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Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
(Exact name of Registrant)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
(Name of Depositor)
116 Huntington Avenue
Boston, Massachusetts 02116
(Address of Depositor's Principal Executive Offices)
(617) 266-6008
(Depositor's Telephone Number Including Area Code)
James D. Gallagher, Esq. Copy to:
Vice President, Secretary J. Sumner Jones, Esq.
and General Counsel Jones & Blouch L.L.P.
The Manufacturers Life Insurance 1025 Thomas Jefferson Street, N.W.
Company of North America Washington, DC 20007
116 Huntington Avenue
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
-----------------------
Title of Securities Being Registered: Combination Fixed and
Variable Group and Individual Annuity Contracts
Approximate Date of Proposed Public Offering: As soon as
practicable after the effective date of this registration statement.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall be come
effective on such date as the Commission, acting pursuant to section 8(a), may
determine.
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THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE
ACCOUNT A
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
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N-4 Item Caption in Prospectus
Part A ---------------------
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1..................................Cover Page
2..................................Special Terms
3..................................Summary
4..................................Performance Data;Financial Statements
5..................................General Information about The Manufacturers Life Insurance Company of
North America, The Manufacturers Life Insurance Company of North
America Separate Account A and Manufacturers Investment Trust
6..................................Charges and Deductions; Administration Fees; Reduction or Elimination of
Annual Administration Fee; Mortality and Expense Risk
Charge; Taxes; Appendix A; Appendix B
7..................................Accumulation Provisions; Purchase Payments; Accumulation Units;
Net Investment Factor; Transfers Among Investment Options; Telephone
Transactions; Special Transfer Services-Dollar Cost Averaging;
Withdrawals; Special Withdrawal Services-Income Plan; Owner Inquiries;
Other Contract Provisions; Ownership; Beneficiary; Modification
8..................................Annuity Provisions; General; Annuity Options; Determination of Amount of
the First Variable Annuity Payment; Annuity Units and the Determination
of Subsequent Variable Annuity Payments; Transfers After Maturity Date
9..................................Accumulation Provisions; Death Benefit Before Maturity Date; Annuity
Provisions; Death Benefit on or After Maturity Date
10.................................Accumulation Provisions; Purchase Payments; Accumulation Units; Value
of Accumulation Units; Net Investment Factor; Distribution of Contracts
11 ............................... Withdrawals; Restrictions under the Texas Optional Retirement Program;
Accumulation Provisions; Purchase Payments; Other Contract Provisions;
Ten Day Right to Review
12.................................Federal Tax Matters; Introduction; The Company's Tax Status; Taxation of
Annuities in General; Diversification Requirements; Qualified Retirement
Plans
13.................................Legal Proceedings
14.................................Statement of Additional Information - Table of Contents
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Part B Caption in Statement of
- ------ Additional Information
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15.................................Cover Page
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16.................................Table of Contents
17.................................General Information and History
18.................................Services-Independent Auditors; Services-Servicing Agent
19.................................Not Applicable
20.................................Services-Principal Underwriter
21.................................Performance Data
22.................................Not Applicable
23.................................Financial Statements
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
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Annuity Service Office Mailing Address
116 Huntington Avenue Post Office Box 9230
Boston, Massachusetts 02116 Boston, Massachusetts
(617) 266-6008 02205-9230
(800) 344-1029
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THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
- --------------------------------------------------------------------------------
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
FLEXIBLE PAYMENT DEFERRED COMBINATION
FIXED AND VARIABLE ANNUITY CONTRACTS
NON-PARTICIPATING
This Prospectus describes flexible purchase payment deferred
combination fixed and variable annuity contracts issued by The Manufacturers
Life Insurance Company of North America ("the Company"), a stock life insurance
company, the ultimate parent of which is The Manufacturers Life Insurance
Company ("Manulife").
The Prospectus describes both an individual deferred annuity contract
and a participating interest in a group deferred annuity contract. Both are
designed and offered to provide retirement programs for eligible individuals
and retirement plans. Participation in a group contract will be separately
accounted for by the issuance of a certificate evidencing the owner's interest
under the contract. Ownership of an individual contract is evidenced by the
issuance of an individual annuity contract. An individual contract will
usually be issued only where a group contract may not be used.
The contracts provide for the accumulation of contract values and the
payment of annuity benefits on a variable and/or fixed basis. The contracts
offer thirty-nine investment options: thirty-five variable and four fixed.
The variable portion of the contract value and annuity payments, if selected on
a variable basis, will vary according to the investment performance of the
sub-accounts of The Manufacturers Life Insurance Company of North America
Separate Account A (the "Variable Account"). The Variable Account is a
separate account established by the Company. Purchase payments and earnings on
those purchase payments may be allocated to and transferred among one or more
of thirty-five sub-accounts of the Variable Account. The assets of each
sub-account are invested in shares of Manufacturers Investment Trust (the
"Trust"), a mutual fund having an investment portfolio for each sub-account of
the Variable Account (see the accompanying Prospectus of the Trust). Fixed
contract values may be accumulated under one, three, five and seven year fixed
account investment options. Except as specifically noted herein and as set
forth under the caption "FIXED ACCOUNT INVESTMENT OPTIONS" below, this
Prospectus describes only the variable portion of the contract.
Shares of the Trust are not deposits or obligations of, or guaranteed
or endorsed by, any bank, and the shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency.
Additional information about the variable portion of the contracts and
Variable Account is contained in a Statement of Additional Information, dated
the same date as this Prospectus, which has been filed with the Securities and
Exchange Commission (the "Commission") and is incorporated herein by reference.
The Statement of Additional Information is available without charge upon
request by writing the Company at the above address or telephoning (617)
266-6008. In addition, the Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding registrants
that file electronically with the Commission. The table of contents for the
Statement of Additional Information is included on page 37 of this Prospectus.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT
CONTAINS INFORMATION ABOUT THE VARIABLE ACCOUNT AND THE VARIABLE PORTION OF THE
CONTRACTS THAT A PROSPECTIVE PURCHASER SHOULD KNOW BEFORE INVESTING.
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.
The date of this Prospectus is ______, 1998.
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TABLE OF CONTENTS
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SPECIAL TERMS ...............................................................3
SUMMARY .....................................................................5
GENERAL INFORMATION ABOUT THE
MANUFACTURERS LIFE INSURANCE COMPANY OF
NORTH AMERICA, THE MANUFACTURERS LIFE
INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT A AND
MANUFACTURERS INVESTMENT TRUST .............................................10
The Manufacturers Life Insurance Company of North
America.............................................................10
The Manufacturers Life Insurance Company of North
America Separate Account A .........................................11
Manufacturers Investment Trust.........................................11
DESCRIPTION OF THE CONTRACTS ...............................................15
ELIGIBLE GROUPS AND INDIVIDUALS..........................................15
ACCUMULATION PROVISIONS .................................................16
Purchase Payments .....................................................16
Accumulation Units ....................................................16
Value of Accumulation Units ...........................................17
Net Investment Factor .................................................17
Transfers Among Investment Options.....................................27
Maximum Number of Investment Options...................................18
Telephone Transactions ................................................18
Special Transfer Services - Dollar Cost Averaging......................18
Asset Rebalancing Program..............................................18
Withdrawals............................................................19
Special Withdrawal Services - Income Plan..............................19
Loans..................................................................20
Death Benefit Before Maturity Date.....................................20
ANNUITY PROVISIONS ......................................................21
General ...............................................................21
Annuity Options .......................................................22
Determination of Amount of the First Variable
Annuity Payment.....................................................23
Annuity Units and the Determination of Subsequent
Variable Annuity Payments ..........................................23
Transfers After Maturity Date .........................................23
Death Benefit on or After Maturity Date ...............................24
OTHER CONTRACT PROVISIONS ...............................................24
Ten Day Right to Review ...............................................24
Ownership..............................................................24
Beneficiary ...........................................................24
Annuitant..............................................................25
Modification ..........................................................25
Discontinuance of New Owners ..........................................25
Misstatement and Proof of Age, Sex or Survival.........................25
FIXED ACCOUNT INVESTMENT OPTIONS.........................................25
CHARGES AND DEDUCTIONS .....................................................28
Administration Fees....................................................28
Reduction or Elimination of Annual
Administration Fee..................................................28
Mortality and Expense Risk Charge .....................................29
Taxes .................................................................29
FEDERAL TAX MATTERS ........................................................30
INTRODUCTION .............................................................30
THE COMPANY'S TAX STATUS .................................................30
TAXATION OF ANNUITIES IN GENERAL ........................................ 30
Tax Deferral During Accumulation Period ...............................30
Taxation of Partial and Full Withdrawals ..............................31
Taxation of Annuity Payments ..........................................32
Taxation of Death Benefit Proceeds ....................................32
Penalty Tax on Premature Distributions ................................32
Aggregation of Contracts ..............................................32
Loss of Interest Deduction Where Contracts are
Held by or for the Benefit of Certain
Non-Natural Persons....................................................32
QUALIFIED RETIREMENT PLANS................................................33
Qualified Plan Types ..................................................33
Direct Rollovers ......................................................35
FEDERAL INCOME TAX WITHHOLDING............................................35
GENERAL MATTERS.............................................................35
Tax Deferral...........................................................35
Performance Data.......................................................35
Financial Statements...................................................35
Asset Allocation and Timing Services...................................35
Restrictions Under the Texas Optional
Retirement Program ....................................................35
Distribution of Contracts .............................................35
Owner Inquiries........................................................37
Confirmation Statements................................................37
Legal Proceedings .....................................................37
Other Information......................................................37
STATEMENT OF ADDITIONAL INFORMATION-
TABLE OF CONTENTS.........................................................38
APPENDIX A: STATE PREMIUM TAXES............................................39
APPENDIX B: PENNSYLVANIA MAXIMUM
MATURITY AGE..............................................................40
</TABLE>
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SPECIAL TERMS
The following terms as used in this Prospectus have the indicated
meanings:
Accumulation Unit - A unit of measure that is used to calculate the
value of an owner's variable investment account before the maturity date.
Annuitant - Any natural person or persons whose life is used to
determine the duration of annuity payments involving life contingencies. The
"annuitant" is as designated on the specifications page of the contract or
certificate or in the application, unless changed.
Annuity Option - The method selected by each owner for annuity
payments made by the Company. At the maturity date, the Company will provide
an annuity with payments guaranteed for 10 years and for the lifetime of the
annuitant, if the annuitant lives more than 10 years. This will be the
annuity option unless changed.
Annuity Service Office - The service office of the Company is P.O. Box
9230, Boston, Massachusetts 02205-9230.
Annuity Unit - A unit of measure that is used after the maturity date
to calculate variable annuity payments.
Application - The document signed by each owner that serves as his or
her application for an individual contract or participation under a group
contract.
Beneficiary - The person, persons or entity entitled to the death
benefit under the contract upon the death of an owner or, in certain
circumstances, the annuitant. If there is a surviving owner, that person will
be deemed to be the beneficiary.
Certificate - The document which is issued to and which summarizes the
rights and benefits of the owner of a participating interest in a group
contract.
Contract Anniversary - For an individual contract, the anniversary of
the contract date. For a group contract, the anniversary of the date of issue
of a certificate under the contract.
Contract Application - The document signed by the Group Holder that
evidences the Group Holder's application for a Contract or, where context
requires, the document signed by a prospective owner applying for an individual
contract or a certificate evidencing participation in a group contract.
Contract Date - In the case of an individual contract, the date of
issue of the contract as designated in the contract specifications page. In
the case of a group contract, the effective date of participation under the
group annuity contract as designated in the certificate specifications page.
Contract Value - The total of an owner's investment account values
and, if applicable, any amount in the loan account attributable to that owner.
Contract Year - The period of twelve consecutive months beginning on
the contract date, or any anniversary thereafter.
Contingent Beneficiary - The person, persons or entity to become the
beneficiary if the beneficiary is not alive. The contingent beneficiary is as
specified in the application, unless changed.
Debt - Any amounts in an owner's loan account plus any accrued loan
interest. The loan provision is available only under contracts or certificates
issued in connection with Section 403(b) qualified plans that are not subject
to Title I of ERISA.
Due Proof of Death - Due Proof of Death is required upon the death of
the owner or annuitant, as applicable. One of the following must be received
at the Annuity Service Office within one year of the date of death:
(a) A certified copy of a death certificate;
(b) A certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
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(c) Any other proof satisfactory to us.
Death benefits will be paid within 7 days of receipt of due proof of death and
all required claim forms by the Company's Annuity Service Office.
Fixed Annuity - An annuity option with payments which are
predetermined and guaranteed as to dollar amount.
General Account - All the assets of the Company other than assets in
separate accounts.
Group Holder - The person, persons or entity to whom a group contract
is issued.
Investment Account - An account established by the Company which
represents an owner's interest in an investment option prior to the maturity
date.
Investment Account Value - The value of an owner's investment in an
investment account.
Investment Options - The investment choices available to owners.
Currently, there are thirty-five variable and four fixed investment options
under the contract.
Loan Account - The portion of the general account that is used for
collateral when a loan is taken by an owner.
Market Value Charge - A charge that may be assessed if amounts are
withdrawn or transferred from the three, five or seven year investment options
prior to the end of the interest rate guarantee period.
Maturity Date - The date on which annuity benefits commence. The
maturity date is the date specified in the contract or certificate
specifications page and is generally the first day of the month following the
later of the annuitant's 85th birthday or the tenth contract anniversary,
unless changed.
Net Purchase Payment - The purchase payment paid by or on behalf of an
owner less the amount of premium tax, if any.
Non-Qualified Certificates - Certificates issued under non-qualified
contracts.
Non-Qualified Contracts - Contracts which are not issued under
qualified plans.
Owner - In the case of a group contract, the person, persons or entity
named in a certificate and entitled to all of the ownership rights under the
contract not expressly reserved to the group holder. In the case of an
individual contract, the person, persons or entity named in the contract and
entitled to all of the ownership rights under the contract. The owner is
specified in the application, unless changed.
Portfolio or Trust Portfolio - A separate investment portfolio of the
Trust, a mutual fund in which the Variable Account invests, or of any
successor mutual fund.
Purchase Payment - An amount paid by or on behalf of an owner to the
Company as consideration for the benefits provided by the contract.
Qualified Certificates - Certificates issued under Qualified
Contracts.
Qualified Contracts - Contracts issued under qualified plans.
Qualified Plans - Retirement plans which receive favorable tax
treatment under Section 401, 403, 408 or 457 of the Internal Revenue Code of
1986, as amended.
Separate Account - A segregated account of the Company that is not
commingled with the Company's general assets and obligations.
3
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Sub-Account(s) - One or more of the sub-accounts of the Variable
Account. Each sub-account is invested in shares of a different Trust
portfolio.
Valuation Date - Any date on which the New York Stock Exchange is open
for business and the net asset value of a Trust portfolio is determined.
Valuation Period - Any period from one valuation date to the next,
measured from the time on each such date that the net asset value of each
portfolio is determined.
Variable Account - The Variable Account, which is a separate account
of the Company.
Variable Annuity - An annuity option with payments which: (1) are not
predetermined or guaranteed as to dollar amount, and (2) vary in relation to
the investment experience of one or more specified sub-accounts.
SUMMARY
The Contracts. The flexible purchase payment combination fixed and
variable annuity contracts offered by this Prospectus are a group contract,
including an owner's participating interest in the group contract, and an
individual contract. Usually, a group contract certificate will be issued. An
individual contract is intended for use where a group contract is not
available. Specific accounts are maintained under a group contract for each
member of an eligible group participating in the contract as evidenced by the
issuance of a certificate. The contracts provide for the accumulation of
contract values and the payment of annuity benefits on a variable and/or fixed
basis. Except as specifically noted herein and as set forth under the caption
"FIXED ACCOUNT INVESTMENT OPTIONS" below, this Prospectus describes only the
variable portion of the contracts.
The contracts are designed as funding vehicles for amounts that are
"rolled over" from employee benefit plans. The contracts will serve primarily
as Individual Retirement Annuities under Section 408 of the Internal Revenue
Code ("IRAs") and will be used for amounts transferred from plans entitled to
be rolled over into an IRA. The contracts may also be used to fund other plans
qualifying for special income tax treatment under the Code (See "QUALIFIED
RETIREMENT PLANS") or plans not entitled to such special income tax treatment
under the code.
Purchase Payments. The minimum initial purchase payment is $3,500 and
the minimum subsequent purchase payment is $30. Purchase payments may be made
at any time, except that if a purchase payment would cause the owner's contract
value to exceed $1,000,000, or the owner's contract value already exceeds
$1,000,000, additional purchase payments will be accepted only with the prior
approval of the Company. The Company may, at its option, cancel a contract or
certificate and an owner's participation under a contract at the end of any two
consecutive contract years in which no purchase payments by or on behalf of the
owner have been made, if both (i) the total purchase payments made for the
contract or certificate, less any withdrawals, are less than $2,000; and (ii)
the contract value for the owner at the end of such two year period is less
than $2,000. The cancellation of contract privileges may vary in certain states
in order to comply with the requirements of insurance laws and regulations in
such state. (See "PURCHASE PAYMENTS")
Investment Options. Purchase payments may be allocated among the
thirty-nine investment options currently available under the contract:
thirty-five variable account investment options and four fixed account
investment options. Due to current administrative capabilities, a contract
owner is limited to a maximum of seventeen investment options (including all
fixed account investment options) during the period prior to the maturity date
of the contract. The thirty-five variable account investment options are the
thirty-five sub-accounts of the Variable Account, a separate account
established by the Company. The sub-accounts invest in corresponding
portfolios of the Trust: the Pacific Rim Emerging Markets Trust, the Science &
Technology Trust, the International Small Cap Trust, the Emerging Growth Trust,
the Pilgrim Baxter Growth Trust, the Small/Mid Cap Trust, the International
Stock Trust, the Worldwide Growth Trust, the Global Equity Trust, the Small
Company Value Trust, the Equity Trust, the Growth Trust, the Quantitative
Equity Trust, the Blue Chip Growth Trust, the Real Estate Securities Trust,
the Value Trust, the International Growth and Income Trust, the Growth and
Income Trust, the Equity-Income Trust, the Balanced Trust, the Aggressive Asset
Allocation Trust, the High Yield Trust, the Moderate Asset Allocation Trust,
the Conservative Asset Allocation Trust, the Strategic Bond Trust, the Global
Government Bond Trust, the Capital Growth Bond Trust, the Investment Quality
Bond Trust, the U.S. Government Securities Trust, the Money Market Trust, the
Lifestyle Aggressive 1000 Trust, the Lifestyle Growth 820 Trust, the Lifestyle
Balanced 640 Trust, the Lifestyle Moderate 460 Trust and the Lifestyle
Conservative 280 Trust (see the accompanying Prospectus of the Trust). The
portion of an owner's contract value in the
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Variable Account and monthly annuity payments, if selected on a variable basis,
will reflect the investment performance of the sub-accounts selected. (See
"THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A")
Purchase payments may also be allocated to the four fixed account investment
options: one, three, five and seven year guaranteed investment accounts.
Under the fixed account investment options, the Company guarantees the
principal value of purchase payments and the rate of interest credited to the
investment account for the term of the guarantee period. The portion of an
owner's contract value in the fixed account investment options and monthly
annuity payments, if selected on a fixed basis, will reflect such interest and
principal guarantees. (See "FIXED ACCOUNT INVESTMENT OPTIONS") Subject to
certain regulatory limitations, the Company may elect to add, subtract or
substitute investment options.
Transfers. Prior to the maturity date, amounts may be transferred
among an owner's variable account investment options and from the owner's
variable account investment options to his or her fixed account investment
options without charge. In addition, amounts may be transferred prior to the
maturity date among the owner's fixed account investment options and from the
owner's fixed account investment options to his or her variable account
investment options, subject to a one year holding period requirement and a
market value charge which may apply to such a transfer. (See "FIXED ACCOUNT
INVESTMENT OPTIONS") After the maturity date, transfers are not permitted from
variable annuity options to fixed annuity options or from fixed annuity options
to variable annuity options. Transfers from any investment account must be at
least $300 or, if less, the entire balance in the investment account. If, after
the transfer the amount remaining in the investment account from which the
transfer is made is less than $100, then we will transfer the entire amount
instead of the requested amount. The Company may impose certain additional
limitations on transfers. (See "TRANSFERS AMONG INVESTMENT OPTIONS" and
"TRANSFERS AFTER MATURITY DATE") Transfer privileges may also be used under a
special service offered by the Company to dollar cost average an investment in
the contract. (See "SPECIAL TRANSFER SERVICES - DOLLAR COST AVERAGING")
Withdrawals. Prior to the earlier of the maturity date or the death
of an owner, the owner may withdraw all or a portion of his or her contract
value. The amount withdrawn from any investment account must be at least $300
or, if less, the entire balance of the investment account. If a partial
withdrawal would reduce the owner's contract value to less than $300, the
withdrawal request will be treated as a request to withdraw the owner's entire
contract value. An administration fee may be imposed. (See "WITHDRAWALS") A
withdrawal may be subject to a penalty tax. (See "FEDERAL TAX MATTERS")
Withdrawal privileges may also be exercised pursuant to the Company's income
plan service. (See "SPECIAL WITHDRAWAL SERVICES - INCOME PLAN")
Loans. The Company offers a loan privilege under contracts or
certificates issued in connection with Section 403(b) qualified plans that are
not subject to Title I of ERISA. Where available, owners may obtain loans
using their contract value as the only security for the loan. The effective
cost of a loan is 2% per year of the amount borrowed. (See "LOANS")
Death Benefits. The Company will pay the death benefit described
below (which, as defined, is net of any debt) to the beneficiary if any owner
dies before the maturity date. If there is a surviving owner, that owner will
be deemed to be the beneficiary. No death benefit is payable on the death of
any annuitant, except that if any owner is not a natural person, the death of
any annuitant will be treated as the death of an owner. The death benefit will
be determined as of the date on which written notice and proof of death and all
required claim forms are received at the Company's Annuity Service Office.
The death benefit will be the greater of the contract value or the
minimum death benefit. The minimum death benefit is equal to the sum of all
purchase payments made by or on behalf of the owner minus a reduction for any
partial withdrawals made by or on behalf of the owner. The amount of the
reduction is the greater of (a) or (b), where (a) is the amount of the partial
withdrawal and (b) is the amount obtained by multiplying the minimum death
benefit prior to the withdrawal by the ratio of the partial withdrawal to the
contract value prior to the withdrawal. (See "DEATH BENEFIT BEFORE MATURITY
DATE") If the annuitant dies after the maturity date and annuity payments have
been selected based on an annuity option providing for payments for a
guaranteed period, the Company will make the remaining guaranteed payments to
the beneficiary. (See "DEATH BENEFIT ON OR AFTER MATURITY DATE")
Annuity Payments. The Company offers a variety of fixed and variable
annuity options. Periodic annuity payments will begin on the maturity date.
The owner selects the maturity date, frequency of payment and annuity option.
(See "ANNUITY PROVISIONS")
Ten Day Review. Within 10 days of receipt of his or her contract or
certificate, an owner may cancel the contract or certificate by returning it to
the Company. The ten day right to review may vary in certain states in order
to comply with the
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requirements of insurance laws and regulations in such states. (See "TEN DAY
RIGHT TO REVIEW")
Modification. The contract or certificate may not be modified by the
Company without the consent of the group holder or owner, as applicable, except
as may be required to make it conform to any law or regulation or ruling issued
by a governmental agency. However, on 60 days' notice to the group holder, the
Company may change the administration fees, mortality and expense risk charges,
annuity purchase rates and the market value charge as to any certificate issued
after the effective date of the modification. (See "MODIFICATION")
Discontinuance of New Owners. In the case of group contracts, on
thirty days' notice to the group holder, the Company may limit or discontinue
acceptance of new applications and the issuance of new certificates. (See
"DISCONTINUANCE OF NEW OWNERS")
Charges and Deductions. The following table and Example are designed
to assist group holders and owners in understanding the various costs and
expenses to which they are subject directly and indirectly. The table reflects
expenses of the separate account and the underlying portfolio company. In
addition to the items listed in the following table, premium taxes may be
applicable to certain owners. The items listed under "Separate Account Annual
Expenses" are more completely described in this Prospectus (see "CHARGES AND
DEDUCTIONS") The items listed under "Trust Annual Expenses" are described in
detail in the accompanying Trust Prospectus to which reference should be made.
TRANSACTION EXPENSES
None.
<TABLE>
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ANNUAL ADMINISTRATION FEE................... $30(1)
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and expense risk fees............. 0.85%
Administration fee - asset based........... 0.15%
Total Separate Account Annual Expenses...... 1.00%
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets)
</TABLE>
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(1)The $30 annual administration fee will not be assessed prior to the
maturity date if at the time of its assessment the sum of all the owner's
investment accounts is greater than $100,000.
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MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
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Pacific Rim Emerging Markets........ 0.850% 0.300% 1.150%
Science & Technology................ 1.100% 0.100% 1.200%
International Small Cap............. 1.100% 0.190% 1.290%
Emerging Growth..................... 1.050% 0.100% 1.150%
Pilgrim Baxter Growth............... 1.050% 0.300% 1.350%
Small/Mid Cap....................... 1.000% 0.100% 1.100%
International Stock................. 1.050% 0.200% 1.250%
Worldwide Growth.................... 1.000% 0.300% 1.300%
Global Equity....................... 0.900% 0.110% 1.010%
Small Company Value Trust........... 1.050% 0.150%* 1.200%
Equity.............................. 0.750% 0.050% 0.800%
Growth.............................. 0.850% 0.160% 1.010%
Quantitative Equity**............... 0.700%** 0.060% 0.760%**
Blue Chip Growth.................... 0.925% 0.050% 0.975%
Real Estate Securities**............ 0.700%** 0.100% 0.800%**
Value............................... 0.800% 0.050% 0.850%
International Growth and Income..... 0.950% 0.160% 1.110%
Growth and Income................... 0.750% 0.050% 0.800%
Equity-Income....................... 0.800% 0.050% 0.850%
Balanced............................ 0.800% 0.150% 0.950%
Aggressive Asset Allocation......... 0.750% 0.150% 0.900%
High Yield.......................... 0.775% 0.145% 0.920%
Moderate Asset Allocation........... 0.750% 0.090% 0.840%
Conservative Asset Allocation....... 0.750% 0.120% 0.870%
Strategic Bond...................... 0.775% 0.085% 0.860%
Global Government Bond.............. 0.800% 0.100% 0.900%
Capital Growth Bond**............... 0.650%** 0.100% 0.750%**
Investment Quality Bond............. 0.650% 0.080% 0.730%
U.S. Government Securities.......... 0.650% 0.060% 0.710%
Money Market........................ 0.500% 0.050% 0.550%
</TABLE>
<TABLE>
<CAPTION>
MINIMUM TOTAL TRUST MAXIMUM TOTAL TRUST
ANNUAL EXPENSES*** ANNUAL EXPENSES****
(AFTER FEE WAIVER) (AFTER FEE WAIVER)
<S> <C> <C>
Lifestyle Aggressive 1000# 0.760% 1.350%
Lifestyle Growth 820# 0.720% 1.260%
Lifestyle Balanced 640# 0.680% 1.180%
Lifestyle Moderate 460# 0.630% 1.090%
Lifestyle Conservative 280# 0.590% 1.010%
</TABLE>
*Based on estimates of payments to be made during the current fiscal year.
** "Total Trust Annual Expenses" for the Quantitative Equity, Real Estate
Securities and Capital Growth Bond Trusts do not reflect an agreement by
Manufacturers Securities Services, LLC ("MSS") voluntarily to waive fees
payable to it and/or reimburse expenses for a period of one year commencing
January 1, 1997 to the extent necessary to prevent "Total Trust Annual
Expenses" for each such Trust from exceeding .50% of average net assets.
"Management Fees" for each such Trust do not reflect estimated fee waivers by
MSS pursuant to such agreement. If such waivers were reflected "Management
Fees" would be 0.440%, 0.400% and 0.400% for the Quantitative Equity Trust,
Real Estate Securities Trust and the Capital Growth Bond Trust, respectively.
*** Minimum Fees are determined assuming the following allocation for the
Underlying Portfolios: Lifestyle Aggressive 1000 Trust, 100% Quantitative
Equity Trust; Lifestyle Growth 820 Trust, 80% Quantitative Equity Trust, 20%
Money Market Trust;
7
<PAGE> 13
Lifestyle Balanced 640 Trust, 60% Quantitative Equity Trust, 40% Money Market
Trust; Lifestyle Moderate 460 Trust, 40% Quantitative Equity Trust, 60% Money
Market Trust; Lifestyle Conservative 280 Trust, 20% Quantitative Equity Trust,
80% Money Market Trust.
**** Maximum Fees are determined assuming the following allocation for the
Underlying Portfolios: Lifestyle Aggressive 1000 Trust, 100% Pilgrim Baxter
Growth Trust; Lifestyle Growth 820 Trust, 80% Pilgrim Baxter Growth Trust, 20%
High Yield Trust; Lifestyle Balanced 640 Trust, 60% Pilgrim Baxter Growth
Trust, 40% High Yield Trust; Lifestyle Moderate 460 Trust, 40% Pilgrim Baxter
Growth Trust, 60% High Yield Trust; Lifestyle Conservative 280 Trust, 20%
Pilgrim Baxter Growth Trust, 80% High Yield Trust.
#Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will, in addition to its own expenses, such as
certain Other Expenses, bear its pro rata share of the fees and expenses
incurred by the Underlying Portfolios and the investment return of each
Lifestyle Trust will be net of the Underlying Portfolio expenses. MSS has
voluntarily agreed to pay the expenses of each Lifestyle Trust (excluding the
expenses of the Underlying Portfolios). This expense reimbursement may be
terminated at any time. If such expense reimbursement was not in effect, Total
Trust Annual Expenses would be .04% higher (based on the expenses of the
Lifestyle Trusts for the preceding fiscal year) as reflected in the chart
below:
<TABLE>
<CAPTION>
Minimum Total Trust Maximum Total Trust
Annual Expenses Annual Expenses
(see note *** above) (see note **** above)
-------------------- -------------------
<S> <C> <C>
Lifestyle Aggressive 1000 Trust 0.800% 1.390%
Lifestyle Growth 820 Trust 0.760% 1.300%
Lifestyle Balanced 640 Trust 0.720% 1.220%
Lifestyle Moderate 460 Trust 0.670% 1.130%
Lifestyle Conservative 280 Trust 0.630% 1.050%
</TABLE>
EXAMPLE
An owner will have paid the following expenses on a $1,000 investment,
assuming 5% annual return on assets, regardless of whether the contract
owner annuitized as provided in the contract, surrendered the contract or did
not surrender the contract at the end of the applicable time period:
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS* 10 YEARS*
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pacific Rim Emerging Markets........ $27 $82 $140 $297
Science & Technology................ 27 83
International Small Cap............. 28 86 147 311
Emerging Growth..................... 27 82
Pilgrim Baxter Growth............... 29 88
Small/Mid Cap....................... 26 80 137 292
International Stock................. 28 85
Worldwide Growth.................... 28 86
Global Equity....................... 25 78 133 283
Small Company Value Trust........... [ ] [ ]
Equity.............................. 23 71 122 262
Growth.............................. 25 78 133 283
Quantitative Equity................. 23 70 120 258
Blue Chip Growth.................... 25 77 131 280
Real Estate Securities.............. 23 71 122 262
Value............................... 24 73
Int'l Growth and Income............. 26 81 138 293
Growth and Income................... 23 71 122 262
Equity-Income....................... 24 73 125 267
Balanced............................ 25 76
</TABLE>
8
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C>
Aggressive Asset Allocation......... 24 74 127 272
High Yield.......................... 24 75
</TABLE>
<TABLE>
<CAPTION>
TRUST PORTFOLIO 1 YEAR 3 YEARS 5 YEARS* 10 YEARS*
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Moderate Asset Allocation........... 24 73 124 266
Conservative Asset Allocation....... 24 74 126 269
Strategic Bond...................... 24 73 125 268
Global Government Bond.............. 24 74 127 272
Capital Growth Bond................. 23 70 120 257
Investment Quality Bond............. 22 69 119 255
U.S. Government Securities.......... 22 69 118 253
Money Market........................ 21 64 110 236
Lifestyle Aggressive 1000**......... 26 79
Lifestyle Growth 820**.............. 25 77
Lifestyle Balanced 640**............ 24 75
Lifestyle Moderate 460**............ 24 73
Lifestyle Conservative 280**........ 23 71
</TABLE>
* The example of expenses for certain Trusts contains only one year and three
year examples since they are newly formed Trusts.
** The example of expenses for the Lifestyle Trusts is calculated using the
midpoint of the minimum and maximum fees set forth under Trust Annual Operating
Expenses.
For purposes of presenting the foregoing Example, the Company has made
certain assumptions mandated by the Commission. The Company has assumed that
there are no transfers or other transactions and that the "Other Expenses" line
item under "Trust Annual Expenses" will remain the same. Such assumptions,
which are mandated by the Commission in an attempt to provide prospective
investors with standardized data with which to compare various annuity
contracts, do not take into account certain features of the contract and
prospective changes in the size of the Trust which may operate to change the
expenses borne by contract owners. Consequently, the amounts listed in the
Example above should not be considered a representation of past or future
expenses and actual expenses borne by contract owners may be greater or lesser
than those shown.
In addition, for purposes of calculating the values in the above
Example, the Company has translated the $30 annual administration charge listed
under "Annual Administration Fee" to a 0.136% annual asset charge based on the
$22,000 approximate average size of contracts and certificates of this series.
So translated, such charge would be higher for smaller contract values and
lower for larger contract values.
* * * * * * * *
The above summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and Statement of Additional
Information and the accompanying Prospectus and Statement of Additional
Information for the Trust, to which reference should be made. This Prospectus
generally describes only the variable aspects of the contract, except where
fixed aspects are specifically mentioned.
GENERAL INFORMATION ABOUT THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH
AMERICA, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE
ACCOUNT A AND MANUFACTURERS INVESTMENT TRUST
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
The Manufacturers Life Insurance Company of North America ("the
Company"), formerly North American Security Life Insurance Company, is a stock
life insurance company organized under the laws of Delaware in 1979. The
Company's principal office is located at 116 Huntington Avenue, Boston,
9
<PAGE> 15
Massachusetts. The ultimate parent of the Company is The Manufacturers Life
Insurance Company ("Manulife"), a Canadian mutual life insurance company based
in Toronto, Canada. Prior to January 1, 1996, the Company was a wholly owned
subsidiary of North American Life Assurance Company ("NAL"), a Canadian mutual
life insurance company. On January 1, 1996 NAL and Manulife merged with the
combined company retaining the Manulife name.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA SEPARATE ACCOUNT A
The Company established the Variable Account on August 24, 1984 as a
separate account under Delaware law. The income, gains and losses, whether or
not realized, from assets of the Variable Account are, in accordance with the
contracts, credited to or charged against the Variable Account without regard
to other income, gains or losses of the Company. Nevertheless, all obligations
arising under the contracts are general corporate obligations of the Company.
Assets of the Variable Account may not be charged with liabilities arising out
of any other business of the Company.
The Variable Account is registered with the Commission under the
Investment Company Act of 1940, as amended ("1940 Act") as a unit investment
trust. A unit investment trust is a type of investment company which invests
its assets in specified securities, such as the shares of one or more
investment companies. Registration under the 1940 Act does not involve
supervision by the Commission of the management or investment policies or
practices of the Variable Account. If deemed by the Company to be in the best
interests of persons having voting rights under the contracts, the Variable
Account may be operated as a management company under the 1940 Act or it may be
deregistered under such Act in the event such registration is no longer
required.
There are currently thirty-five sub-accounts within the Variable
Account. The Company reserves the right to add other sub-accounts, eliminate
existing sub-accounts, combine sub-accounts or transfer assets in one
sub-account to another sub-account established by the Company or an affiliated
company. The Company will not eliminate existing sub-accounts or combine
sub-accounts without obtaining any necessary approval of the appropriate state
or federal regulatory authorities.
MANUFACTURERS INVESTMENT TRUST
The assets of each available sub-account of the Variable Account are
invested in shares of a corresponding portfolio of the Trust. A description of
each portfolio is set forth below. The Trust is registered under the 1940 Act
as an open-end management investment company. Each of the portfolios is
diversified for purposes of the 1940 Act, except for the Global Government Bond
Trust, the Emerging Growth Trust and the five Lifestyle Trusts which are
non-diversified. The Trust receives investment advisory services from MSS.
The Trust currently has fifteen subadvisers who manage all of the
portfolios:
<TABLE>
<CAPTION>
SUBADVISER SUBADVISER TO
---------- -------------
<S> <C>
Fidelity Management Trust Company Equity Trust
Conservative Asset Allocation Trust
Moderate Asset Allocation Trust
Aggressive Asset Allocation Trust
Founders Asset Management, Inc. Growth Trust
Worldwide Growth Trust
Balanced Trust
International Small Cap Trust
Fred Alger Management, Inc. Small/Mid Cap Trust
J.P. Morgan Investment Management Inc. International Growth and Income Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Real Estate Securities Trust
Capital Growth Bond Trust
Money Market Trust
</TABLE>
10
<PAGE> 16
<TABLE>
<S> <C>
Lifestyle Trusts
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
Oechsle International Advisors, L.P. Global Government Bond Trust
Rosenberg Institutional Equity Small Company Value Trust
Management
Rowe Price-Fleming International, Inc. International Stock Trust
Pilgrim Baxter & Associates Pilgrim Baxter Growth Trust
Salomon Brothers Asset Management, Inc. U.S. Government Securities Trust
Strategic Bond Trust
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Warburg, Pincus Counsellors, Inc. Emerging Growth Trust
Wellington Management Company, LLP Growth and Income Trust
Investment Quality Bond Trust
</TABLE>
The following is a brief description of each portfolio:
The PACIFIC RIM EMERGING MARKETS TRUST seeks long-term growth of
capital by investing in a diversified portfolio that is comprised primarily of
common stocks and equity-related securities of corporations domiciled in
countries in the Pacific Rim region.
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital.
Current income is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks capital appreciation by
investing primarily in securities issued by foreign companies which have total
market capitalization or annual revenues of $1 billion or less. These
securities may represent companies in both established and emerging economies
throughout the world.
The EMERGING GROWTH TRUST seeks maximum capital appreciation by
investing primarily in a portfolio of equity securities of domestic companies.
The Emerging Growth Trust ordinarily will invest at least 65% of its total
assets in common stocks or warrants of emerging growth companies that represent
attractive opportunities for maximum capital appreciation.
The PILGRIM BAXTER GROWTH TRUST seeks capital appreciation by
investing in companies believed by the subadviser to have an outlook for strong
earnings growth and the potential for significant capital appreciation.
The SMALL/MID CAP TRUST seeks long-term capital appreciation by
investing at least 65% of its total assets (except during temporary defensive
periods) in small/mid cap equity securities. As used herein small/mid cap
equity securities are equity securities of companies that, at the time of
purchase, have total market capitalization between $500 million and $5 billion.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by
investing primarily in common stocks of established, non-U.S. companies.
The WORLDWIDE GROWTH TRUST seeks long-term growth of capital by
normally investing at least 65% of its total assets in equity securities of
growth companies in a variety of markets throughout the world.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by
investing primarily in equity securities
11
<PAGE> 17
throughout the world, including U.S. issuers and emerging markets.
The SMALL COMPANY VALUE TRUST seeks long term growth of capital by
investing in equity securities of smaller companies which are traded
principally in the markets of the United States.
The EQUITY TRUST seeks growth of capital by investing primarily in
common stocks of United States issuers and securities convertible into or
carrying the right to buy common stocks.
The GROWTH TRUST seeks long-term growth of capital by investing at
least 65% of the portfolio's total assets in the common stocks of
well-established, high-quality growth companies that the subadviser believes
have the potential to increase earnings faster than the rest of the market.
The QUANTITATIVE EQUITY TRUST seeks to achieve intermediate and
long-term growth through capital appreciation and current income by investing
in common stocks and other equity securities of well established companies with
promising prospects for providing an above average rate of return.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of
capital (current income is a secondary objective) and many of the stocks in the
portfolio are expected to pay dividends.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of
long-term capital appreciation and satisfactory current income by investing in
real estate related equity and debt securities.
The VALUE TRUST seeks to realize an above-average total return over a
market cycle of three to five years, consistent with reasonable risk, by
investing primarily in common and preferred stocks, convertible securities,
rights and warrants to purchase common stocks, ADRs and other equity securities
of companies with equity capitalizations usually greater than $300 million.
The INTERNATIONAL GROWTH AND INCOME TRUST seeks long-term growth of
capital and income by investing, under normal circumstances, at least 65% of
its total assets in equity securities of foreign issuers. The portfolio may
also invest in debt securities of corporate or sovereign issuers rated A or
higher by Moody's or S&P or, if unrated, of equivalent credit quality as
determined by the subadviser. Under normal circumstances, the portfolio will
be invested approximately 85% in equity securities and 15% in fixed income
securities.
The GROWTH AND INCOME TRUST seeks long-term growth of capital and
income, consistent with prudent investment risk, by investing primarily in a
diversified portfolio of common stocks of United States issuers which the
subadviser believes are of high quality.
The EQUITY-INCOME TRUST seeks to provide substantial dividend income
and also long-term capital appreciation by investing primarily in
dividend-paying common stocks, particularly of established companies with
favorable prospects for both increasing dividends and capital appreciation.
The BALANCED TRUST seeks current income and capital appreciation by
investing in a balanced portfolio of common stocks, U.S. and foreign government
obligations and a variety of corporate fixed-income securities.
The HIGH YIELD TRUST seeks to realize an above-average total return
over a market cycle of three to five years, consistent with reasonable risk, by
investing primarily in high yield debt securities, including corporate bonds
and other fixed-income securities.
The AUTOMATIC ASSET ALLOCATION TRUSTS seek the highest potential total
return consistent with a specified level of risk tolerance -- conservative,
moderate or aggressive -- by investing primarily in the kinds of securities in
which the Equity, Investment Quality Bond, U.S. Government Securities and Money
Market Trusts may invest.
* The AGGRESSIVE ASSET ALLOCATION TRUST seeks the highest total return
consistent with an aggressive level of risk tolerance. This Trust attempts to
limit the decline in portfolio value in very adverse market conditions to 15%
over any three year period.
12
<PAGE> 18
* The MODERATE ASSET ALLOCATION TRUST seeks the highest total return
consistent with a moderate level of risk tolerance. This Trust attempts to
limit the decline in portfolio value in very adverse market conditions to 10%
over any three year period.
* The CONSERVATIVE ASSET ALLOCATION TRUST seeks the highest total
return consistent with a conservative level of risk tolerance. This Trust
attempts to limit the decline in portfolio value in very adverse market
conditions to 5% over any three year period.
The STRATEGIC BOND TRUST seeks a high level of total return consistent
with preservation of capital by giving its subadviser broad discretion to
deploy the portfolio's assets among certain segments of the fixed-income market
as the subadviser believes will best contribute to achievement of the
portfolio's investment objective.
The GLOBAL GOVERNMENT BOND TRUST seeks a high level of total return by
placing primary emphasis on high current income and the preservation of capital
by investing primarily in a global portfolio of high-quality, fixed-income
securities of foreign and United States governmental entities and supranational
issuers.
The CAPITAL GROWTH BOND TRUST seeks to achieve growth of capital by
investing in medium-grade or better debt securities, with income as a secondary
consideration. The Capital Growth Bond Trust differs from most "bond" funds in
that its primary objective is capital appreciation, not income.
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds and
U.S. Government bonds with intermediate to longer term maturities. The
portfolio may also invest up to 20% of its assets in non-investment grade fixed
income securities.
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current
income consistent with preservation of capital and maintenance of liquidity, by
investing in debt obligations and mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
derivative securities such as collateralized mortgage obligations backed by
such securities.
The MONEY MARKET TRUST seeks maximum current income consistent with
preservation of principal and liquidity by investing in high quality money
market instruments with maturities of 397 days or less issued primarily by
United States entities.
The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long-term growth
of capital (current income is not a consideration) by investing 100% of the
Lifestyle Trust's assets in other portfolios of the Trust ("Underlying
Portfolios") which invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long-term growth of
capital with consideration also given to current income by investing
approximately 20% of the Lifestyle Trust's assets in Underlying Portfolios
which invest primarily in fixed income securities and approximately 80% of its
assets in Underlying Portfolios which invest primarily in equity securities.
The LIFESTYLE BALANCED 640 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater emphasis
given to capital growth by investing approximately 40% of the Lifestyle Trust's
assets in Underlying Portfolios which invest primarily in fixed income
securities and approximately 60% of its assets in Underlying Portfolios which
invest primarily in equity securities.
The LIFESTYLE MODERATE 460 TRUST seeks to provide a balance between a
high level of current income and growth of capital with a greater emphasis
given to high income by investing approximately 60% of the Lifestyle Trust's
assets in Underlying Portfolios which invest primarily in fixed income
securities and approximately 40% of its assets in Underlying Portfolios which
invest primarily in equity securities.
The LIFESTYLE CONSERVATIVE 280 TRUST seeks to provide a high level of
current income with some consideration also given to growth of capital by
investing approximately 80% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in fixed income securities and approximately
20% of its assets in Underlying Portfolios which invest primarily in equity
securities.
13
<PAGE> 19
In pursuing the Strategic Bond, High Yield and Investment Quality Bond
Trusts' investment objective, each portfolio expects to invest a portion of its
assets in high yield securities, commonly known as "junk bonds" which also
present a high degree of risk. The risks of these securities include price
volatility and risk of default in the payment of interest and principal. See
"Risk Factors Relating to High Yield Securities" contained in the Manufacturers
Investment Trust prospectus before investing in either Trust.
In pursuing the Pacific Rim Emerging Markets, International Stock,
Worldwide Growth, International Small Cap, Global Equity, Strategic Bond,
International Growth and Income, High Yield and Global Government Bond Trusts'
investment objective, each portfolio may invest up to 100% of its assets in
foreign securities which may present additional risks. See "Foreign Securities"
in the Manufacturers Investment Trust prospectus before investing in any of
these Trusts.
If the shares of a Trust portfolio are no longer available for
investment or in the Company's judgment investment in a Trust portfolio becomes
inappropriate in view of the purposes of the Variable Account, the Company may
eliminate the shares of a portfolio and substitute shares of another portfolio
of the Trust or another open-end registered investment company. Substitution
may be made with respect to both existing investments and the investment of
future purchase payments. However, no such substitution will be made without
notice to the contract owner and prior approval of the Commission to the extent
required by the 1940 Act.
The Company will vote shares of the Trust portfolios held in the
Variable Account at meetings of shareholders of the Trust in accordance with
voting instructions received from the persons having the voting interest under
the contracts. The number of portfolio shares for which voting instructions
may be given will be determined by the Company in the manner described below,
not more than 90 days prior to the meeting of the Trust. Trust proxy material
will be distributed to each person having the voting interest under the
contract together with appropriate forms for giving voting instructions.
Portfolio shares held in the Variable Account that are attributable to contract
owners and as to which no timely instructions are received and portfolio shares
held in the Variable Account that are beneficially owned by the Company will be
voted by the Company in proportion to the instructions received.
Prior to the maturity date, the person having the voting interest
under a contract is the contract owner and the number of votes as to each
portfolio for which voting instructions may be given is determined by dividing
the value of the investment account corresponding to the sub-account in which
such portfolio shares are held by the net asset value per share of that
portfolio. After the maturity date, the person having the voting interest
under a contract is the annuitant and the number of votes as to each portfolio
for which voting instructions may be given is determined by dividing the
reserve for the contract allocated to the sub-account in which such portfolio
shares are held by the net asset value per share of that portfolio. Generally,
the number of votes tends to decrease as annuity payments progress since the
amount of reserves attributable to a contract will usually decrease after
commencement of annuity payments. The Company reserves the right to make any
changes in the voting rights described above that may be permitted by the
federal securities laws or regulations or interpretations of these laws or
regulations.
A full description of the Trust, including the investment objectives,
policies and restrictions of each of the portfolios, is contained in the
Prospectus for the Trust which accompanies this Prospectus and should be read
by a prospective purchaser before investing.
DESCRIPTION OF THE CONTRACTS
ELIGIBLE GROUPS AND INDIVIDUALS
The contracts are designed as funding vehicles for amounts that are
"rolled over" from employee benefit plans. The contracts will serve primarily
as Individual Retirement Annuities under Section 408 of the Internal Revenue
Code ("IRAs") and will be used for amounts transferred from plans entitled to
be rolled over into an IRA. The contracts may be used to fund plans qualifying
for special income tax treatment under the Code, such as pension and
profit-sharing plans for corporations and sole proprietorships/partnerships
("H.R. 10" and "Keogh" plans), tax-sheltered annuities, and state and local
government deferred compensation plans. (See "QUALIFIED RETIREMENT PLANS.")
The contracts are also designed so that they may be used with non-qualified
retirement plans, such as deferred compensation and payroll savings plans and
such groups (trusteed or non-trusteed) as may be eligible under applicable
law.
Usually, a group contract certificate will be issued. An individual
contract is intended for use where a group contract is not available. Group
contracts have been issued to the Venture Trust, a trust established with
United Missouri Bank, N.A., Kansas City, Missouri, as group holder for groups
comprised of persons who have brokerage accounts with brokers having selling
agreements
14
<PAGE> 20
with MSS, the principal underwriter of the contracts.
An eligible member of a group to which a group contract has been
issued may become an owner under the contract, or a person may purchase an
individual contract, where available, by submitting a completed application, if
required by the Company, and a minimum purchase payment. A certificate
summarizing the rights and benefits of the owner under the group contract, or
an individual contract defining such rights and benefits, may be issued to an
applicant acceptable to the Company. The Company reserves the right to decline
to issue a certificate or contract to any person in its sole discretion. All
rights and privileges under a group contract may be exercised by each owner as
to his or her interest unless expressly reserved to the group holder.
Provisions of any plan in connection with which the contract was issued may
restrict an owner's ability to exercise contractual rights and privileges.
ACCUMULATION PROVISIONS
PURCHASE PAYMENTS
Purchase payments are paid to the Company at its Annuity Service
Office. The minimum initial purchase payment is $3,500 and the minimum
subsequent purchase payment is $30. Purchase payments may be made at any
time. The Company may provide by separate agreement for purchase payments to
be automatically withdrawn from an owner's bank account on a periodic basis.
If a purchase payment would cause the contract value for an owner to exceed
$1,000,000 or the owner's contract value already exceeds $1,000,000, additional
purchase payments will be accepted only with the prior approval of the Company.
The Company may, at its option, cancel an individual contract or a
certificate and an owner's participation under a group contract at the end of
any two consecutive contract years in which no purchase payments by or on
behalf of the owner have been made, if both (i) the total purchase payments
made for the contract or certificate, less any withdrawals, are less than
$2,000; and (ii) the contract value for the owner at the end of such two year
period is less than $2,000. The cancellation of contract privileges may vary in
certain states in order to comply with the requirements of insurance laws and
regulations in such state. Upon cancellation the Company will pay the owner his
or her contract value computed as of the valuation period during which the
cancellation occurs less any debt and less the annual $30 administration fee.
The amount paid will be treated as a withdrawal for Federal tax purposes and
thus may be subject to income tax and to a 10% penalty tax. (See "FEDERAL TAX
MATTERS")
Purchase payments are allocated among the investment options in
accordance with the percentages designated by the owner. In addition, owners
have the option to participate in the Guarantee Plus Program administered by
the Company. Under the Guarantee Plus Program the initial purchase payment is
split between the fixed and variable investment options. A percentage of the
initial purchase payment is allocated to the chosen fixed account, such that at
the end of the guaranteed period the fixed account will have grown to an amount
at least equal to the total initial purchase payment. The percentage depends
upon the current interest rate of the fixed investment option. The balance of
the initial purchase payment is allocated among the variable investment options
as indicated on the contract or certificate specifications page. Owners may
elect to participate in the Guarantee Plus Program and may obtain full
information concerning the program and its restrictions from their securities
dealers or the Annuity Service Office. An owner may change the allocation of
subsequent purchase payments at any time upon written notice to the Company or
by telephone in accordance with the Company's telephone transfer procedures.
ACCUMULATION UNITS
The Company will establish an investment account for each owner for
each variable account investment option to which such owner allocates purchase
payments. Purchase payments are credited to such investment accounts in the
form of accumulation units. The following discussion of accumulation units, the
value of accumulation units and the net investment factor formula pertains only
to the accumulations in the variable account investment options. The parallel
discussion regarding accumulations in the fixed account investment options
appears elsewhere in this Prospectus. (See "FIXED ACCOUNT INVESTMENT OPTIONS")
The number of accumulation units to be credited to each investment
account is determined by dividing the net purchase payment allocated to that
investment account by the value of an accumulation unit for that investment
account for the valuation period during which the purchase payment is received
at the Company's Annuity Service Office complete with all necessary information
or, in the case of the first purchase payment for a certificate or contract,
pursuant to the procedures described below.
Initial purchase payments for a certificate or contract received by
mail will usually be credited in the valuation period
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during which received at the Annuity Service Office, and in any event not later
than two business days after receipt of all information necessary for
processing issuance of the certificate or contract. The applicant will be
informed of any deficiencies preventing processing if the certificate or
contract cannot be issued and the purchase payment credited within two
business days after receipt. If the deficiencies are not remedied within five
business days, the purchase payment will be returned promptly to the applicant,
unless the applicant specifically consents to the Company's retaining the
purchase payment until all necessary information is received. Initial purchase
payments received by wire transfer from broker-dealers will be credited in the
valuation period during which received where such broker-dealers have made
special arrangements with the Company.
VALUE OF ACCUMULATION UNITS
The value of accumulation units will vary from one valuation period to
the next depending upon the investment results of the particular sub-accounts
to which purchase payments are allocated. The value of an accumulation unit
for each sub-account was arbitrarily set at $10 or $12.50 for the first
valuation period under contracts similar to the contracts described in this
Prospectus. The value of an accumulation unit for any subsequent valuation
period is determined by multiplying the value of an accumulation unit for the
immediately preceding valuation period by the net investment factor for such
sub-account (described below) for the valuation period for which the value is
being determined.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment
performance of a sub-account from one valuation period to the next. The net
investment factor for each sub-account for any valuation period is determined
by dividing (a) by (b) and subtracting (c) from the result:
Where (a) is:
(1) the net asset value per share of a portfolio share held
in the sub-account determined at the end of the current valuation
period, plus
(2) the per share amount of any dividend or capital gain
distributions made by the portfolio on shares held in the sub-account
if the "ex-dividend" date occurs during the current valuation period.
Where (b) is:
the net asset value per share of a portfolio share held in
the sub-account determined as of the end of the immediately preceding
valuation period.
Where (c) is:
a factor representing the charges deducted from the
sub-account on a daily basis for administrative expenses and mortality
and expense risks. Currently, such factor is equal on an annual basis
to 1.00% (0.15% for administrative expenses and 0.85% for mortality and
expense risks).
The net investment factor may be greater or less than or equal to one;
therefore, the value of an accumulation unit may increase, decrease or remain
the same.
TRANSFERS AMONG INVESTMENT OPTIONS
Before the maturity date an owner may transfer amounts among his or
her variable account investment options and from such investment options to his
or her fixed account investment options at any time and without charge upon
written notice to the Company or by telephone if the owner authorizes the
Company in writing to accept telephone transfer requests. Accumulation units
will be canceled from the investment account from which amounts are transferred
and credited to the investment account to which amounts are transferred. The
Company will effect such transfers so that the contract value on the date of
the transfer will not be affected by the transfer. The owner must transfer at
least $300 or, if less, the entire value of the investment account. If after
the transfer the amount remaining in the investment account is less than $100,
then the Company will transfer the entire amount instead of the requested
amount. The Company reserves the right to limit, upon notice, the maximum
number of transfers an owner may
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make to one per month or six at any time within a contract year. In addition,
the Company reserves the right to defer the transfer privilege at any time that
the Company is unable to purchase or redeem shares of the Trust portfolios.
The Company also reserves the right to modify or terminate the transfer
privilege at any time in accordance with applicable law.
MAXIMUM NUMBER OF INVESTMENT OPTIONS
Due to current administrative capabilities, a contract owner is
limited to a maximum of 17 investment options (including all fixed account
investment options) during the period prior to the maturity date of the
contract (the "Contract Period"). In calculating this limit for each contract
owner, investment options to which the contract owner has allocated purchased
payments at any time during the Contract Period will be counted toward the 17
maximum even if the contract owner no longer has contract value allocated to
these investment options.
TELEPHONE TRANSACTIONS
Owners are permitted to request transfers/redemptions by telephone.
The Company will not be liable for following instructions communicated by
telephone that it reasonably believes to be genuine. To be permitted to
request a transfer/redemption by telephone, an owner must elect the option.
The Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine and may only be liable for any losses due
to unauthorized or fraudulent instructions where it fails to employ its
procedures properly. Such procedures include the following. Upon telephoning
a request, owners will be asked to provide their account number, and if not
available, their social security number. For the owner's and Company's
protection, all conversations with owners will be tape recorded. All telephone
transactions will be followed by a confirmation statement of the transaction.
SPECIAL TRANSFER SERVICES - DOLLAR COST AVERAGING
The Company administers a Dollar Cost Averaging ("DCA") program which
enables an owner to pre-authorize a periodic exercise of the contractual
transfer rights described above. Owners entering into a DCA agreement instruct
the Company to transfer monthly a predetermined dollar amount from any
sub-account or the one year fixed account investment option to other
sub-accounts until the amount in the sub-account from which the transfer is
made or one year fixed account investment option is exhausted. The DCA program
is generally suitable for owners making a substantial deposit and who desire to
control the risk of investing at the top of a market cycle. The DCA program
allows such investments to be made in equal installments over time in an effort
to reduce such risk. Owners interested in the DCA program may elect to
participate in the program on the application or by separate application.
Owners may obtain a separate application and full information concerning the
program and its restrictions from their securities dealer or the Annuity
Service Office.
ASSET REBALANCING PROGRAM
The Company administers an Asset Rebalancing Program which enables an
owner to indicate to the Company the percentage levels he or she would like to
maintain in particular portfolios. The contract value will be automatically
rebalanced pursuant to the schedule described below to maintain the indicated
percentages by transfers among the portfolios. The entire contract value must
be included in the Asset Rebalancing Program. Other investment programs, such
as the DCA program, or other transfers or withdrawals may not work in concert
with the Asset Rebalancing Program. Therefore, owners should monitor their use
of these other programs and any other transfers or withdrawals while the Asset
Rebalancing Program is being used. Owners interested in the Asset Rebalancing
Program may obtain a separate application and full information concerning the
program and its restrictions from their securities dealer or the Annuity
Service Office.
Asset rebalancing will only be permitted on the following time
schedules:
(i) quarterly on the 25th day of the last month of the quarter (or the
next business day if the 25th is not a business day);
(ii) semi-annually on June 25th or December 26th (or the next business
day if these dates are not business days); or
(iii) annually on December 26th (or the next business day if December
26th is not a business day).
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WITHDRAWALS
Prior to the earlier of the maturity date or the death of an owner, an
owner may withdraw all or a portion of his or her contract value upon written
request complete with all necessary information to the Company's Annuity
Service Office. For certain qualified contracts, exercise of the withdrawal
right may require the consent of the qualified plan participant's spouse under
the Internal Revenue Code and regulations promulgated by the Treasury
Department. In the case of a total withdrawal, the Company will pay the
contract value as of the date of receipt of the request at its Annuity Service
Office, less the annual $30 administration fee if applicable and any debt, and
the owner's contract or certificate, as applicable, will be canceled. In the
case of a partial withdrawal, the Company will pay the amount requested and
cancel that number of accumulation units credited to each investment account
necessary to equal the amount withdrawn from each investment account. (See
"CHARGES AND DEDUCTIONS")
When making a partial withdrawal, the owner should specify the
investment options from which the withdrawal is to be made. The amount
requested from an investment option may not exceed the value of that investment
option. If the owner does not specify the investment options from which a
partial withdrawal is to be taken, a partial withdrawal will be taken from the
variable account investment options until exhausted and then from the fixed
account investment options, beginning with the shortest guarantee period first
and ending with the longest guarantee period last. If the partial withdrawal
is less than the total value in the variable account investment options, the
withdrawal will be taken pro rata from the variable account investment options:
taking from each such variable account investment option an amount which bears
the same relationship to the total amount withdrawn as the value of such
variable account investment option bears to the total value of all the owner's
investments in variable account investment options.
For the rules governing the order and manner of withdrawals from the
fixed account investment options, see "FIXED ACCOUNT INVESTMENT OPTIONS."
There is no limit on the frequency of partial withdrawals; however,
the amount withdrawn must be at least $300 or, if less, the entire balance in
the investment option. If after the withdrawal the amount remaining in the
investment option is less than $100, the Company will treat the partial
withdrawal as a withdrawal of the entire amount held in the investment option.
If a partial withdrawal would reduce the contract value to less than $300, the
Company will treat the partial withdrawal as a total withdrawal of the contract
value.
The amount of any withdrawal from the variable account investment
options will be paid promptly, and in any event within seven days of receipt of
the request, complete with all necessary information at the Company's Annuity
Service Office, except that the Company reserves the right to defer the right
of withdrawal or postpone payments for any period when: (1) the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (2)
trading on the New York Stock Exchange is restricted, (3) an emergency exists
as a result of which disposal of securities held in the Variable Account is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Variable Account's net assets, or (4) the Commission, by order, so
permits for the protection of security holders; provided that applicable rules
and regulations of the Commission shall govern as to whether the conditions
described in (2) and (3) exist.
Withdrawals from the contract may be subject to income tax and a 10%
penalty tax. Withdrawals are permitted from contracts or certificates issued
in connection with Section 403(b) qualified plans only under limited
circumstances. (See "FEDERAL TAX MATTERS")
TELEPHONE REDEMPTIONS. The owner may request the option to withdraw a
portion of his or her contract value by telephone by completing a separate
application. The Company reserves the right to impose maximum withdrawal
amounts and procedural requirements regarding this privilege. For additional
information on Telephone Redemptions see "Telephone Transactions" above.
SPECIAL WITHDRAWAL SERVICES - INCOME PLAN
The Company administers an Income Plan ("IP") which enables an owner
to pre-authorize a periodic exercise of the contractual withdrawal rights
described above. Owners entering into an IP agreement instruct the Company to
withdraw a level dollar amount from specified investment options on a periodic
basis. The total of IP withdrawals in a contract year is limited to not more
than 20% of the purchase payments made by or on behalf of the owner. If an
additional withdrawal is made by an owner participating in an IP, the IP will
terminate automatically and may be reinstated only on or after the next
contract anniversary. The
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IP is not available to owners participating in the dollar cost averaging
program or for which purchase payments are being automatically deducted from a
bank account on a periodic basis. IP withdrawals will be free of withdrawal
and market value charges. IP withdrawals may, however, be subject to income
tax and a 10% penalty tax. (See "FEDERAL TAX MATTERS") Owners interested in
an IP may elect to participate in this program may obtain a separate
application and full information concerning the program and its restrictions
from their securities dealer or the Annuity Service Office.
LOANS
The Company offers a loan privilege only under contracts or
certificates issued in connection with Section 403(b) qualified plans that are
not subject to Title I of ERISA. Where available, owners may obtain loans
using their contract value as the only security for the loan. Loans are
subject to provisions of the Code and to applicable retirement program rules
(collectively, "loan rules"). Tax advisers and retirement plan fiduciaries
should be consulted prior to exercising loan privileges.
Under the terms of the contract, the maximum loan value is equal to
80% of an owner's contract value, although loan rules may serve to reduce such
maximum loan value in some cases. The amount available for a loan at any given
time is the loan value less any outstanding debt. Debt equals the amount of
any loans taken by the owner plus accrued interest. Loans will be made only
upon written request from the owner. The Company will make loans within seven
days of receiving a properly completed loan application (applications are
available from the Annuity Service Office), subject to postponement under the
same circumstances that payment of withdrawals may be postponed. (See
"WITHDRAWALS")
When an owner requests a loan, the Company will reduce the owner's
investment in the investment accounts and transfer the amount of the loan to
the owner's loan account, a part of the Company's general account. The owner
may designate the investment accounts from which the loan is to be withdrawn.
Absent such a designation, the amount of the loan will be withdrawn from the
owner's investment accounts in accordance with the rules for making partial
withdrawals. (See "WITHDRAWALS") The contract provides that owners may repay
contract debt at any time. Under applicable loan rules, loans generally must
be repaid within five years, repayments must be made at least quarterly and
repayments must be made in substantially equal amounts. When a loan is repaid,
the amount of the repayment will be transferred from the owner's loan account
to the investment accounts. The owner may designate the investment accounts to
which a repayment is to be allocated. Otherwise, the repayment will be
allocated in the same manner as the owner's most recent purchase payment. On
each contract anniversary, the Company will transfer from the owner's
investment accounts to his or her loan account the amount by which the owner's
debt exceeds the balance in his or her loan account.
The Company charges interest of 6% per year on contract loans. Loan
interest is payable in arrears and, unless paid in cash, the accrued loan
interest is added to the amount of the owner's debt and bears interest at 6% as
well. The Company credits interest with respect to amounts held in the owner's
loan account at a rate of 4% per year. Consequently, the net cost of loans
under the contract is 2%. If on any date an owner's debt exceeds his or her
contract value, there will be a default as to the owner. In such case the
owner will receive a notice indicating the payment needed to cure the default
and will have a thirty-one day grace period within which to pay the default
amount. If the required payment is not made within the grace period, the
contract may be foreclosed as to that owner (terminated without value) and the
contract or certificate, as applicable, canceled.
The amount of an owner's debt will be deducted from the death benefit
otherwise payable to the beneficiary. (See "DEATH BENEFIT BEFORE MATURITY
DATE") In addition, debt, whether or not repaid, will have a permanent effect
on an owner's contract value because the investment results of the investment
accounts will apply only to the unborrowed portion of the contract value.
The longer debt is outstanding, the greater the effect is likely to be. The
effect could be favorable or unfavorable. If the investment results are
greater than the rate being credited on amounts held in the loan account while
the debt is outstanding, the owner's contract value will not increase as
rapidly as it would have if no debt were outstanding. If investment results
are below that rate, the contract value will be higher than it would have been
had no debt been outstanding.
DEATH BENEFIT BEFORE MATURITY DATE
In General. The following discussion applies principally to contracts
and certificates that are not issued in connection with qualified plans, i.e.,
a "non-qualified" contract or certificate. The requirements of the tax law
applicable to qualified plans, and the tax treatment of amounts held and
distributed under such plans, are quite complex. Accordingly, a prospective
purchaser of a contract or certificate to be used in connection with a
qualified plan should seek competent legal and tax advice regarding the
suitability of the contract or certificate for the situation involved and the
requirements governing the distribution of benefits, including death benefits,
from a contract or certificate used in the plan.
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The death benefit will be the greater of the contract value or the
minimum death benefit. The minimum death benefit is equal to the sum of all
purchase payments made by or on behalf of the owner minus a reduction for any
partial withdrawals made by or on behalf of the owner. The amount of the
reduction is the greater of (a) or (b), where (a) is the amount of the partial
withdrawal and (b) is the amount obtained by multiplying the minimum death
benefit prior to the withdrawal by the ratio of the partial withdrawal to the
contract value prior to the withdrawal.
The determination of the death benefit will be made on the date
written notice and proof of death, as well as all required claims forms, are
received at the Company's Annuity Service Office. No person is entitled to the
death benefit until this time. In addition, partial withdrawals include
amounts applied under an annuity option under the contract. If the owner has
any debt under the contract, the death benefit equals the death benefit, as
described above, less such debt.
Payment of Death Benefit. The Company will pay the death benefit
(which, as defined above, is net of any debt) to the beneficiary if any owner
dies before the maturity date. If there is a surviving owner, that owner will
be deemed to be the beneficiary. No death benefit is payable on the death of
any annuitant, except that if any owner is not a natural person, the death of
any annuitant will be treated as the death of an owner. On the death of the
last surviving annuitant, the owner, if a natural person, will become the
annuitant unless the owner designates another person as the annuitant.
The death benefit may be taken in the form of a lump sum immediately.
If not taken immediately, the contract or certificate will continue subject to
the following: (1) The beneficiary will become the owner. (2) Any excess of
the death benefit over the owner's contract value will be allocated to the
owner's investment accounts in proportion to their relative values on the date
of the Company's receipt at its Annuity Service Office of written notice and
proof of death and all required claim forms. (3) No additional purchase
payments may be made. (4) If the beneficiary is not the deceased's owner
spouse, distribution of the owner's entire interest in the contract or
certificate must be made within five years of the owner's death, or
alternatively, distribution may be made as an annuity, under one of the annuity
options described below, which begins within one year of the owner's death and
is payable over the life of the beneficiary or over a period not extending
beyond the life expectancy of the beneficiary. Upon the death of the
beneficiary, the death benefit will equal the contract value which must be
distributed immediately in a single sum. (5) If the owner's spouse is the
beneficiary, the contract or certificate will continue with the spouse as the
new owner. The surviving spouse may name a new beneficiary and if no
beneficiary is so named the surviving spouse's estate will be the beneficiary.
Upon the death of the surviving spouse, the death benefit will be the contract
value at the time of the surviving spouse's death, and the distribution rules
described in "(4)" applicable when an owner dies will apply when the spouse, as
the owner, dies.
If the annuitant is changed and the contract owner is not a natural
person, the entire interest in the contract must be distributed to the contract
owner within five years. The amount distributed will be reduced by charges
which would otherwise apply upon withdrawal.
A substitution or addition of any owner may result in resetting the
death benefit to an amount equal to the contract value as of the date of the
change and treating such value as a payment made on that date for purposes of
computing the amount of the death benefit. In addition, all purchase payments
made and all amounts deducted in connection with partial withdrawals prior to
the date of the change of owner will not be considered in the determination of
the death benefit. No such change in death benefit will be made if the
individual whose death will cause the death benefit to be paid is the same
after the change in ownership or if ownership is transferred to the owner's
spouse.
Death benefits will be paid within seven days of the date the amount
of the death benefit is determined, as described above, subject to postponement
under the same circumstances that payment of withdrawals may be postponed.
(See "WITHDRAWALS")
ANNUITY PROVISIONS
GENERAL
Proceeds payable on death, withdrawal or the maturity date may be
applied to the annuity options described below, subject to the distribution of
death benefits provisions. ( See "DEATH BENEFIT BEFORE MATURITY DATE")
Generally, annuity benefits under the contract will begin on the
maturity date. The maturity date is the date specified on the contract or
certificate specifications page. If no date is specified, the maturity date is
the maximum maturity date described below.
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The maximum maturity date is the first day of the month following the later of
the 85th birthday of the annuitant or the tenth contract anniversary. An owner
may specify a different maturity date at any time by written request at least
one month before both the previously specified and the new maturity date. The
new maturity date may not be later than the maximum maturity date unless the
Company consents. Maturity dates which occur at advanced ages, e.g., past age
85, may in some circumstances have adverse income tax consequences. (See
"FEDERAL TAX MATTERS.")
Distributions from IRAs and other qualified contracts may be required
before the maturity date. In the case of IRAs, the owner's entire interest
must be distributed no later than the "required beginning date" or begin to be
distributed by that date over (a) the life of the owner or the joint lives of
the owner and the owner's designated beneficiary, or (b) a period not extending
beyond the life expectancy of the owner, or the joint life and last survivor
life expectancy of the owner and the owner's designated beneficiary. The
"required beginning date" generally is April 1 of the calendar year following
the calendar year in which the owner attains age 70.
An owner may select the frequency of annuity payments. However, if
the owner's contract value at the maturity date is such that a monthly payment
would be less than $20, the Company may pay the contract value, less any debt,
in one lump sum to the annuitant on the maturity date.
ANNUITY OPTIONS
Annuity benefits are available under the contract on a fixed or
variable basis, or any combination of fixed and variable bases. On or before
the maturity date, an owner may select one or more of the annuity options
described below on a fixed and/or variable basis (except Option 5 which is
available on a fixed basis only) or choose an alternate form of settlement
acceptable to the Company. If an annuity option is not selected, the Company
will provide as a default option annuity payments on a fixed, variable or
combined fixed and variable basis in proportion to the Investment Account Value
of each investment option at the maturity date. Annuity payments will continue
for 10 years or the life of the annuitant, if longer. Treasury Department
regulations may preclude the availability of certain annuity options in
connection with certain qualified contracts. Thus, for example, in the case of
contracts or certificates issued as IRAs, the co-annuitant referred to in
options 2(a) and 2(b) must be the owner's spouse, the life expectancy of the
annuitant in option 1(b) and of the joint annuitants in option 2(b) must be at
least ten years, and options 3, 4, and 5 are available only with the consent of
the Company.
The following annuity options are guaranteed in the contract:
Option 1(a): Non-Refund Life Annuity - An annuity with payments during
the lifetime of the annuitant. No payments are due after the death of the
annuitant. Since there is no guarantee that any minimum number of payments
will be made, an annuitant may receive only one payment if the annuitant dies
prior to the date the second payment is due.
Option 1(b): Life Annuity with Payments Guaranteed for 10 Years - An
annuity with payments guaranteed for 10 years and continuing thereafter during
the lifetime of the annuitant. Since payments are guaranteed for 10 years,
annuity payments will be made to the end of such period if the annuitant dies
prior to the end of the tenth year.
Option 2(a): Joint & Survivor Non-Refund Life Annuity - An annuity
with payments during the lifetimes of the annuitant and a designated
co-annuitant. No payments are due after the death of the last survivor of the
annuitant and co-annuitant. Since there is no guarantee that any minimum
number of payments will be made, an annuitant or co-annuitant may receive only
one payment if the annuitant and co-annuitant die prior to the date the second
payment is due.
Option 2(b): Joint & Survivor Life Annuity with Payments Guaranteed
for 10 Years - An annuity with payments guaranteed for 10 years and continuing
thereafter during the lifetimes of the annuitant and a designated co-annuitant.
Since payments are guaranteed for 10 years, annuity payments will be made to
the end of such period if both the annuitant and the co-annuitant die prior to
the end of the tenth year.
In addition to the foregoing annuity options which the Company is
contractually obligated to offer at all times, the Company currently offers the
following annuity options. The Company may cease offering the following
annuity options at any time and may offer other annuity options in the future.
Option 3: Life annuity with Payments Guaranteed for 5, 10, 15 or 20
Years - An annuity with payments guaranteed for 5,
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10, 15 or 20 years and continuing thereafter during the lifetime of the
annuitant. Since payments are guaranteed for the specific number of years,
annuity payments will be made to the end of the last year of the 5, 10, 15 or
20 year period.
Option 4: Joint & Two-Thirds Survivor Non-Refund Life Annuity - An
annuity with full payments during the joint lifetime of the annuitant and a
designated co-annuitant and two-thirds payments during the lifetime of the
survivor. Since there is no guarantee that any minimum number of payments will
be made, an annuitant or co-annuitant may receive only one payment if the
annuitant and co-annuitant die prior to the date the second payment is due.
Option 5: Period Certain Only Annuity for 5, 10, 15 or 20 years - An
annuity with payments for a 5, 10, 15 or 20 year period and no payments
thereafter.
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DETERMINATION OF AMOUNT OF THE FIRST VARIABLE ANNUITY PAYMENT
The first variable annuity payment is determined by applying that
portion of the contract value used to purchase a variable annuity, measured as
of a date not more than ten business days prior to the maturity date (minus any
applicable premium taxes), to the annuity tables contained in the contract and
the certificate. The rates contained in such tables depend upon the
annuitant's age (as adjusted depending on the annuitant's year of birth) and
the annuity option selected. Under such tables, the longer the life expectancy
of the annuitant under any life annuity option or the duration of any period
for which payments are guaranteed under the option, the smaller will be the
amount of the first monthly variable annuity payment. The rates are based on
the 1983 Table A projected at Scale G, assume births in year 1942 and reflect
an assumed interest rate of 3% per year
ANNUITY UNITS AND THE DETERMINATION OF SUBSEQUENT VARIABLE ANNUITY PAYMENTS
Variable annuity payments subsequent to the first will be based on the
investment performance of the sub-accounts selected by the owner. The amount
of such subsequent payments is determined by dividing the amount of the first
annuity payment from each sub-account by the annuity unit value of such
sub-account (as of the same date the contract value used to effect annuity
payments under a certificate was determined) to establish the number of annuity
units which will thereafter be used to determine payments. This number of
annuity units for each sub-account is then multiplied by the appropriate
annuity unit value as of a uniformly applied date not more than ten business
days before the annuity payment is due, and the resulting amounts for each
sub-account selected by the owner are then totaled to arrive at the amount of
the payment to be made. The number of annuity units remains constant during
the annuity payment period. A pro-rata portion of the administration fee will
be deducted from each annuity payment.
The value of an annuity unit for each sub-account for any valuation
period is determined by multiplying the annuity unit value for the immediately
preceding valuation period by the net investment factor for that sub-account
(see "NET INVESTMENT FACTOR") for the valuation period for which the annuity
unit value is being calculated and by a factor to neutralize the assumed
interest rate.
A 3% assumed interest rate is built into the annuity tables in the
contract used to determine the first variable annuity payment. A higher
assumption would mean a larger first annuity payment, but more slowly rising
subsequent payments when actual investment performance exceeds the assumed
rate, and more rapidly falling subsequent payments when actual investment
performance is less than the assumed rate. A lower assumption would have the
opposite effect. If the actual net investment performance is 3% annually,
annuity payments will be level.
TRANSFERS AFTER MATURITY DATE
Once variable annuity payments have begun, an owner may transfer all
or part of the investment upon which such payments are based from one
sub-account to another. Transfers will be made upon notice to the Company at
least 30 days before the due date of the first annuity payment to which the
change will apply. Transfers after the maturity date will be made by
converting the number of annuity units being transferred by the owner to the
number of annuity units of the sub-account to which the transfer is made, so
that the next annuity payment if it were made at that time would be the same
amount that it would have been without the transfer. Thereafter, annuity
payments will reflect changes in the value of the new annuity units. Once
annuity payments have commenced, no transfers may be made from a fixed annuity
option to a variable annuity option or from a variable annuity option to a
fixed annuity option. The Company reserves the right to limit, upon notice, the
maximum number of transfers an owner may make per contract year to four. In
addition, the Company reserves the right to defer the transfer privilege at any
time that the Company is unable to purchase or redeem shares of the Trust
portfolios. The Company also reserves the right to modify or terminate the
transfer privilege at any time in accordance with applicable law.
DEATH BENEFIT ON OR AFTER MATURITY DATE
If annuity payments have been selected based on an annuity option
providing for payments for a guaranteed period, and the annuitant dies on or
after the maturity date, the Company will make the remaining guaranteed
payments to the beneficiary. Any remaining payments will be made as rapidly as
under the method of distribution being used as of the date of the annuitant's
death. If no beneficiary is living, the Company will commute any unpaid
guaranteed payments to a single sum (on the basis of the interest rate used in
determining the payments) and pay that single sum to the estate of the last to
die of the annuitant and the beneficiary.
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OTHER CONTRACT PROVISIONS
TEN DAY RIGHT TO REVIEW
An owner may return his or her contract or certificate to the
Company's Annuity Service Office or agent at any time within 10 days after
receipt of the contract or certificate. Within 7 days of receipt of the
contract or certificate by the Company, the Company will pay the owner's
contract value, less any debt, computed at the end of the valuation period
during which the contract or certificate is received by the Company, to the
owner.
No charge is imposed upon return of the contract or certificate within
the ten day right to review period. The ten day right to review may vary in
certain states in order to comply with the requirements of insurance laws and
regulations in such states. When the contract or certificate is issued as an
individual retirement annuity under Internal Revenue Code section 408, during
the first 7 days of the 10 day period, the Company will return all purchase
payments if this is greater than the amount otherwise payable.
OWNERSHIP
In the case of an individual annuity contract, the owner is the person
entitled to exercise all rights under the contract. In the case of a group
annuity contract, the contract is owned by the group holder; however, all
contract rights and privileges not expressly reserved to the group holder may
be exercised by each owner as to his or her interest as specified in his or her
certificate. Prior to the maturity date, an owner is the person designated on
the specifications page of the contract or certificate or as subsequently
named. On and after the maturity date, the annuitant is the owner. If amounts
become payable under the contract to any beneficiary, the beneficiary is the
owner.
In the case of non-qualified contracts, an owner's interest in a
contract may be changed, or a certificate or individual contract may be
collaterally assigned, at any time prior to the maturity date, subject to the
rights of any irrevocable beneficiary. Ownership of a group contract may be
assigned at any time by the group holder. Assigning a contract or interest
therein, or changing the ownership of a contract, may be treated as a
distribution of the contract value for Federal tax purposes. A change of any
owner may result in resetting the death benefit to an amount equal to the
contract value as of the date of the change and treating such value as a
purchase payment made on that date for purposes of computing the amount of the
death benefit. See "DEATH BENEFIT BEFORE MATURITY DATE"
Any change of ownership or assignment must be made in writing. Any
change must be approved by the Company. Any assignment and any change, if
approved, will be effective as of the date the Company receives the request at
its Annuity Service Office. The Company assumes no liability for any payments
made or actions taken before a change is approved or an assignment is accepted
or responsibility for the validity or sufficiency of any assignment. An
absolute assignment will revoke the interest of any revocable beneficiary.
In the case of qualified contracts, ownership of the contract or an
owner's interest in the contract generally may not be transferred except to the
trustee of an exempt employees' trust which is part of a retirement plan
qualified under Section 401 of the Internal Revenue Code or as otherwise
permitted by applicable IRS regulations. Subject to the foregoing, an owner's
interest in a qualified contract may not be sold, assigned, transferred,
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
the Company.
BENEFICIARY
The beneficiary is the person, persons or entity designated on the
contract or certificate specifications page or as subsequently named. However,
if there is a surviving owner, that person will be treated as the beneficiary.
The beneficiary may be changed subject to the rights of any irrevocable
beneficiary. Any change must be made in writing, approved by the Company and
if approved, will be effective as of the date on which written. The Company
assumes no liability for any payments made or actions taken before the change
is approved. If no beneficiary is living, the contingent beneficiary will be
the beneficiary. The interest of any beneficiary is subject to that of any
assignee. If no beneficiary or contingent beneficiary is living, the
beneficiary is the estate of the deceased owner. In the case of certain
qualified contracts or certificates, regulations promulgated by the Treasury
Department prescribe certain limitations on the designation of a beneficiary.
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ANNUITANT
The annuitant is any natural person or persons whose life is used to
determine the duration of annuity payments involving life contingencies. If
the owner names more than one person as an "annuitant," the second person named
shall be referred to as "co-annuitant." The annuitant is as designated on the
contract or certificate specifications page, unless changed.
On the death of the annuitant, the co-annuitant, if living, becomes
the annuitant. If there is no living co-annuitant, the owner becomes the
annuitant. In the case of certain qualified contracts, there are limitations
on the ability to designate and change the annuitant and the co-annuitant.
Thus, in the case of an IRA, the owner and annuitant must be the same person
and the annuitant cannot be changed.
MODIFICATION
The contract or certificate may not be modified by the Company without
the consent of the group holder or the owner, as applicable, except as may be
required to make it conform to any law or regulation or ruling issued by a
governmental agency. However, in the case of group contracts, on 60 days'
notice to the group holder, the Company may change the administration fees,
mortality and expense risk charges, annuity purchase rates and the market value
charge as to any certificates issued after the effective date of the
modification. The provisions of the contract shall be interpreted so as to
comply with the requirements of Section 72(s) of the Internal Revenue Code.
DISCONTINUANCE OF NEW OWNERS
In the case of group contracts, on thirty days' notice to the group
holder, the Company may limit or discontinue acceptance of new applications and
the issuance of new certificates.
MISSTATEMENT AND PROOF OF AGE, SEX OR SURVIVAL
The Company may require proof of age, sex or survival of any person
upon whose age, sex or survival any payment depends. If the age or sex of the
annuitant has been misstated, the benefits will be those that would have been
provided for the annuitant's correct age and sex. If the Company has made
incorrect annuity payments, the amount of any underpayment will be paid
immediately and the amount of any overpayment will be deducted from future
annuity payments.
FIXED ACCOUNT INVESTMENT OPTIONS
Due to certain exemptive and exclusionary provisions, interests in the
fixed account investment options are not registered under the Securities Act of
1933, as amended ("1933 Act") and the Company's general account is not
registered as an investment company under the 1940 Act. Accordingly, neither
interests in the fixed account investment options nor the general account are
subject to the provisions or restrictions of the 1933 Act or the 1940 Act and
the staff of the Commission has not reviewed the disclosures in this Prospectus
relating thereto. Disclosures relating to interests in the fixed account
investment options and the general account, however, may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy of statements made in a registration statement.
Pursuant to a Guarantee Agreement dated March 31, 1996, Manulife, the
ultimate parent of the Company, unconditionally guarantees to the Company on
behalf of and for the benefit of the Company and owners and groupholders of
fixed annuity contracts issued by the Company that it will, on demand, make
funds available to the Company for the timely payment of contractual claims
under fixed annuity contracts issued after June 27,1984. This Guarantee covers
the fixed portion of the contracts described by this Prospectus. This
Guarantee may be terminated by Manulife on notice to the Company. Termination
will not affect Manulife's continuing liability with respect to all fixed
annuity contracts issued prior to the termination of the Guarantee except if:
(i) the liability to pay contractual claims under the contracts is assumed by
another insurer or (ii) the Company is sold and the buyer's guarantee is
substituted for the Manulife guarantee.
Effective June 30, 1995, the "Company entered into a Reinsurance
Agreement with Peoples Security Life Insurance Company ("Peoples") pursuant to
which Peoples reinsures certain amounts with respect to the fixed account
portion of the contracts described in this Prospectus. Under this Reinsurance
Agreement, the Company remains liable for the contractual obligations of the
contracts' fixed account and Peoples agrees to reimburse the Company for
certain amounts and obligations in connection with the
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fixed account. Peoples contractual liability runs solely to the Company, and
no contract owner shall have any right of action against Peoples. Peoples is a
wholly-owned subsidiary of Louisville, Kentucky based Providian Corporation, a
diversified financial services corporation.
Investment Options. Currently there are four fixed account investment
options under the contract: one, three, five and seven year investment
accounts. The Company may offer additional fixed account investment options
for any yearly period from two to ten years. Fixed investment accounts provide
for the accumulation of interest on purchase payments at guaranteed rates for
the duration of the guarantee period. The guaranteed interest rates on new
amounts allocated or transferred to a fixed investment account are determined
from time-to-time by the Company in accordance with market conditions. In no
event will the guaranteed rate of interest be less than 3%. Once an interest
rate is guaranteed for a fixed investment account, it is guaranteed for the
duration of the guarantee period and may not be changed by the Company.
Investment Accounts. Owners may allocate purchase payments, or make
transfers from their variable investment options, to fixed account investment
options at any time prior to the maturity date. The Company establishes a
separate investment account each time an owner allocates or transfers amounts
to a fixed account investment option, except that amounts allocated or
transferred to the same fixed account investment option on the same day will
establish a single investment account. Amounts may not be allocated to a fixed
account investment option that would extend the guarantee period beyond the
maturity date.
Renewals. At the end of a guarantee period, an owner may establish a
new investment account with the same guarantee period at the then current
interest rate, select a different fixed account investment option or transfer
the amounts to a variable account investment option, all without the imposition
of any charge. An owner may not select a guarantee period that would extend
beyond the maturity date. In the case of renewals within one year of the
maturity date, the only fixed account investment option available is to have
interest accrued up to the maturity date at the then current interest rate for
one year guarantee periods.
If an owner does not specify the renewal option desired, the Company
will select the same guarantee period as has just expired, so long as such
period does not extend beyond the maturity date. In the event a renewal would
extend beyond the maturity date, the Company will select the longest period
that will not extend beyond such date, except in the case of a renewal within
one year of the maturity date in which case the Company will credit interest up
to the maturity date at the then current interest rate for one year guarantee
periods.
Market Value Charge. Any amount withdrawn, transferred or borrowed
from an investment account prior to the end of the guarantee period may be
subject to a market value charge. A market value charge will be calculated
separately for each investment account affected by a transaction to which a
market value charge may apply. The market value charge for an investment
account will be calculated by multiplying the amount withdrawn or transferred
from the investment account by the adjustment factor described below. In the
case of group contracts the Company reserves the right to modify the market
value charge as to any certificates issued after the effective date of a charge
specified in written notice to the group holder.
The adjustment factor is determined by the following formula:
0.75x(B-A)xC/12 where:
A - The guaranteed interest rate on the investment account.
B - The guaranteed interest rate available, on the date the
request is processed, for amounts allocated to a new
investment account with the same length of guarantee period
as the investment account from which the amounts are being
withdrawn.
C - The number of complete months remaining to the end of the
guarantee period.
For purposes of applying this calculation, the maximum difference
between "B" and "A" will be 3%. The adjustment factor may never be less than
zero.
The total market value charge will be the sum of the market value
charges for each investment account being withdrawn. Where the guaranteed rate
available on the date of the request is less than the rate guaranteed on the
investment account from which the amounts are being withdrawn (B-A in the
adjustment factor is negative), there is no market value charge. There is only
a market value charge when interest rates have increased (B-A in the adjustment
factor is positive).
There will be no market value charge on withdrawals from the fixed
account investment options in the following situations: (a) death of the owner:
(b) amounts withdrawn to pay fees or charges; (c) amounts applied at the
maturity date to purchase an
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annuity at the guaranteed rates provided in the contract; (d) amounts withdrawn
from investment accounts within one month prior to the end of the guarantee
period; (e) amounts withdrawn from a one-year fixed investment account; and (f)
amounts withdrawn in any contract year that do not exceed 10% of (i) total
purchase payments less (ii) any prior partial withdrawals in that contract
year.
Notwithstanding application of the foregoing formula, in no event will
the market value charge (i) be greater than the amount by which the earnings
attributable to the amount withdrawn or transferred from an investment account
exceed an annual rate of 3%, (ii) be greater than 10% of the amount transferred
or withdrawn, or (iii) reduce the amount payable on withdrawal or transfer
below the amount required under the non-forfeiture laws of the state with
jurisdiction over the contract.
Transfers. Prior to the maturity date, an owner may transfer amounts
among his or her fixed account investment options and from the fixed account
investment options to his or her variable account investment options, subject
to the following conditions. An amount in a fixed investment account may not be
transferred until held in such account for at least one year, except transfers
may be made pursuant to the Dollar Cost Averaging program. Consequently,
except as noted above, amounts in one year investment accounts effectively may
not be transferred prior to the end of the guarantee period. Amounts in any
other investment accounts may be transferred after the one year holding period
has been satisfied, but the market value charge described above may apply to
such a transfer. The market value charge, if applicable, will be deducted from
the amount transferred.
An owner must specify the fixed account investment option from or to
which a transfer is to be made. Where there are multiple investment accounts
within a fixed account investment option, amounts must be withdrawn from the
fixed account investment option on a first-in-first-out basis.
Withdrawals. An owner may make total and partial withdrawals of
amounts held in his or her fixed account investment options at any time prior
to the earlier of the death of an owner or the maturity date. Withdrawals from
fixed account investment options will be made in the same manner and be subject
to the same limitations as set forth under "WITHDRAWALS" plus the following
provisions also apply to withdrawals from fixed account investment options:
(1) the Company reserves the right to defer payment of amounts withdrawn from
fixed account investment options for up to six months from the date it receives
the written withdrawal request and contract or certificate if required (if a
withdrawal is deferred for more than 30 days pursuant to this right, the
Company will pay interest on the amount deferred at a rate not less than 3% per
year); (2) if there are multiple investment accounts under a fixed account
investment option, amounts must be withdrawn from such accounts on a
first-in-first-out basis; and (3) the market value charge described above may
apply to withdrawals from any investment option except for a one year
investment option. In the event a market value charge applies to a withdrawal
from a fixed investment account, it will be calculated with respect to the full
amount in the investment account and deducted from the amount payable in the
case of a total withdrawal. In the case of a partial withdrawal, the market
value charge will be calculated on the amount requested and deducted, if
applicable, from the remaining investment account value.
Where an owner requests a partial withdrawal in excess of his or her
amounts in the variable account investment options and does not specify the
fixed account investment options from which the withdrawal is to be made, such
withdrawal will be made from his or her investment options beginning with the
shortest guarantee period. Within such sequence, where there are multiple
investment accounts within a fixed account investment option, withdrawals will
be made on a first-in-first-out basis.
Withdrawals from the contract may be subject to income tax and a 10%
penalty tax, and withdrawals are permitted from contracts and certificates
issued in connection with Section 403(b) qualified plans only under limited
circumstances. (See "FEDERAL TAX MATTERS")
Loans. The Company offers a loan privilege only under contracts or
certificates issued in connection with Section 403(b) qualified plans that are
not subject to Title I of ERISA. Where available, owners may obtain loans
using their contract value as the only security for the loan. Owners may
borrow amounts allocated to their fixed investment accounts in the same manner
and subject to the same limitations as set forth under "LOANS." The market
value charge described above may apply to amounts transferred from the fixed
investment accounts to the loan account in connection with such loans and, if
applicable, will be deducted from the amount so transferred.
Fixed Annuity Options. Subject to the distribution of death benefits
provisions (see "DEATH BENEFIT BEFORE MATURITY DATE)", on death, withdrawal or
the maturity date, the proceeds may be applied to a fixed annuity option. (See
"ANNUITY OPTIONS") The amount of each fixed annuity payment is determined by
applying the portion of the proceeds (less any applicable premium taxes)
applied to purchase the fixed annuity to the appropriate table in the contract.
If the table in use by the
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Company is more favorable to the owner, the Company will substitute that table.
The Company guarantees the dollar amount of fixed annuity payments.
CHARGES AND DEDUCTIONS
Charges and deductions are assessed against purchase payments,
contract values or annuity payments. Currently, there are no deductions made
from purchase payments, except for premium taxes in certain states. In
addition, there are deductions from and expenses paid out of the assets of the
Trust portfolios that are described in the accompanying Prospectus of the
Trust.
ADMINISTRATION FEES
Except as noted below, the Company will deduct each year an annual
administration fee of $30 from each owner's contract value as partial
compensation for the cost of providing all administrative services attributable
to the contracts and certificates and the operations of the Variable Account
and the Company in connection with the contracts and certificates. However, if
prior to the maturity date the contract value is greater than or equal to
$100,000 at the time of the fee's assessment, the fee will be waived. Prior to
the maturity date, this administration fee is deducted on the last day of each
contract year. It is withdrawn from each investment option in the same
proportion that the value of such investment option bears to the sum of the
investments options. If an owner's entire contract value is withdrawn on other
than the last day of any contract year, the $30 administration fee will be
deducted from the amount paid. During the annuity period, the fee is deducted
on a pro-rata basis from each annuity payment.
A daily charge in an amount equal to 0.15% of the value of each
variable investment account on an annual basis is also deducted from each
sub-account to reimburse the Company for administrative expenses. This
asset-based administrative charge will not be deducted from the fixed account
investment options. The charge will be reflected in the contract value as a
proportionate reduction in the value of each variable investment account.
Because this portion of the administrative fee is a percentage of assets rather
than a flat amount, larger contract values will in effect pay a higher
proportion of this portion of the administrative expense than smaller contract
values.
The Company does not expect to recover from such fees any amount in
excess of its accumulated administrative expenses. Even though administrative
expenses may increase, the Company guarantees that it will not increase the
amount of the administration fees as to any outstanding individual contracts
or any certificates under group contracts issued prior to the effective date of
the Company's modification of such fees. There is no necessary relationship
between the amount of the administrative charge imposed on a given certificate
and the amount of the expense that may be attributed to that contract or
certificate.
REDUCTION OR ELIMINATION OF ANNUAL ADMINISTRATION FEE
The amount of the annual administration fee on a contract or
certificate may be reduced or eliminated when some or all of the contracts or
certificates are to be sold to a group of individuals in such a manner that
results in savings of administration expenses. The entitlement to such a
reduction or elimination of the administration charges will be determined by
the Company in the following manner:
1. The size and type of group to which administrative services are to
be provided will be considered.
2. The total amount of purchase payments to be received will be
considered.
3. There may be other circumstances of which the Company is not
presently aware, which could result in reduced administrative expense.
If, after consideration of the foregoing factors, it is determined
that there will be a reduction or elimination of administration expenses, the
Company will provide a reduction in the annual administration fee. In no event
will reduction or elimination of the administration fees be permitted where
such reduction or elimination will be unfairly discriminatory to any person.
The Company may waive all or a portion of the administration fee when a
contract or certificate is issued to an officer, director or employee, or
relative thereof, of the Company, Manulife, the Trust or any of their
affiliates.
MORTALITY AND EXPENSE RISK CHARGE
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The mortality risk assumed by the Company is the risk that annuitants
may live for a longer period of time than estimated. The Company assumes this
mortality risk by virtue of annuity rates incorporated into the contract which
cannot be changed in the case of individual contracts or with respect to
existing certificates in the case of group contracts. This assures each
annuitant that his or her longevity will not have an adverse effect on the
amount of annuity payments. Also, the Company guarantees that if an owner dies
before the maturity date, it will pay a death benefit. (See "DEATH BENEFIT
BEFORE MATURITY DATE") The expense risk assumed by the Company is the risk
that the administration charges may be insufficient to cover actual expenses.
To compensate it for assuming these risks, the Company currently
deducts from each of the sub-accounts a daily charge in an amount equal to
0.85% of the value of the variable investment accounts on an annual basis,
consisting of 0.55% for the mortality risk and 0.30% for the expense risk.
The charge will be reflected in each owner's contract value as a proportionate
reduction in the value of each variable investment account. The rate of the
mortality and expense risk charge cannot be increased under an individual
contract. The rate can be increased under a group contract, but only as to
certificates issued after the effective date of the increase and upon 60 days'
prior written notice to the group holder. The Company may issue contracts and
certificates with a mortality or expense risk charge at rates less than those
set out above, if it concludes that the mortality or expense risks of the
groups involved are less than the risks it has determined for persons for whom
the contracts have been generally designed. If the charge is insufficient to
cover the actual cost of the mortality and expense risks undertaken, the
Company will bear the loss. Conversely, if the charge proves more than
sufficient, the excess will be profit to the Company and will be available for
any proper corporate purpose including, among other things, payment of
distribution expenses. On the Period Certain Only Annuity Option, where an
owner elects benefits payable on a variable basis, the mortality and expense
risk charge is assessed although the Company bears only the expense risk and
not any mortality risk. The mortality and expense risk charge is not assessed
against the fixed account investment options.
TAXES
The Company reserves the right to charge, or provide for, certain
taxes against purchase payments (either at the time of payment or liquidation),
contract values, payment of death benefit or annuity payments. Such taxes may
include premium taxes or other taxes levied by any government entity which the
Company determines to have resulted from the (i) establishment or maintenance
of the Variable Account, (ii) receipt by the Company of purchase payments,
(iii) issuance of the contracts or certificates, or (iv) commencement or
continuance of annuity payments under the contracts or certificates. In
addition, the Company will withhold taxes to the extent required by applicable
law.
Except for residents in South Dakota, premium taxes will be deducted
from the contract value used to provide for fixed or variable annuity payments
unless required otherwise by applicable law. The amount deducted will depend on
the premium tax assessed in the applicable state. State premium taxes currently
range from 0% to 3.5% depending on the jurisdiction and the tax status of the
contract and are subject to change by the legislature or other authority. (See
"APPENDIX A: STATE PREMIUM TAXES") FOR RESIDENTS OF SOUTH DAKOTA THE FOLLOWING
PREMIUM TAX ASSESSMENT WILL APPLY: A premium tax will be assessed against all
non-qualified purchase payments received from contract owners who are residents
of South Dakota. The rate of tax is 1.25% for South Dakota residents. In South
Dakota, purchase payments received in connection with the funding of a qualified
plan are exempt from state premium tax.
FEDERAL TAX MATTERS
INTRODUCTION
The following discussion of the federal income tax treatment of the
contract is not exhaustive, does not purport to cover all situations, and is
not intended as tax advice. The federal income tax treatment of a group
annuity contract is unclear in certain circumstances, and a qualified tax
adviser should always be consulted with regard to the application of law to
individual circumstances. This discussion is based on the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Department regulations, and
interpretations existing on the date of this Prospectus. These authorities,
however, are subject to change by Congress, the Treasury Department, and
judicial decisions. References below to the contract generally include the
certificate in the case of group contracts.
This discussion does not address state or local tax consequences
associated with the purchase of a contract. In addition, THE COMPANY MAKES NO
GUARANTEE REGARDING ANY TAX TREATMENT -- FEDERAL, STATE OR LOCAL -- OF ANY
CONTRACT OR OF ANY TRANSACTION INVOLVING A CONTRACT.
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THE COMPANY'S TAX STATUS
The Company is taxed as a life insurance company under the Code.
Since the operations of the Variable Account are a part of, and are taxed with,
the operations of the Company, the Variable Account is not separately taxed as
a "regulated investment company" under the Code. Under existing federal income
tax laws, investment income and capital gains of the Variable Account are not
taxed to the extent they are applied under a contract. The Company does not
anticipate that it will incur any federal income tax liability attributable to
such income and gains of the Variable Account, and therefore the Company does
not intend to make provision for any such taxes. If the Company is taxed on
investment income or capital gains of the Variable Account, then the Company
may impose a charge against the Variable Account in order to make provision for
such taxes.
TAXATION OF ANNUITIES IN GENERAL
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any
increase in an owner's contract value is generally not taxable to the owner or
annuitant until received, either in the form of annuity payments as
contemplated by the contract, or in some other form of distribution. However,
certain requirements must be satisfied in order for this general rule to apply,
including: (1) the contract must be owned by an individual (or treated as owned
by an individual), (2) the investments of the Variable Account must be
"adequately diversified" in accordance with Treasury Department regulations,
(3) the Company, rather than the owner, must be considered the owner of the
assets of the Variable Account for federal tax purposes, and (4) the contract
must provide for appropriate amortization, through annuity payments, of the
contract's purchase payments and earnings, e.g., the maturity date must not
occur at too advanced an age.
Non-Natural Owners. As a general rule, deferred annuity contracts
held by "non-natural persons" such as a corporation, trust or other similar
entity, as opposed to a natural person, are not treated as annuity contracts
for federal tax purposes. The investment income on such contracts is taxed as
ordinary income that is received or accrued by the owner during the taxable
year. There are several exceptions to this general rule for non-natural
owners. First, contracts will generally be treated as held by a natural person
if the nominal owner is a trust or other entity which holds the contract as an
agent for a natural person. Thus, if a group annuity contract is held by a
trustee, contract owners who are individuals should be treated as owning an
annuity contract for federal tax purposes. However, this special exception
will not apply in the case of any employer who is the nominal owner of an
annuity contract under a non-qualified deferred compensation arrangement for
its employees.
In addition, exceptions to the general rule for non-natural owners
will apply with respect to (1) contracts acquired by an estate of a decedent by
reason of the death of the decedent, (2) certain qualified contracts, (3)
certain annuities purchased by employers upon the termination of certain
qualified plans, (4) certain annuities used in connection with structured
settlement agreements, and (5) annuities purchased with a single premium when
the annuity starting date (as defined in the tax law) is no later than a year
from purchase of the annuity and substantially equal periodic payments are
made, not less frequently than annually, during the annuity period.
Diversification Requirements. For a contract to be treated as an
annuity contract for federal income tax purposes, the investments of the
Variable Account must be "adequately diversified" in accordance with Treasury
Department regulations. The Secretary of the Treasury has issued regulations
which prescribe standards for determining whether the investments of the
Variable Account are "adequately diversified." If the Variable Account failed
to comply with these diversification standards, a contract would not be treated
as an annuity contract for federal income tax purposes and an owner would be
taxable currently on the excess of his or her contract value over the premiums
he or she paid for the contract.
Although the Company does not control the investments of the Trust, it
expects that the Trust will comply with such regulations so that the Variable
Account will be considered "adequately diversified."
Ownership Treatment. In certain circumstances, a variable annuity
owner may be considered the owner, for federal income tax purposes, of the
assets of the separate account used to support his or her contract. In those
circumstances, income and gains from such separate account assets would be
includible in the variable annuity owner's gross income. The Internal Revenue
Service (the "Service") has stated in published rulings that a variable annuity
owner will be considered the owner of separate account assets if the owner
possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. In addition,
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the Treasury Department announced, in connection with the issuance of
regulations concerning investment diversification, that those regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." This announcement also stated that guidance would be issued by way
of regulations or rulings on the "extent to which policyholders may direct
their investments to particular sub-accounts [of a separate account] without
being treated as owners of the underlying assets." As of the date of this
Prospectus, no such guidance has been issued.
The ownership rights under this contract are similar to, but different
in certain respects from, those described by the Service in rulings in which it
was determined that policyholders were not owners of separate account assets.
For example, an owner under this contract has the choice of many more
investment options to which to allocate premiums and contract values, and may
be able to transfer among investment options more frequently than in such
rulings. These differences could result in the owner being treated as the
owner of the assets of the Variable Account and thus subject to current
taxation on the income and gains from those assets. In addition, the Company
does not know what standards will be set forth in the regulations or rulings
which the Treasury Department has stated it expects to issue. The Company
therefore reserves the right to modify the contract as necessary to attempt to
prevent owners from being considered the owners of the assets of the Variable
Account.
Delayed Maturity Dates. If the maturity date occurs (or is scheduled
to occur) at a time when the annuitant has reached an advanced age, e.g., past
age 85, it is possible that the contract would not be treated as an annuity for
federal income tax purposes. In that event, the income and gains under the
contract could be currently includible in the owner's income.
The remainder of this discussion assumes that the contract will be
treated as an annuity contract for federal income tax purposes and that the
Company will be treated as the owner of the Variable Account assets.
TAXATION OF PARTIAL AND FULL WITHDRAWALS
In the case of a partial withdrawal, amounts received are includible
in income to the extent the owner's contract value before the withdrawal
exceeds his or her "investment in the contract." In the case of a full
withdrawal, amounts received are includible in income to the extent they exceed
the "investment in the contract." For these purposes the investment in the
contract at any time equals the total of the purchase payments made under the
contract to that time (to the extent such payments were neither deductible when
made nor excludable from income as, for example, in the case of certain
contributions to qualified plans) less any amounts previously received from the
contract which were not included in income.
Other than in the case of certain qualified contracts, any amount
received as a loan under a contract, and any assignment or pledge (or agreement
to assign or pledge) any portion of the contract value, is treated as a
withdrawal of such amount or portion. (Loans, assignments and pledges are
permitted only in limited circumstances under qualified contracts.) The
investment in the contract is increased by the amount includible in income with
respect to such assignment or pledge, though it is not affected by any other
aspect of the assignment or pledge (including its release). If an individual
transfers his or her interest in a contract without adequate consideration to a
person other than the owner's spouse (or to a former spouse incident to
divorce), the owner will be taxed on the difference between his or her contract
value and the "investment in the contract" at the time of transfer. In such
case, the transferee's investment in the contract will be increased to reflect
the increase in the transferor's income.
There may be special income tax issues present in situations where the
owner and the annuitant are not the same person and are not married to one
another. A tax advisor should be consulted in those situations.
TAXATION OF ANNUITY PAYMENTS
Normally, the portion of each annuity payment taxable as ordinary
income is equal to the excess of the payment over the exclusion amount. In the
case of variable annuity payments, the exclusion amount is the "investment in
the contract" (defined above) allocated to the variable annuity option,
adjusted for any period certain or refund feature, when payments begin to be
made divided by the number of payments expected to be made (determined by
Treasury Department regulations which take into account the annuitant's life
expectancy and the form of annuity benefit selected). In the case of fixed
annuity payments, the exclusion amount is the amount determined by multiplying
(1) the payment by (2) the ratio of the investment in the contract allocated to
the fixed annuity option, adjusted for any period certain or refund feature, to
the total expected value of annuity payments for the term of the contract
(determined under Treasury Department regulations). A simplified method of
determining the taxable portion of annuity payments applies to contracts issued
in connection with certain qualified plans other than IRAs.
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<PAGE> 37
Once the total amount of the investment in the contract is excluded
using these ratios, annuity payments will be fully taxable. If annuity
payments cease because of the death of the annuitant and before the total
amount of the investment in the contract is recovered, the unrecovered amount
generally will be allowed as a deduction to the annuitant in his or her last
taxable year.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a contract because of the death of an
owner or an annuitant. Prior to the maturity date, such death benefit proceeds
are includible in income as follows: (1) if distributed in a lump sum, they are
taxed in the same manner as a full withdrawal, as described above, or (2) if
distributed under an annuity option, they are taxed in the same manner as
annuity payments, as described above. After the maturity date, where a
guaranteed period exists under an annuity option and the annuitant dies before
the end of that period, payments made to the beneficiary for the remainder of
that period are includible in income as follows: (1) if received in a lump sum,
they are includible in income to the extent that they exceed the unrecovered
investment in the contract at that time, or (2) if distributed in accordance
with the existing annuity option selected, they are fully excludable from
income until the remaining investment in the contract is deemed to be
recovered, and all annuity payments thereafter are fully includible in income.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
There is a 10% penalty tax on the taxable amount of any payment from a
non-qualified contract unless the payment is: (a) received on or after the
owner reaches age 59 1/2; (b) attributable to the owner's becoming disabled (as
defined in the tax law); (c) made to a beneficiary on or after the death of the
owner or, if the owner is not an individual, on or after the death of the
primary annuitant (as defined in the tax law); (d) made as a series of
substantially equal periodic payments (not less frequently than annually) for
the life (or life expectancy) of the annuitant or for the joint lives (or joint
life expectancies) of the annuitant and designated beneficiary (as defined in
the tax law); (e) made under a contract purchased with a single premium when
the annuity starting date (as defined in the tax law) is no later than a year
from purchase of the contract and substantially equal periodic payments are
made, not less frequently than annually, during the annuity period; or (f) made
with respect to certain annuities issued in connection with structured
settlement agreements. (A similar penalty tax, applicable to distributions
from certain qualified contracts, is discussed below.)
AGGREGATION OF CONTRACTS
In certain circumstances, the amount of an annuity payment or a
withdrawal from a contract that is includible in income may be determined by
combining some or all of the non-qualified certificates and annuity contracts
owned by an individual. For example, if a person purchases a contract offered
by this Prospectus and also purchases at approximately the same time an
immediate annuity, the Service may treat the two contracts as one contract. In
addition, if a person purchases two or more deferred annuity contracts from the
same insurance company (or its affiliates) during any calendar year, all such
contracts will be treated as one contract. The effects of such aggregation are
not clear; however, it could affect the amount of a withdrawal or an annuity
payment that is taxable and the amount which might be subject to the penalty
tax described above.
LOSS OF INTEREST DEDUCTION WHERE CONTRACTS ARE HELD BY OR FOR THE BENEFIT OF
CERTAIN NON-NATURAL PERSONS
In the case of contracts issued after June 8, 1997 to a non-natural
taxpayer (such as a corporation or a trust), or held for the benefit of such an
entity, recent changes in the tax law may result in otherwise deductible
interest no longer being deductible by the entity, regardless of whether the
debt is used to purchase or carry the contract. However, this interest
deduction disallowance does not affect contracts where the income on such
contracts is treated as ordinary income that is received or accrued by the
owner during the taxable year. Entities that are considering purchasing the
contract, or entities that will be beneficiaries under a contract, should
consult a tax adviser.
QUALIFIED RETIREMENT PLANS
The contracts are also designed for use in connection with certain
types of retirement plans which receive favorable treatment under the Code.
Numerous special tax rules apply to the participants in such qualified plans
and to the contracts used in connection with such qualified plans. Therefore,
no attempt is made in this Prospectus to provide more than general information
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<PAGE> 38
about use of the contract with the various types of qualified plans.
The tax rules applicable to qualified plans vary according to the type
of plan and the terms and conditions of the plan itself. For example, for both
withdrawals and annuity payments under certain qualified contracts, there may
be no "investment in the contract" and the total amount received may be
taxable. Also, loans from qualified contracts, where allowed, are subject to a
variety of limitations, including restrictions as to the amount that may be
borrowed, the duration of the loan, and the manner in which the loan must be
repaid. (Owners should always consult their tax advisors and retirement plan
fiduciaries prior to exercising their loan privileges.) Both the amount of the
contribution that may be made, and the tax deduction or exclusion that the
owner may claim for such contribution, are limited under qualified plans. If
this contract is used in connection with a qualified plan, the owner and
annuitant must be the same individual. If a co-annuitant is named, all
distributions made while the annuitant is alive must be made to the annuitant.
Also, if a co-annuitant is named who is not the annuitant's spouse, the annuity
options which are available may be limited, depending on the difference in ages
between the annuitant and co-annuitant. Furthermore, the length of any
guarantee period may be limited in some circumstances to satisfy certain
minimum distribution requirements under the Code.
In addition, special rules apply to the time at which distributions
must commence and the form in which the distributions must be paid. For
example, failure to comply with minimum distribution requirements applicable to
IRAs and other qualified plans will result in the imposition of an excise tax.
This excise tax generally equals 50% of the amount by which a minimum required
distribution exceeds the actual distribution from the qualified plan. In the
case of IRAs, distributions of minimum amounts (as specified in the tax law)
must generally commence by April 1 of the calendar year following the calendar
year in which the owner attains age 70 1/2. In the case of certain other
qualified plans, distributions of such minimum amounts generally must commence
by the later of this date or April 1 of the calendar year following the
calendar year in which the employee retires.
There is also a 10% penalty tax on the taxable amount of any payment
from certain qualified contracts (but not section 457 plans). (The amount of
the penalty tax is 25% of the taxable amount of any payment received from a
"SIMPLE retirement account" during the 2-year period beginning on the date the
individual first participated in any qualified salary reduction agreement (as
defined in the tax law) maintained by the individual's employer.) There are
exceptions to this penalty tax which vary depending on the type of qualified
plan. In the case of an IRA, including a "SIMPLE IRA," exceptions provide that
the penalty tax does not apply to a payment (a) received on or after the owner
reaches age 59 1/2, (b) received on or after the owner's death or because of
the owner's disability (as defined in the tax law), or (c) made as a series of
substantially equal periodic payments (not less frequently than annually) for
the life (or life expectancy) of the owner or for the joint lives (or joint
life expectancies) of the owner and designated beneficiary (as defined in the
tax law). These exceptions, as well as certain others not described herein,
generally apply to taxable distributions from other qualified plans (although,
in the case of plans qualified under sections 401 and 403, exception "c" above
for substantially equal periodic payments applies only if the owner has
separated from service). In addition, the penalty tax does not apply to
certain distributions from IRAs taken after December 31, 1997 which are used
for qualified first time home purchases or for higher education expenses.
Special conditions must be met to qualify for these two exceptions to the
penalty tax. Owners wishing to take a distribution from an IRA for these
purposes should consult their tax adviser.
When issued in connection with a qualified plan, a contract will be
amended as generally necessary to conform to the requirements of the type of
plan. However, owners, annuitants, and beneficiaries are cautioned that the
rights of any person to any benefits under qualified plans may be subject to
the terms and conditions of the plans themselves, regardless of the terms and
conditions of the contract and certificate. In addition, the Company shall not
be bound by terms and conditions of qualified plans to the extent such terms
and conditions contradict the contract or certificate, unless the Company
consents.
QUALIFIED PLAN TYPES
Following are brief descriptions of various types of qualified plans
in connection with which the Company may issue a contract.
Individual Retirement Annuities. Section 408 of the Code permits
eligible individuals to contribute to an individual retirement program known as
an IRA. IRAs are subject to limits on the amounts that may be contributed
(generally, the lesser of $2000 or 100% of earned income), the persons who may
be eligible and on the time when distributions may commence. Also,
distributions from certain other types of qualified retirement plans may be
"rolled over" on a tax-deferred basis into an IRA. The contribution limits do
not apply to such rollover amounts. The contract may not be used in connection
with an "Education IRA."
Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code
allows employers to establish simplified
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<PAGE> 39
employee pension plans for their employees, using the employees' IRAs for such
purposes, if certain criteria are met. Under these plans the employer may,
within specified limits, make deductible contributions on behalf of the
employees to IRAs. Employers intending to use the contract in connection with
such plans should seek competent advice.
SIMPLE IRAs. Section 408(p) of the Code permits certain small
employers to establish "SIMPLE retirement accounts," including SIMPLE IRAs, for
their employees. Under SIMPLE IRAs, certain deductible contributions are made
by both employees and employers. SIMPLE IRAs are subject to various
requirements, including limits on the amounts that may be contributed, the
persons who may be eligible, and the time when distributions may commence.
Employees intending to use the contract in connection with such plans should
seek competent advice.
Corporate and Self-Employed ("H.R. 10" and "Keogh") Pension and
Profit-Sharing Plans. Sections 401(a) and 403(a) of the Code permit corporate
employers to establish various types of tax-favored retirement plans for
employees. The Self-Employed Individuals' Tax Retirement Act of 1962, as
amended, commonly referred to as "H.R. 10" or "Keogh," permits self-employed
individuals also to establish such tax-favored retirement plans for themselves
and their employees. Such retirement plans may permit the purchase of the
contract in order to provide benefits under the plans. Employers intending to
use the contract in connection with such plans should seek competent advice.
Tax-Sheltered Annuities. Section 403(b) of the Code permits public
school employees and employees of certain types of charitable, educational and
scientific organizations specified in Section 501(c)(3) of the Code to have
their employers purchase annuity contracts for them and, subject to certain
limitations, to exclude the amount of purchase payments from gross income for
tax purposes. These annuity contracts are commonly referred to as
"tax-sheltered annuities." Purchasers of the contracts for such purposes
should seek competent advice as to eligibility, limitations on permissible
amounts of purchase payments and other tax consequences associated with the
contracts.
Tax-sheltered annuity contracts must contain restrictions on
withdrawals of (i) contributions made pursuant to a salary reduction agreement
in years beginning after December 31, 1988, (ii) earnings on those
contributions, and (iii) earnings after 1988 on amounts attributable to salary
reduction contributions (and earnings on those contributions) held as of the
last day of the year beginning before January 1, 1989. These amounts can be
paid only if the employee has reached age 59 1/2, separated from service, died,
or become disabled (within the meaning of the tax law), or in the case of
hardship (within the meaning of the tax law). Amounts permitted to be
distributed in the event of hardship are limited to actual contributions;
earnings thereon cannot be distributed on account of hardship. Amounts subject
to the withdrawal restrictions applicable to section 403(b)(7) custodial
accounts may be subject to more stringent restrictions. (These limitations on
withdrawals do not apply to the extent the Company is directed to transfer some
or all of the contract value to the issuer of another tax-sheltered annuity or
into a section 403(b)(7) custodial account.)
Deferred Compensation Plans of State and Local Governments and
Tax-Exempt Organizations. Section 457 of the Code permits employees of state
and local governments and tax-exempt organizations to defer a portion of their
compensation without paying current taxes. The employees must be participants
in an eligible deferred compensation plan. Generally, a contract purchased by
a state or local government or a tax-exempt organization will not be treated as
an annuity contract for federal income tax purposes. Those who intend to use
the contracts in connection with such plans should seek competent advice.
DIRECT ROLLOVERS
If the contract is used in connection with a retirement plan that is
qualified under sections 401(a), 403(a), or 403(b) of the Code, any "eligible
rollover distribution" from the contract will be subject to "direct rollover"
and mandatory withholding requirements. An eligible rollover distribution
generally is any taxable distribution from such qualified plans, excluding
certain amounts such as (i) minimum distributions required under section
401(a)(9) of the Code, and (ii) certain distributions for life, life
expectancy, or for 10 years or more which are part of a "series of
substantially equal periodic payments."
Under these requirements, federal income tax equal to 20% of the
eligible rollover distribution will be withheld from the amount of the
distribution. Unlike withholding on certain other amounts distributed from the
contract, discussed below, the owner cannot elect out of withholding with
respect to an eligible rollover distribution. However, this 20% withholding
will not apply if, instead of receiving the eligible rollover distribution, the
distributee elects to have it directly transferred to certain qualified
plans. Prior to receiving an eligible rollover distribution, a notice will be
provided explaining generally the direct rollover and mandatory withholding
requirements and how to avoid the 20% withholding by electing a direct
rollover.
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FEDERAL INCOME TAX WITHHOLDING
The Company will withhold and remit to the U.S. government a part of
the taxable portion of each distribution made under a contract unless the
distributee notifies the Company at or before the time of the distribution that
he or she elects not to have any amounts withheld. In certain circumstances,
the Company may be required to withhold tax, as explained above. The
withholding rates applicable to the taxable portion of periodic annuity
payments (other than eligible rollover distributions) are the same as the
withholding rates generally applicable to payments of wages. In addition, the
withholding rate applicable to the taxable portion of non-periodic payments
(including withdrawals prior to the maturity date) is 10%. As discussed above,
the withholding rate applicable to eligible rollover distributions is 20%.
GENERAL MATTERS
TAX DEFERRAL
The status of the contract as an annuity generally allows all earnings
on the underlying investments to be tax-deferred until withdrawn or until
annuity payments begin. (See "FEDERAL TAX MATTERS") This tax deferred
treatment may be beneficial to owners in building assets in a long-term
investment program.
PERFORMANCE DATA
Each of the sub-accounts may in its advertising and sales materials
quote total return figures. The sub-accounts may advertise both "standardized"
and "non-standardized" total return figures, although standardized figures will
always accompany non-standardized figures. Non-standardized total return
figures may be quoted assuming both (i) redemption at the end of the time
period and (ii) not assuming redemption at the end of the time period.
Standardized figures include total return figures from: (i) the inception date
of the sub-account of the Variable Account which invests in the portfolio or
(ii) ten years, whichever period is shorter. Non-standardized figures include
total return numbers from: (i) inception date of the portfolio or (ii) ten
years, whichever period is shorter. Such figures will always include the
average annual total return for recent one year and, when applicable, five and
ten year periods and, where less than ten years, the inception date of the sub-
account, in the case of standardized returns, and the inception date of the
portfolio, in the case of nonstandardized returns. Where the period since
inception is less than one year, the total return quoted will be the aggregate
return for the period. The average annual total return is the average annual
compounded rate of return that equates a purchase payment to the market value
of such purchase payment on the last day of the period for which such return is
calculated. The aggregate total return is the percentage change (not
annualized) that equates a purchase payment to the market value of such
purchase payment on the last day of the period for which such return is
calculated. For purposes of the calculations it is assumed that an initial
payment of $1,000 is made on the first day of the period for which the return
is calculated. For total return figures quoted for periods prior to the
commencement of the offering of this contract, standardized performance data
will be the historical performance of the Trust portfolio from the date the
applicable sub-account of the Variable Account first became available for
investment under other contracts offered by the Company, adjusted to reflect
current contract charges. In the case of non-standardized performance,
performance figures will be the historical performance of the Trust portfolio
from the inception date of the portfolio (or in the case of the Trust
portfolios created in connection with the merger of Manulife Series Fund, Inc.
into the Trust, the inception date of the applicable predecessor Manulife
Series Fund portfolio), adjusted to reflect current contract charges. Past
performance figures quoted are not intended to indicate future performance of
any sub-account. More detailed information on the computations is set forth in
the Statement of Additional Information.
FINANCIAL STATEMENTS
Financial Statements for the Variable Account and the Company are
contained in the Statement of Additional Information.
ASSET ALLOCATION AND TIMING SERVICES
The Company is aware that certain third parties are offering asset
allocation and timing services in connection with the contracts. In certain
cases the Company has agreed to honor transfer instructions from such asset
allocation and timing services where it has received powers of attorney, in a
form acceptable to it, from the owners participating in the service. THE
COMPANY DOES NOT ENDORSE, APPROVE OR RECOMMEND SUCH SERVICES IN ANY WAY AND
GROUPHOLDERS/OWNERS SHOULD BE AWARE THAT FEES PAID FOR SUCH SERVICES ARE
SEPARATE AND IN ADDITION TO FEES PAID UNDER THE
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CONTRACTS.
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM
Section 830.105 of the Texas Government Code permits participants in
the Texas Optional Retirement Program ("ORP") to withdraw their interest in a
variable annuity contract issued under the ORP only upon (1) termination of
employment in the Texas public institutions of higher education, (2)
retirement, (3) death, or (4) the participant's attainment of age 70 1/2.
Accordingly, before any amounts may be distributed from the contract, proof
must be furnished to the Company that one of the four events has occurred. The
foregoing restrictions on withdrawal do not apply in the event a participant in
the ORP transfers his or her contract value to another contract or another
qualified custodian during the period of participation in the ORP. Loans are
not available under contracts issued under the ORP.
DISTRIBUTION OF CONTRACTS
Manufacturers Securities Services, LLC ("MSS"), 116 Huntington Avenue,
Boston, Massachusetts 02116, a wholly-owned subsidiary of the Company, is the
principal underwriter of the contracts in addition to providing advisory
services to the Trust. MSS is a broker-dealer registered under the Securities
Exchange Act of 1934 ("1934 Act") and a member of the National Association of
Securities Dealers, Inc. ("NASD"). MSS has entered into a promotional agent
agreement with ManEquity, Inc., a broker-dealer controlled by Manulife.
ManEquity, Inc. also is registered under the 1934 Act and is a member of the
NASD. Sales of the contracts and certificates will be made by registered
representatives of broker-dealers authorized by MSS to sell them. Such
registered representatives will also be licensed insurance agents of the
Company. MSS will pay distribution compensation to selling brokers in varying
amounts which under normal circumstances are not expected to exceed 0.30% of
purchase payments. In addition, MSS may pay trail compensation after the first
contract year, which under normal circumstances will not exceed 0.30% of
contract value per year. MSS may from time to time pay additional compensation
pursuant to promotional contests. Additionally, in some circumstances, MSS will
provide reimbursement of certain sales and marketing expenses. MSS will pay
ManEquity, Inc. for providing marketing support for the distribution of the
contracts.
OWNER INQUIRIES
All owner inquiries should be directed to the Company's Annuity
Service Office at P.O. Box 9230, Boston, Massachusetts 02205-9230.
CONFIRMATION STATEMENTS
Owners will be sent confirmation statements for certain transactions
in their account. Owners should carefully review these statements to verify
their accuracy. Any mistakes should immediately be reported to the Company's
Annuity Service Office. If the owner fails to notify the Company's Annuity
Service Office of any mistake within 60 days of the mailing of the confirmation
statement, the owner will be deemed to have ratified the transaction.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a
party or to which the assets of the Variable Account are subject. Neither the
Company nor MSS are involved in any litigation that is of material importance
in relation to their total assets or that relates to the Variable Account.
OTHER INFORMATION
A registration statement has been filed with the Commission under the
1933 Act, as amended, with respect to the variable portion of the contracts
discussed in this Prospectus. Not all the information set forth in the
registration statement, amendments and exhibits thereto has been included in
this Prospectus. Statements contained in this Prospectus or the Statement of
Additional Information concerning the content of the contracts and other legal
instruments are only summaries. For a complete statement of the terms of these
documents, reference should be made to the instruments filed with the
Commission.
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
General Information and History.....................................
Performance Data....................................................
Services
Independent Auditors.......................................
Servicing Agent............................................
Principal Underwriter......................................
Cancellation...............................................
Financial Statements.......................................
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APPENDIX A
STATE PREMIUM TAXES
Premium taxes vary according to the state and are subject to change.
In many jurisdictions there is no tax at all. For current information, a tax
adviser should be consulted.
<TABLE>
<CAPTION>
TAX RATE
QUALIFIED NON-QUALIFIED
STATE CONTRACTS CONTRACTS
- -----------------------------------------------------------
<S> <C> <C>
CALIFORNIA................ .50% 2.35%
DISTRICT OF COLUMBIA...... 2.25% 2.25%
KANSAS.................... .00% 2.00%
KENTUCKY.................. 2.00% 2.00%
MAINE..................... .00% 2.00%
NEVADA.................... .00% 3.50%
PUERTO RICO............... 1.00% 1.00%
SOUTH DAKOTA.............. .00% 1.25%
TEXAS..................... .04% .04%
WEST VIRGINIA............. 1.00% 1.00%
WYOMING................... .00% 1.00%
</TABLE>
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APPENDIX B
For all contracts and certificates issued in Pennsylvania the maximum maturity
age based upon the issue age of the annuitant is as follows:
<TABLE>
<CAPTION>
ISSUE AGE MAXIMUM MATURITY AGE
- -------------------------------------------------
<S> <C>
70 or less................ 85
71-75..................... 86
76-80..................... 88
81-85..................... 90
86-90..................... 93
91-93..................... 96
94-95..................... 98
96-97..................... 99
98-99..................... 101
100-101................... 102
102....................... 103
103....................... 104
104....................... 105
105....................... 106
</TABLE>
It is required that the annuitant exercise a settlement annuity option
no later than the maximum maturity age stated above. For example an annuitant
age 60 at issue must exercise a settlement option prior to the attainment of
age 86. The Company will use the issue age of the youngest named annuitant in
the determination of the required settlement option date.
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PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 46
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NORTH AMERICA SEPARATE ACCOUNT A
- --------------------------------------------------------------------------------
OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF
NORTH AMERICA
FLEXIBLE PAYMENT DEFERRED COMBINATION
FIXED AND VARIABLE ANNUITY CONTRACTS
NON-PARTICIPATING
This Statement of Additional Information is not a Prospectus. It
contains information in addition to that described in the Prospectus and should
be read in conjunction with the Prospectus dated the same date as this
Statement of Additional Information. The Prospectus may be obtained by writing
The Manufacturers Life Insurance Company of North America (the "Company") at
the Annuity Service Office, P.O. Box 9230, Boston, Massachusetts 02205-9230 or
telephoning (617) 266-6008.
The date of this Statement of Additional Information is , 1998.
The Manufacturers Life Insurance Company of North America
116 Huntington Avenue
Boston, Massachusetts 02116
(617) 266-6008
- --------------------------------------------------------------------------------
1
<PAGE> 47
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
General Information and History..........................
Performance Data.........................................
Services
Independent Auditors.................................
Servicing Agent......................................
Principal Underwriter................................
Cancellation.........................................
Financial Statements.....................................
2
<PAGE> 48
GENERAL INFORMATION AND HISTORY
The Manufacturers Life Insurance Company of North America Separate Account
A ("Variable Account") is a separate investment account of the Company, a
stock life insurance company organized under the laws of Delaware in 1979. The
Company changed its name from "North American Security Life Insurance Company"
effective October 1, 1997. The ultimate parent of the Company is The
Manufacturers Life Insurance Company ("Manulife"), a Canadian mutual life
insurance company based in Toronto, Canada. Prior to January 1, 1996, the
Company was a wholly owned subsidiary of North American Life Assurance Company
("NAL"), a Canadian mutual life insurance company. On January 1, 1996 NAL and
Manulife merged with the combined company retaining the Manulife name.
PERFORMANCE DATA
Each of the sub-accounts may in its advertising and sales materials quote
total return figures. The sub-accounts may advertise both "standardized" and
"non-standardized" total return figures, although standardized figures will
always accompany non-standardized figures. Non-standardized total return
figures may be quoted assuming both (i) redemption at the end of the time
period and (ii) not assuming redemption at the end of the time period.
Standardized figures include total return figures from: (i) the inception date
of the subaccount of the Variable Account which invests in the portfolio or
(ii) ten years, whichever period is shorter. Non-standardized figures include
total return numbers from: (i) inception date of the portfolio or (ii) ten
years, whichever period is shorter. Such figures will always include the
average annual total return for recent one year and, when applicable, five and
ten year periods and, where less than ten years, the inception date of the
subaccount, in the case of standardized returns, and the inception date of the
portfolio, in the case of nonstandardized returns. Where the period since
inception is less than one year, the total return quoted will be the aggregate
return for the period. The average annual total return is the average annual
compounded rate of return that equates a purchase payment to the market value
of such purchase payment on the last day of the period for which such return is
calculated. The aggregate total return is the percentage change (not
annualized) that equates a purchase payment to the market value of such
purchase payment on the last day of the period for which such return is
calculated. For purposes of the calculations it is assumed that an initial
payment of $1,000 is made on the first day of the period for which the return
is calculated.
In calculating standardized return figures, all recurring charges (all
asset charges (mortality and expense risk fees, administrative fees and
distribution fees)) are reflected, and the asset charges are reflected in
changes in unit values. Standardized total return figures will be quoted
assuming redemption at the end of the period. Non-standardized total return
figures reflecting redemption at the end of the time period are calculated on
the same basis as the standardized returns. Non-standardized total return
figures not reflecting redemption at the end of the time period are calculated
on the same basis as the standardized returns except that the calculations
assume no redemption at the end of the period and do not reflect deduction of
the annual contract fee. The Company believes such non-standardized figures
not reflecting redemptions at the end of the time period are useful to contract
owners who wish to assess the performance of an ongoing contract of the size
that is meaningful to the individual contract owner.
For total return figures quoted for periods prior to the commencement of
the offering of this contract, standardized performance data will be historical
performance of the Trust portfolio from the date the applicable sub-account of
the Variable Account first became available for investment under other
contracts offered b the Company; adjusted to reflect current contract charges.
In the case of non-standardized performance, performance figures will be the
historical performance of the Trust portfolio from the inception date of the
portfolio (or in the case of the Trust portfolios created in connection with
the merger of Manulife Series Fund, Inc. into the Trust, the inception date of
the applicable predecessor Manulife Series Fund portfolio), adjusted to reflect
current contract charges.
3
<PAGE> 49
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FIGURES
CALCULATED AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
==============================================================================================================================
TRUST PORTFOLIO 1 YEAR SINCE INCEPTION OR SINCE INCEPTION OR INCEPTION DATE
5 YEARS, 10 YEARS, WHICHEVER
WHICHEVER IS IS SHORTER
SHORTER
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Pacific Rim Emerging 10/4/94
Markets*
- ------------------------------------------------------------------------------------------------------------------------------
Science & Technology
- ------------------------------------------------------------------------------------------------------------------------------
International Small Cap 3/4/96
- ------------------------------------------------------------------------------------------------------------------------------
Emerging Growth
- ------------------------------------------------------------------------------------------------------------------------------
Pilgrim Baxter Growth
- ------------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap 3/4/96
- ------------------------------------------------------------------------------------------------------------------------------
International Stock
- ------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth
- ------------------------------------------------------------------------------------------------------------------------------
Global Equity 3/18/88
- ------------------------------------------------------------------------------------------------------------------------------
Growth 7/15/96
- ------------------------------------------------------------------------------------------------------------------------------
Equity 6/18/85
- ------------------------------------------------------------------------------------------------------------------------------
Quantitative Equity* 4/30/87
- ------------------------------------------------------------------------------------------------------------------------------
Blue Chip Growth 12/11/92
- ------------------------------------------------------------------------------------------------------------------------------
Real Estate Securities* 4/30/87
- ------------------------------------------------------------------------------------------------------------------------------
Value
- ------------------------------------------------------------------------------------------------------------------------------
Int'l Growth & Income 1/09/95
- ------------------------------------------------------------------------------------------------------------------------------
Growth and Income 4/23/91
- ------------------------------------------------------------------------------------------------------------------------------
Equity-Income 2/19/93
- ------------------------------------------------------------------------------------------------------------------------------
Balanced
- ------------------------------------------------------------------------------------------------------------------------------
Aggressive Asset 8/03/89
Allocation
- ------------------------------------------------------------------------------------------------------------------------------
High Yield
- ------------------------------------------------------------------------------------------------------------------------------
Moderate Asset Allocation 8/03/89
- ------------------------------------------------------------------------------------------------------------------------------
Conservative Asset 8/03/89
Allocation
- ------------------------------------------------------------------------------------------------------------------------------
Strategic Bond 2/19/93
- ------------------------------------------------------------------------------------------------------------------------------
Global Government Bond 3/18/88
</TABLE>
4
<PAGE> 50
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Capital Growth Bond* 6/26/84
- ------------------------------------------------------------------------------------------------------------------------------
Investment Quality Bond** 4/23/91
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Government 5/01/89
Securities***
- ------------------------------------------------------------------------------------------------------------------------------
Money Market 6/18/85
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Growth 820
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Balanced 640
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Moderate 460
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Conservative 260
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 51
Non-Standardized Average Annual Total Return Figures
Calculated as of December 31, 1997
<TABLE>
<CAPTION>
==============================================================================================================================
TRUST PORTFOLIO 1 YEAR SINCE INCEPTION OR SINCE INCEPTION OR INCEPTION DATE
5 YEARS, 10 YEARS, WHICHEVER
WHICHEVER IS IS SHORTER
SHORTER
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Pacific Rim Emerging 10/4/94
Markets*
- ------------------------------------------------------------------------------------------------------------------------------
Science & Technology
- ------------------------------------------------------------------------------------------------------------------------------
International Small Cap 3/4/96
- ------------------------------------------------------------------------------------------------------------------------------
Emerging Growth
- ------------------------------------------------------------------------------------------------------------------------------
Pilgrim Baxter Growth
- ------------------------------------------------------------------------------------------------------------------------------
Small/Mid Cap 3/4/96
- ------------------------------------------------------------------------------------------------------------------------------
International Stock
- ------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth
- ------------------------------------------------------------------------------------------------------------------------------
Global Equity 3/18/88
- ------------------------------------------------------------------------------------------------------------------------------
Growth 7/15/96
- ------------------------------------------------------------------------------------------------------------------------------
Equity 6/18/85
- ------------------------------------------------------------------------------------------------------------------------------
Quantitative Equity* 4/30/87
- ------------------------------------------------------------------------------------------------------------------------------
Blue Chip Growth 12/11/92
- ------------------------------------------------------------------------------------------------------------------------------
Real Estate Securities* 4/30/87
- ------------------------------------------------------------------------------------------------------------------------------
Value
- ------------------------------------------------------------------------------------------------------------------------------
Int'l Growth & Income 1/09/95
- ------------------------------------------------------------------------------------------------------------------------------
Growth and Income 4/23/91
- ------------------------------------------------------------------------------------------------------------------------------
Equity-Income 2/19/93
- ------------------------------------------------------------------------------------------------------------------------------
Balanced
- ------------------------------------------------------------------------------------------------------------------------------
Aggressive Asset 8/03/89
Allocation
- ------------------------------------------------------------------------------------------------------------------------------
High Yield
- ------------------------------------------------------------------------------------------------------------------------------
Moderate Asset Allocation 8/03/89
- ------------------------------------------------------------------------------------------------------------------------------
Conservative Asset 8/03/89
Allocation
- ------------------------------------------------------------------------------------------------------------------------------
Strategic Bond 2/19/93
- ------------------------------------------------------------------------------------------------------------------------------
Global Government Bond 3/18/88
</TABLE>
6
<PAGE> 52
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Capital Growth Bond* 6/26/84
- ------------------------------------------------------------------------------------------------------------------------------
Investment Quality Bond** 4/23/91
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Government 5/01/89
Securities***
- ------------------------------------------------------------------------------------------------------------------------------
Money Market 6/18/85
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Aggressive 1000
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Growth 820
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Balanced 640
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Moderate 460
- ------------------------------------------------------------------------------------------------------------------------------
Lifestyle Conservative 260
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ 10 year average annual return.
* On December 31, 1996, Manulife Series Fund, Inc. merged with the Trust.
Performance presented for these sub-accounts is based upon the performance of
the respective predecessor Manulife Series Fund portfolio for the periods prior
to December 31, 1996. Performance for each of these sub-accounts is based on
the historical expenses and performance of the predecessor Manulife Series Fund
portfolio, adjusted to reflect current contract charges, and, therefore, does
not reflect for periods prior to December 31, 1996 the current Trust portfolio
expenses that an investor would incur as a holder of units of the sub-account.
* * * * *
In addition to the non-standardized returns quoted above, each of the
sub-accounts may from time to time quote aggregate non-standardized total
returns calculated in the same manner as set forth above for other time
periods. From time to time the Trust may include in its advertising and sales
literature general discussions of economic theories, including but not limited
to, discussions on how demographic and political trends can affect the
financial markets. Further, the Trust may also include in its advertising and
sales literature specific information on each of the Trust's subadvisers,
including but not limited to, research capabilities of a subadviser, assets
under management, information relating to other clients of a subadviser, and
other generalized information.
SERVICES
INDEPENDENT AUDITORS
The financial statements of the Company and the Variable Account at
December 31, 1997 and for the two years then ended appearing in this Statement
of Additional Information have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
is included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
The statutory balance sheet of the Company as of December 31, 1995 and the
related statutory statement of operations, changes in capital and deficit, and
cash flows for the year ended December 31, 1995, appearing in this Statement of
Additional Information have been included herein in reliance on the report
(which includes an adverse opinion as to generally accepted accounting
principles and an unqualified opinion as to statutory accounting practices
prescribed or permitted by the Insurance Department of the State of Delaware),
of Coopers & Lybrand L.L.P., independent accountants given the authority of
that firm as experts in accounting and auditing.
7
<PAGE> 53
The statement of operations and changes in net assets of the Variable
Account for the year ended December 31, 1995 appearing in this Statement of
Additional Information has been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The financial statements of the Company which are included in the Statement
of Additional Information should be considered only as bearing on the ability
of the Company to meet its obligations under the contracts. They should not be
considered as bearing on the investment performance of the assets held in the
Variable Account.
SERVICING AGENT
Vantage Computer Systems, Inc. ("Vantage") provides to the Company a
computerized data processing recordkeeping system for variable annuity
administration. Vantage provides various daily, semimonthly, monthly,
semiannual and annual reports including: daily updates on accumulation unit
values, variable annuity participants and transactions, agent production and
commissions; semimonthly commission statements; monthly summaries of agent
production and daily transaction reports; semiannual statements for contract
owners; and annual contract owner tax reports. Vantage receives approximately
$7.50 per policy per year, plus certain other fees paid by the Company for the
services provided.
PRINCIPAL UNDERWRITER
Manufacturers Securities Services, LLC ("MSS"), a wholly-owned subsidiary
of the Company, serves as principal underwriter of the contracts. Contracts are
offered on a continuous basis. The aggregate dollar amount of underwriting
commissions paid to MSS in 1997, 1996 and 1995 were ,
$83,031,288 and $68,782,161 respectively. MSS did not retain any of these
amounts during such periods.
CANCELLATION
The Company may, at its option, cancel an individual contract or
certificate and an owner's participation under a group contract at the end of
any two consecutive contract years in which no purchase payments by or on
behalf of the owner have been made, if both (i) the total purchase payments
made for the contract or certificate, less any withdrawals, are less than
$2,000; and (ii) the contract value for the owner at the end of such two year
period is less than $2,000. The Company, as a matter of administrative
practice, will attempt to notify an owner prior to such cancellation in order
to allow the owner to make the necessary purchase payment to keep the contract
or certificate in force. The cancellation provisions may vary in certain states
in order to comply with the requirements of insurance laws and regulations in
such states.
8
<PAGE> 54
PART C
OTHER INFORMATION
<PAGE> 55
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Statements of the Registrant, The
Manufacturers Life Insurance Company of North
America Separate Account A (Part B of the
registration statement). [to be filed by amendment]
(2) Financial Statements of the Depositor, The
Manufacturers Life Insurance Company of North
America (Part B of the registration statement). [to
be filed by amendment]
(b) Exhibits
(1) (i) Resolution of the Board of Directors of
North American Security Life Insurance
Company establishing the NASL Variable
Account -- Incorporated by reference to
Exhibit (A)(1) to Form S-6, file number
2-93435, filed September 24, 1984 on behalf
of the NASL Variable Account of North
American Security Life Insurance Company.
(ii) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create additional sub-accounts, dated May
30, 1995 -- Incorporated by reference to
Exhibit (b)(1)(ii) to post-effective
amendment no. 2 to Form N-4, file number
33-76684, filed March 1, 1996 on behalf of
the NASL Variable Account of North American
Security Life Insurance Company.**
(iii) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create additional sub-accounts, dated
September 30, 1996 -- Incorporated by
reference to Exhibit (b)(1)(iii) to
post-effective amendment no. 3 to Form N-4,
file number 33-76684, filed February 28,
1997 on behalf of the NASL Variable Account
of North American Security Life Insurance
Company.**
(iv) Resolution of the Board of Directors of
North American Security Life Insurance
Company redesignating existing sub-accounts
and dividing the NASL Variable Account to
create additional sub-accounts, dated
September 30, 1996 -- Incorporated by
reference to Exhibit (b)(1)(iv) to
post-effective amendment no. 3 to Form N-4,
file number 33-76684, filed February 28,
1997 on behalf of the NASL Variable Account
of North American Security Life Insurance
Company.**
(2) Agreements for custody of securities and similar
investments - Not Applicable.
(3) (i) Underwriting Agreement -- to be filed by
amendment.
(ii) Form of broker-dealer agreement -- to be
filed by amendment.
(4) (i) Form of Flexible Payment Deferred
Combination Fixed and Variable Group
Annuity Contract, Non-Participating --
Filed herewith.
(ii) Specimen Certificate Under Flexible Payment
Deferred Combination Fixed and Variable
Group Annuity Contract, Non-Participating
-- Filed herewith.
-1-
<PAGE> 56
(iii) Specimen Endorsements to Contracts -
Incorporated by reference to Exhibit 4
(ii) Form N-4, file number 33-76684, filed
March 18, 1994 on behalf of the NASL
Variable Account
(iv) Individual Retirement Annuity Endorsement
-- Filed herewith.
(5) (i) Specimen Application for Flexible Payment
Deferred Combination Fixed and Variable
Group Annuity Contract, Non-Participating
-- to be filed by amendment.
(ii) Specimen Certificate Application -
Incorporated by reference to Exhibit 5 (i)
Form N-4, file number 33-76684, filed March
18, 1994 on behalf of the NASL Variable
Account.
(6) (i) Certificate of Incorporation of North
American Security Life Insurance Company --
Incorporated by reference to Exhibit
(A)(6) to Form S-6, file number 2-93435,
filed September 24, 1984 on behalf of the
NASL Variable Account of North American
Security Life Insurance Company.
(ii) Amendment to Certificate of Incorporation
Changing Name to "The Manufacturers Life
Insurance Company of North America" --
Filed herewith.
(iii) Amended and Restated By-laws of The
Manufacturers Life Insurance Company of
North America -- Filed herewith.
(7) (i) Contract of reinsurance in connection with
the variable annuity contracts being
offered - Variable Annuity Guaranteed Death
Benefit Reinsurance Contract between North
American Security Life Insurance Company
and Connecticut General Life Insurance
Company, effective July 1, 1995 --
Incorporated by reference to Exhibit
(b)(7)(ii) to post-effective amendment no.
2 to Form N-4, file number 33-76684, filed
March 1, 1996 on behalf of the NASL
Variable Account of North American Security
Life Insurance Company.**
(ii) Contract of reinsurance in connection with
the variable annuity contracts being
offered - Variable Annuity Guaranteed Death
Benefit Reinsurance Contract between
North American Security Life Insurance
Company and Connecticut General Life
Insurance Company, effective July 1, 1995
-- Incorporated by reference to Exhibit
(b)(7)(iii) to post-effective amendment no.
2 to Form N-4, file number 33-76684, filed
March 1, 1996 on behalf of the NASL
Variable Account of North American Security
Life Insurance Company.**
(iii) Contract of reinsurance in connection with
the variable annuity contracts being
offered - Automatic Reinsurance Agreement
between North American Security Life
Insurance Company and Swiss Re America,
effective August 1, 1995 -- Incorporated by
reference to Exhibit (b)(7)(iv) to
post-effective amendment no. 3 to Form N-4,
file number 33-76684, filed February 28,
1997 on behalf of the NASL Variable Account
of North American Security Life Insurance
Company.**
(iv) Contract of reinsurance in connection with
the variable annuity contracts being
offered - Reinsurance Agreement between
North American Security Life Insurance
Company and PaineWebber Life Insurance
Company, effective
-2-
<PAGE> 57
December 31, 1994 -- Incorporated by
reference to Exhibit (b)(7)(v) to
post-effective amendment no. 2 to Form N-4,
file number 33-76684, filed March 1,
1996 on behalf of the NASL Variable Account
of North American Security Life Insurance
Company.
(8) Other material contracts not made in the ordinary
course of business which are to be performed in
whole or in part on or after the date the
registration statement is filed:
(i) Form of Remote Service Agreement dated
November 1, 1996 between North
American Security Life Insurance Company
and CSC Continuum, Inc.-- Incorporated by
reference to Exhibit (b)(8)(i) to
post-effective amendment no. 3 to Form N-4,
file number 33-76684 , filed February 28,
1997 on behalf of the NASL Variable Account
of North American Security Life Insurance
Company.**
(9) Opinion of Counsel and consent to its use as to the
legality of the securities being registered -- [to
be filed by amendment].
(10) (i) Written consent of Ernst & Young LLP
independent certified public accountants--
[to be filed by amendment].
(ii) Written consent of Coopers & Lybrand
independent certified public accounts--[to
be filed by amendment].
(11) All financial statements omitted from Item 23,
Financial Statements -- Not Applicable.
(12) Agreements in consideration for providing initial
capital between or among Registrant, Depositor,
Underwriter or initial contract owners -- Not
Applicable.
(13) Schedule for computation of performance quotations
provided in the Registration Statement in response
to Item 21--Incorporated by reference to Exhibit
(b)(13) to post-effective amendment no. 2 to Form N-
4, file number 33-76684, filed March 1, 1996 on
behalf of the NASL Variable Account of North
American Security Life Insurance Company.**
(14) Financial Data Schedule - [to be filed by
amendment].
(15) (i) Powers of Attorney - The Manufacturers Life
Insurance Company of North America
Directors -- Incorporated by reference to
Exhibit (b)(14) to Form N-4, file number
33-55712, filed March 22, 1993 on behalf of
the NASL Variable Account of North American
Security Life Insurance Company.
(ii) Power of Attorney - The Manufacturers Life
Insurance Company of North America
Treasurer (Principal Financial and
Accounting Officer) -- Incorporated by
reference to Exhibit (b)(14)(b) to Form
N-4, file number 33-28455, filed on April
2, 1993 on behalf of the NASL Variable
Account of North American Security Life
Insurance Company.
** Filed Electronically.
-3-
<PAGE> 58
Item 25. Directors and Officers of the Depositor.
OFFICERS AND DIRECTORS OF THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NORTH AMERICA
<TABLE>
<CAPTION>
Name and Principal
Business Address Position with Depositor
- ------------------ -----------------------
<S> <C>
John Richardson Chairman of the Board of Directors
200 Bloor Street East
North Tower 11th Floor
Toronto, Ontario
Canada M4W-1E5
Peter S. Hutchison Director
5650 Yonge Street
North York, Ontario
Canada M2M 4G4
John D. DesPrez III President and Director
73 Tremont Street
Boston, MA 02108
James Boyle Vice President, Annuity Administration Services and Chief
116 Huntington Avenue Administrative Officer
Boston, MA 02116
John G. Vrysen Vice President and Chief Actuary
73 Tremont Street
Boston, MA 02108
Hugh McHaffie Vice President, Product Management
73 Tremont Street
Boston, MA 02108
Richard C. Hirtle Vice President, Treasurer and Chief Operating Officer
73 Tremont Street
Boston, MA 02108
James D. Gallagher Vice President, Secretary and General Counsel
73 Tremont Street
Boston, MA 02108
Janet Sweeney Vice President, Corporate Services
73 Tremont Street
Boston, MA 02108
</TABLE>
-4-
<PAGE> 59
Item 26. Persons Controlled by or Under Common Control with Depositor or
Registrant.
THE MANUFACTURERS LIFE INSURANCE COMPANY
(Subsidiaries Organization Chart- including certain Significant Investments)
The Manufacturers Life Insurance Company (Canada)
1. ManuLife Holdings (Hong Kong) Limited - H.K. (100%)
2. ManuLife Financial Systems (Hong Kong) Limited - H.K. (100%)
3. P.T. Asuransi Jiwa Dharmala Manulife - Indonesia (51%)
4. WT (SW) Properties Ltd. - U.K. (100%)
5. OUB Manulife Pte. Ltd. - Singapore (50%)
6. Manulife (Malaysia) SDN. BHD. - Malaysia (100%)
7. Manulife (Thailand) Ltd. - Thailand (100%)
8. Young Poong Manulife Insurance Company - Korea (50%)
9. Ennal, Inc. - Ohio (100%)
10. First North American Realty, Inc. - Minnesota (100%)
11. NAL Resources Limited - Alberta (100%)
(a) Nottingham Gas Limited - Saskatchewan (31%)
12. Nottingham Gas Limited - Saskatchewan (31%)
13. 484551 Ontario Limited - Ontario (100%)
(a) 911164 Ontario Limited - Ontario (100%)
14. Peel-de Maisonneuve Investments Ltd. - Canada (50%)
(a) 2932121 Canada Inc. - Canada (100%)
15. Balmoral Developments Inc. - Canada (100%)
16. KY Holding Corporation - Canada (100%)
17. 165351 Canada Limited - Canada (100%)
18. 172846 Canada Limited - Canada (100%)
19. 576986 Ontario Inc. - Ontario (100%)
20. Cantay Holdings Inc. - Ontario (100%)
-5-
<PAGE> 60
21. Manufacturers Life Capital Corporation Inc. - Canada (100%)
22. Elliott & Page Asset Management Ltd. - Canada (100%)
23. 495603 Ontario Limited - Ontario (100%)
24. 994744 Ontario Inc. - Ontario (100%)
25. The North American Group Inc. - Ontario (100%)
26. Manulife Investment Management Corporation - Canada (100%)
(a) 159139 Canada Inc. - Canada (50%)
i. Altamira Management Ltd. - Canada (60.96%)
A. ACI2 Limited - Cayman (100%)
a/ Regent Pacific Group Limited-Cayman (63.8%)
a.1 Manulife Regent Investment Corporation -
Barbados (100%) [50% by Regent Pacific Group Limited
and 50% by Manulife Data Services Inc.]
b.1 Manulife Regent Investment Asia Limited -
Hong Kong (100%)
B. Altamira Financial Services Inc. - Ontario (100%)
a/ AIS Securities (Partnership) - Ontario (100%) [5% by
Altamira Financial Services, Inc. and 95% by
Altamira Investment Services Inc.]
b/ Altamira Investment Services Inc. - Ontario (100%)
(a) AIS Securities (Partnership) - Ontario (100%)[95% by
by Altamira Investment Services Inc. and 5% by
Altamira Financial Services Inc.]
(b) Altamira (Alberta) Ltd. - Alberta (100%)
(c) Capital Growth Financial Services Inc. -
Ontario (100%)
27. Manulife International Investment Management Limited - U.K. (100%)
(a) Manulife International Fund Management Limited - U.K. (100%)
28. Manulife (International) Limited - Bermuda (100%)
(a) The Manufacturers (Pacific Asia) Insurance Company Limited
- Hong Kong (100%)
(b) Newtime Consultants Limited - Hong Kong (100%)
29. Manulife Data Services Inc.- Barbados (100%)
(a) Manulife Regent Investment Corporation - Barbados - (100%)
[50% by Manulife Data Services Inc. and 50% by Regent
Pacific Group Limited]
(b) Manulife Regent Investment Asia Limited - Hong Kong (100%)
30. FNA Financial Inc. - Canada (100%)
(a) NAL Trustco Inc. - Ontario (100%)
(b) First North America Insurance Company - Canada (100%)
(c) Elliott & Page Limited - Ontario (100%)
(d) Seamark Asset Management Ltd. - Canada (69.175%)
(e) NAL Resources Management Limited - Canada (100%)
-6-
<PAGE> 61
(i) NAL Energy Inc. - Alberta (100%)
31. ManuCab Ltd. - Canada (100%)
(a) Plazcab Service Limited - Canada (100%)
32. Townvest Inc. - Ontario (100%)
33. Manulife Reinsurance Corporation (U.S.A.) - Michigan (100%)
(a) The Manufacturers Life Insurance Company (U.S.A.) - Michigan (100%)
(b) Manulife Holding Corporation - Delaware (100%)
i. Manufacturers Life Mortgage Securities
Corporation - Delaware (100%)
ii. Manulife Property Management of Washington, D.C., Inc.
- Washington D.C. (100%)
iii. Capital Design Corporation - California - (100%)
iv. ManEquity, Inc. - Colorado (100%)
v. Manulife Service Corporation - Colorado (100%)
vi. Succession Planning International Inc. - Wisconsin (100%)
(c) The Manufacturers Life Insurance Company of America - Michigan (100%)
i. Manulife Series Fund, Inc. - Maryland (100%)
ii. Manufacturers Adviser Corporation - Colorado (100%)
(d) Manulife Reinsurance Limited - Bermuda (100%)
34. The Manufacturers Investment Corporation - Michigan (100%)
35. Capitol Bankers Life Insurance Company - Minnesota (100%)
36. NAWL (North American Wood Logan Holding Company) - Delaware (85%)
(a) Wood Logan Associates Inc. - Connecticut (100%)
(i) Wood Logan Distributors - Connecticut (100%)
(b) The Manufacturers Life Insurance Company of North America - Delaware
(100%)
(i) Manufacturers Securities Services, LLC. - Massachusetts (100%)
(ii) The Manufacturers Life Insurance Company of New York (100%)
37. Manulife (International) Reinsurance Limited - Bermuda (100%)
(a) Manulife (International) P&C Limited - Bermuda (100%)
(b) Manufacturers P&C Limited - Barbados (100%)
38. Manulife Financial Holdings Limited - Ontario (100%)
(a) 742166 Ontario Inc. - Ontario (100%)
(b) Family Realty Firstcorp Limited - Ontario (100%)
(c) Thos. N. Shea Investment Corporation Limited - Ontario (100%)
(d) Manulife Bank of Canada - Canada (100%)
i. Manulife Securities International Ltd. - Canada (100%)
Item 27. Number of Contract owners.
As of September 30, 1997, there were no contracts of the series offered hereby
outstanding.
Item 28. Indemnification.
Article 9 of the Articles of Incorporation of the Company provides as follows:
-7-
<PAGE> 62
NINTH: A director of this corporation shall not be liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director except to the extent such exemption from liability or limitation
thereof is not permitted under the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended. Any repeal or
modification of the foregoing sentence shall not adversely affect any right or
protection of a director of the corporation existing hereunder with respect to
any act or omission occurring prior to such repeal or modification.
Article XIV of the By-laws of the Company provides as follows:
Each Director or officer, whether or not then in office, shall be indemnified
by the Company against all costs and expenses reasonably incurred by or imposed
upon him or her, including legal fees, in connection with or resulting from any
claim, action, suit or proceeding, whether civil, criminal or administrative,
in which he or she may become involved as a party or otherwise, by reason of
his or her being or having been a Director or officer of the Company.
(1) Indemnity will not be granted to any Director or officer with respect
to any claim, action, suit or proceeding which shall be brought against such
Director or officer by or in the right of the Company, and
(2) Indemnification for amounts paid and expenses incurred in settling
such action, claim, suit or proceeding, will not be granted, until it shall be
determined by a disinterested majority of the Board of Directors or by a
majority of any disinterested committee or group of persons to whom the
question may be referred by the Board, that said Director or officer did indeed
act in good faith and in a manner he or she reasonably believed to be in, or
not adverse, to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonably cause to believe that his or her
conduct was legal, and that the payment of such costs, expenses, penalties or
fines is in the interest of the Company, and not contrary to public policy or
other provisions of law.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendre or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in, or not
adverse, to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful. Indemnification shall be made by the corporation upon
determination by a disinterested majority of the Board of Directors or of a
majority of any disinterested committee or group or persons to whom the
question may be referred to by said Board, that the person did indeed act in
good faith and in a manner he or she reasonably believed to be in, or not
adverse, to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonably cause to believe that his or her
conduct was legal.
The foregoing right to indemnity shall not be exclusive of any other
rights to which such Director or officer may be entitled as a matter of law.
The foregoing right to indemnity shall also extend to the estate of any
deceased Director or officer with respect to any such claim, action, suit or
proceeding in which such Director or officer or his or her estate may become
involved by reason of his or her having been a Director or officer of the
Company, and subject to the same conditions outlined above.
Notwithstanding the foregoing, Registrant hereby makes the following
undertaking pursuant to Rule 484 under the Securities Act of 1933:
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit
-8-
<PAGE> 63
or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 29. Principal Underwriters.
<TABLE>
<CAPTION>
Name of Investment Company Capacity in which acting
-------------------------- ------------------------
<S> <C>
Manufacturers Investment Trust Investment Adviser
The Manufacturers Life Insurance Principal Underwriter
Company of New York Separate
Account A
The Manufacturers Life Insurance Principal Underwriter
Company of North America
Separate Account B
</TABLE>
b. The Manufacturers Life Insurance Company of North America is the
managing member of Manufacturers Securities Services, LLC and has sole
power to act on behalf of Manufacturers Securities Services, LLC. The
officers and directors of The Manufacturers Life Insurance Company of
North America are set forth under Item 25
c. None.
Item 30. Location of Accounts and Records.
All books and records are maintained at 116 Huntington Avenue, Boston, MA
02116 and at 73 Tremont Street, Boston, MA 02108.
Item 31. Management Services.
None.
Item 32. Undertakings.
a. The Manufacturers Life Insurance Company of North America Separate
Account A undertakes (a) 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, (b) 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
commuication affixed to or included in the prospectus that the
applicant can remove to send for a Statement of Additional Information
and (c) 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.
b. Representation of Insurer Pursuant to Section 26 of the Investment
Company Act of 1940
The Manufacturers Life Insurance Company of North America (the
"Company") hereby represents that the fees and charges deducted under
the contracts issued pursuant to this registration statement in the
aggregate are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by the
Company.
-9-
<PAGE> 64
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant, The Manufacturers Life Insurance Company of North
American Separate Account A, has caused this Registration Statement to be
signed on its behalf, in the City of Boston, and Commonwealth of Massachusetts
on this 16th day of October, 1997.
The Manufacturers Life Insurance Company of North America Separate Account A
----------------------------------------------------------------------------
(Registrant)
By: The Manufacturers Life Insurance Company
of North America
(Depositor)
By: /s/ John D. Desprez III
------------------------------
John D. DesPrez III, President
Attest:
/s/ James D. Gallagher
- -------------------------------
James D. Gallagher, Secretary
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Depositor has duly caused this Registration
Statement to be signed on its behalf by the undersigned on the 16th day of
October , 1997 in the City of Boston, and Commonwealth of Massachusetts.
THE MANUFACTURERS LIFE INSURANCE
--------------------------------
COMPANY OF NORTH AMERICA
------------------------
(Depositor)
By: /s/ John D. DesPrez III
-------------------------------
John D. DesPrez III, President
Attest:
/s/ James D. Gallagher
- ------------------------------
James D. Gallagher, Secretary
<PAGE> 65
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities with the Depositor
and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ John D. DesPrez III Director and President October 16, 1997
- --------------------------- (Principal Executive ----------------------
John D. DesPrez III Officer) (Date)
* Director
---------------------- --------------------
Peter S. Hutchison (Date)
* Director and Chairman
---------------------- of the Board --------------------
John D. Richardson (Date)
/s/ Richard C. Hirtle Vice President and October 16, 1997
- ----------------------------- Treasurer (Principal -----------------------
Richard C. Hirtle Financial and Accounting (Date)
Officer)
*By: Richard C. Hirtle October 16, 1997
----------------------- ----------------------
Richard C. Hirtle (Date)
Attorney-in-Fact
Pursuant to Powers
of Attorney
</TABLE>
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN SEQUENTIAL
NUMBERING
SYSTEM WHERE
EXHIBIT NO. DESCRIPTION OF EXHIBIT EXHIBIT LOCATED
- ----------- ---------------------- ---------------
<S> <C>
99.4(i) Form of Flexible Payment Deferred Combination Fixed and Variable
Group Annuity Contract, Non-Participating
99.4(ii) Specimen Certificate Under Flexible Payment Deferred Combination
Fixed and Variable Group Annuity Contract, Non-Participating
99.4(iv) Individual Retirement Annuity Endorsement
99.6(ii) Amendment to Certificate of Incorporation Changing Name to "The
Manufacturers Life Insurance Company of North America"
*99.6(iii) Amended and Restated By-laws of The Manufacturers Life Insurance
Company of North America
</TABLE>
<PAGE> 1
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NORTH AMERICA
- ------------------------------------------------------------------------------
EXECUTIVE OFFICE: ANNUITY SERVICE OFFICE: HOME OFFICE:
116 Huntington Avenue P.O. Box 9230 Wilmington, Delaware
Boston, MA 02116 Boston, MA 02205-9230
1-800-344-1029
THIS IS A LEGAL CONTRACT - READ IT CAREFULLY.
The Manufacturers Life Insurance Company of North America will pay an annuity
commencing on the Maturity Date to the Annuitant, if then living, in accordance
with the Benefits and the Payment of Contract Benefits provisions. If the Owner
dies while the Contract is in effect and the Owner's Certificate is in force and
before the Maturity Date, the Company will pay a Death Benefit to the
Beneficiary upon receipt of all required claim forms and proof of death of the
Owner at the Annuity Service Office.
THIS CONTRACT is issued in consideration of the Contract Application and the
Payments. Provisions and endorsements printed or written by the Company on the
following pages form part of the Contract.
SIGNED FOR THE COMPANY at its Executive Office, Boston, Massachusetts, on
the Contract Date.
DETAILS OF VARIABLE ACCOUNT PROVISIONS ON PAGE 8
DETAILS OF FIXED ACCOUNT PROVISIONS ON PAGE 9
Vice President President
Flexible Payment Deferred Combination Fixed and Variable Group Annuity
Contract
Non-Participating
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON
THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE AND NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT.
<PAGE> 2
INTRODUCTION
This is a flexible payment deferred combination fixed and variable group annuity
contract. This Contract provides that prior to the Maturity Date, the Contract
Value will accumulate on either a fixed or variable basis or a combination of
both. After the Maturity Date, annuity payments may be either fixed or variable,
or a combination of fixed and variable.
The variable portion of the Contract will vary with the investment performance
of an Owner's Investment Account. The fixed portion of the Contract will
accumulate based on interest rates guaranteed by the Company for the period
selected.
If an Owner selects annuity payments on a variable basis, the payment amount
will vary with the investment performance of the Owner's Investment Account.
An Owner must allocate Payments among one or more Investment Options. The
Investment Options are identified in the Application and on the Certificate
Specifications Page.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Contract Specifications Page Page
<S> <C>
PART 1 - DEFINITIONS 1
----------------------------------------
PART 2 - GENERAL PROVISIONS 3
---------------------------------
PART 3 - OWNERSHIP 5
------------------------------------------
PART 4 - BENEFITS 6
-------------------------------------------
PART 5 - PAYMENTS 8
-------------------------------------------
PART 6 - VARIABLE ACCOUNT PROVISIONS 8
------------------------
PART 7 - FIXED ACCOUNT PROVISIONS 9
---------------------------
PART 8 - ANNUITY PROVISIONS 11
--------------------------------
PART 9 - TRANSFERS 12
-----------------------------------------
PART 10 - WITHDRAWAL PROVISIONS 13
-----------------------------
PART 11 - FEES AND DEDUCTIONS 14
-------------------------------
PART 12 - LOAN PROVISIONS 15
-----------------------------------
PART 13 - PAYMENT OF CONTRACT BENEFITS 15
----------------------
</TABLE>
<PAGE> 3
CONTRACT SPECIFICATIONS PAGE
GROUP HOLDER: [VENTURE TRUST]
POLICY NUMBER: [AB123456]
ISSUE DATE: [XX/XX/XX]
GOVERNING LAW: [APPLICABLE STATE]
ASSET FEE [XX.XX%]
MAXIMUM CHARGE PERCENTAGE [XX.XX%]
ANNUAL ADMINISTRATION FEE: [$XX.XX(1)]
(1) Prior to the Maturity Date, when the
Annual Administration Fee is to be
assessed, if the sum of all Investment
Accounts for a Certificate exceeds
[$100,000], the Annual Administration
Fee will be waived.
QUALIFIED CONTRACT PROVISIONS ENDORSEMENT ATTACHED. THE PROVISIONS IN THIS
ENDORSEMENT SHALL APPLY WITH RESPECT TO THE INTEREST OF AN OWNER AS FOLLOWS
<TABLE>
<CAPTION>
TYPE OF CONTRACT APPLICABLE SECTION OF
(AS INDICATED ON OWNERS CERTIFICATE) ENDORSEMENT
- ------------------------------------------------------------
<S> <C>
(A) PROFIT SHARING PLAN SECTION 401 PLANS
(B) MONEY PURCHASE PENSION PLAN SECTION 401 PLANS
(C) KEOGH (HR-10) SECTION 401 PLANS
(D) PENSION PLAN SECTION 401 PLANS
(E) 401(K) SECTION 401 PLANS
(G) 403(B) ERISA TAX SHELTERED ANNUITY ERISA TAX SHELTERED ANNUITY
(H) 403(B) TAX SHELTERED ANNUITY TAX SHELTERED ANNUITY
(I) IRA, SEP-IRA INDIVIDUAL RETIREMENT ANNUITY
</TABLE>
<PAGE> 4
PART 1 DEFINITIONS
- -------------------------------------------------------------------------------
WE, US, OUR "We", "us" and "our" means The Manufacturers Life
Insurance Company of North America.
ACCUMULATION UNIT A unit of measure that is used to calculate the
value of an Owner's Investment Account before the
Maturity Date.
ANNUITANT Any individual person or persons whose life is used
to determine the duration of annuity payments
involving life contingencies. The Annuitant is as
designated on the Certificate Specifications Page,
unless changed.
ANNUITY OPTION The method selected by the Owner for annuity
payments made by us.
ANNUITY SERVICE OFFICE Any office designated by us for the receipt of
Payments and processing of Group Holder and Owner
requests.
ANNUITY UNIT A unit of measure that is used after the Maturity
Date to calculate Variable Annuity payments.
APPLICATION The document signed by the Owner that serves as his
or her application for participation under this
Contract, a copy of which is attached to the
Certificate.
BENEFICIARY The person, persons or entity to whom certain
benefits are payable following the death of an
Owner, or in certain circumstances, an Annuitant.
CERTIFICATE The document for each Owner which summarizes the
rights and benefits of the Owner under the
Contract.
CERTIFICATE ANNIVERSARY The anniversary of the Certificate Date.
CERTIFICATE DATE The date of issue of a Certificate under this
Contract as designated on the Certificate
Specifications Page.
CERTIFICATE YEAR The period of twelve consecutive months beginning
on the Certificate Date or any anniversary
thereafter.
CONTINGENT BENEFICIARY The person, persons or entity who becomes the
Beneficiary if the Beneficiary is not alive.
CONTRACT APPLICATION The document signed by the Group Holder that
evidences the Group Holder's application for this
Contract.
CONTRACT DATE The date of issue of this Contract as designated on
the Contract Specifications Page.
CONTRACT VALUE The total of an Owner's Investment Account Values
and, if applicable, any amount in the Loan Account
attributable to that Owner.
DEBT Any amounts in the Loan Account attributable to an
Owner plus any accrued loan interest on that
amount. The loan provision is only available to
certain Qualified Contracts.
FIXED ANNUITY An Annuity Option with payments which are
predetermined and guaranteed as to dollar amount.
GENERAL ACCOUNT All the assets of The Manufacturers Life Insurance
Company of North America other than assets in
separate accounts.
GROUP HOLDER The person, persons or entity entitled to the
ownership rights under this Contract. The Group
Holder is as designated on the Contract
Specifications Page and the
1
<PAGE> 5
Contract Application.
INTERNAL REVENUE CODE The Internal Revenue Code of 1986, as amended from
(IRC) time to time, and any successor statute of similar
purposes.
INVESTMENT ACCOUNT An account established by us which represents the
Owner's interest in an Investment Option prior to
the Maturity Date.
INVESTMENT ACCOUNT VALUE The value of the Owner's investment in an
Investment Account.
INVESTMENT OPTIONS The Investment Options can be either fixed or
variable. The Investment Options available under
this Contract are shown on Certificate
Specifications Page.
LOAN ACCOUNT The portion of the General Account that is used for
collateral when a loan is taken.
MARKET VALUE CHARGE A charge that may be assessed if amounts are
withdrawn or transferred from the fixed Investment
Options prior to the end of the interest rate
guarantee period.
MATURITY DATE The date on which annuity benefits commence. It is
the date specified on the Certificate
Specifications Page, unless changed.
NET PAYMENT The Payment less the amount of premium tax, if any,
deducted from the Payment.
NON-QUALIFIED CONTRACTS Contracts which are not issued under Qualified
Plans.
OWNER The person, persons or entity named in each
Certificate. The Owner is as designated on the
Certificate Specifications Page and Application,
unless changed.
PORTFOLIO OR TRUST A separate portfolio of Manufacturers Investment
PORTFOLIO Trust, a mutual fund in which the Variable Account
invests, or any successor mutual fund.
PAYMENT An amount paid to us by or on behalf of an Owner as
consideration for the benefits provided by the
Contract.
QUALIFIED CONTRACTS Contracts issued under Qualified Plans.
QUALIFIED PLANS Retirement plans which receive favorable tax
treatment under sections 401, 403, 408 or 457, of
the Internal Revenue Code of 1986, as amended.
SEPARATE ACCOUNT A segregated account of The Manufacturers Life
Insurance Company of North America that is not
commingled with our general assets and obligations.
SUB-ACCOUNT(S) One or more of the Sub-Accounts of the Variable
Account. Each Sub-Account is invested in shares of
a different Trust Portfolio.
VALUATION DATE Any date on which the New York Stock Exchange is
open for business and the net asset value of a
Trust Portfolio is determined.
VALUATION PERIOD Any period from one Valuation Date to the next,
measured from the time on each such date that the
net asset value of each Portfolio is determined.
VARIABLE ACCOUNT The Manufacturers Life Insurance Company of North
America Separate Account A.
VARIABLE ANNUITY An Annuity Option with payments which: (1) are not
predetermined or guaranteed as to dollar amount;
and (2) vary in relation to the investment
experience of one or more specified variable
Sub-Accounts.
2
<PAGE> 6
PART 2 GENERAL PROVISIONS
- -------------------------------------------------------------------------------
ENTIRE CONTRACT The Contract is issued in consideration of the
Contract Application and receipt of Payment(s).
This Contract, Endorsements, if any, the Contract
Application, a copy of which is attached, and the
Application of each Owner, if one is attached to
the Certificate, constitute the entire Contract.
Only the President, a Vice President, or the
Secretary of the Company has authority to agree on
our behalf to any alteration of the Contract or any
Certificate, or to any waiver of our rights or
requirements. The change or waiver must be in
writing.
The benefits and values available under the
Contract are not less than the minimum required by
any statue of the state in which the Contract is
delivered. We have filed a detailed statement of
the method used to calculate the benefits and
values with the Department of Insurance in the
state in which the Contract is issued, if required
by law.
MODIFICATION We will not change or modify the Contract or any
Certificate without the consent of the Group Holder
or any Owner, as applicable, except as may be
required to make it conform to any applicable law
or regulation or any ruling issued by a government
agency.
In addition, upon 60 days prior written notice to
the Group Holder, the Contract may be modified by
us to change the Withdrawal Charges, Annual
Administration Fees, Maximum Charge Percentage,
Free Withdrawal Percentage, the tables used to
determine the amount of the first monthly annuity
payment and the formula used to calculate the
Market Value Charge, provided that such
modification shall apply only to the Owner's
Certificate established after the effective date of
any such modification.
TEN DAY RIGHT TO REVIEW If not satisfied with the Certificate, an Owner
may, within 10 days after receipt of the
Certificate, return it by delivering or mailing it
to the Annuity Service Office, and it shall be
deemed void from the beginning. Within 7 days of
receipt of the Certificate by us, We will pay the
Contract Value, computed at the end of the
Valuation Period during which the Certificate is
received by us, to the Owner. When the Certificate
is issued as an individual retirement annuity,
during the first 7 days of this 10 day period, We
will return the greater of (i) Contract Value
computed at the end of the Valuation Period during
which the Certificate is received by us or (ii) sum
of all Payments.
BENEFICIARY The Beneficiary is as designated on the Certificate
Specifications Page and Application, unless
changed. However, if there is a surviving Owner,
that person will be treated as the Beneficiary. If
no such Beneficiary is living, the Beneficiary is
the "Contingent Beneficiary". If no Beneficiary or
Contingent Beneficiary is living, the Beneficiary
is the estate of the deceased Owner.
CHANGE IN MATURITY DATE Prior to the Maturity Date, an Owner may request in
writing a change of the Maturity Date. Any
extension of the Maturity Date will be subject to
our prior approval.
ASSIGNMENT The Group Holder may assign this Contract at any
time. An Owner may assign his interest in this
Contract at any time prior to the Maturity Date.
No assignment will be binding on us unless it is
written in a form acceptable to us and received at
our Annuity Service Office. We will not be liable
for any payments made or actions We take before the
assignment is accepted by us. An absolute
assignment by an Owner will revoke the interest of
any revocable Beneficiary. We will not be
responsible for the validity of any assignment.
3
<PAGE> 7
CLAIMS OF CREDITORS To the extent permitted by law, no benefits payable
under the Contract will be subject to the claims of
the Group Holder's, an Owner's, the Beneficiary's,
or the Annuitant's creditors.
DISCONTINUANCE OF NEW By giving 30 days prior written notice to the Group
OWNERS Holder, We may limit or discontinue the acceptance
of new Applications and the issuance of new
Certificates under this Contract. Such limitation
or discontinuance shall have no effect on rights or
benefits with respect to any Certificate
established prior to the effective date of such
limitation or discontinuance.
MISSTATEMENT OF AGE AND We may require proof of age or survival of any
PROOF OF SURVIVAL person upon whose age or survival any payments
depend. If the age of the Annuitant has been
misstated, the benefits will be those which the
Payments would have provided for the correct age.
If We have made incorrect annuity payments, the
amount of any underpayment will be paid
immediately. The amount of any overpayment will be
deducted from future annuity payments.
ADDITION, DELETION OR We reserve the right, subject to compliance with
SUBSTITUTION OF applicable law, to make additions to, deletions
INVESTMENT from, or substitutions for the Portfolio shares
OPTIONS that are held by the Variable Account or that the
Variable Account may purchase. We reserve the
right to eliminate the shares of any of the
eligible Portfolios and to substitute shares of
another Portfolio of the Trust, or of another
open-end registered investment company, if the
shares of any eligible Portfolio are no longer
available for investment, or if in our judgment
further investment in any eligible Portfolio should
become inappropriate in view of the purposes of the
Variable Account. We will not substitute any
shares attributable to an Owner's interest in a
Sub-Account without notice to the Owner and prior
approval of the Securities and Exchange Commission
to the extent required by the Investment Company
Act of 1940. Nothing contained herein shall
prevent the Variable Account from purchasing other
securities for other series or classes of
contracts, or from effecting a conversion between
shares of another open-end investment company.
We reserve the right, subject to compliance with
applicable law, to establish additional
Sub-Accounts which would invest in shares of a new
Portfolio of the Trust or in shares of another
open-end investment company. We also reserve the
right to eliminate existing Sub-Accounts, to
combine Sub-Accounts or to transfer assets in a
Sub-Account to another Separate Account established
by us or an affiliated company. In the event of
any such substitution or change, We may, by
appropriate endorsement, make such changes in this
and other Contracts as may be necessary or
appropriate to reflect such substitutions or
change. If deemed by us to be in the best
interests of persons having voting rights under the
Contracts, the Variable Account may be operated as
a management company under the Investment Company
Act of 1940 or it may be de-registered under such
Act in the event such registration is no longer
required.
NON-PARTICIPATING The Contract is non-participating and will not
share in our profits or surplus earnings. We will
pay no dividends on the Contract.
REPORTS At least once each year We will send the Group
Holder and each Owner a report containing
information required by the Investment Company Act
of 1940 and applicable state law.
INSULATION The portion of the assets of the Variable Account
equal to the reserves and other contract
liabilities with respect to such account are not
chargeable with liabilities arising out of any
other business We may conduct. Moreover, the
income, gains and losses, realized or unrealized,
from assets allocated to the Variable Account shall
be credited to or charged against such account
without regard to our other income, gains or losses.
4
<PAGE> 8
CURRENCY AND PLACE OF All payments made to or by us shall be made in the
PAYMENTS lawful currency of the United States of America at
the Annuity Service Office or elsewhere if We
consent.
NOTICES AND ELECTIONS Unless otherwise provided in this Contract, all
notices, requests and elections will be effective
when received by us at our Annuity Service Office,
complete with all necessary information and the
signature of the Group Holder and/or Owner, as
appropriate.
GOVERNING LAW The Contract and all Certificates issued in
connection with it will be governed by the laws of
the jurisdiction indicated on the Contract
Specifications Page.
SECTION 72(S) The provisions of this Contract shall be
interpreted so as to comply with the requirements
of Section 72(s) of the Internal Revenue Code.
PART 3 OWNERSHIP
- -------------------------------------------------------------------------------
EXERCISE OF CONTRACT The Contract shall belong to the Group Holder. All
RIGHTS Contract rights and privileges not expressly
reserved by the Group Holder, may be exercised by
the Owner as to his or her interest. Such rights
and privileges can be exercised without the consent
of the Beneficiary (other than an irrevocably
designated beneficiary) or any other person.
Before the Maturity Date, the Owner shall be the
person, persons or entity designated on the
Certificate Specifications Page or the latest
change filed with us. On the Maturity Date the
Annuitant becomes the Owner. If amounts become
payable to the Beneficiary under a Certificate, the
Beneficiary becomes the Owner.
CHANGE OF OWNER, Subject to the rights of an irrevocable
ANNUITANT, BENEFICIARY Beneficiary, each Owner may change the Owner,
Annuitant, or Beneficiary of his or her interest in
the Contract by written request in a form
acceptable to us and which is received at our
Annuity Service Office. The Annuitant may not be
changed after the Maturity Date. The Owner's
Certificate need not be sent unless We request it.
Any change must be approved by us. If approved,
any change of Beneficiary will take effect on the
date the request is signed. If approved, any
change of Owner or Annuitant will take effect on
the date We received the request at the Annuity
Service Office. We will not be liable for any
payments or actions We take before the change is
approved.
The substitution or addition of any Owner may
result in the resetting of the Death Benefit to an
amount equal to the Contract Value as of the date
of such change. For purposes of subsequent
calculations of the Death Benefit, described in
Part 4, Benefits, Death Benefit Before Maturity
Date, the Contract Value on the date of the change
will be treated as a Payment made on that date. In
addition, all Payments made and all amounts
deducted in connection with partial withdrawals
prior to the date of the change of Owner will not
be considered in the determination of the Death
Benefit. This paragraph will not apply if (a) the
individual whose death will cause the Death Benefit
to be paid is the same after the change of Owner,
or (b) if Ownership is transferred to the Owner's
spouse.
If any Annuitant is changed and any Owner is not an
individual, the entire interest in the Certificate
must be distributed to the Owner within five years
of the change.
5
<PAGE> 9
PART 4 BENEFITS
- -------------------------------------------------------------------------------
ANNUITY BENEFITS We will pay a monthly income to the Annuitant, if
living, on the Maturity Date. Payments can be
fixed or variable, or a combination of fixed and
variable. Annuity benefits will commence on the
Maturity Date and continue for the period of time
provided for under the Annuity Option selected.
We may pay the Contract Value, less Debt, on the
Maturity Date in one lump sum if the monthly income
is less than $20.
On or before the Maturity Date, the Owner must
select how the Contract Value will be used to
provide the monthly income. The Owner may select a
Fixed or Variable Annuity. Unless the Owner
indicates otherwise, We will provide either
variable or fixed, or a combination variable and
fixed annuity payments in proportion to the
Investment Account Value of each Investment Option
at the Maturity Date. Annuity payments will
continue for 10 years or the life of the Annuitant,
if longer.
If a Variable Annuity is used, the amount of the
first monthly annuity payment will be obtained from
the appropriate option table under the "Payment of
Contract Benefits" Section. Subsequent monthly
annuity payments will vary based on the investment
experience of the Sub-Account(s) used to effect the
annuity. The method used to calculate the amount
of the initial and subsequent payments is described
under the "Variable Annuity Payments" Section of
Part 8 of this Contract.
If a Fixed Annuity is used, the portion of the
Contract Value used to effect a Fixed Annuity will
be applied to the appropriate table contained in
this Contract. If the table in use by us on the
Maturity Date is more favorable to the Owner, We
will use that table. We guarantee the dollar
amount of fixed annuity payments.
DEATH BENEFIT BEFORE A Death Benefit will be determined as of the date
MATURITY DATE on which written notice and proof of death and all
required claim forms are received at the Company's
Annuity Service Office as follows:
The Death Benefit will be determined as the greater
of the Contract Value or the Minimum Death
Benefit. The Minimum Death Benefit is equal to the
sum of all Payments made by or on behalf of the
Owner. Partial withdrawals will reduce the Minimum
Death Benefit. The reduction in Minimum Death
Benefit for each partial withdrawal will be equal
to the greater of (a) or (b) where:
(a) is equal to the amount of the partial
withdrawal made by or on behalf of the Owner,
and
(b) is equal to (i) times (ii) where:
(i) is equal to the Minimum Death Benefit
prior to the withdrawal, and
(ii) is equal to the partial withdrawal
amount divided by the Contract Value
prior to the partial withdrawal.
If there is any Debt, the Death Benefit equals the
amount described above less the Debt under the
Certificate.
DEATH OF ANNUITANT: On the death of the last
surviving Annuitant, the Owner becomes the new
Annuitant, if the Owner is an individual. If any
Owner is not an individual the death of any
Annuitant is treated as the death of an Owner and
the Death Benefit will be determined by
substituting the Annuitant for the Owner as
described below.
6
<PAGE> 10
DEATH OF OWNER: We will pay the Death Benefit to
the Beneficiary if any Owner dies prior to the
Maturity Date. The Death Benefit may be taken in
one sum immediately, in which case the Certificate
will terminate. If the Death Benefit is not taken
in one sum immediately, the Certificate will
continue subject to the following provisions:
(a) The Beneficiary becomes the Owner.
(b) The excess, if any, of the Death Benefit over
the Contract Value will be allocated to and
among the Investment Accounts in proportion to
their values as of the date on which the Death
Benefit is determined.
(c) No additional Payments may be applied under the
Contract by or on behalf of the Owner.
(d) If the Beneficiary is not the deceased Owner's
spouse, the entire interest in the Contract
must be distributed under one of the following
options:
(i) The entire interest in the Contract must be
distributed over the life of the
Beneficiary, or over a period not extending
beyond the life expectancy of the
Beneficiary, with distributions beginning
within one year of the Owner's death; or
(ii) the entire interest in the Contract must
be distributed within 5 years of the Owner's
Death.
If the Beneficiary dies before the
distributions required by (i) or (ii) are
complete, the entire remaining Contract Value
must be distributed in a lump sum immediately.
(e) If the Beneficiary is the deceased Owner's
spouse, the Contract will continue with the
surviving spouse as the new Owner. The
surviving spouse may name a new Beneficiary
(and, if no Beneficiary is so named, the
surviving spouse's estate will be the
Beneficiary). Upon the death of the surviving
spouse, the Death Benefit will equal the
Contract Value at the time of the surviving
spouse's death, and the entire interest in the
Contract must be distributed to the new
Beneficiary in accordance with the provisions
of (d) (i) or (d) (ii) above.
If there is more than one Beneficiary, the
foregoing provisions will independently apply to
each Beneficiary.
DEATH BENEFIT ON OR If annuity payments have been selected based on an
AFTER MATURITY DATE Annuity Option providing for payments for a
guaranteed period, and the Annuitant dies on or
after the Maturity Date, We will make the remaining
guaranteed payments to the Beneficiary. Any
remaining payments will be made as rapidly as under
the method of distribution being used as of the
date of the Annuitant's death. If no Beneficiary is
living, We will commute any unpaid guaranteed
payments to a single sum (on the basis of the
interest rate used in determining the payments) and
pay that single sum to the estate of the last to
die of the Annuitant and the Beneficiary.
PROOF OF DEATH Proof of death is required upon the death of the
Annuitant or the Owner. Proof of death is one of
the following received at the Annuity Service
Office:
(a) A certified copy of a death certificate.
(b) A certified copy of a decree of a court of
competent jurisdiction as to the finding of
death.
(c) Any other proof satisfactory to us.
7
<PAGE> 11
PART 5 PAYMENTS
- -------------------------------------------------------------------------------
GENERAL All Payments under this Contract are payable at our
Annuity Service Office or such other place as We
may designate.
The minimum Payment for any Certificate will be
$30. If a Payment for a Certificate would cause the
Contract Value for an Owner to exceed $1,000,000,
or that Contract Value already exceeds $1,000,000,
no additional Payments will be accepted without our
prior approval.
NONPAYMENT OF PAYMENTS If, prior to the Maturity Date, no Payments for a
FOR TWO YEARS Certificate have been made for two consecutive
Certificate Years, and if both:
(a) the total Payments made for the Certificate,
less any partial withdrawals, are less then
$2,000; and
(b) the Contract Value for an Owner at the end of
such two year period is less than $2,000;
We may cancel the Certificate and participation
under this Contract and pay the Owner the Contract
Value (measured as of the Valuation Period during
which the cancellation occurs), less the Debt and
Annual Administration Fee.
ALLOCATION OF NET When We receive Payments, the Net Payments will be
PAYMENTS allocated among Investment Options in accordance
with the allocation percentages shown on the
Certificate Specifications Page. The Owner may
change the allocation of subsequent Net Payments at
any time, without charge, by giving us written
notice.
PART 6 VARIABLE ACCOUNT PROVISIONS
- -------------------------------------------------------------------------------
INVESTMENT ACCOUNT We will establish a separate Investment Account for
each Owner for each variable Investment Option to
which an Owner allocates amounts. The
Investment Account represents the number of an
Owner's Accumulation Units in an Investment Option.
INVESTMENT ACCOUNT VALUE The Investment Account Value of an Owner's
Investment Account is determined by (a) times (b)
where:
(a) equals the number of Accumulation Units
credited to the Investment Account; and,
(b) equals the value of the appropriate
Accumulation Unit.
ACCUMULATION UNITS We will credit Net Payments to an Owner's
Investment Accounts in the form of Accumulation
Units. The number of Accumulation Units to be
credited to each Investment Account will be
determined by dividing the Net Payment allocated to
that Investment Account by the Accumulation Unit
value for that Investment Account.
Accumulation Units will be adjusted for any
transfers and will be canceled on payment of a
death benefit, withdrawal, maturity or assessment
of certain charges based on their value for the
Valuation Period in which such transaction occurs.
VALUE OF ACCUMULATION The Accumulation Unit value for a particular
UNIT Investment Account for any Valuation Period is
determined by multiplying the Accumulation Unit
value for the immediately preceding Valuation
Period by the "net investment factor" for the
Valuation Period
8
<PAGE> 12
for which the value is being determined. The value
of an Accumulation Unit may increase, decrease or
remain the same from one Valuation Period to the
next.
NET INVESTMENT FACTOR The net investment factor is an index that measures
the investment performance of a Sub-Account from
one Valuation Period to the next. The net
investment factor for any Valuation Period is
determined by dividing (a) by (b) and subtracting
(c) from the result where:
(a) is the net result of:
1) the net asset value per share of a
Portfolio share held in the Sub-Account
determined as of the end of the current
Valuation Period, plus:
2) the per share amount of any dividend or
capital gain distributions made by the
Portfolio on shares held in the
Sub-Account if the "ex-dividend" date
occurs during the current Valuation
Period, and
(b) is the net asset value per share of a Portfolio
share held in the Sub-Account determined as of
the end of the immediately preceding Valuation
Period, and
(c) is the Asset Fee as defined in Part 11, Fees
and Deductions.
The net investment factor may be greater or less
than, or equal to, one.
PART 7 FIXED ACCOUNT PROVISIONS
- -------------------------------------------------------------------------------
INVESTMENT ACCOUNT We will establish a separate Investment Account for
each Owner each time an Owner allocates amounts to
a fixed Investment Option. Any amounts an Owner
allocates to the same fixed Investment Option on
the same day will establish a new Investment
Account. Amounts invested in these Investment
Accounts will earn interest at the guaranteed rate
in effect on the date the amounts are allocated for
the duration of the guarantee period.
We will determine the guaranteed rates from time to
time for Payments, renewal amounts and amounts
transferred to a fixed Investment Option. In no
event will the minimum guaranteed rate under a
fixed Investment Account be less than 3%.
GUARANTEE PERIODS For any amounts allocated to the fixed Investment
Options, an Owner has the choice of the guarantee
periods available. The amount can be allocated
into any combination of the fixed Investment
Options offered under this Contract.
Separate Investment Accounts will be established
for each guarantee period. The guarantee period
will be the duration of the fixed Investment Option
selected measured from the date the amount is
allocated to the Investment Account. Amounts
cannot be allocated to a fixed Investment Option
that would extend the guarantee period beyond the
Maturity Date.
RENEWALS The renewal amount is the Investment Account Value
at the end of the particular guarantee period. The
renewal amount will be automatically renewed in the
same Investment Option at the end of the guarantee
period, unless the Owner specifies otherwise. If
renewal in a particular Investment Option would
result in the guarantee period for that Investment
Account extending beyond the Maturity Date, the
renewal amount may not be renewed in that
Investment Option. The renewal amount will be
applied to the longest guarantee period of a fixed
Investment Option such that the guarantee period
does not extend beyond the Maturity Date.
INVESTMENT ACCOUNT VALUE The amount in the Investment Accounts of an Owner
will accumulate at a rate of interest determined by
us and in effect on the date the amount is
allocated to the
9
<PAGE> 13
Investment Account. The Investment Account Value of
an Owner's Investment Account is the accumulated
value of the amount invested in the Investment
Account reduced by any withdrawals, loans, transfers
or charges taken from the Investment Account.
MARKET VALUE CHARGE Any amounts withdrawn from a fixed Investment
Account, prior to the end of the guarantee period,
may be subject to a Market Value Charge. The
Market Value Charge will only apply to amounts
withdrawn from a Investment Account pursuant to a
partial withdrawal, total withdrawal, transfer or a
loan. A Market Value Charge will not be assessed
on amounts withdrawn from the 1 year fixed
Investment Account.
MARKET VALUE CHARGE A Market Value Charge will be calculated separately
FACTOR for each fixed Investment Account affected. The
Market Value Charge for a particular Investment
Account will be calculated by multiplying the
amount withdrawn or transferred from the Investment
Account by the adjustment factor described below.
The adjustment factor for a particular Investment
Account is determined by the following formula:
0.75 x (B-A) x C/12.
Where A, B and C are defined as follows:
A - The guaranteed interest rate on the Investment
Account.
B - The guaranteed interest rate available, on the
date the request is processed, for amounts
allocated to a new Investment Account with the
same length of guarantee period as the
Investment Account from which amounts are being
withdrawn.
C - The number of complete months remaining to
the end of the guarantee period.
For purposes of this calculation, the maximum
difference between "B" and "A" will be 3%.
Furthermore, the adjustment factor will never be
less than zero. The amount of Market Value Charge,
if any, upon transfer, or loan is specified in Part
9, Transfer Provisions, and upon withdrawal as
specified in Part 10, Withdrawal Provisions.
10
<PAGE> 14
PART 8 ANNUITY PROVISIONS
- -------------------------------------------------------------------------------
VARIABLE ANNUITY PAYMENTS The amount of the first variable annuity payment is
determined by applying the portion of the Contract
Value used to effect a Variable Annuity, measured
as of a date not more than 10 business days prior
to the Maturity Date (minus any applicable premium
taxes), to the appropriate table(s) contained in
the Contract and the Certificate. If the table in
use by us on the Maturity Date is more favorable to
the Owner, We will use that table. Subsequent
payments will be based on the investment
performance of one or more Sub-Accounts as selected
by the Owner. The amount of such payments is
determined by the number of Annuity Units credited
for each Sub-Account. Such number is determined by
dividing the portion of the first payment allocated
to that Sub-Account by the Annuity Unit value for
that Sub-Account determined as of the same date
that the Contract Value used to effect annuity
payments under a Certificate was determined. This
number of Annuity Units for each Sub-Account is
then multiplied by the appropriate Annuity Unit
value for each subsequent determination date, which
is a uniformly applied date not more than 10
business days before the payment is due.
MORTALITY AND EXPENSE We guarantee that the dollar amount of each
GUARANTEE variable annuity payment will not be affected by
changes in mortality and expense experience.
ANNUITY UNIT VALUE The value of an Annuity Unit for each Sub-Account
for any Valuation Period is determined as follows:
(a) The net investment factor for the Sub-Account
for the Valuation Period for which the Annuity
Unit value is being calculated is multiplied by
the value of the Annuity Unit for the preceding
Valuation Period; and
(b) The result is adjusted to compensate for the
interest rate assumed in the tables used to
determine the first variable annuity payment.
The dollar value of Annuity Units may increase,
decrease or remain the same from one Valuation
Period to the next.
FIXED ANNUITY PAYMENTS The amount of each fixed annuity payment is
determined by applying the portion of the Contract
Value used to effect a Fixed Annuity measured as of
a date not more than 10 business days prior to the
Maturity Date (minus any applicable premium taxes)
to the appropriate table(s) contained in the
Contract and the Certificate. If the table in use
by us on the Maturity Date is more favorable to the
Owner, We will use that table.
We guarantee the dollar amount of fixed annuity
payments.
11
<PAGE> 15
PART 9 TRANSFERS
- -------------------------------------------------------------------------------
TRANSFERS Before the Maturity Date, the Owner may transfer
amounts among Investment Accounts of the Contract.
There is no transaction charge for transfers,
however, amounts transferred from a fixed
Investment Account prior to the end of the
guarantee period may be subject to a Market Value
Charge. Amounts will be canceled from the
Investment Accounts from which amounts are
transferred and credited to the Investment Account
to which amounts are transferred. We will effect
such transfers so that the Contract Value for a
Certificate on the date of transfer will not be
affected by the transfer, except for the Market
Value Charge, if applicable. We reserve the right
to limit, upon notice, the maximum number of
transfers that can be made per Certificate Year to
one per month or six at anytime within a
Certificate Year.
An Owner must transfer at least $300 or, if less,
the entire amount in the Investment Account each
time the Owner makes a transfer. If, after the
transfer, the amount remaining in the Investment
Account from which the transfer is made is less
than $100, then We will transfer the entire amount
instead of the requested amount. We reserve the
right to defer, modify or terminate the transfer
privilege at any time that We are unable to
purchase or redeem shares of the Trust Portfolios.
Amounts may not be transferred from a fixed
Investment Account unless those amounts have been
in the fixed Investment Account for at least one
year. The Market Value Charge, if applicable, will
be deducted from the amount transferred.
Once variable annuity payments have begun, an Owner
may transfer all or part of the investment upon
which the Owner's variable annuity payments are
based from one Sub-Account to another. To do this,
We will convert the number of variable Annuity
Units held by an Owner in the Sub-Account from
which the Owner is transferring to a number of
variable Annuity Units of the Sub-Account to which
the Owner is transferring so that the next annuity
payment, if it were made at that time, would be the
same amount that it would have been without the
transfer. After the transfer, the variable annuity
payments will reflect changes in the values of the
Owner's new variable Annuity Units. An Owner must
give us notice at least 30 days before the due date
of the first variable annuity payment to which the
transfer will apply. We reserve the right, upon
notice, to limit to four the maximum number of
transfers an Owner may make per Certificate Year
after variable annuity payments have begun.
After the Maturity Date, transfers will not be
allowed from a fixed to a variable Annuity Option,
or from a variable to a fixed Annuity Option.
TRANSFER MARKET VALUE Amounts transferred from a fixed Investment Account
CHARGE may be subject to a Market Value Charge. For
Transfers, including transfers to the Loan Account
pursuant to a loan request, the Market Value
Charge, if applicable, will be calculated by
multiplying the amount transferred from each fixed
Investment Account by the Market Value Charge
Factor for that Investment Account and deducted
from the amount transferred.
If there are multiple Investment Accounts under a
fixed Investment Option, the requested amount from
that Investment Option must be transferred from
those Investment Accounts on a first-in-first-out
basis.
The Market Value Charge may not exceed the earnings
in excess of 3% per
12
<PAGE> 16
annum attributable to the amount transferred.
In no event will the Market Value Charge be greater
than 10% of the amount transferred.
In no event will the Market Value Charge reduce the
amount transferred below the amount required under
the non-forfeiture laws of the state that has
jurisdiction over this contract.
PART 10 WITHDRAWAL PROVISIONS
- -------------------------------------------------------------------------------
CONTRACT VALUE An Owner's Contract Value is equal to the total of
that Owner's Investment Account Values and, if
applicable, any amount in the Loan Account
attributable to that Owner.
PAYMENTS OF WITHDRAWALS An Owner may withdraw part or all of the Contract
Value, less any Debt, at any time before the
earlier of the death of an Owner or the Maturity
Date, by sending us a written request. We will pay
all withdrawals within seven days of receipt at the
Annuity Service Office subject to postponement in
certain circumstances, as specified below.
SUSPENSION OF PAYMENTS We may defer the right of withdrawal from, or
postpone the date of payments from, the variable
Investment Accounts for any period when: (1) the
New York Stock Exchange is closed (other than
customary weekend and holiday closings); (2)
trading on the New York Stock Exchange is
restricted; (3) an emergency exists as a result of
which disposal of securities held in the Variable
Account is not reasonably practicable or it is not
reasonably practicable to determine the value of
the Variable Account's net assets; or (4) the
Securities and Exchange Commission, by order, so
permits for the protection of security holders;
provided that applicable rules and regulations of
the Securities and Exchange Commission shall govern
as to whether the conditions described in (2) and
(3) exist.
We may defer the right of withdrawal from the fixed
Investment Accounts for not more than six months
from the day We receive written request and the
Certificate, if required. If such payments are
deferred 30 days or more, the amount deferred will
earn interest at a rate not less than 3% per year.
TOTAL WITHDRAWAL Upon receipt of an Owner's request to withdraw the
entire Contract Value, We will terminate the
Certificate and pay the Owner the Contract Value,
less any applicable Debt, Withdrawal Charges,
Market Value Charges and the Annual Administration
Fee.
PARTIAL WITHDRAWAL If an Owner is withdrawing part of the Contract
Value, he/she should specify the amount that should
be withdrawn from each Investment Option of the
Contract. If there are multiple Investment
Accounts under a fixed Investment Option, the
requested amount from that Investment Option must
be withdrawn from those Investment Accounts on
first-in-first-out basis. If he/she does not
specify, the requested amount will be withdrawn in
the following order:
a) Variable Investment Accounts, on a pro rata
basis,
b) Fixed Investment Options beginning with the
shortest guarantee period first and the longest
guarantee period last.
We will deduct the Market Value Charge, if
applicable, from the Contract Value remaining after
payment of the requested amount. Partial
withdrawals will reduce the Minimum Death Benefit,
as described in Part 4, Benefits, Death Benefit
Before
13
<PAGE> 17
Maturity Date.
WITHDRAWAL CHARGE No Withdrawal Charge will apply.
WITHDRAWAL MARKET VALUE Amounts withdrawn from a fixed Investment Account
CHARGE may be subject to a Market Value Charge. The total
Market Value Charge will be the sum of the Market
Value Charges for each Investment Account being
withdrawn. For full withdrawals, the Market Value
Charge will be calculated on the total amount of
each Investment Account, and the total Market Value
Charge will be deducted from the amount otherwise
payable. For partial withdrawals, the Market Value
Charge will be calculated based on the withdrawal
amount requested from each Investment Account and
the Market Value Charge, if applicable, will be
deducted from the remaining Investment Account
Value.
There will be no Market Value Charge on withdrawals
from the fixed Investment Accounts in the following
situations: (a) withdrawal from a 1-year fixed
Investment Account, (b) death of the Owner, (c)
amounts withdrawn to pay any fees or charges, (d)
amounts applied at the Maturity Date to purchase an
annuity at the guaranteed rates in the Annuity
Option tables, and (e) amounts withdrawn from fixed
Investment Accounts within one month prior to the
end of the guarantee period.
The Market Value Charge may not exceed the earnings
in excess of 3% per annum attributable to the
amount withdrawn.
In no event will the Market Value Charge for an
Investment Account be greater than the Maximum
Charge Percentage as set forth on the Contract
Specifications Page, multiplied by the amount
withdrawn.
In no event will the Market Value Charge reduce the
amount payable on withdrawal below the amount
required under the non-forfeiture laws of the state
that has jurisdiction over this Contract.
FREQUENCY AND AMOUNT OF An Owner may make as many partial withdrawals as he
PARTIAL WITHDRAWALS or she wishes. Any withdrawal from an Owner's
Investment Account must be at least $300 or the
entire balance of the Investment Account, if less.
If after the withdrawal, the amount remaining in
that Owner's Investment Account is less than $100,
then We will consider the withdrawal request to be
a request for withdrawal of the entire amount held
in the Investment Account. If a partial withdrawal
would reduce the Owner's Contract Value to less
than $300, then We will treat the partial
withdrawal request as a total withdrawal of that
Owner's Contract Value.
PART 11 FEES AND DEDUCTIONS
- -------------------------------------------------------------------------------
ASSET FEE To compensate us for assuming mortality and expense
risks, and certain administration expenses, We
deduct from each variable Investment Option a fee
each Valuation Period at an annual rate of 1.00%.
A portion of this Asset Fee may also be used to
reimburse us for distribution expenses. This fee
is reflected in the Net Investment Factor used to
determine the value of Accumulation Units and
Annuity Units of the Certificate.
ANNUAL ADMINISTRATION FEE To compensate us for assuming certain
administrative expenses, We charge an Annual
Administration Fee as set forth on the Certificate
Specifications Page. Prior to the Maturity Date,
the Annual Administration Fee is deducted on each
Certificate Anniversary. It is withdrawn from each
Investment Option in the same proportion that the
value of the Investment Accounts of each Investment
Option bears to the Contract Value. If the
Contract Value is totally withdrawn on any date
other than the Certificate Anniversary, We will
deduct the total amount of the Annual
14
<PAGE> 18
Administration Fee from the amount paid. During
the annuity period, the Annual Administration Fee
is deducted on a pro rata basis from each annuity
payment.
TAXES We reserve the right to charge certain taxes
against Payments for an Owner (either at the time
of payment or liquidation), Contract Value of an
Owner, payment of Death Benefit, or annuity
payments, as appropriate. Such taxes may include
any premium taxes or other taxes levied by any
government entity which we, in our sole discretion,
determine have resulted from the establishment or
maintenance of the Variable Account, or from the
receipt by us of Payments, or from the issuance of
the Contract and an Owner's Certificate, or from
the commencement or continuance of annuity payments
under the Contract.
PART 12 LOAN PROVISIONS (CERTAIN QUALIFIED CONTRACTS ONLY)
- -------------------------------------------------------------------------------
GENERAL This loan provision applies only to certain
Qualified Contracts and Certificates. All
provisions and terms of a loan are included in the
Qualified Plan Endorsement, if attached.
PART 13 PAYMENT OF CONTRACT BENEFITS
- -------------------------------------------------------------------------------
GENERAL Benefits payable under this Contract may be applied
in accordance with one or more of the Annuity
Options described below, subject to any
restrictions of Internal Revenue Code section 72(s).
ALTERNATE ANNUITY OPTIONS Instead of settlement in accordance with the
Annuity Options described below, an Owner may
choose an alternate form of settlement acceptable
to us.
DESCRIPTION OF ANNUITY Option 1: Life Annuity
OPTION
a) Life Non-Refund. We will make payments during
the lifetime of the Annuitant. No payments are
due after the death of the Annuitant.
b) Life 10-Year Certain. We will make payments
for 10 years and after that during the lifetime
of the Annuitant. No payments are due after
the death of the Annuitant or, if later, the
end of the 10-year period certain.
Option 2: Joint and Survivor Life Annuity
The second Annuitant named shall be referred to as
the Co-Annuitant.
a) Joint and Survivor Non-Refund. We will make
payments during the joint lifetime of the
Annuitant and Co-Annuitant. Payments will then
continue during the remaining lifetime of the
survivor. No payments are due after the death
of the last survivor of the Annuitant and
Co-Annuitant.
b) Joint and Survivor with 10-Year Certain. We
will make payments for 10 years and after that
during the joint lifetime of the Annuitant and
Co-Annuitant. Payments will then continue
during the remaining lifetime of the survivor.
No payments are due after the death of the
survivor of the Annuitant and Co-Annuitant or,
if later, the end of the 10-year period certain.
ANNUITY PAYMENT RATES The annuity payment rates on the attached tables
show, that for each $1,000 applied, the dollar
amount of both: (a) the first monthly variable
annuity payment based on the assumed interest rate
of 3%; and (b) the monthly fixed annuity payment,
when this payment is based on the minimum
guaranteed interest rate of 3% per year. The
annuity payment rates for payments made on a less
frequent
15
<PAGE> 19
basis (quarterly, semiannual or annual) will be
quoted by us upon request.
The annuity payment rates are based on the 1983
Table A projected at Scale G with interest at the
rate of 3% per annum and assume births in year
1942. The amount of each annuity payment will
depend upon the and adjusted age of the Annuitant,
the Co-Annuitant, if any, or other payee. The
adjusted age is determined from the actual age
nearest birthday at the time the first monthly
annuity payment is due, as follows:
<TABLE>
<CAPTION>
Calendar Year of Birth Adjustment to Actual Age
-----------------------------------------------------
<S> <C>
1899 - 1905 +6
1906 - 1911 +5
1912 - 1918 +4
1919 - 1925 +3
1926 - 1932 +2
1933 - 1938 +1
1939 - 1945 0
1946 - 1951 -1
1952 - 1958 -2
1959 - 1965 -3
1966 - 1972 -4
1973 - 1979 -5
1980 - 1986 -6
1987 + -7
</TABLE>
The dollar amount of annuity payment for any age or
combination of ages not shown following or for any
other form of Annuity Option agreed to by us will
be quoted on request.
16
<PAGE> 20
AMOUNT OF FIRST MONTHLY PAYMENT
PER $1000 OF CONTRACT VALUE
OPTION 1: LIFE ANNUITY
<TABLE>
<CAPTION>
Option 1(A): Non-Refund Option 1(B): 10-Year Certain
-------------------------------- -------------------------------
Adjusted Adjusted
Age of Male Female Age of Male Female
Annuitant Annuitant
-------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
55 4.27 3.86 55 4.22 3.84
60 4.69 4.19 60 4.61 4.15
65 5.25 4.61 65 5.10 4.55
70 6.02 5.19 70 5.71 5.07
75 7.01 5.99 75 6.42 5.73
80 8.34 7.10 80 7.20 6.52
85 10.13 8.64 85 7.97 7.37
</TABLE>
OPTION 2: JOINT AND SURVIVOR LIFE ANNUITY
Option 2(A): Non-Refund
<TABLE>
<CAPTION>
Age of Co-Annuitant
-----------------------------------------------------------------
Adjusted
Age of
Male 10 Years 5 Years Same 5 Years 10 Years
Annuitant Younger Younger Age Older Older
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.25 3.39 3.55 3.72 3.87
60 3.41 3.60 3.81 4.02 4.21
65 3.62 3.87 4.14 4.41 4.67
70 3.89 4.21 4.57 4.95 5.29
75 4.24 4.67 5.17 5.67 6.11
80 4.71 5.30 5.97 6.63 7.19
85 5.35 6.15 7.05 7.92 8.60
</TABLE>
Option 2(B): 10 Year Certain
<TABLE>
<CAPTION>
Age of Co-Annuitant
-----------------------------------------------------------------
Adjusted
Age of
Male 10 Years 5 Years Same 5 Years 10 Years
Annuitant Younger Younger Age Older Older
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.25 3.39 3.55 3.72 3.87
60 3.41 3.60 3.80 4.01 4.21
65 3.62 3.86 4.13 4.41 4.66
70 3.89 4.21 4.56 4.92 5.24
75 4.24 4.66 5.13 5.58 5.95
80 4.69 5.25 5.85 6.39 6.78
85 5.28 6.00 6.71 7.27 7.67
-----------------------------------------------------------------
</TABLE>
Monthly installments for ages not shown will be furnished on request.
17
<PAGE> 21
- ----------------------------------------------------------------------------
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NORTH AMERICA
- ----------------------------------------------------------------------------
<PAGE> 22
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries.
20
<PAGE> 1
EXHIBIT 99.(4)(ii)
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NORTH AMERICA
- -------------------------------------------------------------------------------
EXECUTIVE OFFICE: ANNUITY SERVICE OFFICE HOME OFFICE:
116 Huntington Avenue P.O. Box 9230 Wilmington, Delaware
Boston, MA 02116 Boston, MA 02205-9230
1-800-344-1029
This is a Certificate which evidences the interest of the Owner named in the
Certificate Specifications Page in the Flexible Payment Deferred Combination
Fixed and Variable Group Annuity Contract issued by The Manufacturers Life
Insurance Company of North America.
The Manufacturers Life Insurance Company of North America will pay an annuity
commencing on the Maturity Date to the Annuitant, if then living, in accordance
with the Benefits and the Payment of Contract Benefits provisions. If the Owner
dies while the Contract is in effect and the Owner's Certificate is in force and
before the Maturity Date, the Company will pay a Death Benefit to the
Beneficiary upon receipt of all required claim forms and proof of death of the
Owner at the Annuity Service Office.
The Contract is the legal contract. This Certificate is merely a summary of the
rights, duties and benefits of that Contract. A copy of the Contract may be
obtained by requesting it in writing from us at our Annuity Service Office. If
there is any conflict, the Contract is the controlling document.
All payments under this Certificate will be made to the persons and in the
manner set forth in the contract.
TEN DAY RIGHT TO REVIEW
THE OWNER MAY CANCEL THE CERTIFICATE BY RETURNING IT TO OUR ANNUITY SERVICE
OFFICE OR AGENT AT ANY TIME WITHIN 10 DAYS AFTER RECEIPT OF THE CERTIFICATE.
WITHIN 7 DAYS OF RECEIPT OF THE CERTIFICATE BY US, WE WILL PAY THE CONTRACT
VALUE, COMPUTED AT THE END OF THE VALUATION PERIOD DURING WHICH THE CERTIFICATE
IS RECEIVED BY US, TO THE OWNER.
WHEN THE CERTIFICATE IS ISSUED AS AN INDIVIDUAL RETIREMENT ANNUITY, DURING THE
FIRST 7 DAYS OF THIS 10 DAY PERIOD, WE WILL RETURN THE GREATER OF (i) CONTRACT
VALUE COMPUTED AT THE END OF THE VALUATION PERIOD DURING WHICH THE CERTIFICATE
IS RECEIVED BY US OR (ii) SUM OF ALL PAYMENTS.
Signed for the Company at its Executive Office, Boston, Massachusetts, on the
Date of Coverage.
Vice President President
Flexible Payment Deferred Combination Fixed and Variable Group Annuity
Certificate
Non-Participating
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CERTIFICATE WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS
TO FIXED DOLLAR AMOUNT.
<PAGE> 2
INTRODUCTION
This Certificate evidences the interest of the Owner in the flexible payment
deferred combination fixed and variable group annuity contract. This Contract
provides that prior to the Maturity Date of this Certificate, the Contract Value
will accumulate on either a fixed or variable basis or a combination of both.
After the Maturity Date, annuity payments may be either fixed or variable, or a
combination of fixed and variable.
An Owner's interest in the variable portion of the Contract will vary with the
investment performance of an Owner's Investment Account. The fixed portion of
the Contract will accumulate based on interest rates guaranteed by the Company
for the period selected.
If an Owner selects annuity payments on a variable basis, the payment amount
will vary with the investment performance of the Owner's Investment Account.
An Owner must allocate Payments among one or more Investment Options. The
Investment Options are identified on the Certificate Specifications Page.
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- ----------------------------------------------------------------------------
CERTIFICATE SPECIFICATIONS PAGE
<S> <C>
PART 1 - DEFINITIONS 1
-------------------------------------------------
PART 2 - GENERAL PROVISIONS 3
------------------------------------------
PART 3 - OWNERSHIP 5
---------------------------------------------------
PART 4 - BENEFITS 5
----------------------------------------------------
PART 5 - PAYMENTS 8
----------------------------------------------------
PART 6 - VARIABLE ACCOUNT PROVISIONS 8
---------------------------------
PART 7 - FIXED ACCOUNT PROVISIONS 9
------------------------------------
PART 8 - ANNUITY PROVISIONS 11
------------------------------------------
PART 9 - TRANSFERS 12
---------------------------------------------------
PART 10 - WITHDRAWAL PROVISIONS 13
---------------------------------------
PART 11 - FEES AND DEDUCTIONS 14
-----------------------------------------
PART 12 - LOAN PROVISION 15
----------------------------------------------
PART 13 - PAYMENT OF CONTRACT BENEFITS 15
--------------------------------
</TABLE>
<PAGE> 3
CERTIFICATE SPECIFICATIONS PAGE
GROUP HOLDER: [VENTURE TRUST] PLAN TYPE: [IRA ROLLOVER]
TYPE OF CONTRACT: [QUALIFIED] MATURITY DATE: [07/25/2027]
CONTRACT DATE: [07/25/1997] CONTRACT NUMBER: [000000005]
INITIAL PAYMENT: [$3,500.00] GOVERNING LAW: [WA]
INITIAL ALLOCATION OF NET PAYMENT: (SEE REVERSE FOR ALL AVAILABLE OPTIONS)
FIXED INVESTMENT OPTIONS: INITIAL INITIAL GUARANTEE
INTEREST RATE PERIOD EXPIRES
VARIABLE INVESTMENTS OPTIONS:
[EQUITY] [100.00%] ASSET FEE [1.00%]
MAXIMUM CHARGE PERCENTAGE [10.00%]
ANNUAL ADMINISTRATION FEE: [$30.00(1)]
(1) Prior to the Maturity Date, when the
Annual Administration Fee is to be
assessed, if the sum of all Investment
Accounts exceeds [$100,000], the Annual
Administration Fee will be waived.
TOTAL 100.00%
THIS PLAN IS INTENDED TO QUALIFY UNDER THE INTERNAL REVENUE CODE FOR TAX-FAVORED
STATUS. PLEASE SEEK THE ADVICE OF YOUR OWN TAX ADVISOR REGARDING YOUR INDIVIDUAL
TAX TREATMENT.
OWNER: [COOKIE DOUGH] CO-OWNER: []
ANNUITANT: [COOKIE DOUGH] AGE: [46]
<PAGE> 4
CO-ANNUITANT: [] BENEFICIARY: [SEE ATTACHED LIST]
<PAGE> 5
AVAILABLE INVESTMENT OPTIONS
FIXED INVESTMENT OPTIONS
1 Year Fixed
3 Year Fixed
5 Year Fixed
7 Year Fixed
VARIABLE INVESTMENT OPTIONS
Pacific Rim Emerging Markets Manufacturers Adviser Corporation
Science & Technology T. Rowe Price Associates, Inc.
International Small Cap Founders Asset Management, Inc.
Emerging Growth Warburg, Pincus Counsellors, Inc.
Pilgrim Baxter Growth Pilgrim Baxter & Associates
Small/Mid Cap Fred Alger Management, Inc.
International Stock Rowe Price-Fleming International, Inc.
Worldwide Growth Founders Asset Management, Inc.
Global Equity Morgan Stanley Asset Management Inc.
Growth Founders Asset Management, Inc.
Small Company Value Rosenberg Institutional Equity
Quantitative Equity Management
Blue Chip Growth Manufacturers Adviser Corporation
Equity T. Rowe Price Associates, Inc.
Real Estate Securities Fidelity Management Trust Company
Value Manufacturers Adviser Corporation
International Growth & Income Miller Anderson & Sherrerd, LLP
Growth and Income J.P. Morgan Investment Management Inc.
Equity-Income Wellington Management Company, LLP
Balanced T. Rowe Price Associates, Inc.
Aggressive Asset Allocation Founders Asset Management, Inc.
High Yield Fidelity Management Trust Company
Moderate Asset Allocation Miller Anderson & Sherrerd, LLP
Conservative Asset Allocation Fidelity Management Trust Company
Strategic Bond Fidelity Management Trust Company
Global Government Bond Salomon Brothers Asset Management Inc.
Capital Growth Bond Oechsle International Advisors, L.P.
Investment Quality Bond Manufacturers Adviser Corporation
U.S. Government Securities Wellington Management Company, LLP
Money Market Salomon Brothers Asset Management Inc.
Manufacturers Adviser Corporation
Lifestyle Portfolios: Manufacturers Adviser Corporation
Conservative 280
Moderate 460
Balanced 640
Growth 820
Aggressive 1000
<PAGE> 6
BENEFICIARY INFORMATION
Please find below the Beneficiary Information for contract number, 000000005,
currently on file at The Manufacturers Life Insurance Company of North America:
Play Dough
<PAGE> 7
PART 1 DEFINITIONS
- -------------------------------------------------------------------------------
WE AND YOU "We", "us" and "our" means The Manufacturers Life
Insurance Company of North America. "You" or
"your" means the Owner of this Certificate.
ACCUMULATION UNIT A unit of measure that is used to calculate the
value of an Owner's Investment Account before the
Maturity Date.
ANNUITANT Any individual person or persons whose life is used
to determine the duration of annuity payments
involving life contingencies. The Annuitant is as
designated on the Certificate Specifications Page,
unless changed.
ANNUITY OPTION The method selected by You for annuity payments
made by us.
ANNUITY SERVICE OFFICE Any office designated by us for the receipt of
Payments and processing of Group Holder and Owner
requests.
ANNUITY UNIT A unit of measure that is used after the Maturity
Date to calculate Variable Annuity payments.
APPLICATION The document signed by the Owner that serves as his
or her application for participation under the
Contract, a copy of which is attached to this
Certificate.
BENEFICIARY The person, persons or entity to whom certain
benefits are payable following the death of an
Owner, or in certain circumstances, an Annuitant.
CERTIFICATE The document for each Owner which summarizes the
rights and benefits of the Owner under the
Contract.
CERTIFICATE ANNIVERSARY The anniversary of the Certificate Date.
CERTIFICATE DATE The date of issue of a Certificate under the
Contract as designated on the Certificate
Specifications Page.
CERTIFICATE YEAR The period of twelve consecutive months beginning
on the Certificate Date or any anniversary
thereafter.
CONTINGENT BENEFICIARY The person, persons or entity who becomes the
Beneficiary if the Beneficiary is not alive.
CONTRACT APPLICATION The document signed by the Group Holder that
evidences the Group Holder's application for the
Contract.
CONTRACT DATE The date of issue of the Contract as designated on
the Contract Specifications Page.
CONTRACT VALUE The total of an Owner's Investment Account Values
and, if applicable, any amount in the Loan Account
attributable to that Owner.
DEBT Any amounts in the Loan Account attributable to an
Owner plus any accrued loan interest on that
amount. The loan provision is only available to
certain Qualified Contracts.
FIXED ANNUITY An Annuity Option with payments which are
predetermined and guaranteed as to dollar amount.
GENERAL ACCOUNT All the assets of The Manufacturers Life Insurance
Company of North America other than assets in
separate accounts.
GROUP HOLDER The person, persons or entity entitled to the
ownership rights under the Contract. The Group
Holder is as designated on the Contract
Specifications Page and the
1
<PAGE> 8
Contract Application.
INTERNAL REVENUE CODE The Internal Revenue Code of 1986, as amended from
(IRC) time to time, and any successor statute of similar
purposes.
INVESTMENT ACCOUNT An account established by us which represents the
Owner's interest in an Investment Option prior to
the Maturity Date.
INVESTMENT ACCOUNT VALUE The value of the Owner's investment in an
Investment Account.
INVESTMENT OPTIONS The Investment Options can be either fixed or
variable. The Investment Options available under
the Contract are shown on the Certificate
Specifications Page.
LOAN ACCOUNT The portion of the General Account that is used for
collateral when a loan is taken.
MARKET VALUE CHARGE A charge that may be assessed if amounts are
withdrawn or transferred from the fixed Investment
Options prior to the end of the interest rate
guarantee period.
MATURITY DATE The date on which annuity benefits commence. It is
the date specified on the Certificate
Specifications Page, unless changed.
NET PAYMENT The Payment less the amount of premium tax, if any,
deducted from the Payment.
NON-QUALIFIED CONTRACTS Contracts which are not issued under Qualified
Plans.
OWNER The person, persons or entity named in the
Certificate. The Owner is as designated on the
Certificate Specifications Page and Application,
unless changed.
PORTFOLIO OR TRUST A separate portfolio of Manufacturers Investment
PORTFOLIO Trust, a mutual fund in which the Variable Account
invests, or any successor mutual fund.
PAYMENT An amount paid to us by or on behalf of an Owner as
consideration for the benefits provided by the
Contract.
QUALIFIED CONTRACTS Contracts issued under Qualified Plans.
QUALIFIED PLANS Retirement plans which receive favorable tax
treatment under sections 401, 403, 408 or 457, of
the Internal Revenue Code of 1986, as amended.
SEPARATE ACCOUNT A segregated account of The Manufacturers Life
Insurance Company of North America that is not
commingled with our general assets and obligations.
SUB-ACCOUNT(S) One or more of the Sub-Accounts of the Variable
Account. Each Sub-Account is invested in shares of
a different Trust Portfolio.
VALUATION DATE Any date on which the New York Stock Exchange is
open for business and the net asset value of a
Trust Portfolio is determined.
VALUATION PERIOD Any period from one Valuation Date to the next,
measured from the time on each such date that the
net asset value of each Portfolio is determined.
VARIABLE ACCOUNT The Manufacturers Life Insurance Company of North
America Separate Account A.
VARIABLE ANNUITY An Annuity Option with payments which: (1) are not
predetermined or guaranteed as to dollar amount;
and (2) vary in relation to the investment
experience of one or more specified variable
Sub-Accounts.
2
<PAGE> 9
PART 2 GENERAL PROVISIONS
- -------------------------------------------------------------------------------
ENTIRE CONTRACT The Contract, the Contract Application, any
Endorsements and the Application, if one is
attached to this Certificate, constitutes the
entire contract.
Only the President, a Vice President, or the
Secretary of the Company has authority to agree
on our behalf to any alteration of the Contract
or any Certificate, or to any waiver of our rights
or requirements. The change or waiver must be in
writing.
The benefits and values available under the
Contract are not less than the minimum required by
any statue of the state in which the Contract is
delivered. We have filed a detailed statement of
the method used to calculate the benefits and
values with the Department of Insurance in the
state in which the Contract is issued, if required
by law.
MODIFICATION We will not change or modify the Certificate
without the consent of the Owner, as applicable,
except as may be required to make it conform to any
applicable law or regulation or any ruling issued
by a government agency.
TEN DAY RIGHT TO REVIEW If not satisfied with the Certificate, an Owner
may, within 10 days after receipt of the
Certificate, return it by delivering or mailing it
to the Annuity Service Office, and it shall be
deemed void from the beginning. Within 7 days of
receipt of the Certificate by us, we will pay the
Contract Value, computed at the end of the
Valuation Period during which the Certificate is
received by us, to the Owner. When the Certificate
is issued as an individual retirement annuity,
during the first 7 days of this 10 day period, we
will return the greater of (i) Contract Value
computed at the end of the Valuation Period during
which the Certificate is received by us or (ii) sum
of all Payments.
BENEFICIARY The Beneficiary is as designated on the Certificate
Specifications Page and Application, unless
changed. However, if there is a surviving Owner,
that person will be treated as the Beneficiary. If
no such Beneficiary is living, the Beneficiary is
the "Contingent Beneficiary". If no Beneficiary or
Contingent Beneficiary is living, the Beneficiary
is the estate of the deceased Owner.
CHANGE IN MATURITY DATE Prior to the Maturity Date, an Owner may request in
writing a change of the Maturity Date. Any
extension of the Maturity Date will be subject to
our prior approval.
ASSIGNMENT An Owner may assign his interest in the Contract at
any time prior to the Maturity Date. No assignment
will be binding on us unless it is written in a
form acceptable to us and received at our Annuity
Service Office. We will not be liable for any
payments made or actions we take before the
assignment is accepted by us. An absolute
assignment by an Owner will revoke the interest of
any revocable Beneficiary. We will not be
responsible for the validity of any assignment.
CLAIMS OF CREDITORS To the extent permitted by law, no benefits payable
under the Contract will be subject to the claims of
the Group Holder's, an Owner's, the Beneficiary's,
or the Annuitant's creditors.
DISCONTINUANCE OF NEW By giving 30 days prior written notice to the Group
OWNERS Holder, we may limit or discontinue the acceptance
of new Applications and the issuance of new
Certificates under the Contract. Such limitation
or discontinuance shall have no effect on rights or
benefits with respect to any Certificate
established prior to the effective date of such
limitation or discontinuance.
3
<PAGE> 10
MISSTATEMENT OF AGE AND We may require proof of age or survival of any
PROOF OF SURVIVAL person upon whose age or survival any Payments
depend. If the age of the Annuitant has been
misstated, the benefits will be those which the
Payments would have provided for the correct age.
If we have made incorrect annuity payments, the
amount of any underpayment will be paid
immediately. The amount of any overpayment will be
deducted from future annuity payments.
ADDITION, DELETION OR We reserve the right, subject to compliance with
SUBSTITUTION OF applicable law, to make additions to, deletions
INVESTMENT from, or substitutions for the Portfolio shares
OPTIONS that are held by the Variable Account or that the
Variable Account may purchase. We reserve the
right to eliminate the shares of any of the
eligible Portfolios and to substitute shares of
another Portfolio of the Trust, or of another
open-end registered investment company, if the
shares of any eligible Portfolio are no longer
available for investment, or if in our judgment
further investment in any eligible Portfolio should
become inappropriate in view of the purposes of the
Variable Account. We will not substitute any
shares attributable to an Owner's interest in a
Sub-Account without notice to the Owner and prior
approval of the Securities and Exchange Commission
to the extent required by the Investment Company
Act of 1940. Nothing contained herein shall
prevent the Variable Account from purchasing other
securities for other series or classes of
contracts, or from effecting a conversion between
shares of another open-end investment company.
We reserve the right, subject to compliance with
applicable law, to establish additional
Sub-Accounts which would invest in shares of a new
Portfolio of the Trust or in shares of another
open-end investment company. We also reserve the
right to eliminate existing Sub-Accounts, to
combine Sub-Accounts or to transfer assets in a
Sub-Account to another Separate Account established
by us or an affiliated company. In the event of
any such substitution or change, we may, by
appropriate endorsement, make such changes in this
and other Contracts as may be necessary or
appropriate to reflect such substitutions or
change. If deemed by us to be in the best
interests of persons having voting rights under the
Contracts, the Variable Account may be operated as
a management company under the Investment Company
Act of 1940 or it may be de-registered under such
Act in the event such registration is no longer
required.
NON-PARTICIPATING The Contract is non-participating and will not
share in our profits or surplus earnings. We will
pay no dividends on the Contract.
REPORTS At least once each year we will send the Group
Holder and each Owner a report containing
information required by the Investment Company Act
of 1940 and applicable state law.
INSULATION The portion of the assets of the Variable Account
equal to the reserves and other contract
liabilities with respect to such account are not
chargeable with liabilities arising out of any
other business we may conduct. Moreover, the
income, gains and losses, realized or unrealized,
from assets allocated to the Variable Account shall
be credited to or charged against such account
without regard to our other income, gains or losses.
CURRENCY AND PLACE OF All payments made to or by us shall be made in the
PAYMENTS lawful currency of the United States of America at
the Annuity Service Office or elsewhere if we
consent.
NOTICES AND ELECTIONS Unless otherwise provided in the Contract, all
notices, requests and elections will be effective
when received by us at our Annuity Service Office,
complete with all necessary information and the
signature of the Group Holder and/or Owner, as
appropriate.
GOVERNING LAW The Contract and all Certificates issued in
connection with it will be governed by the laws of
the jurisdiction indicated on the Contract
Specifications Page.
4
<PAGE> 11
SECTION 72(S) The provisions of the Contract shall be interpreted
so as to comply with the requirements of Section
72(s) of the Internal Revenue Code.
PART 3 OWNERSHIP
- -------------------------------------------------------------------------------
EXERCISE OF CONTRACT The Contract shall belong to the Group Holder. All
RIGHTS Contract rights and privileges not expressly
reserved by the Group Holder, may be exercised by
the Owner as to his or her interest. Such rights
and privileges can be exercised without the consent
of the Beneficiary (other than an irrevocably
designated beneficiary) or any other person.
Before the Maturity Date, the Owner shall be the
person, persons or entity designated on the
Certificate Specifications Page or the latest
change filed with us. On the Maturity Date the
Annuitant becomes the Owner. If amounts become
payable to the Beneficiary under a Certificate, the
Beneficiary becomes the Owner.
CHANGE OF OWNER, Subject to the rights of an irrevocable
ANNUITANT, BENEFICIARY Beneficiary, each Owner may change the Owner,
Annuitant, or Beneficiary of his or her interest in
the Contract by written request in a form
acceptable to us and which is received at our
Annuity Service Office. The Annuitant may not be
changed after the Maturity Date. The Owner's
Certificate need not be sent unless we request it.
Any change must be approved by us. If approved,
any change of Beneficiary will take effect on the
date the request is signed. If approved, any
change of Owner or Annuitant will take effect on
the date we received the request at the Annuity
Service Office. We will not be liable for any
payments or actions we take before the change is
approved.
The substitution or addition of any Owner may
result in the resetting of the Death Benefit to an
amount equal to the Contract Value as of the date
of such change. For purposes of subsequent
calculations of the Death Benefit, described in
Part 4, Benefits, Death Benefit Before Maturity
Date, the Contract Value on the date of the change
will be treated as a Payment made on that date. In
addition, all Payments made and all amounts
deducted in connection with partial withdrawals
prior to the date of the change of Owner will not
be considered in the determination of the Death
Benefit. This paragraph will not apply if (a) the
individual whose death will cause the Death Benefit
to be paid is the same after the change of Owner,
or (b) if Ownership is transferred to the Owner's
spouse.
If any Annuitant is changed and any Owner is not an
individual, the entire interest in the Certificate
must be distributed to the Owner within five years
of the change.
PART 4 BENEFITS
- -------------------------------------------------------------------------------
ANNUITY BENEFITS We will pay a monthly income to the Annuitant, if
living, on the Maturity Date. Payments can be
fixed or variable, or a combination of fixed and
variable. Annuity benefits will commence on the
Maturity Date and continue for the period of time
provided for under the Annuity Option selected.
We may pay the Contract Value, less Debt, on the
Maturity Date in one lump sum if the monthly income
is less than $20.
On or before the Maturity Date, You must select how
the Contract Value will be used to provide the
monthly income. You may select a Fixed or Variable
Annuity.
5
<PAGE> 12
Unless You indicate otherwise, we will provide either
variable or fixed, or a combination variable and fixed
annuity payments in proportion to the Investment
Account Value of each Investment Option at the
Maturity Date. Annuity payments will continue for 10
years or the life of the Annuitant, if longer.
If a Variable Annuity is used, the amount of the
first monthly annuity payment will be obtained from
the appropriate option table under the "Payment of
Contract Benefits" Section. Subsequent monthly
annuity payments will vary based on the investment
experience of the Sub-Account(s) used to effect the
annuity. The method used to calculate the amount
of the initial and subsequent payments is described
under the "Variable Annuity Payments" Section of
Part 8 of this Certificate.
If a Fixed Annuity is used, the portion of the
Contract Value used to effect a Fixed Annuity will
be applied to the appropriate table contained in
this Certificate. If the table in use by us on the
Maturity Date is more favorable to you, we will use
that table. We guarantee the dollar amount of
fixed annuity payments.
DEATH BENEFIT BEFORE A Death Benefit will be determined as of the date
MATURITY DATE on which written notice and proof of death and all
required claim forms are received at the Company's
Annuity Service Office.
The Death Benefit will be determined as the greater
of the Contract Value or the Minimum Death
Benefit. The Minimum Death Benefit is equal to the
sum of all Payments made by or on behalf of the
Owner. Partial withdrawals will reduce the Minimum
Death Benefit. The reduction in Minimum Death
Benefit for each partial withdrawal will be equal
to the greater of (a) or (b) where:
(a) is equal to the amount of the partial
withdrawal made by or on behalf of the
Owner, and
(b) is equal to (i) times (ii) where:
(i) is equal to the Minimum Death Benefit
prior to the withdrawal, and
(ii) is equal to the partial withdrawal
amount divided by the Contract Value
prior to the partial withdrawal.
If there is any Debt, the Death Benefit equals the
amount described above less the Debt under this
Certificate.
DEATH OF ANNUITANT: On the death of the last surviving
Annuitant, the Owner becomes the new Annuitant, if the
Owner is an individual. If any Owner is not an
individual the death of any Annuitant is treated as
the death of an Owner and the Death Benefit will be
determined by substituting the Annuitant for the Owner
as described below.
DEATH OF OWNER: We will pay the Death Benefit to
the Beneficiary if any Owner dies prior to the
Maturity Date. The Death Benefit may be taken in
one sum immediately, in which case the Certificate
will terminate. If the Death Benefit is not taken
in one sum immediately, the Certificate will
continue subject to the following provisions:
(a) The Beneficiary becomes the Owner.
(b) The excess, if any, of the Death Benefit over
the Contract Value will be allocated to and
among the Investment Accounts in proportion to
their values as of the date on which the Death
Benefit is determined.
(c) No additional Payments may be applied under the
Certificate.
(d) If the Beneficiary is not the deceased Owner's
spouse, the entire interest in
6
<PAGE> 13
the Certificate must be distributed under one of the
following options:
(i) The entire interest in the Certificate must
be distributed over the life of the
Beneficiary, or over a period not extending
beyond the life expectancy of the
Beneficiary, with distributions beginning
within one year of the Owner's death; or
(ii) the entire interest in the Certificate
must be distributed within 5 years of the
Owner's Death.
If the Beneficiary dies before the
distributions required by (i) or (ii) are
complete, the entire remaining Contract Value
must be distributed in a lump sum immediately.
(e) If the Beneficiary is the deceased Owner's
spouse, the Certificate will continue with the
surviving spouse as the new Owner. The
surviving spouse may name a new Beneficiary
(and, if no Beneficiary is so named, the
surviving spouse's estate will be the
Beneficiary). Upon the death of the surviving
spouse, the Death Benefit will equal the
Contract Value at the time of the surviving
spouse's death, and the entire interest in the
Certificate must be distributed to the new
Beneficiary in accordance with the provisions
of (d) (i) or (d) (ii) above.
If there is more than one Beneficiary, the
foregoing provisions will independently apply to
each Beneficiary.
DEATH BENEFIT ON OR If annuity payments have been selected based on an
AFTER MATURITY DATE Annuity Option providing for payments for a
guaranteed period, and the Annuitant dies on or
after the Maturity Date, we will make the remaining
guaranteed payments to the Beneficiary. Any
remaining payments will be made as rapidly as under
the method of distribution being used as of the
date of the Annuitant's death. If no Beneficiary is
living, we will commute any unpaid guaranteed
payments to a single sum (on the basis of the
interest rate used in determining the payments) and
pay that single sum to the estate of the last to
die of the Annuitant and the Beneficiary.
PROOF OF DEATH Proof of death is required upon the death of the
Annuitant or the Owner. Proof of death is one of
the following received at the Annuity Service
Office:
(a) A certified copy of a death certificate.
(b) A certified copy of a decree of a court of
competent jurisdiction as to the finding of
death.
(c) Any other proof satisfactory to us.
7
<PAGE> 14
PART 5 PAYMENTS
- -------------------------------------------------------------------------------
GENERAL All Payments under the Contract are payable at our
Annuity Service Office or such other place as we
may designate.
The initial Payment is shown on the Certificate
Specifications Page. Additional Payments may be
made at any time. However, each additional Payment
must be at least $30. If a Payment for a
Certificate would cause the Contract Value for an
Owner to exceed $1,000,000, or that Contract Value
already exceeds $1,000,000, no additional Payments
will be accepted without our prior approval.
NONPAYMENT OF PAYMENTS If, prior to the Maturity Date, no Payments for a
FOR TWO YEARS Certificate have been made for two consecutive
Certificate Years, and if both:
(a) the total Payments made for the Certificate,
less any partial withdrawals, are less then
$2,000; and
(b) the Contract Value for an Owner at the end of
such two year period is less than $2,000;
We may cancel this Certificate and participation
under the Contract and pay the Owner the Contract
Value (measured as of the Valuation Period during
which the cancellation occurs), less the Debt and
Annual Administration Fee.
ALLOCATION OF NET When we receive Payments, the Net Payments will be
PAYMENTS allocated among Investment Options in accordance
with the allocation percentages shown on the
Certificate Specifications Page. The Owner may
change the allocation of subsequent Net Payments at
any time, without charge, by giving us written
notice.
PART 6 VARIABLE ACCOUNT PROVISIONS
- -------------------------------------------------------------------------------
INVESTMENT ACCOUNT We will establish a separate Investment Account for
each Owner for each variable Investment Option to
which an Owner allocates amounts. The Investment
Account represents the number of an Owner's
Accumulation Units in an Investment Option.
INVESTMENT ACCOUNT VALUE The Investment Account Value of an Owner's
Investment Account is determined by (a) times (b)
where:
(a) equals the number of Accumulation Units
credited to the Investment Account; and,
(b) equals the value of the appropriate
Accumulation Unit.
ACCUMULATION UNITS We will credit Net Payments to an Owner's
Investment Accounts in the form of Accumulation
Units. The number of Accumulation Units to be
credited to each Investment Account will be
determined by dividing the Net Payment allocated to
that Investment Account by the Accumulation Unit
value for that Investment Account.
Accumulation Units will be adjusted for any
transfers and will be canceled on payment of a
death benefit, withdrawal, maturity or assessment
of certain charges
8
<PAGE> 15
based on their value for the Valuation Period in which
such transaction occurs.
VALUE OF ACCUMULATION The Accumulation Unit value for a particular
UNIT Investment Account for any Valuation Period is
determined by multiplying the Accumulation Unit
value for the immediately preceding Valuation
Period by the "net investment factor" for the
Valuation Period for which the value is being
determined. The value of an Accumulation Unit may
increase, decrease or remain the same from one
Valuation Period to the next.
NET INVESTMENT FACTOR The net investment factor is an index that measures
the investment performance of a Sub-Account from
one Valuation Period to the next. The net
investment factor for any Valuation Period is
determined by dividing (a) by (b) and subtracting
(c) from the result where:
(a) is the net result of:
1) the net asset value per share of a
Portfolio share held in the Sub-Account
determined as of the end of the current
Valuation Period, plus:
2) the per share amount of any dividend or
capital gain distributions made by the
Portfolio on shares held in the
Sub-Account if the "ex-dividend" date
occurs during the current Valuation
Period, and
(b) is the net asset value per share of a Portfolio
share held in the Sub-Account determined as of
the end of the immediately preceding Valuation
Period, and
(c) is the Asset Fee as defined in Part 11, Fees
and Deductions.
The net investment factor may be greater or less
than, or equal to, one.
PART 7 FIXED ACCOUNT PROVISIONS
- -------------------------------------------------------------------------------
INVESTMENT ACCOUNT We will establish a separate Investment Account for
each Owner each time an Owner allocates amounts to
a fixed Investment Option. Amounts invested in
these Investment Accounts will earn interest at
the guaranteed rate in effect on the date the
amounts are allocated for the duration of the
guarantee period.
We will determine guaranteed rates from time to
time for Payments, renewal amounts and amounts
transferred to a fixed Investment Option. In no
event will a guaranteed rate under a fixed
Investment Account be less than 3%.
GUARANTEE PERIODS For any amounts allocated to the fixed Investment
Options, an Owner has the choice of the guarantee
period available. The amount can be allocated into
any combination of the fixed Investment Options
offered under the Contract.
Separate Investment Accounts will be established
for each guarantee period. The guarantee period
will be the duration of the fixed Investment Option
selected measured from the date the amount is
allocated to the Investment Account. Amounts
cannot be allocated to a fixed Investment Option
that would extend the guarantee period beyond the
Maturity Date.
RENEWALS The renewal amount is the Investment Account Value
at the end of the particular guarantee period. The
renewal amount will be automatically renewed in the
same Investment Option at the end of the guarantee
period, unless the Owner specifies otherwise. If
renewal in a particular Investment Option would
result in the guarantee period for that Investment
Account extending beyond the Maturity Date, the
renewal amount may not be renewed in that
Investment Option. The renewal amount will be
applied to the longest guarantee period of a fixed
Investment Option
9
<PAGE> 16
such that the guarantee period does not extend beyond
the Maturity Date.
INVESTMENT ACCOUNT VALUE The amount in the Investment Accounts of an Owner
will accumulate at a rate of interest determined by
us and in effect on the date the amount is
allocated to the Investment Account. The
Investment Account Value of an Owner's Investment
Account is the accumulated value of the amount
invested in the Investment Account reduced by any
withdrawals, loans, transfers or charges taken from
the Investment Account.
MARKET VALUE CHARGE Any amounts withdrawn from a fixed Investment
Account, prior to the end of the guarantee period,
may be subject to a Market Value Charge. The
Market Value Charge will only apply to amounts
withdrawn from a Investment Account pursuant to a
partial withdrawal, total withdrawal, transfer or a
loan. A Market Value Charge will not be assessed
on amounts withdrawn from the 1 year fixed
Investment Account.
MARKET VALUE CHARGE A Market Value Charge will be calculated separately
FACTOR for each fixed Investment Account affected. The
Market Value Charge for a particular Investment
Account will be calculated by multiplying the
amount withdrawn or transferred from the Investment
Account by the adjustment factor described below.
The adjustment factor for a particular Investment
Account is determined by the following formula:
0.75 x (B-A) x C/12.
Where A, B and C are defined as follows:
A - The guaranteed interest rate on the Investment
Account.
B - The guaranteed interest rate available, on the
date the request is processed, for amounts
allocated to a new Investment Account with the
same length of guarantee period as the
Investment Account from which amounts are being
withdrawn.
C - The number of complete months remaining to
the end of the guarantee period.
For purposes of this calculation, the maximum
difference between "B" and "A" will be 3%.
Furthermore, the adjustment factor will never be
less than zero. The amount of Market Value Charge,
if any, upon transfer, or loan is specified in Part
9, Transfer Provisions, and upon withdrawal as
specified in Part 10, Withdrawal Provisions.
10
<PAGE> 17
PART 8 ANNUITY PROVISIONS
- -------------------------------------------------------------------------------
VARIABLE ANNUITY PAYMENTS The amount of the first variable annuity payment is
determined by applying the portion of the Contract
Value used to effect a Variable Annuity, measured
as of a date not more than 10 business days prior
to the Maturity Date (minus any applicable premium
taxes), to the appropriate table(s) contained in
the Contract and the Certificate. If the table in
use by us on the Maturity Date is more favorable to
the Owner, we will use that table. Subsequent
payments will be based on the investment performance
of one or more Sub-Accounts as selected by the Owner.
The amount of such payments is determined by the
number of Annuity Units credited for each
Sub-Account. Such number is determined by dividing
the portion of the first payment allocated to that
Sub-Account by the Annuity Unit value for that
Sub-Account determined as of the same date that the
Contract Value used to effect annuity payments under
a Certificate was determined. This number of Annuity
Units for each Sub-Account is then multiplied by the
appropriate Annuity Unit value for each subsequent
determination date, which is a uniformly applied date
not more than 10 business days before the payment is
due.
MORTALITY AND EXPENSE We guarantee that the dollar amount of each
GUARANTEE variable annuity payment will not be affected by
changes in mortality and expense experience.
ANNUITY UNIT VALUE The value of an Annuity Unit for each Sub-Account
for any Valuation Period is determined as follows:
(a) The net investment factor for the Sub-Account
for the Valuation Period for which the Annuity
Unit value is being calculated is multiplied by
the value of the Annuity Unit for the preceding
Valuation Period; and
(b) The result is adjusted to compensate for the
interest rate assumed in the tables used to
determine the first variable annuity payment.
The dollar value of Annuity Units may increase,
decrease or remain the same from one Valuation
Period to the next.
FIXED ANNUITY PAYMENTS The amount of each fixed annuity payment is
determined by applying the portion of the Contract
Value used to effect a Fixed Annuity measured as of
a date not more than 10 business days prior to the
Maturity Date (minus any applicable premium taxes)
to the appropriate table(s) contained in the
Contract and the Certificate. If the table in use
by us on the Maturity Date is more favorable to the
Owner, we will use that table.
We guarantee the dollar amount of fixed annuity
payments.
11
<PAGE> 18
PART 9 TRANSFERS
- -------------------------------------------------------------------------------
TRANSFERS Before the Maturity Date, the Owner may transfer
amounts among Investment Accounts of the Contract.
There is no transaction charge for transfers,
however, amounts transferred from a fixed
Investment Account prior to the end of the
guarantee period may be subject to a Market Value
Charge. Amounts will be canceled from the
Investment Accounts from which amounts are
transferred and credited to the Investment Account
to which amounts are transferred. We will effect
such transfers so that the Contract Value for a
Certificate on the date of transfer will not be
affected by the transfer, except for the Market
Value Charge, if applicable. We reserve the right
to limit, upon notice, the maximum number of
transfers that can be made per Certificate Year to
one per month or six at anytime within a
Certificate Year.
An Owner must transfer at least $300 or, if less,
the entire amount in the Investment Account each
time the Owner makes a transfer. If, after the
transfer, the amount remaining in the Investment
Account from which the transfer is made is less
than $100, then we will transfer the entire amount
instead of the requested amount. We reserve the
right to defer, modify or terminate the transfer
privilege at any time that we are unable to
purchase or redeem shares of the Trust Portfolios.
Amounts may not be transferred from a fixed
Investment Account unless those amounts have been
in the fixed Investment Account for at least one
year. The Market Value Charge, if applicable, will
be deducted from the amount transferred.
Once variable annuity payments have begun, an Owner
may transfer all or part of the investment upon
which the Owner's variable annuity payments are
based from one Sub-Account to another. To do this,
we will convert the number of variable Annuity
Units held by an Owner in the Sub-Account from
which the Owner is transferring to a number of
variable Annuity Units of the Sub-Account to which
the Owner is transferring so that the next annuity
payment, if it were made at that time, would be the
same amount that it would have been without the
transfer. After the transfer, the variable annuity
payments will reflect changes in the values of the
Owner's new variable Annuity Units. An Owner must
give us notice at least 30 days before the due date
of the first variable annuity payment to which the
transfer will apply. We reserve the right, upon
notice, to limit to four the maximum number of
transfers an Owner may make per Certificate Year
after variable annuity payments have begun.
After the Maturity Date, transfers will not be
allowed from a fixed to a variable Annuity Option,
or from a variable to a fixed Annuity Option.
TRANSFER MARKET VALUE Amounts transferred from a fixed Investment Account
CHARGE may be subject to a Market Value Charge. For
Transfers, including transfers to the Loan Account
pursuant to a loan request, the Market Value
Charge, if applicable, will be calculated by
multiplying the amount transferred from each fixed
Investment Account by the Market Value Charge
Factor for that Investment Account and deducted
from the amount transferred.
If there are multiple Investment Accounts under a
fixed Investment Option, the requested amount from
that Investment Option must be transferred from
those Investment Accounts on a first-in-first-out
basis.
The Market Value Charge may not exceed the earnings
in excess of 3% per annum attributable to the
amount transferred.
12
<PAGE> 19
In no event will the Market Value Charge for an
Investment Account be greater than the Maximum
Charge Percentage as set forth on the Certificate
Specifications Page, multiplied by the amount
transferred.
In no event will the Market Value Charge reduce the
amount transferred below the amount required under
the non-forfeiture laws of the state that has
jurisdiction over the contract.
PART 10 WITHDRAWAL PROVISIONS
- -------------------------------------------------------------------------------
CONTRACT VALUE The Contract Value is equal to the total of the
Owner's Investment Account Values and, if
applicable, any amount in the Loan Account
attributable to that Owner.
PAYMENTS OF WITHDRAWALS An Owner may withdraw part or all of the Contract
Value, less any Debt, at any time before the
earlier of the death of an Owner or the Maturity
Date, by sending us a written request. We will pay
all withdrawals within seven days of receipt at the
Annuity Service Office subject to postponement in
certain circumstances, as specified below.
SUSPENSION OF PAYMENTS We may defer the right of withdrawal from, or
postpone the date of payments from, the variable
Investment Accounts for any period when: (1) the
New York Stock Exchange is closed (other than
customary weekend and holiday closings); (2)
trading on the New York Stock Exchange is
restricted; (3) an emergency exists as a result of
which disposal of securities held in the Variable
Account is not reasonably practicable or it is not
reasonably practicable to determine the value of
the Variable Account's net assets; or (4) the
Securities and Exchange Commission, by order, so
permits for the protection of security holders;
provided that applicable rules and regulations of
the Securities and Exchange Commission shall govern
as to whether the conditions described in (2) and
(3) exist.
We may defer the right of withdrawal from the fixed
Investment Accounts for not more than six months
from the day we receive written request and the
Certificate, if required. If such payments are
deferred 30 days or more, the amount deferred will
earn interest at a rate not less than 3% per year.
TOTAL WITHDRAWAL Upon receipt of an Owner's request to withdraw the
entire Contract Value we will terminate the
Certificate and pay the Owner the Contract Value,
less any applicable Debt, Market Value Charges and
the Annual Administration Fee.
PARTIAL WITHDRAWAL If an Owner is withdrawing part of the Contract
Value, he/she should specify the amount that should
be withdrawn from each Investment Option of the
Contract. If there are multiple Investment
Accounts under a fixed Investment Option, the
requested amount from that Investment Option must
be withdrawn from those Investment Accounts on
first-in-first-out basis. If he/she does not
specify, the requested amount will be withdrawn in
the following order:
a) Variable Investment Accounts, on a pro rata
basis,
b) Fixed Investment Options beginning with the
shortest guarantee period first and the longest
guarantee period last.
We will deduct the Market Value Charge, if
applicable, from the Contract Value remaining after
payment of the requested amount. Partial
withdrawals will affect the Minimum Death Benefit,
as described in Part 4, Benefits, Death Benefit
Before Maturity Date.
13
<PAGE> 20
WITHDRAWAL CHARGE No Withdrawal Charge will apply.
WITHDRAWAL MARKET VALUE Amounts withdrawn from a fixed Investment Account
CHARGE may be subject to a Market Value Charge. The total
Market Value Charge will be the sum of the Market
Value Charges for each Investment Account being
withdrawn. For full withdrawals, the Market Value
Charge will be calculated on the total amount of
each Investment Account, and the total Market Value
Charge will be deducted from the amount otherwise
payable. For partial withdrawals, the Market Value
Charge will be calculated based on the withdrawal
amount requested from each Investment Account and
the Market Value Charge, if applicable, will be
deducted from the remaining Investment Account
Value.
There will be no Market Value Charge on withdrawals
from the fixed Investment Accounts in the following
situations: (a) withdrawal from a 1-year fixed
Investment Account, (b) death of the Owner, (c)
amounts withdrawn to pay any fees or charges, (d)
amounts applied at the Maturity Date to purchase an
annuity at the guaranteed rates in the Annuity
Option tables, and (e) amounts withdrawn from fixed
Investment Accounts within one month prior to the
end of the guarantee period.
The Market Value Charge may not exceed the earnings
in excess of 3% per annum attributable to the
amount withdrawn.
In no event will the Market Value Charge for an
Investment Account be greater than the Maximum
Charge Percentage as set forth on the Certificate
Specifications Page, multiplied by the amount
withdrawn.
In no event will the Market Value Charge reduce the
amount payable on withdrawal below the amount
required under the non-forfeiture laws of the state
that has jurisdiction over the Contract.
FREQUENCY AND AMOUNT OF An Owner may make as many partial withdrawals as he
PARTIAL WITHDRAWALS or she wishes. Any withdrawal from an Owner's
Investment Account must be at least $300 or the
entire balance of the Investment Account, if less.
If after the withdrawal, the amount remaining in
that Owner's Investment Account is less than $100,
then we will consider the withdrawal request to be
a request for withdrawal of the entire amount held
in the Investment Account. If a partial withdrawal
would reduce the Contract Value to less than $300,
then we will treat the partial withdrawal request
as a total withdrawal of the Contract Value.
PART 11 FEES AND DEDUCTIONS
- -------------------------------------------------------------------------------
ASSET FEE To compensate us for assuming mortality and expense
risks, and certain administration expenses, we
deduct from each variable Investment Option a fee
each Valuation Period at an annual rate of 1.00%.
A portion of this Asset Fee may also be used to
reimburse us for distribution expenses. This fee
is reflected in the Net Investment Factor used to
determine the value of Accumulation Units and
Annuity Units of the Certificate.
ANNUAL ADMINISTRATION FEE To compensate us for assuming certain
administrative expenses, we charge an Annual
Administration Fee as set forth on the Certificate
Specifications Page. Prior to the Maturity Date,
the Annual Administration Fee is deducted on each
Certificate Anniversary. It is withdrawn from each
Investment Option in the same proportion that the
value of the Investment Accounts of each Investment
Option bears to the Contract Value. If the
Contract Value is totally withdrawn on any date
other than
14
<PAGE> 21
the Certificate Anniversary, we will deduct the total
amount of the Annual Administration Fee from the
amount paid. During the annuity period, the Annual
Administration Fee is deducted on a pro rata basis
from each annuity payment.
TAXES We reserve the right to charge certain taxes
against Payments for an Owner (either at the time
of payment or liquidation), Contract Value of an
Owner, payment of Death Benefit, or annuity
payments, as appropriate. Such taxes may include
any premium taxes or other taxes levied by any
government entity which We, in our sole discretion,
determine have resulted from the establishment or
maintenance of the Variable Account, or from the
receipt by us of Payments, or from the issuance of
the Contract and an Owner's Certificate, or from
the commencement or continuance of annuity payments
under the Contract.
PART 12 LOAN PROVISIONS (CERTAIN QUALIFIED CONTRACTS ONLY)
- -------------------------------------------------------------------------------
GENERAL This loan provision applies only to certain
Qualified Contracts and Certificates. All
provisions and terms of a loan are included in the
Qualified Plan Endorsement, if attached.
PART 13 PAYMENT OF CONTRACT BENEFITS
- -------------------------------------------------------------------------------
GENERAL Benefits payable under the Contract may be applied
in accordance with one or more of the Annuity
Options described below, subject to any
restrictions of Internal Revenue Code Section 72(s).
ALTERNATE ANNUITY OPTIONS Instead of settlement in accordance with the
Annuity Options described below, an Owner may
choose an alternate form of settlement acceptable
to us.
DESCRIPTION OF ANNUITY Option 1: Life Annuity
OPTION
a) Life Non-Refund. We will make payments during
the lifetime of the Annuitant. No payments are
due after the death of the Annuitant.
b) Life 10-Year Certain. We will make payments
for 10 years and after that during the lifetime
of the Annuitant. No payments are due after
the death of the Annuitant or, if later, the
end of the 10-year period certain.
Option 2: Joint and Survivor Life Annuity
The second Annuitant named shall be referred to as
the Co-Annuitant.
a) Joint and Survivor Non-Refund. We will make
payments during the joint lifetime of the
Annuitant and Co-Annuitant. Payments will then
continue during the remaining lifetime of the
survivor. No payments are due after the death
of the last survivor of the Annuitant and
Co-Annuitant.
b) Joint and Survivor with 10-Year Certain. We
will make payments for 10 years and after that
during the joint lifetime of the Annuitant and
Co-Annuitant. Payments will then continue
during the remaining lifetime of the survivor.
No payments are due after the death of the
survivor of the Annuitant and Co-Annuitant or,
if later, the end of the 10-year period certain.
ANNUITY PAYMENT RATES The annuity payment rates on the attached tables
show, that for each $1,000
15
<PAGE> 22
applied, the dollar amount of both: (a) the first
monthly variable annuity payment based on the assumed
interest rate of 3%; and (b) the monthly fixed annuity
payment, when this payment is based on the minimum
guaranteed interest rate of 3% per year. The annuity
payment rates for payments made on a less frequent
basis (quarterly, semiannual or annual) will be quoted
by us upon request.
The annuity payment rates are based on the 1983
Table A projected at Scale G with interest at the
rate of 3% per annum and assume births in year
1942. The amount of each annuity payment will
depend upon the adjusted age of the Annuitant, the
Co-Annuitant, if any, or other payee. The adjusted
age is determined from the actual age nearest
birthday at the time the first monthly annuity
payment is due, as follows:
<TABLE>
<CAPTION>
Calendar Year of Birth Adjustment to Actual Age
-----------------------------------------------------
<S> <C>
1899 - 1905 +6
1906 - 1911 +5
1912 - 1918 +4
1919 - 1925 +3
1926 - 1932 +2
1933 - 1938 +1
1939 - 1945 0
1946 - 1951 -1
1952 - 1958 -2
1959 - 1965 -3
1966 - 1972 -4
1973 - 1979 -5
1980 - 1986 -6
1987 - 1993 -7
1994 - -8
</TABLE>
The dollar amount of annuity payment for any age or
combination of ages not shown following or for any
other form of Annuity Option agreed to by us will
be quoted on request.
16
<PAGE> 23
AMOUNT OF FIRST MONTHLY PAYMENT
PER $1000 OF CONTRACT VALUE
OPTION 1: LIFE ANNUITY
<TABLE>
<CAPTION>
Option 1(A): Non-Refund Option 1(B): 10-Year Certain
-------------------------------- -------------------------------
Adjusted Adjusted
Age of Male Female Age of Male Female
Annuitant Annuitant
-------------------------------- -------------------------------
<S> <C> <C> <S> <C> <C>
55 4.27 3.86 55 4.22 3.84
60 4.69 4.19 60 4.61 4.15
65 5.25 4.61 65 5.10 4.55
70 6.02 5.19 70 5.71 5.07
75 7.01 5.99 75 6.42 5.73
80 8.34 7.10 80 7.20 6.52
85 10.13 8.64 85 7.97 7.37
</TABLE>
OPTION 2: JOINT AND SURVIVOR LIFE ANNUITY
Option 2(A): Non-Refund
<TABLE>
<CAPTION>
Age of Co-Annuitant
-----------------------------------------------------------------
Adjusted
Age of 10 Years 5 Years Same 5 Years 10 Years
Male Younger Younger Age Older Older
Annuitant
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.25 3.39 3.55 3.72 3.87
60 3.41 3.60 3.81 4.02 4.21
65 3.62 3.87 4.14 4.41 4.67
70 3.89 4.21 4.57 4.95 5.29
75 4.24 4.67 5.17 5.67 6.11
80 4.71 5.30 5.97 6.63 7.19
85 5.35 6.15 7.05 7.92 8.60
</TABLE>
Option 2(B): 10 Year Certain
<TABLE>
<CAPTION>
Age of Co-Annuitant
-----------------------------------------------------------------
Adjusted
Age of 10 Years 5 Years Same 5 Years 10 Years
Male Younger Younger Age Older Older
Annuitant
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
55 3.25 3.39 3.55 3.72 3.87
60 3.41 3.60 3.80 4.01 4.21
65 3.62 3.86 4.13 4.41 4.66
70 3.89 4.21 4.56 4.92 5.24
75 4.24 4.66 5.13 5.58 5.95
80 4.69 5.25 5.85 6.39 6.78
85 5.28 6.00 6.71 7.27 7.67
-----------------------------------------------------------------
</TABLE>
Monthly installments for ages not shown will be furnished on request.
17
<PAGE> 24
- ----------------------------------------------------------------------------
THE MANUFACTURERS LIFE INSURANCE
- --------------------------------------------------------------------------------
<PAGE> 25
- --------------------------------------------------------------------------------
COMPANY OF NORTH AMERICA
- ----------------------------------------------------------------------------
Manulife Financial and the block design are registered service marks of
The Manufacturers Life Insurance Company and are used by it and its
subsidiaries.
19
<PAGE> 1
EXHIBIT 99.(4)iv)
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
Notwithstanding any provision contained therein to the contrary, the Certificate
to which this Endorsement is attached is amended as follows:
OWNER AND ANNUITANT
1. The Owner must be one individual and the Annuitant. Neither the Owner nor
the Annuitant can be changed.
NONFORFEITABLE
2. The Owner's interest in the Contract is established for the exclusive
benefit of the Owner or his or her Beneficiaries and the interest of the
Owner is nonforfeitable.
NONTRANSFERABLE
3. The Owner may not assign, sell, transfer, discount or pledge his interest
in the Contract as collateral for a loan or as security for the
performance of any obligation or for any other purpose (other than a
transfer incident to a divorce or separation instrument in accordance with
IRC Section 408(d)(6)) to any person other than us.
MAXIMUM PAYMENTS
4. The maximum annual Payments shall not exceed the lesser of $2,000 or 100%
of compensation unless (a) such Payment qualifies as a rollover
contribution described in IRC Sections 408(d)(3), 402(c), 403(a)(4) or
403(b)(8); or (b) such Payment qualifies as a contribution made in
accordance with a Simplified Employee Pension Program as described in IRC
Section 408(k).
To the extent necessary to preserve qualification under the Internal
Revenue Code, we may refund Payments. Any refund of Payments (other than
those attributable to excess contributions) will be applied, before the
close of the calendar year following the refund, toward future Payments or
the purchase of additional benefits.
DISTRIBUTIONS DURING OWNER'S LIFE
5. The Owner's entire interest in the Contract shall be distributed as
required under IRC Section 408(b)(3) and applicable regulations.
Unless deferral is otherwise permitted under applicable regulations,
the Owner's entire interest shall be distributed no later than the
"required beginning date," or shall be distributed beginning no later
than the "required beginning date" over (a) the life of the Owner or
the joint lives of the Owner and an individual who is his or her
designated beneficiary (within the meaning of IRC Section 401(a)(9)),
or (b) a period not extending beyond the life expectancy of the Owner,
or joint life and last survivor expectancy of the Owner and the
designated beneficiary.
The "required beginning date" shall mean April 1 of the calendar year
following the calendar year in which the Owner attains age 70 1/2.
If the Owner's interest is to be distributed over a period greater than
one year, then the amount to be distributed by December 31 of each year
(including the year in which the required beginning date occurs) shall be
determined in accordance with the requirements of IRC Section 401(a)(9),
including the incidental death benefit requirements of IRC Section
401(a)(9)(G), and the regulations thereunder, including the minimum
distribution incidental benefit requirement of Proposed Treasury
Regulation Section 1.401(a)(9)-2.
ANNUITY OPTIONS
6. Only Annuity Options 1 and 2 shall be offered unless we consent to the use
of an additional option. Annuity Option 1(b) is not available for an Owner
whose life expectancy is less than 10 years. Under Annuity Options 2(a)
and 2(b) the designated Co-Annuitant must be the Owner's spouse. Annuity
Option 2(b) is not available for an Owner and his or her spouse where the
life expectancy of the Owner and such spouse is less than 10 years.
DISTRIBUTIONS AFTER OWNER'S DEATH
<PAGE> 2
7. If an Owner dies on or after the required beginning date (or if
distributions have begun before the required beginning date as irrevocable
annuity payments), the remaining portion of the Owner's interest (if any)
shall be distributed at least as rapidly as under the method of
distribution in effect as of the Owner's death.
If the Owner dies before the required beginning date and an irrevocable
annuity distribution has not begun, the Owner's entire interest shall be
distributed by December 31 of the calendar year containing the fifth
anniversary of the Owner's death, except that
(a) if the interest is payable to an individual who is the Owner's
designated beneficiary, the designated beneficiary may elect to
receive the entire interest over the life of the designated
beneficiary or over a period not extending beyond the life
expectancy of the designated beneficiary, commencing on or before
December 31 of the calendar year immediately following the calendar
year in which the Owner died; or
(b) if the designated beneficiary is the Owner's surviving spouse,
the surviving spouse may elect to receive the entire interest over
the life of the surviving spouse or over a period not extending
beyond the life expectancy of the surviving spouse, commencing at
any date prior to the later of
(i) December 31 of the calendar year immediately following the
calendar year in which the Owner died, and
(ii) December 31 of the calendar year in which the Owner would
have attained age 70 1/2.
If the surviving spouse dies before distributions begin, the
limitations of this section shall be applied as if the
surviving spouse were the Owner. An irrevocable election of
the method of distribution by a designated beneficiary who is
the surviving spouse must be made no later than the earlier of
December 31 of the calendar year containing the fifth
anniversary of the Owner's death or the date distributions are
required to begin pursuant to this provision (b).
If the designated beneficiary is the Owner's surviving spouse,
the spouse may irrevocably elect to treat the Owner's interest
in the Contract as his or her own individual retirement
arrangement (IRA). This election will be deemed to have been
made if such surviving spouse (i) fails to elect that his or
her interest will be distributed in accordance with one of the
preceding provisions, or (ii) makes a rollover from the
Contract.
An irrevocable election of the method of distribution by a
designated beneficiary who is not the surviving spouse must be made
within one year of the Owner's death, and if no election is made,
the entire interest will be distributed by December 31 of the
calendar year containing the fifth anniversary of the Owner's death.
In the "Death Benefit Before Maturity Date" section of part 4 of the
Certificate, (a) the provision entitled "Death of Annuitant" is deleted;
and (b) in the "Death of Owner" provision, the distribution requirements
of provisions "(d)" and "(e)" are deleted. If, after the Owner's death,
the designated beneficiary dies before the Maturity Date, no Death Benefit
is payable.
LIFE EXPECTANCY CALCULATIONS
8. Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
If benefits under the Contract are payable in accordance with an Annuity
Option provided under the Contract, life expectancy shall not be
recalculated. If benefits are payable under an alternate form acceptable
to us, life expectancies shall not be recalculated unless annual
recalculations are elected at the time distributions are required to begin
(a) by the Owner, or (b) for purposes of distributions beginning after the
Owner's death, by the surviving spouse. Such an election shall be
irrevocable as to the Owner or the surviving spouse, and shall apply to
all subsequent years.
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The life expectancy of a non-spouse designated beneficiary (a) may not be
recalculated, and (b) shall be calculated using the attained age of such
designated beneficiary during the calendar year in which distributions are
required to begin pursuant to this Endorsement. Payments for any
subsequent calendar year shall be calculated based on such life expectancy
reduced by one for each calendar year which has elapsed since the calendar
year life expectancy was first calculated.
CANCELLATION FOR NONPAYMENT
9. We may pay the Owner the Contract Value (measured as of the Valuation
Period during which the cancellation occurs), less the Administration
Fee (if applicable), if (a) prior to the Maturity Date, no Payments are
made for two consecutive Contract Years; (b) the total Payments made,
less any partial withdrawals, are less than $2,000; (c) the Contract
Value at the end of such two-year period is less than $2,000; and (d)
the paid-up annuity benefit at the Maturity Date at the end of such
two-year period would be less than $20 per month.
IRC SECTION 72(S)
10. All references in the Contract to IRC Section 72(s) are deleted.
Endorsed on the Certificate Date of this Certificate.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
Vice-President
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NORTH AMERICAN SECURITY LIFE INSURANCE COMPANY
North American Security Life Insurance Company (the "Company"), duly
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that:
1. That on the 28th day of March 1997, the Board of Directors of the
Company duly adopted by its written consent, pursuant to Section 141(f) of the
General Corporation Law of the State of Delaware, a resolution setting forth a
proposed amendment to the Certificate of Incorporation of the Company as
follows:
RESOLVED, that Article One of the Certificate of Incorporation of the
Company be amended by changing the name of the Company from North
American Security Life Insurance Company to The Manufacturers Life
Insurance Company of North America, and it is
FURTHER RESOLVED, that the change of the Company's name be recommended
to the sole stockholder of the Company, and it is
FURTHER RESOLVED, that any one of the President or the Vice President,
Secretary and General Counsel are hereby authorized to do all things and
take all actions to effect the change of name, and it is
FURTHER RESOLVED, that the change of the Company's name will be
effective upon approval of the Delaware Department of Insurance and any
other regulatory agencies needed to approve such change.
2. That on the 28th day of March 1997, pursuant to the resolution of the
Board of Directors, the sole stockholder of the Company duly adopted by its
written consent, pursuant to Section 228 of the General Corporation Law of the
State of Delaware, a resolution in favor of the amendment.
<PAGE> 2
3. That the Certificate of Incorporation of the Company is hereby
amended by deleting Article FIRST in its entirety and inserting the following in
lieu thereof:
FIRST: The name of the Company is:
The Manufacturers Life Insurance Company of
North America.
4. That the foregoing amendment has been duly adopted in accordance with
the provisions of Sections 242 and 228 (by the written consent of the sole
stockholder) of the General Corporation Law of the State of Delaware.
5. That the foregoing amendment shall be effective at 12:01 a.m. Eastern
Standard Time on October 1, 1997.
IN WITNESS WHEREOF, North American Security Life Insurance Company has
caused this Certificate to be executed by James D. Gallagher, Vice President,
Secretary and
General Counsel.
NORTH AMERICAN SECURITY LIFE INSURANCE COMPANY
By /s/ James D. Gallagher
---------------------------------------
James D. Gallagher
Vice President, Secretary & General Counsel
<PAGE> 1
EXHIBIT (99.6)(iii)
AMENDED AND RESTATED
BY-LAWS
of
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NORTH AMERICA
ARTICLE I
MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders shall be held each year at such time
and on such date as the Board, the Chairman or the President may from time to
time determine.
Written notice of the Annual Meeting shall be given at least ten days
prior to the date of such meeting to each stockholder whose name shall be
registered as such upon the books of the Company, and such notice shall state
the place, date and hour of the Meeting.
Special meetings of the stockholders may be called on the order of the
Chairman, the President or a majority of the Board of Directors. Such call
shall be made by a written notice given at least ten days prior to the date of
such meeting to each stockholder whose name shall be registered as such upon
the books of the Company, and such call shall state the place, date and hour of
the meeting, and the general nature of the business proposed to be transacted
thereat; and no other business shall be transacted at such meeting.
Annual and special meetings of stockholders shall be held at such places,
within or without the United States, as may from time to time be designated by
the Board of Directors and stated in the notice of meeting.
The attendance in person or by proxy of a majority in interest of all
stockholders entitled to vote at any meeting, whether annual or special, shall
be necessary to constitute a quorum at such meeting, and each stockholder shall
be entitled, either in person or by proxy at any such meeting, to as many votes
as he owns shares of stock in the Company, upon all matters that come properly
before the meeting.
Unless otherwise provided in the certificate of incorporation, any action
required to be taken at any annual or special meeting of stockholders of the
Company, or any action which may be taken at any annual or special meeting of
such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Whenever, under the provision of these By-Laws, notice is required to be
given to any stockholder, such provision shall not be construed to require
personal notice; but the notice may be given by facsimile or by mail, to such
stockholder, at such address as he or she may have registered with the
Secretary of the Company or, in default of such registered address, then at his
or her last known place of residence or business. Such notice shall be deemed
to be given at the time when the same shall be sent via facsimile or mail.
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Any stockholder may, at any time, waive any notice required to be given
under the By-Laws or otherwise, either before or after the meeting or action
with respect to which notice is waived.
ARTICLE II
ELECTION OF DIRECTORS
The stockholders at their annual meeting shall elect such number of
directors, not less than three nor more than ten, as shall be determined by
resolution of the Board of Directors and specified in the notice of meeting,
and such Directors shall hold office until the next annual meeting of the
stockholders and until others are duly chosen and qualified in their stead.
To be eligible for election as a Director of the Company, a person must
be less than 72 years of age and of sound mental health. Directors need not be
stockholders.
If election of Directors is not held at the annual meeting of
stockholders, the Directors shall cause the election to be held at a special
meeting of stockholders as soon thereafter as conveniently may be.
The number of Directors may be increased at any time and from time to
time by amendment of the By-Laws or by resolution of the Board of Directors.
The number of Directors may be decreased at any time and from time to time (but
never to a smaller number than three) by amendment of the By-Laws or by
resolution of the Directors. Any directorship to be filled by reason of an
increase in the number of Directors shall be filled by election at any annual
or at a special meeting of stockholders called for that purpose or by
resolution of the Board of Directors. A Director elected by the Board to fill
any such directorship shall hold office until the next succeeding annual
meeting of stockholders and until his or her successor has been elected and
qualified.
Any vacancy occurring through death, resignation, disqualification or
otherwise, among the Directors of the Company, may be filled by the vote of a
majority of the Directors in office. A Director elected by the Board to fill
any such directorship shall hold office until the next succeeding annual
meeting of stockholders and until his or her successor has been elected and
qualified.
A Director of the Company may resign his or her office at any time by
delivering his or her resignation in writing to the Company, and the acceptance
of such resignation, unless required by the terms thereof, shall not be
necessary to make such resignation effective.
Any or all of the Directors may be removed by the stockholders for cause
or without cause.
ARTICLE III
POWERS OF THE DIRECTORS
The Board of Directors shall manage the business and affairs of the
Company and, in addition to the powers and authority expressly conferred upon
them by the By-Laws, may exercise all such powers and do all such
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things as may be exercised or done by the Company subject, nevertheless, to the
provisions of the applicable statutes, of the company's Articles of
Incorporation, and of the By-Laws.
ARTICLE IV
MEETINGS OF DIRECTORS
The Board of Directors shall hold meetings at such places, within or
without the United States, and at such time and on such date as the Chairman,
the President or any two Directors may request. The Secretary shall give
notice of each meeting of the Board by mailing the same at least five days
before the meeting or by telephoning or faxing the same at least one day before
the meeting to each Director.
Whenever, under the provision of these By-Laws, notice is required to be
given to any Director, such provision shall not be construed to require
personal notice; but the notice may be given by facsimile or by mail, to such
Director, at such address as he or she may have registered with the Secretary
of the Company or, in default of such registered address, then at his or her
last known place of residence or business. Such notice shall be deemed to be
given at the time when the same shall be sent via facsimile or mail.
Any Director may at any time waive any notice required to be given under
the By-Laws or otherwise, either before or after the meeting or action with
respect to which notice is waived. Attendance of a Director at a meeting shall
constitute waiver of notice of the meeting, except when the Director attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened.
The attendance of a majority of the Board of Directors shall be necessary
to constitute a quorum for the transaction of business; but a smaller number
may meet and adjourn. When a vacancy or vacancies prevents a majority of the
whole Board constituting a quorum, then a majority of the Directors in office
shall constitute a quorum, provided that such majority shall constitute at
least one-third (1/3) of the whole Board.
Any Director may participate in a meeting of the Board by means of a
conference telephone or similar communications equipment by means of which all
Directors participating in the meeting can hear each other, and such
participation in a meeting of the Board shall constitute presence in person at
such meeting.
Unless otherwise restricted by the certificate of incorporation or these
By-Laws, any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting,
if all members of the Board or committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
ARTICLE V
STANDING COMMITTEES
Section 1. The Board may appoint a Investment Committee. If appointed,
the Investment Committee shall consist of two or more Directors, to be
appointed annually by the Board of Directors who shall appoint one of the
members of such Committee as Chairman.
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If appointed, the Investment Committee shall have authority to direct and
control the investment of funds and the purchase and sale of securities by the
Company. A majority of the members of such Committee shall constitute a
quorum. The Investment Committee, or a quorum thereof, may act from time to
time on the basis of written approval without a formal meeting. Regular
meetings of the Committee shall be held quarterly at dates set by vote of the
Committee. Special meetings may be called at any time at the request of any
member.
Section 2. The Board of Directors may appoint other committees which
shall have such powers and perform such duties as from time to time may be
prescribed by a majority of the Board. The Board shall have the power at any
time to establish, fill vacancies in, to change the membership of, or to
dissolve any committee. Action taken by any committee shall be reported at the
meeting of the Board next succeeding such action.
ARTICLE VI
OFFICERS
Section 1. Executive Officers. The Board of Directors will elect or
appoint a President, one or more Vice Presidents, a Treasurer and a Secretary.
The Board of Directors may also elect a Chairman of the Board, a Vice Chairman
and may designate Vice Presidents as Executive or Senior Vice Presidents, and
may elect from time to time such other officers as it considers necessary, each
of whom shall hold office for such period, have such authority, and perform
such duties as the Board may from time to time determine. Any person may hold
two but no more than two offices, provided the same individual shall not hold
the office of Treasurer and Controller. The Chairman, the Vice Chairman, if
any, and the President shall be chosen from among the Directors.
Section 2. Administrative Officers. The administrative officers of the
Company shall be a Chief Actuary, a Controller and a General Counsel, who shall
be appointed by the President and hold office for a period of time as
prescribed by the President. Additional administrative officers may be
designated and appointed by the President and the authorities and duties of all
administrative officers shall be generally designated by the President.
Section 3. Term of Office. The executive officers shall be chosen
annually by the Board of Directors at the first meeting of the Board following
the stockholders' annual meeting, or as soon thereafter as is conveniently
possible. Additional executive officers may be elected from time to time.
Unless otherwise provided in the resolution of election or appointment, the
term of office of all executive officers shall be for one year and until their
respective successors are duly chosen and qualified, but any executive officer
may be removed, with or without cause, at any time by the Board of Directors.
Section 4. Salaries. The salaries of the executive officers of the
Company shall be fixed by the Board of Directors.
Section 5. Duties and Responsibilities.
(a) The Chairman shall be jointly responsible with the President for
the establishment of corporate policies. Except where, by law, the signature
of the President is required, the Chairman shall possess the same power as the
President to sign all certificates, contracts and other instruments of the
Company which may be authorized by the Board of Directors.
(b) The Vice Chairman, if any, shall have such powers and perform
such duties as the Chairman may delegate to him or her.
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(c) The President shall have such powers and perform such duties as
the Board of Directors and the Chairman may delegate to him or her. In the
absence of the Chairman, the President shall exercise the functions and duties
of the Chairman.
(d) Each Vice President shall have such powers and perform such
duties as the Board of Directors, the Chairman or the President may from time
to time prescribe. The Vice Presidents in the order of priority designated by
the Chairman, the President or the Board of Directors, shall exercise the
functions of the President in his or her absence. If no priority is
designated, then by order of election.
(e) The Treasurer shall have the custody and care of all the funds
and securities of the Company, and shall deposit all funds to the credit of the
Company in such institution or institutions as the Board of Directors may
designate; he or she or an Assistant Treasurer or such other officer or
officers or appointee or appointees as may be authorized by the Board of
Directors shall endorse all instruments or documents requiring endorsement for
or on behalf of the Company; he or she shall perform all acts incident to the
position of Treasurer, subject to the control of the Board; he or she shall
have such other powers and perform such other duties as the Board of Directors,
the Chairman or the President may from time to time prescribe.
(f) The Secretary shall keep the minutes of all meetings of the Board
of Directors and of the Stockholders and shall attend to the giving of proper
notices to Directors and stockholders; he or she or an Assistant Secretary or
such other officer or officers or appointee or appointees as authorized by the
Board of Directors may sign, with the President, all authorized contracts,
instruments or documents in the name of the Company; he or she shall be the
custodian of the seal of the Company and shall attest such seal when required;
he or she shall perform all the duties incident to the office of Secretary,
subject to the control of the Board of Directors; he or she shall have custody
of the stock registers and transfer books of the Company; he or she shall have
such other powers and perform such other duties as the Board of Directors, the
Chairman or the President may from time to time prescribe or as may be
prescribed by these By-Laws.
(g) The Chairman, or the Vice Chairman, if any, or the President or
any Vice President, jointly with the Secretary, shall have power and is hereby
authorized to do all acts and things necessary to comply with the laws of any
state, territory, foreign government or other jurisdiction to secure the right
of the Company to do or continue the business of insurance in such
jurisdiction, and to act in the name of the Company to appoint from time to
time such person or persons as may be necessary and under such terms and
conditions as may be necessary, as the true and lawful attorney or attorneys of
the Company in and for such jurisdiction upon whom all lawful processes of any
description in any suit, action or proceeding against the Company may be served
in like manner and with the same effect as if served upon the Company and as if
the Company were organized under the laws of the jurisdiction for which such
attorney or attorneys are appointed; and the Company hereby empowers and
authorizes said officers for it and its name to agree that any lawful process
against the Company which may be served on its attorneys so appointed shall be
of the same legal force, effect and validity as if served on the Company.
(h) In case of the absence or disability of any officer of the
Company and of any persons hereby authorized to act in his or her place during
such period of absence or disability, the Board of Directors may from time to
time delegate the powers and duties of such officer to any other officer, or
any Director, or any other person whom it may select.
Section 6. Bonding of Officers. All officers shall be bonded under a
blanket bond, upon undertaking the duties of their respective offices, with a
surety company authorized to transact business in the state of Delaware, as
surety, and in such sum as may be specified by resolution of the Board of
Directors, conditioned for the faithful
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discharge of their duties. The Board of Directors may at any time, by
resolution, increase or decrease the amount of bond as hereinabove provided.
Section 7. Deaths, Resignations and Vacancies. An officer of the
Company may resign his or her office at any time by delivering his or her
resignation in writing to the Company, and the acceptance of such resignation,
unless required by the terms thereof, shall not be necessary to make such
resignation effective.
Any vacancy occurring through death, resignation, disqualification or
otherwise, among the Executive Officers of the Company, may be filled by the
vote of a majority of the Directors in office. Any person so chosen shall hold
office until the annual election of executive officers at the first meeting of
the Board of Directors following the stockholders' annual meeting, or as soon
thereafter as is conveniently possible.
ARTICLE VII
OFFICES
The Company may have offices and transact business at such other place
than its registered office in the State of Delaware as from time to time the
business of the Company may require.
ARTICLE VIII
INVESTMENTS AND MONEYS
Investment of the funds of the Company and the purchase and sale of
securities by the Company shall be made only as authorized or approved by the
Board of Directors or the Investment Committee or by some other committee
appointed by the Board of Directors and charged with the duty of supervising or
making such investments, purchases or sales. All investments requiring
registration shall be registered in the name of the Company except in such
cases as the Board of Directors or the Investment Committee may specially
direct otherwise.
Securities representing the invested funds of the Company shall be placed
for safekeeping in safe deposit vaults in the name of the Company, or pursuant
to a custodian account, in such Banks, Trust or Safe Deposit Companies as shall
be approved by the Board of Directors. Access to the vaults shall be in
accordance with procedures approved by resolution of the Board of Directors and
such resolution shall be effective upon a copy thereof being provided to the
Bank, Trust or Safe Deposit Company in which the securities are held. In the
event that the Board of Directors shall determine to establish a custodian
account with a Bank or Trust Company and shall provide that all or any part of
the securities now or hereafter representing the invested funds of the Company
shall be delivered to such Bank or Trust Company approved by the Board of
Directors; then, and in that event, such Bank or Trust Company shall hold such
securities so delivered in the custodian account in accordance with the
procedure and under the authority of the resolution approved by the Board of
Directors.
Any two of the following: the Chairman, Vice Chairman, if any,
President, or any Vice President acting jointly, or any one of them acting
jointly with any Vice President or the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer is authorized and empowered to
sell, assign, exchange and transfer any and all
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shares of stock, bonds and other securities owned by or standing in the name of
the Company, and to make, execute and deliver in the name and as the act of the
Company under its corporate seal any and all instruments in writing necessary
or proper to carry such sales, assignments, exchanges and transfers into
effect, but the Board of Directors or the Investment Committee may from time to
time adopt resolutions authorizing other methods for accomplishing same.
The Chairman, or the Vice Chairman, if any, or the President or any Vice
President or the Treasurer shall have authority to vote in person or by proxy
any of the stock of any other company in which the Company may hold and to
execute any and all consents or other documents relating to such stocks.
Moneys received by the Company may be deposited to its credit in such
Trust Companies or Banks as the Board of Directors may designate and checks
thereon shall be signed by two officers, one of whom shall be the Chairman or
the Vice Chairman, if any, or the President or Vice President; but the Board of
Directors may from time to time adopt resolutions authorizing other methods for
drawing checks, including the use of facsimile signatures, and such resolutions
shall be effective upon a copy thereof being provided to the Trust Company or
Bank upon which the check is drawn.
ARTICLE IX
FISCAL YEAR
Except as from time to time otherwise provided by the Board of Directors,
the fiscal year of the Company shall be the calendar year.
ARTICLE X
DIVIDENDS
Dividends may be declared and paid at such times as may be determined by
the Board of Directors.
Before declaring payment of any dividends or making any other
distribution of the surplus or profits of the Company, the Directors of the
Company may, according to their discretion, set aside such sum or sums as they
think proper as a reserve fund to meet contingencies or to meet the statutory
requirements of any State or country in which they may be transacting business,
or for equalizing dividends, or for any other purpose which they shall think
conducive to the interest of the Company.
ARTICLE XI
STOCK CERTIFICATES, TRANSFER AND RECORD DATES
All certificates of stock of the Company shall be signed by the Chairman
or the Vice Chairman, if any, or the President or a Vice President and by the
Secretary or an Assistant Secretary.
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ARTICLE XII
EMERGENCY AUTHORITY
The Board of Directors, by resolution adopted by a majority of the whole
Board, may make advance provision for the continuity and authority of the
Company's management in the event of a major catastrophe or force majeure
resulting in the loss or unavailability of members of the Board of Directors,
whether by death, incapacity, isolation or otherwise, or in loss or
unavailability of officers of the Company, and, in the event of such major
catastrophe, the terms of any such resolution shall have the same effect as if
included in these By-Laws and shall supersede the terms of these By-Laws to the
extent that they may be inconsistent therewith.
ARTICLE XIII
COMPENSATION OF DIRECTORS, ETC.
The Directors shall receive such compensation for their services as
Directors as may be prescribed by the Board of Directors and shall be
reimbursed by the Company for ordinary and reasonable expenses incurred in the
performance of their duty.
Each member of the Investment or other committees, if any, and each
alternate member thereof, if any, shall receive such compensation as may be
deemed just and reasonable by a majority of the Board of Directors, which may
be a fee for attendance at meetings or on an annual basis. No officers of the
Company, however, shall be eligible to receive compensation for serving on any
of the foregoing committees.
ARTICLE XIV
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Each Director or officer, whether or not then in office, shall be
indemnified by the Company against all costs and expenses reasonably incurred
by or imposed upon him or her, including legal fees, in connection with or
resulting from any claim, action, suit or proceeding, whether civil, criminal
or administrative, in which he or she may become involved as a party or
otherwise, by reason of his or her being or having been a Director or officer
of the Company.
(1) Indemnity will not be granted to any Director or officer with respect
to any claim, action, suit or proceeding which shall be brought against such
Director or officer by or in the right of the Company, and
(2) Indemnification for amounts paid and expenses incurred in settling
such action, claim, suit or proceeding, will not be granted, until
it shall be determined by a disinterested majority of the Board of Directors or
by a majority of any disinterested committee or group of persons to whom the
question may be referred by the Board, that said Director or officer did
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indeed act in good faith and in a manner he or she reasonably believed to be
in, or not adverse, to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonably cause to believe that his
or her conduct was legal, and that the payment of such costs, expenses,
penalties or fines is in the interest of the Company, and not contrary to
public policy or other provisions of law.
The termination of any action, suit or proceeding by judgement, order,
settlement, conviction or upon a plea of nolo contendre or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in, or not
adverse, to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful. Indemnification shall be made by the corporation upon
determination by a disinterested majority of the Board of Directors or of a
majority of any disinterested committee or group or persons to whom the
question may be referred to by said Board, that the person did indeed act in
good faith and in a manner he or she reasonably believed to be in, or not
adverse, to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonably cause to believe that his or her
conduct was legal.
The foregoing right to indemnity shall not be exclusive of any other
rights to which such Director or officer may be entitled as a matter of law.
The foregoing right to indemnity shall also extend to the estate of any
deceased Director or officer with respect to any such claim, action, suit or
proceeding in which such Director or officer or his or her estate may become
involved by reason of his or her having been a Director or officer of the
Company, and subject to the same conditions outlined above.
ARTICLE XV
BY-LAWS
These By-Laws or any articles thereof may be altered, amended or repealed
or further By-Laws may be adopted by a vote of a majority of the Directors then
in office at any regular or special meeting of the Board of Directors, or by
written consent, provided five days' notice in writing shall be given to each
of the Directors of the proposed alteration, amendment or repeal of an existing
By-Law or the proposed adoption of a new By-Law. Any By-Law made by the
Directors under this Article may be altered, amended or repealed by the
stockholders.
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