ANNUITANT - The person on whose life annuity payments depend.
ANNUITY - A series of payments during the period specified in the annuity
settlement.
ANNUITY COMMENCEMENT DATE - The first day of any month during which annuity
payments begin, as provided in the Group Contract or Employee Benefit Plan,
provided however that the date shall not be later than the required beginning
date as defined in the applicable section of the Internal Revenue Code and the
Code of Federal Regulations.
ANNUITY UNIT - A share of Fund B expressed in dollars used to measure the
amount of annuity payments.
COMPANION CONTRACT - A fixed dollar annuity Group Contract issued by AUL to a
Contractholder for the benefit of the same employees covered by the Group
Contract of such Contractholder.
CONTRACTHOLDER - A party to a Group Contract on behalf of itself as an
employer or on behalf of other employers.
EMPLOYEE BENEFIT PLAN - A pension or profit sharing plan established by an
employer for the benefit of its employees which plan is qualified or designed to
be qualified under Section 401 of the Internal Revenue Code. (See Federal Tax
Status.)
EMPLOYER - A tax exempt or public school organization or other employer with
respect to which a Group Contract has been entered into for the benefit of its
employees. In some cases, the Custodian of a Trust may act as the
Contractholder for Participants. In this case, rights usually reserved to the
Employer will be exercised either directly by the Employees or through such
Custodian who will act as the agent of such Employees.
EMPLOYER'S PARTICIPANT ACCOUNT - The sum of Accumulation Units credited to the
employer as a result of Net Payments to Fund B under a Group Contract for use
with an Employee Benefit Plan.
FIXED DOLLAR ANNUITY - An annuity providing for payments fixed in amount and
which do not vary with investment experience.
GROUP CONTRACT - A group variable annuity contract between a Contractholder
and AUL which calls for the deposit of Net Payments in Fund B.
HR-10 PLAN - An Employee Benefit Plan established by a self-employed person in
accordance with the Self-employed Individuals Tax Retirement Act of 1962 and
Section 401 of the Internal Revenue Code, as amended.
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NET PAYMENT - The difference between a payment and the deduction of the 6% or
4% (as the case may be) payment to AUL for its sales and administrative
services.
PARTICIPANT - Any natural person and any employer having an interest in Fund
B.
PARTICIPANT'S INDIVIDUAL ACCOUNT - The sum of the Accumulation Units credited
to a Participant as a result of Net Payments made to Fund B by him or on his
behalf under a Group Contract.
PAYMENT - Any payment made by a Participant or by an employer on behalf of a
Participant under a 403(b) Program, a 408 Program, an Employee Benefit Plan, or
by an employer in connection with a 457 deferred compensation plan.
SEGREGATED INVESTMENT ACCOUNT - A separate account (such as Fund B) authorized
by law which is not chargeable with the liabilities arising out of any business
of AUL other than its contracts under which payments are made into and out of
such account.
VALUATION PERIOD - A period beginning immediately after a valuation of Fund B
and ending with the next valuation of Fund B. Valuations will occur as of the
close of trading on the New York Stock Exchange on each day during which the
Exchange is open for trading provided AUL is open for business. Traditionally,
in addition to federal holidays, AUL is not open for business on the day after
Thanksgiving and either the day before or after Christmas or Independence Day.
VARIABLE ANNUITY - An annuity providing for payments which vary in amount in
accordance with the investment experience of a Segregated Investment Account.
403(B) PROGRAM - An arrangement by a tax-exempt or public school organization
to permit its employees to take advantage of the federal income tax deferral
benefits provided for in Section 403(b) of the Internal Revenue Code.
408 PROGRAM - A plan of individual retirement accounts or annuities, including
a simplified employee pension plan or SIMPLE IRA plan established by an em-
ployer, that meets the requirements of Section 408 of the Internal Revenue Code.
457 PROGRAM - A plan established by a unit of state or local government under
Section 457 of the Internal Revenue Code. An employer who shall have set up such
a program is referred to as a 457 Employer.
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EXPENSE SUMMARY
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Contract Owner or Participant
Transaction Expenses:
Sales Load Imposed on Purchases 6%*
(as a percentage of purchase payments)
Deferred Sales Load NONE
Surrender Fees NONE
Exchange Fee NONE
Annual Contract Fee: NONE
*This charge is reduced to 4% when a Participant's total contributions exceed
$5,000.
Annual Expenses:
(as a percentage of average net assets)
Management Fees 0.3%
Mortality and Expense Risk Fees 0.9%
Other Expenses NONE
Total Annual Expenses 1.2%
<TABLE>
<CAPTION>
Example: 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Whether or not a contract is annuitized or
surrendered at the end of the applicable time period,
you would pay the following expenses on a $1,000 in-
vestment, assuming a 5% annual return on assets:
$71.50 $95.80 $121.96 $196.43
</TABLE>
The purpose of these tables is to assist a Contract Owner or Participant in
understanding the various costs and expenses that are paid, either directly or
indirectly. These deductions and expenses are further described in the
Prospectus in the section "Deductions and Expenses." Depending on the state of
residence of the Participant, there may be an additional charge for premium
taxes which AUL is required to withhold. The examples above should not be
considered representations of past or future expenses or returns and actual
expenses may be greater or less than those shown.
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SYNOPSIS
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Group variable contracts described in this Prospectus are offered to (i)
employees of tax exempt or public school organizations with a 403(b) Program
("tax deferred annuities"); (ii) employees of employers with 401 Employee
Benefit Plans or 408 Programs ("Individual Retirement Annuities"); and (iii)
employers that are units of state or local government with 457 deferred
compensation plans. In order to fund such plans, the employer has entered into a
group variable annuity contract ("Group Contract") with American United Life
Insurance Company(R) ("AUL"). Pursuant to a properly completed application, a
variable annuity may be purchased through employer payments ($120 or $300 per
year minimum depending on the type of contract selected) under a 403(b), 408 or
457 Program or by means of employee and employer payments under a 401 Employee
Benefit Plan or 408 Program.
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Variable annuities such as those described in this Prospectus are designed
to provide Participants with annuity payments that, unlike fixed dollar annuity
payments, vary with the investment performance of the assets of Fund B. Since
the assets are invested, for the most part, in common stocks, the value of the
investments of Fund B will fluctuate and are subject to all of the risks of
changing economic and market conditions. The type, identity and timing involved
in the purchase and sale of the securities which make up the Fund B portfolio
will also have a major impact on the overall performance experienced by the
Fund. At the time an annuity is taken, a Participant will be able to choose
among several different options. These are more fully described under "Optional
Variable Annuity Settlements."
American United Life Pooled Equity Fund B ("Fund B") was established by AUL
as a Segregated Investment Account under provisions of the Indiana Insurance
Law. Under that law, Fund B is not chargeable with any liabilities except those
arising under the Group Contracts described in this Prospectus. Other charges
and expenses associated with Fund B, including charges for Sales and
Administrative Services, Investment Management Services, and Mortality and
Expense Risk Charges, are discussed in the section titled "Deductions and
Expenses." No fee or other deduction is charged by AUL upon withdrawal or
transfer of an account or payment of benefits except premium taxes levied by the
state of residence of the Participant, if any.
Under the Investment Company Act of 1940, Fund B is registered as an
open-end, diversified management investment company. Such registration does not
involve supervision of the management or investment practices of Fund B or AUL
by the Securities and Exchange Commission.
The principal investment objective of Fund B is the selection of
investments for long-term growth of capital. A secondary investment objective is
the production of current income. Investments will be made primarily in common
stocks, but may also include preferred stocks and debentures which may or may
not be convertible into common stocks or be accompanied by warrants for the
purchase of common stock. There may be temporary occasions, however, when the
Board of Managers may determine for defensive purposes that other types of
investments are more advantageous because of general economic conditions or for
other reasons, in which event, investments may be made to some extent in bonds,
notes, or other evidences of indebtedness, including United States Government
securities, issued publicly, of a type customarily purchased for investment by
institutional investors. A complete description of the Investment Objectives and
Policies of Fund B may be found on pages 8-10 of the Prospectus.
A contractholder may cancel the contract no later than ten days after
receiving it by returning it along with a written notice of cancellation to AUL
at its Home Office. See page 19 "Right of Cancellation" in this Prospectus for
details.
Certain rights including voting rights may be associated with being a
"Participant." For a discussion of these and other rights, see pages 13 and 14
of the Prospectus.
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<TABLE>
<CAPTION>
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CONDENSED FINANCIAL INFORMATION
PER UNIT INCOME AND CAPITAL CHANGES
IN FUND B ACCUMULATION UNIT
(For an accumulation unit outstanding throughout the year)
- ---------------------------------------------------------------------------------------------------------------
Year Ended December 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Investment Income* $ .285 $ .262 $ .236 $ .194 $ .162 $ .180 $ .197 $ .194 $ .192 $ .160
Expenses* .163 .128 .109 .099 .088 .077 .070 .061 .057 .048
- ----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net investment income .122 .134 .127 .095 .074 .103 .127 .133 .135 .112
Net realized and
unrealized gain (loss)
on investments 3.411 1.731 1.519 0.069 1.239 .473 1.098 (.385) .903 .310
----- ----- ----- ----- ----- ---- ----- ------ ---- ----
Net increase (decrease) in
Accumulation Unit Value 3.533 1.865 1.646 0.164 1.313 .576 1.225 (.252) 1.038 .422
Fund B Accumulation Unit
Value at beginning of year $11.774 $ 9.909 $8.263 $8.099 $6.786 $6.210 $4.980 $5.232 $4.194 $3.772
Fund B Accumulation Unit
Value at end of year $15.307 $11.774 $9.909 $8.263 $8.099 $6.786 $6.205 $4.980 $5.232 $4.194
======= ======= ====== ====== ====== ====== ====== ====== ====== ======
Ratio of expenses to
average net assets 1.20% 1.20% 1.20% 1.20% 1.19% 1.21% 1.20% 1.21% 1.19% 1.19%
Ratio of net investment
income to avg. net assets 0.90% 1.25% 1.39% 1.16% 1.01% 1.64% 2.16% 2.65% 2.85% 3.97%
Total Return 31.2% 19.8% 21.1% 2.9% 20.4% 10.3% 25.7% (4.0%) 25.9% 12.2%
Portfolio turnover rate 28.0% 17.5% 20.0% 23.3% 25.4% 11.9% 36.7% 24.8% 24.3% 20.4%
Number of Accumulation Units
outstanding at end of year
(in thousands): 933 1,068 1,264 1,417 1,518 1,635 1,698 1,784 1,860 2,028
Average Commission Rate Paid**$0.0718 $0.0669 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
<FN>
*Investment income and expenses are calculated on the basis of average units
outstanding during the year. Net investment income represents investment income
less expenses.
**Computed by dividing the total amount of commissions paid by the total number of shares purchased and sold during
the period for which there was a commission. This disclosure is required by the SEC beginning in 1996.
</FN>
</TABLE>
Other financial information consisting of the financial statements for Fund B
and for AUL is located in the Statement of Additional Information, on pages 7
through 23.
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DESCRIPTION OF AUL
AND FUND B
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AMERICAN UNITED LIFE
AUL is a legal reserve mutual life insurance company existing under the
laws of the State of Indiana. It was originally incorporated as a fraternal
society on November 7, 1877, under the laws of the federal government, and
reincorporated under the laws of the State of Indiana in 1933. It is qualified
to do business in 48 states and the District of Columbia. As a mutual company,
it is owned by and operated exclusively for the benefit of its policyowners. AUL
has its principal business office located at One American Square, Indianapolis,
IN 46282.
AUL conducts a conventional life insurance, reinsurance, and annuity
business. At December 31, 1997, AUL had admitted assets of $8,597,755,587 and a
policyowners' surplus of $664,638,385. With respect to the variable annuities
offered hereunder, the assets of AUL should be considered only as bearing upon
the ability of AUL to meet its obligations under the variable annuity contracts,
since the amounts payable to the Participants will depend upon the investment
performance of Fund B and not on the value of the other assets of AUL.
FUND B
American United Life Pooled Equity Fund B ("Fund B") was established by AUL
on November 20, 1967 as a Segregated Investment Account (See Definitions) under
provisions of the Indiana Insurance Law. Under that law, Fund B is not
chargeable with any liabilities except those arising under the Group Contracts
described in this Prospectus which are fundable and computable as to payments or
benefits on the basis of experience factors of Fund B. By law, any surplus or
deficit which may arise in Fund B by virtue of mortality experience contracted
for by AUL shall be adjusted by withdrawals from or additions to Fund B so that
the assets of Fund B shall always be equal to the assets required to satisfy all
liabilities arising under contracts fundable by Fund B. Income, gains, and
losses from assets allocated to Fund B, whether or not realized, are credited to
or charged against Fund B without regard to other income, gains, or losses of
AUL. Under the Investment Company Act of 1940, Fund B is registered as an
open-end, diversified management investment company. Such registration does not
involve supervision of the management or investment practices of Fund B or AUL
by the Securities and Exchange Commission.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies shown below in Items 1 through 11
are fundamental and may not be changed without approval of Fund B Participants
casting a majority of the votes entitled to be cast. (See "Voting and Other
Rights under the Variable Annuity Contracts.") Although the fundamental
investment policy permits investment in restricted securities and in real
estate, none has been made nor is any contemplated at this time.
1. The principal investment objective of Fund B is the selection of investments
for long-term growth of capital. A secondary investment objective is the
production of current income.
2. Investments will be made primarily in common stocks, but may also include
preferred stocks and debentures which may or may not be convertible into common
stocks or be accompanied by warrants for the purchase of common stock. There may
be temporary occasions, however, when the Board of Managers may determine for
defensive purposes that other types of invest-
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ments are more advantageous because of general economic conditions or for other
reasons, in which event investment may be made to some extent in bonds, notes or
other evidences of indebtedness, including United States Government securities,
issued publicly, of a type customarily purchased for investment by institutional
investors.
3. Income and realized capital gains will be retained.
4. Fund B assets will be kept fully invested except for reasonable amounts held
in cash or United States Government securities to meet normal contract payments
and held for temporary periods pending investment or for defensive purposes.
5. With respect to 75% of the assets, not more than 5% of the value of Fund B
assets will be invested in securities of any one issuer, except obligations of
the United States Government and instrumentalities thereof.
6. Not more than 10% of the voting securities of any one issuer will be
acquired. Fund B does not propose to concentrate its investments in any
particular industries. In no event will investments in any one industry exceed
25% of the value of Fund B assets.
7. Borrowings will not be made except for temporary or emergency purposes in an
amount not in excess of 5% of the value of the assets of Fund B, but not for
investment purposes.
8. Fund B will not act as an underwriter of securities of other issuers, except
that Fund B may invest up to 10% of the value of its assets (at the time of
investment) in portfolio securities which Fund B might not be free to sell to
the public without registration of such securities under the Securities Act of
1933. If through the appreciation of restricted securities or the depreciation
of unrestricted securities, Fund B should be in a position where more than 10%
of the value of its net assets are invested in illiquid assets, including
restricted securities, and a question arises with respect to liquidity, then,
Fund B will consider appropriate steps to provide adequate flexibility.
9. Real estate will not be purchased or sold as a principal activity. However,
Fund B may invest up to 10% of its assets in real properties.
10. No purchase of commodities or commodity contracts will be made.
11. Loans will not be made except through the acquisition of a portion of an
issue of publicly distributed bonds, debentures or other evidences of
indebtedness of a type customarily purchased by institutional investors.
Additional non-fundamental investment objectives and policies are:
12. Investment will not be made in the securities of a company for the purpose
of exercising management or control.
13. Investment in securities of other investment companies will not be made with
the exception of participation in a money market fund to facilitate the
management of Fund B liquidity. Such investments, together with all other
investments for which market disposition is not readily available, will not
exceed 10% of the value of Fund B, which is acceptable under current federal
securities laws.
14. Short sales of securities will not be made.
15. Purchases will not be made on margin except for such short-term credits as
are necessary for the clearance of transactions.
16. The investments of Fund B are subject to the provisions of the Indiana
Insurance Law of 1935, as amended and will conform to the restrictions found
therein.
Variable annuities such as those described in this Prospectus are designed
to provide Participants with annuity payments that, unlike fixed dollar annuity
payments, vary with the investment performance of the assets in Fund B. Since
the assets are invested, for the most part, in common stocks, the value of the
investments of Fund B will fluctuate and are subject to all of the risks of
changing
9
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economic and market conditions. Although the value of a diversified portfolio of
common stocks held for an extended period of time has tended to rise
sufficiently to offset inflation, there have been periods during which the
values of securities have declined while the cost of living has risen. Equally
important to the performance of Fund B is the type, identity and timing involved
in the purchase and sale of the securities which make up the Fund B portfolio.
To comply with regulations under Section 817(h) of the Code, the Portfolio
underlying a separate account will be required to diversify its investments.
Generally, to meet the requirements, on the last day of each calendar quarter,
no more than 55% of the total assets may be represented by any one investment,
no more than 70% may be represented by any two investments, no more than 80% may
be represented by any three investments, and no more than 90 % may be
represented by any four investments. All securities of a given issuer generally
are regarded for this purpose as one investment and, in the case of U.S.
Government securities, each U.S. Government agency or instrumentality is treated
as a separate issuer. Other tax-related diversification requirements may apply
to each Portfolio in connection with qualifying as a regulated investment
company.
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MANAGEMENT OF FUND B
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Fund B is managed by a Board of Managers, consisting of five members. Under
a Management Agreement between Fund B and AUL dated December 20, 1971, and most
recently renewed on May 9, 1997, AUL is responsible for managing the investment
and reinvestment of Fund B's assets and for administering its other affairs,
subject to the supervision of Fund B's Board of Managers. The Agreement between
Fund B and AUL provides that AUL will invest the assets of Fund B in accordance
with the investment objectives and policies of Fund B. At least quarterly, AUL
reports its investment decisions and recommendations to the Board of Managers to
allow the Board to perform its responsibility to oversee AUL's activity and
conformity to the objectives and policies of Fund B. Currently, the Fund B Board
of Managers consists of James W. Murphy, Chairman, Ronald D. Anderson, Leslie
Lenkowsky, R. Stephen Radcliffe, and James P. Shanahan.
Commencing with the first Annual Meeting of Fund B Participants on May 8,
1970, and at each Annual Meeting of Fund B Participants until May 6, 1994,
successors to the members of the Board of Managers whose terms had expired were
elected to serve for terms of three (3) years and until their successors were
duly elected and qualified. At the Annual Meeting of Participants held on May 6,
1994, a proposal to amend the Rules and Regulations of Fund B was approved by
the Participants. Under the proposal, as approved, an Annual Meeting of Fund B
Participants would not be held in any year when only routine matters were being
considered. The re-election of those members of the Board of Managers who had
previously been elected by the Participants would be considered a routine matter
so long as a majority of the Board has previously been elected by Fund B
Participants. However, a Participants' meeting will be held whenever required by
Federal Securities laws. (See "Voting and Other Rights under the Variable
Annuity Contracts.") On August 4, 1997, a Meeting of Participants was held and
the five managers named above were elected by the Participants as members of the
Board of Managers of Fund B.
AUL, the investment advisor for Fund B, is an
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Indiana insurance company with its Home Office located at One American Square,
Indianapolis, Indiana 46282. AUL is registered with the Securities and Exchange
Commission as an investment adviser for Fund B.
AUL furnishes to Fund B all necessary office space, facilities and
equipment and pays the compensation of members of the Board of Managers. Due to
the size of Fund B, the Board of Managers has not felt the need to establish an
Audit Committee, Compensation Committee or Nominating Committee.
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DEDUCTIONS AND EXPENSES
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SALES AND ADMINISTRATIVE SERVICES
Under the Sales and Administrative Services Agreement between AUL and Fund
B, AUL is obligated to act as the principal underwriter for Fund B and to
perform the sales and administrative services relative to the Group Contracts.
Such services include all services of AUL, its employees, agents and brokers and
include the payment by AUL to such persons of all compensation related to the
sale and administration of such Group Contracts and the payment of other
expenses related thereto including, if applicable, rent, postage, telephone,
travel, stationery, office equipment and supplies and legal, actuarial and
auditing fees. In addition, AUL is obligated under such agreement to pay the
fees of the members of the Board of Managers of Fund B (presently $1,500 per
manager per year, plus $50 expense allowance per meeting attended, and any
member's out of state travel expenses incurred to attend meetings of the Board
of Managers), the fee of the auditors for the annual audit of Fund B, the cost
of preparing and mailing the annual and other regular reports of Fund B to the
Fund B Participants, and the cost of registering the Group Contracts and
variable annuities as required under federal and state securities laws.
For such sales and administrative services, AUL will receive 6% (5% for
sales expense and 1% for administrative expense) of each payment (which equals
6.38% of the amount invested in Fund B) made for or by a Participant under all
Group Contracts until payments totaling $5,000 have been made for or by such
Participant and 4% (3% for sales expense and 1% for administrative expense) of
each payment (which equals 4.17% of the amount invested in Fund B) made in
excess of $5,000 for or by such Participant. The balance of any payment will be
invested in Fund B, and such Participant or his employer, as the case may be,
will be credited with that number of Accumulation Units determined by dividing
such balance by the value of one Accumulation Unit at the end of the Valuation
Period in which the payment is received. The deductions for sales and
administrative expense represent AUL's estimate of the minimal cost it will
incur and contain no specific loading for profit. Recently, however, the
distribution expenses have exceeded the sales charges and administrative
expenses. This excess has been paid by AUL from its general account assets which
consist, in part, of amounts derived from mortality and expense risk charges
received from Fund B. The amounts for sales and administrative services payable
to AUL may be reduced by the participation of the Group Contracts in the
divisible surplus of AUL under certain circumstances described in the Section
titled "Participation" on the following page.
INVESTMENT MANAGEMENT SERVICES
Under the Investment Management Services Agreement between AUL and Fund B,
AUL is obligated to provide investment management services relative to such
Group Contracts and to
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the assets of Fund B, including the management of such assets, investment
analysis, preparation of investment programs for the approval or rejection of
the Board of Managers, the placing of orders for the purchase and sale of
investments and all other matters normally associated with the investment
management activities of such a fund. For such services, as provided in both the
Group Contracts and Investment Management Services Agreement, AUL will receive
from Fund B a daily fee of .00082% of the value of Fund B. This amounts to 0.3%
on an annual basis.
MORTALITY AND EXPENSE RISK CHARGES
Although variable annuity payments will vary with the investment
performance of Fund B, payments will not be affected by adverse mortality
experience or when the actual expenses of AUL exceed the fees charged by AUL
under the Group Contracts. AUL has agreed to assume the risk (except under the
Fixed Period Option described on page 15 where there is no such risk) that
annuitants, as a class, may live longer than had been estimated. In this case,
payments would continue beyond the period estimated and AUL's expenses could
exceed the fees received from Fund B. For assuming these risks, AUL receives
from Fund B a daily fee of .00164% of the value of Fund B for the mortality
risks and a daily fee of .00082% of the value of Fund B for the expense risks.
These two fees amount to approximately 0.9% on an annual basis and continue to
be charged during the annuity payout period under all of the settlement options
described on pages 14 and 15.
DEDUCTION FOR PREMIUM TAXES
When an annuity is effected (or at the time of purchase if required by a
particular state's law), any applicable premium taxes will be deducted from the
amount to be applied to purchase the annuity or from the amount deposited and
paid over immediately to the state. Presently, such taxes range from .0% to
3.5%. In any given state, the rate may also vary depending on the type of
contract purchased. Since premium tax statutes can be enacted, changed or
repealed by a state's legislature at any time, and since the imposition of a
premium tax will usually be at the time the annuity is commenced, the present
tax rates may not be in effect when the actual premium tax charge is imposed.
PARTICIPATION
Because AUL is a mutual life insurance company, its Group Contracts
participate in the divisible surplus of AUL, according to the annual
determination by AUL of the portion, if any, of the divisible surplus which has
resulted from and accrued on such Group Contracts. Any such portion determined
to be payable will be applied to the benefit of the Participants under such
Group Contracts in one of the following ways (as determined by AUL):
(a) a reduction in the sales and administrative service fee payable to AUL in
the next succeeding year, or
(b) a crediting of additional Accumulation or Annuity Units to the
Participant's accounts. (Such additional units shall be credited without
deductions for sales and administrative service charges.)
Although the Group Contracts so provide for participation, there has been no
divisible surplus to date and there can be no assurance that there will be any
available for payment or payable under such Group Contracts.
AMENDMENTS
AUL cannot amend or change any Group Contract to increase the amount of its
charges for its sales and administrative services, investment advisory services
or mortality risk and expense charges or to affect the annuity purchase rates as
such charges and rates apply to existing Accumu-
12
<PAGE>
lation and Annuity Units or to Accumulation and Annuity Units which may
thereafter be purchased for any existing Participant under a 403(b) or 408
contract except to the extent that payments for such Participant in any contract
year are in excess of the greater of either (a) $5,000 or (b) twice the average
of all payments for such Participant for the five contract years preceding the
change (or lesser period if the Participant has not completed five contract
years). Insofar as any payments for such a Participant are in excess of such
amount in any contract year following the change, such payments will be affected
by any amendments of the Group Contract by AUL, but subject to the further
limitation that, during the first five years of a Group Contract, no change or
amendment of any kind may be made by AUL in a Group Contract without the consent
of the Contractholder and, in addition, the consent of all Participants if the
change would adversely affect their rights under the contract (except to conform
the contract to any federal or state statute or rule or regulation of the U.S.
Treasury Department). By agreement and at any time, a 457 employer and AUL may,
unless specifically prohibited by state law, amend any contract provision and
such amendments shall thereafter be binding on all affected Participants,
beneficiaries or contingent annuitants.
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VOTING AND OTHER RIGHTS UNDER
THE VARIABLE ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
Generally, a Participant or the employer of a Participant, depending on the
type of contract involved, has certain rights associated with the contract.
During the accumulation period, these rights consist of the right to vote at any
meeting of Fund B Participants. A meeting of Participants will be held in any
year when any of the following matters are being considered:
(a) any change in the investment adviser;
(b) any change to any of Fund B's fundamental investment objectives or in any
of the fundamental investment restrictions;
(c) filling a vacancy on the Board of Managers when less than 2/3 of the Man-
agers have been elected by the Participants, or electing members to the
Board of Managers when less than a majority of the Managers have been
elected by the Participants;
(d) any other action requiring Participant approval under the Investment Com-
pany Act of 1940, as amended, or by the Rules and Regulations of Fund B.
In addition to these rights, during accumulation, Participants have an ongoing
right to contribute to or withdraw funds from the account, the right to name and
change the beneficiary, the right to select the annuity settlement option from
those described on pages 14 and 15, and the right to select the date that
payments shall commence. However, the section entitled "Federal Tax Status" on
pages 19-22 should be reviewed for the effect and requirements of current law on
this election.
After a Participant's account has been annuitized, annuitants continue to
have the right to vote on any issue which may be voted on by Participants, as
listed above. After the death of an annuitant, the voting rights of a contingent
payee under a Survivorship Annuity (see page 15) are the same as the annuitant
had. Under some annuity options, all rights under the contract may terminate at
the death of the annuitant.
Each Fund B Participant under a Group Contract may cast one vote for each
Accumulation Unit credited to his account or accounts under such contract. (See
Accumulation Units,
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pages 16-17). Each variable Annuitant who is receiving variable annuity payments
under a Group Contract may cast that number of votes equal to (i) the dollar
amount of the assets established in Fund B to meet the annuity obligation
relating to such Annuitant divided by (ii) the value of one Accumulation Unit,
determined in each case as of the valuation date next preceding the Fund B
Participant record date. Fractional votes shall be counted. During the annuity
period, the number of votes will generally decrease. This occurs because the
Annuitant has voting interests attributable to the reserves during the pay-out
period.
The Board of Managers may fix a Fund B Participant record date, not more
than 90 days before the date set for any meeting of Fund B Participants, for the
purpose of determining the Fund B Participants entitled to notice of and to vote
at such meeting, and the number of votes each Fund B Participant may cast. If
the Board of Managers does not fix a Fund B Participant record date, the record
date shall be the 90th day before the date of the meeting.
For a description of AUL's right to change the provisions of the contracts,
see the Section entitled "Amendments."
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ANNUITY PERIOD
- --------------------------------------------------------------------------------
VARIABLE RETIREMENT ANNUITY. Each Participant has an Annuity Commencement
Date (see Definitions) and selects a variable annuity settlement except that in
a 457 Program the Employer shall make the election. Group Contracts provide the
five optional variable annuity settlements described hereinafter. Within limits,
other options may be mutually agreed to between the Participant and AUL. For
403(b), 408 and 457 Programs, the automatic option shall be an annuity payable
during the lifetime of the Annuitant with payments certain for 120 months. For
use with an Employee Benefit Plan, the automatic option shall be an annuity
payable during the lifetime of the Annuitant with payments certain for 120
months or, for a married Annuitant, a joint and survivor annuity. Once annuity
payments have commenced, a Participant cannot surrender his annuity and receive
a lump-sum settlement in lieu thereof. If, under any option, monthly payments
are less than $20 each, AUL has the right to make larger payments at quarterly
or semi-annual intervals. AUL will not allow annuitization of a Participant's
account if the total value is less than $2,000. Should this occur, a Participant
may elect either a lump-sum settlement or may choose to receive the account
balance in installments over a period of 36 months. Participants should
carefully review the following settlement options with their financial or tax
advisers since a settlement option cannot be changed after receipt of the first
payment under that option.
The method of determining the amount of the payments under any option
selected is described under "Amount of Variable Retirement Annuity" on pages
15-16.
OPTIONAL VARIABLE ANNUITY SETTLEMENTS.
OPTION 1 - LIFE ANNUITY. An annuity payable monthly during the lifetime of
the Annuitant which ends with the last monthly payment before the death of
the Annuitant. This option offers the maximum level of monthly payments
since there is no guarantee of a minimum number of payments or provision
for a death benefit for beneficiaries. However, under this option it is
possible that the Annuitant would receive only one annuity payment if he
died prior to the due date of the second annuity payment, two if he died
prior to the third annuity payment, and so forth.
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<PAGE>
OPTION 2 - CERTAIN AND LIFE ANNUITY. An annuity payable monthly during the
lifetime of the Annuitant with the promise that if, at the death of the
Annuitant, payments have been made for less than a stated period, which may
be five, ten, fifteen, or twenty years as elected, annuity payments will be
continued during the remainder of such period to the beneficiary designated
by the Annuitant.
OPTION 3 - SURVIVORSHIP ANNUITY. An annuity payable monthly during the
lifetime of the Annuitant and after the death of the Annuitant, an amount
equal to 50%, 66 2/3% or 100% (as specified in the election) of such
annuity will be paid to the contingent Annuitant named in the election if
and so long as such contingent Annuitant lives. An election of this option
is automatically cancelled if either the Participant or the contingent
Annuitant dies prior to the Annuity Commencement Date.
OPTION 4 - UNIT REFUND LIFE ANNUITY. An annuity payable monthly during the
lifetime of the Annuitant, terminating with the last payment due prior to
the death of the Annuitant, provided that, at the death of the Annuitant,
the beneficiary designated by the Annuitant will receive an additional
payment of the then dollar value of a number of Annuity Units (described
below) equal to the excess, if any, of (a) over (b) where (a) is the total
amount applied under the option divided by the Annuity Unit value at the
date annuity payments commence and (b) is the number of Annuity Units
represented by each monthly payment multiplied by the number of monthly
payments made. An illustration of this Settlement Option can be found in
the Statement of Additional Information on page 6.
OPTION 5 - FIXED PERIODS. An annuity payable monthly for a fixed period
(not to exceed 30 years) as elected, with the guarantee that if, at the
death of the Annuitant, payments have been made for less than the
contracted fixed period, annuity payments will be continued during the
remainder of said period to the beneficiary designated by the Annuitant.
THE ANNUITY UNIT. The value of an Annuity Unit was established at $1 on
April 3, 1969. The value of the Annuity Unit at the end of any current Valuation
Period is determined by multiplying the value of an Annuity Unit at the end of
the next preceding Valuation Period by the product of (a) the Net Investment
Factor (see page 17) for the current Valuation Period and (b) 0.9999058 for each
calendar day in such current Valuation Period. This daily factor neutralizes the
assumed net investment rate of 3 1/2% per annum built into the annuity tables
contained in the Group Contracts, which assumed rate is not applicable as actual
net investment result is credited instead.
The objective of a variable annuity contract is to provide level payments
during periods when the securities market is relatively stable and to reflect as
increased payments only investment results in excess of the 3 1/2% assumption.
The achievement of this objective will depend in part upon the validity of the 3
1/2% assumption. A higher assumption would mean a higher initial payment but a
more slowly rising series of subsequent payments (or a more rapidly falling
series of subsequent payments in a period when unit values are declining). A
lower assumption would have the opposite effect. If the actual net investment
rate is at the annual rate of 3 1/2%, the annuity payments will be level. There
can be no assurance that the net investment rate will be as high as 3 1/2%.
AMOUNT OF VARIABLE RETIREMENT ANNUITY. Except for certain Employee Benefit
Plans, the Group Contracts contain tables (1951 Group Annuity Table, projected
to 1967 by scale C) indicating the dollar amount of the first monthly payment
under each optional annuity settlement for each $1,000 of value of the
Participant's Individual
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<PAGE>
Account and the vested portion, if any, of the Employer's Participant Account
for such Participant applied under the option, less any applicable premium taxes
not previously deducted.
The first monthly payment varies according to the form of annuity selected
(see the descriptions above) and the adjusted age of the Annuitant. The amount
of the first monthly annuity payment is divided by the value of an Annuity Unit
at the valuation next following the eighteenth day of the month prior to the
Participant's Annuity Commencement Date to determine the number of Annuity Units
on which subsequent payments are based. The amount of each monthly payment after
the first will be equal to the number of Annuity Units multiplied by the value
of an Annuity Unit at the valuation next following the eighteenth day of the
month prior to the month in which the payment is due. An illustration of this
calculation can be found in the Statement of Additional Information on page 6.
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RETURN OF ACCUMULATED VALUE
IN THE EVENT OF DEATH
- --------------------------------------------------------------------------------
If the death of a Participant occurs prior to his Annuity Commencement
Date, the value as of the end of the Valuation Period in which due proof of
death is received by AUL will be paid to his designated beneficiary. This amount
will be equal to (i) such Participant's Individual Account under the 403(b)
Program, 408 Program or an HR-10 Plan, or (ii) such Participant's Individual
Account plus the vested portion, if any, of the Employer's Participant Account
for such Participant under an Employee Benefit Plan other than an HR-10 Plan, or
(iii) the sum of (i) and (ii) if both are applicable. Such amount will be paid
to the beneficiary in a single sum or under one of the Optional Variable
Settlements, as directed by the Participant or as elected by the beneficiary.
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PURCHASES AND CONTRACT VALUES
- --------------------------------------------------------------------------------
PURCHASE LIMITS. With respect only to Group Contracts for use with 403(b),
408, and 457 Programs, the minimum payment for the purchase of a variable
annuity that may be made by or for the benefit of a Participant is $120 or $300
annually, depending on the type of contract selected. With respect to 408
Programs, the maximum payment is, under current federal law, $2,000 for each
Participant per year (except that for Simplified Employee Pension Plans, the
limit may be the lesser of $22,500 or 15% of earned income.) There is no minimum
with respect to Employee Benefit Plans. The $2,000 maximum payment described
above may be reduced if either the Participant or his spouse is an active
participant in a qualified retirement or tax deferred annuity plan.
ACCUMULATION UNITS. During the Accumulation Period, (the period before
annuity payments begin), the Net Payments for any Participant are credited as of
the end of the Valuation Period in which any such payment is received by AUL for
the account of such Participant, in the case of 403(b) Programs, 408 Programs,
457 Programs and HR-10 Plans, and for the accounts both of the Participant and
the employer in the case of Employee Benefit Plans other than HR-10 Plans. Such
credit is made and the account of such Participant or employer, as
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<PAGE>
the case may be, is kept on the basis of Accumulation Units. The number of
Accumulation Units credited at any time to an account is determined by dividing
the dollar amount to be credited by the value of an Accumulation Unit at the end
of the Valuation Period in which the amount to be credited is received by AUL. A
payment shall be received by AUL at such time as AUL has received the payment,
and, if applicable, proper instructions from an employer or other contractholder
regarding the allocation of the payments among Participants. The number of
Accumulation Units credited to the account shall not be changed by any
subsequent change in the value of an Accumulation Unit, but the dollar value of
an Accumulation Unit may vary from valuation to valuation depending upon the
investment experience of Fund B.
VALUE OF ACCUMULATION UNIT. The value of an Accumulation Unit was
established at $1 on April 3, 1969. The value of an Accumulation Unit at the end
of a specific Valuation Period is determined by multiplying the value of an
Accumulation Unit at the end of the immediately preceding Valuation Period by
the Net Investment Factor for such specific Valuation Period.
The value of an Accumulation Unit will vary and is directly affected by the
market value and performance of portfolio securities, expenses and the deduction
of the charges described on pages 11 and 12.
NET INVESTMENT FACTOR. At each valuation of Fund B a gross investment rate
for the Valuation Period then ended is determined from the investment
performance of Fund B during the Valuation Period. Such gross rate is (i) 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
applicable taxes and less expenses of Fund B which are not the contractual
liabilities of AUL divided by (ii) the value of the assets of Fund B at the
beginning of such Valuation Period. The gross investment rate may be positive or
negative.
The net investment rate for the Valuation Period is then determined by
deducting from the gross investment rate the percentage which reflects the fee
payable to AUL for providing investment management services and for mortality
risk and expense risk charges. The daily fee is .00328% of the value of the
assets of Fund B (approximately 1.2% on an annual basis).
The Net Investment Factor for the Valuation Period is the sum of 1.0000000
plus the net investment rate for the period.
The net investment rate may be negative if the combined capital losses and
deduction for taxes and expenses exceed the investment income and capital gains.
Thus, the Net Investment Factor may be less than 1.0000000, and the value of an
Accumulation Unit at the end of a Valuation Period may be less than the value
for the previous Valuation Period.
An example of valuation of assets and the determination of the Net
Investment Factor can be found in the Statement of Additional Information on
page 6.
VALUATION OF ASSETS. The value of the assets in Fund B at the end of any
Valuation Period shall be the aggregate of the following:
(a) the face amount of cash; plus
(b) when market quotations are readily available with respect to
securities, the total market value of such securities, valued at the
closing prices on that day for securities traded on national
securities exchanges, and at the bid prices quoted that day for
over-the-counter securities or last sale prices for NASDAQ quoted
securities; plus
(c) when market quotations are not readily available, or when restricted
securities or
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<PAGE>
other assets are being valued, the fair value of such securities or
other assets as determined in good faith by the Board of Managers; and
minus
(d) liabilities of Fund B other than contract liabilities.
Valuation of assets will occur once each business day, Monday through
Friday, as of the close of trading on the New York Stock Exchange, usually at or
about 4 p.m., eastern standard time ("EST"). The determination may be made
earlier than 4 p.m. EST if the markets close earlier than 4 p.m. EST and it is
possible to determine the net asset value at that time. Net asset value will not
be determined on days that the New York Stock Exchange is closed, on any federal
holidays or on days when AUL is not open for business. Traditionally, in
addition to federal holidays, AUL is not open for business on the day after
Thanksgiving and either the day before or the day after Christmas or
Independence Day.
Any change in the method of valuation must be approved by the Board of
Managers.
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REDEMPTIONS
- --------------------------------------------------------------------------------
REDEMPTION (WITHDRAWAL). During the Accumulation Period and in accordance
with the applicable provisions of the Employee Benefit Plan or 457 plan
document, if any, a Participant or 457 Employer may elect at any time to
withdraw a portion or all of his individual account, except as described below.
If the amount of any withdrawal by a Participant reduces his individual account
below $500, his entire account must be withdrawn. In such event, AUL shall have
the right to refuse to accept future payments by or for the benefit of such
Participant, unless an account is being maintained for such Participant under
the Companion Contract. The amount received by a Participant upon withdrawal of
his entire account may be more or less than the original cost, depending on the
value of the securities in the portfolio and other assets of Fund B at the time
of the withdrawal. Withdrawal is effected by sending a written application for
withdrawal to American United Life Insurance Company(R), P.O. Box 368,
Indianapolis, IN 46206-0368. The Participant's account will be valued on the
basis of the valuation of Fund B at the end of the Valuation Period during which
the request was received by AUL. AUL will pay in cash the portion so requested
to be withdrawn from the Participant's Individual Account. Payment of the
withdrawal value will be made within seven days after receipt of such request,
except that payment may be postponed whenever (i) the New York Stock Exchange is
closed (other than customary weekend and holiday closings), (ii) the Securities
and Exchange Commission permits postponement and so orders, or (iii) an
emergency exists, or trading on such Exchange is restricted, as defined by the
Securities and Exchange Commission, so that the valuation of assets or disposal
of securities is not reasonably practicable. See Federal Tax Status, pages
19-22, for a discussion of possible tax consequences on withdrawal.
Amounts withdrawn may not be reinvested without payment of a sales and
administrative service charge.
CONSTRAINTS ON DISTRIBUTIONS FROM SECTION 403(B) ANNUITY CONTRACTS. Section
403(b) of the Code requires that distribution from Section 403(b) tax-deferred
annuities that are attributable to employee contributions under a salary
reduction agreement not begin before the employee reaches age 59 1/2, separates
from service, dies, becomes disabled, or incurs a hardship. Furthermore,
distributions of income attributable to such contributions may not be made on
account of
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<PAGE>
hardship. Hardship, for this purpose, is generally defined as an immediate and
heavy financial need, such as paying medical expenses, the purchase of a
principal residence, or paying certain tuition expenses.
Therefore, a Participant in an annuity purchased as a tax-deferred 403(b)
annuity contract will not be entitled to exercise the right of withdrawal, as
described in this prospectus, in order to receive the value of his account
attributable to elective contributions credited after December 31, 1988 or that
portion of his account attributable to increases in the value of the December
31, 1988 balance unless one of the above-described conditions has been
satisfied. A Participant's account may be able to be transferred to certain
other investment alternatives meeting the requirements of Section 403(b) that
are available under an employer's 403(b) arrangement. See "Federal Tax Status",
pages 19-22 for a discussion of the tax consequences of such distributions.
RIGHT OF CANCELLATION. A contractholder may cancel the contract no later
than ten days after receiving it by returning it along with a written notice of
cancellation to the Company at its Home Office. AUL will refund contributions
not later than seven days after it receives such contract and such notice at its
Home Office. Unless applicable state law requires a refund of purchase payments,
AUL will refund the purchase payments (contributions) plus any increase or minus
any decrease in the value attributable to the market performance during the time
such funds were invested in Fund B.
TEXAS OPTIONAL RETIREMENT PROGRAM. A contract sold to a Participant of the
Texas Optional Retirement Program may not be redeemed except upon termination of
employment in all Texas public institutions of public education, retirement,
death or total disability of such Participant. However, if the termination
should occur before the commencement of a second year of employment, the
Participant would not receive that portion of his account attributable to
contributions made on his behalf by his employer other than under the terms of a
salary reduction agreement.
The tax consequences of redemptions and withdrawals should be carefully
reviewed by a Participant's tax adviser before such action is taken. The Section
entitled "Federal Tax Status" below should also be reviewed.
However, this does not purport to be a complete treatment of the subject
and is intended only to highlight certain important features of the tax laws.
<PAGE>
20
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FEDERAL TAX STATUS
- --------------------------------------------------------------------------------
INTRODUCTION
The Contracts described in this Prospectus are designed for use by
Employer, association, and other group retirement plans under the provisions of
Sections 401, 403, 408, and 457 of the Internal Revenue Code ("Code"). The
ultimate effect of Federal income taxes on values under a Contract, the
Participant's Account, on annuity payments, and on the economic benefits to the
Owner, the Participant, the Annuitant, and the Beneficiary or other payee may
depend upon the type of Plan for which the Contract is purchased and a number of
different factors. The discussion contained herein and in the Statement of
Additional Information is general in nature. It is based upon AUL's
understanding of the present Federal income tax laws as currently interpreted by
the Internal Revenue Service ("IRS"), and is not intended as tax advice. No
representation is made
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<PAGE>
regarding the likelihood of continuation of the present Federal income tax laws
or of the current interpretations by the IRS. Moreover, no attempt is made to
consider any applicable state or other laws. Because of the inherent complexity
of such laws and the fact that tax results will vary according to the particular
circumstances of the Plan or individual involved, any person contemplating the
purchase of a Contract, or becoming a Participant under a Contract, or receiving
annuity payments under a Contract should consult a qualified tax adviser.
AUL DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS, FEDERAL, STATE, OR
LOCAL, OF ANY CONTRACT OR PARTICIPANT'S ACCOUNT OR ANY TRANSACTION INVOLVING THE
CONTRACTS.
TAX STATUS OF THE COMPANY AND THE VARIABLE ACCOUNT
AUL is taxed as a life insurance company under Part I, Subchapter L of the
Code. The operations of Fund B will form a part of, and be taxed with, the
operations of AUL and therefore Fund B is not taxed as a "regulated investment
company" under the Code.
TAX TREATMENT OF RETIREMENT PROGRAMS
The Contracts described in this Prospectus are offered for use with several
types of retirement programs as described above. The tax rules applicable to
Participants in such retirement programs vary according to the type of
retirement plan and its terms and conditions. Therefore, no attempt is made
herein to provide more than general information about the use of the Contracts
with the various types of retirement programs. Participants under such programs,
as well as Owners, Annuitants, Beneficiaries and other payees are cautioned that
the rights of any person to any benefits under these programs may be subject to
the terms and conditions of the Plans themselves, regardless of the terms and
conditions of the Contracts issued in connection therewith.
Generally, no taxes are imposed on the increases in the value of a Contract
by reason of investment experience until a distribution occurs, either as a
lump-sum payment or annuity payments under an elected Annuity Option or in the
form of cash withdrawals, surrenders, or other distributions prior to the
Annuity Commencement Date.
When annuity payments commence (as opposed to a lump-sum distribution),
under Section 72 of the Code, the portion of each payment attributable to
contributions that were taxable to the Participant in the year made, if any, is
excluded from gross income as a return of the Participant's investment. The
portion so excluded is determined at the time the payments commence by dividing
the Participant's investment in the Contract by the expected return. The
periodic payments in excess of this amount are taxable as ordinary income. Once
the participant's investment has been recovered, the full annuity payment will
be taxable. If the annuity should stop before the investment has been received,
the unrecovered portion is deductible on the Annuitant's final return. If the
Participant made no contributions that were taxable to the Participant in the
year made there would be no portion excludable.
The amounts that may be contributed to the Plans are subject to limitations
that may vary depending on the type of Plan. In addition, early distributions
from most Plans may be subject to penalty taxes, or in the case of distributions
of amounts contributed under salary reduction agreements, could cause the Plan
to be disqualified. Furthermore, distributions from most Plans are subject to
certain minimum distribution rules.
20
<PAGE>
Failure to comply with these rules could result in disqualification of the plan
or subject the Participant to penalty taxes. As a result, the minimum
distribution rules could limit the availability of certain Annuity Options to
Participants and their Beneficiaries.
Below are brief descriptions of various types of retirement programs and
the use of the Contracts in connection therewith.
EMPLOYEE BENEFIT PLANS
Code Section 401 permits business employers and certain associations to
establish various types of retirement plans for employees. Such retirement plans
may permit the purchase of Contracts to provide benefits thereunder.
If a Participant under an Employee Benefit Plan receives a lump-sum
distribution, the portion of the distribution equal to any contribution that was
taxable to the Participant in the year when paid is received tax free. The
balance of the distribution will be treated as ordinary income. Special
five-year forward averaging provisions under Code Section 402 may be utilized on
any amount subject to ordinary income tax treatment, provided that the
Participant has reached age 59 1/2, has not previously elected forward averaging
for a distribution from any Employee Benefit Plan after reaching age 59 1/2, and
has not rolled over a partial distribution from a similar plan into an
individual retirement account or annuity. Special ten-year averaging and a
capital-gains election may be available to a Participant who reached age 50
before 1986.
403(B) PROGRAMS
Code Section 403(b) permits public school systems and certain types of
charitable, educational, and scientific organizations specified in Code Section
501(c)(3) to purchase annuity contracts on behalf of their employees, and,
subject to certain limitations, allows employees of those organizations to
exclude the amount of contributions from gross income for Federal income tax
purposes.
If a Participant under a 403(b) Program makes a surrender or partial
withdrawal from the Participant's Account, the Participant will realize income
taxable at ordinary tax rates on the full amount received. See "Constraints on
Distributions from Section 403(b) Annuity Contracts." Since, under a 403(b)
Program, contributions are excludable from the taxable income of the employee,
the full amount received will usually be taxable as ordinary income when annuity
payments commence.
408 PROGRAMS
Code Sections 219 and 408 permit eligible individuals to contribute to an
individual retirement program, including Simplified Employee Pension Plans and
Employer/Association Established Individual Retirement Account Trusts, known as
an Individual Retirement Account ("IRA"). These IRA accounts are subject to
limitations on the amount that may be contributed, the persons who may be
eligible, and on the time when distributions may commence. In addition, certain
distributions from some other types of retirement plans may be placed on a
tax-deferred basis in an IRA. Sale of the Contracts for use with IRA's may be
subject to special requirements imposed by the Internal Revenue Service.
Purchasers of the Contracts for such purposes will be provided with such
supplementary information as may be required by the Internal Revenue Service or
other appropriate agency, and will have the right to revoke the Contract under
certain circumstances.
If a Participant under a 408 Program makes a surrender or partial
withdrawal from the Participant's Account, the Participant will realize income
taxable at ordinary tax rates on the full amount received. Since under a 408
Program, contribu-
21
<PAGE>
tions are deductible from the taxable income of the employee, the full amount
received will usually be taxable as ordinary income when annuity payments
commence.
457 PROGRAMS
Section 457 of the Code permits employees of state and local governments
and units and agencies of state and local governments as well as tax-exempt
organizations described in Section 501(c)(3) of the Code to defer a portion of
their compensation without paying current taxes. The employees must be
Participants in an eligible deferred compensation plan.
If the Employer sponsoring a 457 Program requests and receives a withdrawal
for an eligible employee in connection with a 457 Program, then the amount
received by the employee will be taxed as ordinary income. Since under a 457
Program, contributions are excludable from the taxable income of the employee,
the full amount received will be taxable when annuity payments commence or other
distribution is made.
TAX PENALTY
Any distribution made to a Participant from an Employee Benefit Plan, a 408
Program or a 403(b) Program other than on account of one or more of the
following events will be subject to a 10% penalty tax on the amount includible
in gross income:
(a) the Participant has attained age 59 1/2;
(b) the Participant has died; or
(c) the Participant is disabled.
In addition, a distribution from an Employee Benefit Plan or 403(b) Program
will not be subject to a 10% excise tax on the amount distributed if the
Participant is 55 and has separated from service. Distributions that are made as
a part of a series of substantially equal periodic payments over the life of a
Participant where payment is made at least annually will not be subject to an
excise tax. Certain amounts paid for medial care also may not be subject to an
excise tax.
WITHHOLDING
Distributions from an Employee Benefit Plan under Code Section 401(a) or a
403(b) Program to an employee, surviving spouse, or former spouse who is an
alternate payee under a qualified domestic relations order, in the form of a
lump-sum settlement or periodic annuity payments for a fixed period of fewer
than 10 years are subject to mandatory federal income tax withholding of 20% of
the taxable amount of the distribution, unless the distributee directs the
transfer of such amounts to another Employee Benefit Plan or 403(b) Program or
to an Individual Retirement Account under Code Section 408. The taxable amount
is the amount of the distribution, less the amount allocable to after-tax
contributions.
All other types of distributions from Employee Benefit Plans and 403(b)
Programs, and all distributions from Individual Retirement Accounts, are subject
to federal Income tax withholding on the taxable amount unless the distributee
elects not to have the withholding apply. The amount withheld is based on the
type of distribution. Federal tax will be withheld from annuity payments (other
than those subject to mandatory 20% withholding) pursuant to the recipient's
withholding certificate. If no withholding certificate is filed with AUL, tax
will be withheld on the basis that the payee is married with three withholding
exemptions. Tax on all surrenders and lump-sum distributions from Individual
Retirement Accounts will be withheld at a flat 10% rate.
Withholding on annuity payments and other distributions from the Contract
will be made in accordance with regulations of the Internal Revenue Service.
22
<PAGE>
- --------------------------------------------------------------------------------
YEAR 2000 ISSUES AND READINESS
- --------------------------------------------------------------------------------
In recent years, the Year 2000 problem has received extensive publicity.
The problem arises because most computer systems and programs were written with
dates expressed as a 2 digit code. Unless steps are taken, on January 1, 2000,
many systems may read the year "2000" as "1900" and date-related computations
either would not be processed or would be processed incorrectly. This could have
a material and adverse effect on financial institutions such as banks and
insurance companies like AUL. To prevent this, AUL began assessing the potential
impact in early 1996 and adopted a detailed written work plan in June, 1997 to
deal with Year 2000 issues.
Due to the complexity of this issue and the ever-increasing
interrelationships of computer systems in the United States, it would be
extremely difficult for any company to state that it has or will achieve
complete Year 2000 compliance or to guarantee that its systems will not be
affected in any way on January 1, 2000. However, AUL currently believes that all
critical computer systems and software (those systems or software, which would
cause great disruption to the Company if they were inoperable for any length of
time or if they were to generate erroneous data) will, before January 1, 2000,
be Year 2000 compliant. Although AUL has no reason to believe that these steps
will not be sufficient to avoid any material adverse impact from Year 2000
issues and is addressing its Year 2000 issues by using both internal staff and
external consultants, by replacing hardware, operating systems, and application
software, and by remediating current application software, there can be no
assurance that the Company's efforts will be sufficient to avoid any adverse
impact. This project is currently expected to require more than 285,000 hours of
labor at a cost of approximately $17,000,000, which will be expensed against
current operating funds.
As a part of its plan, the Company has surveyed its primary service
providers to be sure that such providers have taken steps to address the Year
2000 issues. AUL will continue to periodically monitor the status of all service
providers' Year 2000 efforts.
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
There are no legal proceedings pending which would materially affect Fund B.
23
<PAGE>
- --------------------------------------------------------------------------------
HISTORICAL RECORD
- --------------------------------------------------------------------------------
The value of an Accumulation Unit was established at $1.00 with the initial
payment being received on August 8, 1969. The following is a historical record
of quarterly values of an Accumulation Unit to December 31, 1997.
<TABLE>
<S> <C>
Date Value
Aug. 8, 1969 1.000
Sept. 30, 1969 1.032
Dec. 31, 1969 1.086
Mar. 31, 1970 1.075
June 30, 1970 .863
Sept. 30, 1970 1.027
Dec. 31, 1970 1.142
Mar. 31, 1971 1.261
June 30, 1971 1.218
Sept. 30, 1971 1.214
Dec. 31, 1971 1.278
Mar. 31, 1972 1.321
June 30, 1972 1.333
Sept. 30, 1972 1.364
Dec. 31, 1972 1.471
Mar. 31, 1973 1.337
June 30, 1973 1.210
Sept. 30, 1973 1.338
Dec. 31, 1973 1.115
Mar. 31, 1974 1.116
June 30, 1974 1.012
Sept. 30, 1974 .737
Dec. 31, 1974 .815
Mar. 31, 1975 1.015
June 30, 1975 1.167
Sept. 30, 1975 1.000
Dec. 31, 1975 1.102
Mar. 31, 1976 1.244
June 30, 1976 1.280
Sept. 30, 1976 1.333
Dec. 31, 1976 1.353
Mar. 31, 1977 1.230
June 30, 1977 1.262
Sept. 30, 1977 1.250
Dec. 31, 1977 1.248
Mar. 31, 1978 1.168
June 30, 1978 1.298
Sept. 30, 1978 1.396
Dec. 31, 1978 1.313
Mar. 31, 1979 1.366
June 30, 1979 1.397
Sept. 30, 1979 1.488
Dec. 31, 1979 1.450
Mar. 31, 1980 1.356
June 30, 1980 1.521
Sept. 30, 1980 1.558
Dec. 31, 1980 1.663
Mar. 31, 1981 1.667
June 30, 1981 1.636
Sept. 30, 1981 1.438
Dec. 31, 1981 1.550
Mar. 31, 1982 1.519
June 30, 1982 1.513
Sept. 30, 1982 1.679
Dec. 31, 1982 1.943
Mar. 31, 1983 2.079
June 30, 1983 2.242
Sept. 30, 1983 2.241
Dec. 31, 1983 2.270
Mar. 31, 1984 2.214
June 30, 1984 2.149
Sept. 30, 1984 2.278
Dec. 31, 1984 2.336
Mar. 31, 1985 2.514
June 30, 1985 2.720
Sept. 30, 1985 2.624
Dec. 31, 1985 3.015
Mar. 31, 1986 3.505
June 30, 1986 3.581
Sept. 30, 1986 3.384
Dec. 31, 1986 3.553
Mar. 31, 1987 4.240
June 30, 1987 4.432
Sept. 30, 1987 4.735
Dec. 31, 1987 3.772
Mar. 31, 1988 3.904
June 30, 1988 4.173
Sept. 30, 1988 4.125
Dec. 31, 1988 4.194
Mar. 31, 1989 4.403
June 30, 1989 4.720
Sept. 30, 1989 5.086
Dec. 31, 1989 5.232
Mar. 31, 1990 5.144
June 30, 1990 5.341
Sept. 30, 1990 4.596
Dec. 31, 1990 4.980
Mar. 31, 1991 5.816
June 30, 1991 5.969
Sept. 30, 1991 6.034
Dec. 31, 1991 6.205
Mar. 31, 1992 6.388
June 30, 1992 6.435
Sept. 30, 1992 6.389
Dec. 31, 1992 6.786
Mar. 31, 1993 7.232
June 30, 1993 7.252
Sept. 30, 1993 7.570
Dec. 31, 1993 8.099
Mar. 31, 1994 8.095
June 30, 1994 7.927
Sept. 30, 1994 8.363
Dec. 31, 1994 8.263
Mar. 31, 1995 8.537
June 30, 1995 9.235
Sept. 30. 1995 9.765
Dec. 31, 1995 9.914
Mar. 31, 1996 10.293
June 30, 1996 10.728
Sept. 30, 1996 11.186
Dec. 31, 1996 11.774
Mar. 31, 1997 11.981
June 30, 1997 13.788
Sept. 30, 1997 15.344
Dec. 31, 1997 15.307
</TABLE>
25
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS FOR THE
STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Financial statements and other information relating to Fund B and American
United Life Insurance Company(R) may be found in the Statement of Additional
Information. To obtain a copy of the current Statement of Additional
Information, mail the Business Reply Mail card included in this Prospectus to
AUL. Postage has been prepaid for your convenience. This card may also be used
for inquiries regarding AUL or Fund B.
The Table of Contents for the Statement of Additional Information follows.
<TABLE>
<CAPTION>
Location in
Statement of
Additional
Information
<S> <C>
Cover Page.................................................. 1
Table of Contents........................................... 2
General Information and History............................. 3
Investment Objectives and Policies.......................... 3
Management of Fund B........................................ 3-4
Investment Advisory and Other Services...................... 4-5
Brokerage................................................... 5
Purchase and Pricing of Securities Being Offered............ 5
Underwriters................................................ 6
Annuity Payments and Other Calculations..................... 6
Financial Statements of Fund B.............................. 7-13
Financial Statements of AUL................................. 14-24
</TABLE>
<PAGE>
25
================================================================================
No dealer, salesman or any other person is authorized by Fund B or by AUL
to give any information or to make any representation other than as
contained in this Prospectus in connection with the offering described
herein.
There has been filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, with
respect to the offering herein described. For further information with
respect to Fund B, AUL and its variable annuities, reference is made
thereto and the exhibits filed therewith or incorporated therein, which
include all contracts or documents referred to herein.
================================================================================
AMERICAN UNITED LIFE
POOLED EQUITY FUND B
Group Variable Annuity Contracts
Sold By
AMERICAN UNITED
LIFE INSURANCE COMPANY(R)
One American Square
Indianapolis, Indiana 46282
PROSPECTUS
Dated: May 1, 1998
================================================================================
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
American United Life Pooled Equity Fund B
Group Variable Annuity Contracts
Sold By
American United Life Insurance Company(R)
One American Square
Indianapolis, Indiana 46282
(317) 263-1877
(Fund B Logo)
This Statement of Additional Information is not a Prospectus and should
be read in conjunction with the current Prospectus for American United
Life Pooled Equity Fund B dated May 1, 1998.
A Prospectus is available upon request by mailing the Business Reply Mail
card included in this Statement of Additional Information to AUL. Postage
has been prepaid for your convenience.
The date of this Statement of Additional Information is May 1, 1998.
<PAGE>
(This page left intentionally blank.)
<PAGE>
<TABLE>
<CAPTION>
Table of Contents for the
Statement of Additional Information
Location in Cross
Statement of Reference
Additional to Location in
Information Prospectus
<S> <C> <C>
Cover Page.................................................................................... 1 -
Table of Contents............................................................................. 2 25
General Information and History............................................................... 3 8
Investment Objectives and Policies............................................................ 3 8-10
Management of Fund B.......................................................................... 3-4 10
Investment Advisory and Other Services........................................................ 4-5 11
Brokerage..................................................................................... 5 -
Purchase and Pricing of Securities Being Offered.............................................. 5 16-18
Underwriters.................................................................................. 6 -
Annuity Payments and Other Calculations....................................................... 6 14-18
Financial Statements of Fund B................................................................ 7-13 -
Financial Statements of AUL................................................................... 14-24 -
</TABLE>
<PAGE>
(This page left intentionally blank.)
<PAGE>
3
GENERAL INFORMATION AND HISTORY
See page 8 of the Prospectus for a description of the history and
operations of both AUL and Fund B.
INVESTMENT OBJECTIVES AND POLICIES
See the Prospectus for the complete description of the Investment
Objectives and Policies of Fund B.
Fund B has no fixed policy as to timing or amount of sales or purchase of
securities. Fund B does not engage in trading on a short-term basis. However,
occasionally Fund B may sell investments which have been held for only a short
period of time when it is deemed necessary to achieve the long-range objectives
of Fund B. While no specific prediction regarding turnover of securities may be
made, it is not contemplated that annual turnover of securities in the portfolio
under normal circumstances will be in excess of 50%. Portfolio turnover during
the last 10 years is itemized in the Condensed Financial Information in the
Prospectus.
MANAGEMENT OF FUND B
Fund B is managed by a Board of Managers, consisting of five members who
were initially appointed by AUL. The Board has adopted Rules and Regulations for
Fund B. Commencing with the first Annual Meeting of Fund B Participants on May
8, 1970, and at each Annual Meeting of Fund B Participants until May 6, 1994,
successors to the members of the Board of Managers whose terms had expired were
elected to serve for terms of three (3) years and until their successors were
duly elected and qualified. At the Annual Meeting of Participants held on May 6,
1994, a proposal to amend the Rules and Regulations was approved by the
Participants. Under the proposal, as approved, an Annual Meeting of Fund B
Participants would not be held in any year when only routine matters were being
considered. The re-election of those Members of the Board of Managers who had
previously been elected by the Participants would be considered a routine matter
so long as a majority of the Board has previously been elected by Fund B
Participants. However, a Participants' meeting will be held whenever required by
Federal securities laws. On August 4, 1997, a Meeting of Participants was held
and the five managers named below were elected by the Participants to serve as
members of the Board of Managers of Fund B:
<TABLE>
<CAPTION>
Position with Present Position and Principal
Name Fund B Occupation During Last Five Years
- ---- ------ ---------------------------------
<S> <C> <C>
James W. Murphy* Chairman and Senior Vice President, Corporate Finance, AUL
Member
Ronald D. Anderson Member Professor, School of Business, Indiana University,
Indianapolis (8/88 to present)
Leslie Lenkowsky Member Professor, Indiana University Center of Philanthropy,
Indiana University, Indianapolis (9/97 to present)
President, Hudson Institute (6/90 to 9/97)
R. Stephen Radcliffe* Member Director and Executive Vice
President, AUL, (8/94 to present);
Sr. V.P., Chief Actuary, AUL,
(5/83 - 8/94)
James P. Shanahan* Member Senior Vice President, Pension Operations, AUL
(1/84 to 1/98)
- -----------------------------------------------------------------------------------------------------------------------------------
Richard A. Wacker* Secretary to the Associate General Counsel, AUL, (10/92 to present)
Board
<FN>
*Classified as an interested person under the Investment Company Act of 1940.
</FN>
</TABLE>
<PAGE>
4
REMUNERATION OF THE BOARD OF MANAGERS
Aggregate remuneration for all members of the Board of Managers and the
Secretary to the Board of Managers of Fund B for the year 1997 was as follows:
<TABLE>
<CAPTION>
Name of Individual or Capacities in Which Remuneration Aggregate
Identity of Group Will be Received Remuneration
----------------- ---------------- ------------
<S> <C> <C>
All members of the Board of Managers and As members of the Board of Managers $3,500*
the Secretary of Fund B, as a group or Secretary of Fund B
</TABLE>
*AUL has agreed to pay $1,500 per year, plus a $50 expense allowance per meeting
attended to each member of the Board of Managers of Fund B who is not also an
active employee of AUL and any member's out of state travel expenses incurred to
attend meetings of the Board of Managers. Active employees of AUL who serve Fund
B will not be additionally compensated by AUL for such services. It is not
estimated that any additional remuneration will be paid by either AUL or Fund B
to the members of the Board of Managers and the Secretary to the Board of
Managers of Fund B other than what AUL has so agreed to pay. It is estimated
that the aggregate remuneration for all members of the Board of Managers and the
Secretary to the Board of Managers of Fund B, as a group, for the current fiscal
year will not exceed $5,500.
INVESTMENT ADVISORY AND OTHER SERVICES
American United Life Insurance Company(R) is a Registered Investment
Adviser and as such provides investment advisory services to Fund B. A general
description of the business and organization of AUL can be found in the
Prospectus. Information regarding the computation of the advisory fee payable by
Fund B to AUL is described in the topic "Investment Management Services" in of
the Prospectus. For its services under the Investment Management Services
Agreement. AUL charged Fund B $40,319 in the year 1997, $37,854 in the year
1996, and $36,619 in 1995.
The following is a list of the Directors and senior officers of AUL.
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with AUL with Fund B
- ---- -------- ---------------------
<S> <C> <C>
John H. Barbre Senior Vice President None
Steven C. Beering M.D. Director None
William R. Brown General Counsel & Secretary;
Secretary, State Life Insurance Company None
Arthur L. Bryant Director; President, State Life Insurance Company None
James M. Cornelius Director None
James E. Dora Director None
Otto N. Frenzel III Director and Chairman of the Audit Committee None
David W. Goodrich Director None
William P. Johnson Director None
Scott A. Kincaid Senior Vice President None
Charles D. Lineback Senior Vice President None
James T. Morris Director None
James W. Murphy Senior Vice President Chairman and Member, Board
of Managers
Jerry L. Plummer Senior Vice President None
R. Stephen Radcliffe Director and Executive Vice President Member, Board of Managers
Thomas E. Reilly Jr. Director and Chairman of the Finance Committee, AUL None
William R. Riggs Director None
G. David Sapp Senior Vice President None
John C. Scully Director None
Jerry D. Semler Chairman of the Board, President, Chief Executive Officer None
and Chairman of the Executive Committee, AUL; Chairman of
the Board and Chief Executive Officer, State Life
Insurance Company
Yvonne H. Shaheen Director None
James P. Shanahan Senior Vice President (1/84 to 1/98) Member, Board of Managers
William L. Tindall Senior Vice President None
Frank D. Walker Director None
Gerald T. Walker Senior Vice President None
</TABLE>
<PAGE>
5
CUSTODIAL ARRANGEMENTS
Substantially all of the assets of Fund B are held by National City Bank,
Indiana, under a custodial agreement to which AUL, Fund B and such Bank are
parties.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One American Square, Indianapolis, Indiana,
serve as independent accountants for Fund B. Coopers & Lybrand L.L.P. provides
the following audit services for Fund B: audit of Fund B's annual financial
statements; review and consultation regarding filings with the Securities and
Exchange Commission; and consultation regarding financial accounting and
reporting matters. Coopers & Lybrand L.L.P. is not engaged to provide any
non-audit services nor do they have any direct or material indirect interest in
Fund B.
OTHER FEES RECEIVED BY AUL
AUL also receives compensation under the Sales and Administrative Services
Agreement for the services described in of the Prospectus. For these services,
during 1997, AUL charged Fund B $10,654. In the years 1996 and 1995, AUL charged
Fund B $23,406 and $17,995 respectively, under the terms of this Agreement.
AUL also assumes the risks that annuitants as a class will live longer than
estimated and that its expenses will exceed the fees received from Fund B as
described in the Prospectus. Total mortality and expense risk payments to AUL
were $120,956 in 1997, $113,562 in 1996, and $109,858 in 1995.
BROKERAGE
With respect to transactions in portfolio securities, whether through a
broker as agent or with a dealer as a principal, it is the policy of Fund B to
obtain the most favorable prices and execution of orders. AUL, as the investment
advisor, is responsible for the execution of this policy. However, AUL
investment personnel may be allowed to pay a broker a commission in excess of
that which another broker might charge for the same transaction if the executing
broker has provided AUL with statistical and factual information and services.
This type of information is customarily available only in return for brokerage
and under this type of arrangement, AUL customarily receives investment reports,
recommendations and analyses regarding individual companies, industries, and the
economy in general with regard to equity investing. Access to such information
is a commonly recognized way to keep abreast of information circulated generally
among institutional investors by broker-dealers. Research services furnished by
such brokers may be used by AUL in servicing any of its other separate accounts,
however, and not solely by or for the benefit of Fund B.
During 1997, 100% of the Fund B portfolio transactions constituting
brokerage commissions of $6,479 placed with broker-dealers providing such
information. For the years 1996 and 1995, brokerage commissions were paid to
such broker-dealers in the amounts of $8,355 and $9,707 respectively. While
this information is useful in varying degrees, it is of indeterminable value. No
portion of any commissions payable to a broker-dealer from the purchase or sale
of portfolio securities of Fund B will be surrendered to any other broker-dealer
who was not involved in the execution of such transactions. Brokerage
transactions and portfolio decisions for Fund B are made through the office of
G. David Sapp, AUL Senior Vice President, Investments.
Some securities considered for investment by the Fund's Portfolio may also
be appropriate for other accounts served by the Advisor, including the Adviser's
general account. If a purchase or sale of securities consistent with the
investment policies of the Portfolio and one or more of these accounts served by
the Adviser is considered at or about the same time, it is the policy of AUL not
to favor any one account or Portfolio over another, and any purchase or sale
orders executed contemporaneously are allocated at the average price and as
nearly as practicable on a pro rata basis in proportion to the amounts desired
to be purchased or sold by each account or portfolio. While it is conceivable
that in certain instances this procedure could adversely affect the price or
number of shares involved in a particular portfolio transaction, it is believed
that the procedure generally contributes to better overall execution of the
Fund's portfolio transactions. This allocation method and the results of such
allocations, are subject to periodic review by the Fund's Adviser and the Board
of Managers.
Fund B will use the third and over-the-counter markets whenever the best
prices and executions for securities can be obtained through such use, and it
intends to deal with the principal market makers in such transactions. It is
contemplated that a substantial majority of the transactions will involve
securities traded on national exchanges.
PURCHASE AND PRICING OF SECURITIES BEING OFFERED
Variable annuity contracts are sold by AUL through life insurance salesmen
who have been licensed by the state insurance departments and through certain of
its home office employees. Where state law so requires, such persons are also
licensed or registered as securities salesmen.
Accumulation Units are purchased with Net Payments or Contributions from
Participants as described in the Prospectus. There are no special purchase plans
or exchange privileges.
<PAGE>
6
UNDERWRITERS
The variable annuity contracts described in the Prospectus and in this
Statement of Additional Information are sold and underwritten on a continuous
basis by American United Life Insurance Company(R). Underwriting commissions
received by AUL from Fund B have been listed previously and identified as sales
and administrative services fees under "Other Fees Received by AUL" on page 5.
ANNUITY PAYMENTS AND OTHER CALCULATIONS
1. AMOUNT OF VARIABLE RETIREMENT ANNUITY
Assume a Participant at the date of retirement has credited to his
individual account 23,000 Accumulation Units, and that the value of an
Accumulation Unit at the valuation immediately following the eighteenth day of
the month preceding the Annuity Commencement Date was $2.649321, producing a
total value of his individual account of $60,934.38. Assume also that the
Participant elects an option for which the table in the Group Contract indicates
the first monthly payment is $6.83 per $1,000 of value applied; the
Participant's first monthly payment would thus be 60.93438 multiplied by $6.83
or $416.18.
Assume that the Annuity Unit value at the valuation immediately following
the eighteenth day of the month preceding the Annuity Commencement Date was
$1.324655. When this is divided into the first monthly payment, the number of
Annuity Units represented by that payment is determined to be 314.179919. The
value of this same number of Annuity Units will be paid in each subsequent
month.
To illustrate the calculation of the amount of the payment due in any
subsequent month, assume further that the value of an Annuity Unit at the
valuation immediately following the eighteenth day of the month previous to the
month in which the payment is due is $1.327020. The payment for that month is
then calculated by multiplying the number of Annuity Units (314.179919) by the
Annuity Unit value ($1.327020) which produces a payment of $416.92.
2. VALUATION OF ASSETS AND DETERMINATION OF NET INVESTMENT FACTOR
Assume a Valuation Period of one day's duration at the beginning of which
the value of the assets of Fund B was $10,000,000 and the value of an
Accumulation Unit was $1.276431. Assume further that during the Valuation Period
investment income was $1,850, net realized capital losses were $500, net
unrealized capital gains were $2,500, and there were no applicable taxes or
expenses of Fund B which were not the contractual liability of AUL. The value of
the assets of Fund B at the end of the Valuation Period would thus be
$10,003,850 ($10,000,000 plus $1,850, minus $500 plus $2,500).
The gross investment rate for the Valuation Period would be equal to (a)
$3,850 ($1,850 minus $500, plus $2,500) divided by (b) $10,000,000 which
produces .0003850. The net investment rate for the Valuation Period is
determined by deducting .0000328 for one day from the gross investment rate,
which results in a net investment rate of .0003522. The Net Investment Factor
for the Valuation Period would be determined as the net investment rate plus
1.0000000, or 1.0003522.
The value of the Accumulation Unit at the end of such Valuation Period
would equal the value at the beginning of the period ($1.276431) multiplied by
the Net Investment Factor for the period (1.0003522), which produces $1.276881.
3. OPTIONAL VARIABLE ANNUITY SETTLEMENT - OPTION 4
If it is assumed that (a) $15,000 were applied to purchase an annuity under
this option, (b) the value of an Annuity Unit was $1.753261 on the Annuity
Commencement Date, (c) the number of Annuity Units represented by each monthly
payment was 53.985117, (d) 23 monthly annuity payments were made prior to the
date of death, and (e) the value of an Annuity Unit on the valuation date
following the Annuitant's death was $1.849375, then the amount paid to the
beneficiary would be $13,526.01.
<PAGE>
7
FINANCIAL STATEMENTS
AMERICAN UNITED LIFE POOLED EQUITY FUND B
The following financial statements relate to the condition and operations of
Fund B.
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Managers and Contract Owners
American United Life Pooled Equity Fund B
Indianapolis, Indiana
We have audited the accompanying statement of net assets of American United Life
Pooled Equity Fund B, including the schedule of investments, as of December 31,
1997, and 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
then ended. These financial statements and financial highlights are the
responsibility of the Fund'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 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 investments and cash held by
the custodian as of December 31, 1997 and confirmation by correspondence with
brokers as to securities purchased but not received at that date or other
auditing procedures where confirmations from brokers were not received. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
American United Life Pooled Equity Fund B as of December 31, 1997, the results
of its operations for the year then ended, the changes in its 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 then ended, in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Indianapolis, Indiana
February 2, 1998
<PAGE>
8
<TABLE>
<CAPTION>
AMERICAN UNITED LIFE POOLED EQUITY FUND B
STATEMENT OF NET ASSETS
December 31, 1997
<S> <C>
Assets:
Investments at value (cost: $8,538,883)
Common stock $ 13,004,303
Money market mutual funds 751,324
Short-term notes 495,250
---------------
14,250,877
Cash 26,273
Dividends and interest receivable 25,032
Due from AUL 400
---------------
Total assets 14,302,582
Liabilities 23,046
---------------
Net Assets $14,279,536
===============
Units outstanding 932,682
===============
Accumulation Unit Value $ 15.31
===============
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
AMERICAN UNITED LIFE POOLED EQUITY FUND B
STATEMENT OF OPERATIONS
for the year ended December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Net Investment Income:
Income
Dividends $ 260,943
Interest 20,774
---------------
281,717
---------------
Expense
Investment management services 40,319
Mortality and expense risks charges 120,956
---------------
161,275
---------------
Net investment income 120,442
---------------
Gain on Investments:
Net realized gain 1,177,099
Net change in unrealized gain 2,177,306
---------------
Net gain 3,354,405
---------------
Increase in Net Assets from Operations $ 3,474,847
===============
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
<PAGE>
9
<TABLE>
<CAPTION>
AMERICAN UNITED LIFE POOLED EQUITY FUND B
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended December 31, 1997 and 1996
- --------------------------------------------------------------------------------
1997 1996
----------------- -------------
<S> <C> <C>
Operations:
Net investment income $ 120,442 $ 157,883
Net realized gain 1,177,099 370,506
Net change in unrealized gain 2,177,306 1,637,717
-------------- -------------
Increase in net assets from operations 3,474,847 2,166,106
-------------- -------------
Changes from Contract Owner Transactions:
Proceeds from units sold 262,150 604,294
Payments for units withdrawn (2,025,646) (2,723,610)
Payments for units redeemed (3,204) (1,684)
-------------- -------------
Decrease (1,766,700) (2,121,000)
-------------- -------------
Net increase in net assets 1,708,147 45,106
Net Assets at beginning year 12,571,389 12,526,283
-------------- -------------
Net Assets at end of year $ 14,279,536 $ 12,571,389
============== =============
Units sold 18,716 57,351
Units withdrawn (153,443) (253,596)
Units redeemed (233) (156)
-------------- -------------
Net decrease in units outstanding (134,960) (196,401)
Units outstanding at beginning of year 1,067,642 1,264,043
-------------- -------------
Units outstanding at end of year 932,682 1,067,642
============== =============
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
<PAGE>
10
AMERICAN UNITED LIFE POOLED EQUITY FUND B
SCHEDULE OF INVESTMENTS
December 31, 1997
Market
Description Shares Value
- ---------------------------------------------- ------------ -----------
Common Stock (91.2%)
Aerospace (1.9%)
Boeing 2,800 $ 137,025
Precision Castparts 2,200 132,688
-----------
269,713
-----------
Automotive & Auto Parts (4.9%)
Bandag, Inc. 5,600 299,250
Ford Motor Co 8,200 398,725
-----------
697,975
-----------
Banks & Financial (12.0%)
American Express Company 4,000 357,000
Banc One Corporation 6,120 332,393
Ohio Casualty Corporation 4,500 200,813
Travelers Group, Inc. 8,644 465,695
Washington Mutual 5,470 349,054
-----------
1,704,955
-----------
Broadcasting & Publishing (8.1%)
Chris-Craft Industries, Inc.* 4,821 252,199
Deluxe Corporation 6,400 220,800
Gibson Greetings, Inc. 8,000 175,000
Harland (John H.) Company 7,300 153,300
Meredith Corporation 5,900 210,556
Moore Corporation, Ltd. 9,200 139,150
-----------
1,151,005
-----------
Electrical Equipment & Electronics (7.6%)
Baldor Electric Company 16,840 365,217
Dynatech Corporation* 11,600 543,750
General Electric Company 2,400 176,100
-----------
1,085,067
-----------
Entertainment & Leisure (5.1%)
CPI Corporation 10,600 239,825
Fleetwood Enterprises, Inc. 11,500 488,031
-----------
727,856
-----------
Furniture & Apparel (10.3%)
Hillenbrand Industries, Inc. 6,600 337,838
Kellwood Corporation 9,300 279,000
La Z Boy Chair Company 9,800 422,625
Liz Claiborne, Inc. 6,100 255,055
Reebok International 5,800 167,113
-----------
1,461,631
-----------
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
<PAGE>
11
American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS (continued)
December 31, 1997
Market
Description Shares Value
- ---------------------------------------------- ------------ -------------
Common Stock (91.2%), continued
Health Care (7.2%)
Acuson Corporation* 7,400 $ 122,563
Guidant Corp. 1,400 87,150
Lilly (Eli) and Company 2,572 179,075
McKesson Corporation 4,000 433,500
Merck & Company, Inc. 1,900 201,875
-----------
1,024,163
-----------
Information Processing & Telecommunications (10.5%)
AT&T Communications 6,400 392,400
International Business Machines Corporation 2,900 303,230
Novell* 14,600 109,500
Sun Microsystems, Inc.* 9,100 362,863
Telxon Corporation 13,500 322,313
-----------
1,490,306
-----------
Merchandising (5.5%)
Longs Drug Stores Corporation 12,100 388,712
Mercantile Stores Co. 3,800 231,325
Stanhome, Inc. 6,500 166,969
-----------
787,006
-----------
Metals & Mining (5.2%)
AK Steel Holding Corp. 5,100 90,207
Aluminum Company of America 4,000 281,500
Cleveland Cliffs, Inc. 4,900 224,481
Oregon Steel Mills, Inc. 7,300 155,581
-----------
751,769
-----------
Oil & Oil Services (4.1%)
Royal Dutch Petroleum Company 5,200 281,775
Valero Energy Corporation 9,700 304,944
-----------
586,719
-----------
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
<PAGE>
12
American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS (continued)
December 31, 1997
Market
Description Shares Value
- -------------------------------------------- --------------- -----------
Common Stock (91.2%), continued
Transportation (3.4%)
Alexander & Baldwin, Inc. 10,500 $ 286,781
Norfolk Southern Corporation 6,600 203,363
-----------
490,144
-----------
Miscellaneous (5.4%)
Carlisle Companies 3,500 149,625
Kelly Services 9,600 288,000
Michael Foods, Inc. 7,200 175,500
PG&E Corp. 5,373 162,869
-----------
775,994
-----------
Total common stock (cost: $7,292,309) 13,004,303
-----------
Money Market Mutual Funds (5.3%)
Dreyfus Cash Management 450,131 450,131
Merrill Lynch Institutional Fund 301,193 301,193
-----------
Total money market mutual funds (cost: $751,324) 751,324
-----------
Interest Maturity Principal
Rate Date Amount
-------- --------- ----------
Short-term Notes (3.5%)
G.E. Capital (cost: $495,250) 5.70% 1/13/1998 500,000 495,250
-----------
Total Investments (cost: $8,538,883) $14,250,877
===========
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
<PAGE>
13
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
American United Life Pooled Equity Fund B (Fund B) is registered under the
Investment Company Act of 1940 as an open-end, diversified management investment
company. Fund B was established by and is managed by American United Life
Insurance Company (AUL) for the purpose of issuing group and individual variable
annuities.
Investments are valued at closing prices for those securities traded on
organized exchanges and at bid prices for securities traded over-the-counter.
Gains and losses on the sale of investments are determined on a first-in,
first-out (FIFO) basis. Investment transactions are accounted for on a trade
date basis.
Dividends are included in income as of the ex-dividend date. Interest income is
accrued daily.
Operations of the Variable Account are part of, and are taxed with, the
operations of AUL, which is taxed as a "life insurance company" under the
Internal Revenue Code. Under current law, investment income, including realized
and unrealized capital gains of the investment accounts, is not taxed to AUL to
the extent it is applied to increase reserves under the contracts. The Variable
Account has not been charged for federal and state income taxes since none have
been imposed.
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 increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.
2. Investments
Net realized and unrealized gain on investments is summarized below.
Common
Stock
-----
Net Realized Gain:
Proceeds from securities sold $ 6,133,659
Cost of securities sold 4,956,560
------------
$ 1,177,099
=============
Net change in Unrealized Gain:
Market value at end of period $ 13,004,303
Less: investments purchased (3,886,270)
Add: investments sold at cost 4,956,560
Less: market value at beginning of year (11,897,287)
------------
$ 2,177,306
============
<PAGE>
14
NOTES TO FINANCIAL STATEMENTS (continued)
3. Transactions With AUL
Fund B pays AUL an annual fee of 1.2% of its average daily net assets for
providing investment management services and for mortality and expense risk
charges. The expense incurred during the years ended December 31, 1997 and 1996
was $161,275 and $151,416, respectively.
AUL withholds a portion of the proceeds obtained from contract owners to pay
commissions and certain expenses under a sales and administrative services
agreement with Fund B. The amount AUL retained during the years ended December
31, 1997 and 1996 was $10,654 and $23,406, respectively.
4. Net Assets
Net Assets as of December 31, 1997:
Proceeds from units sold less payments $(7,942,438)
for units withdrawn and redeemed
Net investment income 4,099,431
Net realized gains 12,410,549
Unrealized gain 5,711,994
------------
$ 14,279,536
============
The unrealized gain of $5,711,994 consists of common stock appreciation and
depreciation of $5,838,350 and $126,356, respectively.
<PAGE>
15
FINANCIAL HIGHLIGHTS
The per unit amounts are based on average units outstanding throughout the year.
Year Ended December 31
1997 1996 1995 1994 1993
------ ------ ----- ------ ------
Investment income $ 0.28 $ 0.26 $0.24 $ 0.19 $ 0.16
Expenses 0.16 0.13 0.11 0.10 0.09
------ ------ ----- ------ ------
Net investment income 0.12 0.13 0.13 0.09 0.07
Net gain 3.42 1.73 1.52 0.07 1.24
------ ------ ----- ------ ------
Net increase 3.54 1.86 1.65 0.16 1.31
Value per unit:
Beginning of year 11.77 9.91 8.26 8.10 6.79
------ ------ ----- ------ ------
End of year $15.31 $11.77 $9.91 $ 8.26 $ 8.10
====== ====== ===== ====== ======
Ratio to Average Net
Assets:
Expenses 1.20% 1.20% 1.20% 1.20% 1.19%
Net investment income 0.90% 1.25% 1.39% 1.16% 1.01%
Total Return 31.2% 19.8% 21.1% 2.94% 20.4%
Portfolio Turnover Rate 28% 18% 20% 23% 25%
Average Commission Rate Paid* $ 0.0718 $ 0.0669 N/A N/A N/A
Units outstanding 933 1,068 1,264 1,417 1,518
(in 000's)
* Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a commission.
This disclosure is required by the SEC beginning in 1996.
<PAGE>
14
FINANCIAL STATEMENTS - AUL
The following statements relate solely to the condition and operations of AUL.
REPORT OF INDEPENDENT ACCOUNTANTS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
American United Life Insurance Company
Indianapolis, Indiana
We have audited the accompanying combined balance sheet of American United Life
Insurance Company(R) and affiliates as of December 31, 1997 and 1996, and the
related combined statements of operations, policyholders' surplus and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements 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 are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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, the combined financial statements referred to above present
fairly, in all material respects, the financial position of American United Life
Insurance Company(R) and affiliates as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Indianapolis, Indiana
February 27, 1998
<PAGE>
15
COMBINED BALANCE SHEET
December 31, 1997 and 1996 1997(in millions)1996
-------------------------------------------------------------------------
Assets
Investments:
Fixed Maturities:
Available for sale at fair value ........... $ 1,653.8 $ 1,593.4
Held to maturity at amortized cost ......... 2,902.2 3,013.6
Equity securities at fair value ............. 18.6 15.2
Mortgage loans .............................. 1,120.4 1,114.6
Real estate ................................. 52.1 52.3
Policy loans ................................ 143.1 143.5
Short term and other invested assets ........ 102.0 43.8
Cash and cash equivalents ................... 41.2 20.2
-------------------------------------------------------------------------
Total investments ........................... 6,033.4 5,996.6
Accrued investment income ................... 79.3 82.1
Reinsurance receivables ..................... 244.3 209.5
Deferred acquisition costs .................. 421.2 348.2
Property and equipment ...................... 55.5 54.0
Insurance premiums in course of collection .. 72.9 47.5
Other assets ................................ 17.2 35.7
Assets held in separate accounts ............ 1,674.0 1,078.7
-------------------------------------------------------------------------
Total assets ................................ $ 8,597.8 $ 7,852.3
-------------------------------------------------------------------------
Liabilities and policyholders' surplus
Liabilities
Policy reserves ............................ $ 5,642.9 $ 5,688.6
Other policyholder funds ................... 175.2 176.2
Pending policyholder claims ................ 164.3 137.6
Surplus notes .............................. 75.0 75.0
Other liabilities and accrued expenses ..... 201.8 123.4
Liabilities related to separate accounts ... 1,674.0 1,078.7
-------------------------------------------------------------------------
Total liabilities ........................... 7,933.2 7,279.5
-------------------------------------------------------------------------
Unrealized appreciation of securities,
net of deferred income tax ................. 36.5 19.0
Policyholders' surplus ...................... 628.1 553.8
-------------------------------------------------------------------------
Total policyholders' surplus ................ 664.6 572.8
-------------------------------------------------------------------------
Total liabilities and policyholders' surplus $ 8,597.8 $ 7,852.3
-------------------------------------------------------------------------
COMBINED STATEMENT
OF POLICYHOLDERS' SURPLUS
Policyholders' surplus at beginning of year .... $ 572.8 $ 548.9
Net income ..................................... 74.3 52.1
Change in unrealized appreciation (depreciation)
of securities, net ............................. 17.5 (28.2)
- ----------------------------------------------------------------------------
Policyholders' surplus at end of year .......... $ 664.6 $ 572.8
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
17
COMBINED STATEMENT OF OPERATIONS
December 31, 1997 and 1996 1997(in millions)1996
- ---------------------------------------------------------------------------
Revenues:
Insurance premiums and other
considerations ............................... $ 413.9 $ 401.1
Policy and contract charges ................... 69.3 50.4
Net investment income ......................... 464.9 471.8
Realized investment gains ..................... 13.7 6.6
Other income .................................. 5.9 1.2
- ----------------------------------------------------------------------------
Total revenues ................................. 967.7 931.1
- ----------------------------------------------------------------------------
Benefits and expenses:
Policy benefits ............................... $ 386.2 $ 381.9
Interest expense on annuities and
financial products ........................... 257.3 261.6
Underwriting, acquisition and
insurance expenses ........................... 126.6 111.2
Amortization of deferred acquisition costs .... 53.2 49.8
Dividends to policyholders .................... 25.0 26.3
Interest expense on surplus notes ............. 5.8 5.1
Other operating expenses ...................... 9.5 8.7
- ----------------------------------------------------------------------------
Total benefits and expenses ................... 863.6 844.6
- ----------------------------------------------------------------------------
Income before income tax expense .............. 104.1 86.5
Income tax expense ............................ 29.8 34.4
- ----------------------------------------------------------------------------
Net income .................................... $ 74.3 $ 52.1
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
18
COMBINED STATEMENT OF CASH FLOWS
December 31, 1997 and 1996 1997(in millions)1996
- ---------------------------------------------------------------------------
Cash flows from operating activities:
- ---------------------------------------------------------------------------
Net Income ..................................... $ 74.3 $ 52.1
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of deferred acquisition costs ..... 53.2 49.8
Depreciation ................................... 10.1 9.2
Deferred taxes ................................. 7.3 1.8
Realized investment gains ...................... (13.7) (6.6)
Policy acquisition costs capitalized ........... (90.8) (69.3)
Interest credited to deposit liabilities ....... 252.1 254.7
Fees charged to deposit liabilities ............ (32.9) (19.8)
Amortization and accrual of investment income .. (8.2) (6.2)
Increase in insurance liabilities .............. 140.2 93.9
Increase in noninvested assets ................. (66.3) (44.4)
Increase in other liabilities .................. 35.1 19.6
- ----------------------------------------------------------------------------
Net cash provided by operating activities ...... 360.4 334.8
- -----------------------------------------------------------------------------
Cash flows from investing activities:
Purchases:
Fixed maturities, Held to Maturity ............. (120.8) (194.4)
Fixed maturities, Available for Sale ........... (348.3) (477.7)
Equity securities .............................. (9.4) (24.7)
Mortgage loans ................................. (155.4) (169.1)
Real estate .................................... (1.9) (3.9)
Short term and other invested assets ........... (43.3) (2.6)
Proceeds from sales, calls or maturities:
Fixed maturities, Held to Maturity ............. 241.2 158.8
Fixed maturities, Available for Sale ........... 335.1 466.4
Equity securities .............................. 7.2 28.7
Mortgage loans ................................. 149.7 175.0
Real estate .................................... 4.3 3.1
Short term and other invested assets ........... 1.6 27.6
- ----------------------------------------------------------------------------
Net cash provided (used) by investing activities 60.0 (12.8)
- ----------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of surplus notes ........ 0 75.0
Deposits to insurance liabilities .............. 713.6 595.2
Withdrawals from insurance liabilities ......... (1,112.5) (984.6)
Change in policyholder dividend liability ...... (.9) 3.6
Decrease (increase) in policy loans ............ .4 (1.9)
- ----------------------------------------------------------------------------
Net cash used by financing activities .......... (399.4) (312.7)
- ----------------------------------------------------------------------------
Net increase in cash and cash equivalents ...... 21.0 9.3
- ----------------------------------------------------------------------------
Cash and cash equivalents beginning of year .... 20.2 10.9
- ----------------------------------------------------------------------------
Cash and cash equivalents end of year .......... $ 41.2 $ 20.2
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
19
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Presentation
American United Life Insurance Company (AWL) is an Indiana domiciled mutual life
insurance company with headquarters in Indianapolis. AUL is licensed to do
business in 48 states and the District of Columbia and is an authorized
reinsurer in all states. AUL offers individual life and annuity products through
its career agent distribution system. AUL's qualified group retirement plans,
tax deferred annuities and other non-medical group products are marketed through
independent agents and brokers, as well as career agents who are supported by 29
regional sales offices located throughout the country. Life and pooled
reinsurance is marketed directly to other insurance companies. In 1997, AUL
International began operations to develop reinsurance partners in Central and
South America. The combined Company financial statements include the accounts of
AUL and its affiliate, The State Life Insurance Company (State Life).
Significant intercompany transactions have been excluded.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP). AUL and State Life file
separate financial statements with insurance regulatory authorities which are
prepared on the basis of statutory accounting practices which are significantly
different from financial statements prepared in accordance with GAAP. These
differences are described in detail in Note 9 - Statutory Information.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Investments
Fixed maturity securities which may be sold to meet liquidity and other needs of
the Company are categorized as available for sale and are stated at fair value.
Fixed maturity securities which the Company has the positive intent and ability
to hold to maturity are categorized as held-to-maturity and are stated at
amortized cost. Equity securities are stated at fair value. Mortgage loans on
real estate are carried at amortized cost less an impairment allowance for
estimated uncollectible amounts. Real estate is reported at cost less allowances
for depreciation. Depreciation is provided (straight line) over the estimated
useful lives of the related assets. Investment real estate is net of accumulated
depreciation of $31.7 million and $28.8 million at December 31, 1997 and 1996,
respectively. Depreciation expense for investment real estate amounted to $2.5
million and $2.4 million for 1997 and 1996, respectively. Policy loans are
carried at their unpaid balance. Other invested assets are reported at cost plus
the Company's equity in undistributed net equity since acquisition. Short term
investments include investments with maturities of one-year or less and are
carried at cost which approximates market. Short term certificates of deposit
and savings certificates are considered to be cash equivalents. The carrying
amount for cash and cash equivalents approximates market.
Realized gains and losses on sale or maturity of investments are based upon
specific identification of the investments sold and do not include amounts
allocable to separate accounts. At the time a decline in value of an investment
is determined to be other than temporary, a provision for loss is recorded which
is included in realized investment gains and losses. Unrealized gains and
losses, resulting from carrying available-for-sale securities at fair value, are
reported in policyholders' surplus, net of deferred taxes.
Deferred Policy Acquisition Costs
Those costs of acquiring new business, which vary with and are primarily related
to the production of new business, have been deferred to the extent that such
costs are deemed recoverable. Such costs include commissions, certain costs of
policy underwriting and issue and certain variable agency expenses. These costs
are amortized with interest as follows:
For participating whole life insurance products, over the lesser of 30
years or the lifetime of the policy in relation to the present value of
estimated gross margins from expenses, investments and mortality,
discounted using the expected investment yield.
For universal life-type policies and investment contracts, over the lesser
of the lifetime of the policy or 30 years for life policies or 20 years for
other policies in relation to the present value of estimated gross profits
from surrender charges and investment, mortality and expense margins,
discounted using the interest rate credited to the policy.
For term life insurance products and life reinsurance policies, over the
lesser of the benefit period or 30 years for term life or 20 years for life
reinsurance policies in relation to the ratio of anticipated annual premium
revenue to the anticipated total premium revenue, using the same
assumptions used in calculating policy benefits.
For miscellaneous group life and individual and group health policies,
straight line over the expected life of the policy.
For credit insurance policies, the deferred acquisition cost balance is
primarily equal to the unearned premium reserve multiplied by the ratio of
deferrable commissions to premiums written.
Recoverability of the unamortized balance of deferred policy acquisition costs
is evaluated regularly. For universal life-type contracts, investment contracts
and participating whole life policies, the accumulated amortization is adjusted
(increased or decreased) whenever there is a material change in the estimated
gross profits or gross margins expected over the life of a block of business in
order to maintain a constant relationship between cumulative amortization and
the present value of gross profits or gross margins. For most other contracts,
the unamortized asset balance is reduced by a charge to income only when the
present value of future cash flows, net of the policy liabilities, is not
sufficient to cover such asset balance.
<PAGE>
20
NOTES TO FINANCIAL STATEMENTS
Assets Held in Separate Accounts
Separate accounts are funds on which investment income and gains or losses
accrue directly to certain policies, primarily variable annuity contracts and
equity-based pension and profit sharing plans. The assets of these accounts are
legally segregated, and are valued at fair value. The related liabilities are
recorded at amounts equal to the underlying assets; the fair value of these
liabilities is equal to their carrying amount.
Property and Equipment
Property and equipment includes real estate owned and occupied by the Company.
Property and equipment is carried at cost, net of accumulated depreciation of
$41.6 million and $37.2 million as of December 31, 1997 and 1996, respectively.
The Company provides for depreciation of property and equipment using the
straight-line method over its estimated useful life. Depreciation expense for
1997 and 1996 was $7.6 million and $6.8 million, respectively.
Premium Revenue and Benefits to Policyholders
The premiums and benefits for whole life and term insurance products and certain
annuities with life contingencies (immediate annuities) are fixed and
guaranteed. Such premiums are recognized as premium revenue when due. Group
insurance premiums are recognized as premium revenue over the time period to
which the premiums relate. Benefits and expenses are associated with earned
premiums so as to result in recognition of profits over the life of the
contracts. This association is accomplished by means of the provision for
liabilities for future policy benefits and the amortization of deferred policy
acquisition costs.
Universal life policies and investment contracts are policies with terms that
are not fixed and guaranteed. The terms that may be changed could include one or
more of the amounts assessed the policyholder, premiums paid by the policyholder
or interest accrued to policyholder balances. The amounts collected from
policyholders for these policies are considered deposits, and only the
deductions during the period for cost of insurance, policy administration and
surrenders are included in revenue. Policy benefits and claims that are charged
to expense include interest credited to contracts and benefit claims incurred in
the period in excess of related policy account balances.
Reserves for Future Policy and Contract Benefits
Liabilities for future policy benefits for participating whole life policies are
calculated using the net level premium method and assumptions as to interest and
mortality. The interest rate is the dividend fund interest rate and the
mortality rates are those guaranteed in the calculation of cash surrender values
described in the contract. Liabilities for future policy benefits for term life
insurance and life reinsurance policies are calculated using the net level
premium method and assumptions as to investment yields, mortality and
withdrawals. The assumptions are based on projections of past experience and
include provisions for possible unfavorable deviation. These assumptions are
made at the time the contract is issued. Liabilities for future policy benefits
on universal life and investment contracts consist principally of policy account
values plus certain deferred policy fees which are amortized using the same
assumptions and factors used to amortize the deferred policy acquisition costs.
If the future benefits on investment contracts are guaranteed (immediate
annuities with benefits paid for a period certain) the liability for future
benefits is the present value of such guaranteed benefits. Claim liabilities
include provisions for reported claims and estimates based on historical
experience, for claims incurred but not reported.
Income Taxes
The provision for income taxes includes amounts currently payable and deferred
income taxes resulting from the temporary differences in the assets and
liabilities determined on a tax and financial reporting basis.
<PAGE>
21
NOTES TO FINANCIAL STATEMENTS
2. Investments:
The book value and fair value of investments in fixed maturity securities by
type of investment were as follows:
<TABLE>
<CAPTION>
December 31, 1997
- ----------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------------
Available for sale: (in millions)
<S> <C> <C> <C> <C>
Obligations of U.S. government states,
political subdivisions end foreign governments $ 47.8 $ 4.0 $0.0 $ 51.8
Corporate securities ......................... 1,064.1 55.5 1.8 1,117.8
Mortgage-backed securities ................... 456.8 27.6 0.2 484.2
- ----------------------------------------------------------------------------------------------------------------
$ 1,568.7 $ 87.1 $2.0 $ 1,653.8
- ----------------------------------------------------------------------------------------------------------------
Held to maturity
Obligations of U.S. government, states,
political subdivisions and foreign governments $ 124.2 $ 6.2 $0.3 $ 130.1
Corporate securities ......................... 1,854.4 123.4 3.6 1,9742
Mortgage-backed securities ................... 923.6 55.5 0.2 978.9
- ----------------------------------------------------------------------------------------------------------------
$ 2,902.2 $185.1 $4.1 $ 3,083.2
- ----------------------------------------------------------------------------------------------------------------
December 31, 1997
- ----------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------------
Available for sale: (in millions)
<S> <C> <C> <C> <C>
Obligations of U.S. government, states,
political subdivisions end foreign governments $ 85.2 $ 1.9 $1.3 $ 85.8
Corporate securities ......................... 1,000.0 33.9 7.0 1,026.9
Mortgage-backed securities ................... 463.0 19.1 1.4 480.7
$ 1,548.2 $ 54.9 $9.7 $ 1,593.4
Held to maturity:
Obligations of U.S. government, states,
political subdivisions and foreign governments $ 132.0 $ 5.5 $ 1.1 $ 136.4
Corporate securities ......................... 1,891.1 100.1 14.0 1,977.2
Mortgage-backed securities ................... 990.5 44.9 4.4 1,031.0
$ 3,013.6 $ 150.5 $19.5 $ 3,144.6
</TABLE>
<PAGE>
22
NOTES TO FINANCIAL STATEMENTS
The amortized cost and fair value of fixed maturity securities at December
31,1997, by contractual average maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
Available for Sale Held to Maturity Total
Amortized Fair Amortized Fair Amortized Fair
(in millions) Cost Value Cost Value Cost Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Due in one year or less .............. $ 127.0 $ 127.2 $ 60.8 $ 61.5 $ 187.8 $ 188.7
Due after one year through five years 311.6 318.4 768.5 798.0 1,080.1 1,116.4
Due after five years through ten years 368.9 388.5 738.9 794.7 1,107.8 1,183.2
Due after ten years .................. 304.4 335.5 410.4 450.1 714.8 785.6
1,111.9 1,169.6 1,978.6 2,104.3 3,090.5 3,273.9
Mortgage-backed securities ........... 456.8 484.2 923.6 978.9 1,380.4 1,463.1
$1,568.7 $1,653.8 $2,902.2 $3,083.2 $4,470.9 $4,737.0
</TABLE>
Net investment income consisted of the following:
for years ended December 31 1997(in millions)1996
- ----------------------------------------------------------------------------
Fixed maturity securities $359.4 $364.0
Equity securities 2.5 2.0
Mortgage loans 100.9 104.4
Real estate 11.5 10.8
Policy loans 8.8 9.0
Other 7.3 6.1
- ----------------------------------------------------------------------------
Gross investment income 490.4 496.3
Investment expenses 25.5 24.5
- ----------------------------------------------------------------------------
Net investment income $464.9 $471.8
- ----------------------------------------------------------------------------
Net realized investment gains and (losses) include write downs and changes in
the reserve for losses on mortgage loans and foreclosed real estate of $(1.3)
million and $.5 million for 1997 and 1996, respectively. Proceeds from the
sales, maturities or calls of investments in fixed maturities during 1997 and
1996 were approximately $576.3 million and $625.2 million, respectively. Gross
gains of $11.6 million and $12.0 million, and gross losses of $1.3 million and
$6.9 million were realized in 1997 and 1996, respectively. The changes in
unrealized appreciation (depreciation) of fixed maturities amounted to
approximately $39.9 million and $(64.3) million in 1997 and 1996, respectively.
At December 31, 1997, the unrealized appreciation on equity securities of
approximately $2.3 million is comprised of $3.8 million in unrealized gains and
$1.5 million of unrealized losses and has been reflected directly in
policyholders' surplus. The change in the unrealized appreciation (depreciation)
of equity securities amounted to approximately $.9 million and $(1.1)million in
1997 and 1996, respectively.
The Company maintains a diversified mortgage loan portfolio and exercises
internal limits on concentrations of loans by geographic area, industry, use and
individual mortgagor. At December 31, 1997, the largest geographic concentration
of commercial mortgage loans was in California, Indiana, and Florida where
approximately 33% of the portfolio was invested. A total of 40% of the mortgage
loans have been issued on retail properties, primarily backed by long term
leases or guarantees from strong credits.
The Company has outstanding mortgage loan commitments at December 31, 1997, of
approximately $117.2 million. As of December 31, 1997, the carrying value of
investments that produced no income for the previous twelve month period was
$1.8 million.
<PAGE>
23
NOTES TO FINANCIAL STATEMENTS
3. Insurance Liabilities:
At December 31, 1997 and 1996, insurance liabilities consisted of the following:
<TABLE>
<CAPTION>
(in millions)
- ------------------------------------------------------------------------------------------------------------------------------------
Withdrawal Mortality or morbidity Interest rate
assumption assumption assumption 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Future policy benefits:
Participating whole life contracts ........... Company Company 2.5% to 6.0% $ 594.5 $ 554.9
experience experience
Universal life-type contracts ................ n/a n/a n/a 376.4 352.0
Other individual life contracts .............. Company Company 6.8% to 10.0% 216.4 183.6
Accident and health .......................... n/a n/a n/a 51.0 43.7
Annuity products ............................. n/a n/a n/a 4,213.6 4,397.1
Group life and health ........................ n/a n/a n/a 191.0 157.3
Other policyholder funds ..................... n/a n/a n/a 175.2 176.2
Pending policyholder claims .................. n/a n/a n/a 164.3 137.6
- ------------------------------------------------------------------------------------------------------------------------------------
Total insurance liabilities $ 5,982.4 $6,002.4
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Participating life insurance policies under generally accepted accounting
principles represent approximately 9% and 11 % of the total individual life
insurance in force at December 31, 1997 and 1996, respectively. Participating
policies represented approximately 39% and 40% of life premium income for 1997
and 1996, respectively. The amount of dividends to be paid is determined
annually by the Board of Directors.
4. Employees' and Agents' Benefit Plans:
The Company has a noncontributory defined benefit pension plan covering
substantially all employees. Company contributions to the employee plan are made
annually in an amount between the minimum ERISA required contribution and the
maximum tax-deductible contribution. Contributions made to the Plan were $2.6
million in 1997 and $2.4 million in 1996. The net periodic pension cost was
$(.5) million and $.6 million for the years ended December 31, 1997 and 1996,
respectively. This includes service cost of $2.2 million and $3.5 million,
interest cost of $1.6 million and $1.4 million, and return on plan assets of
$4.3 million, and $4.3 million for the years ended December 31, 1997 and 1996,
respectively.
The following benefit information for the employees' defined benefit plan was
determined by independent actuaries as of January 1, 1997 and 1996,
respectively, the most recent actuarial valuation dates:
1997 (in millions) 1996
Actuarial present value of accumulated benefits
for the employees' defined benefit plan:
Vested $20.5 $20.1
Nonvested 2.0 .2
- --------------------------------------------------------------------------------
Total accumulated benefits $22.5 $20.3
- --------------------------------------------------------------------------------
Related net assets available for plan benefits $34.0 $28.8
- --------------------------------------------------------------------------------
The Company has a defined contribution plan and a 401(k) plan covering employees
who have completed one full calendar year of service. Annual contributions are
made by the Company in amounts based upon the Company's financial results.
Company contributions to the plan during 1997 and 1996 were $1.4 million and
$1.7 million, respectively.
<PAGE>
24
NOTES TO FINANCIAL STATEMENTS
The Company has a defined contribution pension plan and a 401(k) plan covering
substantially all of the agents, except general agents. Contributions of 3% of
defined commissions (plus 3% for commissions over the Social Security wage base)
are made to the pension plan. An additional contribution of 3% of defined
commissions are made to a 401(k) plan. Company contributions expensed for these
plans for 1997 and 1996 were $268,000 and $612,000, respectively.
The funds for all plans are held by the Company under deposit administration and
group annuity contracts.
The Company also provides certain health care and life insurance benefits (post
retirement benefits) for retired employees and certain agents (retirees).
Employees and agents with at least 10 years of plan participation may become
eligible for such benefits if they reach retirement age while working for the
Company.
The net periodic post retirement benefit cost was $1,035,000 and $956,000 for
the year ended December 31, 1997 and 1996, respectively. This includes service
cost of $336,000 and $255,000, interest cost of $697,000 and $645,000,
amortization of unrecognized loss of $2,000 and $56,000 for the years ended
December 31, 1997 and 1996, respectively.
Accrued post retirement benefits as of December 31: 1997(in millions) 1996
- --------------------------------------------------------------------------------
Accumulated post retirement benefit obligation (APBO):
Retirees and their dependents $5.2 $ 4.6
Active employees fully eligible to retire and
receive benefits 3.1 2.6
Active employees not fully eligible 2.6 2.7
Unrecognized loss (1.6) (1.0)
- --------------------------------------------------------------------------------
Total APBO $9.3 $ 8.9
- --------------------------------------------------------------------------------
The assumed discount rate used in determining the accumulated post retirement
benefit was 7.00% and the assumed health care cost trend rate was 10% graded to
5% until 2004. Compensation rates were assumed to increase 6% at each year end.
The health coverage for retirees 65 and over is capped in the year 2000. The
health care cost trend rate assumption has an effect on the amounts reported. An
increase in the assumed health care cost trend rates by one percentage point
would increase the accumulated post retirement benefit obligation as of December
31, 1997, by $885,000 and increase the accumulated post retirement benefit cost
for 1997 by $126,000.
5. Federal Income Taxes:
A reconciliation of the income tax attributable to continuing operations
computed at U.S. federal statutory tax rates to the income tax expense included
in the statement of operations follows:
for years ended December 31 1997 (in millions) 1996
- --------------------------------------------------------------------------------
Income tax computed at statutory tax rate $36.3 $30.3
Tax exempt income (1.5) (1.6)
Mutual company differential earnings amount 6.1 7.5
Prior year differential earnings amount (3.7) (5.6)
Other (7.4) 3.8
- --------------------------------------------------------------------------------
Federal income tax $29.8 $34.4
The components of the provision for income taxes on earnings included current
tax provisions of $22.5 million and $32.6 million for the years ended December
31, 1997 and 1996, respectively, and deferred tax expense of $7.3 million and
$1.8 million for the years ended December 31, 1997 and 1996, respectively.
<PAGE>
25
NOTES TO FINANCIAL STATEMENTS
Deferred income tax assets (liabilities)
as of December 31: 1997 1996
- --------------------------------------------------------------------------------
(in millions)
Deferred policy acquisition costs $(137.0) $(110.9)
Investments (12.0) (8.1)
Insurance liabilities 154.7 139.0
Unrealized appreciation of securities (21.9) (11.2)
Other (4.7) (4.9)
- --------------------------------------------------------------------------------
Deferred income tax assets (liabilities) $ (20.9) $ 3.9
- --------------------------------------------------------------------------------
Federal income taxes paid were $28.6 million and $39.0 million for 1997 and
1996, respectively.
6. Reinsurance:
The Company is a party to various reinsurance contracts under which it receives
premiums as a reinsurer and reimburses the ceding companies for portions of the
claims incurred. At December 31,1997 and 1996, life Reinsurance assumed was
approximately 71% and 67%, respectively, of life insurance in force.
The Company cedes that portion of the total risk on an individual life in excess
of $1,500,000. For accident and health and disability policies, the Company has
established various limits of coverage it will retain on any one policy owner
and cedes the remainder of such coverage.
Certain statistical data with respect to reinsurance follows:
for years ended December 31 1997 1996
- --------------------------------------------------------------------------------
(in millions)
Direct statutory premiums $369.4 $353.1
Reinsurance assumed 253.9 214.8
Reinsurance ceded 132.3 109.8
- --------------------------------------------------------------------------------
Net premiums 491.0 458.1
- --------------------------------------------------------------------------------
Reinsurance recoveries $103.4 $ 73.5
- --------------------------------------------------------------------------------
The Company accounts for all reinsurance agreements as transfers of risk. If
companies to which reinsurance has been ceded are unable to meet obligations
under the reinsurance agreements, the Company would remain liable. Six
reinsurers account for approximately 57% of the Company's December 31, 1997,
ceded reserves for life and accident and health insurance. The remainder of such
ceded reserves is spread among numerous reinsurers.
7. Surplus Notes and Lines of Credit:
On February 16, 1996, the Company issued $75 million of Surplus Notes, due March
30, 2026. Interest is payable semi-annually on March 30, and September 30 at a
7.75% annual rate. Any payment of interest on or principal of the Notes may be
made only with the prior approval of the Commissioner of the Indiana Department
of Insurance. The Surplus Notes may not be redeemed at the option of AUL or any
holder of the Surplus Notes. Interest paid during 1997 was $5.8 million. The
Company has available a $125 million committed credit facility. No amounts have
been drawn as of December 31, 1997.
8. Commitments and Contingencies:
Various lawsuits have arisen in the ordinary course of the Company's business.
In each of the matters, the Company believes the ultimate resolution of such
litigation will not result in any material adverse impact to operations or
financial condition of the Company.
Pursuant to an Investment Agreement with Indianapolis Life Insurance Company and
the Indianapolis Life Group of Companies (IL Group), the Company has agreed to
purchase from IL Group $27 million of common stock. As of December 31,1997, $8.9
million of this stock was purchased, with an additional $18.1 million committed
to be purchased upon the approval of the Insurance Departments of various
states. Upon purchase of the full commitment, the Company will own 25% of IL
Group's issued and outstanding stock.
<PAGE>
26
NOTES TO FINANCIAL STATEMENTS
9. Statutory Information:
AUL and State Life prepare statutory financial statements in accordance with
accounting Principles and practices prescribed or permitted by the Indiana
Department of Insurance. Prescribed statutory accounting practices (SAP)
currently include state laws, regulations and general administrative rules
applicable to all insurance enterprises domiciled in a particular state, as well
as practices described in National Association of Insurance Commissioners'
(NAIC) publications.
A reconciliation of SAP surplus to GAAP surplus at December 31 follows:
for years ended December 31 1997 (in millions) 1996
- --------------------------------------------------------------------------------
SAP surplus $464.2 $407.9
Deferred policy acquisition costs 447.4 362.7
Adjustments to policy reserves (303.1) (278.3)
Asset valuation and interest maintenance reserves 86.1 106.4
Unrealized gain on invested assets, net 36.5 19.0
Surplus notes (75.0) (75 0)
Deferred income taxes 1.0 16.8
Other, net 7.5 13.3
- --------------------------------------------------------------------------------
GAAP surplus $664.6 $572.8
- --------------------------------------------------------------------------------
A reconciliation of SAP net income to GAAP net income for the years ended
December 31 follows:
for years ended December 31 1997 (in millions) 1996
- --------------------------------------------------------------------------------
SAP income $41.8 $ 51.4
Deferred policy acquisition costs 37.6 19.5
Adjustments to policy reserves (9.2) (15.0)
Deferred income taxes (7.3) (1.8)
Other, net 11.4 (2.0)
- --------------------------------------------------------------------------------
GAAP net income $74.3 $52.1
- --------------------------------------------------------------------------------
Life insurance companies are required to maintain certain amounts of assets on
deposit with state regulatory authorities. Such assets had an aggregate carrying
value of $4.5 million at December 31,1997.
10. Fair Value of Financial Instruments:
The disclosure of fair value information about certain financial instruments is
based primarily on quoted market prices. The fair values of short-term
investments and accrued investment income approximate the carrying amounts
reported in the balance sheets. Fair values for fixed maturity and equity
securities, and surplus notes are based on quoted market prices where available.
For fixed maturity securities not actively traded, fair values are estimated
using values obtained from independent pricing services, or in the case of
private placements, are estimated by discounting expected future cash flows
using a current market rate applicable to the yield, credit quality and maturity
of the investments. The fair value of the aggregate mortgage loan portfolio was
estimated by discounting the future cash flows using current rates at which
similar loans would be made to borrowers with similar credit ratings for similar
maturities.
The estimated fair values of the liabilities for policyholder funds approximate
the statement values because interest rates credited to account balances
approximate current rates paid on similar funds and are not generally guaranteed
beyond one year. Fair values for other insurance reserves are not required to be
disclosed. However, the estimated fair values for all insurance liabilities are
taken into consideration in the Company's overall management of interest rate
risk, which minimizes exposure to changing interest rates through the matching
of investment maturities with amounts due under insurance contracts. The fair
values of certain financial instruments along with their corresponding carrying
values at December 31,1997 and 1996 follow.
- --------------------------------------------------------------------------------
1997 (in millions) 1996
Carrying Fair Carrying Fair
Amount Value Amount Value
- --------------------------------------------------------------------------------
Fixed maturity securities:
Available for sale $1,653.8 $1,653.8 $1,593 4 $1,593.4
Held to Maturity 2,902.2 3,083.2 3,013.6 3,144.6
Equity securities 18.6 18.6 15.2 15.2
Mortgage loans 1,120.4 1,201.0 1,114.6 1,186.3
Policy loans 143.1 143.1 143.5 143.5
Surplus notes 75.0 79.5 75.0 73.0
- --------------------------------------------------------------------------------
<PAGE>
27
================================================================================
No dealer, salesman or any other person is authorized by the AUL American
Unit Trust to give any information or to make any representation other than as
contained in this Statement of Additional Information in connection with the
offering described herein.
There has been filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, with respect to the
offering herein described. For further information with respect to the AUL
American Unit Trust, AUL and its variable annuities, reference is made thereto
and the exhibits filed therewith or incorporated therein, which include all
contracts or documents referred to herein.
================================================================================
AMERICAN UNITED LIFE
POOLED EQUITY FUND B
Group Variable Annuity Contracts
Sold By
AMERICAN UNITED
LIFE INSURANCE COMPANY(R)
One American Square
Indianapolis, Indiana 46282
STATEMENT OF ADDITIONAL INFORMATION
Dated: May 1, 1998
================================================================================
<PAGE>
1
Part C: Other Information
ITEM 28(A): FINANCIAL STATEMENTS AND EXHIBITS.
Financial Statements
Included in Prospectus (Part A):
Expense Summary
Condensed Financial Information - Per Unit Income and Capital
Changes in a Fund B Accumulation Unit
Included in Statement of Additional Information (Part B):
Financial Statements of American United Life Pooled Equity Fund B
Report of Independent Accountants
Statement of Net Assets - December 31, 1997
Statement of Operations - December 31, 1997
Statement of Changes in Net Assets - December 31, 1997 and 1996
Schedule of Investments - December 31, 1997
Notes to Financial Statements
Financial Highlights years ended December 31, 1997, 1996, 1995
1994, & 1993
Financial Statements of American United Life Insurance Company(R)
Report of Independent Accountants
Combined Balance Sheet - Assets, Liabilities and Policyowners'
Surplus as of December 31, 1997 and 1996
Combined Statement of Operations for the years ended
December 31, 1997 and 1996
Combined Statement of Policyowners' Surplus for the years ended
December 31, 1997 and 1996
Combined Statement of Cash Flows for the years ended
December 31, 1997 and 1996
Notes to Financial Statements
Schedules for which provision is made under the applicable articles of
Regulation S-X have been omitted because the items are not present in
the financial statements, or if present, are adequately explained in
the financial statements or are not considered to be material to the
purpose for which the financial statements are included in the
Prospectus.
ITEM 28(B): EXHIBITS.
Copies of all Exhibits required by Form N-3.
(1) Resolution of American United Life Insurance Company(R) ("AUL")
Board of Directors establishing American United Life Pooled
Equity Fund B ("Fund B")...........................................(1)
(2) Rules and Regulations of Fund B......................................(1)
(3) Custodial Agreement between AUL, Fund B, and
National City Bank ................................................(1)
(4) Investment Management Services Agreement between AUL and Fund B .....(1)
(5) Sales and Administrative Services Agreement between AUL and Fund B ..(1)
(6) Form of Variable Annuity Contracts and Certificates
6.1 TDA Group variable annuity contract for 403(b)
Plans, Form TA-VA-TP ........................................(1)
6.2 Individual Participant's certificate for
403(b) Plans, Form TA-VA-C ..................................(1)
6.3 Group variable annuity contract for use with
Employee Pension Plans, Form TA-VAQ-TP.......................(1)
6.4 Individual Participant's certificate for use with
Employee Pension Plans, Form TA-VAQ-C........................(1)
6.5 Group variable annuity contract for
HR-10 Plans, Form TA-VAH-TP .................................(1)
6.6 Individual Participants certificate for
HR-10 Plans, Form TA-VAH-C ..................................(1)
6.7 Group variable annuity contract for
408 Plans, Form TA-VA-9894 ..................................(1)
6.8 Individual Participant's certificate for
408 Plans, Form VA-9896 .....................................(1)
6.9 Group variable annuity contract for
457 Programs, Form VA-10515 .................................(1)
(1) Refiled in Registrant's Post Effective Amendment No. 42, Form N-3,
File Number 811-1571, on April 30, 1998.
(2) Filed in Registrant's Post Effective Amendment No. 42, Form N-3,
File Number 811-1571, on April 30, 1998.
<PAGE>
2
ITEM 28(B): EXHIBITS (CONTINUED).
(7) Application for Fund B contracts ....................................(1)
(8.1) Articles of Merger between American Central Life
Insurance Company and United Mutual Life
Insurance Company .................................................(1)
(8.2) Certification of the Indiana Secretary of State as to
the filing of the Articles of Merger between American
Central Life Insurance Company and United Mutual Life
Insurance Company .................................................(1)
(8.3) Code of By-Laws of AUL ..............................................(1)
(9) Exhibit 9 to Form N-3.....................................Not Applicable
(10) Exhibit 10 to Form N-3....................................Not Applicable
(11) Exhibit 11 to Form N-3....................................Not Applicable
(12) Exhibit 12 to Form N-3 - Opinion of Counsel .........................(1)
(13.1) Powers of Attorney ..................................................(1)
(13.2) Consent of Independent Accountant ...................................(2)
(14) Exhibit 14: No financial statements are omitted from
Item 27.................................................Not Applicable
(15) Exhibit 15 to Form N-3....................................Not Applicable
(16) Exhibit 16 to Form N-3....................................Not Applicable
(17) Electronic Filers - Financial Data Schedule..........................(2)
(1) Refiled in Registrant's Post Effective Amendment No. 42, Form N-3,
File Number 811-1571, on April 30, 1998.
(2) Filed in Registrant's Post Effective Amendment No. 42, Form N-3,
File Number 811-1571, on April 30, 1998.
ITEM 29: DIRECTORS AND SENIOR OFFICERS OF AMERICAN UNITED LIFE INSURANCE
COMPANY(R)
<TABLE>
<CAPTION>
Association with Other
Principal Officers Positions and Company and Nature of
and Directors of AUL Positions and Offices Offices with Such Association Within
and Business Address with AUL Registrant the Past 2 Years
- -------------------- --------------------- -------------- --------------------------
<S> <C> <C> <C>
John H. Barbre* Senior Vice President None None
Steven C. Beering M.D. Director None President, Purdue University;
Purdue University Director, Lilly (Eli) and Company;
West Lafayette, Indiana Director, Arvin Industries;
Director, NIPSCO Industries, Inc.;
Director, State Life Ins. Co.
William R. Brown* General Counsel and None Secretary, State Life Insurance Company
Secretary; Dir. AUL
Equity Sales Corp.
*One American Square
Indianapolis, Indiana
<PAGE>
3
<CAPTION>
ITEM 29: (CONTINUED)
Association with Other
Principal Officers Positions and Company and Nature of
and Directors of AUL Positions and Offices Offices with Such Association Within
and Business Address with AUL Registrant the Past 2 Years
- -------------------- --------------------- -------------- --------------------------
<S> <C> <C> <C>
Arthur L. Bryant Director None Chairman of the Board & President, State Life
141 E. Washington St. Insurance Company
Indianapolis, Indiana
James E. Cornelius Director None Chairman of the Board, Guidant Corporation;
P.O. Box 44906 Director, State Life Insurance Company;
Indianapolis, Indiana Director, National Bank of Indianapolis;
Director, Lilly Industries, Inc.
James E. Dora Director None Chairman of the Board, President, Chief
P.O. Box 42908 Executive Officer and Owner, General
Indianapolis, Indiana Hotels Corporation; Director, NBD Bank, N.A.;
Director, State Life Insurance Company
Otto N. Frenzel III Director and Chairman None Chairman, Executive Committee, National City
101 W. Washington St., Suite 400E of the Audit Committee Bank Indiana; Director: Indiana Gas Company;
Indianapolis, Indiana Indianapolis Power & Light Co.; Baldwin & Lyons,
Inc.; IPALCO Enterprises, Inc.; IWC Resources
Corp.(3/86-2/97); Indiana Energy, Inc.; National
City Corp.; State Life Insurance Company;
Indianapolis Water Co.(4/63-2/97)
David W. Goodrich Director None Executive Vice President & Treasurer, F.C.
One American Square Tucker Company; Chairman, Methodist Hospital of
Suite 2500 Indiana (1/93-6/96); Director: State Life Ins.
Indianapolis, Indiana Co.; Irwin Financial Corp.; Citizens Gas & Coke
Utility; Vice Chairman, Clarian Health Partners
William P. Johnson Director None Chairman of the Board & CEO: Goshen Rubber Co.,
1525 S. 10th St. Inc.; GSH Corp.; GRN Corp.; Goshen Rubber of
Goshen, Indiana Canada, Ltd.; Syracuse Rubber Co.; Bond-Flex
Rubber Co.; Palmer Plastics; Dayton Polymrics;
GR Plastics; ETI Incorporated; GKI Incorporated;
Prolon, Inc.; Yeasel, Inc.; Bower Mfg.;
Director, Society Bank Ind.(formerly Trustcorp
Inc.), So. Bend, IN; Member of Advisory Comm.,
Society Bank Ind., Goshen, IN; Director,
Coachman Industries Inc.; Petro Go, Inc.; Flair
Inc.; Lightfoot Enterprises; State Life Ins.Co.
First Source Bank; Kootnz Wagner
<PAGE>
4
ITEM 29: (CONTINUED)
Association with Other
Principal Officers Positions and Company and Nature of
and Directors of AUL Positions and Offices Offices with Such Association Within
and Business Address with AUL Registrant the Past 2 Years
- -------------------- --------------------- -------------- --------------------------
Scott A. Kincaid* Senior Vice President None None
Charles D. Lineback* Senior Vice President None None
James T. Morris Director None Chairman & CEO, Indianapolis Water Co.;
1220 Water Boulevard President, Chairman & CEO, IWC Resources
Indianapolis, Indiana Corp.; Director: National City Bank Corp.;
Paul Harris; State Life Ins. Co.
James W. Murphy* Senior Vice President; Chairman & Chairman of the Board & President, AUL
Director, President & Member of the American Series Fund, Inc.,
Treasurer, AUL Sales Board of
Equity Corp. Managers
Jerry L. Plummer* Senior Vice President None None
R. Stephen Radcliffe* Director & Executive Member of Director, State Life Ins. Co.
Vice President; Chairman the Board of
of the Board, AUL Equity Managers
Sales Corp.
Thomas E. Reilly Jr. Director and Chairman of the None Chairman, Reilly Industries, Inc.; Director,
151 N. Delaware St. Finance Committee Lilly Indus. Inc.; First Chicago NBD Corp.;
Indianapolis, Indiana Herff Jones Corp; State Life Ins. Co.
William R. Riggs* Director None Partner, Ice Miller Donadio & Ryan;
Director, State Life Ins. Co.
*One American Square
Indianapolis, Indiana
<PAGE>
5
Item 29: (continued)
Association with Other
Principal Officers Positions and Company and Nature of
and Directors of AUL Positions and Offices Offices with Such Association Within
and Business Address with AUL Registrant the Past 2 Years
- -------------------- --------------------- -------------- --------------------------
G. David Sapp* Senior Vice President; None None
Director, AUL Equity
Sales Corp.
John C. Scully Director None President and CEO, LIMRA International
2636 Ocean Dr., # 505 (6/92-11/97); Director, State Life Ins. Co.
Vero Beach, Florida
Jerry D. Semler* Chairman of the Board, None Director: Jenn Foundation Board;
President, Chief Executive IWC Resources Corp; Chairman of the Board &
Officer CEO, State Life Ins. Co.
Yvonne H. Shaheen Director None President and Chief Executive Officer, Long
1310 S. Franklin Rd. Electric Co.; Director, State Life Ins. Co.;
Indianapolis, Indiana E.F.S.
James P. Shanahan* Senior Vice President Member, Director, AUL American Series Fund;
(1/84-1/98) Board of Vice President & Treasurer, AUL American Series
Managers Fund (3/90-3/98)
William L. Tindall* Senior Vice President None Senior Vice President, Pension Management Sales,
Mass Mutual Ins. Co. (79-8/97)
Frank D. Walker Director None Chairman of the Board, Walker Information,
P.O. Box 80432 Inc.; Managing Partner, W. R. Properties
Indianapolis, Indiana (6/84-1/98); Director: Citizen's Gas & Coke
Utility; NBD Bank N.A. Indiana; State Life Ins.
Co.; Advisor, Wild Birds Unlimited, Inc.
Gerald T. Walker* Senior Vice President None None
</TABLE>
*One American Square,
Indianapolis, Indiana
<PAGE>
6
ITEM 30: PERSONS CONTROLLED OR UNDER COMMON CONTROL OF AMERICAN UNITED LIFE
INSURANCE COMPANY(R).
American United Life Insurance Company(R) (AUL) is a mutual insurance company
organized under the laws of the State of Indiana. As a mutual company, AUL has
no shareholders and therefore no one individual controls as much as 10% of AUL.
AUL may also be deemed to control State Life Insurance Company(R) ("State
Life"), since a majority of AUL's Directors also serve as Directors of State
Life. By virtue of an agreement between AUL and State Life, AUL provides
investment and other support services for State Life on a contractual basis.
AUL owns a 20% share of the stock of Princeton Reinsurance Managers, LLC,
("Princeton") a limited liability Delaware company. Princeton is a reinsurance
intermediary for certain catastrophic or pooled risks. AUL's affiliation allows
it the opportunity to participate in this reinsurance business.
AUL Equity Sales Corp. is a wholly-owned subsidiary of American United Life
Insurance Company(R) organized under the laws of the State of Indiana in 1969
as a broker-dealer to market mutual funds.
AUL American Unit Trust and AUL American Individual Unit Trust are separate
accounts of AUL, organized for the purpose of the sale of group and individual
variable annuity contracts, respectively.
AUL American Individual Variable Life Unit Trust is a separate account of AUL,
organized for the purpose of the sale of individual variable life insurance
products.
AUL American Series Fund, Inc. (the "Fund") was incorporated under the laws
of Maryland on July 26, 1989 and is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940. As a
"series" type of mutual Fund, the Fund issues shares of common stock relating to
separate investment portfolios. Substantially all of the Fund's shares were
originally purchased by AUL in connection with the initial capitalization of the
Fund. On December 31, 1997, AUL owned 8.11% of the outstanding shares of the
Fund's Equity portfolio and 13.97% of the Fund's Tactical Asset Allocation
Portfolio. At a meeting of the Board of Directors held on November 19, 1997, the
Board approved the addition of three new Portfolios to the Fund, namely, the AUL
American Conservative Investor Portfolio, the AUL American Moderate Investor
Portfolio and the AUL American Aggressive Investor Portfolio, collectively
referred to as the LifeStyle Portfolios. On March 31, 1998, AUL provided the
initial capitalization for the LifeStyle Portfolios and therefore, would be able
to control any issue submitted to the vote of shareholders of the LifeStyle
Portfolios.
Indianapolis Life Insurance company ("IL") is an Indiana domestic mutual
insurance company, whose principal business is the sale of life insurance and
annuity contracts. On November 3, 1997, AUL entered into an agreement with IL to
invest $27 million in its wholly owned downstream holding company, Indianapolis
Life Group of Companies, Inc., in exchange for a 25% equity interest. AUL paid
the balance of the $27 million on March 30, 1998; therefore, AUL currently owns
a 25% equity interest in Indianapolis Group of Companies, Inc.
Registrant is a separate account of AUL organized for the purpose of the sale
of group variable annuity contract.
ITEM 31: NUMBER OF CONTRACTOWNERS
The number of contractowners/participants for all variable annuity contracts
offered by American United Life Insurance Company(R) and Fund B was 478 as of
December 31, 1997.
ITEM 32: INDEMNIFICATION OF DIRECTORS AND OFFICERS
On March 5, 1969, American United Life Insurance Company(R), sponsor of the
Registrant, agreed to indemnify the members of the Board of Managers of the
Registrant against expenses incurred by any member in defense of an
<PAGE>
7
action brought by reason of his being a member of the Board of Managers, except
when in such action, the member is adjudged to have been liable for negligence
or misconduct. American United Life Insurance Company(R) has also agreed to pay
costs of settlement if it is determined by American United Life Insurance
Company(R) that settlement should be made and that the member was not guilty of
negligence or misconduct.
ITEM 33: BUSINESS AND OTHER CONNECTIONS OF OFFICERS AND DIRECTORS OF
AMERICAN UNITED LIFE INSURANCE COMPANY(R)
See Response to Item 29.
ITEM 34: PRINCIPAL UNDERWRITER AND COMPENSATION
(a) American United Life Insurance Company(R) is principal underwriter only for
the Registrant.
<TABLE>
<CAPTION>
(b) Net Underwriting Discounts
and Commissions Deducted Compensation Gross
Name of Principal From Offering Price at or Profit on Brokerage Other
Underwriter Time of Sale Redemptions and Purchases Commissions Compensation
- ----------- --------------------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
American United Life $10,654 $---- $---- $----(A)
Insurance Company(R)
Note A-American United Life Insurance Company(R) performs the duties of
principal underwriter under the Sales and Administrative Services Agreement.
The other compensation paid is the fee for providing investment management
services ($40,319), and for mortality risk and expense charges ($120,956) as
explained elsewhere.
</TABLE>
ITEM 35: LOCATION OF ACCOUNTS AND RECORDS
All accounts, records and other pertinent documents of the Registrant are
under the control of Richard A. Wacker, Secretary to the Board of Managers and
are physically located at One American Square, Indianapolis, IN 46282.
ITEM 36: MANAGEMENT SERVICES
The terms of the Investment Management Services Agreement are fully described
on page 11 of the Prospectus.
ITEM 37: UNDERTAKINGS
Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted.
Registrant undertakes to include either (1) as part of any application to
purchase a contract offered by the Prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a post card or
similar written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information.
Registrant undertakes to deliver any Statement of Additional Information and
any financial statements required to be made available under this Form promptly
upon written or oral request.
The Registrant and its Depositor are relying upon Rule 6c-7 under the
Investment Company Act of 1940 (17 CRF 270.6c-7), Exemptions from Certain
Provisions of Section 22(e) and 27 for Registered Separate Accounts Offering
Variable Annuity Contracts to Participants in the Texas Optional Retirement
Program, and the provisions of paragraphs (a) through (d) of this Rule have been
complied with.
The Registrant and its Depositor, American United Life Insurance Company(R),
are relying upon American Council of Life Insurance, SEC No-Action Letter, SEC
Ref. No. IP-6-88 (November 28, 1988) with respect to annuity contracts offered
as funding vehicles for retirement plans meeting the requirements of Section
403(b) of the Internal Revenue Code, and the provisions of paragraphs (1)-(4) of
this letter have been complied with.
The Registrant represents that the aggregate fees and charges deducted
under the variable annuity contracts are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by the
Insurance Company.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) of the Securities Act of 1933 and
has duly caused this Post-Effective Amendment to the Registration Statement
(Form N-3) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Indianapolis and the State of Indiana on this
30th day of April, 1998.
AMERICAN UNITED LIFE POOLED EQUITY FUND B
By: American United Life Insurance Company(R)
------------------------------------------
By: James W. Murphy*, Chairman of
the Board of Managers
/s/ Richard A. Wacker
_________________________________________
*By: Richard A. Wacker as Attorney-in-fact
Date: April 30, 1998
Pursuant to the requirements of the Securities Act of 1933, this Post Effective
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
__________________________________________ Member, Board of Managers April 30, 1998
Ronald D. Anderson*
__________________________________________ Member, Board of Managers April 30, 1998
Leslie Lenkowsky*
__________________________________________ Member, Board of Managers April 30, 1998
R. Stephen Radcliffe*
__________________________________________ Member, Board of Managers April 30, 1998
James P. Shanahan*
/s/ Richard A. Wacker
__________________________________________
*By: Richard A. Wacker as Attorney-in-fact
Date: April 30, 1998
</TABLE>
<PAGE>
9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, American United Life Insurance Company(R) certifies that it
meets all of the requirements for effectiveness of this Post-Effective Amendment
to the Registration Statement pursuant to Rule 485(b) of the Securities Act of
1933 and has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Indianapolis and the State of Indiana on this
30th day of April, 1998.
American United Life Insurance Company(R)
------------------------------------------
By: Jerry D. Semler*, Chairman of the Board,
President, and Chief Executive Officer
/s/ Richard A. Wacker
___________________________________________
*By: Richard A. Wacker as Attorney-in-fact
Date: April 30, 1998
Pursuant to the requirements of the Securities Act of 1933, this Post Effective
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
_______________________________________________ Director April 30, 1998
Steven C. Beering M.D.*
_______________________________________________ Director April 30, 1998
Arthur L. Bryant*
_______________________________________________ Director April 30, 1998
James E. Cornelius*
_______________________________________________ Director April 30, 1998
James E. Dora*
_______________________________________________ Director April 30, 1998
Otto N. Frenzel III*
_______________________________________________ Director April 30, 1998
David W. Goodrich*
<PAGE>
10
SIGNATURES (Continued)
Signature Title Date
- --------- ----- ----
_______________________________________________ Director April 30, 1998
William P. Johnson*
_______________________________________________ Director April 30, 1998
James T. Morris*
_______________________________________________ Principal Financial April 30, 1998
James W. Murphy* and Accounting Officer
_______________________________________________ Director April 30, 1998
R. Stephen Radcliffe*
_______________________________________________ Director April 30, 1998
Thomas E. Reilly Jr*
_______________________________________________ Director April 30, 1998
William R. Riggs*
_______________________________________________ Director April 30, 1998
John C. Scully*
_______________________________________________ Director April 30, 1998
Yvonne H. Shaheen*
_______________________________________________ Director April 30, 1998
Frank D. Walker*
</TABLE>
/s/ Richard A. Wacker
_______________________________________________
*By: Richard A. Wacker as Attorney-in-fact
Date: April 30, 1998
* Powers of Attorney filed with AUL American Unit Trust's Registration Statement
(File No. 33-31375) and Post-Effective Amendment Nos. 1, 2, 3, 7, 10, and 13 and
incorporated by reference thereto.
<PAGE>
11
***
EXHIBIT LIST
Exhibit
Number in Exhibit
Form N-3, Numbering Name of
Item 28(b) Value Exhibit
- --------- --------- -------
1 EX-99.B1 Resolution of American United Life Insurance
Company(R) ("AUL") Board of Directors
establishing American United Life Pooled
Equity Fund B ("Fund B")
2 EX-99.B2 Rules and Regulations of American United Life
Pooled Equity Fund B
3 EX-99.B3 Custodial Agreement between AUL, Fund B, and
National City Bank
4 EX-99.B4 Investment Management Services Agreement
between AUL and Fund B
5 EX-99.B5 Sales and Administrative Services Agreement
between AUL and Fund B
6 EX-99.B6.1 Form of TDA Group variable annuity contract
for 403(b) Plans, Form TA-VA-TP
6 EX-99.B6.2 Form of Individual Participant's certificate
for 403(b) Plans, Form TA-VA-C
6 EX-99.B6.3 Form of Group variable annuity contract for use
with Employee Pension Plans, Form TA-VAQ-TP
6 EX-99.B6.4 Form of Individual Participant's certificate
for use with Employee Pension Plans, Form TA-VAQ-C
6 EX-99.B6.5 Form of Group variable annuity contract
for HR-10 Plans, Form TA-VAH-TP
6 EX-99.B6.6 Form of Individual Participants certificate
for HR-10 Plans, Form TA-VAH-C
6 EX-99.B6.7 Form of Group variable annuity contract
for 408(b) Plans, Form TA-VA-9894
6 EX-99.B6.8 Form of Individual Participant's certificate
for 408(b) Plans, Form VA-9896
6 EX-99.B6.9 Form of Group variable annuity contract
for 457 Programs, Form VA-10515
7 EX-99.B7 Form of Application for Fund B contracts
8 EX-99.B8.1 Articles of Merger of between American Central
Life Insurance Company and United Mutual Life
Insurance Company
8 EX-99.B8.2 Certification of the Indiana Secretary of State
as to the filing of Articles of Merger between
American Central Life Insurance Company and
United Mutual Life Insurance Company
8 EX-99.B8.3 Code of By-Laws of AUL
12 EX-99.B12 Opinion of Counsel
13 EX-99.B13.1 Powers of Attorney
13 EX-99.B13.2 Consent of Independent Accountants
17 EX-27 Electronic Filers - Financial Data Schedule
- --------------------------------------------------------------------------------
EXHIBIT 1
RESOLUTION OF AMERICAN UNITED LIFE INSURANCE COMPANY(R) ("AUL")
BOARD OF DIRECTORS ESTABLISHING AMERICAN UNITED LIFE
POOLED EQUITY FUND B ("FUND B")
- --------------------------------------------------------------------------------
(Excerpted language from the Minutes of a meeting
of the Board of Directors held on Nov. 17, 1967)
RESOLUTION - ESTABLISHMENT OF AMERICAN UNITED EQUITY FUND B
Upon motion of Mr. Ice, seconded by Mr. Frenzel, the following resolution was
adopted unanimously:
RESOLVED, That the Board of Directors of American United Life Insurance Company
does hereby:
(a) Establish, under the provisions of Section 59 of the Indiana Insurance Law,
a segregated investment account for the annuities (including variable
annuities which qualify as "tax sheltered annuities" under Section 403 (b)
of the Internal Revenue Code) and insurance of the Company fundable and
computable as to payments or benefits on the basis of experience factors of
such account, the assets of which shall be set aside by the Company from
contributions or considerations received by it under the contracts
providing for such annuities or insurance, such account to be known as
"American United Life Pooled Equity Fund B";
(b) Approve and authorize the issuance of Group Pooled Equity Fund B Contracts'
and certificates issued thereunder, in the style and form of the contracts
and certificates copies of which were presented to this meeting and
reserves for which shall be accumulated in the aforesaid Fund B;
(c) Approve and adopt the rules and regulations of American United Life Pooled
Equity Fund B, copies of which were presented to this meeting and pursuant
to which the aforesaid Fund B shall be managed and administered:
(d) Designate and appoint the following persons to constitute the initial
members of the Board of Managers of Pooled Equity Fund B, to serve until
the first annual meeting of Participants of such Fund:
Victor C. Seiter
Paul W. Cook, Jr.
Harold W. Handley
L. S. Norman
Frank J. Travers
and further designate Victor C. Seiter to be the temporary chairman of the
Board of Managers pending the formal organization of such Board;
(e) Approve and authorize on behalf of the Company the sales and administrative
services agreement presented to this meeting to be entered into between the
Company and Fund B;
<PAGE>
(Board Meeting, Nov. 17, 1967) 8.
(f) Approve and authorize on behalf of the Company the investment management
services agreement presented to this meeting to be entered into between the
Company and Fund B;
(g) Approve and authorize on behalf of the Company the safekeeping agreement
presented to this meeting to be entered into among the Company, Fund B and
the____________________ ;
(h) Authorize and direct that Fund B be registered as an investment company
under the Investment Company Act of 1940, as amended, with such exemptions
therefrom to be applied for as may be required on advice of counsel to the
Company;
(i) Authorize and direct that the Group Pooled Equity Fund B Contracts and the
annuities be issued thereunder be registered as required, upon advice of
counsel, under the Securities Act of 1933 and such Blue-Sky Laws as may be
applicable;
(j) Authorize the registration of the Company as broker-dealer under the
Securities Act of 1934 and under Blue Sky Laws of the states where such
registration is required on such forms and in such manner as counsel for
the Company may advise is necessary in order to carry out the sale of the
variable annuities under the Group Pooled Equity Fund B Contract;
(k) Authorize and direct that the approval of the Department of Insurance be
obtained for the Group Pooled Equity Fund B Contract and other-related
matters; and
(l) Authorize and direct that appropriate requests for tax rulings on behalf of
the Company be filed as may be required upon advice of counsel;
RESOLVED FURTHER, that the officers of the Company are authorized and directed
for and on its behalf to do any and all acts and things and to execute, deliver,
record and file any and all instruments and other documents necessary or
incidental to the establishment and operation of the aforesaid Fund B and the
issuance of variable annuities under the aforesaid Group Pooled Equity Fund B
Contracts;
RESOLVED FURTHER that the officers of the Company are authorized upon advice of
counsel to make such changes in the forms and contracts and other documents
approved at this meeting as may be necessary to comply with any legal
requirements pertaining thereto in order to carry out the sale of the variable
annuities under the Group Pooled Equity Fund B Contracts.
- --------------------------------------------------------------------------------
EXHIBIT 2
RULES AND REGULATIONS OF AMERICAN UNITED LIFE POOLED EQUITY FUND B
- --------------------------------------------------------------------------------
AMERICAN UNITED LIFE POOLED EQUITY FUND B
Indianapolis, Indiana
RULES AND REGULATIONS
ARTICLE I
General
Section 1. Name. The name of this segregated investment account is
American United Life Pooled Equity Fund B ("Fund B").
Section 2. Office. The principal office of Fund B is at One American
Square, Indianapolis, Indiana (mailing address: P.O. Box 368, Indianapolis,
Indiana 46206).
Section 3. Purpose. The purpose of Fund B is to provide, in accordance with
certain provisions of the Indiana Insurance Law, a segregated investment account
for certain variable annuity contracts ("Contracts") sold by American United
Life Insurance Company(R) ("AUL") which are fundable and computable as to
payments or benefits on the basis of experience factors of such account, the
assets of which account shall be set aside by AUL from payments received under
such Contracts.
Section 4. Title to Assets. The title to the assets of Fund B shall be
taken in the name of American United Life Insurance Company(R) for American
United Life Pooled Equity Fund B, or appropriate abbreviation thereof or nominee
therefor.
Section 5. Execution of Contracts and Other Documents. Unless otherwise
ordered by the Board of Managers, all written contracts and other documents
entered into by Fund B shall be executed on behalf of Fund B by the chairman of
the board and the secretary of the board.
ARTICLE II
Variable Annuity Participants
Section 1. Fund B Participants. Any person (including any employer)
credited with accumulation units or annuity units in Fund B shall be deemed a
Fund B Participant under these Rules and Regulations so long as (but no longer
than) he shall continue to be credited with any such units. The records of AUL
shall be conclusive evidence as to the identity of such Fund B Participants.
Section 2. Annual Meetings. No annual or regular meetings of the
Participants are required. Meetings of Participants may be called by the Board
and shall be held at such times, on such day and at such hour as the Board may
from time to time determine, for the following purposes: (i) for the election of
Members of the Board of Managers to the extent required under the Investment
Company Act of 1940 (the "1940 Act") or other applicable law; (ii) for the
removal of Members of the Board of Managers to the extent required by the 1940
Act, other applicable law, or by these Rules and Regulations; (iii) with respect
to approval of any contract with an investment adviser to the extent required by
the 1940 Act or other applicable law; (iv) with respect to the merger,
consolidation and sale of assets of the Fund to the extent required by the 1940
Act or other applicable law; (v) for the ratification of the selection of
independent public accountants to the extent required by the 1940 Act or other
applicable law;
<PAGE>
(vi) with respect to such additional matters relating to the Fund as may be
required by the 1940 Act or other applicable law, by these Rules and
Regulations, by the Securities and Exchange Commission or the law of any state
of the United States, or as the Board may deem desirable. When held as provided
herein, all annual meetings shall be general meetings at which any business may
be considered without being specified as a purpose in the notice unless
otherwise required by law.
Section 3. Special Meetings. Special meetings of Fund B Participants may be
called by the chairman of the board, by the Board of Managers, or by Fund B
Participants who hold not less than one-fourth (1/4) of all of the votes which
may be cast on the business proposed to be transacted thereat.
Section 4. Notice of Meetings. Written notice stating the place, day and
hour of any meeting of Fund B Participants and, in the case of special meetings
or when otherwise required by law, the purpose for which any such meeting is
called, shall be delivered or mailed by the secretary of Fund B to each Fund B
Participant entitled to vote at such meeting, at such address as appears upon
the records of AUL and at least thirty (30) days before the date of such
meeting.
Section 5. Quorum. At any meeting of Fund B Participants, Fund B
Participants who are entitled to cast not less than fifty percent (50%) of the
votes which may be voted on the business to be transacted at such meeting,
represented thereat in person or by proxy, shall constitute a quorum, and a
majority vote of such quorum shall be necessary for the transaction of any
business by the meeting, unless a greater number is required by law or these
Rules and Regulations. If a quorum shall not be present, a majority vote of the
Fund B Participants represented may adjourn the meeting to a later time or
times.
Section 6. Voting by Proxy. A Fund B Participant entitled to vote at any
meeting of Fund B Participants may vote either in person or by proxy executed in
writing by the Fund B Participant. A proxy for any meeting shall be valid for
any adjournment of such meeting. No proxy shall be voted at any meeting of Fund
B Participants unless the same shall be filed with the secretary of the meeting
at the commencement thereof. The general proxy of a fiduciary shall be given the
same effect as the general proxy of any other Fund B Participant.
Section 7. Voting. Each Fund B Participant under a Contract may cast one
(1) vote for each accumulation unit in Fund B credited to his account. Each Fund
B Participant who is receiving annuity payments under a Contract may cast a
number of votes equal to (i) the dollar amount of the assets in Fund B to meet
the annuity obligation relating to such Fund B Participant divided by (ii) the
value of an accumulation unit in Fund B, determined in each case as of the
valuation date next preceding the date of determination of voting rights as
provided in Section 8 of this article.
Section 8. Date of Determination of Voting Rights. The Board of Managers
may fix a Fund B Participant record date, not exceeding ninety (90) days
preceding the date appointed for any meeting of Fund B Participants, for the
purpose of determining the Fund B Participants entitled to notice of and to vote
at such meeting, and the number of votes each Fund B Participant is entitled to
cast. In the absence of action by the Board of Managers to set a record date as
herein provided, the record date shall be the ninetieth (90th) day before the
date of such meeting.
- 2 -
<PAGE>
Section 9. Conduct of Meetings. Fund B Participants' meetings, including
the order of business, shall be conducted in accordance with Roberts' Rules of
Order, Revised, except insofar as these Rules and Regulations or any rule
adopted by the Board of Managers or Fund B Participants may otherwise provide.
The Fund B Participants may, by unanimous consent of those present at any
meeting, waive the requirements of this section; but such waiver shall not
preclude any Fund B Participant from invoking the requirements of this section
at any subsequent meeting.
Section 10. Inspectors. At each meeting of the Fund B 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 Fund B
Participants, shall be appointed by the Board of Managers 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.
ARTICLE III
Board of Managers
Section 1. Board of Managers. The Board of Managers shall consist of five
(5) Members who shall be elected, after their initial designation by AUL, by the
Fund B Participants to the extent required by the 1940 Act or other applicable
law and as provided for in Article II, Section 2 and in Article III, Section 2
of these Rules and Regulations. The Members need not be Fund B Participants. No
person shall be eligible to continue serving as a Member of the Board of
Managers after reaching his seventieth (70th) birthday.
Section 2. Terms of Office of Managers. Members of the Board of Managers
shall be elected at the annual meeting of Participants or at a special meeting
held for that purpose to the extent required by the 1940 Act or other applicable
law or by Article II, Section 2 of these Rules and Regulations. Each Member of
the Board of Managers shall hold office until his successor is duly appointed
and qualified, or if elected, duly elected and qualified or until the earlier of
his death, resignation, or removal. A member appointed to the Board of Managers
may hold office until the next annual meeting of Participants and until his
successor is duly elected and qualified. If at any time, less than a majority of
the Members of the Board of Managers then in office have been elected by the
Participants, a meeting of the Participants shall be called within sixty (60)
days for the purpose of filling any existing vacancies in the Board of Managers,
unless the Securities and Exchange Commission or any court of competent
jurisdiction shall by order extend such period.]
Section 3. Powers. The Board of Managers shall be responsible for the
management of Fund B, and in connection therewith shall have the following
duties, responsibilities and powers:
a. To select annually an independent public accountant for Fund B provided
that the initial appointment of an independent accountant or the
appointment of a new independent accountant for Fund B shall be submitted
to the Participants for ratification or rejection;
- 3 -
<PAGE>
b. To approve annually an agreement providing for sales and administrative
services;
c. To approve annually agreements providing for investment management services
and mortality and expense guarantees. Such agreements as initially adopted,
and any material amendments thereto shall be subject to approval by the
Fund B Participants.
d. To recommend from time to time any changes deemed appropriate in the
fundamental investment policy of Fund B, which proposed changes shall be
submitted to the Fund B Participants at their next meeting.
e. To authorize investment programs for Fund B in accordance with the
investment objectives and policies of Fund B.
Section 4. Meetings. Regular meetings of the Board of Managers shall be
held at Indianapolis, Indiana and at such times as the Board, by vote, may
determine from time to time, and if so determined, no call or notice thereof
need be given. Special meetings of the Board may be held at any time at
Indianapolis, Indiana whenever called by the Chairman of the Board of Managers,
or three or more Members of the Board of Managers. Notice thereof shall be given
to each Member by the person calling the meeting, unless all members are present
or unless those not present shall waive notice thereof in writing, which shall
be filed with the records of the meeting. Notice of special meetings stating the
time and place thereof shall be given by mail to each member at his residence or
business address at lease two days before the meeting, or by delivering or
telephoning the same to him personally or by telegramming the same to him at his
residence or business address at least one day before the meeting. The Chairman
of the Board of Managers shall preside at all meetings of the Board of Managers
at which he is present.
Section 5. Quorum. A majority of the Members of the Board of Managers 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.
Section 6. Chairman of and Secretary to the Board of Managers. At the first
meeting of the Board of Managers and annually thereafter, the Board of Managers
shall elect one of its Members to act as Chairman of the Board of Managers, and
he shall hold office until his successor is elected and qualified.
The Board of Managers shall appoint a Secretary to the Board, who need not
be a Member of the Board. The Secretary shall have the power to certify the
minutes of the proceedings of the Participants and the Board of Managers and
portions thereof and shall perform such other duties and have such other powers
as these Rules and Regulations or the Board of Managers shall provide from time
to time. In the absence of a Secretary, a temporary Secretary, appointed by the
Board shall perform such duties and have such powers.
Section 7. Vacancies. Vacancies occurring by reason of death, resignation,
removal or otherwise of duly elected Members of the Board of Directors occurring
between meetings of the
- 4 -
<PAGE>
Fund B Participants may be filled for the unexpired term thereof by a majority
vote of all the remaining Members if immediately after so filling any such
vacancy at least two-thirds of the Members then holding office shall have been
elected to such office by ballot of the Fund B Participants at an annual or
special meeting; otherwise the vacancies shall be filled by the Fund B
Participants at a meeting called for such purpose.
The Board of Managers shall have and may exercise all its powers
notwithstanding the existence of one or more vacancies in its number, provided
there be at least two Members in office. If the office of any Member of the
Executive Committee, Investment or any other committee, or the Chairman of the
Board of Managers or the Secretary becomes vacant, the Board of Managers 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 and until his successor shall
be elected or appointed and qualified, or until he sooner dies, resigns, is
removed or becomes disqualified.
Section 8. Removal of Members of the Board of Managers. At any meeting of
Participants, the Participants may by a vote of two-thirds (2/3) of all votes
entitled to be cast for the election of Members, remove any Member from office,
either with or without cause, and may, by the vote normally required to elect
Members, elect a successor to fill any resulting vacancy for the unexpired term
of the removed Member. The Board of Managers shall promptly call a meeting of
Participants for the purpose of voting on the question of removal of a Member
when requested to do so in writing by the holders of not less than ten percent
(10%) of the votes entitled to be cast.
Section 9. Committees. The Board of Managers may elect by vote of a
majority of the whole Board, two or more of its Members to constitute an
Executive Committee which committee shall have and may exercise when the Board
is not in session, any or all powers of the Board of Managers in the management
of the business and affairs of Fund B.
The Board of Managers may elect by a majority of the whole Board, two or
more of its number to constitute an Investment Committee, which committee shall
approve all investment transactions relative to Fund B.
The Board of Managers likewise may appoint from their number other
committees from time to time, the number (not less than two) composing such
committees, and the functions to be performed by the same to be determined by
the vote of the Board of Managers.
Each committee may make rules for the notice and conduct of its meetings
and the keeping of the records thereof. The terms of any member of any committee
shall be fixed by the Board of Managers but all members of a committee shall
hold office for an initial period of one (1) year and shall be subject to
reappointment annually thereafter by the Board of Managers.
ARTICLE IV
Amendments
These Rules and Regulations, subject to applicable law, may be altered,
amended or repealed by vote of a majority of the Board of Managers.
- 5 -
- --------------------------------------------------------------------------------
EXHIBIT 3
CUSTODIAL AGREEMENT BETWEEN AUL, FUND B,
AND NATIONAL CITY BANK
- --------------------------------------------------------------------------------
CUSTODIAL AGENCY AGREEMENT
This Custodial Agency Agreement (the "Agreement"), executed this 28 th day of
January, 1994, by and between National City Bank, Indiana, a national banking
association organized and existing under the laws of the United States of
America (the "Custodian"), and American United Life Pooled Equity Fund B
("Depositor").
WITNESSETH:
In consideration of the mutual agreements herein contained, Depositor does
hereby appoint Custodian as the Custodian of the assets of the Depositor and
hereby authorizes Custodian to maintain the securities and monies of Depositor
under the terms of this Agreement. The Custodian shall establish and maintain a
custody account (the "Account") for and in the name of the Depositor and hold
therein all Securities deposited with or collected by the Custodian for the
Account. The terms "Security" or "Securities" shall mean any negotiable or
non-negotiable investment instrument(s) commonly known as a security or
securities in banking custom or practice.
SECTION 1. ACCEPTANCE OF SECURITIES
(a) The Custodian shall accept delivery from and on behalf of the Depositor of
such Securities as shall, from time to time, be acceptable to it. Any
Securities now held by the Custodian for the Depositor under prior security
agreements shall be deemed to have been deposited hereunder.
(b) The Custodian shall keep the Securities received by it hereunder separate
and distinct from securities, documents, and property owned by itself or
others to the end that each and every item received by it hereunder shall
at all times be identified and identifiable as the sole property of the
Depositor.
(c) The Custodian may, in its discretion, safekeep the Depositor's Securities
in a nationally recognized securities depository or safekeeping facility
including, but not limited to, any facility operated by the Federal Reserve
System, any member of the Federal Reserve System, or any other agency or
instrumentality of the United States Government. Such deposits by the
Custodian into a securities depository or safekeeping facility may be in
book-entry form or such other form as the Custodian deems appropriate.
Placement by the Custodian of Securities into a securities depository or
safekeeping facility shall neither augment nor diminish the Custodian's
responsibilities and rights under any other paragraph of this Agreement. If
the Custodian shall hold the securities in a book entry account, then: (i)
the Custodian shall only deposit the Depositor's securities in a
non-proprietary account which includes only assets held for customers, (ii)
the custodian shall send the Depositor written confirmation of any transfer
to or from the Depositor's account with the Custodian, (iii) the Custodian
shall promptly, upon request, send the Depositor a copy of reports it
receives from depository's system of internal account control, and (iv) the
Custodian shall promptly send the Depositor such
<PAGE>
reports on the Custodian's system of internal accounting control as the
Depositor may from time to time request.
(d) The Custodian is authorized to re-register the Securities in the name of
the Custodian or its nominee if required for purposes of book entry deposit
unless alternative and acceptable registration instructions are furnished
by the Depositor.
SECTION 2. STANDARD OF CARE
The Custodian shall exercise due care in receiving, holding and handling the
Securities and will give to such Securities the same care and safeguards as are
afforded similar property owned by the Custodian.
Custodian agrees to receive and to safely keep and preserve all of Depositor's
assets delivered to it and to take all action with respect thereto, as provided
in this Agreement. Custodian assumes full responsibility for the safekeeping of
all of Depositor's securities in the Custodian's custody under this Agreement
and for the performance and completion of any transaction relating to any of
Depositor's securities and hereby indemnifies Depositor against all loss of
principal, interest and any other sums caused by Custodian's failure to meet its
responsibilities hereunder. Custodian shall not, however, be responsible for any
loss arising out of an act of God, war, riot, civil commotion, or the act, order
or decree of any governmental, military, naval or usurped power. In the event
that there is a loss of custodied securities for which Custodian shall be
obligated to indemnify Depositor, Custodian shall promptly replace the
securities or the value thereof and the value of any loss of rights or
privileges resulting from said loss of securities and it is further agreed that
Custodian's responsibility for the performance and completion of any transaction
shall be limited to prompt replacement of the securities or the value thereof if
its inability to complete a transaction shall be directly caused by the
unexpected and intervening act of any third party not subject to Custodian's
direct or indirect control.
Notwithstanding anything to the contrary, Depositor understands and agrees that
the Custodian is acting solely in the capacity as custodian agent for the
Depositor and has no duty to advise the Depositor relative to the investment,
purchase, retention, sale, or other disposition of any Securities held
hereunder. Nothing in this Agreement shall be construed to impose a fiduciary
capacity as Trustee, Guardian, Executor, Administrator or other personal
representative on the Custodian.
Depositor further understands and agrees that Custodian is not responsible for
any system operated by third parties and/or securities exchanges, wire transfer
systems, computer interfaces, etc. nor the availability or failure of same.
Depositor also understands and agrees that the service offered by Custodian and
purchased by Depositor is of the type and character offered to similarly
situated clients of the Custodian and that the Custodian's actions are to be
judged in the context of the usual and customary practice within the custody
business.
<PAGE>
SECTION 3. DEPOSITOR DUTIES
The Depositor shall provide the Custodian with a written certificate containing
the specimen signatures of Authorized Persons, any two of whom are hereby
authorized to jointly act and give direction on behalf of the Depositor.
Whenever the term "Authorized Persons" shall be used in this Agreement, this
term shall refer to at least two of the persons authorized to act on behalf of
the Depositor. The Custodian shall be entitled to rely upon such certificate
until notified otherwise by the Depositor in writing.
In the event that the Custodian shall receive conflicting instructions from
Depositor regarding any particular transaction, Custodian shall make best
efforts to resolve such conflict. If the conflict is not resolved, no action
shall be taken. Custodian shall have no further duty to process conflicting
instructions until such conflict can be resolved.
SECTION 4. CUSTODIAN DUTIES
(a) The Custodian shall, at the direction of the Depositor, use its best
efforts to undertake completion of any purchase, sale, exchange, or any
other disposition of Securities made or arranged by the Depositor provided
that such direction is received by the Custodian in each case prior to the
applicable deadline as established by the Custodian.
The net proceeds of any sale shall be credited to the Account or remitted in
accordance with the instructions of the Depositor.
The Depositor shall provide the Custodian with immediately available funds in an
amount sufficient to complete any purchase. Any failure to provide such funds
shall result in such purchase not being deemed completed as far as the
Depositor's ownership of such Securities are concerned and the Custodian shall
be authorized to dispose of such Securities and any proceeds therefrom as soon
as practicable in such manner as the Custodian shall, within its sole
discretion, deem appropriate for the purpose of recouping any amounts expended
by the Custodian in the purchase of such Securities. Whether any Custodian funds
shall be expended towards the purchase of Securities for the Depositor hereunder
shall be within the Custodian's sole discretion. The Depositor shall be liable
to the Custodian for any costs, expenses and losses incurred by the Custodian in
the disposition of such Securities or proceeds and shall immediately reimburse
the Custodian for such amounts upon demand.
(b) The Custodian may accept written, oral, electronic, and telecommunications
instructions from the Depositor. The Custodian shall have no responsibility
for the adequacy or accuracy of such instructions received from the
Depositor and shall incur no liability for, and shall be entitled to rely
upon, any such instructions which the Custodian believes in good faith are
given by Authorized Persons. All instructions which have been given by
Depositor by means of oral, electronic, or telecommunications shall be
confirmed by Authorized Persons of Depositor in writing.
<PAGE>
(c) The custodian shall promptly notify the Depositor of any calls for
redemption, mergers, tenders, consolidations, reorganizations,
recapitalizations, or similar proceedings affecting domestic Securities
(other than those Securities registered in the Depositor's name) held in
the Account, provided notice of such proceedings appears in standard New
York financial publications or a service to which the Custodian subscribes.
The Custodian shall not be liable for late presentation of such items when
the Depositor has failed to timely instruct the Custodian in writing.
Should any Security held in a securities depository be called for a partial
redemption by the issuer of such Security, the Custodian is authorized, in
its sole discretion, to allot the called portion to the respective holders
in any manner it deems fair and equitable. Upon the request of the
Depositor, Custodian shall provide a written explanation of the method used
to allot the called portion of a partial redemption.
(d) The Custodian shall present all maturing bonds and coupons for collection
and is authorized to receive payment of income and principal on other items
in accordance with their terms. All funds so collected shall be credited to
the Account or remitted in accordance with the instructions of the
Depositor.
(e) The Custodian shall furnish the Depositor with periodic statements showing
the Securities held in the Account and the transactions for the '
immediately preceding period. Custodian acknowledges that all of the
accounts and records maintained by the Custodian pursuant to this Agreement
will be made available for inspection or reproduction within a reasonable
period of time after demand. Custodian will assist the Depositor's
independent accountants, or with the approval of the Depositor, any
regulatory body in any requested review of the Depositor's accounts and
records but shall be reimbursed for all expenses and employee time spent in
any such review outside of routine and normal periodic reviews.
SECTION 5. FOREIGN SECURITIES
With respect to Securities of foreign issuers, the Custodian shall use its best
efforts to collect dividends, interest, and other income, and to notify the
Depositor of any calls for redemption, offers of exchange, rights of
subscriptions, reorganizations, or other proceedings affecting such Securities.
The Custodian shall not be responsible for any failures or delays in collection
or notice not within the control of the Custodian.
<PAGE>
Collections or income in foreign currency shall, to the extent possible, be
converted into United States dollars and, in effecting such conversions, the
Custodian may use such methods or agencies as it deems appropriate. The risk of
transmittal, instability of the issuer or country of the issuer or its agents,
and any expense incident to such collection and conversion shall be at the
Depositor's risk and expense. In addition, the Custodian shall have no
responsibility for any fluctuation in exchange rates affecting such conversion.
SECTION 6. PROXY MATERIALS
All proxies and related information received by the Custodian in connection with
the Securities shall be promptly transmitted to the Depositor.
SECTION 7. CUSTODIAN POWER OF ATTORNEY
The Custodian is authorized and empowered in the name of and on behalf of the
Depositor to execute any certificates of ownership or other instruments which
are or may hereafter be required by any regulations of the United States or any
state or political subdivision thereof, so that the Custodian may fulfill its
obligations hereunder as required in connection with any Securities.
SECTION 8. FEES AND EXPENSES
The Depositor agrees to promptly pay upon receipt of an invoice from the
Custodian the fees set forth in the attached schedule. The Custodian reserves
the right to revise its fees upon giving ninety (90) days written notice to the
Depositor. Fees for services not specifically enumerated in the attached
schedule shall be in addition to these specifically enumerated.
SECTION 9. AMENDMENTS
The parties may make amendments to the Agreement from time to time, provided
that any such amendment shall be reduced to writing and shall be executed as an
addendum to this Agreement in the same manner as this Agreement has been
executed.
SECTION 10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of the
successors and assigns of the respective parties hereto.
SECTION 11. COMPLETENESS OF AGREEMENT
This Agreement along with a copy of the fee schedule constitutes the full and
complete agreement between the Custodian and Depositor, and no other
understanding or agreement, whether written or oral, shall bind either of the
parties hereto.
SECTION 12. GOVERNING LAW
This Agreement shall be governed by the applicable laws of the State of Indiana.
SECTION 13. TERMINATION
All the covenants and agreements in this Agreement contained by or on behalf of
the Custodian or the Depositor shall bind and inure to the benefit of their
respective successors and assigns.
<PAGE>
This Agreement may be terminated by either the Depositor or the Custodian upon
at least ninety (90) days prior written notice to the other. The Depositor shall
have a period of forty five (45) days from the date of the last and final
accounting provided by the Custodian to make any objection or claim, and failure
to do so within the forty five (45) day period shall be deemed by the parties
hereto to constitute accord and satisfaction. As soon as practicable following
termination of this Agreement, Custodian shall deliver all Securities in
accordance with Depositor's written instructions.
In the event of the inability of the Custodian to serve or continue to serve or
as a result of the termination of this Agreement by either party, then the
Depositor shall forthwith appoint a bank or trust company of good standing,
having capital, surplus and undivided profits of not less than $2,000,000 and
said Bank or Trust Company shall act as successor to the Custodian. In such
event, and providing that Custodian shall have been compensated for the fees
properly due and owing it, Custodian shall deliver the Depositor's funds and
securities to the successor Custodian selected by Depositor, duly endorsed and
in form for transfer.
SECTION 14. NOTICES
It shall be sufficient service of any notice, request, authorization, complaint,
demand or other paper required under this Agreement to be given or filed with
the Custodian or Depositor if the same shall be duly mailed by first class mail
with postage prepaid addressed as follows:
(a) If to the Custodian:
National City Bank, Indiana
Corporate Trust Department
Attention: Security Custody
101 W. Washington Street
Indianapolis, Indiana 46255
Fax Number: (317)267-7658
(b) If to the Depositor:
American United Life Insurance Company
One American Square, Box 1995
Indianapolis, Indiana 46206
Fax Number: (317)263-1947
SECTION 15. ASSIGNMENT
This Agreement may not be assigned by the Custodian without the written consent
of the Depositor duly approved by resolution of its Board of Directors or the
Executive Committee or any successor Committee similar to the present Executive
Committee.
<PAGE>
SECTION 16. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed an
original.
IN WITNESS WHEREOF, the parties hereto executed this Agreement as of the day and
year first above written.
DEPOSITOR
American United Life Insurance Company
/s/ Jerry D. Semler
--------------------------------------
BY: Jerry D. Semler
TITLE: Chairman, President and
Chief Executive Officer
ATTEST:
/s/ William R. Brown
- ---------------------------
William R. Brown Secretary
/s/ James W. Murphy
- ---------------------------
James W. Murphy
Chairman of Board of Manager
Pooled Equity Fund B
CUSTODIAN
National City Bank Indiana
/s/ Faith Berning
--------------------------------------
BY: Faith Berning, Vice President
ATTEST:
/s/ Catherine S. Krug
- --------------------------
Catherine S. Krug,
Assistant Vice President
<PAGE>
CERTIFICATE OF AUTHORIZED
REPRESENTATIVES
The following individuals are Authorized Representatives for purpose of giving
direction on behalf of American Life Insurance Company pursuant to that
Custodial Agency Agreement dated, 1994 by and between National City Bank,
Indiana and American United Life Insurance Company.
Name and Title Signature
- -------------- ---------
Jerry D. Semler, Chairman of the Board, /s/ Jerry D. Semler
President and Chief Executive Officer
J. W. Murphy, Senior Vice President /s/ J. W. Murphy
Corporate Finance
G. David Sapp, Senior Vice President, Investments /s/ G. David Sapp
Drew C. Boggs, Vice President, Mortgage Loans /s/ Drew C. Boggs
Kent R Adams, Vice President /s/ Kent R. Adams
Fixed Income Securities
L. Sweany, Controller /s/ L. Sweany
Jack Hufford, Treasurer /s/ Jack Hufford
James C. Shields, Assistant Teasurer /s/ James C. Shields
Dated this 28th day of January, 1994.
American United Life Insurance Company
/s/ Jerry D. Semler
--------------------------------------
By: Jerry D. Semler
Title: Chairman, President and
Chief Executive Officer
Attest:
/s/ William R. Brown
- ---------------------------------
By: William R. Brown
Title: Secretary
- --------------------------------------------------------------------------------
EXHIBIT 4
INVESTMENT MANAGEMENT SERVICES AGREEMENT BETWEEN AUL AND FUND B
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT entered into this 20th day of December, 1971, by and between
American United Life Insurance Company (herein "AUL") an Indiana corporation,
with its principal place of business at Indianapolis, Indiana, and American
United Life Pooled Equity Fund B (herein "Fund B") , a segregated investment
account which has been established by AUL for certain variable annuity contracts
(herein "Contracts") sold by AUL which are fundable and computable as to
payments or benefits on the basis of experience factors of such account, the
assets of which account shall be set aside by AUL from payments received under
such Contracts.
1. AUL hereby agrees to provide investment management services relative to
the Contracts, such services to include the management of the assets of Fund B,
investment analysis, preparation of programs for the approval or rejection of
the Board of Managers of Fund B, placing of orders for the purchase or sale of
investments and all other matters normally associated with the investment
management activities of such a fund and to pay all expenses incidental to such
services, except brokerage commissions, stamp or other transfer taxes and other
direct costs of acquisition or disposition of assets in Fund B, which shall be
borne by Fund B. AUL shall have authority to make cash transfers to and from
Fund B arising from the interaction of payments received, benefit payments,
payments of the fees to AUL as provided in Paragraph 2 and in the Contracts, and
for mortality.
2. For its investment management services, AUL shall receive a daily fee of
.00082% of the value of the assets of Fund B (approximately 0.3% on an annual
basis), to be determined by the regular valuations of the assets of Fund in
accordance with the provisions of the Contracts.
<PAGE>
3. This agreement shall continue in full force and effect from year to year
until terminated (a) by the Board of Managers of Fund B or (b) by a majority
vote of the votes of the Fund B Participants under the Contracts are entitled to
cast at a meeting thereof or (c) by the board of directors of AUL, without the
payment of any penalty, on thirty (30) days written notice at the other party.
This agreement shall terminate automatically and without notice:
(a) in the event it is not approved by a majority of the votes entitled to be
cast at a meeting of the Fund B Participants under the Contracts at a
meeting thereof when it is initially submitted to them for their approval,
or
(b) upon any assignment thereof, or
(c) if after initial approval, its continuance is not specifically approved at
least annually either by the affirmative vote of a majority of the members
of the Board of Managers of Fund B, or by a majority of the votes entitled
to be cast by the Fund B Participants under the Contracts at a meeting
thereof. In any event, the terms of such agreement and any continuance
thereof must be specifically approved by the affirmative vote of a majority
of the members of the Board of Managers of Fund B, including a majority of
such members who are not parties to such agreement or interested persons of
any such party.
4. Notwithstanding the provisions in Paragraph 3, the Board of Directors of
AUL may not terminate this agreement at any time in violation of the provisions
of the Contracts.
5. This agreement is subject to the provisions of the Investment Company
Act of 1940, as amended, the Securities Act of 1933, as amended, and the Rules
and Regulations promulgated by the Securities and Exchange Commission pursuant
to the aforesaid Acts.
2
<PAGE>
Executed this 20th day of December, 1971.
AMERICAN UNITED LIFE INSURANCE COMPANY
By: /s/ Jack Reich
------------------
President
ATTEST:
/s/ K.B. Wilson
- ---------------
Secretary
AMERICAN UNITED LIFE POOLED EQUITY FUND B
By: /s/ Victor C. Seiter
------------------------
Chairman of the Board
ATTEST:
/s/ K.B. Wilson
- ---------------
Secretary
3
- --------------------------------------------------------------------------------
EXHIBIT 5
SALES AND ADMINISTRATIVE SERVICES AGREEMENT BETWEEN AUL AND FUND B
- --------------------------------------------------------------------------------
SALES AND ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT entered into this 20th day of December, 1971, by and between
American United Life Insurance Company (herein "AUL"), an Indiana corporation,
with its principal place of business at Indianapolis, Indiana, and American
United Life Pooled Equity Fund B (herein "Fund B"), a segregated investment
account which has been established by AUL for certain variable annuity contracts
(herein "Contracts") sold by AUL which are fundable and computable as to
payments or benefits on the basis of experience factors of such account, the
assets of which account shall be set aside by AUL from payments received under
such Contracts.
1. AUL does hereby agree to provide sales ant administrative services
relative to the Contracts which services shall consist of and include all
services of AUL, its employees, agents and brokers, in connection with the sale
of the Contracts, and the payment by AUL to such persons of all compensation
related to the sale and administration of the Contracts, and the payment of
other expenses related thereto, including, if applicable, rent, postage,
telephone, travel, Stationery, office equipment and supplies and legal,
actuarial and auditing fees. In addition, AUL also shall pay the salaries of the
members of the Board of Managers of Fund B (but not in excess of $1,500 per
manager per year plus $50 expense allowance per meeting attended), the fee of
the auditors for the annual audit of Fund B. the cost of preparing and mailing
of the annual and other regular reports of Fund B to the Fund B Participants,
and the cost of registering (as required in the opinion of AUL)the Contracts and
the annuities issuable thereunder under federal and state securities law.
<PAGE>
2. In consideration of its services and payments hereunder, AUL shall
receive for each group variable annuity 6% of each payment received for a
Participant under the Contracts until payments in the aggregate of $5,000 have
been received for such participation and 4% of each payment received for such
Participant after $5,000 has been received. For individual annual purchase
variable annuity contracts AUL shall receive a sales charge of 9% of the first
$2500 received for such Participant; thereafter AUL shall receive a sales charge
of 7% of the next $7500 received and 5% of each payment made thereafter. For
individual single purchase variable annuity contracts, AUL shall receive a sales
charge of 7% of the first $2500 received for a Participant under the contracts,
5% of the next $7500 received, 4% of the next $40,000 received and 3% of the
next $200,000 received. For Administrative Services under Individual Annual
Purchase Payment Deferred Annuity contracts, AUL will receive an annual
administrative charge of $15 for any year during which a payment is received for
a Participant and $5 for any year during which no payment is received for a
participant. For Administrative Services under Individual Annual Purchase and
Single Purchase Payment Immediate Annuity Contracts, AUL will receive $50 at the
time said contract is purchased by a Participant. For Administrative Services
under Individual Single Purchase Payment Deferred Annuity Contracts, AUL will
receive $50 at the time and for the year said contract is purchased by a
Participant and $5 for each additional year and contract is in existence.
<PAGE>
3. This agreement shall continue in full force and effect from year to year
until terminated by AUL or the Board of Managers of Fund B. Termination may be
effected by either party, without penalty, on thirty (30)days written notice.
This agreement shall automatically terminate:
(a) upon any assignment thereof by AUL.
(b) unless its continuance is specifically approved, at least annually, either
(i) by the affirmative vote of a majority of the members of the Board of
Managers of Fund B, or (ii) by a majority of the voters entitled to be cast
by the Fund B Participants under the Contracts at a meeting thereof. In any
event, the terms of such agreement and any continuance thereof must be
specifically approved by the affirmative vote of a majority of the members
of the Board of Managers of Fund B including a majority of such members who
are not parties to such agreement or interested persons of any such party.
4. Notwithstanding the foregoing provisions in Paragraph 3 hereof, AUL may
not terminate this agreement in any way which would be contrary to or a
violation of any provisions of the Contracts. In the event of termination by the
Board of Managers or Participants of Fund B in such manner that AUL must still
render sales and administrative services under the Contracts to any of the Fund
B Participants thereunder, AUL shall be compensated therefor to the extent such
services are rendered in accordance with the terms of such Contracts.
5. This agreement is subject to the provisions of the Investment Company
Act of 1940, as amended, the Securities Act of 1933, as amended, and the Rules
and Regulations promulgated by the Securities and Exchange Commission pursuant
to the aforesaid Acts.
<PAGE>
Executed this 20th day of December, 1971.
AMERICAN UNITED LIFE INSURANCE COMPANY
By: /s/ Jack Reich
------------------
President
ATTEST:
/s/ K.B. Wilson
- ---------------
Secretary
AMERICAN UNITED LIFE POOLED EQUITY FUND B
By: /s/ Victor C. Seiter
------------------------
Chairman of the Board
ATTEST:
/s/ K.B. Wilson
- ---------------
Secretary
- --------------------------------------------------------------------------------
EXHIBIT 6.1
FORM OF TDA GROUP VARIABLE ANNUITY CONTRACT
FOR 403(B) PLANS, FORM TA-VA-TP
- --------------------------------------------------------------------------------
AMERICAN UNITED
LIFE INSURANCE COMPANY
ESTABLISHED 1877
GROUP POOLED EQUITY FUND B CONTRACT NO.
CONTRACTHOLDER
CONTRACT DATE
American United Life Insurance Company ("Company") agrees to make the payments
provided by this contract.
This contract is issued in consideration of the application for this contract
and of the payment to the Company of Contributions as provided in this contract.
This contract provides for investment in Pooled Equity Fund B. and supplements
Group Annuity Contract which provides for fixed-dollar benefits and which shall
hereinafter be referred to as the "Companion Contract".
The provisions and tables on the following pages are part of this contract.
This contract is delivered in
Signed at the Home Office of the Company on the Contract Date.
AMERICAN UNITED LIFE INSURANCE
COMPANY
By ___________________________
President
___________________________
Secretary
Group Annuity Contract
Equity Fund - Variable
Annuities
Participating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AS HEREIN
PROVIDED AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1----- Definitions
ARTICLE II PARTICIPANTS
Section 1----- Eligibility
Section 2----- Participant
Section 3----- Cessation of Participation.
ARTICLE III CONTRIBUTIONS TO THE COMPANY
Section 1----- Contributions
Section 2----- Application of Contributions
Section 3----- Credit of Accumulation Units
Section 4----- Suspension of Contributions
ARTICLE IV VALUATION
Section 1----- Gross Investment Rate and Net Investment Rate
Section 2----- Net Investment Factor
Section 3----- Accumulation Unit Value
Section 4----- Annuity Unit Value
Section 5----- Valuation of Assets
ARTICLE V BENEFITS
Section 1----- Variable Retirement Annuity
Section 2----- Optional Variable Annuity Settlements
Section 3----- Amount of Variable Retirement Annuity
Section 4----- Transfer Option
Section 5----- Termination Benefits
Section 6----- Withdrawal Benefits
Section 7----- Death Benefits
ARTICLE VI GENERAL PROVISIONS
Section 1----- Certificates
Section 2----- Beneficiary
Section 3----- Participating
TA-VA;TC -2
<PAGE>
(TABLE OF CONTENTS)
Section 4 ---- Contracts
Section 5----- Waiver and Modification
Section 6----- Amendments
Section 7----- Not Transferable
Section 8----- Misstatements
Section 9----- Information, Proofs and Determination of Facts
Section 10---- Frequency of Payments
Section 11---- Facility of Payment
Section 12---- Relation of this Contract to Pooled Equity Fund B
Section 13---- Voting
TABLES
TA-VA-TC(2)
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1--DEFINITIONS. Yearly Date is the Contract Date and the same day of
each year thereafter.
MONTHLY DATE is the Contract Date and the same day of each month thereafter.
CONTRACT YEAR is a period of one year beginning on a Yearly Date.
EMPLOYER is the Contractholder designated on the title page. Any similar or
related organization which makes written election to come under this contract
shall be an "Employer" if such election is approved by the Company.
PARTICIPANT is as set out in Article II.
ANNUITANT is a Participant who is receiving annuity benefits hereunder.
POOLED EQUITY FUND B is that segregated investment account entitled "American
United Life Pooled Equity Fund B" which has been established by the Company for
this and other variable annuity contracts sold by the Company which are fundable
and computable as to payments or benefits on the basis of experience factors of
such account, the assets of which are set aside by the Company from
contributions received under such contracts.
VALUATION PERIOD is that period beginning immediately after a valuation of
Pooled Equity Fund B and ending with the next valuation of Pooled Equity Fund B.
Valuations shall occur as of the close of trading on the New York Stock Exchange
on each day during which the Exchange is open for trading.
PARTICIPANT'S INDIVIDUAL ACCOUNT is the sum of the accumulation units credited
to such Participant.
NORMAL RETIREMENT DATE is, for a Participant, the Monthly Date immediately
following the date on which he attains age 65.
ANNUITY COMMENCEMENT DATE is, for a Participant, his Normal Retirement Date,
except that,
(a) upon written request of the Participant, the Annuity Commencement Date
shall become any Monthly Date specified in such request which is prior to
his Normal Retirement Date and subsequent to the date of such request, or
TA-VA;1--1 -7
<PAGE>
(b) Retirement Date, upon written request of the Participant, Annuity
Commencement Date shall become any Monthly Date specified in such request
which is subsequent to his Normal Retirement Date, but not later than the
Monthly Date following the date he attains age 75.
VARIABLE RETIREMENT ANNUITY is a series of retirement payments under this
contract in amounts which may vary from time to time because of the investment
results of Pooled Equity Fund B.
COMPANION CONTRACT is the Group Annuity Contract issued by the Company to the
Contractholder which provides for fixed dollar annuity payments which are
guaranteed as to dollar amount throughout the payment period.
TA-VA; 1--1(2) -4
<PAGE>
ARTICLE II
PARTICIPANTS
SECTION 1--ELIGIBILITY. An employee of an Employer shall be eligible to become a
Participant on the earliest Monthly Date on which he is employed by such
Employer.
SECTION 2--PARTICIPANT. An eligible employee shall become a Participant when he
has made written request to the Contractholder on a form furnished or approved
by the Company and said request has been delivered to the Company.
SECTION 3--CESSATION OF PARTICIPATION. A Participant shall cease to be a
Participant upon the earliest of the following dates:
(a) The date he no longer has accumulation units or annuity units under this
contract.
(b) The date of his death.
TA-VA; 2--1,2,3 -4
<PAGE>
ARTICLE III
CONTRIBUTIONS TO THE COMPANY
SECTION 1--CONTRIBUTIONS. The Contractholder shall, on the written request of a
Participant, direct the Company to invest the Contributions for that Participant
in Pooled Equity Fund B. The amount of such Contribution for each Participant
may not be less than $120 annually.
SECTION 2--APPLICATION OF CONTRIBUTIONS. The Company shall deduct for its sales
and administrative service (provided pursuant to the agreement therefor between
the Company and Pooled Equity Fund B) (i) 6% of each Contribution made for such
Participant until Contributions under this Contract plus any contributions made
for such Participant under any other Fund B contract with the Company total
$5,000, and (ii) 4% of any Contributions made thereafter for such Participant.
The Company will invest the balance of such Contributions in Pooled Equity Fund
B.
SECTION 3--CREDIT OF ACCUMULATION UNITS. The number of accumulation units
credited to a Participant's Individual Account as a result of investing such
balance shall be determined by dividing such balance by the dollar value of an
accumulation unit next computed following receipt of such Contribution by the
Company at its Home Office. The number of accumulation units so determined shall
not be changed by any subsequent change in the dollar value of accumulation
units.
SECTION 4--SUSPENSION OF CONTRIBUTIONS. Suspension of Contributions may occur on
any Monthly Date on which the number of Participants making Contributions under
this contract during the current Contract Year is less than 25 if written notice
has been given prior thereto by the Company to the Contractholder that
Suspension of Contributions will occur.
On or after the effective date of Suspension of Contributions no further
Contributions shall be payable under this contract. The Company shall not be
liable for the payment of any benefits other than those provided by
Contributions previously received.
TA-VA; 3--1,2,3,4 -5
<PAGE>
ARTICLE IV
VALUATION
SECTION 1--GROSS INVESTMENT RATE AND NET INVESTMENT RATE. The Cross Investment
Rate of Pooled Equity Fund B for each Valuation Period is equal to (i) the
investment income and capital gains and losses for such Valuation Period,
whether realized or unrealized, on the assets of Pooled Equity Fund B less a
deduction for any applicable taxes and less expenses of Pooled Equity Fund B
which are not the contractual liability of the Company divided by (ii) the value
of such assets of Pooled Equity Fund B at the beginning of such Valuation
Period. Such Gross Investment Rate may be either positive or negative. The Net
Investment Rate of Pooled Equity Fund B for any Valuation Period is equal to
such Gross Investment Rate expressed in decimal form to seven places less a
deduction of .0000328 for each calendar day in the Valuation Period, which
deduction reflects the fee payable to the Company for its mortality risk and
expense guarantees and its investment management services (provided pursuant to
the agreement therefor between the Company and Pooled Equity Fund B).
SECTION 2--NET INVESTMENT FACTOR. The net investment factor for each Valuation
Period is the sum of 1.0000000 plus the Net Investment Rate for that Valuation
Period.
SECTION 3--ACCUMULATION UNIT VALUE. The value of an accumulation unit was
established at $1.000000 on____________________, 1969. The value of an
accumulation unit at the end of any specific Valuation Period thereafter is
determined by multiplying such value at the end of the previous Valuation Period
by the Net Investment Factor for the specific Valuation Period.
SECTION 4--ANNUITY UNIT VALUE. The value of an annuity unit was established at
$1.000000 on _______________, 1969. The value of an annuity unit at the end of
any specific Valuation Period thereafter is determined by multiplying the value
of an annuity unit at the end of the previous Valuation Period by .9999058 for
each calendar day in the specific Valuation Period and by the Net Investment
Factor for the specific Valuation Period.
SECTION 5--VALUATION OF ASSETS. The value of the assets in Pooled Equity Fund B
at the end of any Valuation Period shall be the aggregate of the following:
(a) The face amount of cash; plus
(b) The total market value of any securities, valued at the closing at the end
of such Valuation Period for securities traded on organized exchanges, and
at the mean between the bid and asked prices on the last business day
preceding the day of valuation for non-traded securities and securities not
traded on an organized exchange; Plus
(c) The fair market value as determined by, or at the direction of, the Pooled
Equity Fund B Board of Managers of any other assets; minus
TA-VA 4--1,2,3,4,5
<PAGE>
(d) An amount for taxes on realized and unrealized capital gains and any other
taxes based on income of, assets in, or the existence of, Pooled Equity
Fund B which may be applicable; and minus
(e) Liabilities of Pooled Equity Fund B other than contract liabilities.
The determination by the Company of the value of the assets and the accumulation
units and annuity units shall be conclusive. Any change in the method of
valuation must be approved by the Board of Managers of Pooled Equity Fund B.
TA-VA;4--5(2) -2
<PAGE>
ARTICLE V
BENEFITS
SECTION 1--VARIABLE RETIREMENT ANNUITY. Prior to a Participant's Annuity
Commencement Date, the Participant may file a written request with the Company
at its Home Office on a form satisfactory to the Company to select one of the
Optional Variable Annuity Settlements, and on the date such annuity is to
commence, the Company shall apply all accumulation units then in the
Participant's Individual Account to provide a Variable Retirement Annuity on the
selected settlement. In the absence of written notice of election by the
Participant given to the Company at least 30 days prior to the date Variable
Retirement Annuity payments are to begin, the Variable Retirement Annuity will
be the ten years Certain and Life Annuity. The Company reserves the right to
require proof satisfactory to it of the age of any Annuitant and any contingent
annuitant prior to making the first payment under any option.
SECTION 2--OPTIONAL VARIABLE ANNUITY SETTLEMENTS.
Option 1--Life Annuity. An annuity payable monthly during the lifetime of
the Annuitant and terminating with the last monthly payment preceding the
death of the Annuitant.
Option 2--Certain and Life Annuity. An annuity payable monthly during the
lifetime of the Annuitant with the guarantee that if, at the death of the
Annuitant, payments have been made for less than a stated certain period,
which may be five, ten, fifteen or twenty years, as elected, annuity
payments will be continued during the remainder of said period to the
beneficiary designated by the Annuitant.
Option 3--Survivorship Annuity. An annuity payable monthly during the
lifetime of the Annuitant, and after the death of the Annuitant, 66 2/3% or
100% (as specified in the election) of such annuity will be paid to the
contingent annuitant named in the election if and so long as such
contingent annuitant lives. An election of this option shall be
automatically cancelled if either the contingent annuitant or Participant
dies prior to his Annuity Commencement Date.
Option 4--Unit Refund Life Annuity. An annuity payable monthly during the
lifetime of the Annuitant and terminating with the last monthly payment
preceding the death of the Annuitant, provided that, at the death of the
Annuitant, the beneficiary designated by the Annuitant will receive an
additional payment of the then dollar value of the number of annuity units
equal to the excess, if any, of (a) over (b) where (a) is the total amount
applied under this option divided by the annuity unit value at the Annuity
Commencement Date and (b) is the number of annuity unite represented by
each monthly payment multiplied by the number of monthly payments made.
TA-VA; 5--1,2 -2
<PAGE>
Any other option that is mutually agreed upon between the Participant and the
Company will be made available.
Provided, however, in no event shall any option selected provide a Retirement
Annuity to the Participant or to the Participant and his Spouse which will
extend for a period beyond the life expectancy of such Participant or such
Participant and his Spouse as determined on the date the Participant retires.
The first payment under any option will be determined in accordance with Section
3 of this Article.
SECTION 3--AMOUNT OF VARIABLE RETIREMENT ANNUITY. The Tables contained herein
show the dollar amount of the first monthly payment which can be purchased with
$1,000 of value in the Participant's Individual Account, after deduction of any
applicable premium taxes. The value of the Participant's Individual Account will
be computed at the valuation next following the eighteenth day of the month
prior to the Participant's Annuity Commencement Date.
The amount of the first monthly payment shall be divided by the Annuity Unit
Value at the valuation next following the eighteenth day of the month prior to
the Participant's Annuity Commencement Date to determine the number of annuity
units on which subsequent payments are based. The amount of each monthly
Variable Retirement Annuity payment after the first monthly payment will be
equal to such number of annuity units multiplied by the Annuity Unit Value at
the valuation next following the eighteenth day of the month prior to the month
in which the payment is due.
SECTION 4--TRANSFER OPTION. A Participant may, prior to his Annuity Commencement
Date, by filing written request with the Company at its Home Office on a form
satisfactory to the Company, elect to transfer a portion or all of his
Participant's Individual Account to the Companion Contract. The Company will
transfer the value of such portion of the Participant's Individual Account to
the Participant's Accumulation Value under the Companion Contract, at the end of
the Valuation Period in which such request is received or at the end of any
later Valuation Period selected by the Participant.
SECTION 5--TERMINATION BENEFITS. If a Participant terminates employment prior to
his Annuity Commencement Date, he may elect to:
(a) Have his Participant's Individual Account applied to provide Variable
Retirement Annuity payments under one of the Optional Variable Annuity
Settlements, such payments to begin on the first Monthly Date at least 30
days after the election of the Participant is received by the Company;
(b) Leave his Participant's Individual Account under this contract to provide
Variable Retirement Annuity payments on his Annuity Commencement Date, in
which case the number of accumulation units in his Individual Account will
remain fixed, except as provided in Section 3 of Article VI;
TA-VA; 5--3,4,5 -7
<PAGE>
(c) Withdraw his Participant's Individual Account, as provided in Section 6 of
this Article V.
SECTION 6--WITHDRAWAL BENEFITS. A Participant may elect prior to his Annuity
Commencement Date to withdraw a portion or all of his Participant's Individual
Account upon proper written request to the Company. The amount of such
withdrawal may not be less than $1,000 or the entire Participant's Individual
Account, whichever is smaller. Upon receipt of such request the Company will pay
in cash the amount of the withdrawn Participant's Individual Account, determined
as of the end of the Valuation Period in which such request is received, and
such payment, by the amount withdrawn, shall be in lieu of all other benefits
under this contract as to such Participant, his beneficiary and his contingent
annuitant.
If a Participant makes such a request more than twice, the Company shall have
the right to refuse subsequent Contributions on behalf of such Participant.
SECTION 7--DEATH BENEFITS. If the death of a Participant occurs prior to his
Annuity Commencement Date, the Company, on receipt of due proof of his death,
will pay to his beneficiary a Death Benefit equal to the value of such
Participant's Individual Account determined at the end of the Valuation Period
in which written proof of death is received by the Company. Such Death Benefit
will be paid:
(a) in a single sum, or
(b) if elected by the Participant and approved by the Company prior to his
death, to his beneficiary under one of the Optional Variable Annuity
Settlements set forth in Section 3 of this Article. If no such election has
been made and approved, the beneficiary may, for his benefit only, elect
one of such Settlements.
TA-VA; 5--6,7 -3
<PAGE>
ARTICLE VI
GENERAL PROVISIONS
SECTION 1--CERTIFICATES. The Company shall issue to the Contractholder for
delivery to each Participant an individual certificate. Such certificate shall
not constitute a part of this contract.
SECTION 2--BENEFICIARY. The beneficiary is as designated on the Company's
records in accordance with the Participant's written request. Any Participant
may change his beneficiary by filing written notice in form satisfactory to the
Company. When the change is recorded by the Company, the change will take effect
as of the date the notice was signed, except that it will not apply to any
action taken by the Company before the notice was received at the Home Office.
If at the death of the Participant there is no living beneficiary, any payments
due will be paid to the estate of the Participant except that the Company, in
such case may make such payment to any one or more of the surviving relatives of
such Participant in accordance with the laws of the State of domicile of the
Participant, and such payment will completely discharge the Company with respect
to the amount paid. If any beneficiary dies while receiving payments and no
beneficiary is designated to receive any remaining payments, such remaining
payments will be paid to the estate of such beneficiary except that the Company,
in such case may make such payments to any one or more of the surviving
relatives of such beneficiary in accordance with the laws of the State of
domicile of the beneficiary, and such payments will completely discharge the
Company with respect to the amount paid.
SECTION 3--PARTICIPATING. The proportion of the divisible surplus, if any, as
determined by the Company, which accrues on this contract will be determined
annually by the Company and will be credited to this contract. Any credit will
be in the form of an adjustment in the next succeeding year to the deduction
from Contributions, as provided in Article III, Section 2, or in the form of
additional accumulation units credited to the Participant's Individual Account
or in the form of additional annuity units, as applicable. Any additional units
credited will be considered Contributions in the year credited for the purpose
of determining the guarantees applicable.
TA-VA; 6--1,2,3 -3
<PAGE>
SECTION 4--CONTRACT. This contract and the application of the Contractholder, a
copy of which is attached hereto and made a part hereof, constitute the entire
contract between the parties.
SECTION 5--WAIVER AND MODIFICATION. Only the President, a Vice President or the
Secretary of the Company has power on behalf of the Company to make or to modify
this contract. No waiver nor modification of this contract shall be binding on
the Company unless it is in writing signed by one of such officers.
SECTION 6--AMENDMENTS. This contract may be changed at any time as to any of its
provisions by written agreement between the Contractholder and the Company but
no such change shall, without the written consent of the affected Participants,
adversely affect the benefits provided by Contributions made before the
effective date of the change; except that any change of any kind whatsoever in
this contract necessary to conform this contract to, or give the Contractholder
or Participant the benefit of, any federal or state statute or any rule or
regulation of the United States Treasury Department may be made effective, with
the consent of the Company, as of the Contract Date or any subsequent date
without the consent of any Participant or any other person affected thereby. All
benefits under this Contract shall be nonforfeitable with respect to a
Participant, beneficiary or contingent annuitant.
The Company shall have the right at the fifth and each subsequent Yearly Date to
change this contract in any respect and without the consent of any Participant
or beneficiary provided that (i) any such change will not affect in any way the
benefits provided by Contributions made before the effective date of the change,
and (ii) any such change shall not affect Section 2 of Article III, Sections
1,2,3, and 4 of Article IV and Section 3 of Article V as they apply to
accumulation unit purchases made by Contributions made on behalf of any
Participant who is a Participant on the day immediately preceding the effective
date of such change to the extent that such Contributions in any Contract Year
are not in excess of the greater of (i) twice the average of the Contributions
made for such Participant in the five Contract Years (or lesser period if the
Participant has not completed five Contract Years) immediately preceding the
effective date of such change, and (ii) $5,000 for such Participant. The Company
shall give the Contractholder thirty (30) days prior written notice of any such
change.
The portions of Contributions on behalf of any Participant in any Contract Year
which are in excess of the greater of (i) twice the average of the Contributions
made for such Participant in the five Contract Years (or lesser period if the
Participant has not completed five Contract Years) immediately preceding the
effective date of such change, and (ii) $5,000 shall be subject to the
provisions of Section 2 of Article III, Sections l, 2, 3, and 4 of Article IV
and Section 3 of Article V which are in effect at the time such Contributions
are first received by the Company and such provisions shall apply without change
to such Contributions so long as they are continuously contributed.
TA-VA; 6--4,5,6 -7
<PAGE>
SECTION 7--NOT TRANSFERABLE. Th is contract may not be sold, assigned,
discounted, or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose, to any person other than
this Company.
SECTION 8--MISSTATEMENTS. If the age or sex of any payee has been misstated, the
correct amount paid or payable by the Company shall be such as the Contributions
would have provided for the correct age or sex. For Variable Retirement Annuity
payments following such a correction, the number of annuity unite will be
corrected and the dollar amount of payments will be adjusted for any
overpayments or underpayments made.
SECTION 9--INFORMATION, PROOFS AND DETERMINATION OF FACTS. Each Employer shall
furnish to the Company records, data, proofs and all other information which the
Company may reasonably require to administer this contract. If such Employer
cannot furnish any required item of information, the Company may request such
information from the person concerned. me Company shall not be liable for the
fulfillment of any obligations in any way dependent on such information until
such information is received.
SECTION 10--FREQUENCY OF PAYMENTS. Variable Retirement Annuity payments under
this contract will be paid monthly, except that, if at any time such monthly
payments are less than $20 each, the Company shall have the right to make
payments at less frequent intervals, or the Company may make such other
settlement as may be equitable to the payee.
SECTION 11--FACILITY OF PAYMENT. If any Participant, beneficiary, or contingent
annuitant is, in the opinion of the Company, legally incapable of giving a valid
receipt for any payment due him and no guardian has been appointed, the Company
may, at its option, make such payment to the person or persons as have, in the
Company's opinion assumed the care and principal support of such Participant,
beneficiary, or contingent annuitant, except that any payment due a minor will
be paid at a rate not exceeding $100 per month. Any such payment made by the
Company will fully discharge the Company to the extent of such payment.
SECTION 12--RELATION OF THIS CONTRACT TO POOLED EQUITY FUND B. me Company shall
have absolute ownership of the assets in Pooled Equity Fund B.
SECTION 13--VOTING. The Participants shall not be entitled to vote at meetings
of the policyholders of the Company but shall be entitled to vote at meetings of
the Participants of Pooled Equity Fund B in accordance with the Rules and
Regulations of Pooled Equity Fund B.
TA-VA; 6-7,8,9,10,11,12,13 -4
<PAGE>
TABLE OF BENEFIT OPTION VALUES
Amounts shown in Table I are based upon the 1951 Group Annuity Table, projected
to 1967 by Scale C, with interest at the rate of 3 1/2% per annum. Amounts shown
in Table I are for exact adjusted ages and must be interpolated between age. for
each full month of adjusted ate in excess of the exact age. For convenience in
interpolation Table II gives the addition to Table I for each month of adjusted
age in excess of that exact age.
The adjusted age is determined by the following process:
MALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct one month for each year his calendar year of birth exceeds l900AD,
or add one month for each year his calendar year of birth precedes 1900AD
FEMALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct five years from such age, and
3. Deduct one month for each year her calendar year of birth exceeds 1900AD,
or add one month for each year her calendar year of birth precedes 1900AD.
All monthly payments will be rounded to the nearest cent with exact one-half
cents rounded up.
Example: A male participant born on June 15, 1903 decides to retire and receive
his first annuity check on January 1, 1968. His exact age on January 1, 1968 is
64 years, 6 months and 16 days. His calendar year of birth exceeds 1900AD by 3
years and therefore his adjusted age is 64 years and 3 months. His annuity
payable for life with 120 payments guaranteed is $6.6296 plus 3 times 0.0142 or
$6.6722 per $1,000 of proceeds applied on January 1, 1968.
A female participant born on the same date and retiring on the same date would
have an adjusted age of 59 years and 3 months and her annuity on the same option
would be $5.8700 plus 3 times 0.0117 or $5.9051 per $1,000 of proceeds applied
on January 1, 1968.
-1
<PAGE>
TABLE I
Dollar Amount of the First Monthly Payment Which is Purchased with Each $1,000
of Proceeds Applied for Each Full Year of Adjusted Exact Age.
<TABLE>
<CAPTION>
Options 1. 2 and 4 - Single Life Annuities
----------------------------------------------------------------------------------------------
Adjusted
Exact Age
in Full Period Certain Unit
Years --------------------------------------------------------------------------------- -----
None 5 Years 10 Years 15 Years 20 Years Refund
- ------ --------------------------------------------------------------------------------- ------
<S> <C> <C> <C> <C> <C> <C>
45 $4.5100 $4.5004 $4.4696 $4.4196 $4.3400 $4.3396
46 4.5904 4.5796 4.5404 4.4796 4.3904 4.3804
47 4.6696 4.6600 4.6196 4.5504 4.4504 4.4404
48 4.7596 4.7500 4.7000 4.6200 4.5104 4.5100
49 4.8496 4.8400 4.7804 4.6896 4.5704 4.5796
50 4.9504 4.9300 4.8704 4.7700 4.6304 4.6504
51 5.0500 5.0296 4.9604 4.8504 4.6904 4.7296
52 5.1604 5.1304 5.0600 4,9296 4.7600 4.8004
53 5.2696 5.2396 5.1596 5,0196 4.8200 4.8904
54 5.3896 5.3596 5.2604 5.1000 4.8800 4.9804
55 5.5204 5.4796 5.3696 5.1900 4.9496 5.0704
56 5.6596 5.6104 5.4896 5.2800 5.0096 5.1604
57 5.8000 5.7496 5.6096 5.3796 5.0804 5.2696
58 5.9500 5.8996 5.7404 5.4804 5.1404 5.3704
59 6.1204 6.0604 5.8700 5.5800 5.2004 5.4904
60 6.2896 6.2200 6.0104 5.6796 5.2604 5.6104
61 6.4804 6.4000 6.1604 5.7804 5.3204 5.7304
62 6.6904 6.5896 6.3104 5.8800 5.3696 5.8600
63 6.9100 6.7900 6.4700 5.9796 5.4200 6.0004
64 7.1404 7.0096 6.6296 6.0804 5.4704 6.1504
65 7.3900 7.2400 6.8000 6.1800 5.5100 6.3100
66 7.6600 7.4800 6.9800 6.2796 5.5496 6.4696
67 7.9504 7.7404 7.1600 6.3696 5.5904 6.6400
68 8.2600 8.0104 7.3400 6.4596 5.6204 6.8296
69 8.5996 8.2996 7.5200 6.5400 5.6396 7.0204
70 8.9596 8.6104 7.7096 6.6204 5.6696 7.2196
71 9.3496 8.9296 7.8896 6.6900 5.6804 7.4404
72 9.7804 9.2800 8.0696 6.7596 5.6996 7.6696
73 10.2400 9.6400 8.2496 6.8100 5.7104 7.9000
74 10.7296 10.0096 8.4200 6.8604 5.7200 8.1496
75 11.2696 10.4104 8.5796 6.9096 5.7296 8.4196
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE I (continued)
OPTION 3 - Survivorship Annuity Sample Values
Portion Payable to the Surviving Contingent Annuitant
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Adjusted
Exact Age 100% 100% 100% 66 2/3% 66 2/3% 66 2/3%
of the ---- ---- ---- ------- ------- -------
Annuitant Adjusted Exact Age in Full Years of the
in Full Years Surviving Contingent Annuitant
- ------------- ----------------------------------------------------------------------------------------------
55 60 65 55 60 65
------ ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
50 4.4616 -- 4.6128 -- -- --
55 4.6836 4.8876 5.0784 4.9332 5.0820 5.2176
60 4.8876 5.1864 5.4828 5.2812 5.5092 5.7288
65 5.0784 5.4828 5.9160 5.6700 6.0000 6.3372
70 -- 5.7360 6.3288 -- 6.5184 7.0152
</TABLE>
Values for ages not shown in these Tables will be furnished any Participant upon
request and will be calculated on the same basis as those shown in these Tables.
<PAGE>
TABLE II - Interpolation Factor for Table I
Dollar Amount to be added to Table I for each Full Month of Adjusted Age in
Excess of the Adjusted Exact Age in Full Years.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Table I Options 1. 2 and 4 - Single Life Annuities
Adjusted ----------------------------------------------------------------------------------------------
Exact Age Period Certain
In Full ----------------------------------------------------------------------------- Unit
Years None 5 years 10 Years 15 Years 20 Years Refund
- ------ ----------------------------------------------------------------------------- ------
55 $0.0116 $0.0109 $0.0100 $0.0075 $0.0050 $0.0075
56 0.0117 0.0116 0.0100 0.0083 0.0059 0.0091
57 0.0125 0.0125 0.0109 0.0084 0.0050 0.0084
58 0.0142 0.0134 0.0108 0.0083 0.0050 0.0100
59 0.0141 0.0133 0.0117 0.0083 0.0050 0.0100
60 0.0159 0.0150 0.0125 0.0084 0.0050 0.0100
61 0.0175 0.0158 0.0125 0.0083 0.0041 0.0108
62 0.0183 0.0167 0.0133 0.0083 0.0042 0.0177
63 0.0192 0.0183 0.0133 0.0084 0.0042 0.0125
64 0.0208 0.0192 0.0142 0.0083 0.0033 0.0133
65 0.0225 0.0200 0.0150 0.0083 0.0033 0.0133
66 0.0242 0.0217 0.0150 0.0075 0.0034 0.0142
67 0.0258 0.0225 0.0150 0.0075 0.0025 0.0158
68 0.0283 0.0241 0.0150 0.0067 0.0016 0.0159
69 0.0300 0.0259 0.0158 0.0067 0.0025 0.0166
70 0.0325 0.0266 0.0150 0.0058 0.0009 0.0184
71 0.0359 0.0292 0.0150 0.0058 0.0016 0.0191
72 0.0383 0.0300 0.0150 0.0042 0.0009 0.0192
73 0.0408 0.0308 0.0142 0.0042 0.0008 0.0208
74 0.0450 0.0334 0.0133 0.0041 0.0008 0.0225
</TABLE>
- --------------------------------------------------------------------------------
EXHIBIT 6.2
FORM OF INDIVIDUAL PARTICIPANT'S CERTIFICATE
FOR 403(B) PLANS, FORM TA-VA-C
- --------------------------------------------------------------------------------
Contract No._______________________
Contract Date______________________
Contractholder:____________________
Employer:__________________________
CERTIFICATE NO. ___________________ Date___________________
AMERICAN UNITED LIFE INSURANCE COMPANY
Indianapolis, Indiana
(Herein called the Company)
Certifies that, in accordance with the provisions of the Group Pooled
Equity Fund B Contract issued and delivered to the Contract-holder, ____________
____________________________________ Participant, is entitled to a Variable
Retirement Annuity payable under the Optional Variable Annuity Settlement
selected by the Participant and commencing on his Annuity Commencement Date (as
determined pursuant to the Group Contract) provided he is then alive.
If any death benefit is payable at the time of the Participant's death it
shall be paid to____________________________________________________________,
Beneficiary. The Participant may change his beneficiary, as provided in the
Group Contract.
The Group Contract between the Contractholder and the Company is the only
contract and all rights and benefits are fixed and determined solely by and in
accordance with its provisions. Amendments to and changes in the Group Contract
may be made by the Contractholder and the Company, as provided in the Group
Contract. A copy of the Group Contract is held by the Contractholder and may be
inspected at any reasonable time upon request.
By: /s/ J. Harold Thompson
Secretary
ALL PAYMENTS AND VALUES DESCRIBED IN THIS CERTIFICATE
ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT
GROUP ANNUITY CERTIFICATE
TA-VA-C
See reverse side for notations by the Company
- --------------------------------------------------------------------------------
EXHIBIT 6.3
FORM OF GROUP VARIABLE ANNUITY CONTRACT
FOR EMPLOYEE PENSION PLANS, FORM TA-VAQ-TP
- --------------------------------------------------------------------------------
AMERICAN UNITED LIFE INSURANCE COMPANY
GROUP POOLED EQUITY FUND B CONTRACT NO.
CONTRACT
HOLDER
CONTRACT DATE
American United Life Insurance Company ("Company") agrees to make the payments
provided by this contract.
This contract is issued in consideration of the application for this contract
and of the payment to the Company of Contributions as provided in this contract.
This contract provides for investment in Pooled Equity Fund B, and supplements
Group Annuity Contract which provides for fixed-dollar benefits and which shall
hereinafter be referred to as the "Companion Contract."
The provisions and tables on the following pages are part of this contract.
This contract is delivered in
SIGNED at the Home Office of the Company on the Contract Date.
AMERICAN UNITED LIFE INSURANCE COMPANY
By ___________________________________
President
By:___________________________ By____________________________________
___________________________ Secretary
Group Annuity Contract
Equity Fund - Variable Annuities
Participating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AS
HEREIN PROVIDED AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
TA-VAQ;TP
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1 ------- Definitions
ARTICLE II
ARTICLE II PARTICIPANTS
Section 1 ------- Eligibility
Section 2 ------- Active Participant
Section 3 ------- Inactive Participant
Section 4 ------- Voluntary Discontinuance
Section 5 ------- Cessation of Participation
ARTICLE III STIPULATED PAYMENTS TO THE COMPANY
Section 1 ------- Stipulated Payments
Section 2 ------- Payment of Stipulated Payments
Section 3 ------- Application of Stipulated Payments
Section 4 ------- Credit of Accumulation Units
Section 5 ------- Cessation of Stipulated Payments
ARTICLE IV VALUATION
Section 1 ------- Gross Investment Rate and Net Investment Rate
Section 2 ------- Net Investment Factor
Section 3 ------- Accumulation Unit Value
Section 4 ------- Annuity Unit Value
Section 5 ------- Valuation of Assets
ARTICLE V BENEFITS
Section 1 ------- Definitions
Section 2 ------- Variable Retirement Annuity
Section 3 ------- Optional Variable Annuity Settlements
Section 4 ------- Amount of Variable Retirement Annuity
Section 5 ------- Transfer Option
Section 6 ------- Termination Benefit
Section 7 ------- Benefits at Cessation of Stipulated Payments
Section 8 ------- Death Benefits
Section 9 ------- Withdrawal Benefits
TA-VAQ;TC - 1
<PAGE>
(TABLE OF CONTENTS)
ARTICLE VI GENERAL PROVISIONS
Section 1-------- Certificates
Section 2-------- Beneficiary
Section 3-------- Participating
Section 4-------- Contract
Section 5-------- Waiver and Modification
Section 6-------- Amendments
Section 7-------- Not Transferable
Section 8-------- Misstatements
Section 9-------- Information, Proofs and Determination of Facts
Section 10------- Frequency of Payments
Section 11------- Facility of Payment
Section 12------- Relation of this Contract to Pooled Equity Fund B
Section 13------- Voting
TABLES
TA-VAQ-TC (2) -1
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1--DEFINITIONS. Yearly Date is the Contract Date and the same day of
each year thereafter.
MONTHLY DATE is the Contract Date and the same day of each month thereafter.
CONTRACT YEAR is a period of one year beginning on a Yearly Date.
EMPLOYER is the Contractholder designated on the title page. Any similar or
related organization which makes written election to come under this contract
shall be an "Employer" if such election is approved by the Company.
PARTICIPANT is an Active Participant or an Inactive Participant as set out in
Article II.
ANNUITANT is a Participant who is receiving annuity benefits hereunder.
POOLED EQUITY FUND B is that segregated investment account entitled "American
United Life Pooled Equity Fund B" which has been established by the Company for
this and other variable annuity contracts sold by the Company which are fundable
and computable as to payments or benefits on the basis of experience factors of
such account, the assets of which are set aside by the Company from
contributions received under such contracts.
VALUATION PERIOD is that period beginning immediately after a valuation of
Pooled Equity Fund B and ending with the next valuation of Pooled Equity Fund B.
Valuations shall occur as of the close of trading on the New York Stock Exchange
on each day during which the Exchange is open for trading.
NORMAL RETIREMENT DATE is, for a Participant, the Normal Retirement Date as
defined in the Plan.
ANNUITY COMMENCEMENT DATE is, for a Participant, his Normal Retirement Date,
except that,
(a) upon written request of the Participant and the Employer, the Annuity
Commencement Date shall become any Monthly Date specified in such request
which is prior to his Normal Retirement Date and subsequent to both the
Early Retirement Date specified in the Plan and the date of such request.
TA-VAQ;1--1 -5
<PAGE>
(b) If the Participant continues active work for the Employer after his Normal
Retirement Date, upon written request of the Participant and the Employer,
Annuity Commencement Date shall become the Late Retirement Date specified
in the Plan.
VARIABLE RETIREMENT ANNUITY is a series of retirement payments under this
contract in amounts which may vary from time to time because of the investment
results of Pooled Equity Fund B.
COMPANION CONTRACT is the Group Annuity Contract issued by the Company to the
Employer which provides for fixed dollar annuity payments which are guaranteed
as to dollar amount throughout the payment period.
TERMINATION OF EMPLOYMENT is cessation of active service with the Employer, and
shall be deemed to occur on the last day on which the employee was actively at
work for the Employer, except that absence from active work on account of
sickness, injury or authorized leave of absence shall be deemed not to be a
Termination of Employment unless and until employment is otherwise terminated.
Any discretion of the Employer under the provisions of this paragraph shall be
exercised without discrimination in accordance with definitely established rules
uniformly applicable to employees whose cessation of active service was
occasioned by similar circumstances.
VESTING PERCENTAGE is for any Participant on any specified date, the percentage
determined pursuant to the Plan.
PLAN is, the Employee's Pension Plan Agreement for each respective Employer on
file with the Company, as amended from time to time by amendments filed by such
Employer; provided, however, that no Plan or amendment to a Plan which affects
the duties and obligations of the Company shall be effective, if the Company
gives written notice to the Employer within thirty (30) days after receipt of
such Plan or amendment that such Plan or amendment is not acceptable to the
Company.
TA-VAQ;1--1(2) -1
<PAGE>
ARTICLE II
PARTICIPANTS
SECTION 1--ELIGIBILITY An employee of the Employer shall be eligible to become
an Active Participant on the earliest date on which he meets all of the Annuity
Eligibility Requirements set forth in this Section. Said date shall be known as
his Annuity Eligibility Date. An eligible employee may become an Active
Participant only by complying with the requirements of Section 2 of this
Article.
Annuity Eligibility Requirements:
(a) He is a Participant pursuant to the Plan.
SECTION 2--ACTIVE PARTICIPANT. An employee eligible to become an Active
Participant may become an Active Participant only if he has made written request
to the Employer on a form furnished or approved by the Company and said request
has been delivered to the Company.
If the employee's written request is made before or within thirty-one days
after his Annuity Eligibility Date he shall become an Active Participant as of
said date.
If the employee's written request is made more than thirty-one days after his
Annuity Eligibility Date he shall become an Active Participant as of the Monthly
Date following the date of such request.
SECTION 3--INACTIVE PARTICIPANT. An Active Participant shall become an Inactive
Participant on the earliest of the following dates:
(a) The day following his Annuity Commencement Date.
(b) The day of his Voluntary Discontinuance.
(c) The day of his Termination of Employment.
(d) The effective date of Cessation of Stipulated Payments pursuant to Section
3, Article III.
SECTION 4--VOLUNTARY DISCONTINUANCE. Voluntary Discontinuance as to an Active
Participant shall occur on the date on which he makes written request to the
Employer to withdraw from participation under this Contract. Such an employee
shall be considered, for the purposes of this Contract, as a new employee
commencing employment on the date of his Voluntary Discontinuance, unless and
except as otherwise specifically provided in this Contract.
TA-VAQ;2--1,2,3,4 -1
<PAGE>
SECTION 5--CESSATION OF PARTICIPATION. A Participant shall cease to be a
Participant upon the earliest of the following dates:
(a) The date he requests payment of his Participant Accumulated Deposits, if
any, pursuant to Section 3, Article IV.
(b) The date of his death.
(c) The date his Termination of Employment occurs, if his Vesting is 0% and his
Participant's Individual Account is $0
TA-VAQ;2--5 -1
<PAGE>
ARTICLE III
STIPULATED PAYMENTS TO THE COMPANY
SECTION 1--STIPULATED PAYMENTS. A Stipulated Payment, as to each Active
Participant, in an amount equal to the Participant Stipulated Payments, if any,
and the Employer Stipulated Payment, as determined pursuant to the Plan, shall
be due and shall be paid to the Company as determined pursuant to the Plan.
SECTION 2--PAYMENT OF STIPULATED PAYMENTS. Each Stipulated Payment is payable
directly to the Company at its Home Office in Indianapolis, Indiana.
SECTION 3--APPLICATION OF STIPULATED PAYMENTS. The Company shall deduct for its
sales and administrative services (provided pursuant to the agreement therefor
between the Company and Pooled Equity Fund B) (i) 6% of each Participant's
Stipulated Payments made by a Participant and of each Employer's Stipulated
Payments made for that Participant until such Stipulated Payments under this
contract plus any other payments made for such Participant under any other Fund
B contract with the Company total $5,000, and (ii) 4% of any Stipulated Payments
made thereafter for such Participant. The Company will invest the balance of
such Stipulated Payments in Pooled Equity Fund B.
SECTION 4--CREDIT OF ACCUMULATION OF UNITS. The number of accumulation units
credited to a Participant's Individual Account as a result of investing such
balance of Participant's Stipulated Payments and the number of accumulation
units credited to the Employer's Participant Account for such Participant as a
result of investing such balance of Employer's Stipulated Payments shall be
determined by dividing such balances by the dollar value of an accumulation unit
next computed following receipt of such Stipulated Payments by the Company at
its Home Office. The number of accumulation units so determined shall not be
changed by any subsequent change in the dollar value of accumulation units.
SECTION 5--CESSATION OF STIPULATED PAYMENTS. Cessation of Stipulated Payments
shall occur:
(a) as of any Monthly Date on which the number of Active Participants under
this Contract is less than twenty-five, if written notice has been given
prior thereto by the Company to the Employer that Cessation of Stipulated
Payments will occur.
(b) as of any Monthly Date, if prior to such Monthly Date the Employer has
given written notice to the Company that Cessation is to be effective as of
such Monthly Date.
TA-VAQ; 3--1,2,3,4,5 -2
<PAGE>
(c) as of any Monthly Date on which any Stipulated Payment that is due, as
determined pursuant to the Plan, is not paid to the Company.
(d) as of any date an amendment to the Plan is filed by the Employer at the
Home Office of the Company (or the effective date of such amendment, if
later), if the Company gives written notice to the Contractholder within
thirty days after the date such amendment is filed with the Company that
such amendment is not acceptable to the Company.
TA-VAQ;3--5(2)
<PAGE>
ARTICLE IV
VALUATION
SECTION 1--GROSS INVESTMENT RATE AND NET INVESTMENT RATE. The Gross Investment
Rate of Pooled Equity Fund B for each Valuation Period is equal to (i) the
investment income and capital gains and losses for such Valuation Period,
whether realized or unrealized, on the assets of Pooled Equity Fund B less a
deduction for any applicable taxes and less expenses of Pooled Equity Fund B
which are not the contractual liability of the Company, divided by (ii) the
value of such assets of Pooled Equity Fund B at the beginning of such Valuation
Period. Such Gross Investment Rate may be either positive or negative. The Net
Investment Rate of Pooled Equity Fund B for any Valuation Period is equal to
such Gross Investment Rate expressed in decimal form to seven places less a
deduction of .0000328 for each calendar day in the Valuation Period which
deduction reflects the fee payable to the Company for its mortality risk and
expense guarantees and its investment management services (provided pursuant to
the agreement therefor between the Company and Pooled Equity Fund B).
SECTION 2--NET INVESTMENT FACTOR. The net investment factor for each Valuation
Period is the sum of 1.0000000 plus the Net Investment Rate for that Valuation
Period.
SECTION 3--ACCUMULATION UNIT VALUE. The value of an accumulation unit was
established at $1.0000000 on _____________ , 1969. The value of an accumulation
unit at the end of any specific Valuation Period thereafter is determined by
multiplying such value at the end of the previous Valuation Period by the Net
Investment Factor for the specific Valuation Period.
SECTION 4--ANNUITY UNIT VALUE. The value of an annuity unit was established at
$1.0000000 on ____________________, 1969. The value of the annuity unit at the
end of any specific Valuation Period thereafter is determined by multiplying the
value of an annuity unit at the end of the preceding Valuation Period by
.9999058 for each calendar day in the specific Valuation Period and by the Net
Investment Factor for that valuation period.
SECTION 5--VALUATION OF ASSETS. The value of the assets in Pooled Equity Fund B
at the end of any Valuation Period shall be the aggregate of the following:
(a) The face amount of cash; plus
(b) The total market value of any securities, valued at the closing price at
the end of such Valuation Period for securities traded on organized
exchanges, and at the mean between the bid and asked prices on the last
business day preceding the day of valuation for non-traded securities and
securities not traded on an organized exchange; plus
TA-VAQ;4--1,2,3,4,5 -3
<PAGE>
(c) The fair market value as determined by, or at the direction of, the Pooled
Equity Fund B Board of Managers of any other assets; minus
(d) An amount for taxes on realized and unrealized capital gains and any other
taxes based on income of, assets in, or the existence of, Pooled Equity
Fund B which may be applicable; and minus
(e) Liabilities of Pooled Equity Fund B other than contract liabilities.
The determination by the Company of the value of the assets and the accumulation
units and annuity units shall be conclusive. Any change in the method of
valuation must be approved by the Board of Mangers of Pooled Equity Fund B.
TA-VAQ;4--5(2) -1
<PAGE>
ARTICLE V
BENEFITS
SECTION 1--DEFINITIONS. Participant's Accumulated Account is, for a Participant
on his Annuity Commencement Date, the number of accumulation units in such
Participant's Individual Account on such date plus the number of accumulation
units determined by multiplying the Participant's Vesting Percentage on such
date by the number of accumulation units in the Employer's Participant Account
for such Participant on such date.
Participant's Individual Account is the sum of the accumulation units credited
to such Participant as a result of transfers to Pooled Equity Fund B of his
Participant's Stipulated Payments under this contract.
Employer's Participant Account is, with respect to each Participant, the sum of
the accumulation units credited to the Employer as a result of transfers to
Pooled Equity Fund B of Employer's Stipulated Payments for such Participant
under this contract.
SECTION 2--VARIABLE RETIREMENT ANNUITY. Prior to a Participant's Annuity
Commencement Date, the Participant may file a written request with the Company
at its Home Office on a form satisfactory to the Company to select one of the
Optional Variable Annuity Settlements, and on the date such annuity is to
commence, the Company shall apply all accumulation units then in the
Participant's Accumulated Account to provide a Variable Retirement Annuity on
the selected settlement. In the absence of written notice of election by the
Participant given to the Company at least 30 days prior to the date Variable
Retirement Annuity payments are to begin, the Variable Retirement Annuity will
be the ten years Certain and Life Annuity. The Company reserves the right to
require proof satisfactory to it of the age of any Annuitant and any contingent
annuitant prior to making the first payment under any option.
SECTION 3--OPTIONAL VARIABLE ANNUITY SETTLEMENTS.
Option 1--Life Annuity. An annuity payable monthly during the lifetime of the
Annuitant and terminating with the last monthly payment preceding the death of
the Annuitant.
Option 2--Certain and Life Annuity. An annuity payable monthly during the
lifetime of the Annuitant with the guarantee that if, at the death of the
Annuitant, payments have been made for less than a stated certain period, which
may be five, ten, fifteen or twenty years, as elected, annuity payments will be
continued during the remainder of said period to the beneficiary designated by
the Annuitant.
TA-VAQ;5--1,2,3 -2
<PAGE>
Option 3--Survivorship Annuity. An annuity payable monthly during the lifetime
of the Annuitant, and after the death of the Annuitant, 66 2/3% or 100% (as
specified in the election) of such annuity will be paid to the contingent
annuitant named in the election if and so long as such contingent annuitant
lives. An election of this option shall be automatically canceled if either the
contingent annuitant or Participant dies prior to his Annuity Commencement Date.
Option 4--Unit Refund Life Annuity. An annuity payable monthly during the
lifetime of the Annuitant and terminating with the last monthly payment
preceding the death of the Annuitant, provided that, at the death of the
Annuitant, the beneficiary designated by the Annuitant will receive an
additional payment of the then dollar value of the number of annuity units equal
to the excess, if any, of (a) over (b) where (a) is the total amount applied
under this option divided by the annuity unit value at the Annuity Commencement
Date and (b) is the number of annuity units represented by each monthly payment
multiplied by the number of monthly payments made. Any other option that is
mutually agreed upon between the Participant and the Company will be made
available.
Any other option that is mutually agreed upon between the Participant and the
Company will be made available.
Provided, however, in no event shall any option selected provide a Retirement
Annuity to the Participant or to the Participant and his Spouse which will
extend for a period beyond the life expectancy of such Participant or such
Participant and his Spouse as determined on the date the Participant retires.
The first payment under any option will be determined in accordance with Section
4 of this Article.
SECTION 4--AMOUNT OF VARIABLE RETIREMENT ANNUITY. The Tables contained herein
show the dollar amount of the first monthly payment which can be purchased with
each $1,000 of value in the Participant's Accumulated Account, after deduction
of any applicable premium taxes. The value of the Participant's Accumulated
Account will be computed at the valuation next following the eighteenth day of
the month prior to the Participant's Annuity Commencement Date.
The amount of the first monthly payment shall be divided by the Annuity Unit
Value at the valuation next following the eighteenth day of the month prior to
the Participant's Annuity Commencement Date to determine the number of annuity
units on which subsequent payments are based. The amount of each monthly
Variable Retirement Annuity payment after the first monthly payment will be
equal to such number of annuity units multiplied by the Annuity Unit Value at
the valuation next following the eighteenth day of the month prior to the month
in which payment is due.
SECTION 5--TRANSFER OPTION. A Participant may, prior to his Annuity Commencement
Date by filing written request with the Company at its Home Office on a form
satisfactory to the Company, elect to transfer a portion or all of his
Participant's Individual Account to the Companion Contract. The Company will
transfer the value of such portion of the Participant's Individual Account to
the Participant's Accumulated Deposits under the Companion Contract at the end
of the Valuation Period in which such request is received or at the end of any
later Valuation Period selected by the Participant.
TA-VAQ;5--4,5 -4
<PAGE>
A Participant also may, prior to his Annuity Commencement Date and with the
written consent of the Employer and by filing written request with the Company
at its Home Office on a form satisfactory to the Company, elect to have
transferred a portion or all of the Employer's Participant Account for such
Participant to the Companion Contract. The Company will transfer the value of
such portion of the Employer's Participant Account to the Employer's Accumulated
Deposits for such Participant under the Companion Contract at the end of the
Valuation Period in which such request is received or at the end of any later
Valuation Period selected by the Participant.
SECTION 6--TERMINATION BENEFIT. To the Participant
(i) A Participant who terminates his employment, prior to Cessation of
stipulated Payments, may leave his Participant's Individual Account, if
any, with the Company and retain his vested portion, if any, of the
Employer's Participant Account for such Participant. The vested portion of
the Employer's Participant Account for such Participant shall be deter-
mined by multiplying such Employer's Participant Account for such Partici-
pant by such Participant's Vesting Percentage, as provided in the Plan, on
the date of his Termination of Employment or his Voluntary Discontinuance,
if earlier.
(ii) Such Participant, in lieu of the benefits in (i) of this Section, may
elect to withdraw his Participant's Individual Account, if any, on or sub-
sequent to his Termination of Employment and prior to his Annuity
Commencement Date upon proper written request to the Company upon receipt
of such request the Company will pay in cash the amount of the Partici-
pant's Individual Account, determined as of the end of the Valuation
Period in which such request is received, and such payment shall be in
lieu of all other benefits under this contract as to such Participant,
his beneficiary and his contingent annuitant.
To the Employer
(iii) If a Participant leaves his Participant's Individual Account, if any, with
the Company, thereby retaining the vested portion of the Employer's
Participant Account for such Participant, the balance of such Employer's
Participant Account shall be applied toward the payment of any Employer
Stipulated Payments thereafter becoming due under this Contract.
(iv) If a Participant elects to receive his Participant's Individual Account in
cash, the Employer's Participant Account for such Participant, if I any,
shall be applied toward the payment of any Employer Stipulated Payments
thereafter becoming due under this Contract.
(v) If a Participant's death occurs prior to his Annuity Commencement Date and
all or a portion thereof of the Employer's Participant Account for such
Participant is not applied under the provisions of Section 8 of this
Article; the balance, if any, of such Employer's Participant Account shall
be applied toward the payment of any Employer Stipulated Payments
thereafter becoming due under this Contract.
TA-VAQ;5--6 -1
<PAGE>
In the event all or a portion of an Employer's Participant Account for any
Participant is to be applied toward the payment of any Employer Stipulated
Payments pursuant to paragraphs (iii), (iv) or (v) above, the amount of such
Employer's Participant Account, determined as of the end of the Valuation Period
in which such application is to be made, will reduce proportionately among all
Participants for whom Employer Stipulated Payments are due, the amount of
Employer Stipulated Payments otherwise due.
SECTION 7--BENEFITS AT CESSATION OF STIPULATED PAYMENTS.
(i) If Cessation of Stipulated Payments occurs prior to a Participant's
Annuity Commencement Date, the aggregate of the sum of the Employer's
Participant Account for such Participant not previously canceled, shall be
deemed to be100% vested in such Participant.
(ii) In the event a Participant terminates employment on or subsequent to the
date of Cessation of Stipulated Payments, he may elect either
(1) the termination benefit provided by Subsection (i) of Section 6 of
this Article or,
(2) to withdraw his Participant's Individual Account, if any, prior to his
Annuity Commencement Date and to receive a monthly annuity, payable on
his Annuity Commencement Date, which can be produced by the Employer's
Participant Account for such Participant.
(iii) In the event the death of a Participant occurs on or subsequent to the
date Cessation of Stipulated Payments occurs, 100% of the Employer's
Participant Account for such Participant, which had not previously been
canceled, shall be paid to such Participant's beneficiary in accordance
with Section 8 of this Article.
SECTION 8--DEATH BENEFITS. If the death of a Participant occurs prior to his
Annuity Commencement Date, the Company, on receipt of due proof of his death,
will pay to his beneficiary a Death Benefit equal to (i) or (ii) below:
(i) A single sum equal to the value of the Participant's Individual Account
plus the value of a portion, if any, of the Employer's Participant Account
for such Participant pursuant to the Plan, such values to be determined at
the end of the Valuation Period in which written proof of death is
received by the Company, or
(ii) if elected by the Participant and approved by the Company prior to his
death, the sum determined in (i) of this Section applied under one of the
Optional Variable Annuity Settlements set forth in Section 3 of this
Article. If no such election has been made and approved, the beneficiary
may, for his benefit only, elect one of such Settlements.
TA-VAQ;5--7,8 -1
<PAGE>
SECTION 9--WITHDRAWAL BENEFITS. Subject to any applicable provisions of the
Plan, a Participant may elect prior to his Annuity Commencement Date to withdraw
a portion or all of his Participant's Individual Account upon proper written
request to the Company. The amount of such withdrawal may not be less than
$1,000 or the entire Participant's Individual Account, whichever is smaller.
Upon receipt of such request the Company will pay in cash the amount of the
withdrawn Participant's Individual Account, determined as of the end of the
Valuation Period in which such request is received, and such payment, by the
amount withdrawn, shall be in lieu of all other benefits under this contract as
to such Participant, his beneficiary and his contingent annuitant.
If a Participant makes such a request more than twice, the Company shall have
the right to refuse subsequent Contributions on behalf of such Participant.
TA-VAQ;5--9
<PAGE>
ARTICLE VI
GENERAL PROVISIONS
SECTION 1--CERTIFICATES. The Company shall issue to the Employer for delivery to
each Participant an individual certificate. Such certificate shall not
constitute a part of this contract.
SECTION 2--BENEFICIARY. The beneficiary is as designated on the Company's
records in accordance with the Participant's written request. Any Participant
may change his beneficiary by filing written notice in form satisfactory to the
Company. When the change is recorded by the Company, the change will take effect
as of the date the notice was signed, except that it will not apply to any
action taken by the Company before the notice was received at the Home Office.
If at the death of the Participant there is no living beneficiary, any payments
due will be paid to the estate of the Participant except that the Company, in
such case may make such payment to any one or more of the surviving relatives of
such Participant, and such payment will completely discharge the Company with
respect to the amount paid. If any beneficiary dies while receiving payments and
no beneficiary is designated to receive any remaining payments, such remaining
payments will be paid to the estate of such beneficiary except that the Company,
in such case may make such payments to any one or more of the surviving
relatives of such beneficiary in accordance with the laws of the State of
domicile of the beneficiary, and such payments will completely discharge the
Company with respect to the amount paid.
SECTION 3--PARTICIPATING. The proportion of the divisible surplus, if any, as
determined by the Company, which accrues on this contract will be determined
annually by the Company and will be credited to this contract. Any credit will
be in the form of an adjustment in the next succeeding year to the deduction
from Stipulated Payments, as provided in Article III, Section 3, or in the form
of additional accumulation units credited to the Participant's Individual
Account and the Employer's Participant Accounts or in the form of additional
annuity units, as applicable. Any additional units credited will be considered
Stipulated Payments in the year credited for the purpose of determining the
guarantees applicable.
TA-VAQ;6--1,2,3 -2
<PAGE>
SECTION 4--CONTRACT. This contract and the application of the Contractholder, a
copy of which is attached hereto and made a part hereof, constitute the entire
contract between the parties.
SECTION 5--WAIVER AND MODIFICATION. Only the President, a Vice President or the
Secretary of the Company has power on behalf of the Company to make or to modify
this contract. No waiver nor modification of this contract shall be binding on
the Company unless it is in writing signed by one of such officers.
SECTION 6--AMENDMENTS. This contract may be changed at any time as to any of its
provisions by written agreement between the Contractholder and the Company but
no such change shall, without the written consent of the affected Employer and
Participants, adversely affect the benefits provided by Stipulated Payments made
before the effective date of the change; except that any change of any kind
whatsoever in this contract necessary to conform this contract to, or give the
Contractholder, Employer or Participant the benefit of, any federal or state
statute or any rule or regulation of the United States Treasury Department may
be made effective, with the consent of the Company, as of the Contract Date or
any subsequent date without the consent of any Employer or Participant or any
other person affected thereby.
The Company shall have the right at the fifth and each subsequent Yearly Date to
change this contract in any respect and without the consent of any Employer,
Participant or beneficiary provided that (i) any such change will not affect in
any way the benefits provided by Stipulated Payments made before the effective
date of the change and (ii) any such change shall not affect Section 3 of
Article III, Sections 1,2,3, and 4 of Article IV and Section 4 of Article V as
they apply to accumulation unit purchases made by Stipulated Payments made by or
on behalf of any Participant who is a Participant on the day immediately
preceding the effective date of such change to the extent that such Stipulated
Payments in any Contract Year are not in excess of the greater of (i) twice the
average of the Participant's Stipulated Payments made in the five Contract Years
(or lesser period if the Participant has not completed five Contract Years)
immediately preceding the effective date of change and (ii) $5,000 for such
Participant. The Company shall give the Contractholder thirty (30) days prior
written notice of any such change.
The portions of Stipulated Payments by or on behalf of any Participant in any
Contract Year which are in excess of the greater of (i) twice the average of the
Participant's Stipulated Payments made in the five Contract Years (or lesser
period if the Participant has not completed five Contract Years) immediately
preceding the effective date of such change and (ii) $5,000 shall be subject to
the provisions of Section 3 of Article III, Sections 1,2,3 and 4 of Article IV
and Section 4 of Article V which are in effect at the time such Stipulated
Payments are first received by the Company and such provisions shall apply
without change to such Stipulated Payments so long as they are continuously
contributed.
TA-VAQ; 6--4,5,6 -2
<PAGE>
SECTION 7--NOT TRANSFERABLE. This contract may not be sold, assigned,
discounted, or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose, to any person other than
this Company.
SECTION 8--MISSTATEMENTS. If the age or sex of any payee has been misstated, the
correct amount paid or payable by the Company shall be such as the Contributions
would have provided for the correct age or sex. For Variable Retirement Annuity
payments following such a correction, the number of annuity units will be
corrected and the dollar amount of payments will be adjusted for any
overpayments or underpayments made.
SECTION 9--INFORMATION, PROOFS AND DETERMINATION OF FACTS. The Employer shall
furnish to the Company records, data, proofs and all other information which the
Company may reasonably require to administer this contract. If the Employer
cannot furnish any required item of information, the Company may request such
information from the person concerned. The Company shall not be liable for the
fulfillment of any obligations in any way dependent on such information until
such information is received.
SECTION 10--FREQUENCY OF PAYMENTS. Variable Retirement Annuity payments under
this contract will be paid monthly, except that, if at any time such monthly
payments are less than $20 each, the Company shall have the right to make
payments at less frequent intervals, or the Company may make such other
settlement as may be equitable to the payee.
SECTION 11--FACILITY OF PAYMENT. If any Participant, beneficiary, or contingent
annuitant is, in the opinion of the Company, legally incapable of giving a valid
receipt for any payment due him and no guardian has been appointed, the Company
may, at its option, make such payment to the person or persons as have, in the
Company's opinion assumed the care and principal support of such Participant,
beneficiary, or contingent annuitant, except that any payment due a minor will
be paid at a rate not exceeding $100 per month. Any such payment made by the
Company will fully discharge the Company to the extent of such payment.
SECTION 12--RELATION OF THIS CONTRACT TO POOLED EQUITY FUND B. The Company shall
have absolutes ownership of the assets in Pooled Equity Fund B.
SECTION 13--VOTING. The Contractholder shall be entitled to one vote at meetings
of the policyholders of the Company. The Participants shall not be entitled to
vote at meetings of the policyholders of the Company but shall be entitled to
vote at meetings of the Participants of Pooled Equity Fund B in accordance with
the Rules and Regulations of Pooled Equity Fund B.
TA-VAQ; 6--7,3,9,10,11,12,13 -2
<PAGE>
TABLE OF BENEFIT OPTION VALUES
Amounts shown in Table I are based upon the 1951 Group Annuity Table, projected
to 1967 by Scale C, with interest at the rate of 3 1/2% per annum. Amounts shown
in Table I are for exact adjusted ages and must be interpolated between ages for
each full month of adjusted age in excess of the exact age. For convenience in
interpolation Table II gives the addition to Table I for each month of adjusted
age in excess of that exact age.
The adjusted age is determined by the following process:
MALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct one month for each year his calendar year of birth exceeds 1900AD,
or add one month for each year his calendar year of birth precedes 1900AD.
FEMALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct five years from such age, and
3. Deduct one month for each year her calendar year of birth exceeds 1900AD,
or add one month for each year her calendar year of birth precedes 1900AD.
All monthly payments will be rounded to the nearest cent with exact one-half
cents rounded up.
Example: A male participant born on June 15, 1903 decides to retire and receive
his first annuity check on January 1, 1968. His exact age on January 1, 1968 is
64 years, 6 months and 16 days. His calendar year of birth exceeds 1900AD by 3
years and therefore his adjusted age is 64 years and 3 months. His annuity
payable for life with 120 payments guaranteed is $6.6296 plus 3 times 0.0142 or
$6.6722 per $1,000 of proceeds applied on January 1, 1968.
A female participant born on the same date and retiring on the same date would
have an adjusted age of 59 years and 3 months and her annuity on the same option
would be $5.8700 plus 3 times 0.0117 or $5.9051 per $1,000 of proceeds applied
on January 1, 1968.
-1
<PAGE>
Dollar Amount of the First Monthly Payment Which is Purchased with Each $1,000
of Proceeds Applied for Each Full Year of Adjusted Exact Age.
<TABLE>
<CAPTION>
Options 1. 2 end 4 - Single Life Annuities
__________________________________________________________________
Adjusted Period Certain
Exact Age __________________________________________________________________
in full Unit
Years None 5 Years 10 Years 15 Years 20 Years Refund
- ----- ------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
45 $4.5100 $4.5004 $4.4696 $4.4196 $4.3400 $4.3396
46 4.5904 4.5796 4.5404 4.4796 4.3904 4.3804
47 4.6696 4.6600 4.6196 4.5504 4.4504 4.4404
48 4.7596 4.7500 4.7000 4.6200 4.5104 4.5100
49 4.8496 4.8400 4.7804 4.6896 4.5704 4.5796
50 4.9504 4.9300 4.8704 4.7700 4.6304 4.6504
51 5.0500 5.0296 4.9604 4.8504 4.6904 4.7296
52 5.1604 5.1304 5.0600 4.9296 4.7600 4.8004
53 5.2696 5.2396 5.1596 5,0196 4.8200 4.8904
54 5.3896 5.3596 5.2604 5.1000 4.8800 4.9804
55 5.5204 5.4796 5.3696 5.1900 4.9496 5.0704
56 5.6596 5.6104 5.4896 5.2800 5.0096 5.1604
57 5.8000 5.7496 5.6096 5.3796 5.0804 5.2696
58 5.9500 5.8996 5.7404 5.4804 5.1404 5.3704
59 6.1204 6.0604 5.8700 5.5800 5.2004 5.4904
60 6.2896 6.2200 6.0104 5.6796 5.2604 5.6104
61 6.4804 6.4000 6.1604 5.7804 5.3204 5.7304
62 6.6904 6.5896 6.3104 5.8800 5.3696 5.8600
63 6.9100 6.7900 6.4700 5.9796 5.4200 6.0004
64 7.1404 7.0096 6.6296 6.0804 5.4704 6.1504
65 7.3900 7.2400 6.8000 6.1800 5.5100 6.3100
66 7.6600 7.4800 6.9800 6.2796 5.5496 6.4696
67 7.9504 7.7404 7.1600 6.3696 5.5904 6.6400
68 8.2600 8.0104 7.3400 6.4596 5.6204 6.8296
69 8.5996 8.2996 7.5200 6.5400 5.6396 7.0204
70 8.9596 8.6104 7.7096 6.6204 5.6696 7.2196
71 9.3496 8.9296 7.8896 6.6900 5.6804 7.4404
72 9.7804 9.2800 8.0696 6.7596 5.6996 7.6696
73 10.2400 9.6400 8.2496 6.8100 5.7104 7.9000
74 10.7296 10.0096 8.4200 6.8604 5.7200 8.1496
75 11.2696 10.4104 8.5796 6.9096 5.7296 8.4196
</TABLE>
-1
<PAGE>
TABLE I (continued)
OPTION 3 - Survivorship Annuity Sample Values
<TABLE>
<CAPTION>
Adjusted Portion Payable to the Surviving Contingent Annuitant
Exact Age -----------------------------------------------------
of the 100% 100% 100% 66 2/3% 66 2/3% 66 2/3%
Annuitant --- ---- ---- ------ ------- -------
in Full Years Adjusted Exact Age in Full Years of the
Surviving Contingent Annuitant
55 60 65 55 60 65
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50 4.4616 -- -- 4.6128 -- --
55 4.6836 4.8876 5.0784 4.9332 5.0820 5.2176
60 4.8876 5.1864 5.4828 5.2812 5.5092 5.7288
65 5.0784 5.4828 5.9160 5.6700 6.0000 6.3372
70 -- 5.7360 6.3288 -- 6.5184 7.0152
</TABLE>
Values for ages not shown in these Tables will be furnished any Participant upon
request and will be calculated on the same basis as those shown in these Tables.
<PAGE>
TABLE II - Interpolation Factor for Table I
Dollar Amount to be added to Table I for each Full Month of Adjusted Age in
Excess of the Adjusted Exact Age in Full Years.
<TABLE>
<CAPTION>
Adjusted Options 1, 2 and 4 - Single Life Annuities
Exact Age ----------------------------------------------------------------------------------------
In Full
Years Period Certain Unit
- ------- ------------------------------------------------------------------------
None 5 Years 10 Years 15 Year 20 Years Refund
------ ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
55 $0.0116 $0.0109 $0.0100 $0.0075 $0.0050 $0.0075
56 0.0117 0.0116 0.0100 0.0083 0.0059 0.0091
57 0.0125 0.0125 0.0109 0.0084 0.0050 0.0084
58 0.0142 0.0134 0.0108 0.0083 0.0050 0.0100
59 0.0141 0.0133 0.0117 0.0083 0.0050 0.0100
60 0.0159 0.0150 0.0125 0.0084 0.0050 0.0100
61 0.0175 0.0158 0.0125 0.0083 0.0041 0.0108
62 0.0183 0.0167 0.0133 0.0083 0.0042 0.0177
63 0.0192 0.0183 0.0133 0.0084 0.0042 0.0125
64 0.0208 0.0192 0.0142 0.0083 0.0033 0.0133
65 0.0225 0.0200 0.0150 0.0083 0.0033 0.0133
66 0.0242 0.0217 0.0150 0.0075 0.0034 0.0142
67 0.0258 0.0225 0.0150 0.0075 0.0025 0.0158
68 0.0283 0.0241 0.0150 0.0067 0.0016 0.0159
69 0.0300 0.0259 0.0158 0.0067 0.0025 0.0166
70 0.0325 0.0266 0.0150 0.0058 0.0009 0.0184
71 0.0359 0.0292 0.0150 0.0058 0.0016 0.0191
72 0.0383 0.0300 0.0150 0.0042 0.0009 0.0192
73 0.0408 0.0308 0.0142 0.0042 0.0008 0.0208
74 0.0450 0.0334 0.0133 0.0041 0.0008 0.0225
</TABLE>
- --------------------------------------------------------------------------------
EXHIBIT 6.4
FORM OF INDIVIDUAL PARTICIPANT'S CERTIFICATE
FOR EMPLOYEE PENSION PLANS, FORM TA-VAQ-C
- --------------------------------------------------------------------------------
Contract Date ____________________
Contractholder:___________________
Employer:_________________________
CERTIFICATE NO.____________________ Date: ___________
AMERICAN UNITED LIFE INSURANCE COMPANY
Indianapolis, Indiana
(Herein called the Company)
Certifies that, in accordance with the provisions of the Group Pooled I Equity
Fund B Contract issued and delivered to the Contractholder,
_________________________________, Participant, is entitled to a Variable
Retirement Annuity payable under the Optional Variable Annuity Settlement
selected by the Participant and commencing I on his Annuity Commencement Date
(as determined pursuant to the Group Contract) I provided he is then alive.
If any death benefit is payable at the time of the Participant's death I it
shall be paid to____________________________________, Beneficiary. The
Participant may change his beneficiary, as provided in the Group Contract.
The Group Contract between the Contractholder and the Company is the only
contract and all rights and benefits are fixed and determined solely by and in
accordance with its provisions. Amendments to and changes in the Group Contract
may be made by the Contractholder and the Company, as provided in the Group
Contract. A copy of the Group Contract is held by the Contractholder and may be
inspected at any reasonable time upon request.
By: /s/ J. Harold Thompson
Secretary
ALL PAYMENTS AND VALUES DESCRIBED IN THIS CERTIFICATE ARE VARIABLE AND ARE
NOT GUARANTEED AS TO DOLLAR AMOUNT
GROUP ANNUITY CERTIFICATE
TA-VAQ-C See reverse side for notations by the Company
- --------------------------------------------------------------------------------
EXHIBIT 6.5
FORM OF GROUP VARIABLE ANNUITY CONTRACT
FOR HR-10 PLANS, FORM TA-VAH-TP
- --------------------------------------------------------------------------------
American United Life
INSURANCE COMPANY
GROUP POOLED EQUITY FUND B CONTRACT NO.
CONTRACT HOLDER
CONTRACT DATE
American United Life Insurance Company ("Company") agrees to make the payments
provided by this contract.
This contract is issued in consideration of the application for this contract
and of the payment to the Company of Contributions as provided in this contract.
This contract provides for investment in Pooled Equity Fund B, and supplements
Group Annuity Contract which provides for fixed-dollar benefits and which shall
hereinafter be referred to as the "Companion Contract".
The provisions and tables on the following pages are part of this contract.
This contract is delivered in
Signed at the Home Office of the Company on the Contract Date.
AMERICAN UNITED LIFE INSURANCE COMPANY
By /s/ Jack Reich
--------------------------------------
President
By: /s/ J. Harold Thompson
--------------------------------------
Secretary
Group Annuity Contract
Equity Fund - Variable Annuities
Participating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AS HEREIN
PROVIDED AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
TA-VAH;TP
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1 ----- Definitions
ARTICLE II PARTICIPANTS
Section 1 ----- Active Participant
Section 2 ----- Inactive Participant
Section 3 ----- Cessation of Participation
ARTICLE III CONTRIBUTIONS TO THE COMPANY
Section 1 ----- Employer Contributions
Section 2 ----- Participant Voluntary Contributions
Section 3 ----- Payment of Contributions
Section 4 ----- Transferred Contributions
Section 5 ----- Application of Contributions
Section 6 ----- Credit of Accumulation Units
Section 7 ----- Grace Period
Section 3 ----- Cessation of Contributions
ARTICLE IV VALUATION
Section 1 ----- Gross Investment Rate and Net Investment Rate
Section 2 ----- Net Investment Factor
Section 3 ----- Accumulation Unit Value
Section 4 ----- Annuity Unit Value
ARTICLE V BENEFITS
Section 1 ----- Variable Retirement Annuity
Section 2 ----- Optional Variable Annuity Settlements
Section 3 ----- Amount of Variable Retirement Annuity
Section 4 ----- Transfer Option
Section 5 ----- Termination Benefits
Section 6 ----- Death Benefits
Section 7 ----- Withdrawal Benefits
TA-VAH;TC
<PAGE>
TABLE OF CONTENTS (Continued)
ARTICLE VI GENERAL PROVISIONS
Section l ----- Certificates
Section 2 ----- Beneficiary
Section 3 ----- Dividends
Section 4 ----- Contract
Section 5 ----- Waiver and Modification
Section 6 ----- Amendments
Section 7 ----- Not Transferable
Section 8 ----- Misstatements
Section 9 ----- Information, Proofs and Determination of Facts
Section 10 ---- Frequency of Payments
Section 11 ---- Facility of Payment
Section 12 ---- Relation of This Contract to Pooled Equity Fund B
Section 13 ---- Deferment
Section 14 ---- Voting
Section 15 ---- Pronouns
TABLES
TA-VAH-TC(2)
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1--DEFINITIONS. Yearly Date is the Contract Date and the same day of
each year thereafter.
MONTHLY DATE is the Contract Date and the same day of each month thereafter.
CONTRACT YEAR is a period of one year beginning on a Yearly Date.
Trust is the ___________________ as in effect on the date this contract is
executed by the Company and on file with the Company and as amended from time to
time by Amendment filed by the Contractholder at the Home Office of the Company.
PARTICIPATING EMPLOYER is an Employer as defined in the Trust.
PARTICIPANT is as set out in Article II.
POOLED EQUITY FUND B is that segregated investment Account entitled "American
United Life Pooled Equity Fund B" which has been established by the Company for
this and other variable annuity contracts sold by the Company which are fundable
and computable as to payments or benefits on the basis of experience factors of
such account, the assets of which are set aside by the Company from
contributions received under such contracts.
VALUATION PERIOD is that period beginning immediately after a valuation of
Pooled Equity Fund B and ending with the next valuation of Pooled Equity Fund B.
Valuations shall occur as of the close of trading on the New York Stock Exchange
on each day during which the Exchange is open for trading.
PARTICIPANT'S INDIVIDUAL ACCOUNT is the sum of the accumulation units credited
to such Participant.
NORMAL RETIREMENT DATE for a Participant is defined in the Trust.
ANUITY COMMENCEMENT DATE is the date, for a Participant, on which the first
monthly annuity payment under this contract is payable by the Company.
CONTRIBUTIONS are Employer Contributions and Participant Voluntary Contributions
as set out in Article III.
VARIABLE RETIREMENT ANNUITY is a series of retirement payments under this
contract in amounts which may vary from time to time because of the investment
results of Pooled Equity Fund B.
COMPANION CONTRACT is the Group Annuity Contract issued by the Company to the !
Contractholder which provides for fixed dollar annuity payments which are
guaranteed as to dollar amount throughout the payment period.
TA-VAH;1--1
<PAGE>
ARTICLE II
PARTICIPANTS
SECTION 1--ACTIVE PARTICIPANT. An employee of a Participating Employer shall
become an Active Participant on the earliest date on which he meets all of the
requirements set forth in the Trust. A former Participant shall become an Active
Participant only as provided in the Trust.
SECTION 2--INACTIVE PARTICIPANT. An Active Participant shall become an Inactive
Participant on the earliest of the following dates:
(a) The date he no longer meets all of the requirements, set forth in the
Trust, to continue as an Active Participant.
(b) The day following his Annuity Commencement Date.
(c) The effective date of Cessation of Contributions pursuant to Section 6,
Article III.
SECTION 3--CESSATION OF PARTICIPATION. A Participant shall cease to be a
Participant on the date of his death.
TA-VAH;2--1,2,3
<PAGE>
ARTICLE III
CONTRIBUTIONS TO THE COMPANY
SECTION 1--EMPLOYER CONTRIBUTIONS. The amount of each Contribution made by a
Participating Employer as to each Participant shall be equal to the amount
allocated to such Participant under the Trust as reported by the Participating
Employer to the Company.
SECTION 2--PARTICIPANT VOLUNTARY CONTRIBUTIONS. An Active Participant who elects
to do so may make voluntary contributions in accordance with the provisions of
the Trust.
SECTION 3--PAYMENT OF CONTRIBUTIONS. All Contributions, except Transferred
Contributions, are payable by the Trustee directly to the Company at its Home
Office in Indianapolis, Indiana.
SECTION 4--TRANSFERRED CONTRIBUTIONS. A Participant may, prior to his Annuity
Commencement Date, by filing written request with the Company at its Home Office
on a form satisfactory to the Company, elect to transfer a portion or all of his
accumulated interest under the Companion Contract to his Participant's
Individual Account under this Contract. The amount so transferred is designated
as a Transferred Contribution.
SECTION 5--APPLICATION OF CONTRIBUTIONS. The Company shall deduct for its sales
and administrative service (provided pursuant to the agreement therefor between
the Company and Pooled Equity Fund B) (i) 6% of each Contribution made for such
Partcipant until Contributions under this Contract plus any contributions made
for such Participant under any other Fund B contract owned by the Contractholder
total $5,000, and (ii) 4% of any Contributions made thereafter for such
Participant. The Company will invest the balance of such Contributions in Pooled
Equity Fund B.
SECTION 6--CREDIT OF ACCUMULATION UNITS. The number of accumulation units
credited to a Participant's Individual Account as a result of investing such
balance shall be determined by dividing such balance by the dollar value of an
accumulation unit next computed following receipt of such Contribution by the
Company at its Home Office. The number of accumulation units so determined shall
not be changed by any subsequent change in the dollar value of accumulation
units.
SECTION 7--GRACE PERIOD. A grace period of thirty-one days will be allowed for
payment of any Contribution prescribed by the Trust.
SECTION 8--CESSATION OF CONTRIBUTIONS. Cessation of Contributions shall occur as
of a Yearly Date with respect to a particular Participating Employer, if an
TA-VAH;3--1,2,3,4,5,6,7,8
<PAGE>
amount equal to the aggregate of the Contributions prescribed by the Trust is
not paid to the Company before or within the grace period as to the payment of
such Contributions.
Cessation of Contributions shall also occur on the date any amendment to the
Trust which affects the duties or obligations of the Company is received by the
Company at its Home Office (or the effective date of such amendment, if later)
if the Company gives written notice to the Contractholder within thirty days
after receipt by the Company of such amendment that such amendment is not
acceptable to the Company.
Cessation of Contributions shall also occur with respect to a particular
Participating Employer on any Yearly Date if prior to such Yearly Date such
Participating Employer has given written notice to the Company that cessation is
to be effective as of such Yearly Date.
On and after the effective date of Cessation of Contributions with respect to a
particular Participating Employer, no further employees shall become
Participants, no further Contributions shall be payable, and the Company shall
not be liable for the payment of any benefits other than those provided by the
Contributions previously received.
TA-VAH;3--8(2)
<PAGE>
ARTICLE IV
VALUATION
SECTION 1--GROSS INVESTMENT RATE AND NET INVESTMENT RATE. The Gross Investment
rate of Pooled Equity Fund - for each Valuation Period is equal to (i) the
investment income and capital gains and losses for such Valuation Period,
whether realized or unrealized, on the assets of Pooled Equity Fund B less a
deduction for any applicable taxes and less expenses of Pooled Equity Fund B
which are not the contractual liability of the Company divided by (ii) the value
of such assets of Pooled Equity Fund B at the beginning of such Valuation
Period. Such Gross Investment Rate may be either positive or negative. The Net
Investment Rate of Pooled Equity Fund B for any Valuation Period is equal to
such Gross Investment Rate expressed in decimal form to seven places less a
deduction of .0000328 for each Calendar day in the Valuation Period, which
deduction reflects the fee payable to the Company for its mortality risk and
expense guarantees and its investment management services (provided pursuant to
the agreement therefor between the Company and Pooled Equity Fund B.)
SECTION 2--NET INVESTMENT FACTOR. The net investment factor for each Valuation
Period is the sum of 1.0000000 plus the Net Investment Rate for that Valuation
Period.
SECTION 3--ACCUMULATION UNIT VALUE. The value of an accumulation unit was
established at $1.0000000 on April 3, 1969. The value of an accumulation unit at
the end of any specific Valuation Period thereafter is determined by multiplying
such value at the end of the previous Valuation Period by the Net Investment
Factor for that specific Valuation Period.
SECTION 4--ANNUITY UNIT VALUE. The value of an annuity unit was established at
$1.0000000 on April 3, 1969. The value of an annuity unit at the end of any
specific Valuation Period thereafter is determined by multiplying the value of
an annuity unit at the end of the previous Valuation Period by .9999058 for each
calendar day in the specific Valuation Period and by the Net Investment Factor
for the specific Valuation Period.
TA-VAH;4--1,2,3,4
<PAGE>
ARTICLE V
BENEFITS
SECTION 1--VARIABLE RETIREMENT ANNUITY. Prior to a Participant's Annuity
Commencement Date, the Participant may file a written request with the Company
at its Home Office on a form satisfactory to the Company to select one of the
Optional Variable Annuity Settlements, and on the date such annuity is to
commence, the Company shall apply all accumulation units then in the
Participant's Individual Account to provide a Variable Retirement Annuity on the
selected settlement. The Company may require evidence satisfactory to it of the
good health of the Participant or contingent annuitant before approving any such
request, unless such request is made within six months of the date on which the
Participating Employer became a Participating Employer under the Trust, or more
than three years prior to the Annuity Commencement Date for such Participant. In
the absence of written notice of election by the Participant given to the
Company at least 30 days prior to the date Variable Retirement Annuity payments
are to begin, the Variable Retirement Annuity will be the ten years Certain and
Life Annuity. The Company reserves the right to require proof satisfactory to it
of the age of any Annuitant and any contingent annuitant prior to making the
first payment under any option.
SECTION 2--OPTIONAL VARIABLE ANNUITY SETTLEMENTS.
Option l -- Life Annuity. An annuity payable monthly during the lifetime of the
Annuitant and terminating with the last monthly payment preceding the death of
the Annuitant.
Option 2 -- Certain and Life Annuity. An annuity payable monthly during the
lifetime of the Annuitant with the guarantee that if, at the death of the
Annuitant, payments have been made for less than a stated certain period, which
may be five, ten, fifteen or twenty years, as elected, annuity payments will be
continued during the remainder of said period to the beneficiary designated by
the Annuitant.
Option 3 -- Survivorship Annuity. An annuity payable monthly during the lifetime
of the Annuitant, and after the death of the Annuitant, 66 2/3% or 100% (as
specified in the election) of such annuity will be paid to the contingent
annuitant named in the election if and so long as such contingent annuitant
lives. An election of this option shall be automatically cancelled if either the
contingent annuitant or Participant dies prior to his Annuity Commencement Date.
Option 4 -- Unit Refund Life Annuity. An annuity payable monthly during the
lifetime of the Annuitant and terminating with the last monthly payment
preceding the death of the Annuitant, provided that, at the death of the
Annuitant, the beneficiary designated by the Annuitant will receive an
additional
TA-VAH;5--1,2
<PAGE>
payment of the ten dollar value of the number of annuity units equal to the
excess, if any, of (a) over (b) where (a) is the total amount applied under this
option divided by the annuity unit value at the Annuity Commencement Date and
(b) is the number of annuity units represented by each monthly payment
multiplied by the number of monthly payments made.
Any other option that is mutually agreed upon between the Participant and the
Company will be made available.
Provided, however, in no event shall any option selected provide a Retirement
Annuity to the Participant or to the Participant and his Spouse which will
extend for a period beyond the life expectancy of such Participant or such
Participant and his Spouse as determined on the date the Participant retires.
The first payment under any option will be determined in accordance with Section
3 of this Article.
SECTION 3--AMOUNT OF VARIABLE RETIREMENT ANNUITY. The Tables contained herein
show the dollar amount of the first monthly payment which can be purchased with
$1,000 of value in the Participant's Individual Account, after deduction of any
applicable premium taxes. The value of the Participant's Individual Account will
be computed at the valuation next following the eighteenth day of the month
prior to the Participant's Annuity Commencement Date.
The amount of the first monthly payment shall be divided by the Annuity Unit
Value at the valuation next following the eighteenth day of the month prior to
the Participant's Annuity Commencement Date to determine the number of annuity
unite on which subsequent payments are based. The amount of each monthly
Variable Retirement Annuity payment after the first monthly payment will be
equal to such number of annuity units multiplied by the Annuity Unit Value at
the valuation next following the eighteenth day of the month prior to the month
in which the payment is due.
SECTION 4--TRANSFER OPTION. A Participant may, prior to his Annuity Commencement
Date, by filing written request with the Company at its Home Office on a form
satisfactory to the Company, elect to transfer a portion or all of his
Participant's Individual Account to the Companion Contract. The Company will
transfer the value of such portion of the Participant's Individual Account to
the Participant's Accumulated Deposits under the Companion Contract, at the end
of the Valuation Period in which such request is received or at the end of any
later Valuation Period selected by the Participant.
SECTION 5--TERMINATION BENEFITS. If a Participant terminates employment prior to
his Annuity Commencement Date, subject to any applicable provisions of the
Trust, he may elect to:
(a) Have his Participant's Individual Account applied to provide Variable
Retirement Annuity payments under one of the Optional Variable Annuity
TA-VAH;5--3 4 5
<PAGE>
ARTICLE VI
GENERAL PROVISIONS
SECTION 1--CERTIFICATES. The Company shall issue to the Participating Employer
for delivery to each Participant an individual certificate. Such certificate
shall not constitute a part of this contract.
SECTION 2--BENEFICIARY. The beneficiary is as designated on the Company's
records in accordance with the Participant's written request. Any Participant
may change his beneficiary by filing written notice in form satisfactory to the
Company. When the change is recorded by the Company, the change will take effect
as of the date the notice was signed, except that it will not apply to any
action taken by the Company before the notice was received at the Home Office.
If at the death of a Participant there is no living person designated to receive
any remaining payments, the Company will pay in a single sum to such
Participant's estate the present value of any remaining income payments certain
under Option 2, commuted on the basis of interest at the rate used in
determining the amount of the first income payment. The amount of each remaining
income payment certain will be calculated using the annuity unit value on the
date the present value is determined.
SECTION 3--DIVIDENDS. The proportion of the divisible surplus, if any, as
determined by the Company accruing on this Contract shall be ascertained
annually by the Company and shall be apportioned to this Contract on each Yearly
Date, after the Contract Date.
Such dividends shall be allocated by the Company amongst the Participating
Employers. Any such dividend allocated to a Participating Employer shall be
reallocated to the Participants of such Participating Employer in the proportion
that the amount of a Participant's Accumulation Value on such Yearly Date bears
to the sum of the Accumulation Value, on such Yearly Date, for all such
Participants of such Participating Employer. Dividends will be applied to
provide additional accumulation units. The number of accumulation units credited
to a Participant's Individual Account shall be determined by dividing the
dividend reallocated to such Participant by the dollar value of an accumulation
unit computed at the first valuation on or after such Yearly Date.
SECTION 4--CONTRACT. This Contract and the application of the Contractholder, a
copy of which is attached hereto and made a part hereof, shall constitute the
entire contract between the parties. Except to the extent specified in this
Contract, the Company is not a party to nor bound by any trust or plan.
SECTION 5--WAIVER AND MODIFICATION. No agent or other person, except an Officer
of the Company has power on behalf of the Company to modify this Contract,
TA-VAH;6--1,2,3,4,5
<PAGE>
TABLE OF BENEFIT OPTION VALUES
Amounts shown in Table I are based upon the 1951 Group Annuity Table, projected
to 1967 by Scale C, with interest at the rate of 3 1/2% per annum. Amounts shown
in Table I are for exact adjusted ages and must be interpolated between ages for
each full month of adjusted age in excess of the exact age. For convenience in
interpolation Table II gives the addition to Table I for each month of adjusted
age in excess of that exact age.
The adjusted age is determined by the following process:
MALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct one month for each year his calendar year of birth exceeds 1900AD,
or add one month for each year his calendar year of birth precedes l900AD.
FEMALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct five years from such age, and
3. Deduct one month for each year her calendar year of birth exceeds 1900AD,
or add one month for each year her calendar year of birth precedes 1900AD.
All monthly payments will be rounded to the nearest cent with exact one-half
cents rounded up.
Example: A male participant born on June 15, 1903 decides to retire and receive
his first annuity check on January 1, 1968. His exact age on January 1, 1968 is
64 years, 6 months and 16 days. His calendar year of birth exceeds 1900AD by 3
years and therefore his adjusted age is 64 years and 3 months. His annuity
payable for life with 120 payments guaranteed is $6.6296 plus 3 times 0.0142 or
$6.6722 per $1,000 of proceeds applied on January 1, 1968.
A female participant born on the same date and retiring on the same date would
have an adjusted age of 59 years and 3 months and her annuity on the same option
would be $5.8700 plus 3 times 0.0117 or $5.9051 per $1,000 of proceeds applied
on January 1, 1968.
149
<PAGE>
TABLE I
Dollar Amount of the First Monthly Payment Which is Purchased with Each $1,000
of Proceeds Applied for Each Full Year of Adjusted Exact Age.
Adjusted Options 1, 2 and 4 - Single Life Annuities
Exact Age-----------------------------------------------------------------------
in Full Period Certain
------------------------------------------------------------- Unit
Years None 5 Years 10 Years 15 Years 20 Years Refund
- -------------------------------------------------------------------------------
45 $4.5100 $4.5004 $4.4696 $4.4196 $4.3400 $4.3396
46 4.5904 4.5796 4.5404 4.4796 4.3904 4.3804
47 4.6696 4.6600 4.6196 4.5504 4.4504 4.4404
48 4.7596 4.7500 4.7000 4.6200 4.5104 4.5100
49 4.8496 4.8400 4.7804 4.6896 4.5704 4.5796
50 4.9504 4.9300 4.8704 4.7700 4.6304 4.6504
51 5.0500 5.0296 4.9604 4.8504 4.6904 4.7296
52 5.1604 5.1304 5.0600 4.9296 4.7600 4.8004
53 5.2696 5.2396 5.1596 5,0196 4.8200 4.8904
54 5.3896 5.3596 5.2604 5.1000 4.8800 4.9804
55 5.5204 5.4796 5.3696 5.1900 4.9496 5.0704
56 5.6596 5.6104 5.4896 5.2800 5.0096 5.1604
57 5.8000 5.7496 5.6096 5.3796 5.0804 5.2696
58 5.9500 5.8996 5.7404 5.4804 5.1404 5.3704
59 6.1204 6.0604 5.8700 5.5800 5.2004 5.4904
60 6.2896 6.2200 6.0104 5.6796 5.2604 5.6104
61 6.4804 6.4000 6.1604 5.7804 5.3204 5.7304
62 6.6904 6.5896 6.3104 5.8800 5.3696 5.8600
63 6.9100 6.7900 6.4700 5.9796 5.4200 6.0004
64 7.1404 7.0096 6.6296 6.0804 5.4704 6.1504
65 7.3900 7.2400 6.8000 6.1800 5.5100 6.3100
66 7.6600 7.4800 6.9800 6.2796 5.5496 6.4696
67 7.9504 7.7404 7.1600 6.3696 5.5904 6.6400
68 8.2600 8.0104 7.3400 6.4596 5.6204 6.8296
69 8.5996 8.2996 7.5200 6.5400 5.6396 7.0204
70 8.9596 8.6104 7.7096 6.6204 5.6696 7.2196
71 9.3496 8.9296 7.8896 6.6900 5.6804 7.4404
72 9.7804 9.2800 8.0696 6.7596 5.6996 7.6696
73 10.2400 9.6400 8.2496 6.8100 5.7104 7.9000
74 10.7296 10.0096 8.4200 6.8604 5.7200 8.1496
75 11.2696 10.4104 8.5796 6.9096 5.7296 8.4196
149
<PAGE>
TABLE I (continued)
OPTION 3 - Survivorship Annuity Sample Values
Adjusted Portion Payable to the Surviving Contingent Annuitant
Exact Age --------------------------------------------------------------
of the 100% 100% 100% 66 2/3% 66 2/3% 66 2/3%
Annuitant Adjusted Exact Age in Full Years of the
in Full Years Surviving Contingent Annuitant
55 60 65 55 60 65
-- -- -- -- -- --
50 4.4616 -- -- 4.6128 -- --
55 4.6836 4.8876 5.0784 4.9332 5.0820 5.2176
60 4.8876 5.1864 5.4828 5.2812 5.5092 5.7288
65 5.0784 5.4828 5.9160 5.6700 6.0000 6.3372
70 -- 5.7360 6.3288 -- 6.5184 7.0152
Values for ages not shown in these Tables will be furnished any Participant upon
request and will be calculated on the same basis as those shown in these Tables.
149
<PAGE>
TABLE II - Interpolation Factor for Table I
Dollar Amount to be added to Table I for each Full Month of Adjusted Age in
Excess of the Adjusted Exact Age in Full Years.
Table I Options 1, 2 and 4 - Single Life Annuities
Adjusted ---------------------------------------------------------------------
Exact Age Period Certain
In Full --------------------------------------------------------------
Unit
Years None 5 Years 10 Years 15 Year 20 Years Refund
- --------------------------------------------------------------------------------
55 $0.0116 $0.0109 $0.0100 $0.0075 $0.0050 $0.0075
56 0.0117 0.0116 0.0100 0.0083 0.0059 0.0091
57 0.0125 0.0125 0.0109 0.0084 0.0050 0.0084
58 0.0142 0.0134 0.0108 0.0083 0.0050 0.0100
59 0.0141 0.0133 0.0117 0.0083 0.0050 0.0100
60 0.0159 0.0150 0.0125 0.0084 0.0050 0.0100
61 0.0175 0.0158 0.0125 0.0083 0.0041 0.0108
62 0.0183 0.0167 0.0133 0.0083 0.0042 0.0177
63 0.0192 0.0183 0.0133 0.0084 0.0042 0.0125
64 0.0208 0.0192 0.0142 0.0083 0.0033 0.0133
65 0.0225 0.0200 0.0150 0.0083 0.0033 0.0133
66 0.0242 0.0217 0.0150 0.0075 0.0034 0.0142
67 0.0258 0.0225 0.0150 0.0075 0.0025 0.0158
68 0.0283 0.0241 0.0150 0.0067 0.0016 0.0159
69 0.0300 0.0259 0.0158 0.0067 0.0025 0.0166
70 0.0325 0.0266 0.0150 0.0058 0.0009 0.0184
71 0.0359 0.0292 0.0150 0.0058 0.0016 0.0191
72 0.0383 0.0300 0.0150 0.0042 0.0009 0.0192
73 0.0408 0.0308 0.0142 0.0042 0.0008 0.0208
74 0.0450 0.0334 0.0133 0.0041 0.0008 0.0225
149
- --------------------------------------------------------------------------------
EXHIBIT 6.6
FORM OF GROUP VARIABLE ANNUITY CERTIFICATE
FOR HR-10 PLANS, FORM TA-VAH-C
- --------------------------------------------------------------------------------
Contract No. _______________
Contract Date_______________
Contractholder:________________________
CERTIFICATE NO.________________________ Date______________________
AMERICAN UNITED LIFE INSURANCE COMPANY
Indianapolis, Indiana
(Herein called the Company)
Certifies that, in accordance with the provisions of the Group Pooled Equity
Fund B Contract issued and delivered to the Contractholder, ___________,
Participant, is entitled to a Variable Retirement Annuity payable monthly during
his lifetime and commencing on his Annuity Commencement Date (_______) provided
he is then alive.
If any death benefit is payable at the time of the Participant's death it shall
be paid to __________________, Beneficiary. The Participant may change his
beneficiary, as provided in the Group Contract.
The Group Contract between the Contractholder and the Company is the only
contract and all rights and benefits are fixed and determined solely by and in
accordance with its provisions. A copy of the Group Contract is held by the
Contractholder and may be inspected at any reasonable time upon request. This
Certificate merely summarizes some of the provisions of the Group Contract
principally affecting the Participant, and does not in any way alter or modify
the provisions of the Group Contract.
/s/ J. Harold Thompson
----------------------
Secretary
ALL PAYMENTS AND VALUES DESCRIBED IN THIS CERTIFICATE
ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT
GROUP ANNUITY CERTIFICATE
TA-VAH-C
<PAGE>
SUMMARY OF SOME PROVISIONS OF THE GROUP CONTRACT PRINCIPALLY
AFFECTING THE PARTICIPANT
No. 1 - Definitions
YEARLY DATE is the Contract Date and the same day of each year thereafter.
CONTRACT YEAR is a period of one year beginning on a Yearly Date.
MONTHLY DATE is the Contract Date and the same day of each month thereafter.
POOLED EQUITY FUND B is that segregated investment account entitled "American
United Life Pooled Equity Fund B" which has been established by the Company for
this and other variable annuity contracts sold by the Company which are fundable
and computable as to payments or benefits on the basis of experience factors of
such account, the assets of which are set aside by the Company from
contributions received under such contracts.
participant's individual account is the sum of accumulation units credited to
such Participant.
NORMAL RETIREMENT DATE is, for a Participant, the Monthly Date immediately
following the date on which he attains age 65.
ANNUITY COMMENCEMENT DATE is, for a Participant, his Normal Retirement Date,
except that,
(a) Upon written request of the Participant, the Annuity Commencement Date
shall become any Monthly Date specified in such request which is prior to
his Normal Retirement Date and subsequent to the date of such request, or
(b) If the Participant continues active work for the Employer after his Normal
Retirement Date, upon written request of the Participant, Annuity
Commencement Date shall become any Monthly Date specified in such request,
but not later them the Monthly Date preceeding the date he attains age 75.
VARIABLE RETIREMENT ANNUITY is a series of retirement payments under the
contract in amounts which may vary from time to time because of the investment
results of Pooled Equity Fund B.
COMPANION CONTRACT is the Group Annuity Contract issued by the Company to the
Contractholder which provides for fixed dollar annuity payments which are
guaranteed as to dollar amount throughout the payment period.
NO. 2 - TRANSFER OPTION. A Participant may, prior to his Annuity Commencement
Date, by filing written request with the Company at its Home Office on a form
satisfactory to the Company elect to transfer a portion or all of his
Participant's Individual Account to the Companion Contract. The Company will
transfer the value of such portion of the Participant's Individual Account to
the Participant's Accumulated Deposits under the Companion Contract, at the end
of the Valuation Period in which such request is received or at the end of any
later Valuation Period selected by the Participant.
NO. 3 - TERMINATION BENEFITS. If a Participant terminates employment prior to
his Annuity Commencement Date, subject to any applicable provisions of the
employee benefit plan pursuant to which he is a Participant, he may elect to:
(a) Have his Participant's Individual Account applied to provide Variable
Retirement Annuity payments under one of the Optional Variable Annuity
Settlements, such payments to begin on the first Monthly Date at least 30
days after the election of the Participant is received by the Company;
(b) Leave his Participant's Individual Account under the contract to provide
Variable Retirement Annuity payments on his Annuity Commencement Date, in
which case the number of accumulation units in his individual Account will
remain fixed, except as provided in the contracts;
(c) Withdraw his Participant's Individual Account, as provided under Withdrawal
Benefits.
NO. 4 - WITHDRAWAL BENEFITS. Subject to any applicable provisions of the
employee benefit plan pursuant to which he is a Participant, a Participant may
elect prior to his Annuity Commencement Date to withdraw a portion or all of his
Participant's Individual Account upon proper written request to the Company. If
the amount of any withdrawal by a Participant would reduce his Participant's
Individual Account below $500, his entire Participant's Individual Account must
be withdrawn. Upon receipt of such request the Company will pay in cash the
amount of the withdrawn Participant's Individual Account, determined as of the
end of the Valuation Period in which such request is received and such payment,
by the amount withdrawn, shall be in lieu of all other benefits under the
contract as to such Participant, his beneficiary and his contingent annuitant.
If a Participant withdraws his entire Participant's Individual Account, the
Company shall have, the right to refuse subsequent Contributions on behalf of
such Participant an account is being maintained for such Participant under the
Companion Contract.
NO. 5 - DEATH BENEFITS. If the death of a Participant occurs prior to his
Annuity Commencement Date, the Company, on receipt of due proof of his death,
will pay to his beneficiary a Death Benefit equal to the value of such
Participant's Individual Account determined at the end of the Valuation Period
in which written proof of death is received by the Company. Such Death Benefit
will be paid:
<PAGE>
(a) In a Single sum, or
(b) If elected by the Participant and approved by the Company prior to his
death, to his beneficiary under one of the Optional Variable Annuity
Settlements of the contract. If no such election has been made and
approved, the beneficiary may, for his benefit only, elect one of such
Settlements.
NO. 6 - RETIREMENT OPTION. A Participant may elect to have his Participant's
Individual Account applied under one of the following optional forms of annuity
by proper written request filed with the Company prior to his Annuity
Commencement Date.
OPTION 1 - LIFE ANNUITY. An annuity payable monthly during the lifetime of the
annuitant and terminating with the last monthly payment preceding the death of
the annuitant.
OPTION 2 - CERTAIN AND LIFE ANNUITY. An annuity payable monthly during the
lifetime of the annuitant with the guarantee that if, at the death of the
annuitant, payments have been made for less than a stated certain period, which
may be five, ten or fifteen years, as elected, annuity payments will be
continued during the remainder of said period to the beneficiary designated by
the annuitant.
OPTION 3 SURVIVORSHIP ANNUITY. An annuity payable monthly, during the lifetime
of the annuitant, and after the death of the annuitant, 66 2/3% or 100%, (as
specified in the election) of such annuity will be paid to the contingent
annuitant named in the election if and so long as such contingent annuitant
lives. An election of this option shall be automatically canceled if either the
contingent annuitant or Participant dies prior to his Annuity Commencement Date.
OPTION 4 - UNIT REFUND LIFE ANNUITY. An annuity payable monthly during the
lifetime of the annuitant and terminating with the last monthly payment
preceding the death of the annuitant, provided that, at the death of the
annuitant, the beneficiary designated by the annuitant will receive an
additional payment of the then dollar value of the number of annuity units equal
to the excess, if any, of (a) over (b) where (a) is the total amount applied
under this option divided by the annuity unit value at the Annuity Commencement
Date and (b) is the number of annuity units represented by each payment
multiplied by the number of payments made.
Any other option that is mutually agreed upon between the Participant and the
Company will be made available.
Provided, however, in no event shall any option selected provided a Retirement
Annuity to the Participant or to the Participant and his Spouse which will
extend for a period beyond the life expectancy of such participant or such
participant and his Spouse as determined on the date the Participant retires.
NO. 7 - RETIREMENT BENEFITS. The first monthly payment under any retirement
option will be determined in accordance with the methods described in the Group
Contract. The dollar value of the second and subsequent payments is not
predetermined and may change from month to month depending on the net investment
result of Pooled Equity Fund B. The actual amount of each payment is determined
by multiplying the number of annuity units credited to the Participant by the
annuity unit value for the valuation period next following the eighteenth day of
the month prior to the month in which the payment is due. The number of annuity
units is determined by dividing the first monthly payment by the annuity unit
value for the Valuation Period next following the eighteenth day of the month
prior to the Annuity Commencement Date on the effective date of annuity
payments.
The Company guarantees that the dollar amount of' each payment after the first
will not be affected by variations in the mortality experience for mortality
assumptions used to determine the first payment.
NO. 8 -BENEFICIARY. The beneficiary is as designated on the Company's records in
accordance with the Participant's written request. Any Participant may change
his beneficiary by filing, written notice in form satisfactory to the Company.
When the change is recorded by the Company, the change will take effect as of
the date the notice was signed, except that it will not apply to any action
taken by the Company before the notice was received at the Home Office.
If at the death of the Participant there is no living beneficiary, any payments
due will be paid to the estate of the Participant except that the Company, in
such case may make such payments to any one or more of the surviving relatives
of such Participant in accordance with the laws of the State of Domicile of the
Participant, and such payment will completely discharge the Company with respect
to the amount paid. If any beneficiary dies while receiving payments and no
beneficiary is designated to receive any remaining payments, such remaining
payments will be paid to the estate of such beneficiary except that the Company,
in such case may make such payments to any one or more of the surviving
relatives of such beneficiary in accordance with the laws of the State of
Domicile of the beneficiary, and such payments will completely discharge the
Company with respect to the amount paid.
NO. 9 - NOT TRANSFERABLE. No benefit or privilege under the contract may be
sold, assigned, discounted, or pledged as collateral for a loan or as security
for the performance of an obligation or for any other purpose, to any person
other than this Company.
NO. 10 -AMENDMENTS. The contract may be changed at any time as to any of its
provisions by written agreement between the Contractholder and the Company but
no such change shall, without the written consent of the affected Participants,
adversely affect the benefits provided by Contributions made before the
effective date of the change; except that any change of any kind whatsoever in
the contract necessary to conform the contract to or give the Contractholder or
Participant the benefit of, any federal or state statute or any rule or
regulation of the United States Treasury Department may be made effective, with
the consent of the Company, as of the Contract Date or any subsequent date
without the consent of any Participant or any other person affected thereby. All
benefits under the contract shall be nonforfeitable with respect to a
Participant, beneficiary or contingent annuitant.
<PAGE>
The Company shall have the right at the fifth and each subsequent Yearly Date to
change the contract in any respect and without the consent of any Participant or
beneficiary provided that (i) any such change will not affect in any way the
benefits provided by Contributions made before the effective date of the change,
and (ii) any such change shall not affect the deduction from Contributions, the
determination of values or the annuity rates applicable to accumulation unit
purchases made by Contributions made on behalf of any Participant who is a
Participant on the day immediately preceding the effective date of such change
to the extent that such Contributions in any Contract Year are not in excess of
the greater of (i) twice the average of the Contributions made for such
Participant in the five Contract Years (or lesser period if the Participant has
not completed five Contract Years) immediately preceding the effective date of
such change, and (ii) $5,000 for such Participant. The Company shall give the
Contractholder thirty (30) days prior written notice of any such change.
The portions of Contributions made on behalf of any Participant in any Contract
Year which are in excess of the greater of (i) twice the average of the
Contributions made for such Participant in the five Contract Years (or lesser
period if the participant has not completed five Contract Years) immediately
preceding the effective date of such change, and (ii) $5,000 shall be subject to
the provisions for deduction from Contributions, determination of values and
annuity rates which are in effect at the time such Contributions are first
received by the Company and such provisions shall apply without change to such
Contributions so long as they are continuously contributed.
NO. 11 - VOTING. The Participants shall not be entitled to vote at meetings of
the policyholders of the Company but shall be entitled to vote at meetings of
the Participants of Pooled Equity Fund B in accordance with the Rules and
Regulations of Pooled Equity Fund B.
- --------------------------------------------------------------------------------
Notations (By the Company) as to Beneficiary
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER NOTATIONS ( By the Company)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 6.7
FORM OF GROUP VARIABLE ANNUITY CONTRACT
FOR 408 PLANS, FORM TA-VA-9894
- --------------------------------------------------------------------------------
American United Life
INSURANCE COMPANY
GROUP POOLED EQUITY FUND B CONTRACT NO.
CONTRACTHOLDER
CONTRACT DATE
American United Life Insurance Company ("Company") agrees to make the payments
provided by this contract.
This contract is issued in consideration of the application for this contract
and of the payment to the Company of Contributions as provided in this contract.
This contract provides for investment in Pooled Equity Fund B, and supplements
Group Annuity Contract which provides for fixed-dollar benefits and which shall
hereinafter be referred to as the "Companion Contract"
The provisions and tables on the following pages are part of this contract.
This contract is delivered in
Signed at the Home Office of the Company on the Contract Date.
AMERICAN UNITED LIFE INSURANCE COMPANY
By: /s/ Jack Reich
---------------------------------------
President
Attest
By: /s/ Robert L. Bach
---------------------------------------
Secretary
Group Pension Builder
Group Annuity Contract
Equity Fund - Variable Annuities
Participating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AS HEREIN
PROVIDED AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
TP VA-9894
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1 ----------- Definitions
ARTICLE II PARTICIPANTS
Section 1 ----------- Eligibility
Section 2 ----------- Participant
Section 3 ----------- Cessation of Participation
ARTICLE III CONTRIBUTIONS TO THE COMPANY
Section 1 ----------- Contributions
Section 2 ----------- Application of Contributions
Section 3 ----------- Credit of Accumulation Units
Section 4 ----------- Suspension of Contributions
ARTICLE IV VALUATION
Section 1 ----------- Gross Investment Rate and Net Investment Rate
Section 2 ----------- Net Investment Factor
Section 3 ----------- Accumulation Unit Value
Section 4 ----------- Annuity Unit Value
Section 5 ----------- Valuation of Assets
ARTICLE V BENEFITS
Section 1 ----------- Variable Retirement Annuity
Section 2 ----------- Optional Variable Annuity Settlements
Section 3 ----------- Amount of Variable Retirement Annuity
Section 4 ----------- Transfer Option
Section 5 ----------- Termination Benefits
Section 6 ----------- Withdrawal Benefits
Section 7 ----------- Death Benefits
Section 8 ----------- Disability Benefits
ARTICLE VI GENERAL PROVISIONS
Section 1 ----------- Certificates
Section 2 ----------- Beneficiary
Section 3 ----------- Participating
Section 4 ----------- Contract
Section 5 ----------- Waiver and Modification
Section 6 ----------- Amendments
Section 7 ----------- Not Transferable
Section 8 ----------- Misstatements
TC
<PAGE>
(TABLE OF CONTENTS)
Section 9 ---------- Information, Proofs and Determination of Facts
Section 10 ---------- Frequency of Payments
Section 11 ---------- Facility of Payment
Section 12 ---------- Relation of this Contract to Pooled Equity Fund B
Section 13 ---------- Voting
TABLES
TC(2)
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1--DEFINITIONS. Yearly Date is the Contract Date and each January 1
thereafter.
MONTHLY DATE is the Contract Date and the same day of each month thereafter.
CONTRACT YEAR is a period of one year beginning on a Yearly Date.
EMPLOYER is the Contractholder designated on the title page. Any similar or
related organization which makes written election to come under this contract
shall be an "Employer" if such election is approved by the Company.
PARTICIPANT is as set out in Article II.
MARRIED PARTICIPANT is a Participant, who, at his Annuity Commencement Date or
date of death has been married throughout the one-year period ending on such
Participant's Annuity Commencement Date or date of death.
ANNUITANT is a Participant who is receiving annuity benefits hereunder.
POOLED EQUITY FUND B is that segregated investment account entitled "American
United Life Pooled Equity Fund B" which has been established by the Company for
this and other variable annuity contracts sold by the Company which are fundable
and computable as to payments or benefits on the basis of experience factors of
such account, the assets of which are set aside by the Company from
contributions received under such contracts.
VALUATION PERIOD is that period beginning immediately after a valuation of
Pooled Equity Fund B and ending with the next valuation of Pooled Equity Fund B.
Valuations shall occur as of the close of trading on the New York Stock Exchange
on each day during which the Exchange is open for trading.
PARTICIPANT'S INDIVIDUAL ACCOUNT is the sum of the accumulation units credited
to such Participant.
NORMAL RETIREMENT DATE is, for a Participant, the Monthly Date immediately
following the date on which he attains age 65.
ANNUITY COMMENCEMENT DATE is, for a Participant, his Normal Retirement Date,
except that,
(a) upon written request of the Participant, the Annuity Commencement Date
shall become any Monthly Date specified in such request which is prior to
his Normal Retirement Date and sub-
1--1
<PAGE>
sequent to (i) the date of such request, and (ii) the earlier of (a) his
age 59% or (b) the date of his Total and Permanent Disability.
(b) upon written request of the Participant, Annuity Commencement Date shall
become any Monthly Date specified in such request which is subsequent to
his Normal Retirement Date, but not later than the Monthly Date preceding
the date he attains age 70 1/2%.
TOTALLY AND PERMANENTLY DISABLED means that the Participant must be receiving
disability benefits under the Federal Social Security Act, as amended.
VARIABLE RETIREMENT ANNUITY is a series of retirement payments under this
contract in amounts which may vary from time to time because of the investment
results of Pooled Equity Fund B.
COMPANION CONTRACT is the Group Annuity Contract issued by the Company to the
Contractholder which provides for fixed dollar annuity payments which are
guaranteed as to dollar amount throughout the payment period.
1--1(2)
<PAGE>
ARTICLE II
PARTICIPANTS
SECTION 1--ELIGIBILITY. An employee of an Employer shall be eligible to become a
Participant on the earliest Monthly Date on which he is employed by such
Employer.
SECTION 2--PARTICIPANT. An eligible employee shall become a Participant when he
has made written request to the Contractholder on a form furnished or approved
by the Company and said request has been delivered to the Company.
SECTION 3--CESSATION OF PARTICIPATION. A Participant shall cease to be a
Participant upon the earliest of the following dates:
(a) The date he no longer has accumulation units or annuity units under this
contract.
(b) The date of his death.
TA-VA; 2--1,2,3 719
<PAGE>
ARTICLE III
CONTRIBUTIONS TO THE COMPANY
SECTION l--CONTRIBUTIONS. The Contractholder shall, upon the written request of
a Participant, direct the Company to invest the Contributions for that
Participant in Pooled Equity Fund B. The amount of such Contribution for each
Participant may not be less than $240 annually.
SECTION 2--APPLICATION OF CONTRIBUTIONS. The Company shall deduct for its sales
and administrative service (provided pursuant to the agreement therefor between
the Company and Pooled Equity Fund B) (i) 6% of each Contribution made for such
Participant until Contributions under this Contract plus any Contributions made
for such Participant under any other Group Fund B contract with the Company
total $5,000, and (ii) 4% of any Contributions made thereafter for such
Participant. The Company will invest the balance of such Contributions in Pooled
Equity Fund B.
SECTION 3--CREDIT OF ACCUMULATION UNITS. The number of accumulation units
credited to a Participant's Individual Account as a result of investing such
balance shall be determined by dividing such balance by the dollar value of an
accumulation unit next computed following receipt of such Contribution by the
Company at its Home Office. The number of accumulation units so determined shall
not be changed by any subsequent change in the dollar value of accumulation
units.
SECTION 4--SUSPENSION OF CONTRIBUTIONS. Suspension of Contributions may occur on
any Monthly Date on which the amount of Contributions paid to the Company is
less than the amount specified in Section l of this Article, if written notice
has been given prior thereto by the Company to the Contractholder that
Suspension of Contributions will occur.
On or after the effective date of Suspension of Contributions no further
Contributions shall be payable under this contract. The Company shall not be
liable for the payment of any benefits other than those provided by
Contributions previously received.
3--1,2,3,4
<PAGE>
ARTICLE IV
VALUATION
SECTION 1--GROSS INVESTMENT RATE AND NET INVESTMENT RATE. The Gross Investment
rate of Pooled Equity Fund B for each Valuation Period is equal to (i) the
investment income and capital gains and losses for such Valuation Period,
whether realized or unrealized, on the assets of Pooled Equity Fund B less a
deduction for any applicable taxes and less expenses of Pooled Equity Fund B
which are not the contractual liability of the Company divided by (ii) the value
of such assets of Pooled Equity Fund B at the beginning of such Valuation
Period. Such Gross Investment Rate may be either positive or negative. The Net
Investment Rate of Pooled Equity Fund B for any Valuation Period is equal to
such Gross Investment Rate expressed in decimal form to seven places less a
deduction of .0000328 for each Calendar day in the Valuation Period, which
deduction reflects the fee payable to the Company for its mortality risk and
expense guarantees and its investment management services (provided pursuant to
the agreement therefor between the Company and Pooled Equity Fund B.)
SECTION 2--NET INVESTMENT FACTOR. The net investment factor for each Valuation
Period is the sum of 1.0000000 plus the Net Investment Rate for that Valuation
Period.
SECTION 3--ACCUMULATION UNIT VALUE. The value of an accumulation unit was
established at $1.0000000 on April 3, 1969. The value of an accumulation unit at
the end of any specific Valuation Period thereafter is determined by multiplying
such value at the end of the previous Valuation Period by the Net Investment
Factor for the specific Valuation Period.
SECTION 4--ANNUITY UNIT VALUE . The value of an annuity unit was established at
$1.0000000 on April 3, 1969. The value of an annuity unit at the end of any
specific Valuation Period thereafter is determined by multiplying the value of
an annuity unit at the end of the previous Valuation Period by .9999058 for each
calendar day in the specific Valuation Period and by the Net Investment Factor
for the specific Valuation Period.
SECTION 5--VALUATION OF ASSETS. The value of the assets in Pooled Equity Fund B
at the end of any Valuation Period shall be the aggregate of the following:
(a) The face amount of cash; plus
(b) When market quotations are readily available with respect to securities,
the total market value of such securities, valued at the closing prices on
the last business day during the Valuation Period for securities traded on
organized exchanges, and at the bid price preceding the valuation date for
non-traded securities and securities not traded on an organized exchange;
plus
(c) When market quotations are not readily available, or when restricted
securities or other assets are being valued, the fair value as determined
in good faith by the Pooled Equity Fund B Board of Managers of any other
assets; minus
TA_VA 4--1,2,3,4,5 719
<PAGE>
(d) An amount for taxes on realized and unrealized capital gains and any other
taxes based on income of, assets in, or the existence of, Pooled Equity
Fund B which may be applicable; and minus
(e) Liabilities of Pooled Equity Fund B other than contract liabilities.
The determination by the Company of the value of the assets and the accumulation
units and annuity units shall be conclusive. Any change in the method of
valuation must be approved by the Board of Managers of Pooled Equity Fund B.
TA-VA;4--5(2)
<PAGE>
ARTICLE V
BENEFITS
SECTION 1--VARIABLE RETIREMENT ANNUITY. Prior to a Participant's Annuity
Commencement Date, the Participant may file a written request with the Company
at its Home Office on a form satisfactory to the Company to select one of the
Optional Variable Annuity Settlements, and on the date such annuity is to
commence, the Company shall apply all accumulation units then in the
Participant's Individual Account to provide a Variable Retirement Annuity on the
selected settlement. In the absence of written notice of election by the
Participant given to the Company at least 30 days prior to the date Variable
Retirement Annuity payments are to begin, the Variable Retirement Annuity will
be the ten years Certain and Life Annuity; provided, however, for a Married
Participant, the Variable Retirement Annuity will be the fifty percent (50%)
Survivorship Annuity. The Company reserves the right to require proof
satisfactory to it of the age of any Annuitant and any contingent annuitant
prior to making the first payment under any option.
SECTION 2--OPTIONAL VARIABLE ANNUITY SETTLEMENTS.
OPTION 1--LIFE ANNUITY. An annuity payable monthly during the lifetime of the
Annuitant and terminating with the last monthly payment preceding the death of
the Annuitant.
OPTION 2--CERTAIN AND LIFE ANNUITY. An annuity payable monthly during the
lifetime of the Annuitant with the guarantee that if, at the death of the
Annuitant, payments have been made for less than a stated certain period, which
may be five, ten, fifteen or twenty years, as elected, annuity payments will be
continued during the remainder of said period to the beneficiary designated by
the Annuitant.
OPTION 3---SURVIVORSHIP ANNUITY. An annuity payable monthly during the lifetime
of the Annuitant, and after the death of the Annuitant, 50%, 66 2/3% or 100% (as
specified in the election) of such annuity will be paid to the contingent
annuitant named in the election if and so long as such contingent annuitant
lives. An election of this option shall be automatically cancelled if either the
contingent annuitant or Participant dies prior to his Annuity Commencement Date.
OPTION 4--UNIT REFUND LIFE ANNUITY. An annuity payable monthly during the
lifetime of the Annuitant and terminating with the last monthly payment
preceding the death of the Annuitant, provided that, at the death of the
Annuitant, the beneficiary designated by the Annuitant will receive an
additional payment of the then dollar value of the number of annuity units equal
to the excess, if any, of (a) over (b) where (a) is the total amount applied
under this option divided by the annuity unit value at the Annuity Commencement
Date and (b) is the number of annuity units represented by each monthly payment
multiplied by the number of monthly payments made.
5--1,2,
<PAGE>
Any other option that is mutually agreed upon between the Participant and the
Company will be made available.
Provided, however, in no event shall any option selected provide a Retirement
Annuity to the Participant or to the Participant and his Spouse which will
extend for a period beyond the life expectancy of such Participant or such
Participant and his Spouse as determined on the date the Participant retires.
The first payment under any option will be determined in accordance with Section
3 of this Article.
SECTION 3--AMOUNT OF VARIABLE RETIREMENT ANNUITY. The Tables contained herein
show the dollar amount of the first monthly payment which can be purchased with
$1,000 of value in the Participant's Individual Account, after deduction of any
applicable premium taxes The value of the Participant's Individual Account will
be computed at the valuation next following the eighteenth day of the month
prior to the Participant's Annuity Commencement Date.
The amount of the first monthly payment shall be divided by the Annuity Unit
Value at the valuation next following the eighteenth day of the month prior to
the Participant's Annuity Commencement Date to determine the number of annuity
units on which subsequent payments are based. The amount of each monthly
Variable Retirement Annuity payment after the first monthly payment will be
equal to such number of annuity units multiplied by the Annuity Unit Value at
the valuation next following the eighteenth day of the month prior to the month
in which the payment is due.
SECTION 4--TRANSFER OPTION. A Participant may, prior to his Annuity Commencement
Date, by filing written request with the Company at its Home Office on a form
satisfactory to the Company, elect to transfer a portion or all of his
Participant's Individual Account to the Companion Contract. The Company will
transfer the value of such portion of the Participant's Individual Account to
the Participant's Accumulated Deposits under the Companion Contract, at the end
of the Valuation Period in which such request is received or at the end of any
later Valuation Period selected by the Participant.
SECTION 5--TERMINATION BENEFITS. If a Participant terminates employment prior to
his Annuity Commencement Date, he may elect to:
(a) Have his Participant's Individual Account applied to provide Variable
Retirement Annuity payments under one of the Optional Variable Annuity
Settlements, such payments to begin on the first Monthly Date at least 30
days after the election of the Participant is received by the Company;
(b) Leave his Participant's Individual Account under this contract to provide
Variable Retirement Annuity payments on his Annuity Commencement Date, in
which case the number of accumulation units in his Individual Account will
remain fixed, except as provided in Section 3 of Article VI;
TA-VA; 5--3,4,5 719
<PAGE>
(c) Withdraw his Participant's Individual Account, as provided in Section 6 of
this Article V.
SECTION 6--WITHDRAWAL BENEFITS. A Participant may elect prior to his Annuity
Commencement Date to withdraw a portion or all of his Participant's Individual
Account upon proper written request to the Company. If the amount of any
withdrawal by a Participant would reduce his Participant's Individual Account
below $500, his entire Participant's Individual Account must be withdraw. Upon
receipt of such request the Company will pay in cash the amount of the withdrawn
Participant's Individual Account, determined as of the end of the Valuation
Period in which such request is received, and such payment, by the amount
withdrawn, shall be in lieu of all other benefits under this contract as to such
Participant, his beneficiary and his contingent annuitant.
If a Participant withdraws his entire Participant's Individual Account, the
Company shall have the right to refuse subsequent Contributions on behalf of
such Participant unless Accumulated Deposits are then being held for such
Participant under the Companion Contract.
SECTION 7--DEATH BENEFITS. If the death of a Participant occurs prior to his
Annuity Commencement Date, the Company, on receipt of due proof of his death,
will pay to his beneficiary a Death Benefit equal to the value of such
Participant's Individual Account determined at the end of the Valuation Period
in which written proof of death is received by the Company. Such Death Benefit
will be paid:
(a) in a single sum, or
(b) if elected by the Participant and approved by the Company prior to his
Death, to his beneficiary under one of the Optional Variable Annuity
Settlements set forth in Section 2, of this Article. If no such election
has been made and approved, the beneficiary may, for his benefit only,
elect one of such Settlements.
SECTION 8--DISABILITY BENEFITS. If a Participant becomes Totally and Permanently
Disabled he may elect to:
(a) Continue his Contributions;
(b) Receive his Participant's Individual Account in cash in lieu of all other
benefits under this contract, or
(c) Have his Participant's Individual Account applied to provide Variable
Retirement Annuity payments under one of the Optional Variable Annuity
Settlements.
5--6,7,8
<PAGE>
ARTICLE VI
GENERAL
PROVISIONS
SECTION 1--CERTIFICATES. The Company shall issue to the Contractholder for
delivery to each Participant an individual certificate. Such certificate shall
not constitute a part of this contract.
SECTION 2--BENEFICIARY. The beneficiary is as designated on the Company's
records in accordance with the Participant's written request. Any Participant
may change his beneficiary by filing written notice in form satisfactory to the
Company. When the change is recorded by the Company, the change will take effect
as of the date the notice was signed, except that it will not apply to any
action taken by the Company before the notice was received at the Home Office.
If at the death of the Participant there is no living beneficiary, any payments
due will be paid to the estate of the Participant except that the Company, in
such case may make such payment to any one or more of the surviving relatives of
such Participant in accordance with the laws of the State of domicile of the
Participant, and such payment will completely discharge the Company with respect
to the amount paid. If any beneficiary dies while receiving payments and no
beneficiary is designated to receive any remaining payments, such remaining
payments will be paid to the estate of such beneficiary except that the Company,
in such case may make such payments to any one or more of the surviving
relatives of such beneficiary in accordance with the laws of the State of
domicile of the beneficiary, and such payments will completely discharge the
Company with respect to the amount paid.
SECTION 3--PARTICIPATING. The proportion of the divisible surplus, if any, as
determined by the Company, which accrues on this contract will be determined
annually by the Company and will be credited to this contract. Any credit will
be in the form of an adjustment in the next succeeding year to the deduction
from Contributions, as provided in Article III, Section 2, or in the form of
additional accumulation units credited to the Participant's Individual Account
or in the form of additional annuity units, as applicable. Any additional units
credited will be considered Contributions in the year credited for the purpose
of determining the guarantees applicable.
TA-VA;; 6--1,2,3 719
<PAGE>
SECTION 4--CONTRACT. This contract and the application of the Contractholder, a
copy of which is attached hereto and made a part hereof, constitute the entire
contract between the parties.
SECTION 5--WAIVER AND MODIFICATION. Only the President, a Vice President or the
Secretary of the Company has power on behalf of the Company to make or to modify
this contract. No waiver nor modification of this contract shall be binding on
the Company unless it is in writing signed by one of such officers.
SECTION 6--AMENDMENTS. This contract may be changed at any time as to any of its
provisions by written agreement between the Contractholder and the Company but
no such change shall, without the written consent of the affected Participants,
adversely affect the benefits provided by Contributions made before the
effective date of the change; except that any change of any kind whatsoever in
this contract necessary to conform this contract to, or give the Contractholder
or Participant the benefit of, any federal or state statute or any rule or
regulation of the United States Treasury Department may be made effective, with
the consent of the Company, as of the Contract Date or any subsequent date
without the consent of any Participant or any other person affected thereby.
All benefits under this contract shall be nonforfeitable with respect to a
Participant, beneficiary or contingent annuitant.
The Company shall have the right at the fifth Yearly Date and each subsequent
Monthly Date to change this contract in any respect and without the consent of
any Participant or beneficiary provided that (i) any such change will not affect
in any way the benefits provided by Contributions made before the effective date
of the change, and (ii) any such change shall not affect Section 2 of Article
III, Sections 1, 2, 3 and 4 of Article IV and Section 3 of Article V as they
apply to accumulation unit purchases made by Contributions made on behalf of any
Participant who is a Participant on the day immediately preceding the effective
date of such change to the extent that such Contributions in any Contract Year
are not in excess of the greater of (i) twice the average of the Contributions
made for such Participant in the five Contract Years (or lesser period if the
Participant has not completed five Contract Years) immediately preceding the
effective date of such change, and (ii) $5,000 for such Participant. The Company
shall give the Contractholder thirty (30) days prior written notice of any such
change.
The portions of Contributions made on behalf of any Participant in any Contract
Year which are in excess of the greater of (i) twice the average of the
Contributions made for such Participant in the five Contract Years (or lesser
period if the Participant has not completed five Contract Years) immediately
preceding the effective date of such change, and (ii) $5,000 shall be subject to
the provisions of Section 2 of Article III, Sections 1, 2, 3 and 4 of Article IV
and Section 3 of Article V which are in effect at the time such Contributions
are first received by the Company and such provisions shall apply without change
to such Contributions so long as they are continuously contributed.
6--4,5,6
<PAGE>
SECTION 7--NOT TRANSFERABLE. No benefit or privilege under this contract may be
sold, assigned, discounted, or pledged as collateral for a loan or as security
for the performance of an obligation or for any other purpose, to any person
other than this Company.
SECTION 8--MISSTATEMENTS. If the age or sex of any payee has been misstated, the
correct amount paid or payable by the Company shall be such as the Contributions
would have provided for the correct age or sex. For Variable Retirement Annuity
payments following such a correction, the number of annuity units will be
corrected and the dollar amount of payments will be adjusted for any
overpayments or underpayments made.
SECTION 9--INFORMATION, PROOFS AND DETERMINATION OF FACTS. Each Employer shall
furnish to the Company records, data, proofs and all other information which the
Company may reasonably require to administer this contract. If such Employer
cannot furnish any required item of information, the Company may request such
information from the person concerned. The Company shall not be liable for the
fulfillment of any obligations in any way dependent on such information until
such information is received.
SECTION 10--FREQUENCY OF PAYMENTS. Variable Retirement Annuity payments under
this contract will be paid monthly, except that, if at any time such monthly
payments are less than $20 each, the Company shall have the right to make
payments at less frequent intervals, or the Company may make such other
settlement as may be equitable to the payee.
SECTION 11--FACILITY OF PAYMENT. If any Participant, beneficiary, or contingent
annuitant is, in the opinion of the Company, legally incapable of giving a valid
receipt for any payment due him and no guardian has been appointed, the Company
may, at its option, make such payment to the person or persons as have, in the
Company's opinion assumed the care and principal support of such Participant,
beneficiary, or contingent annuitant, except that any payment due a minor will
be paid at a rate not exceeding $100 per month. Any such payment made by the
Company will fully discharge the Company to the extent of such payment.
SECTION 12--RELATION OF THIS CONTRACT TO POOLED EQUITY FUND B. The Company shall
have absolute ownership of the assets in Pooled Equity Fund B.
SECTION 13--VOTING. The Participants shall not be entitled to vote at meetings
of the policyholders of the Company but shall be entitled to vote at meetings of
the Participants of Pooled Equity Fund B in accordance with the Rules and
Regulations of Pooled Equity Fund B.
TA-VA;; 6--7,8,9,10,11,12,13 719
<PAGE>
TABLE OF BENEFIT OPTION VALUES
Amounts shown in Table I are based upon the 1951 Group Annuity Table, projected
to 1967 by Scale C, with interest at the rate of 3 1/2% per annum. Amounts shown
in Table I are for exact adjusted ages and must be interpolated between ages for
each full month of adjusted age in excess of the exact age. For convenience in
interpolation Table II gives the addition to Table I for each month of adjusted
age in excess of that exact age.
The adjusted age is determined by the following process:
MALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct one month for each year his calendar year of birth exceeds l900AD,
or add one month for each year his calendar year of birth precedes l900AD.
FEMALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct five years from such age, and
3. Deduct one month for each year her calendar year of birth exceeds l900AD,
or add one month for each year her calendar year of birth precedes 1900AD.
All monthly payments will be rounded to the nearest cent with exact one-half
cents rounded up.
Example: A male participant born on June 15, 1903 decides to retire and receive
his first annuity check on January 1, 1968. His exact age on January 1, 1968 is
64 years, 6 months and 16 days. His calendar year of birth exceeds 1900AD by 3
years and therefore his adjusted age is 64 years and 3 months. His annuity
payable for life with 120 payments guaranteed is $6.6296 plus 3 times 0.0142 or
$6.6722 per $1,000 of proceeds applied on January 1, 1968.
A female participant born on the same date and retiring on the same date would
have an adjusted age of 59 years and 3 months and her annuity on the same option
would be $5.8700 plus 3 times 0.0117 or $5.9051 per $1,000 of proceeds applied
on January 1, 1968.
149
TABLE I
Dollar Amount of the First Monthly Payment Which is Purchased with Each $1,000
of Proceeds Applied for Each Full Year of Adjusted Exact Age.
Adjusted Options 1, 2 and 4 - Single Life Annuities
Exact Age --------------------------------------------------------
in Full Period Certain
-------------------------------------------------------- Unit
Years None Years 10 Years 15 Years 20 Years Refund
- --------------------------------------------------------------------------------
45 $4.5100 $4,5004 $4.4696 $4.4196 $4.3400 $4.3396
46 4.5904 4.5796 4.5404 4.4796 4.3904 4.3804
47 4.6696 4.6600 4.6196 4.5504 4.4504 4.4404
48 4.7596 4.7500 4.7000 4.6200 4.5104 4.5100
49 4.8496 4.8400 4.7804 4.6896 4.5704 4.5796
50 4.9504 4.9300 4.8704 4.7700 4.6304 4.6504
51 5.0500 5.0296 4.9604 4.8504 4.6904 4.7296
52 5.1604 5.1304 5.0600 4.9296 4.7600 4.8004
53 5.2696 5.2396 5.1596 5,0196 4.8200 4.8904
54 5.3896 5.3596 5.2604 5.1000 4.8800 4.9804
55 5.5204 5.4796 5.3696 5.1900 4.9496 5.0704
56 5.6596 5.6104 5.4896 5.2800 5.0096 5.1604
57 5.8000 5.7496 5.6096 5.3796 5.0804 5.2696
58 5.9500 5.8996 5.7404 5.4804 5.1404 5.3704
59 6.1204 6.0604 5.8700 5.5800 5.2004 5.4904
60 6.2896 6.2200 6.0104 5.6796 5.2604 5.6104
61 6.4804 6.4000 6.1604 5.7804 5.3204 5.7304
62 6.6904 6.5896 6.3104 5.8800 5.3696 5.8600
63 6.9100 6.7900 6.4700 5.9796 5.4200 6.0004
64 7.1404 7.0096 6.6296 6.0804 5.4704 6.1504
65 7.3900 7.2400 6.8000 6.1800 5.5100 6.3100
66 7.6600 7.4800 6.9800 6.2796 5.5496 6.4696
67 7.9504 7.7404 7.1600 6.3696 5.5904 6.6400
68 8.2600 8.0104 7.3400 6.4596 5.6204 6.8296
69 8.5996 8.2996 7.5200 6.5400 5.6396 7.0204
70 8.9596 8.6104 7.7096 6.6204 5.6696 7.2196
71 9.3496 8.9296 7.8896 6.6900 5.6804 7.4404
72 9.7804 9.2800 8.0696 6.7596 5.6996 7.6696
73 10.2400 9.6400 8.2496 6.8100 5.7104 7.9000
74 10.7296 10.0096 8.4200 6.8604 5.7200 8.1496
75 11.2696 10.4104 8.5796 6.9096 5.7296 8.4196
149
<PAGE>
TABLE I (continued)
OPTION 3 - Survivorship Annuity Sample Values
Adjusted
Exact Age
of the Adjusted Exact Age of the Contingent Annuitant in Full
Years 50 55 60 65 70
Annuitant -- -- -- -- --
in Full Years With 100% Payable to Surviving Contingent Annuitant
50 4.3032 4.4616 4.5936 4.7088 4.7940
55 4.4616 4.6836 4.8876 5.0784 5.2272
60 4.5936 4.8876 5.1864 5.4828 5.7360
65 4.7088 5.0784 5.4828 5.9160 6.3288
70 4.7940 5.2272 5.7360 6.3288 6.9552
With 66 2/3% Payable to Surviving Contingent Annuitant
50 4.4988 4.6128 4.7064 4.7868 4.8456
55 4.7664 4.9332 5.0820 5.2176 5.3208
60 5.0484 5.2812 5.5092 5.7288 5.9112
65 5.3568 5.6700 6.0000 6.3372 6.6480
70 5.6736 6.0696 6.5184 7.0152 7.5156
With 50% Payable to Surviving Contingent Annuitant
50 4.6044 4.6932 4.7664 4.8264 4.8720
55 4.9356 5.0688 5.1852 5.2908 5.3700
60 5.3124 5.5020 5.6868 5.8608 6.0036
65 5.7540 6.0216 6.2964 6.5736 6.8196
70 6.2472 6.6036 6.9960 7.4184 7.8336
Values for ages not shown in these Tables will be furnished any
Participant upon request and will be calculated on the same basis
as those shown in these Tables.
<PAGE>
TABLE II - Interpolation Factor for Table I
Dollar Amount to be added to Table I for each Full Month of
Adjusted Age in Excess of the Adjusted Exact Age in Full Years.
Table I
Adjusted Options 1. 2 and 4 - Single Life Annuities
Exact Age -------------------------------------------------------------------
In Full Period Certain
---------------------------------------------------------- Unit
Years None 5 Years 10 Years 15 Year 20 Years Refund
- ------ ----------------------------------------------------------- -------
55 $0.0116 $0.0109 $0.0100 $0.0075 $0.0050 $0.0075
56 0.0117 0.0116 0.0100 0.0083 0.0059 0.0091
57 0.0125 0.0125 0.0109 0.0084 0.0050 0.0084
58 0.0142 0.0134 0.0108 0.0083 0.0050 0.0100
59 0.0141 0.0133 0.0117 0.0083 0.0050 0.0100
60 0.0159 0.0150 0.0125 0.0084 0.0050 0.0100
61 0.0175 0.0158 0.0125 0.0083 0.0041 0.0108
62 0.0183 0.0167 0.0133 0.0083 0.0042 0.0177
63 0.0192 0.0183 0.0133 0.0084 0.0042 0.0125
64 0,0208 0.0192 0.0142 0.0083 0.0033 0.0133
65 0.0225 0.0200 0.0150 0.0083 0.0033 0.0133
66 0.0242 0.0217 0.0150 0.0075 0.0034 0.0142
67 0.0258 0.0225 0.0150 0.0075 0.0025 0.0158
68 0.0283 0.0241 0.0150 0.0067 0.0016 0.0159
69 0.0300 0.0259 0.0158 0.0067 0.0025 0.0166
70 0.0325 0.0266 0.0150 0.0058 0.0009 0.0184
71 0.0359 0.0292 0.0150 0.0058 0.0016 0.0191
72 0.0383 0.0300 0.0150 0.0042 0.0009 0.0192
73 0.0408 0.0308 0.0142 0.0042 0.0008 0.0208
74 0.0450 0.0334 0.0133 0.0041 0.0008 0.0225
149
- --------------------------------------------------------------------------------
EXHIBIT 6.8
FORM OF INDIVIDUAL PARTICIPANT'S CERTIFICATE
FOR 408 PLANS, FORM TA-VA-9896
- --------------------------------------------------------------------------------
American United Life
INSURANCE COMPANY
(Herein called the Company)
Certifies that, in accordance with the provisions of the Group Pooled Equity
Fund B Contract issued and delivered to the Contractholder, the above-named
Participant is entitled to a Variable Retirement Annuity payable monthly during
his lifetime and beginning on his Annuity Commencement Date provided he is then
alive.
If any death benefit is payable at the time of the Participant's death it shall
be paid to the above designated Beneficiary. The Participant may change his
beneficiary, as provided in the Group Contract.
The Group Contract between the Contractholder and the Company is the only
contract and all rights and benefits are fixed and determined solely by and in
accordance with its provisions. A copy of the Group Contract is held by the
Contractholder and may be inspected at any reasonable time upon request. This
Certificate merely summarizes some of the provisions of the Group Contract
principally affecting the Participant, and does not in any way alter or modify
the provisions of the Group Contract.
AMERICAN UNITED LIFE INSURANCE COMPANY
/s/ Robert L. Bach
--------------------------------------
Secretary
ALL PAYMENTS AND VALUES DESCRIBED IN THIS CERTIFICATE
ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT
INDIVIDUAL RETIREMENT
GROUP ANNUITY CERTIFICATE
VA - 9896
<PAGE>
SUMMARY OF SOME PROVISIONS OF THE GROUP CONTRACT PRINCIPALLY
AFFECTING THE PARTICIPANT
No. 1 - Definitions
YEARLY DATE is the Contract Date and January I of each year thereafter.
CONTRACT YEAR is a period of one year beginning on a Yearly Date.
MONTHLY DATE is the Contract Date and the same day of each month thereafter.
POOLED EQUITY FUND B is that segregated investment account entitled "American
United Life Pooled Equity Fund B" which has been established by the Company for
this and other variable annuity contracts sold by the Company which are fundable
and computable as to payments or benefits on the basis of experience factors of
such account, the assets of which are set aside by the Company from
contributions received under such contracts.
PARTICIPANT'S INDIVIDUAL ACCOUNT is the sum of accumulation units credited to
such Participant.
NORMAL RETIREMENT DATE is, for a Participant, the Monthly Date immediately
following the date on which he attains age 65.
ANNUITY COMMENCEMENT DATE is, for a Participant, his Normal Retirement Date,
except that,
(a) Upon written request of the Participant, the Annuity Commencement Date
shall become any Monthly Date specified in such request which is prior to
his Normal Retirement Date and subsequent to (i) the date of such request,
and (ii) the earlier of his age 59 1/2 or his Total and Permanent
Disability.
(b) Upon written request of the Participant, Annuity Commencement Date shall
become any Monthly Date specified in such request, but not later than the
Monthly Date preceding the date he attains age 70 1/2.
VARIABLE RETIREMENT ANNUITY is a series of retirement payments under the
contract in amounts which may vary from time to time because of the investment
results of Pooled Equity Fund B.
COMPANION CONTRACT is the Group Annuity Contract issued by the Company to the
Contractholder which provides for fixed dollar annuity payments which are
guaranteed as to dollar amount throughout the payment period.
NO. 2.- TRANSFER OPTION. A Participant may, prior to his Annuity Commencement
Date, by filing written request with the Company at its Home Office on a form
satisfactory to the Company, elect to transfer a portion or all of his
Participant's Individual Account to the Companion Contract. The Company will
transfer the value of such portion of the Participant's Individual Account to
the Participant's Accumulated Deposits under the Companion Contract, at the end
of the Valuation Period in which such request is received or at the end of any
later Valuation Period selected by the Participant.
NO. 3 - TERMINATION BENEFITS. If a Participant terminates employment prior to
his Annuity Commencement Date, he may elect to:
(a) Have his Participant's Individual Account applied to provide Variable
Retirement Annuity payments under one of the Optional Variable Annuity
Settlements such payments to begin on the first Monthly Date at least 30
days after the election of the Participant is received by the Company;
(b) Leave his Participant's Individual Account under the contract to provide
Variable Retirement Annuity payments on his Annuity Commencement Date, in
which case the number of accumulation units in his Individual Account will
remain fixed, except as provided in the contract;
(c) Withdraw his Participant's Individual Account, as provided under Withdrawal
Benefits.
NO. 4 - WITHDRAWAL BENEFITS. A Participant may elect prior to his Annuity
Commencement Date to withdraw a portion or all of his Participant's Individual
Account upon proper written request to the Company. If the amount of any
withdrawal by a Participant would reduce his Participant's Individual Account
below $500, his entire Participant's Individual Account must be withdrawn. Upon
receipt of such request the Company will pay in cash the amount of the withdrawn
Participant's Individual Account, determined as of the end of the Valuation
Period in which such request is received and such payment, by the amount
withdrawn, shall be in lieu of all other benefits under the contract as to such
Participant, his beneficiary and his contingent annuitant.
If a Participant withdraws his entire Participant's Individual Account, the
Company shall have the right to refuse subsequent Contributions on behalf of
such Participant unless Accumulated Deposits are then being held for such
Participant under the Companion Contract.
NO. 5 - DEATH BENEFITS. If the death of a Participant occurs prior to his
Annuity Commencement Date, the Company, on receipt of due proof of his death,
will pay to his beneficiary a Death Benefit equal to the value of such
Participant's Individual Account determined at the end of the Valuation Period
in which written proof of death is received by the Company. Such Death Benefit
will be paid:
<PAGE>
(a) In a single sum, or
(b) If elected by the Participant and approved by the Company prior to his
death, to his beneficiary under one of the Optional Variable Annuity
Settlements of the Contract. If no such election has been made and
approved, the beneficiary may, for his benefit only, elect one of such
Settlements.
NO. 6 - DISABILITY BENEFITS. If a Participant becomes Totally and Permanently
Disabled he may elect to:
(a) Continue his Contributions;
(b) Receive his Participant's Individual Account in cash in lieu of all other
benefits under this Contract as to such Participant, his beneficiary, and
his contingent annuitant, or
(c) Have his Participant's Individual Account applied to provide Variable
Retirement Annuity payments under one of the Optional Variable Annuity
Settlements.
NO. 7 - RETIREMENT OPTION. A Participant may elect to have his Participant's
Individual Account applied under one of the following optional forms of annuity
by proper written request filed with the Company prior to his Annuity
Commencement Date.
OPTION 1 - LIFE ANNUITY. An annuity payable monthly during the lifetime of the
annuitant and terminating with the last monthly payment preceding the death of
the annuitant.
OPTION 2 - CERTAIN AND LIFE ANNUITY. An annuity payable monthly during the
lifetime of the annuitant with the guarantee that if, at the death of the
annuitant, payments have been made for less than a stated certain period, which
may be five, ten or fifteen years, as elected, annuity payments will be
continued during the remainder of said period to the beneficiary designated by
the annuitant.
OPTION 3 - SURVIVORSHIP ANNUITY. An annuity payable monthly during the lifetime
of the annuitant, and after the death of the annuitant, 50%, 66 2/3% or 100 %
(as specified in the election) of such annuity will be paid to the contingent
annuitant named in the election if and so long as such contingent annuitant
lives. An election of this option shall be automatically canceled if either the
contingent annuitant or Participant dies prior to his Annuity Commencement Date.
OPTION 4 - UNIT REFUND LIFE ANNUITY. An annuity payable monthly during the
lifetime of the annuitant and terminating with the last monthly payment
preceding the death of the annuitant, provided that, at the death of the
annuitant, the beneficiary designated by the annuitant will receive an
additional payment of the then dollar value of the number of annuity units equal
to the excess, if any, of (a) over (b) where (a) is the total amount applied
under this option divided by the annuity unit value at the Annuity Commencement
Date and (b) is the number of annuity units represented by each payment
multiplied by the number of payments made.
Any other option that is mutually agreed upon between the Participant and the
Company will be made available.
Provided, however, in no event shall any option selected provide a Retirement
Annuity to the Participant or to the Participant and his spouse which will
extend for a period beyond the life expectancy of such Participant or such
Participant and his spouse as determined on the date the Participant retires.
NO. 8 - RETIREMENT BENEFITS. The first monthly payment under any retirement
option will be determined in accordance with the methods described in the Group
Contract. The dollar value of the second and subsequent payments is not
predetermined and may change from month to month depending on the net investment
result of Pooled Equity Fund B. The actual amount of each payment is determined
by multiplying the number of annuity units credited to the Participant by the
Annuity Unit Value for the Valuation Period next following the eighteenth day of
the month prior to the month in which the payment is due. The number of annuity
units is determined by dividing the first monthly payment by the Annuity Unit
Value for the Valuation Period next following the eighteenth day of the month
prior to the Annuity Commencement Date on the effective date of annuity
payments.
The Company guarantees that the dollar amount of each payment after the first
will not be affected by variations in the mortality experience for mortality
assumptions used to determine the first payment.
NO. 9 - BENEFICIARY. The beneficiary is as designated on the Company's records
in accordance with the Participant's written request. Any Participant may change
his beneficiary by filing written notice in form satisfactory to the Company.
When the change is recorded by the Company, the change will take effect as of
the date the notice was signed, except that it will not apply to any action
taken by the Company before the notice was received at the Home Office.
If at the death of the Participant there is no living beneficiary, any payments
due will be paid to the estate of the Participant except that the Company, in
such case may make such payment to any one or more of the surviving relatives of
such Participant in accordance with the laws of the State of Domicile of the
Participant, and such payment will completely discharge the Company with respect
to the amount paid. If any beneficiary dies while receiving payments and no
beneficiary is designated to receive any remaining payments, such remaining
payments will be paid to the estate of such beneficiary except that the Company,
in such case may make such payments to any one or more of the surviving
relatives of such beneficiary in accordance with the laws of the State of
Domicile of the beneficiary, and such payments will completely discharge the
Company with respect to the amount paid.
NO. 10 - NOT TRANSFERABLE. No benefit or privilege under the contract may be
sold, assigned, discounted, or pledged as collateral for a loan or as security
for the performance of an obligation or for any other purpose, to any person
other than this Company.
<PAGE>
NO. 11 - AMENDMENTS. The contract may be changed at any time as to any of its
provisions by written agreement between the Contractholder and the Company but
no such change shall, without the written consent of the affected Participants,
adversely affect the benefits provided by Contributions made before the
effective date of the change; except that any change of any kind whatsoever in
the contract necessary to conform the contract to or give the Contractholder or
Participant the benefit of, any federal or state statute or any rule or
regulation of the United States Treasury Department may be made effective, with
the consent of the Company, as of the Contract Date or any subsequent date
without the consent of any Participant or any other person affected thereby. All
benefits under the contract shall be nonforfeitable with respect to a
Participant, beneficiary or contingent annuitant.
The Company shall have the right at the fifth yearly Date and each subsequent
Monthly Date to change the contract in any respect and without the consent of
any Participant or beneficiary provided that (i) any such change will not affect
in any way the benefits provided by Contributions made before the effective date
of the change, and (ii) any such change shall not affect the deduction from
Contributions, the determination of values or the annuity rates applicable to
accumulation unit purchases made by Contributions made on behalf of any
Participant who is a Participant on the day immediately preceding the effective
date of such change to the extent that such Contributions in any Contract Year
are not in excess of the greater of (i) twice the average of the Contributions
made for such Participant in the five Contract Years (or lesser period if the
Participant has not completed five Contract Years) immediately preceding the
effective date of such change, and (ii) $5,000 for such Participant. The Company
shall give the Contractholder thirty (30) days prior written notice of any such
change.
The portions of Contributions made on behalf of any Participant in any Contract
Year which are in excess of the greater of (i) twice the average of the
Contributions made for such Participant in the five Contract Years (or lesser
period if the Participant has not completed five Contract Years) immediately
preceding the effective date of such change, and (ii) $5,000 shall be subject to
the provisions for deduction from Contributions, determination of values and
annuity rates which are in effect at the time such Contributions are first
received by the Company and such provisions shall apply without change to such
Contributions so long as they are continuously contributed.
NO. 12 - VOTING. The Participants shall not be entitled to vote at meetings of
the policyholders of the Company but shall be entitled to vote at meetings of
the Participants of Pooled Equity Fund B in accordance with the Rules and
Regulations of Pooled Equity Fund B.
- --------------------------------------------------------------------------------
NOTATIONS (By the Company) as to Beneficiary
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER NOTATIONS (By the Company)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 6.9
FORM OF GROUP VARIABLE ANNUITY CONTRACT
FOR 457 PROGRAMS, FORM VA-10515
- --------------------------------------------------------------------------------
American United Life INSURANCE COMPANY
GROUP FUND B
CONTRACT NO. VA _____________________
CONTRACTHOLDER ______________________
CONTRACT DATE _______________________
American United Life Insurance Company ("Company") will provide all the rights
and benefits of this contract.
This contract is issued in consideration of the application and of the payment
to the Company of Annuity Deposits. This contract provides for investment in
Fund B, and supplements Group Annuity Contract G xx,xxx which shall be referred
to as the "Companion Contract."
Signed for the Company at its Home Office, ___________________________________.
AMERICAN UNITED LIFE INSURANCE COMPANY
By: __________________________________
Attest
GROUP ANNUITY CONTRACT
Equity Fund - Variable Annuities Participating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AS HEREIN
PROVIDED AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
VA-10515
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
ARTICLE II ANNUITY DEPOSITS
Section 1 ------- Annuity Deposits
Section 2 ------- Application of Annuity Deposits
Section 3 ------- Credit of Accumulation Units
Section 4 ------- Cessation of Annuity Deposits
ARTICLE III VALUATION
Section 1 ------- Gross Investment Rate and Net Investment Rate
Section 2 ------- Net Investment Factor
Section 3 ------- Accumulation Unit Value
Section 4 ------- Annuity Unit Value
Section 5 ------- Valuation of Assets
ARTICLE IV TRANSFER OPTIONS
Section 1 ------- Transfers from the Companion Contract
Section 2 ------- Transfers to the Companion Contract
ARTICLE V BENEFITS
Section 1 ------- Variable Annuity Benefits
Section 2 ------- Single Sum Benefits
Section 3 ------- Emergency Withdrawals
Section 4 ------- Death Benefits
ARTICLE VI GENERAL PROVISIONS
Section 1 ------- Contract
Section 2 ------- Ownership
Section 3 ------- Beneficiary
Section 4 ------- Dividends
Section 5 ------- Amendments
Section 6 ------- Misstatements
Section 7 ------- Information, Proofs and Determination of Facts
Section 8 ------- Facility of Payment
Section 9 ------- Pronouns
Section 10 ------ Relation of this Contract to Fund B
Section 11 ------ Voting
Section 12 ------ Transfer to Substitute Funding Medium
TABLES
<PAGE>
ARTICLE I
DEFINITIONS
CONTRACT ANNIVERSARY means the Contract Date and each subsequent anniversary of
the Plan.
MONTHLY DATE means the Contract Date and the first day of each month thereafter.
CONTRACT YEAR means a period of time beginning on a Contract Anniversary and
ending on the day immediately preceding the next Contract Anniversary.
PLAN means the Deferred Compensation Plan of the Contractholder as it exists on
the Contract Date and any subsequent amendments.
PARTICIPANT means a person on whose behalf funds are on deposit under this
contract.
FUND B is the segregated investment account entitled "American united Life
Fund B" which has been established by the Company to provide the funding for the
variable annuity contracts sold by the Company.
VALUATION PERIOD is a period beginning immediately after a valuation of Fund B
and ending with the next valuation of Fund B. Valuations shall occur as of the
close of trading on the New York Stock Exchange on each day during which the
Exchange is open for trading provided that the Company is open for business.
ANNUITY DEPOSITS means an amount paid on behalf of a Participant by the
Contractholder to the Company at its Home Office.
INDIVIDUAL ACCOUNT is the sum of the accumulation units credited on behalf of a
Participant.
ANNUITY COMMENCEMENT DATE means the Monthly Date on which annuity benefits are
to commence for a Participant, as reported to the Company. The Annuity
Commencement Date must be prior to the Participant's 75th birthday.
VARIABLE ANNUITY is an annuity providing for payments which vary in amount in
accordance with the investment experience of a segregated investment account
such as Fund B.
COMPANION CONTRACT is the group annuity contract issued by the Company to the
Contractholder which provides for fixed dollar annuity payments which are
guaranteed as to dollar amount throughout the payment period.
3
<PAGE>
ARTICLE II
ANNUITY DEPOSITS
SECTION 1--ANNUITY DEPOSITS. The Contractholder will direct the Company to
invest all or a portion of the Annuity Deposits made on behalf of a Participant
in Fund B. A Participant's annual Annuity Deposits cannot be less than the
Company's then current established minimum.
SECTION 2--APPLICATION OF ANNUITY DEPOSITS. The Company shall deduct for its
sales and administrative services (provided for by the agreement between the
Company and Fund B) (i) 6% of each Annuity Deposit made for a Participant until
Annuity Deposits under this Contract plus any Annuity Deposits made for the
Participant under any other Fund B contract with the Company total $5,000, and
(ii) 4% of any Annuity Deposits made thereafter for such Participant. The
Company will invest the balance of the Annuity Deposits in Fund B.
SECTION 3--CREDIT OF ACCUMULATION UNITS. The number of accumulation units
credited to an Individual Account will be determined by dividing the balance of
the Annuity Deposit by the dollar value of an accumulation unit immediately
following receipt of the Annuity Deposits by the Company at its Home Office. The
number of accumulation units will not be changed by any subsequent change in the
dollar value of accumulation units.
SECTION 4--CESSATION OF ANNUITY DEPOSITS. Cessation of Annuity Deposits will
occur when the number of Participants on whose behalf Annuity Deposits are being
made is less than 25, if written notice has been given by the Company to the
Contractholder.
Also, cessation of Annuity Deposits will occur if an amendment is made to the
Plan which affects the duties or obligations of the Company; provided that
within 30 days after receiving the amendment, the Company notifies the
Contractholder that the amendment is not acceptable. Unless a mutually
satisfactory agreement is reached within 30 days of the Company's notice,
cessation will occur as of the amendment's effective date.
4
<PAGE>
ARTICLE III
VALUATION
SECTION 1--GROSS INVESTMENT RATE AND NET INVESTMENT RATE. The Gross Investment
Rate of Fund B for each Valuation Period is equal to (i) the investment income
and capital gains and losses for the Valuation Period, whether realized or
unrealized, on the assets of Fund B, less a deduction for any applicable taxes
and less expenses of Fund B which are not the contractual liability of the
Company, divided by (ii) the value of the assets of Fund B at the beginning of
the Valuation Period. The Gross Investment Rate may be either positive or
negative. The Net Investment Rate of Fund B for any Valuation Period is equal to
the Gross Investment Rate expressed in decimal form to seven places less a
deduction of .0000328 for each calendar day in the Valuation Period. This
deduction reflects the fee payable to the Company for its mortality risk and
expense guarantees and its investment management services (provided for by the
agreement between the Company and Fund B).
SECTION 2--NET INVESTMENT FACTOR. The net investment factor for each Valuation
Period is the sum of 1.0000000 plus the Net Investment Rate for that Valuation
Period.
SECTION 3--ACCUMULATION UNIT VALUE. The value of an accumulation unit was
established at $1.0000000 on April 3, 1969. The value of an accumulation unit at
the end of any subsequent Valuation Period is determined by multiplying the
value at the end of the previous Valuation Period by the Net Investment Factor
for the specific Valuation Period.
SECTION 4--ANNUITY UNIT VALUE. The value of an annuity unit was established at
$1.0000000 on April 3, 1969. The value of an annuity unit at the end of any
subsequent Valuation Period is determined by multiplying the value of an annuity
unit at the end of the previous Valuation Period by .9999058 for each calendar
day in the specific Valuation Period and by the Net Investment Factor for the
specific Valuation Period.
SECTION 5--VALUATION OF ASSETS. The value of the assets in Fund B
at the end of any Valuation Period will be the aggregate of the
following:
(a) The face amount of cash; plus
(b) When market quotations are readily available with respect to securities,
the total market value of the securities, valued at the closing prices on
that day for securities traded on national securities exchanges, and at the
bid prices quoted on that day for securities traded over the counter; plus
(c) When market quotations are not readily available, or when restricted
securities or other assets are being valued, the fair value as determined
in good faith by the Fund B Board of Managers; minus
5
<PAGE>
(d) An amount for taxes on realized and unrealized capital gains and any other
applicable taxes based on income of, assets in, or the existence of, Fund
B; and minus
(e) Liabilities of Fund B other than contract liabilities.
The determination by the Company of the value of the assets and the accumulation
units and annuity units will be conclusive. Any change in the method of
valuation must be approved by the Board of Managers of Fund B.
6
<PAGE>
ARTICLE IV
TRANSFER OPTIONS
SECTION 1--TRANSFERS FROM THE COMPANION CONTRACT. If a Participant is also a
Participant under the Companion Contract, the Contractholder may elect to
transfer all or a portion of the Participant's Withdrawal Value under the
Companion Contract to this contract. The amount so transferred will be
considered an Annuity Deposit on the date of transfer.
The Contractholder may also elect to transfer all or a portion of the
Participant's Annuity Value under the Companion Contract to this contract on his
Annuity Commencement Date to provide the Participant a Variable Annuity. The
amount so transferred will be considered an Annuity Deposit on the date of
transfer.
SECTION 2--TRANSFERS TO THE COMPANION CONTRACT. The Contractholder may, prior to
a Participant's Annuity Commencement Date, by filing written request with the
Company at its Home Office on a form satisfactory to the Company, elect to
transfer all or a portion of the value of the Participant's Individual Account
to the Companion Contract.
The Contractholder may also elect to transfer all or a portion of the value of
the Participant's Individual Account to the Companion Contract on his Annuity
Commencement Date to provide the Participant a fixed dollar annuity settlement
under the Companion Contract.
Transfers to the Companion Contract will be made by the Company at the end of
the Valuation Period in which such written request is received by the Company or
at the end of any later Valuation Period selected by the Contractholder.
7
<PAGE>
ARTICLE V
BENEFITS
SECTION 1--VARIABLE ANNUITY BENEFITS. At the Contractholder's request a
Participant's Individual Account will be applied as of his Annuity Commencement
Date to provide a monthly Variable Annuity beginning on that date.
On behalf of the Contractholder, the annuity will be payable to the Participant
under one of the following options as specified in the Contractholder's written
request. If no such written notice has been received by the Company at least 30
days prior to the Participant's 75th birthday, his Annuity Value shall be
automatically applied under Option 2 as a 10 year Certain and Life Annuity.
OPTION 1--LIFE ANNUITY. The monthly annuity will be payable to the
Participant for as long as he lives.
OPTION 2-- CERTAIN AND LIFE ANNUITY. The monthly annuity will be payable to
the Participant for as long as he lives. If the Participant dies before
receiving payments for the certain period (5, 10, or 15 years, as specified
in the election), any remaining payments for the balance of the certain
period will be paid to his beneficiary.
OPTION 3--SURVIVORSHIP ANNUITY. The monthly annuity will be payable to the
Participant for as long as he lives. After the death of the Participant, a
portion (all, 2/3 or 1/2, as specified in the election) of the monthly
annuity will be paid to his contingent annuitant for as long as he lives.
An election of this option will be cancelled automatically if either the
Participant or contingent annuitant dies prior to the Annuity Commencement
Date.
OPTION 4--UNIT REFUND ANNUITY. The monthly annuity will be payable to the
Participant for as long as he lives. At the death of the Participant, his
beneficiary will receive a single sum payment of the then dollar value of
the number of annuity units equal to the excess of (a) the total amount
applied under this option divided by the annuity unit value at the Annuity
Commencement Date over (b) the number of annuity units represented by each
monthly payment multiplied by the number of monthly payments made.
Any other options, including annuities for a fixed period, mutually agreed upon
between the Contractholder and the Company will be made available.
8
<PAGE>
In no event will any option elected provide annuity benefits which would extend
for a certain period beyond the life expectancy of a Participant or the joint
life expectancy of a Participant and his contingent annuitant, as determined on
the Annuity Commencement Date.
The Tables show the dollar amount of the first monthly payment which can be
purchased with $1,000 of value in a Participant's Individual Account, after
deduction of any applicable premium taxes. The value of an Individual Account
will be computed at the valuation which follows the eighteenth day of the month
prior to the Participant's Annuity Commencement Date.
The amount of the first monthly payment shall be divided by the Annuity Unit
Value at the valuation which follows the eighteenth day of the month prior to
the Participant's Annuity Commencement Date to determine the number of annuity
units on which subsequent payments are based. The amount of each monthly
Variable Annuity payment after the first monthly payment will be equal to this
number of annuity units multiplied by the Annuity Unit Value at the valuation
which follows the eighteenth day of the month prior to the month in which the
payment is due.
If the yearly amount of the annuity payable is less than the Company's
established minimum on the Annuity Commencement Date, the Company may pay the
annuity on a less frequent basis.
If the dollar value of a Participant's Individual Account is less than $1,750.00
on his Annuity Commencement Date, or on the date he becomes an Inactive
Participant, the Company may pay the dollar value in cash in full settlement of
all benefits otherwise payable to such Participant.
SECTION 2 -- SINGLE SUM BENEFITS. Upon the Contractholder's written request, the
payment of benefits to a Participant on his Annuity Commencement Date shall be
made in a single sum. The amount paid in a single sum will be equal to the value
of the Participant's Individual Account, determined as of the end of the
Valuation Period in which the request is received, and will be in lieu of the
benefits otherwise provided under this contract for such Participant, his
beneficiary or his contingent annuitant.
SECTION 3--EMERGENCY WITHDRAWALS. If a Participant is faced with an unforseeable
emergency (as defined in the Plan), the Company, upon receipt of the
Contractholder's written request, will pay to the Participant all or a portion
of the value of Participant's Individual Account, determined as of the end of
the Valuation Period in which the request is received. This withdrawal will be
paid in lieu of the benefits otherwise provided under this contract for the
Participant, his beneficiary or his contingent annuitant.
9
<PAGE>
SECTION 4--DEATH BENEFITS. If a Participant dies prior to his Annuity
Commencement Date, the Company, upon receipt of due proof of death, will pay a
benefit equal to the value of the Participant's Individual Account determined at
the end of the Valuation Period in which such proof of death is received by the
Company. At the Contractholder's request and on his behalf, the benefit will be
paid to the beneficiary in one sum or as a monthly annuity under one of the
options in Section 1 of this Article. If the Participant has not made an.
election prior to his death, the beneficiary may make such an election.
10
<PAGE>
ARTICLE VI
GENERAL PROVISIONS
SECTION 1--CONTRACT. This contract and the application of the Contractholder, a
copy of which is attached to and made a part of the contract, constitute the
entire contract. No agent or other person, except an officer of the Company, can
change this contract or waive any of its conditions.
SECTION 2--OWNERSHIP. The value of all Annuity Deposits received under this
contract and the value of all property and rights purchased with, and all income
attributable to such Annuity Deposits shall remain (until made available to the
Participant or other beneficiary) solely the property and rights of the
Contractholder (without being restricted to the provision of benefits under the
Plan) subject only to the claims of the Contractholder's general creditors.
SECTION 3--BENEFICIARY. Beneficiaries are as designated on the Contractholder's
records in accordance with a Participant's written request.
SECTION 4--DIVIDENDS. This contract's share of the divisible surplus, if any,
will be determined annually by the Company and credited as a dividend on the
Contract Anniversary. Any dividend credited to this contract will be in the form
of an adjustment in the next succeeding year to the deduction from Annuity
Deposits, as provided in Article III, Section 2, or in the form of additional
accumulation units credited to the Participant's Individual Account or in the
form of additional annuity units, as applicable. Any additional units credited
will be considered Annuity Deposits in the year credited for the purpose of
determining the guarantees applicable.
SECTION 5--AMENDMENTS. The Company reserves the right to change any of the
provisions of this contract after the fifth Contract Year. The Company must give
written notice to the Contractholder of its intention to so amend at least 30
days prior to the date the amendment is to take effect. Any such amendment will
not apply to Annuity Deposits made prior to the effective date of the amendment.
Also, this contract may be changed at any time as to any of its provisions by
written agreement between the Contractholder and the Company without the consent
of any Participant, beneficiary and contingent annuitant. Such an amendment will
be binding on each tax Participant, beneficiary and contingent annuitant.
This contract may also be amended or changed at any time by the Company without
the consent of the Contractholder or any Participant, beneficiary or contingent
annuitant if such amendment or change is necessary to permit the contract or the
Plan to meet the requirements of any federal or state statute or rule or
regulation of the U.S. Treasury Department.
11
<PAGE>
SECTION 6--MISSTATEMENTS. If the age or sex of any Participant or contingent
annuitant is misstated, the amount of annuity payable by the Company will be
adjusted to the amount the value of the Participant's Individual Account would
have provided on the Annuity Commencement Date using the correct age and sex.
Any overpayments will be deducted from future amounts payable, and any
underpayments will be paid in full with the next payment.
SECTION 7--INFORMATION, PROOFS AND DETERMINATION OF FACTS. The Contractholder
will furnish the Company with any information which, in the opinion of the
Company, is necessary for the administration of this contract.
SECTION 8--FACILITY OF PAYMENT. If any Participant, contingent annuitant or
beneficiary is legally incapable of giving a valid receipt for any payment due
him and no guardian has been appointed, the Company may make such payment to the
person or persons who have assumed the care and principal support of such
Participant, contingent annuitant or beneficiary, except that any payment due a
minor will be paid at a rate not exceeding $100.00 per month. Any payment made
by the Company will fully discharge the Company to the extent of such payment.
SECTION 9--PRONOUNS. Masculine pronouns used in this contract shall include both
masculine and feminine gender unless the context indicates otherwise.
SECTION 10--RELATION OF THIS CONTRACT TO FUND B. The Company shall have absolute
ownership of the assets in Fund B.
SECTION 11--VOTING. The Contractholder shall not be entitled to vote at meetings
of the policyholders of the Company but shall be entitled to vote at meetings of
the participants of Fund B in accordance with the Rules and Regulations of Fund
B.
SECTION 12--TRANSFER TO SUBSTITUTE FUNDING MEDIUM. At the written election of
the Contractholder, the Company will pay to a substitute funding medium an
amount equal to the value of all unapplied accumulation units determined at the
end of the Valuation Period in which the election is received by the Company at
its Home Office.
12
<PAGE>
TABLE OF BENEFIT OPTION VALUES
Amounts shown in Table I are based upon the 1951 Group Annuity Table, projected
to 1967 by Scale C, with interest at the rate of 3 1/2% per annum. Amounts shown
in Table I are for exact adjusted ages ant must be interpolated between ages for
each full month of adjusted age in excess of the exact age. For convenience in
interpolation Table II gives the addition to Table I for each month of adjusted
age in excess of that exact age.
The adjusted age is determined by the following process:
MALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct one month for each year his calendar year of birth exceeds 1900AD,
or add one month for each year his calendar year of birth precedes 1900AD.
FEMALES
1. Determine the Participant's age in years and full months on the date
retirement payments are to commence, and
2. Deduct five years from such age, and
3. Deduct one month for each year her calendar year of birth exceeds 1900AD,
or add one month for each year her calendar year of birth precedes 1900AD.
All monthly payments will be rounded to the nearest cent with exact one-half
cents rounded up.
Example: A male participant born on June 15, 1903 decides to retire and receive
his first annuity check on January 1, 1968. His exact age on January 1, 1968 is
64 years, 6 months and 16 days. His calendar year of birth exceeds 1900AD by 3
years and therefore his adjusted age is 64 years and 3 months. His annuity
payable for life with 120 payments guaranteed is $6.6296 plus 3 times 0.0142 or
$6.6722 per $1,000 of proceeds applied on January l, 1968.
A female participant born on the same date and retiring on the same date would
have an adjusted age of 59 years and 3 months and her annuity on the same option
would be $5.8700 plus 3 times 0.0117 or $5.9051 per $1,000 of proceeds applied
on January l, 1968.
P-9979
13
<PAGE>
TABLE I
Dollar Amount of the First Monthly Payment Which is Purchased with Each $1,000
of Proceeds Applied for Each Full Year of Adjusted Exact Age.
<TABLE>
<CAPTION>
Adjusted Options 1, 2 and 4 - Single Life Annuities
Exact Age ----------------------------------------------------------------------------
in Full Period Certain
Years ----------------------------------------------------------------------------- Unit
- ------- None 5 Years 10 Years 15 Years 20 Years Refund
------- ------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
45 $4.5100 $4.5004 $4.4696 $4.4196 $4.3400 $4.3396
46 4.5904 4.5796 4.5404 4.4796 4.3904 4.3804
47 4 6696 4.6600 4.6196 4.5504 4,4504 4.4404
48 4 7596 4.7500 4.7000 4.6200 4.5104 4.5100
49 4.8496 4.8400 4.7804 4.6896 4.5704 4.5796
50 4.9504 4.9300 4.8704 4.7700 4.6304 4.6504
51 5.0500 5.0296 4.9604 4.8504 4.6904 4.7296
52 5.1604 5.1304 5.0600 4.9296 4.7600 4.8004
53 5.2696 5.2396 5.1596 5.0196 4.8200 4.8904
54 5.3896 5.3596 5.2604 5.1000 4.8800 4.9804
55 5.5204 5.4796 5.3696 5.1900 4.9496 5.07C4
56 5.6596 5.6104 5.4896 5.2800 5.0096 5.1604
57 5.8000 5.7496 5.6096 5.3796 5.0804 5.2696
58 5.9500 5.8996 5.7404 5.~804 5.1404 5.3704
59 6.1204 6.0604 5.8700 5.5800 5.2004 5.4904
60 6.2896 6.2200 6.0104 5.6796 5.2604 5.6104
61 6.4~04 6.4000 6.1604 5.7804 5.3204 5.7304
62 6.6904 6.5896 6.3104 5.8800 5.3696 5.8600
63 6 9100 6.7900 6.4700 5.9796 5.4200 6.0000
64 7 1404 7.0096 6.6296 6.0804 5.4704 6.1504
65 7.3900 7.2400 6.8000 6.1800 5.5100 6.3100
66 7.6600 7.4800 6.9800 6.2796 5.5496 6.4696
67 7.9504 7.7404 7.1600 6.3696 5.5904 6.6400
68 8.2600 8.0104 7.3400 6.4596 5.6204 6.8296
69 8.5996 8.2996 7.5200 6.5400 5.6396 7.0204
70 8.9596 8.6104 7.7096 6.6204 5.6696 7.2196
71 9.3496 8.9296 7.3896 6.6~00 5.6804 7.4404
72 9.7804 9.2800 8.0696 6.7596 5.6996 7,6696
73 10,2400 9.6400 8.9496 6.8100 5.7104 7.9C00
74 10.7296 10.0096 8.4200 6.8604 5.7200 8.1496
75 11.2696 10.4104 S.5796 6.9096 5.7296 8.4196
</TABLE>
67GA35-0
<PAGE>
TABLE I (continued)
OPTION 3 - Survivorship Annuity Sample Values
<TABLE>
<CAPTION>
Adjusted
Exact Age Adjusted Exact Age of the Contingent Annuitant in Full Year
of the 50 55 60 65 70
Annuitant -- -- -- -- --
in Full Years With 100% Payable to Surviving Contingent Annuitant
- ------------- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
50 4.3032 4.4616 4.5936 4.7088 4.7940
55 4.4616 4.6836 4.8876 5.0784 5.2272
60 4.5936 4.8876 5.1864 5.4828 5.7360
65 4.7088 5.0784 5.4828 5.9160 6.3288
70 4.7940 5.2272 5.7360 6.3288 6.9552
With 66 2/3% Payable to Surviving Contingent Annuitant
-------------------------------------------------------------------------
50 4.4988 4.6128 4.7064 4.7868 4.8456
55 4.7664 4.9332 5.0820 5.2176 5.3208
60 5.0484 5.2812 5.5092 5.7288 5.9112
65 5.3568 5.6700 6.0000 6.3372 6.6480
70 5.6736 6.0696 6.5184 7.0152 7.5156
With 50% Payable to Surviving Contingent-Annuitant
------------------------------------------------------------------------
50 4.6044 4.6932 4.7664 4.8264 4.8720
55 4.9356 5.0688 5.1852 5.2908 5.3700
60 5.3124 5.5020 5.6868 5.8608 6.0036
65 5.7540 6.0216 6.2964 6.5736 6.8196
70 6.2472 6.6036 6.9960 7.4184 7.8336
Values for ages not show. in these Tables will be furnished any Participant upon
request and will be calculated on the same basis as those shown in these Tables.
</TABLE>
67GA35-0
<PAGE>
TABLE II - Interpolation Factor for Table I
Dollar Amount to be added to Table I for each Full Month of Adjusted Age in
Excess of the Adjusted Exact Age in Full Years.
<TABLE>
<CAPTION>
Table I
Options 1. 2 and 4 - Single Life
Adjusted -----------------------------------------------------------------------------
Exact Age Period Certain
In Full ----------------------------------------------------------------------------- Unit
Years None 5 Years 10 Years 15 Years 20 Years Refund
- ----- ------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
55 $0.0116 $0.0109 $0.0100 $0.0075 $0.0050 $0.0075
56 0.0117 0.0116 0.0100 0.0083 0.0059 0.0091
57 0.0125 0.0125 0.0109 0.0084 0.0050 0.0084
58 0.0142 0.0134 0.0108 0.0083 0.0050 0.0100
59 0.0141 0.0133 0.0117 0.0083 0.0050 0.0100
60 0.0159 0.0150 0.0125 0.0084 0.0050 0.0100
61 0.0175 0.0158 0.0125 0.0083 0.0041 0.0108
62 0.0183 0.0167 0.0133 0.0083 0.0042 0.0177
63 O.Ol92 0.0183 0.0133 0.0084 0.0042 0.0125
64 0.0208 0.0192 0.0142 0.0083 0.0033 0.0133
65 0.0225 0.0200 0.0150 0.0083 0.0033 0.0133
66 0.0242 0.0217 0.0150 0.0075 0.0034 0.0142
67 0.0258 0.0225 0.0150 0.0075 0:0025 0.0158
68 0.0283 0.0241 0.0150 0.0067 0.0016 0.0159
69 0.0300 0.0259 0.0158 0.0067 0.0025 0.0166
70 0.0325 0.0266 0.0150 0.0058 0.0009 0.0184
71 0.0359 0.0292 0.0150 0.0058 0.0016 0.0191
72 0.0383 0.0300 0.0150 0.0042 0.0009 0.0192
73 0.0408 0.0308 0.0142 0.0042 0.0008 0.0208
74 0.0450 0.0334 0.0133 0.0041 0.0008 0.0225
</TABLE>
67GA35-0
<PAGE>
DESCRIPTION OF
GROUP ANNUITY CONTRACT
Legal Name ________________________________
Address _________________________________________
Contract Effective Date _________________________
(Beginning date must be first day of month desired)
To Provide (check appropriate boxes):
TAX DEFERRED ANNUITIES
__ 403 (b) Account (TSA)
Fixed Plan __ Variable Plan __
__ Individual Retirement Account
Fixed Plan __ Variable Plan __
Deposits to begin_______, 19_____________
IMPORTANT All payments and values provided by the variable part of this contract
since based on the investment experience of a separate account are variable and
are not guaranteed to dollar amount.
QUALIFIED PENSION PLAN
__ Money Purchase Plan
__ Profit Sharing Plan
__ _______________________________
Advance payment of $ _________________ is submitted.
Date ___________________ By:____________________________
________________________ _______________________________
(Agent/Registered Rep.) (Title of Officer)
Accepted By: ________________________________________
American United Life Insurance Company
p-7116 E va-45. XXX
- --------------------------------------------------------------------------------
EXHIBIT 7
FORM OF APPLICATION FOR FUND B CONTRACTS
- --------------------------------------------------------------------------------
Request For Participation Under Group Annuity Contract AUL(R)
- --------------------------------------------------------------------------------
American United Life Insurance Company(R)
Type or Print
- --------------------------------------------------------------------------------
Participants Name Male
Last First Middle Female
- --------------------------------------------------------------------------------
Beneficiary's Name Relationship to Participant
Last First Middle
- --------------------------------------------------------------------------------
Secondary Beneficiary (if any) Participant's Date of Birth
Mo. Day Year
- --------------------------------------------------------------------------------
Participants Address (show zip code) Participant's Social Security Number
-- --
- --------------------------------------------------------------------------------
Contractholders Name and Address Contract Number Plan (check one)
Group Number TDA __ IRA __ SEP__ DCP __
Plan I __ Plan I __ Plan I __
Plan II __ Plan II __ Plan II __
Plan III __ Plan III __ Plan III __
- --------------------------------------------------------------------------------
Servicing Agent's Name and Number First Year's Contributions
- --------------------------------------------------------------------------------
,19
- ------------------------------ -------------------------------
Date of Application Signature of Participant
<PAGE>
- --------------------------------------------------------------------------------
Name and Residence Address (show zip code) Occupation Date of Employment
-- --
Mo. Day Year
Payments For Participant
Employee Contributions Employer Contributions
Total Payment per pay period _________________ ____________________
Pay periods per contract year _________________ ____________________
Pay period of first payment _________________ ____________________
0% 25% 50% 75% 100% other __________%* of payment to be allocated to an equity
fund to provide Variable Benefits (to fluctuate with investment experience),
balance to provide Fixed-dollar Benefits.
* Percentage remains in effect until written notice of change received by AUL at
its Home Office.
- --------------------------------------------------------------------------------
___________________,19__ ________________________________
Date Signed Signature of Participant
- --------------------------------------------------------------------------------
Servicing Agents Name and Number Approval By Principal of Broker Dealer
- --------------------------------------------------------------------------------
<PAGE>
(Complete if enrolling in Variable Annuity)
SUITABILITY QUESTIONNAIRE
Agents selling variable annuities are required to make the following inquiries
relating to the financial condition and other retirement plans of participants
under variable annuity contracts. Participants arc urged to supply such
information but they are not required to do so. Those who do not wish to do so
should check Item 9 and sign below.
- --------------------------------------------------------------------------------
1. Family members or dependents:
Name Relation Age Name Relation Age
- --------------------------------------------------------------------------------
2. Annual earned income from employer 3. Other income (describe)
- --------------------------------------------------------------------------------
4. Value of assets: Home Car Stocks Savings
Checking Other (describe)
- --------------------------------------------------------------------------------
5. Amount of Life Insurance 6. Covered under Federal Social Security
__ Yes __ No
- --------------------------------------------------------------------------------
7. Other retirement resources (include annuities--state whether variable or
fixed)
- --------------------------------------------------------------------------------
8. Value of Liabilities (describe)
- --------------------------------------------------------------------------------
9. __ I understand the agent is required to make the above inquiries to enable
him to form an opinion as to the suitability of the variable annuity for my
retirement program. However, I do not wish to divulge this information.
I certify that I have received a prospectus.
___________________________________________ __________________________________
Signature of Participant Licensed Registered Representative
P-8088M
- --------------------------------------------------------------------------------
EXHIBIT 8.1
ARTICLES OF MERGER BETWEEN
AMERICAN CENTRAL LIFE INSURANCE COMPANY
AND UNITED MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
ARTICLES OF MERGER
OF
AMERICAN CENTRAL LIFE
INSURANCE COMPANY
INDIANAPOLIS, INDIANA
AND
UNITED MUTUAL LIFE
INSURANCE COMPANY
INDIANAPOLIS, INDIANA
<PAGE>
(This page was left blank intentionally)
<PAGE>
ARTICLES OF MERGER
IT IS HEREBY CERTIFIED by the American Central Life Insurance Company and the
United Mutual Life Insurance Company that the following Joint Agreement of
Merger between said corporations has been duly adopted and executed by them,
viz:
THIS JOINT AGREEMENT OF MERGER, made and entered into this 17th day of December,
A. D., 1936, at Indianapolis, Indiana, by and between the AMERICAN CENTRAL LIFE
INSURANCE COMPANY, a corporation duly organized, established, and existing under
and by virtue of the laws of the State of Indiana, as a capital stock life
insurance company (hereinafter designated as the "American Central"), and the
UNITED MUTUAL LIFE INSURANCE COMPANY, a corporation duly organized, established,
and existing under and by virtue of the laws of the State of Indiana, as a
mutual life insurance company (hereinafter designated as the "United Mutual"),
each with its principal office and place of business at Indianapolis, Indiana,
WITNESSETH THAT,
WHEREAS, The laws of the State of Indiana by Acts 1935, Chapter 162,
authorize and empower domestic insurance corporations to enter into joint
agreements of merger and provide the method and procedure for the approval,
adoption, and execution of such agreements and the approval of articles of
merger,
NOW THEREFORE, In consideration of the mutual promises, covenants, and
agreements herein contained and to effectuate a merger of the American Central
and the United Mutual pursuant to the approval and authorization of their
respective boards of directors, the stockholders of the American Central and the
members of the United Mutual and subject to the approval of the necessary
officials and departments of the State of Indiana, all as provided by law, IT IS
HEREBY MUTUALLY AGREED by and between the parties hereto as follows:
1. Merger Agreement and Name of Surviving Corporation:
The American Central Life Insurance Company shall merge into the United
Mutual Life Insurance Company, (which, with its name changed to "AMERICAN UNITED
LIFE INSURANCE COMPANY," shall be and is hereinafter designated as the
"Surviving Corporation"), under the present certificate of authority of the
United Mutual, except for such modification and changes as are specifically set
forth in this Joint Merger Agreement and restatement of its Articles of
Incorporation.
3
<PAGE>
2. Surrender of American Central Stock and Issuance of Participation
Certificates:
Immediately upon the issuance of the Certificate of Merger by the Secretary
of State, stock certificates evidencing ownership of at least eighty-five per
centum (85%) in amount of the capital stock of the American Central shall be
surrendered by Herbert M. Woollen and Harry R. Wilson, as Trustees for American
Central stockholders and owners of Participation Certificates, free and clear of
any pledge, lien or claim of any nature whatsoever to the Surviving Corporation
for cancellation; provided that surrender of a substantial part of the remaining
shares shall be completed within four (4) months from the effective date of said
merger; and provided that coincident with any such surrender and cancellation
and in exchange for said stock certificates and in consideration therefor, there
shall be issued by the Surviving Corporation to said Trustees for delivery to
each owner, in lieu of his certificates of stock in the American Central,
Participation Certificates, in the form hereinafter set forth, entitling him to
such fractional part of the amounts herein called "Conversion Proceeds" less
deductions herein set out as the number of his surrendered shares of stock bears
to 2,740, the total outstanding shares of stock in the American Central. In the
event any shares of American Central stock shall be acquired in accordance with
the provisions of Chapter III, Article V, Section 123 of the Indiana Insurance
Law, or by purchase, Participation Certificates shall be issued for such stock
so acquired or purchased and shall share in the regular distribution of
Conversion Proceeds. Such Participation Certificates shall be held by the
Surviving Corporation as Trustee for the remaining Participation Certificate
owners and the share thereof in the Conversion Proceeds shall be equitably
distributed by the said Trustee among the remaining Participation Certificate
owners. The Surviving Corporation may purchase Participation Certificates for
its own account. The Participation Certificates shall be registered on the books
of the Surviving Corporation and shall be transferable. They shall give the
owners and holders thereof no other or greater rights than stated in such
Certificates and this Agreement, and shall create no liability against the
Surviving Corporation except for Conversion Proceeds, as hereinafter defined,
when, if, and as determined in the manner herein provided.
3. Segregation of American Central Assets and Liabilities American Central
Fund
There shall be created, by proper segregation, designations, and entries
upon the books of the Surviving Corporation, a complete separation, listing, and
accounting of all assets, liabilities, and business of the American Central,
(except those assets taken over by the Surviving Corporation by agreement,) as
the same exist
4
<PAGE>
and are shown by the books and records in the accounting for the American
Central at the close of business on December 31, 1936, which, with all
accretions thereto and depletions therefrom, shall constitute and be known as
the "American Central Fund" and shall continue until all Participation
Certificates are retired as hereinafter provided.
4. Conversion Proceeds Determined Annually and Distributed:
The Conversion Proceeds above mentioned shall be determined in the
following manner: As of December 31, 1936, and annually thereafter until and
including December 31, 1956, a complete annual accounting of the business of the
American Central Fund shall be prepared in the form required for annual
statements to the Indiana Insurance Department.
A. In these statements there shall be credited to the American Central Fund
the following:
a. In the first accounting as of December 31, 1936, all assets received
from the American Central at book values. Subsequent accountings shall
start with the ledger assets at the date of the preceding accounting.
b. All income of any sort derived from business and assets of the
American Central Fund.
c. All profits on sales and maturities of ledger assets and gross
increase by adjustment in book value of ledger assets of the American
Central Fund.
d. Interest, rents and other income, including profits on sales or
maturities and increases by adjustments on that portion, if any, of
the general assets of the Surviving Corporation which is derived from
the business and assets of the American Central Fund, at the net rate
realized by the Surviving Corporation on all of its assets acquired
after this Merger, excluding those transferred from the American
Central and the United Mutual.
B. In said annual statements, there shall be charged as disbursements:
a. All disbursements specifically chargeable to the business and assets
of the American Central Fund. The expenses which cannot be
specifically allocated to the business of the American Central or the
Surviving Corporation, shall be pro-rated between the respective
businesses and assets on the basis hereinafter set forth, it being
expressly understood that no part of the acquisition expense of the
Surviving Corporation shall be charged to the American Central Fund.
5
<PAGE>
b. All investment expenses and investment losses on account of assets of
the American Central Fund.
c. All payments made or credited to owners of Participation Certificates
and dissenting stockholders.
C. In preparing the statements of assets and liabilities, the following
principles shall be followed:
a. All assets received from the American Central with accretions and
substitutions less depletions, shall be included.
b. An amount equal to the value of the undivided part of the general
assets of the Surviving Corporation derived from income from the
business and assets of the American Central Fund shall be included.
c. All policy assets and liabilities and all other non-ledger assets and
liabilities shall be included as required by the Insurance Department
Annual Statement Blank unless otherwise specified herein. Disability
reserves shall be based upon the tables heretofore used by the
American Central.
From the statements prepared as provided herein, the gain or loss of the
Surviving Corporation on account of the business of the American Central shall
be determined. The amount thereof shall constitute the Conversion Proceeds. Any
such loss in excess of gains from other sources and of the existing Fluctuation
Fund as hereinafter provided shall be a first charge against the Conversion
Proceeds of the succeeding year or years until equalized. The determination of
Conversion Proceeds, as herein provided, shall be made annually as of December
31st, and after deducting the amounts provided in Sections 5, 6 and 7 hereof,
the remainder of said Conversion Proceeds shall within ninety (90) days
thereafter be distributed in cash annually for a period ending December 31,
1956, to the registered owners of the Participation Certificates. The Trustees
shall have access at all times to the books and records of the Surviving
Corporation for the purpose of determining the correctness of the accounting, or
for any other purposes. Any expense of any examinations or audits at the request
of the Trustees shall be paid by the Surviving Corporation and charged against
the American Central Fund.
5. Equalization of American Central Surplus as of December 31, 1935:
It is agreed that the capital and surplus of the American Central as of
December 31, 1935, and the surplus of the United Mutual constitute the surplus
of the Surviving Corporation. If necessary to equalize the surplus of the
American Central at the effective date hereof to the amount thereof as of
December 31,
6
<PAGE>
1935, there shall be deducted from the Conversion Proceeds each year beginning
with the accounting for the year 1937 an amount not in excess of ten per centum
(10%) of the Conversion Proceeds created by the operations of that year, which
amounts so deducted shall remain in the American Central Fund.
6. Provision for Fluctuations and Losses" Final Accounting December 31, 1956 -
Appraisal:
In order to provide for fluctuations in the value of investments and other
losses, there shall be deducted an amount equal to twenty per centum (20%) of
the remainder of the Conversion Proceeds after the deduction provided in Section
5 hereof has been made, beginning with the accounting for the year 1939, which
amounts so deducted shall remain in the American Central Fund and be carried as
a liability to be known as the "Fluctuation Fund," against which losses in
excess of gains from other sources may be charged, until December 31,1956,
provided that the maximum of said Fund shall not at any accounting exceed ten
per centum (10%) of the book value of the assets of the American Central Fund,
and provided further that the American Central Committee, as hereinafter
created, shall annually determine the extent to which the further maintenance of
this Fund is reasonably necessary. In the accounting as of December 31, 1956,
the reasonable, fair, normal, average market value of all assets in the American
Central Fund shall be determined by agreement between the American Central
Committee and the Surviving Corporation; or, in the event they are unable so to
agree, by disinterested parties employed by the American Central Committee with
the approval of the Surviving Corporation. In that accounting, the values so
fixed shall be used in determining the Conversion Proceeds payable to the
Participation Certificate owners, and the remainder of the Fluctuation Fund, if
any, shall be distributed as a part of the final accounting and payment. Any
part of the Fluctuation Fund which shall be distributed in accordance with this
agreement shall not be subject to the deduction provided for in Section 7 of
this agreement. Immediately thereupon the Participation Certificates shall be
surrendered for cancellation.
7. Allocation of Conversion Proceeds to Surviving Corporation:
In the accounting for each of the years 1937 and 1938 there shall be
deducted and credited to the surplus of the Surviving Corporation an amount
equal to ten per centum (10%) of the Conversion Proceeds as determined from the
operations during said year. For each of the years 1939 and thereafter such
deduction and credit shall be fifteen per centum (15%).
7
<PAGE>
8. Effective Date of Merger:
The "effective date" of the merger shall be the date of the issuance of the
Certificate of Merger by the Secretary of State, as provided by Chap. III, Art.
V, Sec. 118 of the Indiana Insurance Law.
9. Surviving Corporation Vested with Property and Responsible for Liabilities:
When such merger has been effected, as provided by Chap. III, Art. V, Sec.
125 of the Indiana Insurance Law, the Surviving Corporation shall thereupon and
thereafter possess and be vested with all the rights, privileges, immunities,
powers, and franchises of a public, as well as of a private nature of each of
the corporations, parties hereto; and all property, real, personal, and mixed,
and all debts due on whatever account and all choses in action and all and every
other interest, of or belonging to or due to each of them shall be deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the title to any real estate, or any interest therein, under the laws
of this State vested in either of the corporations, parties hereto, shall not
revert or be in any way impaired by reason of the merger, and the Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of each of the corporations, parties hereto, in the same manner
and to the same extent as if the Surviving Corporation had itself incurred the
same or contracted therefor. The American Central, its directors, officers and
agents shall make all conveyances, assignments, and do or refrain from all other
acts and deeds deemed necessary, expedient or proper to effectuate the merger,
and to vest in the Surviving Corporation all of the American Central's right,
title and interest in and to said property, and to carry out the full intents
and purposes of the merger, and the Surviving Corporation shall have all rights
of action, legal and equitable possessed by each of the corporations, parties
hereto.
10. Taxes Paid by Owners of Participation Certificates:
The Participation Certificate owners shall pay all state and federal taxes
which may be imposed against said owners upon the portion of the Conversion
Proceeds paid to them; provided that should any state or federal law require
that the said taxes be paid by the Surviving Corporation prior to payment to the
Participation Certificate owners, the Surviving Corporation shall pay the same
and withold and deduct in the annual accounting the proper prorated amounts
thereof from the amounts payable to the various Participation Certificate
owners.
11. Disbursements and Income - Allocation and Pro-Rata Division:
Whenever, in this Joint Agreement of Merger, reference is made to a
pro-rata division of profits or losses on the undivided
8
<PAGE>
assets of the Surviving Corporation or income from those assets or disbursements
on their account or a division of the general income, expenses or disbursements
of the Surviving Corporation, the following principles shall govern:
A. The items which are derived from the undivided assets, if any, shall be
divided in proportion to the contributions on the one part of the American
Central and on the other part of the United Mutual and the Surviving Corporation
to such undivided assets of the Surviving Corporation.
B-1. The following disbursements of the Surviving Corporation as listed in
the annual statement are considered as specifically chargeable to the American
Central Fund and as such shall be charged as disbursements to that Fund, as
provided for in Section 4, Paragraph B(a) of this Agreement of Merger:
a. All payments of any kind to or for any policyholder, or his or her
beneficiary, on contracts of life insurance or on annuities written or
assumed by the American Central.
b. Amounts paid for claims on supplementary contracts issued or assumed
by the American Central.
c. Expenses of investigation and settlement of American Central policy
and contract claims, including legal expenses.
d. Renewal commissions and first year commissions to agents on life
insurance policies and annuity contracts written by them for the
American Central.
e. All taxes, licenses, and fees laid by any State or the Federal
Government and all other taxes on assets belonging to the American
Central Fund or paid to protect same, and taxes on annuity
considerations or insurance premiums on contracts or policies written
or assumed by the American Central.
f. All bills and accounts and similar obligations incurred by the
American Central prior to date of this merger.
g. Bank exchange on American Central items.
h. American Central agents' balances charged off.
i. Gross loss on sale or maturity of ledger assets of the American
Central Fund.
j. Gross decrease by adjustment in book value of ledger assets of the
American Central Fund.
k. Any other general disbursements clearly allocable to the business and
assets of the American Central Fund.
B-2. The following listed disbursements of the Surviving Corporation are to
be divided between the American Central Fund and the Surviving Corporation in
proportion to the amount of insurance
9
<PAGE>
remaining in force as of December 31st of the preceding year, originally written
or assumed on the one part by the American Central and on the other part by the
United Mutual and the Surviving Corporation:
a. The rent of the two home office buildings, (941 North Meridian Street
and 30 West Fall Creek Parkway). It is understood and agreed that the
building at 941 North Meridian Street will be disposed of by sale or
lease as soon as possible, and at that time the rent on this building
will be dropped from the disbursements.
b. Bureau and association dues and assessments, with the exception of
those of the National Fraternal Congress, M. I. B., Life Insurance
Sales Research Bureau, Association of Life Agency Officers and any
other association of which neither the American Central nor the United
Mutual is now a member, or in which membership would be clearly for
the benefit of the Surviving Corporation. Such excepted membership
costs shall be charged to the Surviving Corporation.
c. Books, newspapers and periodicals not clearly allocable.
d. Postage, express, telegraph, and telephone not clearly allocable.
e. General Office maintenance and expenses not clearly allocable.
f. Legislative expense not clearly allocable.
B-3. The following listed disbursements of the Surviving Corporation are to
be divided in proportion to the actual time devoted, use made, and expense
incurred in carrying out the business of the American Central Fund and the
Surviving Corporation respectively:
a. Salaries and all other compensation of officers, directors, trustees,
and home office employees.
b. Home office travel.
c. Legal expenses not incurred in connection with settlement of policy or
annuity claims.
d. Furniture and fixtures.
e. Printing and stationery.
f. Insurance except on real estate.
g. Investment expense.
h. Miscellaneous expense.
B-4. The division of any general disbursements of the Surviving
Corporation, other than those enumerated in this Section or which are not
clearly allocable to the business and assets of the American Central Fund or of
the Surviving Corporation, shall be made by the
10
<PAGE>
American Central Committee, hereinafter mentioned, in accordance with a survey
of the items of expense.
B-6. Payments to inactive employees, retired prior to the effective date of
or as a result of this merger shall be charged to the American Central Fund if
paid to former employees of the American Central or charged entirely to the
Surviving Corporation if paid to former employees of the United Mutual.
12. American Central Committee:
The by-laws of the Surviving Corporation shall create a Committee to be
known as the "American Central Committee," which shall consist of four (4)
members of the Board of Directors of the Surviving Corporation of whom two (2)
shall be named by the Trustees for the Participation Certificate owners and two
(2) shall be named by the Board of Directors of the Surviving Corporation; the
duties of such Committee shall be:
a. To operate, manage, control, direct, lease, sell, convert, and collect the
assets of the American Central Fund and to reinvest the proceeds thereof
available for reinvestment in such securities as will comply with the
Indiana Insurance Law.
b. To formulate and apply a just and accurate rule or formula for the
distribution of the income and disbursements and the profits and losses of
the American Central Fund where situations and conditions arise not covered
by the terms of this Agreement.
c. To supervise, manage, and control the insurance and reinsurance business of
the American Central Fund as the same exists at the date of the merger and
as the same continues thereafter until the expiration of the term provided
in this Agreement, provided that with respect to the agency field force of
the American Central, it is understood that in the acquisition of new
business the same shall be under the complete supervision, management and
control of the Surviving Corporation, except:
That such agency field force may have the privilege of writing new business
for the Surviving Corporation under the contracts with the American Central
in force on the effective date of the merger and that none of the members
of such agency field force shall be subject to dismissal, nor shall their
contracts be terminated by the Surviving Corporation, unless for willful
violation of the terms of the contract of employment or the rules and
regulations of the Surviving Corporation, or if it be found upon experience
that the acquisition
11
<PAGE>
cost of new business through them is unduly excessive and that proper
measures in accordance with the spirit of their contracts to reduce such
cost to a proper figure are not effective, unless with the approval of the
American Central Committee.
d. Each Committee Member shall have power to designate a suitable person to
act as substitute, provided, however, that not more than two (2)
substitutes shall be permitted at any one time; no action of the Committee
shall be valid unless it is by the unanimous act of all members or
substitutes therefor.
e. The Committee shall choose from its members its own Chairman and Secretary
who shall serve without compensation and neither of whom shall lose his
vote in Committee matters; upon request of the Committee the Secretary of
the Surviving Corporation may, however, act as secretary; Committee
meetings shall be held at the Home Office as frequently as practicable on
call of any two members; full and complete minutes of all Committee
meetings shall be kept, preserved, and reported to the Board of Directors
at each regular meeting thereof; full and complete records and books of
account reflecting truly and accurately all business transactions and the
state and condition of the American Central Fund shall be kept and
maintained and the minutes of the Committee and such books and records
shall be kept in the office of the Secretary of the Surviving Corporation
and shall be open at all times to inspection by the executive officers and
directors of the Surviving Corporation.
f. The Committee shall have no power or authority to waive, alter, change or
amend the provisions, terms and requirements of this Agreement, but all of
the provisions, terms, and requirements hereof shall be binding upon and
controlling over such Committee in all of its actions. If the Committee
cannot agree unanimously with respect to any matter in this Paragraph
hereafter enumerated no further action shall be taken with respect thereto
until the same shall, upon the request of any member thereof, be referred
to and acted upon by the Board of Directors or by the Executive Committee,
which shall promptly review the subject so to it referred and determine the
proper action to be taken with respect thereto, of which action immediate
notice shall be given to the Committee. If such failure to agree shall
occur within fifteen (15) days prior to a regular Board meeting, such
matter shall be referred to the Board; if at any other
12
<PAGE>
time, then such matter shall be referred to the Executive Committee; if
referred to the Executive Committee, the chief executive officer, if he so
desires, may have a period of fifteen (15) days within which to call a
special meeting of the Board to consider such matter. The matters which may
be thus referred to the Board are:
(1) Those matters defined in Paragraph (a) of this Section.
(2) Those matters defined in Paragraph (b) of this Section, so far as they
do not violate the terms of this Agreement.
(3) The administration and handling of the reinsurance in force on the
effective date of the merger and contracts and treaties therefor.
(4) Dealings and relations with the agency field force of the American
Central under contracts in force at the effective date of the merger.
g. Any such by-laws relating to the foregoing subject matter shall be
irrevocable while any Participation Certificates are outstanding.
13. Participation Certificates Form:
The Participation Certificates to be issued to stockholders of the American
Central shall be in the form following:
PARTICIPATION CERTIFICATE
No. _______________ ____Units
AMERICAN UNITED LIFE INSURANCE COMPANY
Indianapolis, Indiana
This certifies that _____________________________________ is the owner of
________________________________ Beneficial Units entitling him to participate
in any and all distributions from certain assets and proceeds therefrom,
designated as the American Central Fund in Articles of Merger executed by
American Central Life Insurance Company and United Mutual Life Insurance
Company, both of Indianapolis, Indiana, by which said corporations were merged
into American United Life Insurance Company, the issuer hereof. Said Articles of
Merger were filed in the office of the
Secretary of State of Indiana on the ____________ day of __________________,
1936, and were recorded in the office of the Recorder of Marion County,
Indiana, in Miscellaneous Record ____________________, page _______ By the
provisions of said Articles of Merger, all holders of shares of capital stock in
American Central Life Insurance Company are entitled to surrender for
cancellation the certificates evidencing said shares and to receive in lieu
thereof a Certificate or Certificates in the form hereof for such the American
Central Fund and the Surviving Corporation in proportion to the amount of
insurance
13
<PAGE>
outstanding 2,740 shares of said stock and the rights of the holder of this
certificate participate shall be in the proportion that the number of units
represented by this certificate bears to the total number (not in excess of
2,740) of shares for which certificates shall be issued.
For the sole protection and the enforcement of the rights of holders of
certificates, of which this Certificate is a part, there has been executed by
American United Life Insurance Company and by Herbert M. Woollen and Harry R.
Wilson, formerly President and Vice President, respectively, of American Central
Life Insurance Company, a written Trust Indenture dated the ____________ day of
_______________________, 1936. The aforesaid Articles of Merger and said Trust
Indenture are made parts of this Participation Certificate, and any holder
hereof is bound by all the terms and conditions of said documents and by the
provisions of the Indiana Insurance Law.
On the effective day of the said Articles of Merger, American United Life
Insurance Company became vested with all of the property and assets of American
Central Life Insurance Company and assumed liability to perform all of its
obligations. As a part of that merger said American United Life Insurance
Company agreed to issue said Participation Certificates in consideration of and
proportionately to the extent of the surrender to it of the shares of capital
stock above described.
The American Central Fund consists of all the assets and liabilities and
business delivered by American Central Life Insurance Company to American United
Life Insurance Company pursuant to said merger as shown by the books and records
of said former company at the close of business on December 31, 1936, with all
subsequent accretions thereto and depletions therefrom until and including the
year 1956.
Before March 31st of each year beginning with 1938 until all Participation
Certificates are retired there shall be determined the gain or loss, which
amount so determined shall constitute what is described in the Articles of
Merger as the Conversion Proceeds.
If necessary to equalize the surplus of the American Central Life Insurance
Company to the amount thereof as of December 31, 1935, an amount not in excess
of ten per centum (10%) of the Conversion Proceeds created by operations of each
respective preceding year shall, in 1938 and each year thereafter, be retained
in the American Central Fund.
Beginning with the accounting for December 31, 1939, and in each year thereafter
until December 31, 1956, there shall be deducted twenty per centum (20%) of the
amount remaining in the Conversion Proceeds after said deduction, which amount
so deducted shall remain in the American Central Fund and shall be known as the
"Fluctuation Fund," which shall serve to provide for fluctuations in the value
of investments and other losses and against which losses in excess of gains from
other sources may be charged, provided that the maximum amount in this
Fluctuation Fund shall at no time exceed ten per centum (10%) of the book value
of the assets in the American Central Fund. Such deductions for the Fluctuation
Fund shall continue so long only as may be reasonably necessary.
In each of the years 1938 and 1939, there shall be deducted and credited to the
surplus of American United Life Insurance Company ten per centum (10%) of the
Conversion Proceeds for distribution in that year; in the year 1940 and in each
year thereafter such deduction shall be fifteen per centum (15%).
The remainder of the Conversion Proceeds after the foregoing deductions and any
expense incurred in accordance with the Trust Agreement shall be distributed
annually at the times and in the manner provided in the Articles of Merger
pro-rata to holders of Participation Certificates.
14
<PAGE>
On or before March 31st, 1957, by methods provided in the Articles of Merger,
there shall be determined the net amount, if any, to be distributed from the
American Central Fund as at the close of business on December 31, 1956, and the
same shall then be distributed pro-rata to Participation Certificate holders,
whereupon all further rights and claims of the owner of this certificate against
any property or assets of American United Life Insurance Company shall cease and
this Certificate and all other certificates shall be deemed fully satisfied and
shall be surrendered for cancellation.
The owner hereof shall have no claim against any of the property or assets of
American United Life Insurance Company except as is described in this
Certificate and in the Articles of Merger, nor is any liability created hereby
except as, and when funds are available as provided in said Articles of Merger
for distribution to the owners of Participation Certificates.
For a more complete description of the American Central Fund, methods of
creating such Fund, principles of debiting and crediting the same in the
determination of the Conversion Proceeds, and of the participation rights of the
holders of these Certificates, there should be examined the aforesaid Articles
of Merger and the Trust Indenture.
All distributions hereunder may be delivered to the person or persons registered
as the owner or owners hereof by valid remittance transmitted by United States
mail addressed to the owner or owners all as is shown by the registration books
of the Company. Or, before making any remittance, the Company may in its
discretion demand production and exhibit of this certificate and, on final
distribution, the surrender hereof.
IN WITNESS WHEREOF, American United Life Insurance Company by its authorized
officers, has hereunto affixed its signature attested by its corporate seal this
____________ day of ____________, 1936.
AMERICAN UNITED LIFE INSURANCE COMPANY
By___________________________
President
ATTEST:
_____________________________
Secretary
(Corporate Seal)
14. American Central Policyholders:
The policyholders of the American Central on the effective date of the merger
shall not participate in the profits of the Surviving Corporation or otherwise,
but their respective policies shall continue to remain non-participating,
provided that any policy issued by the American Central on the participating
basis shall continue to participate in the manner and to the extent provided in
the policy. The rights and obligations between the American Central
policyholders and the Surviving Corporation shall continue unchanged from those
existing between the American Central and said policy. holders prior to the
merger, without change, diminution, or enlargement.
15
<PAGE>
15. Restatement of Articles of Incorporation:
In order to give effect to the merger described herein, it is deemed necessary
and advisable to restate certain of the Articles of Incorporation of the
Surviving Corporation: Such Articles as are so restated and the restatements
thereof are as follows:
ARTICLE I
Sec. 1. NAME AND SEAL: The name of the Corporation shall be American United
Life Insurance Company.
The seal shall be a circular disk around the edge of which shall appear the
words, "American United Life Insurance Company," and in the center of which
shall appear the words "Seal" and "A Mutual Corporation."
ARTICLE II
Sec. 1. TERM OF CORPORATE EXISTENCE: The existence of the Surviving
Corporation shall be perpetual.
ARTICLE III
Sec. 1. MEMBERSHIP - CLASSES OF MEMBERS AND POLICYHOLDERS: The members and
policyholders of the American United Life Insurance Company shall consist of
voting members and non-voting policyholders.
a. VOTING MEMBERS: The voting members shall consist of the present members
of the United Mutual Life Insurance Company and those becoming members of the
American United Life Insurance Company subsequent to the effective date of the
merger.
b. NON-VOTING POLICYHOLDERS: The non-voting policyholders shall consist of
all policyholders of the American Central Life Insurance Company on the
effective date of the merger.
ARTICLE: IV
Sec. 1. BOARD OF DIRECTORS - NUMBER: The number of directors of the
American United Life Insurance Company shall be sixteen (16) and until the first
annual meeting and their successors are elected and qualified and vacancies
filled they shall consist of the following present directors of the United
Mutual Life Insurance Company and the following present directors of the
American Central Life Insurance Company, namely:
Go. A. Bangs Alva M. Lumpkin
Earl B. Barnes William R. O'Neal
Harry C. Byers Gwynn F. Patterson
Russell T. Byers James E. Watson
John W. Craig Harry R. Wilson
Leslie E. Crouch Richard S. Witte
Edward A. Horton Herbert M. Woollen
16
<PAGE>
IN WITNESS WHEREOF, Said parties, respectively, in accordance with resolutions
of their respective Board of Directors, have caused these presents to be signed
in their names by their presidents and have affixed hereto their corporate seals
attested by their secretaries at the City of Indianapolis, Indiana, the day and
year first above written.
AMERICAN LIFE INSURANCE COMPANY
By \s\ Herbert M. Woollen
--------------------------------
President
ATTEST:
\s\ H. W. Buttolph
- --------------------
Secretary
(CORPORATE SEAL)
UNITED MUTUAL LIFE INSURANCE COMPANY
By /s/ Geo. A. Bangs
-------------------------------------
President
ATTEST:
/s/ W.A. Jenkins
- ----------------------
Secretary
(CORPORATE SEAL)
STATE OF INDIANA }
}ss:
COUNTY OF MARION }
On this 17 th day of December, 1936, before me appeared Geo. A. Bangs and W. A.
Jenkins, to me personally known, who, being by me duly sworn, did say that they
are the President and the Secretary, respectively, of the United Mutual Life
Insurance Company and that the seal affixed to said instrument is the corporate
seal of said corporation, and that said instrument was signed and sealed in
behalf of said corporation by authority of its Board of Directors, and said Go.
A. Bangs and W. A. Jenkins acknowledged said instrument to be the free act and
deed of said corporation.
Witness my hand and official seal this 17 th day of December, 1936.
\s\ Alma H. Irwin
- ----------------------------
Notary Public
My commission expires Jan. 15, 1939
- ---------------------------------------
17
<PAGE>
STATE OF INDIANA }
}ss:
COUNTY OF MARION }
On this 17th day of December,1936, before me appeared Herbert M. Woollen and H.
W. Buttolph, to me personally known, who, being by me duly sworn, did say that
they are the President and the Secretary, respectively, of the American Central
Life Insurance Company and that the seal affixed to said instrument is the
corporate seal of said corporation, and that said instrument was signed and
sealed in behalf of said corporation by authority of its Board of Directors, and
said Herbert M. Woollen and H. W. Buttolph acknowledged said instrument to be
the free act and deed of said corporation.
Witness my hand and official seal this 17 th day of December, 1936.
\s\ Helen L. Clark
- -------------------------
Notary Public
My commission expires: Feb. 23 1938
- -----------------------------------------
IT IS FURTHER CERTIFIED that the signatures appended to the foregoing Joint
Agreement of Merger are the respective signatures of the corporations, parties
thereto, and that the manner of adoption of said Joint Agreement of Merger and
the vote by which adopted by each of said corporations is as follows:
(1) That at a duly called regular meeting of the Board of Directors of the
United Mutual Life Insurance Company, held at its home office on the 15th day of
August, 1936, at which a quorum was present, said Board did unanimously adopt a
resolution approving the Joint Agreement of Merger above set forth; that said
resolution directed that said agreement be submitted to a vote of all of the
members of said corporation entitled to vote in respect thereof at a special
meeting of said members, which was by said resolution called to be held at the
home office of said corporation at 941 N. Meridian Street, Indianapolis,
Indiana, on the 6th day of October, 1936, at the hour of 10:00 o'clock A. M.,
and did further direct that notice of said special meeting be given by the
secretary of the corporation to all members of record in the manner provided by
law; that in compliance with said resolution said secretary did, on the 5th day
of September, 1936, mail a printed notice of the place, day, hour and purposes
of said special meeting to each mem-
18
<PAGE>
ber entitled to vote, at his address as it appeared upon the records of the
corporation; that said special members' meeting was duly held at the place, day
and hour in said notice stated and that there were present and entitled to vote
13 members in person and 27,289 members represented by proxy; that said members
so present in person and represented by proxy constituted a quorum for the
transaction of business under the by-laws of the corporation; that a resolution
approving said Joint Agreement of Merger was duly adopted by said members, and
that the affirmative vote by which said resolution was so adopted was 27,302
votes in favor of and none against its adoption, whereupon said Joint Agreement
of Merger was duly adopted by the corporation; that on the 7th day of October,
1936, and within five days after the adoption of the said Joint Agreement of
Merger as above stated, the secretary of the corporation did mail a printed
notice of the adoption of said Joint Agreement of Merger to each member of
record of the corporation who was not present in person or represented by proxy
at said special meeting of members, and the corporation did on the 8th day of
October, 1936, file with the Indiana Insurance Department an affidavit, signed
by the President and the Secretary, that such notice was given; that no member
or members have, in the manner provided by law or otherwise, objected to the
adoption of said Joint Agreement of Merger or filed a petition with the Indiana
Insurance Department for a hearing thereon; that at a duly called adjourned
regular meeting of the Board of Directors held at the corporation's home office
on the 11th day of December, 1936, at which a quorum was present, said Board did
again consider and by a unanimous vote adopted a resolution reapproving said
Joint Agreement of Merger in all things and authorizing its execution by the
proper officers of the corporation as provided by law; that said adjourned
regular meeting of the Board of Directors was held as soon as practicable after
the expiration of a period of thirty days after the adoption of said Joint
Agreement of Merger by the American Central Life Insurance Company, which
corporation was the last, in point of time, to adopt it.
(2) That at a duly called special meeting of the Board of Directors of the
American Central Life Insurance Company held at its home office on the 31st day
of August, 1936, at which a quorum was present, said Board did unanimously adopt
a resolution approving the above set forth Joint Agreement of Merger; that said
resolution directed that said agreement be submitted to a vote of all of the
shareholders of said corporation entitled to vote in respect thereof at a
special meeting of said shareholders, which was by said resolution called to be
held at the home office of said corporation at 30 West Fall Creek Parkway,
Indianapolis, Indiana, on the 10th day of November, 1936, at the hour of 10:00
o'clock A. M., and did
19
<PAGE>
further direct that notice of said special meeting be given by the secretary of
the corporation to all shareholders of record in the manner provided by law;
that in compliance with said resolution said secretary did, on the 7th day of
October, 1936, deliver or mail a written notice of the place, day, hour and
purposes of said special meeting to each shareholder entitled to vote, at his
address as it appeared upon the records of the corporation; that the said
special meeting was duly held at the place, day and hour in said notice stated
and that there were present in person or represented by proxy 2,619 1/2 shares
of the total 2,740 outstanding shares of capital stock; that said shareholders
so present in person and by proxy constituted a quorum for the transaction of
business under the by-laws of the corporation and more than two-thirds of all
its outstanding capital stock; that a resolution approving said Joint Agreement
of Merger was duly adopted by said shareholders, and that the affirmative vote
by which said resolution was so adopted was 2,619 1/2 votes in favor of and none
against its adoption, whereupon said Joint Agreement of Merger was duly adopted
by the corporation; that on the 10th day of November, 1936, and being within
five days after the adoption of said Joint Agreement of Merger as above stated,
the secretary of the corporation did mail a written notice of the adoption of
said Joint Agreement of Merger to each shareholder of record of the corporation
who was not present in person or represented by proxy at said special meeting of
shareholders, and the corporation did on the 11th day of November, 1936, file
with the Indiana Insurance Department an affidavit, signed by the President and
the Secretary, that such notice was given; that no shareholder has, in the
manner provided by law or otherwise, objected to the adoption of said Joint
Agreement of Merger or demanded payment of the value of his share or shares of
stock; that at a duly called special meeting of the Board of Directors held at
the corporation's home office on the 11th day of December, 1936, at which a
quorum was present, said Board did again consider and by a unanimous vote
adopted a resolution reapproving said Joint Agreement of Merger in all things
and authorizing its execution by the proper officers of the corporation as
provided by law; that said special meeting of the Board of Directors was held as
soon as practicable after the expiration of a period of thirty day after the
adoption of said Joint Agreement of Merger by the shareholders of and by said
corporation.
(3) That pursuant to authorization by their respective Boards of Directors
as hereinbefore stated, said corporations did on the 17 th day of December,
1936, duly execute said Joint Agreement of Merger.
20
<PAGE>
IN WITNESS WHEREOF, said corporations, respectively, have caused these
presents to be signed in such multiple copies as shall be required in their
names by their presidents and have affixed hereto their corporate seals attested
by their secretaries at the city of Indianapolis, Indiana, this 17th day of
December, 1936.
AMERICAN CENTRAL LIFE INSURANCE COMPANY
By /s/ Herbert M. Woollen
---------------------------------------
President
ATTEST:
/s/ H. W. Buttolph
- ---------------------------
Secretary
(CORPORATE SEAL)
UNITED MUTUAL LIFE INSURANCE COMPANY
By /s/ Geo. A. Bangs
----------------------------------------
President
ATTEST:
/s/ W.A. Jenkins
- ---------------------------
Secretary
(CORPORATE SEAL)
STATE OF INDIANA }
}ss:
COUNTY OF MARION }
On this 17 th day of December, 1936, before me appeared Herbert M. Woollen and
H. W. Buttolph, to me personally known, who, being by me duly sworn, did say
that they are the President and the Secretary, respectively, of the American
Central Life Insurance Company and that the seal affixed to said instrument is
the corporate seal of said corporation, and that said instrument was signed and
sealed in behalf of said corporation by authority of its Board of Directors, and
said Herbert M. Woollen and H. W. Buttolph acknowledged said instrument to be
the free act and deed of said corporation.
Witness my hand and official seal this 17 th day of December, 1936.
/s/ Helen L. Clark
- -----------------------------
Notary Public
My commission expires: Feb. 26, 1938
- --------------------------------------
21
<PAGE>
STATE OF INDIANA }
}ss:
COUNTY OF MARION }
On this 17th day of December, 1936, before me appeared Geo. A. Bangs and W.
A. Jenkins, to me personally known, who, being by me duly sworn, did say that
they are the President and the Secretary, respectively, of the United Mutual
Life Insurance Company and that the seal affixed to said instrument is the
corporate seal of said corporation, and that said instrument was signed and
sealed in behalf of said corporation by authority of its Board of Directors, and
said Go A. Bangs and W. A. Jenkins acknowledged said instrument to be the free
act and deed of said corporation.
Witness my hand and official seal this 17 th day of December, 1936.
/s/ Alma H. Irwin
- -----------------------
Notary Public
My commission expires: January 15, 1939
- -----------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 8.2
CERTIFICATION OF THE INDIANA SECRETARY OF STATE
AS TO THE FILING OF THE ARTICLES OF MERGER BETWEEN
AMERICAN CENTRAL LIFE INSURANCE COMPANY
AND UNITED MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
August G. Mueller, Secretary of State
To Whom These Presents Come, Greeting:
WHEREAS, there have been presented to me at this office Articles of Merger in
forty-eight copies whereby AMERICAN CENTRAL LIFE INSURANCE COMPANY,
non-surviving corporation, is merged into the UNITED MUTUAL LIFE INSURANCE
COMPANY, surviving corporation, showing no capital stock, hereinafter designated
as the AMERICAN UNITED LIFE INSURANCE COMPANY.
Said Articles of Merger having been prepared and signed in accordance with "An
Act Concerning Insurance and Declaring an Emergency", approved March 8, 1935.
WHEREAS, upon due examination, I find that they conform to law:
NOW, THEREFORE, I hereby certify that I have this day endorsed my approval upon
the forty-eight copies of Articles so presented, and, having received the fees
required by law, in the sum of $6.50, have filed one copy of the Articles in
this office and returned forty-seven copies bearing the endorsement of my
approval to the surviving corporation. I further certify that said American
Central Life Insurance Company is duly merged into said United Mutual Life
Insurance Company and that the name of the latter is duly changed to AMERICAN
UNITED LIFE INSURANCE COMPANY, and that Section 125 of said Act, approved March
8, 1935, provides that all property, assets and rights of every nature and
wherever situated owned by the non-surviving corporation are transferred and
vested in the surviving corporation.
In Witness Whereof, I have hereunto set my hand and affixed the seal of the
State of Indiana at the City of Indianapolis, this 31st day of December, 1936
[SEAL]
at the hour of 5:00 o'clock P.M.
/s/ August G. Mueller
---------------------
Secretary of State
By: /s/ Joseph O. Hoffman
-------------------------
Deputy
- --------------------------------------------------------------------------------
EXHIBIT 8.3
CODE OF BY-LAWS OF AMERICAN UNITED LIFE INSURANCE COMPANY(R)
- --------------------------------------------------------------------------------
CODE OF BY-LAWS
OF
AMERICAN UNITED LIFE INSURANCE COMPANY (R)
ARTICLE I
CORPORATE SEAL AND PRINCIPAL OFFICE
Section 1. Corporate Seal. The corporate seal shall be circular in form
with the words "American United Life Insurance Company (R) " around the top of
its periphery and the words "Seal" and "A Mutual Corporation" through its
center.
Section 2. Principal Office. The principal office and place of business
shall be at One American Square, City of Indianapolis, County of Marion and
State of Indiana.
ARTICLE II
MEMBERSHIP
Section 1. Classes of Members. As provided in the articles of
incorporation, the members of the corporation shall be divided into two classes:
(a) voting members, and (b) non-voting policyholders. The members of each class
shall have such rights, privileges, duties and liabilities, with respect to the
regulation and management of the affairs of the corporation, as are provided in
these By-laws or in the articles of incorporation.
Section 2. Voting Members. The voting members of the corporation shall
consist of those policyholders
(a) who hold insurance certificates issued by the Insurance Department of the
Supreme Lodge Knights of Pythias and
(b) who hold policies issued or assumed by the former American Life Insurance
Company of Detroit, Michigan, and by the former Mutual Savings Life
Insurance Company of St. Louis, Missouri, which were assumed by this
corporation, and
(c) who hold policies of insurance or annuity contracts issued by the
corporation under its present name or under the name United Mutual Life
Insurance Company.
Each voting member continues to be a member of the corporation so long as any
policy or annuity contract, which entitles him to voting membership, remains in
full force and effect.
Section 3. Non-Voting Policyholders. The non-voting policyholders of the
corporation shall consist of those persons (a) who were policyholders in the
American Central Life Insurance Company when that corporation was merged into
this corporation, or (b) who prior to that merger were policyholders in the
American Central Life Insurance Company and subsequently were reinstated as
policyholders. Nothing contained in this Section 3, however, shall disqualify a
policyholder who qualifies as a voting member according to the provisions of
Section 2 of Article II.
<PAGE>
ARTICLE III
MEETINGS OF MEMBERS
Section 1. Annual Meeting. The regular annual meeting of the members of
this corporation shall be held at its principal place of business on the third
Thursday in February of each year at ten a.m. Elections for directors shall be
held at the annual meeting.
Section 2. Special Meetings. Special meetings of the members of the
corporation may be called by the chief executive officer of the corporation, by
the board of directors or by not less than twenty-five percent of the voting
members.
Section 3. Notice of Meetings. Thirty day written notice stating the place,
day and hour of any meetings of members shall be delivered or mailed by the
secretary of the corporation or by the officer or persons calling the meeting to
each member entitled to vote at such meeting at such address as appears upon the
records of the corporation. In the case of special meetings or when otherwise
required by law, the purpose or purposes for which the meeting is called shall
also be stated. With respect to annual meetings of members, notice need not be
given to any member in whose policy of insurance or annuity contract there is a
statement of the time and place of the meeting.
If less than a quorum of voting members attend in person or by proxy, a
majority of the voting members who are present in person or by proxy may
adjourn, without notice other than by announcement at the meeting, until the
number of members required to form a quorum shall attend. No annual meeting of
members may be adjourned to a date later than five months after the close of the
fiscal year of the corporation. At any adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
original meeting.
Section 4. Waiver of Notice. Notice of any meeting of members may be waived
in writing by any member if the waiver sets forth in reasonable detail the time
and place of the meeting and its purpose. Attendance at any meeting in person or
by proxy shall constitute a waiver of notice of such meeting.
Section 5. Voting Rights. Except as hereinafter provided, each voting
member of the corporation shall have the right to cast one vote on each matter
submitted to a vote of the members, regardless of the number of policies or
amount of insurance standing in his name with the corporation.
<PAGE>
Section 6. Voting by Proxy. A member entitled to vote at a meeting of
members may vote either in person or by proxy executed in writing by the member
or the member's duly authorized attorney-in- fact. No proxy shall be voted at
any meeting of members unless the proxy is filed with the secretary of the
meeting at or before the meeting.
Section 7. Quorum. To constitute a quorum at any meeting of members, there
must be at least ten percent of the voting members represented in person or by
proxy. A majority vote of any such quorum shall be necessary for the transaction
of any business at the meeting unless a greater vote is required by law or the
articles of incorporation.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Duties and Qualifications. The business and affairs of the
corporation shall be managed by a board of directors. Each director shall be a
voting member of the corporation, and the policy of insurance or annuity
contract entitling each director to membership in the corporation shall be free
of liens to secure any debt to the corporation. Each director shall be a citizen
of the U.S. or the Dominion of Canada, and at least one director shall be a
resident of the State of Indiana. No person shall be eligible for election as a
director who has reached, or will reach, his seventieth birthday in the year of
election, and is retired from his business or profession.
Section 2. Number and Terms of Office. The board of directors shall consist
of sixteen members who are elected by the voting members at annual meetings to
serve for terms of three years, and until their successors are elected and
qualified. The board of directors shall be divided into three classes, two of
which consist of five directors and one of which consists of six directors. I he
teens of office of all directors in a particular class shall be identical;
however, the terms of office of each class of directors shall be staggered so
that in every three year period a different class shall be elected at each
succeeding annual meeting of members.
Section 3. Limitation as to Employee or Retired Employee Directors. No more
than five fulltime employees of the corporation or retired employees of the
corporation receiving a pension or other retirement benefits from the
corporation shall be eligible to serve at one time as directors.
Section 4. Vacancies. Any vacancy in the board of directors caused by
death, resignation or disqualification shall be filled by a majority vote of the
remaining members of the board of directors for the unexpired term of the
director whose place is filled. Any vacancy on the board of directors occasioned
by an
<PAGE>
increase in the number of directors shall be filled by a majority vote of the
existing directors for a term ending with the next annual meeting of members of
the corporation.
Section 5. Oath of Office. Each director of the corporation, when elected,
shall take and subscribe to an oath that he will insofar as the duty devolves
upon him, faithfully, honestly and diligently administer the affairs of the
corporation and that he will not knowingly violate or willingly permit violation
of any laws applicable to the corporation.
Section 6. Annual Meetings. Unless otherwise unanimously agreed upon, the
board of directors shall meet each year, immediately following the annual
meeting of members, at the place where the meeting of members was held. This
meeting shall be held for the purpose of organization, election of officers of
the corporation and consideration of any other business which may be brought
before the meeting. No notice shall be necessary for the holding of any annual
meeting of the board of directors.
Section 7. Other Meetings. Meetings of the board of directors, other than
the annual meeting, shall be held regularly once each quarter during the second,
third and fourth quarters of each calendar year, in accordance with a duly
adopted resolution or motion of the board of directors. Special meetings may be
called by the chief executive officer of the corporation, the chairman of the
board or any seven directors, upon five days' notice. The time and general
purposes of any such meeting must be specified and given to each director either
personally or by mail or telegram. No notice shall be necessary for any regular
meeting, and notice of any special meeting may be waived in writing or by
telegram. Attendance at any such meeting shall constitute waiver of notice of
such meeting. All meetings of the board of directors shall be held at the
principal office or at such other place as may be unanimously designated by the
board of directors.
Section 8. Quorum. A majority of the whole board of directors shall be
necessary to constitute a quorum for the transaction of any business except the
filling of vacancies. The act of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the board of directors
unless a greater number is required by law, the articles of incorporation or
these By-laws. If a quorum is not present, a majority of the directors present
may adjourn the meeting from time to time without further notice.
Section 9. Honorary Directors. Any person who has served as the chief
executive officer of the corporation may be elected an honorary member of the
board of directors and shall be privileged to attend all meetings of directors,
but shall have no right to vote.
ARTICLE V
COMMITTEES
Section 1. Standing Committees. The standing committees of the corporation
shall be the following: executive committee, finance committee, and audit
committee. The board of directors may from time to time create other standing
committees as deemed desirable by amending these By-laws.
Section 2. Members of Standing Committees. At its annual meeting, the board
of directors shall designate the members of each standing committee and shall,
except as otherwise provided in these Bylaws, name the chairman thereof. The
members shall serve for a term of one year and until their successors are chosen
and qualified unless sooner removed. The chief executive officer of the
corporation shall be an ex- officio member, with full voting power, of each
standing committee except the Audit Committee. Subject to any limitation imposed
by these By-laws, the board of directors shall have the power at any time to
increase or decrease the number of members of any standing committee, to appoint
or remove members from any standing committee and to fill vacancies on any such
committee.
At any meeting of a standing committee, a designated director may act in the
place of an absent member of such committee with full Voting rights. Each
designated director shall be selected in the following manner: The chief
executive officer shall contact a member or members of the board in alphabetical
order according to the member's last name until he obtains agreement of the
necessary number of directors to attend the standing committee meeting. After
the first selection under this section, contact shall commence with the name
alphabetically following that of the director agreeing to serve.
Section 3. Meetings of Standing Committees. Meetings of each standing
committee may be called by its chairman or by the chief executive officer of the
corporation. Each committee shall hold its meetings in accordance with the rules
of procedure and at locations designated by the majority of the committee
members. Except as otherwise provided by these By-laws, each committee shall
select a secretary, who shall not be required to be a member of the committee,
to record the minutes of all its meetings.
Section 4. Special Committees. Special committees may be designated by a
resolution adopted by a majority of the directors present at any board meeting
at which a quorum is present. Except as otherwise provided in the resolution,
members of each special committee shall be members of the corporation, and the
chief executive officer of the corporation shall appoint the committee members.
Any special committee member may be removed by the person or persons authorized
to appoint such member whenever in their
<PAGE>
judgment the best interests of the corporation shall be served by such removal.
Any special committee shall have only the responsibilities for which it was
created. It shall have no power to act except as specifically conferred upon it
by action of the board of directors. Upon completion of its duties, the special
committee shall be discharged. Each member of a special committee shall serve
the committee until it is discharged unless the member is removed from the
committee or ceases to qualify as a member. Committee vacancies shall be filled
by appointments made in the same manner as provided in the case of the original
appointments.
<PAGE>
ARTICLE VI
COMPOSITION AND DUTIES OF STANDING COMMITTEES
Section 1. Executive Committee. he executive committee shall consist of the
chairman of the board and not less shall three nor more than seven other members
of the board of directors. No member of the committee shall Continue as SUCH
after he ceases to be a member of the board of directors. The chairman of the
board shall be chairman of the committee and a vice-chairman may be designated
by the committee. The committee shall select a secretary from among its members
to keep accurate minutes of all meetings. The minutes shall be presented for
approval to the next regular meeting of the board of directors.
During the intervals between meetings of the board of directors and subject to
such limitations as may be imposed by law. the articles of incorporation or
these By-laws, the executive committee shall have and may exercise all the
authority of the board of directors in the management of the corporation.
However, no action shall be taken which will conflict with the expressed
policies of the board of directors.
Section 2. Finance Committee. The finance committee shall consist of the
chief executive officer, not less than three other members of the board of
directors and not more than two officers of the corporation who are not members
of the board of directors. The secretary of the committee shall keep accurate
minutes of all meetings which shall he presented for approval to the next
regular meeting of the board of directors.
Except as otherwise provided in these By-laws, and subject to law and to the
general control of the board of directors, the finance committee shall
supervise, pass upon and authorize the investment of all funds of the
corporation. It shall have the power to purchase and sell or otherwise acquire
or dispose of real estate, bonds, mortgages, securities or other investments, to
authorize and direct conveyances of real estate and interests therein and
thereunder, including the execution of deeds, leases, releases, discharges and
other related documents, and to direct all other things necessary or incidental
to the authorization, acquisition, supervision, control and disposition of all
the investments of the corporation. I he finance committee shall also perform
such other duties as these By-laws or the board of directors may prescribe.
Section 3. Audit Committee. The audit committee shall consist of three
members of the board of directors. All members of the audit committee shall he
independent directors.
The audit committee shall, prior to the annual meeting, recommend selection of
independent certified public accountants for the fiscal year to the board of
directors. The audit committee shall engage the independent auditors selected by
the voting members, be responsible for establishing the independent audit and
review the results of the independent audit prior to presentation to the board
of directors. The audit committee
<PAGE>
shall also be responsible for establishing the scope of the internal audit
function, reviewing internal controls and following tip on deficiencies noted.
The audit committee will confer with internal auditing, auditors and other
consultants as deemed necessary on significant audit findings and shall report
and make recommendations to the board of directors as necessary.
ARTICLE VII
OFFICERS
Section 1. Number and Qualification. The officers of the corporation shall
consist of a chairman of the board of directors, a president, a chief executive
officer, one or more senior vice presidents and one or more additional vice
presidents, a general counsel, a medical director, a secretary, a treasurer, a
controller, an actuary, and such other officers as the board of directors may
elect in accordance with the provisions of this article. The board of directors
may elect or appoint other assistant or subordinate officers, as it deems
desirable, to have the authority to perform the duties prescribed. The chairman
of the board, the president, and the chief executive officer shall be chosen
from among the directors of the corporation, and if any one of such officers
ceases to he a director he shall cease to hold such office as soon as his
successor is elected and qualified. More shall one office. may be held by the
same person, except the duties of the president and secretary shall not be
performed by the same person.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its annual meeting If
tile election of officers is not held at the annual meeting, the election shall
be held as soon thereafter as is convenient. New offices may be created and
filled at any meeting of the board of directors. Each officer shall hold office
until his successor is duly elected and qualified.
Section 3. Vacancies. Whenever any vacancies occur in any of the offices of
the corporation by reason of death, resignation, disqualification, removal or
otherwise, the office may be filled by the board of directors at a regular or
special meeting I he newly elected officer shall hold office until the next
annual meeting of the board of directors and until his successor is duly elected
and qualified.
Section 4. Removal. Any officer of the corporation elected or appointed by
the board of directors may be removed by the hoard of directors whenever, in its
judgment, the best interest of the corporation would be served. Such removal
shall be without prejudice to any contract rights of the officer so removed.
Section 5. Salaries of Officers and Employees. 'I he salaries of the
chairman of the board, the president, the chief executive officer, all vice
presidents (except regional vice presidents), the secretary, the treasurer, the
controller, medical director, general counsel, actuary, anti of all employees
receiving compensation of $75,000 a year or more, shall be approved by the board
of directors.
<PAGE>
ARTICLE VIII
DUTIES OF OFFICERS
Section 1. Chairman of the Board. The chairman of the board of directors
shall preside at all meetings of members and at all meetings of directors. He
shall be entitled to vote upon questions and motions submitted to vote of the
board of directors only when his vote is required to break a tie. He shall
perform such duties as these By-laws or the board of directors prescribe.
Section 2. President. The president shall have power to perform the duties
prescribed by the board of directors, the chairman of the board, or these
By-laws. Section 3. Vice Presidents. The vice presidents shall have the powers
to perform the duties prescribed by the board of directors, the chief executive
officer of the corporation, or these By-laws.
Section 4. General Counsel. The general counsel shall be the chief
consulting officer of the corporation on all legal matters. He shall, subject to
the control of the board of directors and executive committee, have control of
all legal matters pertaining to the business of the corporation and shall
perform such other duties as these By-laws or the board of directors prescribe.
Section 5. Medical Director The medical director shall he the chief
underwriting officer of the corporation on all medical matters. He shall,
subject to the control of the board of directors and executive committee, have
control of all medical matters pertaining to applications for new insurance or
reinstatement of old insurance, appointment and supervision of medical
examiners, and other medical matters pertaining to the corporation's
underwriting operations. He shall perform other duties as these By-laws or the
board of directors prescribe.
Section 6. Secretary. The secretary shall attend all meetings of members
and meetings of the board of directors and shall be responsible for a true anti
complete record of the proceedings of such meetings. He shall serve notice of
all corporate meetings in accordance with these By-laws, have custody of the
books (except books of account), records and corporate seal of the corporation,
affix the corporate seal to all papers and documents requiring a seal, and
perform other duties as these By-laws or the board of directors prescribe.
Section 7. Treasurer. The treasurer shall be the custodian of all funds,
notes, securities, and instruments of title and valuables belonging to and in
the possession of the corporation. He shall deposit, or
<PAGE>
cause to be deposited, all funds of the corporation not required to be on hand
in the operation of the business, in banks or depositories designated by the
board of directors. He shall disburse the funds of the corporation as
authorized, and take proper vouchers for such disbursements. He shall furnish
the board of directors a statement of the financial condition of the corporation
at or before each annual meeting and perform other duties as these By-laws or
the board of directors prescribe.
Section 8. Controller. The controller shall be responsible for keeping
current and complete records of account, showing accurately the financial
condition of the corporation. He shall assemble budget information and keep
budgetary control of disbursements of the corporation, and perform other duties
as these By-laws or the board of directors prescribe.
Section 9. Actuary. I he actuary shall be the chief consulting officer on
all matters relating to the pricing and designing of insurance contracts issued
by the corporation. He shall, subject to the controls of the board of directors
and executive committee, have control of matters pertaining to premium rates,
dividends, policy values, reserve basis, and benefits provided in the insurance
contracts issued by the corporation. He shall perform such other duties as these
By-laws or the board of directors prescribe.
Section 10. Assistant Officers. Assistant officers that the board of
directors may elect or appoint shall have duties specified by the board of
directors. In the absence of such specification, duties shall be specified by
the officer whom the person was appointed to assist.
Section 11. Chief Executive Officer. The chief executive officer of the
corporation shall be the chairman of the board or the president, as determined
by the board of directors Subject to the general control of the corporation by
the board of directors and the executive committee, the chief executive officer
shall supervise, direct anti control the business and affairs of the corporation
and shall discharge all the unusual functions and duties of his office. Except
as otherwise provided in these By-laws he shall appoint, and at his discretion,
remove employees of the corporation, fix and at times change their compensation,
designate their titles and determine their duties. He shall appoint temporary or
permanent committees of officers and employees as he deems necessary for the
control and supervision of the business. He shall have general supervision and
direction of all of the other officers of the corporation and the employees of
all departments. He shall keep the board of directors and executive committee
fully informed as to the activities of the corporation, and shall prepare and
submit to each annual meeting of members a report on the business of the
corporation for the preceding year and a statement of its current financial
condition. He shall perform such other duties as these By-laws or the board of
directors prescribe.
<PAGE>
ARTICLE IX
INDEMNIFICATION
Section 1. Indemnification of Directors and Officers. The corporation shall
indemnify any director or officer or former director or officer against expenses
actually and reasonably incurred by him (and for which he is not covered by
insurance) in connection with the defense of any action, suit or proceeding
(unless such action, suit or proceeding is settled) in which he is made a party
by reason of being or having been such director or officer, except in relation
to matters as to which he shall be adjudged in such action, suit or proceeding,
to be liable for negligence or misconduct in the performance of his duties. The
corporation may also reimburse any director or officer or former director or
officer for the reasonable costs of settlement of any such action, suit or
proceeding, if it shall be found by a majority of the directors not involved in
the matter in controversy (whether or not a quorum) that it was to the interest
of the corporation that such settlement be made and that such director or
officer was not guilty of negligence or misconduct. Such rights of
indemnification and reimbursement shall not be exclusive of any other rights to
which such director or officer may be entitled under any By-law, agreement, vote
of members or otherwise.
ARTICLE X
MISCELLANEOUS
Section 1. Fiscal Year. I he fiscal year of the corporation begins on the
first day of January of each year and ends on the thirty-first day of December
of the same year.
Section 2. Execution of Instruments. Except as may otherwise be provided by
resolution of the board of directors or executive committee, all contracts,
bills of sale, deeds, mortgages, leases, and other similar instruments, as well
as all policies of insurance and annuity contracts of the corporation, shall be
signed by the chairman of the board or by the president. The secretary, or an
assistant secretary, shall affix the corporate seal and attest the same.
Section 3. Checks. All checks, drafts, notes and other instruments calling
for the payment of money by or to the corporation shall be executed or endorsed
by the officers who the board of directors or executive committee shall specify
by resolution.
Section 4. Bonds and Insurance. All officers, employees and other persons
who have control of or access to the moneys, securities or properties of the
company shall be bonded with adequate surety. Fire, casualty and other insurance
shall also be carried for the protection of the company, its personnel and
property.
<PAGE>
The sufficiency of sureties on all bonds, the contingencies insured against in
such bonds and insurance policies and the amount thereof shall be in compliance
with the requirements of law. A report showing the status of such bonds and
hazard insurance shall be submitted to the board of directors at each annual
meeting.
ARTICLE XI
AMENDMENTS
Section 1. Amendments to By-laws. The power to make, alter, amend or repeal
all or any part of these By-laws is vested in the board of directors, and the
affirmative vote of a majority of all the members of the board of directors
shall be necessary to effect any such change in these By-laws.
- --------------------------------------------------------------------------------
EXHIBIT 12
OPINION OF COUNSEL
- --------------------------------------------------------------------------------
ICE MILLER DONADIO & RYAN
FORMERLY ROSS MCCORD ICE & MILLER
10th Floor 111 Monument Circle
INDIANAPOLIS
46204
April 8, 1970
American United Life Pooled
Equity Fund B
30 West Pall Creek Parkway
Indianapolis, Indiana 46208
RE: American United Life Pooled
Equity Fund B - Form S-5
Registration Number 2-27832
Post Effective Amendment No. 2
Gentlemen:
We have acted as counsel for American United Life Pooled Equity Fund B ("Fund
B") and American United Life Insurance Company ("AUL") in connection with the
preparation, authorization and issuance of the Group Variable Annuity Contracts
of Fund B to be sold by AUL as described in the above-described Post Effective
Amendment No. 2.
We are of the opinion that such Group Variable Annuity Contracts and the
variable annuities issued thereunder, upon compliance with any state securities
or insurance laws which may be applicable to the offers or sales thereof of such
variable annuities, will be, when sold, legally and validly issues, fully paid
and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 3(a) to the aforesaid
Registration Statement, as amended by such Post Effective Amendment No. 2, and
further consent to the use of our name under the caption "Legal Opinion" in the
Prospectus comprising a part of such Registration Statement as so amended.
Very truly yours,
ICE MILLER DONADIO & RYAN
/s/ Donald F. Elliott, Jr.
- --------------------------------------------------------------------------------
EXHIBIT 13.1
POWERS OF ATTORNEY
- --------------------------------------------------------------------------------
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 8/4/97
--------------------------------
/s/ Steven C. Beering, M.D.
--------------------------------
Steven C. Beering, M.D.
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/28/97
--------------------------------
/s/ Arthur L. Bryant
--------------------------------
Arthur L. Bryant
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/28/97
--------------------------------
/s/ James M. Cornelius
--------------------------------
James M. Cornelius
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/28/97
--------------------------------
/s/ James E. Dora
--------------------------------
James E. Dora
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/28/97
--------------------------------
/s/ Otto N. Frenzel III
--------------------------------
Otto N. Frenzel III
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 8/4/97
--------------------------------
/s/ David W. Goodrich
--------------------------------
David W. Goodrich
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/28/97
--------------------------------
/s/ William P. Johnson
--------------------------------
William P. Johnson
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 8/1/97
--------------------------------
/s/ James T. Morris
--------------------------------
James T. Morris
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/28/97
--------------------------------
/s/ James W. Murphy
--------------------------------
James W. Murphy
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/25/97
--------------------------------
/s/ R. Stephen Radcliffe
--------------------------------
R. Stephen Radcliffe
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 8/4/97
--------------------------------
/s/ Thomas E. Reilly, Jr.
--------------------------------
Thomas E. Reilly, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 8/4/97
--------------------------------
/s/ William R. Riggs
--------------------------------
William R. Riggs
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 9/29/97
--------------------------------
/s/ John C. Scully
--------------------------------
John C. Scully
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/25/97
--------------------------------
/s/ Jerry D. Semler
--------------------------------
Jerry D. Semler
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/28/97
--------------------------------
/s/ Yvonne H. Shaheen
--------------------------------
Yvonne H. Shaheen
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes
and appoints Richard A. Wacker and William R. Brown, and each of them his true
and lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity and variable life contracts of American United Life Insurance
Company(R) and any Amendments or supplements thereto, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.
Dated: 7/28/97
--------------------------------
/s/ Frank D. Walker
--------------------------------
Frank D. Walker
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and
appoints Richard A. Wacker and William R. Brown, and each of them his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity contracts of American United Life Insurance Company(R) and any
Amendments or supplements thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent may lawfully do or cause to be done by virtue hereof.
Dated: 2/13/96
--------------------------------
/s/ Leslie Lenkowsky
--------------------------------
Leslie Lenkowsky
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and
appoints Richard A. Wacker and William R. Brown, and each of them his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity contracts of American United Life Insurance Company(R) and any
Amendments or supplements thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent may lawfully do or cause to be done by virtue hereof.
Dated: 5/11/90
--------------------------------
/s/ Ronald Anderson
--------------------------------
Ronald Anderson
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and
appoints Richard A. Wacker and William R. Brown, and each of them his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution for him in his name, place and stead to sign any and all
Registration Statements (including Registration Statements or any Amendments
thereto arising from any reorganization of a Separate Account with any other
Separate Account) applicable to Separate Accounts established for funding
variable annuity contracts of American United Life Insurance Company(R) and any
Amendments or supplements thereto, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent may lawfully do or cause to be done by virtue hereof.
Dated: 6/11/90
--------------------------------
/s/ James Shanahan
--------------------------------
James Shanahan
- --------------------------------------------------------------------------------
EXHIBIT 13.2
CONSENT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
Consent of Independent Accountants
Board of Directors
American United Life Insurance Company(R)
Indianapolis, Indiana
We consent to the inclusion in Post-Effective Amendment No. 42 to the
Registration Statement of American United Life Pooled Equity Fund B (the "Fund")
on Form N-3 (File No. 2-27832) of:
(1) Our report dated February 2, 1998, on our audits of the financial
statements of the Fund; and
(2) Our report dated February 27, 1998, on our audits of the financial
statements of American United Life Insurance Company(R).
We also consent to the reference to our Firm under the Caption "Independent
Accountants".
/s/ Coopers & Lybrand L.L.P.
Indianapolis, Indiana
April 24, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000005966
<NAME> AMERICAN UNITED LIFE POOLED EQUITY FUND B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 8,538,883
<INVESTMENTS-AT-VALUE> 14,250,877
<RECEIVABLES> 25,432
<ASSETS-OTHER> 26,273
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,302,582
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,046
<TOTAL-LIABILITIES> 23,046
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 932,682
<SHARES-COMMON-PRIOR> 1,067,642
<ACCUMULATED-NII-CURRENT> 4,099,431
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,410,549
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,711,994
<NET-ASSETS> 14,279,536
<DIVIDEND-INCOME> 260,943
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</TABLE>
