<PAGE> 1
As filed with the Securities and Exchange Commission on August 28, 1998.
Registration No. 333-51293
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. 1
SEPARATE ACCOUNT FOUR OF THE MANUFACTURERS LIFE INSURANCE COMPANY OF
AMERICA
(Exact name of Registrant)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
(Name of Depositor)
500 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of Depositor's Principal Executive Offices)
James D. Gallagher Copy to:
Secretary and General Counsel J. Sumner Jones, Esq.
The Manufacturers Life Insurance Company Jones & Blouch L.L.P.
of America 1025 Thomas Jefferson Street, NW
73 Tremont Street Washington, DC 20007
Boston, MA 02108
(Name and Address of Agent for Service)
Title of Securities Being Registered: Variable Life Insurance Contracts
Approximate date of commencement of proposed public offering: As soon after the
effective date of this Registration Statement as is practicable.
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 the Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
Separate Account Four of
The Manufacturers Life Insurance Company of America
Registration Statement on Form S-6
Cross-Reference Sheet
FORM
N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
1 Cover Page; General Information About Manufacturers (Separate Account
Four)
2 Cover Page; General Information About Manufacturers (Manufacturers
Life of America)
3 *
4 Other Information (Distribution of the Policy)
5 General Information About Manufacturers Life (Separate Account Four)
6 General Information About Manufacturers (Separate Account Four)
7 *
8 *
9 Other Information (Litigation)
10 Death Benefits; Premium Payments; Charges and Deductions; Policy
Value; Policy Loans; Policy Surrender and Partial Withdrawals; Lapse
and Reinstatement; Other Provisions of the Policy; Other Information
11 General Information About Manufacturers (Manufacturers Investment
Trust)
12 General Information About Manufacturers (Manufacturers Investment
Trust)
13 Charges and Deductions
14 Issuing A Policy; Other Information (Responsibilities Assumed By
Manufacturers Life)
15 Issuing A Policy
16 **
17 Policy Surrender and Partial Withdrawals
18 General Information About Manufacturers
19 Other Information (Reports to Policyholders; Responsibilities Assumed
By Manufacturers Life)
20 *
21 Policy Loans
<PAGE> 3
22 *
23 **
24 Other Provisions of the Policy
25 General Information About Manufacturers (Manufacturers Life of
America)
26 *
27 **
28 Other Information (Officers and Directors)
29 General Information About Manufacturers (Manufacturers Life of
America)
30 *
31 *
32 *
33 *
34 *
35 **
36 *
37 *
38 Other Information (Distribution of the Policies; Responsibilities of
Manufacturers Life)
39 Other Information (Distribution of the Policies)
40 *
41 **
42 *
43 *
44 Policy Values --Determination of Policy Value; Units and Unit Values)
45 *
46 Policy Surrender and Partial Withdrawals; Other Information --
Payment of Proceeds)
47 General Information About Manufacturers (Manufacturers Investment
Trust)
48 *
<PAGE> 4
49 *
50 General Information About Manufacturers
51 Issuing a Policy; Death Benefits; Premium Payments; Charges and
Deductions; Policy Value; Policy Loans; Policy Surrender and Partial
Withdrawals; Lapse and Reinstatement; Other Policy Provisions
52 Other Information (Substitution of Portfolio Shares)
53 **
54 *
55 *
56 *
57 *
58 *
59 Financial Statements
* Omitted since answer is negative or item is not applicable.
**Omitted.
<PAGE> 5
PART I
PROSPECTUS
<PAGE> 6
COVER PAGE
This prospectus describes Corporate VUL, a flexible premium variable universal
life insurance policy (the "Policy") offered by The Manufacturers Life Insurance
Company of America (the "Company" or "Manufacturers Life Of America"), a stock
life insurance company that is an indirect wholly-owned subsidiary of The
Manufacturers Life Insurance Company ("Manufacturers Life"). The Policy is
designed for use by corporations and other employers, to provide life insurance
and to fund other employee benefits.
The Policy is designed to provide lifetime insurance protection together with
flexibility as to the timing and amount of premium payments, the investments
underlying the Policy Value, and the amount of insurance coverage.
The Policy provides for:
(1) a Net Cash Surrender Value that can be obtained by surrendering the Policy;
(2) policy loans and partial withdrawals; and
(3) an insurance benefit payable at the life insured's death.
The Policy will remain in force so long as the Net Cash Surrender Value is
sufficient to cover charges assessed against the Policy.
Policy Value may be accumulated on a fixed basis or vary with the investment
performance of the sub-accounts of Manufacturer Life of America's Separate
Account Four (the "Separate Account") to which the policyholder allocates net
premiums. The assets of each sub-account will be used to purchase shares of a
particular investment portfolio (a "Portfolio") of Manufacturers Investment
Trust (the "Trust"). The accompanying prospectus for the Trust, and the
corresponding statement of additional information, describe the investment
objectives of the Portfolios. The Portfolios available for allocation of net
premiums are shown in the Policy Summary under "Investment Options and Fees".
Other sub-accounts and Portfolios may be added in the future.
BECAUSE OF THE SUBSTANTIAL NATURE OF THE SURRENDER CHARGES, THE POLICY IS NOT
SUITABLE FOR SHORT-TERM INVESTMENT PURPOSES. ALSO, PROSPECTIVE PURCHASERS SHOULD
NOTE THAT IT MAY NOT BE ADVISABLE TO PURCHASE A POLICY AS A REPLACEMENT FOR
EXISTING INSURANCE.
The Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains material incorporated by reference and other information regarding
registrants that file electronically with the Commission.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT IS
VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE TRUST.
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 Manufacturers Life Insurance Company of America
500 North Woodward Avenue
Bloomfield Hills, Michigan 48304
The date of this Prospectus is _____, 1998.
<PAGE> 7
TABLE OF CONTENTS
Cover Page.................................................................... 1
Table of Contents............................................................. 2
Definitions................................................................... 4
Policy Summary................................................................ 5
General.................................................................... 5
Death Benefits............................................................. 6
Premiums................................................................... 6
Policy Value............................................................... 6
Policy Loans............................................................... 6
Surrender and Partial Withdrawals.......................................... 6
Lapse and Reinstatement.................................................... 6
Charges and Deductions..................................................... 7
Investment Options and Investment Advisers................................. 7
Table of Charges and Deductions............................................ 8
Table of Investment Management Fees and Expenses........................... 9
Table of Investment Options and Investment Advisers........................10
General Information about Manufacturers.......................................13
Manufacturers Life of America..............................................13
Separate Account Four......................................................13
Manufacturers Investment Trust.............................................14
Investment Objectives of the Portfolios....................................14
Issuing A Policy..............................................................19
Use of the Policy..........................................................19
Requirements...............................................................19
Temporary Insurance Agreement..............................................20
Underwriting...............................................................20
Right to Examine the Policy................................................20
Death Benefits................................................................21
Life Insurance Qualification...............................................21
Death Benefit Options......................................................23
Changing the Face Amount...................................................23
Premium Payments..............................................................25
Initial Premiums...........................................................25
Subsequent Premiums........................................................25
Maximum Premium Limitation.................................................25
Premium Allocation.........................................................26
Charges and Deductions........................................................26
Premium Loads..............................................................26
Surrender Charges..........................................................26
Monthly Charges............................................................27
Charges Assessed Against Assets of the Investment Accounts.................28
Charges for Transfers......................................................28
Company Tax Considerations
Policy Value..................................................................29
Determination of the Policy Value..........................................29
Units and Unit Values......................................................29
Transfers of Policy Value..................................................30
Policy Loans..................................................................31
Maximum Loan...............................................................31
Effect of Policy Loan......................................................31
2
<PAGE> 8
Interest Charged on Policy Loans...........................................31
Loan Account...............................................................31
Policy Surrender and Partial Withdrawals......................................32
Policy Surrender...........................................................32
Partial Withdrawals........................................................32
Lapse and Reinstatement.......................................................33
Lapse......................................................................33
Reinstatement..............................................................33
The General Account...........................................................33
Guaranteed Interest Account................................................34
Other Provisions of the Policy................................................34
Policyholder Rights........................................................34
Beneficiary................................................................35
Incontestability...........................................................35
Misstatement of Age or Sex.................................................35
Suicide Exclusion..........................................................35
Supplementary Benefits.....................................................35
Tax Treatment of the Policy...................................................35
Life Insurance Qualification...............................................36
Tax Treatment of Policy Benefits...........................................37
Alternate Minimum Tax......................................................40
Income Tax Reporting.......................................................40
Other Information.............................................................40
Payment of Proceeds........................................................40
Reports to Policyholders...................................................40
Distribution of the Policies...............................................40
Responsibilities of Manufacturers Life.....................................40
Voting Rights..............................................................40
Substitution of Portfolio Shares...........................................40
Records and Accounts.......................................................40
State Regulations..........................................................40
Litigation.................................................................40
Experts....................................................................40
Further Information........................................................40
Officers and Directors.....................................................40
Impact of Year 2000........................................................40
Death Benefit Schedule with Flexible Term Insurance Option.................40
Illustrations..............................................................40
Assumptions................................................................40
Financial Statements.......................................................50
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS OF MANUFACTURERS INVESTMENT TRUST, OR THE
STATEMENT OF ADDITIONAL INFORMATION OF MANUFACTURERS INVESTMENT TRUST.
Examine this prospectus carefully. The Policy Summary will briefly describe the
Policy. More detailed information will be found further in the prospectus.
3
<PAGE> 9
DEFINITIONS
Attained Age
is the Issue Age of the life insured plus the number of completed Policy Years.
Business Day
is any day that the New York Stock Exchange is open for business. A Business Day
ends at the close of regularly scheduled trading of the New York Stock Exchange
(currently 4:00 p.m. Eastern Time) on that day.
Case
is a group of Policies covering individuals with common employment or other
relationship, independent of the Policies.
Cash Surrender Value
is the Policy Value less the Surrender Charge and any outstanding monthly
deductions due.
Due Proof of Death
Due Proof of Death is required upon the death of the insured. One of the
following must be received at the 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; or
(c) Any other proof satisfactory to the Company.
Effective Date
is the date the Company becomes obligated under the Policy, and when the first
monthly deductions are taken. The Effective Date is the later of:
(a) the date the Company approves issuance of the Policy; and
(b) the date the Company receives at least the initial premium.
Guaranteed Interest Account
is that part of the Policy Value which reflects the value the policyholder has
in the general account of the Company.
Home Office
is the main office of the Company.
Investment Account
is that part of the Policy Value which reflects the value the policyholder has
in one of the sub-accounts of the Separate Account.
Issue Age
is the life insured's age on the birthday closer to the Policy Date.
Issue Date
is the date the Company issued the Policy. The Issue Date is also the date from
which the Suicide and Validity provisions of the Policy are measured.
4
<PAGE> 10
Loan Account
is that part of the Policy Value which reflects policy loans and interest
credited to the Policy Value in connection with such loans.
Net Cash Surrender Value
is the Cash Surrender Value less the Policy Debt.
Net Policy Value
is the Policy Value less the value in the Loan Account.
Net Premium
is the premium paid less the Premium Load.
Policy Anniversary
is the same date each year as the Policy Date.
Policy Date
is the date from which charges for the first monthly deduction are calculated,
and the date from which Policy Years, Policy Months, and Policy Anniversaries
are determined.
Policy Debt
as of any date is the aggregate amount of policy loans, including borrowed and
accrued interest, less any loan repayments.
Policy Year
is a period beginning on a Policy Anniversary and ending on the day immediately
preceding the next Policy Anniversary
Policy Value
is the sum of the values in the Loan Account, the Guaranteed Interest Account,
and the Investment Accounts.
Service Office
is McCamish Systems, L.L.C., 6425 Powers Ferry Road, Atlanta, Georgia 30339, or
such other service center or address as the Company may hereafter specify to the
policyholder by written notice.
Target Premium
is an amount used to measure the Surrender Charge under a Policy. The Target
Premium is based on the Face Amount, as well as the insured's age at issue and
sex, and is set forth in the Policy.
POLICY SUMMARY
GENERAL
The Policy is a flexible premium variable universal life insurance policy. The
following summary is intended to provide a general description of the most
important features of the Policy. It is not comprehensive and is qualified in
its entirety by the more detailed information contained in this prospectus.
Unless otherwise indicated or required by the context, the discussion throughout
this prospectus assumes that the Policy has not gone into default, there is no
outstanding Policy Debt, and the death benefit is not determined by the minimum
death benefit percentage. The Policy's provisions may vary in some states.
5
<PAGE> 11
DEATH BENEFITS
The Policy provides a death benefit in the event of the death of the life
insured. There are two death benefit options. Under Option 1 the death benefit
is the Face Amount of the Policy at the date of death or, if greater, the
Minimum Death Benefit. Under Option 2 the death benefit is the Face Amount plus
the Policy Value of the Policy at the date of death or, if greater, the Minimum
Death Benefit. The policyholder may change the death benefit option and increase
or decrease the Face Amount.
PREMIUMS
Premium payments may be made at any time and in any amount, subject to certain
limitations as described under "Premium Payments - Subsequent Premiums." Net
Premiums will be allocated, according to the policyholder's instructions, to one
or more of the general account and the sub-accounts of Manufacturers Life of
America's Separate Account Four. Allocation instructions may be changed at any
time and transfers among the accounts may be made.
POLICY VALUE
The Policy has a Policy Value reflecting premiums paid, certain charges for
expenses and cost of insurance, and the investment performance of the accounts
to which the policyholder has allocated premiums. The policyholder may obtain a
portion of the Policy Value by taking a policy loan or a partial withdrawal, or
by full surrender of the Policy.
POLICY LOANS
The policyholder may borrow against the Cash Surrender Value of the Policy. Loan
interest at a rate of 5.00% is due and payable in arrears on each Policy
Anniversary. All outstanding Policy Debt will be deducted from proceeds payable
at the insured's death, or upon surrender.
SURRENDER AND PARTIAL WITHDRAWALS
The policyholder may make a partial withdrawal of the Policy Value. A partial
withdrawal may result in a reduction in the Face Amount of the Policy and an
assessment of a portion of the surrender charges to which the Policy is subject.
A Policy may be surrendered for its Net Cash Surrender Value at any time while
the life insured is living. The Net Cash Surrender Value is equal to the Policy
Value less Surrender Charges and outstanding monthly deductions due minus the
Policy Debt.
LAPSE AND REINSTATEMENT
A Policy will lapse (and terminate without value) when the Net Cash Surrender
Value is insufficient to pay the next monthly deduction and a grace period of 61
days expires without an adequate payment being made by the policyholder.
The Policies, therefore, differ in two important respects from conventional life
insurance policies. First, the failure to make planned premium payments will not
itself cause a Policy to lapse. Second, a Policy can lapse even if planned
premiums have been paid.
A lapsed Policy may be reinstated by the policyholder at any time within the
five year period following lapse if the Policy was not surrendered for its Net
Cash Surrender Value. Evidence of insurability is required, along with a certain
amount of premium as described under "Reinstatement."
6
<PAGE> 12
CHARGES AND DEDUCTIONS
The Company assesses certain charges and deductions in connection with the
Policy. These include charges assessed monthly for cost of insurance and
administration expenses, charges assessed daily against the assets invested in
the Investment Account, and loads deducted from premiums paid. These charges are
summarized in the Table of Charges and Deductions.
INVESTMENT OPTIONS AND INVESTMENT ADVISERS
Net Premiums may be allocated to the general account or to one or more of the
sub-accounts of Manufacturers Life of America's Separate Account Four. Each of
the sub-accounts invests in the shares of one of the Portfolios of the Trust.
The Trust receives investment advisory services from Manufacturers Securities
Services, LLC ("MSS"). MSS is a registered investment adviser under the
Investment Advisers Act of 1940. The Trust also employs subadvisers. The Table
of Investment Options and Investment Advisers shows the subadvisers that provide
investment subadvisery services to the indicated Portfolios.
INVESTMENT MANAGEMENT FEES AND EXPENSES
The Separate Account purchases shares of the Portfolios at net asset value. The
net asset value of those shares reflects investment management fees and certain
expenses. The fees and expenses of each Portfolio for the Trust's last fiscal
year are shown in the Table of Investment Management Fees and Expenses. These
fees and expenses are described in detail in the accompanying Trust prospectus
to which reference should be made.
7
<PAGE> 13
TABLE OF CHARGES AND DEDUCTIONS
Premium Load 2.00% of the premium paid.
Surrender Charges The following charges will be assessed on a
surrender or lapse. Charges are expressed as a
percentage of total premiums paid from the
Effective Date to the Policy Year shown. However,
premiums paid in any year in excess of the Target
Premium, and premiums paid after the fifth Policy
Year are not included in the determination of total
premiums paid. Percentages are as follows:
<TABLE>
<CAPTION>
Policy Year Percentage Policy Year Percentage
<S> <C> <C> <C>
1 10.00% 6 5.00%
2 7.50% 7 4.00%
3 5.00% 8 3.00%
4 5.00% 9 2.00%
5 5.00% 10+ 0.00%
</TABLE>
A portion of this charge may be assessed on a
partial withdrawal or a decrease in the Face
Amount.
Monthly Deductions The following charges will be deducted from Net
Policy Value:
An administration charge of $12. The cost of
insurance charge. Any additional charges for
supplementary benefits.
Investment Account Charges A mortality and expense risk charge is assessed
daily against the value of the Investment Account
assets. This charge varies by Policy Year as
follows:
<TABLE>
<CAPTION>
Annual Mortality and
Policy Years Expense Risk Charge
<S> <C>
1-10 0.75%
11+ 0.40%
</TABLE>
Loan Charges A fixed loan interest rate of 5.00%.
Interest credited to amounts in the Loan Account
will be equal to the 5.00% rate charged to the loan
less the following Loan Spread:
<TABLE>
<CAPTION>
Policy Years Loan Spread
<S> <C>
1-10 1.00%
11-20 0.50%
21+ 0.25%
</TABLE>
Transfer Charge A charge of $25 per transfer for each transfer in
excess of 12
8
<PAGE> 14
in a Policy Year.
9
<PAGE> 15
TABLE OF INVESTMENT MANAGEMENT FEES AND EXPENSES
ANNUAL EXPENSES OF EACH PORTFOLIO
(as a percentage of a Portfolio's average net assets)
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT (AFTER EXPENSE TOTAL TRUST
PORTFOLIO FEES REIMBURSEMENT)*** ANNUAL EXPENSES
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggressive Growth
Pacific Rim Emerging Markets 0.850% 0.570% 1.420%
Science & Technology 1.100% 0.160% 1.260%
International Small Cap 1.100% 0.210% 1.310%
Emerging Growth 1.050% 0.060% 1.110%
Pilgrim Baxter Growth 1.050% 0.130% 1.180%
Small/Mid Cap 1.000% 0.050% 1.050%
International Stock 1.050% 0.330% 1.380%
Growth
Worldwide Growth 1.000% 0.320% 1.320%
Global Equity 0.900% 0.110% 1.010%
Small Company Value 1.050% 0.100%* 1.150%
Equity 0.750% 0.050% 0.800%
Growth 0.850% 0.100% 0.950%
Quantitative Equity 0.700% 0.070% 0.770%***
Blue Chip Growth 0.925% 0.050% 0.975%
Real Estate Securities 0.700% 0.070% 0.770%***
Value 0.800% 0.160% 0.960%
International Growth and Income 0.950% 0.170% 1.120%
Growth and Income
Growth and Income 0.750% 0.040% 0.790%
Equity-Income 0.800% 0.050% 0.850%
Balanced
Balanced 0.800% 0.080% 0.880%
Aggressive Asset Allocation 0.750% 0.150% 0.900%
Bond
High Yield 0.775% 0.110% 0.885%
Moderate Asset Allocation 0.750% 0.100% 0.850%
Conservative Asset Allocation 0.750% 0.140% 0.890%
Strategic Bond 0.775% 0.100% 0.875%
Global Government Bond 0.800% 0.130% 0.930%
Capital Growth Bond 0.650% 0.080% 0.730%***
Investment Quality Bond 0.650% 0.090% 0.740%
U.S. Government Securities 0.650% 0.070% 0.720%
Money Market
Money Market 0.500% 0.040% 0.540%
</TABLE>
10
<PAGE> 16
<TABLE>
<S> <C> <C> <C>
Lifestyle
Lifestyle Aggressive 1000# 0% 1.116%** 1.116%
Lifestyle Growth 820# 0% 1.048%** 1.048%
Lifestyle Balanced 640# 0% 0.944%** 0.944%
Lifestyle Moderate 460# 0% 0.850%** 0.850%
Lifestyle Conservative 280# 0% 0.708%** 0.708%
</TABLE>
#Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will 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. Each Lifestyle
Portfolio must also bear its own expenses. However, the Adviser is currently
paying these expenses as described in footnote ** below.
*Based on estimates of payments to be made during the current fiscal year.
** Reflects expenses of the other portfolios of the Trust in which the Lifestyle
Trust invests ("Underlying Portfolios". MSS has voluntarily agreed to pay the
expenses of each Lifestyle Trust (excluding the expenses of the Underlying
Portfolios). This voluntary 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 expenses of the Lifestyle Trusts for the fiscal
year ended December 31, 1997) as noted in the chart below:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
<S> <C> <C> <C>
Lifestyle Aggressive 1000 0% 1.156% 1.156%
Lifestyle Growth 820 0% 1.088% 1.088%
Lifestyle Balanced 640 0% 0.984% 0.984%
Lifestyle Moderate 460 0% 0.890% 0.890%
Lifestyle Conservative 280 0% 0.748% 0.748%
</TABLE>
***During the one year period ended December 31, 1997, MSS voluntarily waived
fees payable to it and/or reimbursed expenses to the extent necessary to prevent
"Total Trust Annual Expenses" for the Quantitative Equity, Real Estate and
Capital Growth Bond Trusts from exceeding .50% of the Trust's average net
assets. This voluntary fee waiver was terminated effective January 1, 1998.
Expenses shown in the table for these three Trusts do not reflect the fee
waiver.
11
<PAGE> 17
TABLE OF INVESTMENT OPTIONS AND INVESTMENT ADVISERS
<TABLE>
<CAPTION>
Portfolio Subadviser
<S> <C>
Aggressive Growth
Pacific Rim Emerging Market Trust Manufacturers Adviser Corporation*
Science and Technology Trust T. Rowe Price Associates, Inc.
International Small Cap Trust Founders Asset Management, Inc.
Emerging Growth Trust Warburg, Pincus Counsellors, Inc.
Pilgrim Baxter Growth Trust Pilgrim, Baxter & Associates, Ltd.
Small/Mid Cap Trust Fred Alger Management, Inc.
International Stock Trust Rowe Price-Fleming International, Inc.
Growth
Worldwide Growth Trust Founders Asset Management LLC
Global Equity Trust Morgan Stanley Asset Management, Inc.
Small Company Value Trust Rosenberg Institutional Equity Management
Equity Trust Fidelity Management Trust Company
Growth Trust Founders Asset Management, Inc.
Quantitative Equity Trust Manufacturers Adviser Corporation*
Equity Index Trust Manufacturers Adviser Corporation*
Blue Chip Growth Trust T. Rowe Price Associates, Inc.
Real Estate Securities Trust Manufacturers Adviser Corporation*
Growth and Income
Value Trust Miller Anderson & Sherrerd, LLP
International Growth and Income Trust J.P. Morgan Investment Management, Inc.
Growth and Income Trust Wellington Management Company
Equity Income Trust T. Rowe Price Associates, Inc.
Balanced
Balanced Trust Founders Asset Management LLC
Aggressive Asset Allocation Trust Fidelity Management Trust Company
Moderate Asset Allocation Trust Fidelity Management Trust Company
Conservative Asset Allocation Trust Fidelity Management Trust Company
Bond
High Yield Trust Miller Anderson & Sherrerd, LLP
Strategic Bond Trust Salomon Brothers Asset Management, Inc.
Global Government Bond Trust Oechsle International Advisors, L.P.
Capital Growth Bond Trust Manufacturers Adviser Corporation*
Investment Quality Bond Trust Wellington Management Company
U.S. Government Securities Trust Salomon Brothers Asset Management, Inc.
Money Market
Money Market Trust Manufacturers Adviser Corporation*
Lifestyle
Lifestyle Aggressive Growth 1000 Trust Manufacturers Adviser Corporation*
Lifestyle Growth 820 Trust Manufacturers Adviser Corporation*
Lifestyle Balanced 640 Trust Manufacturers Adviser Corporation*
Lifestyle Moderate 460 Trust Manufacturers Adviser Corporation*
Lifestyle Conservative 280 Trust Manufacturers Adviser Corporation*
</TABLE>
*Manufacturers Adviser Corporation is an indirect wholly-owned subsidiary of
Manufacturers Life.
12
<PAGE> 18
GENERAL INFORMATION ABOUT MANUFACTURERS
MANUFACTURERS LIFE OF AMERICA
Manufacturers Life of America is a stock life insurance company organized under
the laws of Pennsylvania on April 11, 1977 and redomesticated under the laws of
Michigan on December 9, 1992. It is a licensed life insurance company in the
District of Columbia and all states of the United States except New York. The
ultimate parent of Manufacturers Life of America is Manufacturers Life, a mutual
life insurance company based in Toronto, Canada. Manufacturers Life and its
subsidiaries, together, constitute one of the largest life insurance companies
in North America and rank among the 60 largest life insurers in the world as
measured by assets. However, neither Manufacturers Life of America nor
Manufacturers Life guarantees the investment performance of the Separate
Account.
On January 20, 1998, the Board of Directors of Manulife asked the management of
Manulife to prepare a plan for conversion of Manulife from a mutual life
insurance company to an investor owned, publicly traded stock company. Any
demutualization plan for Manulife is subject to the approval of the Manulife
Board of Directors and policyholders as well as regulatory approval.
RATINGS
Manufacturers Life and Manufacturers Life of America have received the following
ratings from independent rating agencies:
Standard and Poor's Insurance Ratings Service: AA+ (for claims paying ability)
A.M.Best Company: A++ (for financial strength)
Duff & Phelps Credit Rating Co.: AAA (for claims paying ability)
Moody's Investors Service, Inc.: Aa2 (for financial strength)
SEPARATE ACCOUNT FOUR
Manufacturers Life of America established its Separate Account Four on March 17,
1987 as a separate account under Pennsylvania Law. Since December 9, 1992, it
has been operated under Michigan Law. The Separate Account holds assets that are
segregated from all of Manufacturers Life of America's other assets. The
Separate Account is currently used only to support variable life insurance
policies.
ASSETS OF THE SEPARATE ACCOUNT
Manufacturers Life of America is the legal owner of the assets in the Separate
Account. The income, gains, and losses of the Separate Account, whether or not
realized, are, in accordance with applicable contracts, credited to or charged
against the Account without regard to the other income, gains, or losses of
Manufacturers Life of America. Manufacturers Life of America will at all times
maintain assets in the Separate Account with a total market value at least equal
to the reserves and other liabilities relating to variable benefits under all
policies participating in the Separate Account. These assets may not be charged
with liabilities which arise from any other business Manufacturers Life of
America conducts. However, all obligations under the variable life insurance
policies are general corporate obligations of Manufacturers Life of America.
REGISTRATION
The Separate Account is registered with the Securities and Exchange Commission
("S.E.C.") under the Investment Company Act of 1940 ("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, rather than in a portfolio of unspecified securities.
Registration under the 1940 Act does not involve any supervision by the S.E.C.
of the management or investment policies or practices of
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<PAGE> 19
the Separate Account. For state law purposes the Separate Account is treated as
a part or division of Manufacturers Life of America.
MANUFACTURERS INVESTMENT TRUST
Each sub-account of the Separate Account will purchase shares only of a
particular Portfolio. The Trust is registered under the 1940 Act as an open-end
management investment company. The Separate Account will purchase and redeem
shares of the Portfolios at net asset value. Shares will be redeemed to the
extent necessary for Manufacturers Life of America to provide benefits under the
Policies, to transfer assets from one sub-account to another or to the general
account as requested by policyholders, and for other purposes not inconsistent
with the Policies. Any dividend or capital gain distribution received from a
Portfolio with respect to the policies will be reinvested immediately at net
asset value in shares of that Portfolio and retained as assets of the
corresponding sub-account.
The Trust shares are issued to fund benefits under both variable annuity
contracts and variable life insurance policies issued by the Company or life
insurance companies affiliated with the Company. Manufacturers Life of America
will also purchase shares through its general account for certain limited
purposes including initial portfolio seed money. For a description of the
procedures for handling potential conflicts of interest arising from the funding
of such benefits see the accompanying Trust prospectus.
INVESTMENT OBJECTIVES OF THE PORTFOLIOS
The investment objectives and certain policies of the Portfolios currently
available to policyholders through corresponding sub-accounts are set forth
below. There is, of course, no assurance that these objectives will be met. A
full description of the Trust, its investment objectives, policies and
restrictions, the risks associated therewith, its expenses, and other aspects of
its operation is contained in the accompanying Trust prospectus, which should be
read together with this prospectus.
AGGRESSIVE GROWTH PORTFOLIOS
PACIFIC RIM EMERGING MARKETS TRUST.
The investment objective of the Pacific Rim Emerging Markets Trust is to achieve
long-term growth of capital. Manufacturers Adviser Corporation ("MAC") manages
the Pacific Rim Emerging Markets Trust and seeks to achieve this investment
objective by investing in a diversified portfolio that is comprised primarily of
common stocks and equity-related securities of corporations domiciled in
countries of the Pacific Rim region.
SCIENCE & TECHNOLOGY TRUST
The investment objective of the Science and Technology Trust is long-term growth
of capital. Current income is incidental to the portfolio's objective. T. Rowe
Price Associates, Inc. manages the Science & Technology Trust.
INTERNATIONAL SMALL CAP TRUST
The investment objective of the International Small Cap Trust is to seek
long-term capital appreciation. Founders Asset Management LLC ("Founders")
manages the International Small Cap Trust and will pursue this objective by
investing primarily in securities issued by foreign companies which have total
market capitalizations or annual revenues of $1 billion or less. These
securities may represent companies in both established and emerging economies
throughout the world.
EMERGING GROWTH TRUST
The investment objective of the Emerging Growth Trust is maximum capital
appreciation. Warburg, Pincus Counsellors, Inc. manages the Emerging Growth
Trust and will pursue this objective by investing primarily in a portfolio of
equity securities of domestic companies. The Emerging Growth Trust ordinarily
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<PAGE> 20
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.
PILGRIM BAXTER GROWTH TRUST
The investment objective of the Pilgrim Baxter Growth Trust is capital
appreciation. Pilgrim, Baxter & Associates, Ltd. ("PBHG") manages the Pilgrim
Baxter Growth Trust and seeks to achieve its objective by investing in companies
believed by PBHG to have an outlook for strong earnings growth and potential for
significant capital appreciation.
SMALL/MID CAP TRUST
The investment objective of the Small/Mid Cap Trust is to seek long-term capital
appreciation. Fred Alger Management, Inc. manages the Small/Mid Cap Trust and
will pursue this objective by investing at least 65% of the portfolio's total
assets (except during temporary defensive periods) in small/mid cap equity
securities.
INTERNATIONAL STOCK TRUST
The investment objective of the International Stock Trust is to achieve
long-term growth of capital. Rowe Price-Fleming International, Inc. manages the
International Stock Trust and seeks to obtain this objective by investing
primarily in common stocks of established, non-U.S. companies.
GROWTH PORTFOLIOS
WORLDWIDE GROWTH TRUST
The investment objective of the Worldwide Growth Trust is long-term growth of
capital. Founders manages the Worldwide Growth Trust and seeks to attain this
objective by normally investing at least 65% of its total assets in equity
securities of growth companies in a variety of markets throughout the world.
GLOBAL EQUITY TRUST
The investment objective of the Global Equity Trust is long-term capital
appreciation. Morgan Stanley Asset Management Inc. manages the Global Equity
Trust and intends to pursue this objective by investing primarily in equity
securities throughout the world, including U.S. issuers.
SMALL COMPANY VALUE TRUST
The investment objective of the Small Company Value Trust is to seek long-term
growth of capital. Rosenberg Institutional Equity Management ("Rosenberg")
manages the Small Company Value Trust and intends to pursue this objective by
investing in equity securities of smaller companies which are traded principally
in the markets of the United States.
EQUITY TRUST
The principal investment objective of the Equity Trust is growth of capital.
Current income is a secondary consideration although growth of income may
accompany growth of capital. Fidelity Management Trust Company manages the
Equity Trust and seeks to attain the foregoing objective by investing primarily
in common stocks of United States issuers or securities convertible into or
which carry the right to buy common stocks.
GROWTH TRUST
The investment objective of the Growth Trust is to seek long-term growth of
capital. Founders manages the Growth Trust and will pursue this objective by
investing, under normal market conditions, at least 65% of its total assets in
common stocks of well-established, high-quality growth companies that Founders
believes have the potential to increase earnings faster than the rest of the
market.
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<PAGE> 21
QUANTITATIVE EQUITY TRUST
The investment objective of the Quantitative Equity Trust (formerly the "Common
Stock Fund") is 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. MAC manages the Quantitative Equity Trust.
EQUITY INDEX TRUST
The investment objective of the Equity Index Trust is to achieve investment
results which approximate the total return of publicly traded common stocks in
the aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index. MAC manages the Equity Index Trust.
BLUE CHIP GROWTH TRUST
The primary investment objective of the Blue Chip Growth Trust is to provide
long-term growth of capital. Current income is a secondary objective, and many
of the stocks in the Portfolio are expected to pay dividends.
T. Rowe Price Associates, Inc. manages the Blue Chip Growth Trust.
REAL ESTATE SECURITIES TRUST
The investment objective of the Real Estate Securities Trust is to achieve a
combination of long-term capital appreciation and satisfactory current income by
investing in real estate related equity and debt securities. MAC manages the
Real Estate Securities Trust.
GROWTH & INCOME PORTFOLIOS
VALUE TRUST
The investment objective of the Value Trust is to realize an above-average total
return over a market cycle of three to five years, consistent with reasonable
risk. Miller Anderson & Sherrerd, LLP ("MAS") manages the Value Trust and seeks
to attain this objective 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.
INTERNATIONAL GROWTH AND INCOME TRUST
The investment objective of the International Growth and Income Trust is to seek
long-term growth of capital and income. The portfolio is designed for investors
with a long-term investment horizon who want to take advantage of investment
opportunities outside the United States. J.P. Morgan Investment Management Inc.
manages the International Growth and Income Trust.
GROWTH AND INCOME TRUST
The investment objective of the Growth and Income Trust is to provide long-term
growth of capital and income consistent with prudent investment risk. Wellington
Management Company manages the Growth and Income Trust and seeks to achieve the
Trust's objective by investing primarily in a diversified portfolio of common
stocks of U.S. issuers which Wellington Management Company believes are of high
quality.
EQUITY-INCOME TRUST
The investment objective of the Equity-Income Trust (prior to December 31, 1996,
the "Value Equity Trust") is to provide substantial dividend income and also
long-term capital appreciation. T. Rowe Price Associates, Inc. manages the
Equity-Income Trust and seeks to attain this objective by investing primarily in
dividend-paying common stocks, particularly of established companies with
favorable prospects for both increasing dividends and capital appreciation.
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<PAGE> 22
BALANCED PORTFOLIOS
BALANCED TRUST
The investment objective of the Balanced Trust is current income and capital
appreciation. Founders is the manager of the Balanced Trust and seeks to attain
this objective by investing in a balanced portfolio of common stocks, U.S. and
foreign government obligations and a variety of corporate fixed-income
securities.
AUTOMATIC ASSET ALLOCATION TRUSTS (AGGRESSIVE, MODERATE, AND CONSERVATIVE)
The investment objective of each of the Automatic Asset Allocation Trusts is to
realize the highest potential total return consistent with a specified level of
risk tolerance - conservative, moderate, or aggressive. The amount of each
Portfolio's assets invested in each category of securities - debt, equity, and
money market - is dependent upon the judgment of Fidelity Management Trust
Company as to what percentages of each Portfolio's assets in each category will
contribute to the limitation of risk and the achievement of its investment
objective.
BOND PORTFOLIOS
HIGH YIELD TRUST
The investment objective of High Yield Trust is to realize an above-average
total return over a market cycle of three to five years, consistent with
reasonable risk. MAS manages the High Yield Trust and seeks to attain this
objective by investing primarily in high yield debt securities, including
corporate bonds and other fixed-income securities.
STRATEGIC BOND TRUST
The investment objective of the Strategic Bond Trust is to seek a high level of
total return consistent with preservation of capital. The Strategic Bond Trust
seeks to achieve its objective by giving its Subadviser, Salomon Brothers Asset
Management Inc ("SBAM") broad discretion to deploy the Strategic Bond Trust's
assets among certain segments of the fixed-income market as SBAM believes will
best contribute to the achievement of the portfolio's objective.
GLOBAL GOVERNMENT BOND TRUST
The investment objective of the Global Government Bond Trust is to seek a high
level of total return by placing primary emphasis on high current income and the
preservation of capital. Oechsle International Advisors, L.P. manages the Global
Government Bond Trust and intends to pursue this objective by investing
primarily in a selected global portfolio of high-quality, fixed-income
securities of foreign and U.S. governmental entities and supranational issuers.
CAPITAL GROWTH BOND TRUST
The investment objective of the Capital Growth Bond Trust is to achieve growth
of capital by investing in medium-grade or better debt securities, with income
as a secondary consideration. MAC manages the Capital Growth Bond Trust. The
Capital Growth Bond Trust differs from most "bond" funds in that its primary
objective is capital appreciation, not income.
INVESTMENT QUALITY BOND TRUST
The investment objective of the Investment Quality Bond Trust is to provide a
high level of current income consistent with the maintenance of principal and
liquidity. Wellington Management Company manages the Investment Quality Bond
Trust and seeks to achieve the Trust's objective by investing primarily in a
diversified portfolio of investment grade corporate bonds and U.S. Government
bonds with intermediate to longer term maturities.
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<PAGE> 23
U.S. GOVERNMENT SECURITIES TRUST
The investment objective of the U.S. Government Securities Trust is to obtain a
high level of current income consistent with preservation of capital and
maintenance of liquidity. SBAM manages the U.S. Government Securities Trust and
seeks to attain its objective by investing a substantial portion of its assets
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.
MONEY MARKET PORTFOLIO
MONEY MARKET TRUST
The investment objective of the Money Market Trust is to obtain maximum current
income consistent with preservation of principal and liquidity. MAC manages the
Money Market Trust and seeks to achieve this objective by investing in high
quality, U.S. dollar denominated money market instruments.
LIFESTYLE PORTFOLIOS
LIFESTYLE AGGRESSIVE 1000 TRUST
The investment objective of the Lifestyle Aggressive 1000 Trust is to provide
long-term growth of capital. Current income is not a consideration. MAC manages
the Lifestyle Aggressive 1000 Trust and seeks to achieve this objective by
investing approximately 100% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE GROWTH 820 TRUST
The investment objective of the Lifestyle Growth 820 Trust is to provide
long-term growth of capital with consideration also given to current income. MAC
manages the Lifestyle Growth 820 Trust and seeks to achieve this objective by
investing approximately 20% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in fixed-income securities and approximately
80% of the assets in Underlying Portfolios which invest primarily in equity
securities.
LIFESTYLE BALANCED 640 TRUST
The investment objective of the Lifestyle Balanced 640 Trust is to provide a
balance between high level of current income and growth of capital with a
greater emphasis given to capital growth. MAC manages the Lifestyle Balanced 640
Trust and seeks to achieve this objective 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.
LIFESTYLE MODERATE 460 TRUST
The investment objective of the Lifestyle Moderate 460 Trust is to provide a
balance between high level of current income and growth of capital with a
greater emphasis given to high income. MAC manages the Lifestyle Moderate 460
Trust and seeks to achieve this objective 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.
LIFESTYLE CONSERVATIVE 280 TRUST
The investment objective of the Lifestyle Conservative 280 Trust is to provide a
high level of current income with some consideration also given to growth of
capital. MAC manages the Lifestyle Conservative 280 Trust and seeks to achieve
this objective 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.
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<PAGE> 24
ISSUING A POLICY
USE OF THE POLICY
The Policy is designed to provide to corporations and other entities life
insurance coverage on their employees or other persons in whose lives they have
an insurable interest. The Policy may be owned individually or by a corporation,
trust, association, or similar entity. The Policy may be used for such purposes
as funding non-qualified executive deferred compensation or salary continuation
plans, as a means of funding death benefit liabilities incurred under executive
retirement plans, or as a source for funding cash flow obligations under such
plans.
REQUIREMENTS
To purchase a Policy, an applicant must submit a completed application. A Policy
will not be issued until the underwriting process has been completed to the
Company's satisfaction.
Policies may be issued on a basis which does not distinguish between the
insured's sex and/or smoking status, with prior approval from the Company. A
Policy will only be issued on the lives of insureds from ages 20 through 80.
Each Policy is issued with a Policy Date, an Effective Date and an Issue Date.
The Policy Date is the date from which the first monthly deductions are
calculated and from which Policy Years, Policy Months and Policy Anniversaries
are determined. The Effective Date is the date the Company becomes obligated
under the Policy and when the first monthly deductions are deducted from the
Policy Value. The Issue Date is the date from which the Suicide and
Incontestability are measured.
If an application is accompanied by a check for the initial premium and the
application is accepted:
(i) the Policy Date will be the date the application and check were received at
the Service Office (unless a special Policy Date is requested (See "Backdating a
Policy" below);
(ii) the Effective Date will be the date the Company's underwriters approve
issuance of the Policy; and
(iii) the Issue Date will be the date the Company issues the Policy.
If an application accepted by the Company is not accompanied by a check for the
initial premium:
(i) the Policy Date will be the date the Company issues the Policy (unless a
special Policy Date is requested (See "Backdating a Policy" below);
(ii) the Effective Date will be the date the Service Office receives the initial
premium; and
(iii) the Issue Date will be the date the Company issues the Policy.
The initial premium must be received within 60 days after the Policy Date. If
the premium is not paid or if the application is rejected, the Policy will be
cancelled and any partial premiums paid will be returned to the applicant.
MINIMUM INITIAL FACE AMOUNT
Manufacturers Life of America will issue a Policy only if it has a Face Amount
of at least $50,000.
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<PAGE> 25
BACKDATING A POLICY
Under limited circumstances, the Company may backdate a Policy, upon request, by
assigning a Policy Date earlier than the date the application is signed.
However, in no event will a Policy be backdated earlier than the earliest date
allowed by state law, which is generally three months to one year prior to the
date of application for the Policy. Monthly deductions will be made for the
period the Policy Date is backdated. Regardless of whether or not a policy is
backdated, Net Premiums received prior to the Effective Date of a Policy will be
credited with interest from the date of receipt at the rate of return then being
earned on amounts allocated to the Money Market portfolio. As of the Effective
Date, the premiums paid plus interest credited, net of the premium load, will be
allocated among the Investment Accounts and/or Guaranteed Interest Account in
accordance with the policyholder's instructions unless such amount is first
allocated to the Money Market portfolio for the duration of the Right to Examine
period.
TEMPORARY INSURANCE AGREEMENT
In accordance with the Company's underwriting practices, temporary insurance
coverage may be provided under the terms of a Temporary Insurance Agreement.
Generally, temporary life insurance may not exceed $1,000,000 and may not be in
effect for more than 90 days. This temporary insurance coverage will be issued
on a conditional receipt basis, which means that any benefits under such
temporary coverage will only be paid if the life insured meets the Company's
usual and customary underwriting standards for the coverage applied for.
UNDERWRITING
The policies are offered on three underwriting bases, which vary by the amount
of information required of the prospective insured. These bases are: short form
underwriting, simplified underwriting, and regular (medical) underwriting. These
are described in more detail below. Regardless of which underwriting procedure
is used, the acceptance of an application is subject to the Company's
underwriting rules, and the Company reserves the right to request additional
information or to reject an application for any reason.
SHORT FORM UNDERWRITING
Generally, the availability of short form underwriting depends on the
characteristics of the Case, such as the number of lives to be insured and the
amounts of insurance. Under Short Form underwriting, a proposed Insured is
required to answer qualifying questions in the application, but is not required
to submit to a medical or paramedical exam. Short form underwriting is generally
available only up to issue age 65.
SIMPLIFIED UNDERWRITING
Like short form underwriting the availability of simplified underwriting depends
on the characteristics of the Case. Under Simplified Underwriting, the proposed
insured is required to respond satisfactorily to certain health questions in the
application. Medical records, such as "Attending Physician's Statements" (APS's)
are generally required. In some instances, a blood test may also be required.
REGULAR UNDERWRITING
If the requirements for short form or simplified underwriting are not satisfied,
the Company will require satisfactory evidence of insurability. This may include
medical exams and other information. Persons failing to meet standard
underwriting classification may be eligible for a Policy with an additional
rating assigned to it.
RIGHT TO EXAMINE THE POLICY
A Policy may be returned for a refund within 10 days after it is received. Some
states provide a longer period of time to exercise this right. The Policy will
indicate if the policyholder has a longer time. The Policy can be mailed or
delivered to the Manufacturers Life of America agent who sold it or to the
Service Office. Immediately on such delivery or mailing, the Policy shall be
deemed void from the beginning.
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<PAGE> 26
Within seven days after receipt of the returned Policy at its Service Office,
the Company will refund to the policyholder an amount equal to:
(a) the difference between payments made and amounts allocated to the Separate
Account and the Guaranteed Interest Account; plus
(b) the value of the amount allocated to the Separate Account and the
Guaranteed Interest Account as of the date the returned Policy is received
by the Company; minus
(c) any partial withdrawals made and policy loans taken.
Some state laws require the refund of all premiums paid, without adjustment for
the investment gains and losses of the Separate Account. In these states, all
Net Premiums will be allocated to the Money Market Trust during the right to
examine period, and the policyholder will receive a refund of all payments made
less any partial withdrawals and policy loans taken.
If a policyholder requests an increase in face amount which results in new
surrender charges, he or she will have the same rights as described above to
cancel the increase. If cancelled, the Policy Value and the surrender charges
will be recalculated to the amounts they would have been had the increase not
taken place. A policyholder may request a refund of all or any portion of
premiums paid during the free look period, and the Policy Value and the
surrender charges will be recalculated to the amounts they would have been had
the premiums not been paid.
The Company reserves the right to delay the refund of any premium paid by check
until the check has cleared.
DEATH BENEFITS
If the Policy is in force at the time of the life insured's death, the Company
will pay an insurance benefit upon receipt of Due Proof of Death. The amount
payable will be the death benefit under the selected death benefit option, plus
any amounts payable under any supplementary benefits added to the Policy, less
the Policy Debt and any outstanding monthly deductions due. The insurance
benefit will be paid in one lump sum unless another form of settlement option is
agreed to by the beneficiary and the Company. If the insurance benefit is paid
in one sum, the Company will pay interest from the date of death to the date of
payment. If the life insured should die after the Company's receipt of a request
for surrender, no insurance benefit will be payable, and the Company will pay
only the Net Cash Surrender Value.
LIFE INSURANCE QUALIFICATION
A Policy must satisfy either of two tests to qualify as a life insurance
contract for purposes of Section 7702 of the Internal Revenue Code of 1986, as
amended. At the time of application, the policyholder may choose a Policy which
uses either the Cash Value Accumulation Test or the Guideline Premium Test. The
test cannot be changed once the Policy is issued.
CASH VALUE ACCUMULATION TEST
Under the Cash Value Accumulation Test ("CVA Test"), the Policy's death benefit
must be at least equal to the Minimum Death Benefit. There is no restriction on
the amount of premiums that may be paid into a Policy.
GUIDELINE PREMIUM TEST
The Guideline Premium Test ("GLP Test") restricts the maximum premiums that may
be paid into a life insurance policy for a given death benefit. The policy's
death benefit must also be at least equal to the Minimum Death Benefit
(described below). However, the Minimum Death Benefit Percentages are lower than
those required under the Cash Value Accumulation Test.
Changes to the Policy may affect the maximum amount of premiums, such as:
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<PAGE> 27
- - A change in the policy's Face Amount.
- - A change in the death benefit option.
- - Partial Withdrawals.
Any of the above changes could cause the total premiums paid to exceed the new
maximum limit. In this situation, the Company will require the policyholder to
take a partial withdrawal. In addition, these changes could reduce the future
premium limitations.
MINIMUM DEATH BENEFIT
Both the Cash Value Accumulation Test and the Guideline Premium Test require a
life insurance policy to meet minimum ratios of life insurance coverage to
policy value. This is achieved by ensuring that the death benefit is at all
times at least equal to the Minimum Death Benefit. The Minimum Death Benefit on
any date is defined as the Policy Value on that date times the applicable
Minimum Death Benefit Percentage for the Attained Age of the life insured. The
Minimum Death Benefit Percentages for each test are shown in the Table of
Minimum Death Benefit Percentages.
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES
<TABLE>
<CAPTION>
CVA Test Percent CVA Test Percent
--------------------- ---------------------
GLP Test GLP Test
Age Percent Male Female Age Percent Male Female
<S> <C> <C> <C> <C> <C> <C> <C>
20 250% 653% 779% 60 130% 192% 221%
21 250% 634% 754% 61 128% 187% 214%
22 250% 615% 730% 62 126% 182% 208%
23 250% 597% 706% 63 124% 178% 203%
24 250% 580% 684% 64 122% 174% 197%
25 250% 562% 662% 65 120% 170% 192%
26 250% 545% 640% 66 119% 166% 187%
27 250% 528% 619% 67 118% 162% 182%
28 250% 511% 599% 68 117% 159% 177%
29 250% 494% 580% 69 116% 155% 173%
30 250% 479% 561% 70 115% 152% 169%
31 250% 463% 542% 71 113% 149% 164%
32 250% 448% 525% 72 111% 146% 160%
33 250% 433% 507% 73 109% 144% 156%
34 250% 419% 491% 74 107% 141% 153%
35 250% 406% 475% 75 105% 139% 149%
36 250% 392% 459% 76 105% 136% 146%
37 250% 380% 444% 77 105% 134% 143%
38 250% 367% 430% 78 105% 132% 140%
39 250% 356% 416% 79 105% 130% 138%
40 250% 344% 403% 80 105% 129% 135%
41 243% 333% 390% 81 105% 127% 133%
42 236% 323% 378% 82 105% 125% 130%
43 229% 313% 366% 83 105% 124% 128%
44 222% 303% 355% 84 105% 122% 126%
45 215% 294% 344% 85 105% 121% 124%
46 209% 285% 333% 86 105% 120% 123%
</TABLE>
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<PAGE> 28
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
47 203% 277% 323% 87 105% 119% 121%
48 197% 268% 313% 88 105% 118% 119%
49 191% 260% 304% 89 105% 116% 118%
50 185% 253% 295% 90 105% 116% 117%
51 178% 245% 286% 91 104% 115% 115%
52 171% 238% 278% 92 103% 114% 114%
53 164% 232% 270% 93 102% 112% 113%
54 157% 225% 262% 94 101% 111% 112%
55 150% 219% 254% 95 100% 110% 110%
56 146% 213% 247% 96 100% 109% 109%
57 142% 207% 240% 97 100% 107% 107%
58 138% 202% 233% 98 100% 106% 106%
59 134% 197% 227% 99 100% 105% 105%
</TABLE>
DEATH BENEFIT OPTIONS
There are two death benefit options, described below.
DEATH BENEFIT OPTION 1
Under Option 1 the death benefit is the Face Amount of the Policy at the date of
death or, if greater, the Minimum Death Benefit.
DEATH BENEFIT OPTION 2
Under Option 2 the death benefit is the Face Amount plus the Policy Value of the
Policy at the date of death or, if greater, the Minimum Death Benefit.
CHANGING THE DEATH BENEFIT OPTION
The death benefit option may be changed on the first day of any Policy month.
The change will occur on the first day of the next Policy month which is 30 days
after a written request for a change is received at the Service Office. The
Company reserves the right to limit a request for a change if the change would
cause the Policy to fail to qualify as life insurance for tax purposes.
A change in the death benefit option will result in a change in the Policy's
Face Amount, in order to avoid any change in the amount of the death benefit, as
follows:
CHANGE FROM OPTION 1 TO OPTION 2
The new Face Amount will be equal to the Face Amount prior to the change minus
the Policy Value on the date of the change. The Policy will not be assessed a
Surrender Charge for a reduction in Face Amount solely due to a change in the
death benefit option.
CHANGE FROM OPTION 2 TO OPTION 1
The new Face Amount will be equal to the Face Amount prior to the change plus
the Policy Value on the date of the change. No new Surrender Charges will apply
to an increase in Face Amount solely due to a change in the death benefit
option.
CHANGING THE FACE AMOUNT
Subject to the limitations stated in this Prospectus, a policyholder may, upon
written request, increase or decrease the Face Amount of the Policy. The Company
reserves the right to limit a change in Face Amount so as to prevent the Policy
from failing to qualify as life insurance for tax purposes.
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<PAGE> 29
INCREASE IN FACE AMOUNT
Increases in Face Amount are subject to satisfactory evidence of insurability.
An increase will become effective at the beginning of the Policy month following
the date Manufacturers Life of America approves the requested increase. The
Company reserves the right to refuse a requested increase if the life insured's
Attained Age at the effective date of the increase would be greater than the
maximum Issue Age for new Policies at that time.
NEW SURRENDER CHARGES FOR AN INCREASE
An increase in Face Amount will result in the Policy's being subject to new
Surrender Charges. The new Surrender Charges will be computed as if a new Policy
were being purchased for the increase in Face Amount. For purposes of
determining the new Surrender Charges a portion of the premiums paid on or
subsequent to the increase will be deemed to be premiums attributable to the
increase. The portion attributable to the increase in any Policy Year will be
the amount of premiums in excess of the sum of the Target Premiums for the (i)
initial Face Amount during the first five Policy Years and (ii) all prior
increases that are in effect at the time of the increase in Face Amount and have
been in effect for less than five years.
INCREASE WITH PRIOR DECREASES
If, at the time of the increase, there have been prior decreases in Face Amount,
these prior decreases will be restored first. There will be no new Surrender
Charges associated with these increases, since Surrender Charges will have
already been assessed at the time of the prior decrease.
DECREASE IN FACE AMOUNT
A written request from a policyholder for a decrease in the Face Amount must be
received by Manufacturers Life of America at least 30 days prior to the first
day of a policy month for the change to take effect on the first day of that
policy month. If there have been previous increases in Face Amount, the decrease
will be applied to the most recent increase first and thereafter to the next
most recent increases successively.
SURRENDER CHARGES ASSESSED ON A DECREASE
A portion of a Policy's Surrender Charge will be deducted from the Policy Value
on a decrease in Face Amount. Since Surrender Charges are determined separately
for the initial Face Amount and each Face Amount Increase, the portion of the
Surrender Charges to be deducted with respect to each level of insurance
coverage will be determined separately. The portion of the Surrender Charge
deducted with respect to a level of coverage will be equal to:
(a) the amount of the decrease; divided by
(b) the amount of the coverage prior to the decrease; multiplied by
(c) the Surrender Charge for the coverage.
The charges will be allocated among the Investment Accounts and the Guaranteed
Interest Account in the same proportion as the Policy Value in each bears to the
Net Policy Value.
Whenever a portion of the surrender charges are deducted as a result of a
decrease in Face Amount, the Policy's remaining surrender charges will be
reduced in the same proportion that the surrender charge deducted bears to the
total surrender charge immediately prior to the decrease in Face Amount.
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<PAGE> 30
PREMIUM PAYMENTS
INITIAL PREMIUMS
No premiums will be accepted prior to receipt of a completed application by the
Company. All premiums received prior to the Effective Date of the Policy will be
held in the general account and credited with interest from the date of receipt
at the rate of return then being earned on amounts allocated to the Money Market
Trust.
On the Effective Date, the Net Premiums paid plus interest credited will be
allocated among the Investment Accounts or the Guaranteed Interest Account in
accordance with the policyholder's instructions.
All Net Premiums received on or after the Effective Date will be allocated among
Investment Accounts or the Guaranteed Interest Account as of the date the
premiums were received at the Service Office. Monthly deductions are due on the
Policy Date and at the beginning of each policy month thereafter. However, if
due prior to the Effective Date, they will be taken on the Effective Date
instead of the dates they were due.
EXCEPTION FOR CERTAIN STATES
Some state laws require the refund of all premiums paid, without adjustment for
gains and losses of the Separate Account, if a Policy is returned during the
right to examine period. In these states, all Net Premiums will be allocated to
the Money Market Trust during the right to examine period. At the end of this
period, the Policy Value in the Money Market Trust will be allocated among the
Investment Accounts or the Guaranteed Interest Account. The Policy will state if
a return of premiums is required.
SUBSEQUENT PREMIUMS
After the payment of the initial premium, premiums may be paid at any time and
in any amount during the lifetime of the life insured, subject to the
limitations on premium amount described below.
A Policy will be issued with a planned premium, which is based on the amount of
premium the policyholder wishes to pay. Manufacturers Life of America will send
notices to the policyholder setting forth the planned premium at the payment
interval selected by the policyholder. However, the policyholder is under no
obligation to make the indicated payment.
Payment of premiums will not guarantee that the Policy will stay in force.
Conversely, failure to pay premiums will not necessarily cause the Policy to
lapse.
MAXIMUM PREMIUM LIMITATION
If the Policy is issued under the Guideline Premium Test, in no event may the
total of all premiums paid exceed the then-current maximum premium limitations
established by federal income tax law for a Policy to qualify as life insurance.
If, at any time, a premium is paid which would result in total premiums
exceeding the above maximum premium limitation, the Company will only accept
that portion of the premium which will make the total premiums equal to the
maximum. Any part of the premium in excess of that amount will be returned and
no further premiums will be accepted until allowed by the then-current maximum
premium limitation. The maximum premium limitations are set forth in the Policy.
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<PAGE> 31
PREMIUM ALLOCATION
Premiums may be allocated to either the Guaranteed Interest Account for
accumulation at a rate of interest equal to at least 4% or to one or more of the
Investment Accounts for investment in the Portfolio shares held by the
corresponding sub-account of the Separate Account. Allocations among the
Investment Accounts and the Guaranteed Interest Account are made as a percentage
of the premium. The percentage allocation to any account may be any number
between zero and 100, provided the total allocation equals 100. Alternatively, a
policyholder may specify the allocation of a specific premium payment in dollar
amounts, so long as the total allocation among the Investment Accounts equals
the Net Premium paid. A policyholder may change the way in which premiums are
allocated at any time without charge. The change will take effect on the date a
written request for change satisfactory to the Company is received at the
Service Office.
CHARGES AND DEDUCTIONS
PREMIUM LOADS
Manufacturers Life of America deducts a Premium Load from each premium payment,
equal to 2.00% of the premium. Premium Loads are deducted in order to cover
federal, state and local taxes on premium payments.
SURRENDER CHARGES
The Company will deduct a Surrender Charge if during the first 10 years
following the Policy Date, or the effective date of a Face Amount increase:
- - the Policy is surrendered for its Net Cash Surrender Value,
- - a partial withdrawal is made in excess of the Free Partial Withdrawal
Amount,
- - the Face Amount is decreased,
- - or the Policy lapses.
The Surrender Charge is expressed as a percentage of the total premiums paid
from the Effective Date. However, premiums paid in any Policy Year in excess of
the Target Premium, and premiums paid after the fifth Policy Year, are not
counted in the determination of total premiums paid. Therefore, the timing of
premium payments may affect the amount of the Surrender Charge. The percentages
vary by Policy Year as follows:
<TABLE>
<CAPTION>
Policy Year Percentage
<S> <C>
1 10.00%
2 7.50%
3 5.00%
4 5.00%
5 5.00%
6 5.00%
7 4.00%
8 3.00%
9 2.00%
10+ 0.00%
</TABLE>
Although the percentages remain level or decrease as the Policy Year increases,
the total dollar amount of Surrender Charges may increase, as the total premium
paid increases.
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<PAGE> 32
SURRENDER CHARGES ON A PARTIAL WITHDRAWAL
A partial withdrawal will result in the assessment of a portion of the Surrender
Charges to which the Policy is subject. The portion of the Surrender Charges
assessed will be based on the ratio of the amount of the withdrawal which
exceeds the Free Withdrawal Amount to the Net Cash Surrender Value of the Policy
immediately prior to the withdrawal. The Surrender Charges will be deducted on a
pro-rata basis from each of the Investment Accounts and the Guaranteed Interest
Account. If the amount in the accounts are not sufficient to pay the Surrender
Charges assessed, then the amount of the withdrawal will be reduced.
Whenever a portion of the surrender charges are deducted as a result of a
partial withdrawal, the Policy's remaining surrender charges will be reduced in
the same proportion that the surrender charge deducted bears to the total
surrender charge immediately before the partial withdrawal.
FREE WITHDRAWAL AMOUNT
The Free Withdrawal Amount is equal to 10% of the Net Cash Surrender Value at
the time of the withdrawal. In determining what, if any, portion of a partial
withdrawal is in excess of the Free Withdrawal Amount, all previous partial
withdrawals that have occurred in the current Policy Year are included.
MONTHLY CHARGES
On the Policy Date and at the beginning of each policy month, a deduction is due
from the Policy Value to cover certain charges in connection with the Policy
until the insured reaches age 100. Monthly deductions due prior to the Effective
Date will be taken on the Effective Date instead of the dates they were due. The
charges consist of:
(i) a monthly administration charge;
(ii) a monthly charge for the cost of insurance;
(iii) a monthly charge for any supplementary benefits added to the Policy.
Unless otherwise allowed by the Company and specified by the policyholder, the
monthly deduction will be allocated among the Investment Accounts and the
Guaranteed Interest Account in the same proportion as the Policy value in each
bears to the Net Policy Value.
ADMINISTRATION CHARGE
This charge will be equal to $12 per policy month, which is guaranteed not to
increase. The charge is designed to cover certain administrative expenses
associated with the Policy, including maintaining policy records, collecting
premiums and processing death claims, surrender and withdrawal requests and
various change permitted under a Policy.
COST OF INSURANCE CHARGE
The monthly charge for the cost of insurance is determined by multiplying the
applicable cost of insurance rate times the net amount at risk at the beginning
of each policy month. The cost of insurance rate and the net amount at risk are
determined separately for the initial Face Amount and for each increase in Face
Amount. In determining the net amount at risk, if there have been increases in
the Face Amount, the Policy Value shall first be considered a part of the
initial Face Amount. If the Policy Value exceeds the initial Face Amount, it
shall then be considered a part of the additional increases in Face Amount
resulting from the increases in the order of the increases.
The net amount at risk is equal to the greater of zero, or the result of
(a) minus (b) where:
(a) is the death benefit as of the first day of the month, divided by
1.0032737; and
(b) is the Policy Value as of the first day of the month.
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<PAGE> 33
The cost of insurance rate is based upon the following factors:
- - the issue age, sex (unless unisex rates are required by law) and smoking
status of the life insured;
- - the underwriting class of the Policy;
- - the number of years since issue or since an increase in Face Amount;
- - the amount of the Death Benefit in excess of the Face Amount,
- - any extra charges for additional ratings indicated in the Policy.
Cost of insurance rates will generally increase with the life insured's age.
The cost of insurance rates reflect the Company's expectations as to future
mortality experience. The rates may be changed from time to time on a basis
which does not unfairly discriminate within the class of lives insured. In no
event will the cost of insurance rate exceed the guaranteed rates set forth in
the Policy except to the extent that an extra charge is imposed because of an
additional rating applicable to the life insured. The guaranteed rates are based
on the 1980 Commissioners Standard Ordinary Mortality Tables.
CHARGES FOR SUPPLEMENTARY BENEFITS
If the Policy includes Supplementary Benefits, a charge will be made applicable
to such Supplementary Benefit.
CHARGES ASSESSED AGAINST ASSETS OF THE INVESTMENT ACCOUNTS
A daily charge is assessed against amounts in the Investment Accounts equal to a
percentage of the value of the Investment Account. This charge is to compensate
the Company for the mortality and expense risks it assumes under the Policy. The
mortality risk assumed is that lives insured may live for a shorter period of
time than the Company estimated. The expense risk assumed is that expenses
incurred in issuing and administering the Policy will be greater than the
Company estimated. The Company will realize a gain from this charge to the
extent it is not needed to provide benefits and pay expenses under the Policy.
The charge varies by Policy Year as follows:
<TABLE>
<CAPTION>
Equivalent Annual
Daily Mortality and Mortality and Expense
Policy Year Expense Risk Charge Risk Charge
<S> <C> <C>
1-10 0.000020625% 0.75%
11+ 0.000010981% 0.40%
</TABLE>
CHARGES FOR TRANSFERS
A charge of $25 will be imposed on each transfer in excess of twelve in a policy
year.
REDUCTION IN CHARGES
The Policy is available for purchase by corporations and other groups or
sponsoring organizations for multiple life sales. Manufacturers Life of America
reserves the right to reduce any of the Policy's loads or charges on certain
Cases where it is expected that the amount or nature of such Cases will result
in savings of sales, underwriting, administrative or other costs. Eligibility
for these reductions and the amount of reductions will be determined by a number
of factors, including the number of lives to be insured, the total premiums
expected to be paid, total assets under management for the policyholder, the
nature of the relationship among the insured individuals, the purpose for which
the policies are being purchased, expected persistency of the individual
policies, and any other circumstances which
28
<PAGE> 34
Manufacturers Life of America believes to be relevant to the expected reduction
of its expenses. Some of these reductions may be guaranteed and others may be
subject to withdrawal or modification, on a uniform Case basis. Reductions in
charges will not be unfairly discriminatory to any policyholders.
COMPANY TAX CONSIDERATIONS
At the present time, the Company makes no charge to the Separate Account for any
federal, state, or local taxes that the Company incurs that may be attributable
to such Account or to the Policies. The Company, however, reserves the right in
the future to make a charge for any such tax or other economic burden resulting
from the application of the tax laws that it determines to be properly
attributable to the Separate Account or to the Policies.
POLICY VALUE
DETERMINATION OF THE POLICY VALUE
A Policy has a Policy Value, a portion of which is available to the policyholder
by making a policy loan or partial withdrawal, or upon surrender of the Policy.
The Policy Value may also affect the amount of the death benefit. The Policy
Value at any time is equal to the sum of the values in the Investment Accounts,
the Guaranteed Interest Account, and the Loan Account.
INVESTMENT ACCOUNTS
An Investment Account is established under each Policy for each sub-account of
the Separate Account to which net premiums or transfer amounts have been
allocated. Each Investment Account under a Policy measures the interest of the
Policy in the corresponding sub-account. The value of the Investment Account
established for a particular sub-account is equal to the number of units of that
sub-account credited to the Policy times the value of such units.
GUARANTEED INTEREST ACCOUNT
Amounts in the Guaranteed Interest Account do not vary with the investment
performance of any sub-account. Instead, these amounts are credited with
interest at a rate determined by Manufacturers Life of America. For a detailed
description of the Guaranteed Interest Account, see "The General Account -
Guaranteed Interest Account".
LOAN ACCOUNT
Amounts borrowed from the Policy are transferred to the Loan Account. Amounts in
the Loan Account do not vary with the investment performance of any sub-account.
Instead, these amounts are credited with interest at a rate which is equal to
the amount charged on the outstanding Policy Debt less the Loan Spread. For a
detailed description of the Loan Account, see "Policy Loans - Loan Account".
UNITS AND UNIT VALUES
CREDITING AND CANCELING UNITS
Units of a particular sub-account are credited to a Policy when net premiums are
allocated to that sub-account or amounts are transferred to that sub-account.
Units of a sub-account are cancelled whenever amounts are deducted, transferred
or withdrawn from the sub-account. The number of units credited or cancelled for
a specific transaction is based on the dollar amount of the transaction divided
by the value of the unit on the Business Day on which the transaction occurs.
The number of units credited with respect to a premium payment will be based on
the applicable unit values for the Business Day on which the premium is received
at the Service Office, except for any premiums received before the Effective
Date. For premiums received before the Effective Date, the values will be
determined on the Effective Date.
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<PAGE> 35
Units are valued at the end of each Business Day. When an order involving the
crediting or canceling of units is received after the end of a Business Day, or
on a day which is not a Business Day, the order will be processed on the basis
of unit values determined on the next Business Day. Similarly, any determination
of Policy Value, Investment Account value or death benefit to be made on a day
which is not a Business Day will be made on the next Business Day.
UNIT VALUES
The value of a unit of each sub-account was initially fixed at $10.00. For each
subsequent Business Day the unit value for that sub-account is determined by
multiplying the unit value for the immediately preceding Business Day by the net
investment factor for the that sub-account on such subsequent Business Day.
The net investment factor for a sub-account on any Business Day is equal to (a)
divided by (b) minus (c), where:
(a) is the net asset value of the underlying Portfolio shares held by that
sub-account as of the end of such Business Day before any policy transaction are
made on that day;
(b) is the net asset value of the underlying Portfolio shares held by that
sub-account as of the end of the immediately preceding Business Day after all
policy transaction were made for that day; and
(c) is a charge not exceeding the daily mortality and expense risk charge shown
in the "Charges and Deductions - Charges Assessed Against Assets of the
Investment Accounts" section.
The value of a unit may increase, decrease, or remain the same, depending on
the investment performance of a sub-account from one Business Day to the next.
Due to the fact that the daily mortality and expense risk charge varies by
Policy Years, two unit values will be calculated for each sub-account commencing
10 years after the effective date of the first Policy.
TRANSFERS OF POLICY VALUE
At any time, a policyholder may transfer Policy Value from one sub-account to
another or to the Guaranteed Interest Account. Transfer requests must be in
writing in a format satisfactory to the Company, or by telephone if a currently
valid telephone transfer authorization form is on file.
These transfer privileges are subject to the Company's consent. The Company
reserves the right to impose limitations on transfers, including the maximum
amount that may be transferred. In addition, transfer privileges are subject to
any restrictions that may be imposed by the Trust.
TRANSFER CHARGES
A policyholder may make up to twelve transfers each policy year free of charge.
Additional transfers in each policy year may be made at a cost of $25 per
transfer. This charge will be allocated among the Investment Accounts and the
Guaranteed Interest Account in the same proportion as the amount transferred
from each bears to the total amount transferred. All transfer requests received
by the Company on the same Business Day are treated as a single transfer
request.
30
<PAGE> 36
TRANSFERS INVOLVING GUARANTEED INTEREST ACCOUNT
The maximum amount that may be transferred from the Guaranteed Interest Account
in any one policy year is the greater of $500 or 15% of the Guaranteed Interest
Account Value at the previous Policy Anniversary. Any transfer which involves a
transfer out of the Guaranteed Interest Account may not involve a transfer to
the Investment Account for the Money Market Trust.
TELEPHONE TRANSFERS
Although failure to follow reasonable procedures may result in the Company being
liable for any losses resulting from unauthorized or fraudulent telephone
transfers, Manufacturers Life of America will not be liable for following
instructions communicated by telephone that the Company reasonably believes to
be genuine. The Company will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures shall
consist of confirming that a valid telephone authorization form is on file, tape
recording of all telephone transactions and providing written confirmation
thereof.
POLICY LOANS
At any time while this Policy is in force, a policyholder may borrow against the
Policy Value of the Policy. The Policy serves as the only security for the loan.
Policy loans may have tax consequences, see "Tax Treatment of Policy Benefits -
Policy Loan Interest."
MAXIMUM LOAN
The amount of any loan cannot exceed the amount which would cause the Policy
Debt to equal the Loan Value of the Policy on the date of the loan.
LOAN VALUE
The Loan Value is equal to the Policy's Cash Surrender Value less the monthly
deductions due to the next Policy Anniversary.
EFFECT OF POLICY LOAN
A policy loan will have an effect on future Policy Values, since that portion of
the Policy Value in the Loan Account will increase in value at the crediting
interest rate rather than varying with the performance of the underlying
Portfolios or increasing in value at the rate of interest credited for amounts
allocated to the Guaranteed Interest Account. A policy loan may cause a Policy
to be more susceptible to going into default since a policy loan will be
reflected in the Net Cash Surrender Value. See "Lapse and Reinstatement."
Finally, a policy loan will affect the amount payable on the death of the life
insured, since the death benefit is reduced by the Policy Debt at the date of
death in arriving at the insurance benefit.
INTEREST CHARGED ON POLICY LOANS
Interest on the Policy Debt will accrue daily and be payable annually on the
Policy Anniversary. The rate of interest charged will be an effective annual
rate of 5.00%.
LOAN ACCOUNT
When a loan is made, an amount equal to the loan will be deducted from the
Investment Accounts or the Guaranteed Interest Account and transferred to the
Loan Account. The policyholder may designate how the amount to be transferred to
the Loan Account is allocated among the accounts from which the transfer is to
be made. In the absence of instructions, the amount to be transferred will be
allocated to each account in the same proportion as the value in each Investment
Account and the Guaranteed Interest Account bears to the Net Policy Value. A
transfer from an Investment Account will result in the cancellation of units of
the underlying sub-account equal in value to the amount transferred from the
Investment Account. However, since the Loan Account is part of the Policy Value,
transfers made in connection with a loan will not change the Policy Value.
31
<PAGE> 37
INTEREST CREDITED TO THE LOAN ACCOUNT
Interest will be credited to amounts in the Loan Account at an effective annual
rate of at least 4.00%. The actual rate credited is equal to the rate of
interest charged on the policy loan less the Loan Spread. The Loan Spread varies
by policy year as follows:
<TABLE>
<CAPTION>
Policy Year Loan Spread
<S> <C>
1-10 1.00%
11-20 0.50%
21+ 0.25%
</TABLE>
LOAN ACCOUNT ADJUSTMENTS
On the first day of each policy month the difference between the Loan Account
and the Policy Debt is transferred to the Loan Account from the Investment
Accounts or the Guaranteed Interest Account. Amounts transferred from the Loan
Account will be allocated to the Investment Accounts and the Guaranteed Interest
Account in the same proportion as the value in each Investment Account and the
Guaranteed Interest Account bears to the Net Policy Value.
LOAN REPAYMENTS
Policy Debt may be repaid in whole or in part at any time prior to the death of
the life insured, provided that the Policy is in force. When a repayment is
made, the amount is credited to the Loan Account and transferred to the
Guaranteed Interest Account or the Investment Accounts. Loan repayments will be
allocated to the Guaranteed Interest Account and each Investment Account in the
same proportion as the value in each Investment Account and the Guaranteed
Interest Account bears to the Net Policy Value.
Amounts paid to the Company not specifically designated in writing as loan
repayments will be treated as premiums.
POLICY SURRENDER AND PARTIAL WITHDRAWALS
POLICY SURRENDER
A Policy may be surrendered for its Net Cash Surrender Value at any time while
the life insured is living. The Net Cash Surrender Value is equal to the Policy
Value less any surrender charges and outstanding monthly deductions due (the
"Cash Surrender Value") minus the Policy Debt. The Net Cash Surrender Value will
be determined at the end of the Business Day on which Manufacturers Life of
America receives the Policy and a written request for surrender at its Service
Office. After a Policy is surrendered, the insurance coverage and all other
benefits under the Policy will terminate.
PARTIAL WITHDRAWALS
A policyholder may make a partial withdrawal of the Net Cash Surrender Value.
The policyholder may specify the portion of the withdrawal to be taken from each
Investment Account and the Guaranteed Interest Account. In the absence of
instructions, the withdrawal will be allocated among such accounts in the same
proportion as the Policy Value in each account bears to the Net Policy Value.
For information on Surrender Charges on a Partial Withdrawal see "Charges and
Deductions - Surrender Charges."
REDUCTION IN FACE AMOUNT DUE TO A PARTIAL WITHDRAWAL
If Death Benefit Option 1 is in effect when a partial withdrawal is made, the
Face Amount of the Policy will be reduced by the amount of the withdrawal plus
any applicable Surrender Charges. Reductions in Face Amount resulting from
partial withdrawals will not incur any Surrender Charges above the Surrender
Charges applicable to the withdrawal.
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<PAGE> 38
If the death benefit is based upon the Policy Value times the minimum death
benefit percentage set forth under "Death Benefit - Minimum Death Benefit," the
Face Amount will be reduced only to the extent that the amount of the withdrawal
plus the portion of the Surrender Charge assessed exceeds the difference between
the death benefit and the Face Amount. When the Face Amount of a Policy is based
on one or more increases subsequent to issuance of the Policy, a reduction
resulting from a partial withdrawal will be applied in the same manner as a
requested decrease in Face Amount, i.e., against the Face Amount provided by the
most recent increase, then against the next most recent increases successively
and finally against the initial Face Amount.
LAPSE AND REINSTATEMENT
LAPSE
A Policy will go into default if at the beginning of any policy month the
Policy's Net Cash Surrender Value would go below zero after deducting the
monthly deduction then due. Therefore, a Policy could lapse eventually if
increases in Policy Value (prior to deduction of Policy charges) are not
sufficient to cover Policy charges. A lapse could have adverse tax consequences
as described under "Tax Treatment of the Policy - Tax Treatment of Policy
Benefits Surrender or Lapse." Manufacturers Life of America will notify the
policyholder of the default and will allow a 61 day grace period in which the
policyholder may make a premium payment sufficient to bring the Policy out of
default. The required payment will be equal to the amount necessary to bring the
Net Cash Surrender Value to zero, if it was less than zero on the date of
default, plus the monthly deductions due at the date of default and payable at
the beginning of each of the two policy months thereafter, plus any applicable
premium load. If the required payment is not received by the end of the grace
period, the Policy will terminate with no value.
DEATH DURING GRACE PERIOD
If the life insured should die during the grace period, the Policy Value used in
the calculation of the death benefit will be the Policy Value as of the date of
default and the insurance benefit will be reduced by any outstanding monthly
deductions due at the time of death.
REINSTATEMENT
A policyholder can reinstate a Policy which has terminated after going into
default at any time within the five year period following the date of
termination subject to the following conditions:
(a) The Policy must not have been surrendered for its Net Cash Surrender Value;
(b) Evidence of the life insured's insurability satisfactory to Manufacturers
Life of America is furnished to the Company; and
(c) A premium equal to the payment required during the grace period following
default to keep the Policy in force is paid to the Company.
THE GENERAL ACCOUNT
The general account of Manufacturers Life of America consists of all assets
owned by the Company other than those in the Separate Account and other separate
accounts of the Company. Subject to applicable law, Manufacturers Life of
America has sole discretion over the investment of the assets of the general
account.
By virtue of exclusionary provisions, interests in the general account of
Manufacturers Life of America have not been registered under the Securities Act
of 1933 and the general account has not been registered as an investment company
under the Investment Company Act of 1940. Accordingly, neither the general
account nor any interests therein are subject to the provisions of these acts,
and as a result the staff of the S.E.C. has not reviewed the disclosures in this
prospectus relating to the general account. Disclosures regarding the general
account may, however, be subject to certain generally applicable
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<PAGE> 39
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in a prospectus.
GUARANTEED INTEREST ACCOUNT
A policyholder may elect to allocate net premiums to the Guaranteed Interest
Account or to transfer all or a portion of the Policy Value to the Guaranteed
Interest Account from the Investment Accounts. Manufacturers Life of America
will hold the reserves required for any portion of the Policy Value allocated to
the Guaranteed Interest Account in its general account. Transfers from the
Guaranteed Interest Account to the Investment Accounts are subject to
restrictions.
POLICY VALUE IN THE GUARANTEED INTEREST ACCOUNT The Policy Value in the
Guaranteed Interest Account is equal to:
(a) the portion of the net premiums allocated to it; plus
(b) any amounts transferred to it; plus
(c) interest credited to it; less
(d) any charges deducted from it; less
(e) any partial withdrawals from it; less
(f) any amounts transferred from it.
INTEREST ON THE GUARANTEED INTEREST ACCOUNT
An allocation of Policy Value to the Guaranteed Interest Account does not
entitle the policyholder to share in the investment experience of the general
account. Instead, Manufacturers Life of America guarantees that the Policy Value
in the Guaranteed Interest Account will accrue interest daily at an effective
annual rate of at least 4%, without regard to the actual investment experience
of the general account. Consequently, if a policyholder pays the planned
premiums, allocates all net premiums only to the general account and makes no
transfers, partial withdrawals, or policy loans, the minimum amount and duration
of the death benefit of the Policy will be determinable and guaranteed.
OTHER PROVISIONS OF THE POLICY
POLICYHOLDER RIGHTS
Unless otherwise restricted by a separate agreement, the policyholder may:
- - Vary the premiums paid under the Policy.
- - Change the death benefit option.
- - Change the premium allocation for future premiums.
- - Transfer amounts between sub-accounts.
- - Take loans and/or partial withdrawals.
- - Surrender the contract.
- - Transfer ownership to a new owner.
- - Name a contingent owner that will automatically become owner if the
policyholder dies before the insured.
- - Change or revoke a contingent owner.
- - Change or revoke a beneficiary.
ASSIGNMENT OF RIGHTS
Manufacturers Life of America will not be bound by an assignment until it
receives a copy of the assignment at its Service Office. Manufacturers Life of
America assumes no responsibility for the validity or effects of any assignment.
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<PAGE> 40
BENEFICIARY
One or more beneficiaries of the Policy may be appointed by the policyholder by
naming them in the application. Beneficiaries may be appointed in three classes
- - primary, secondary, and final. Beneficiaries may also be revocable or
irrevocable. Unless an irrevocable designation has been elected, the beneficiary
may be changed by the policyholder during the life insured's lifetime by giving
written notice to Manufacturers Life of America in a form satisfactory to the
Company. If the life insured dies and there is no surviving beneficiary, the
policyholder, or the policyholder's estate if the policyholder is the life
insured, will be the beneficiary. If a beneficiary dies before the seventh day
after the death of the life insured, the Company will pay the insurance benefit
as if the beneficiary had died before the life insured.
INCONTESTABILITY
Manufacturers Life of America will not contest the validity of a Policy after it
has been in force during the life insured's lifetime for two years from the
Issue Date. It will not contest the validity of an increase in Face Amount,
after such increase or addition has been in force during the life insured's
lifetime for two years. If a Policy has been reinstated and been in force for
less than two years from the reinstatement date, the Company can contest any
misrepresentation of a fact material to the reinstatement.
MISSTATEMENT OF AGE OR SEX
If the life insured's stated age or sex or both in the Policy are incorrect,
Manufacturers Life of America will change the Face Amount, and if applicable, so
that the death benefit will be that which the most recent monthly charge for the
cost of insurance would have purchased for the correct age and sex.
SUICIDE EXCLUSION
If the life insured, whether sane or insane, dies by suicide within two years
from the Issue Date (or within the maximum period permitted by the state in
which the Policy was delivered, if less than two years), Manufacturers Life of
America will pay only the premiums paid less any partial withdrawals and any
Policy Debt. If the life insured should die by suicide within two year after a
Face Amount increase, the death benefit for the increase will be limited to the
monthly deduction for the increase. At the discretion of the Company, this
provision may be waived under some circumstances, such as policies purchased in
conjunction with certain existing benefit plans.
SUPPLEMENTARY BENEFITS
Subject to certain requirements, one or more supplementary benefits may be added
to a Policy, including, in the case of a Policy owned by a corporation or other
similar entity, a benefit permitting a change in the life insured. More detailed
information concerning these supplementary benefits may be obtained from an
authorized agent of the Company. The cost of any supplementary benefits will be
deducted as part of the monthly deduction.
TAX TREATMENT OF THE POLICY
The following summary provides a general description of the federal income tax
considerations associated with the Policy and does not purport to be complete or
to cover all situations. This discussion is not intended as tax advice. Counsel
or other competent tax advisers should be consulted for more complete
information. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service (the "Service"). No representation is made as to the
likelihood of continuation of the present federal income tax laws nor of the
current interpretations by the Service. MANUFACTURERS LIFE OF AMERICA DOES NOT
MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF ANY POLICY OR ANY TRANSACTION
REGARDING THE POLICIES.
The Policies may be used in various arrangements, including non-qualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans, retiree medical benefit plans
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and others. The tax consequences of such plans may vary depending on the
particular facts and circumstances of each individual arrangement. Therefore, if
the use of such Policies in any such arrangement, the value of which depends in
part on the tax consequences, is contemplated, a qualified tax adviser should be
consulted for advice on the tax attributes of the particular arrangement.
LIFE INSURANCE QUALIFICATION
There are several requirements that must be met for a Policy to be considered a
Life Insurance Contract under the Internal Revenue Code, and thereby to enjoy
the tax benefits of such a contract:
1. The Policy must satisfy the definition of life insurance under Section
7702 of the Internal Revenue Code of 1986 (the "Code").
2. The investments of the Separate Account must be "adequately
diversified" in accordance with Section 817(h) of the Code and Treasury
Regulations.
3. The Policy must be a valid life insurance contract under applicable
state law.
4. The Policyholder must not possess "incidents of ownership" in the
assets of the Separate Account.
These four items are discussed in detail below.
DEFINITION OF LIFE INSURANCE
Section 7702 of the Code sets forth a definition of a life insurance contract
for federal tax purposes. For a Policy to be a life insurance contract, it must
satisfy either the Cash Value Accumulation Test or the Guideline Premium Test.
The Cash Value Accumulation Test requires a minimum death benefit for a given
Policy Value. The Guideline Premium Test also requires a minimum death benefit,
but in addition limits the total premiums that can be paid into a Policy for a
given amount of death benefit.
With respect to a Policy which is issued on the basis of a standard rate class,
the Company believes (largely in reliance on IRS Notice 88-128 and the proposed
mortality charge regulations under Section 7702, issued on July 5, 1991) that
such a Policy should meet the Section 7702 definition of a life insurance
contract.
With respect to a Policy that is issued on a substandard basis (i.e., a rate
class involving higher-than-standard mortality risk), there is less guidance, in
particular as to how mortality and other expense requirements of Section 7702
are to be applied in determining whether such a Policy meets the Section 7702
definition of a life insurance contract. Thus it is not clear whether or not
such a Policy would satisfy Section 7702, particularly if the policyholder pays
the full amount of premiums permitted under the Policy.
The Secretary of the Treasury (the "Treasury") is authorized to prescribe
regulations implementing Section 7702. However, while proposed regulations and
other interim guidance have been issued, final regulations have not been adopted
and guidance as to how Section 7702 is to be applied is limited. If a Policy
were determined not to be a life insurance contract for purposes of Section
7702, such a Policy would not provide the tax advantages normally provided by a
life insurance policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company may take whatever steps are appropriate and reasonable to attempt to
cause such a Policy to comply with Section 7702. For these reasons, the Company
reserves the right to restrict Policy transactions as necessary to attempt to
qualify it as a life insurance contract under Section 7702.
DIVERSIFICATION
Section 817(h) of the Code requires that the investments of the Separate Account
be "adequately diversified" in accordance with Treasury regulations in order for
the Policy to qualify as a life insurance contract under Section 7702 of the
code (discussed above). The Separate Account, through the Trust, intends to
comply with the diversification requirements prescribed in Treas. Reg. Sec.
1.817-5, which
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affect how the Trust's assets are to be invested. The Company believes that the
Separate Account will thus meet the diversification requirement, and the Company
will monitor continued compliance with the requirement.
STATE LAW
State regulations require that the policyholder have appropriate insurable
interest in the life insured. Failure to establish an insurable interest may
result in the Policy not qualifying as a life insurance contract for federal tax
purposes.
INVESTOR CONTROL
In certain circumstances, owners of variable life insurance Policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policyholder's gross income. The IRS has stated in published rulings that a
variable policyholder will be considered the owner of separate account assets if
the policyholder possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
has also announced, in connection with the issuance of regulations concerning
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 (i.e., the policyholder), 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 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 the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyholders were not owners of separate account assets. For example, the
policyholder has additional flexibility in allocating premium payments and
Policy Values. These differences could result in an owner being treated as the
owner of a pro-rata portion of the assets of the Separate Account. In addition,
the Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The company therefore reserves the right to modify the Policy as
necessary to attempt to prevent an owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
TAX TREATMENT OF POLICY BENEFITS
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes. The Company believes that
the proceeds and cash value increases of a Policy should be treated in a manner
consistent with a fixed-benefit life insurance policy for federal income tax
purposes.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's death benefit option, a Policy loan, partial withdrawal, surrender,
change in ownership, the addition of an accelerated death benefit rider, or an
assignment of the Policy may have federal income tax consequences. In addition,
federal, state and local transfer, and other tax consequences of ownership or
receipt of Policy proceeds depend on the circumstances of each policyholder or
beneficiary.
DEATH BENEFIT
The death benefit under the Policy should be excludable from the gross income of
the beneficiary under Section 101(a)(1) of the Code.
CASH VALUES
Generally, the policyholder will not be deemed to be in constructive receipt of
the Policy Value until there is a distribution. This includes additions
attributable to interest, dividends, appreciation or gains realized on transfers
among sub-accounts.
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INVESTMENT IN THE POLICY Investment in the Policy means:
(a) the aggregate amount of any premiums or other consideration paid for a
Policy; minus
(b) the aggregate amount, other than loan amounts, received under the
Policy which has been excluded from the gross income of the
policyholder (except that the amount of any loan from, or secured by, a
Policy that is a MEC, to the extent such amount has been excluded from
gross income, will be disregarded); plus
(c) the amount of any loan from, or secured by a Policy that is a MEC to
the extent that such amount has been included in the gross income of
the policyholder.
The repayment of a policy loan, or the payment of interest on a loan, does not
affect the Investment in the Policy.
SURRENDER OR LAPSE
Upon a complete surrender or lapse of a Policy or when benefits are paid at a
Policy's maturity date, if the amount received plus the amount of Policy Debt
exceeds the total investment in the Policy, the excess will generally be treated
as ordinary income subject to tax.
If, at the time of lapse, a Policy has a loan, the loan is extinguished and the
amount of the loan is a deemed payment to the policyholder. If the amount of
this deemed payment exceeds the investment in the contract, the excess is
taxable income and is subject to Internal Revenue Service reporting
requirements.
DISTRIBUTIONS
The tax consequences of distributions from, and loans taken from or secured by,
a Policy depend on whether the Policy is classified as a "Modified Endowment
Contract" or "MEC".
DISTRIBUTIONS FROM NON-MEC'S
A distribution from a non-MEC is generally treated as a tax-free recovery by the
policyholder of the Investment in the Policy to the extent of such Investment in
the Policy, and as a distribution of taxable income only to the extent the
distribution exceeds the Investment in the Policy. Loans from, or secured by, a
non-MEC are not treated as distributions. Instead, such loans are treated as
indebtedness of the policyholder.
Force Outs
An exception to this general rule occurs in the case of a decrease in the
Policy's death benefit or any other change that reduces benefits under the
Policy in the first 15 years after the Policy is issued and that results in a
cash distribution to the policyholder in order for the Policy to continue to
comply with the Section 7702 definitional limits. Such a cash distribution will
be taxed in whole or in part as ordinary income (to the extent of any gain in
the Policy) under rules prescribed in Section 7702. Changes include partial
withdrawals and death benefit option changes.
DISTRIBUTIONS FROM MEC'S
Policies classified as MEC's will be subject to the following tax rules:
(a) First, all partial withdrawals from such a Policy are treated as ordinary
income subject to tax up to the amount equal to the excess (if any) of the
Policy Value immediately before the distribution over the Investment in the
Policy at such time.
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(b) Second, loans taken from or secured by such a Policy are treated as partial
withdrawals from the Policy and taxed accordingly. Past-due loan interest
that is added to the loan amount is treated as a loan.
(c) Third, a 10% additional income tax is imposed on the portion of any
distribution (including distributions on surrender) from, or loan taken
from or secured by, such a policy that is included in income except where
the distribution or loan:
(i) is made on or after the policyholder attains age 59 1/2;
(ii) is attributable to the policyholder becoming disabled; or
(iii) is part of a series of substantially equal periodic payments
for the life (or life expectancy) of the policyholder or the
joint lives (or joint life expectancies) of the policyholder
and the policyholder's beneficiary.
These exceptions are not likely to apply in situations where the Policy is not
owned by an individual.
Definition of Modified Endowment Contracts
Section 7702A establishes a class of life insurance contracts designated as
"Modified Endowment Contracts," which applies to Policies entered into or
materially changed after June 20, 1988.
In general, a Policy will be a Modified Endowment Contract if the accumulated
premiums paid at any time during the first seven policy years exceed the
"seven-pay premium limit". The seven-pay premium limit on any date is equal to
the sum of the net level premiums that would have been paid on or before such
date if the policy provided for paid-up future benefits after the payment of
seven level annual premiums (the "seven-pay premium").
The rules relating to whether a Policy will be treated as a MEC are extremely
complex and cannot be adequately described in the limited confines of this
summary. Therefore, a current or prospective policyholder should consult with a
competent adviser to determine whether a transaction will cause the Policy to be
treated as a MEC.
Material Changes
A policy that is not a MEC may become a MEC if it is "materially changed". If
there is a material change to the policy, the seven year testing period for MEC
status is restarted. The material change rules for determining whether a Policy
is a MEC are complex. In general, however, the determination of whether a Policy
will be a MEC after a material change generally depends upon the relationship
among the death benefit of the Policy at the time of such change, the Policy
Value at the time of the change, and the additional premiums paid into the
Policy during the seven years starting with the date on which the material
change occurs.
Reductions in Face Amount
If there is a reduction in benefits during the first seven policy years, the
seven-pay premium limit is recalculated as if the policy had been originally
issued at the reduced benefit level. Failure to comply would result in
classification as a MEC regardless of any efforts by the Company to provide a
payment schedule that will not violate the seven pay test.
Exchanges
A life insurance contract received in exchange for a MEC will also be treated as
a MEC.
Processing of Premiums
If a premium is received which would cause the Policy to become a MEC within 23
days of the next Policy Anniversary, the Company will not apply the portion of
the premium which would cause MEC status ("excess premium") to the Policy when
received. The excess premium will be placed in a suspense account until the next
anniversary date, at which point the excess premium, along with interest, earned
on
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the excess premium at a rate of 3.5% from the date the premium was received,
will be applied to the Policy. The policyholder will be advised of this action
and will be offered the opportunity to have the premium credited as of the
original date received or to have the premium returned. If the policyholder does
not respond, the premium and interest will be applied to the Policy as of the
first day of the next anniversary.
If a premium is received which would cause the Policy to become a MEC more than
23 days prior to the next Policy Anniversary, the Company will refund any excess
premium to the policyholder. The portion of the premium which is not excess will
be applied as of the date received. The policyholder will be advised of this
action and will be offered the opportunity to return the premium and have it
credited to the account as of the original date received.
Multiple Policies
All MEC's that are issued by a Company (or its affiliates) to the same
policyholder during any calendar year are treated as one MEC for purposes of
determining the amount includible in gross income under Section 72(e) of the
Code.
POLICY LOAN INTEREST
Generally, personal interest paid on any loan under a Policy which is owned by
an individual is not deductible. For policies purchased on or after January 1,
1996, interest on any loan under a Policy owned by a taxpayer and covering the
life of any individual who is an officer or employee of or is financially
interested in the business carried on by the taxpayer will not be tax deductible
unless the employee is a key person within the meaning of Section 264 of the
Code. A deduction will not be permitted for interest on a loan under a Policy
held on the life of a key person to the extent the aggregate of such loans with
respect to contracts covering the key person exceed $50,000. The number of
employees who can qualify as key persons depends in part on the size of the
employer but cannot exceed 20 individuals.
Furthermore, if a non-natural person owns a Policy, or is the direct or indirect
beneficiary under a Policy, section 264(f) of the Code disallows a pro-rata
portion of the taxpayer's interest expense allocable to unborrowed Policy cash
values attributable to insurance held on the lives of individuals who are not
20% (or more) owners of the taxpayer-entity, officers, employees, or former
employees of the taxpayer.
The portion of the interest expense that is allocable to unborrowed Policy cash
values is an amount that bears the same ratio to that interest expense as the
taxpayer's average unborrowed Policy cash values under such life insurance
policies bear to the average adjusted bases for all assets of the taxpayer.
If the taxpayer is not the Policyholder, but is the direct or indirect
beneficiary under the Policy, then the amount of unborrowed cash value of the
Policy taken into account in computing the portion of the taxpayer's interest
expense allocable to unborrowed Policy cash values cannot exceed the benefit to
which the taxpayer is directly or indirectly entitled under the Policy.
POLICY EXCHANGES
A policyholder generally will not recognize gain upon the exchange of a Policy
for another life insurance policy issued by the Company or another insurance
company, except to the extent that the policyholder receives cash in the
exchange or is relieved of Policy indebtedness as a result of the exchange. In
no event will the gain recognized exceed the amount by which the Policy Value
(including any unpaid loans) exceeds the policyholder's Investment in the
Policy.
OTHER TRANSACTIONS
A transfer of the Policy, a change in the owner, a change in the beneficiary,
and certain other changes to the Policy, as well as particular uses of the
Policy (including use in a so called "split-dollar" arrangement) may have tax
consequences depending upon the particular circumstances and should not be
undertaken
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<PAGE> 46
prior to consulting with a qualified tax adviser. For instance, if
the owner transfers the Policy or designates a new owner in return for valuable
consideration (or, in some cases, if the transferor is relieved of a liability
as a result of the transfer), then the Death Benefit payable upon the death of
the Insured may in certain circumstances be includible in taxable income to the
extent that the Death Benefit exceeds the prior consideration paid for the
transfer and any premiums or other amounts subsequently paid by the transferee.
Further, in such a case, if the consideration received exceeds the transferor's
Investment in the Policy, the difference will be taxed to the transferor as
ordinary income.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the individual
circumstances of each policyholder and beneficiary.
ALTERNATE MINIMUM TAX
Corporate owners may be subject to Alternate Minimum Tax on the annual increases
in Cash Surrender Values and on the Death Benefit proceeds.
INCOME TAX REPORTING
In certain employer-sponsored life insurance arrangements, including equity
split dollar arrangements, participants may be required to report for income tax
purposes, one or more of the following:
(a) the value each year of the life insurance protection provided;
(b) an amount equal to any employer-paid premiums; or
(c) some or all of the amount by which the current value exceeds the
employer's interest in the Policy.
Participants should consult with their tax adviser to determine the tax
consequences of these arrangements.
OTHER INFORMATION
PAYMENT OF PROCEEDS
As long as the Policy is in force, Manufacturers Life of America will ordinarily
pay any policy loans, surrenders, partial withdrawals or insurance benefit
within seven days after receipt at its Service Office of all the documents
required for such a payment. The Company may delay the payment of any policy
loans, surrenders, partial withdrawals, or insurance benefit that depends on
Guaranteed Interest Account values for up to six months or in the case of any
Investment Account for any period during which (i) the New York Stock Exchange
is closed for trading (except for normal weekend and holiday closings), (ii)
trading on the New York Stock Exchange is restricted (iii) an emergency exists
as a result of which disposal of securities held in the Separate Account is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Separate Account's net assets or (iv) the SEC, by order, so permits
for the protection of security holders; provided that applicable rules and
regulations of the SEC shall govern as to whether the conditions described in
(2) and (3) exist.
REPORTS TO POLICYHOLDERS
Within 30 days after each Policy Anniversary, Manufacturers Life of America will
send the policyholder a statement showing, among other things:
- - the amount of death benefit;
- - the Policy Value and its allocation among the Investment Accounts, the
Guaranteed Interest Account and the Loan Account;
- - the value of the units in each Investment Account to which the Policy
Value is allocated;
- - the Policy Debt and any loan interest charged since the last report;
- - the premiums paid and other Policy transactions made during the period
since the last report; and
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- - any other information required by law.
Each policyholder will also be sent an annual and a semi-annual report for
the Trust which will include a list of the securities held in each Portfolio as
required by the 1940 Act.
DISTRIBUTION OF THE POLICIES
ManEquity, Inc., an indirect wholly-owned subsidiary of Manufacturers Life, will
act as the principal underwriter of, and continuously offer, the Policies
pursuant to a Distribution Agreement with Manufacturers Life of America.
ManEquity, Inc. is registered as a broker-dealer under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities Dealers.
ManEquity, Inc. is located at 200 Bloor Street East, Toronto, Ontario, Canada,
M4W 1E5 and was organized under the laws of Colorado on May 4, 1970. The
directors of ManEquity, Inc. are: John Richardson, Roy Bubbs, Bruce Gordon, Gary
Buchanan and Douglas Myers. The officers of ManEquity, Inc. are: (i) Douglas
Myers - President, (ii) Gary Buchanan - Vice President, Compliance, (iii) Thomas
Reives - Treasurer, (iv) Brian Buckley - Secretary and General Counsel. The
principal business address of each director and officer of ManEquity, Inc.,
except Brian Buckley, is Manulife Financial, 200 Bloor Street East, Toronto,
Ontario, Canada, M4W 1E5. The principal business address of Brian Buckley is
Manulife Financial, 73 Tremont Street, Boston, MA 02108. The Policies will be
sold by registered representatives of either ManEquity or other broker-dealers
having distribution agreements with ManEquity who are also authorized by state
insurance departments to do so.
A registered representative will receive commissions not to exceed 15% of
premiums paid up to the Target Premium, and 2.5% of premiums paid in excess of
the Target Premium in Policy Years 1 through 5, commissions of 2.5% of premiums
paid in Policy Years 6 and later, and after the fifth anniversary 0.20% of the
Policy Value per year. In addition representatives may be eligible for an
additional commission of $100 per Policy per year. Representatives who meet
certain productivity standards with regard to the sale of the Policies and
certain other policies issued by Manufacturers Life of America or Manufacturers
Life will be eligible for additional compensation.
RESPONSIBILITIES OF MANUFACTURERS LIFE
Manufacturers Life and Manufacturers USA have entered into an agreement with
ManEquity, Inc. pursuant to which Manufacturers Life or Manufacturers USA, on
behalf of ManEquity, Inc. will pay the sales commissions in respect of the
Policies and certain other policies issued by Manufacturers Life of America,
prepare and maintain all books and records required to be prepared and
maintained by ManEquity, Inc. with respect to the policies and such other
policies, and send all confirmations required to be sent by ManEquity, Inc. with
respect to the Policies and such other policies. ManEquity, Inc. will promptly
reimburse Manufacturers Life or Manufacturers USA for all sales commissions paid
by Manufacturers Life or Manufacturers USA and will pay Manufacturers Life or
Manufacturers USA for its other services under the agreement in such amounts and
at such times as agreed to by the parties.
Manufacturers Life and Manufacturers USA have also entered into a Service
Agreement with Manufacturers Life of America pursuant to which Manufacturers
Life and Manufacturers USA will provide to Manufacturers Life of America all
issue, administrative, general services and recordkeeping functions on behalf of
Manufacturers Life of America with respect to all of its insurance policies
including the Policies.
Finally, Manufacturers USA has entered into a Stoploss Reinsurance Agreement
with Manufacturers Life of America under which Manufacturers Life (or
Manufacturers USA) reinsures all aggregate claims in excess of 110% of the
expected claims for all flexible premium variable life insurance policies issued
by Manufacturers Life of America. Under the agreement, Manufacturers USA will
automatically reinsure the risk for any one life up to a maximum of $7,500,000,
except in the case of aviation risks where the maximum will be $5,000,000.
However, Manufacturers USA may also consider reinsuring any non-aviation risk in
excess of $7,500,000 and any aviation risk in excess of $5,000,000.
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VOTING RIGHTS
As stated previously, all of the assets held in the sub-accounts of the Separate
Account will be invested in shares of a particular Portfolio of the Trust.
Manufacturers Life of America is the legal owner of those shares and as such has
the right to vote upon certain matters that are required by the 1940 Act to be
approved or ratified by the shareholders of a mutual fund and to vote upon any
other matters that may be voted upon at a shareholders' meeting. However,
Manufacturers Life of America will vote shares held in the sub-accounts in
accordance with instructions received from policyholders having an interest in
such sub-accounts. Shares held in each sub-account for which no timely
instructions from policyholders are received, including shares not attributable
to the Policies, will be voted by Manufacturers Life of America in the same
proportion as those shares in that sub-account for which instructions are
received. Should the applicable federal securities laws or regulations change so
as to permit Manufacturers Life of America to vote shares held in the Separate
Account in its own right, it may elect to do so.
The number of shares in each sub-account for which instructions may be given by
a policyholder is determined by dividing the portion of the Policy Value derived
from participation in that sub-account, if any, by the value of one share of the
corresponding Portfolio. The number will be determined as of a date chosen by
Manufacturers Life of America, but not more than 90 days before the
shareholders' meeting. Fractional votes are counted. Voting instructions will be
solicited in writing at least 14 days prior to the meeting.
Manufacturers Life of America may, if required by state officials, disregard
voting instructions if such instructions would require shares to be voted so as
to cause a change in the sub-classification or investment policies of one or
more of the Portfolios, or to approve or disapprove an investment management
contract. In addition, the Company itself may disregard voting instructions that
would require changes in the investment policies or investment adviser, provided
that Manufacturers Life of America reasonably disapproves such changes in
accordance with applicable federal regulations. If Manufacturers Life of America
does disregard voting instructions, it will advise policyholders of that action
and its reasons for such action in the next communication to policyholders.
SUBSTITUTION OF PORTFOLIO SHARES
It is possible that in the judgment of the management of Manufacturers Life of
America, one or more of the Portfolios may become unsuitable for investment by
the Separate Account because of a change in investment policy or a change in the
applicable laws or regulation, because the shares are no longer available for
investment, or for some other reason. In that event, Manufacturers Life of
America may seek to substitute the shares of another Portfolio or of an entirely
different mutual fund. Before this can be done, the approval of the S.E.C. and
one or more state insurance departments may be required.
Manufacturers Life of America also reserves the right (i) to combine other
separate accounts with the Separate Account, (ii) to create new separate
accounts, (iii) to establish additional sub-accounts within the Separate Account
to invest in additional portfolios of the Trust or another management investment
company, (iv) to eliminate existing sub-accounts and to stop accepting new
allocations and transfers into the corresponding portfolio, (v) to combine
sub-accounts or to transfer assets in one sub-account to another sub-account or
(vi) to transfer assets from the Separate Account to another separate account
and from another separate account to the Separate Account. The Company also
reserves the right to operate the Separate Account as a management investment
company or other form permitted by law, and to de-register the Separate Account
under the 1940 Act. Any such change would be made only if permissible under
applicable federal and state law.
RECORDS AND ACCOUNTS
McCamish Systems, L.L.C., 6425 Powers Ferry Road, Atlanta, Georgia 30339, will
act as a Transfer Agent on behalf of Manufacturers Life of America as it relates
to the Policies described in this Prospectus.
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In the role of a Transfer Agent, McCamish Systems will perform administrative
functions, such as decreases, increases, surrenders and partial withdrawals,
fund transfers on behalf of the Company.
All records and accounts relating to the Separate Account and the Portfolios
will be maintained by the Company. All financial transactions will be handled by
the Company. All reports required to be made and information required to be
given will be provided by McCamish Systems on behalf of the Company.
STATE REGULATIONS
Manufacturers Life of America is subject to the regulation and supervision by
the Michigan Department of Insurance, which periodically examines its financial
condition and operations. It is also subject to the insurance laws and
regulations of all jurisdictions in which it is authorized to do business. The
Policies have been filed with insurance officials, and meet all standards set by
law, in each jurisdiction where they are sold.
Manufacturers Life of America is required to submit annual statements of its
operations, including financial statements, to the insurance departments of the
various jurisdictions in which it does business for the purposes of determining
solvency and compliance with local insurance laws and regulations.
LITIGATION
No litigation is pending that would have a material effect upon the Separate
Account or the Trust.
EXPERTS
The financial statements of The Manufacturers Life Insurance Company of America
and Separate Account Four of The Manufacturers Life Insurance Company of
America at December 31, 1997 and for the three years then ended appearing in
this prospectus have been audited by Ernst & Young LLP, independent auditors,
to the extent indicated in their reports thereon also appearing elsewhere
herein. Such financial statements have been included herein in reliance upon
such reports given upon the authority of such firm as experts in auditing and
accounting.
FURTHER INFORMATION
A registration statement under the Securities Act of 1933 has been filed with
the S.E.C. relating to the offering described in this prospectus. This
prospectus does not include all the information set forth in the registration
statement. The omitted information may be obtained from the S.E.C.'s principal
office in Washington D.C. upon payment of the prescribed fee. The Commission
also maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission which is located at http://www.sec.gov.
For further information you may also contact Manufacturers Life of America's
Home Office, the address and telephone number of which are on the first page of
the prospectus.
<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS
<S> <C> <C>
Position with
Manufacturers Life
Name of America Principal Occupation
Sandra M. Cotter (35) Director Attorney at Dykema Gosset - 1989 - present
(since December 1992)
James D. Gallagher (43) Director, Secretary and Vice President, Secretary and General Counsel -
General Counsel (since May January 1997- present, ManUSA; Vice President,
1996) Legal Services U.S. Operations - January 1996 -
present, The Manufacturers Life Insurance Company;
Vice President, Secretary and General Counsel -
1994 - present, The Manufacturers Life Insurance
Company of North America; Vice President and
Associate
</TABLE>
44
<PAGE> 50
<TABLE>
<S> <C> <C>
General Counsel - 1991 - 1994, The
Prudential Insurance Company of America
Bruce Gordon (54) Director Vice President, U.S. Operations - Pensions -
(since May 1996) 1990 - present, The Manufacturers Life
Insurance Company
Donald A. Guloien (41) Director and President Senior Vice President, Business Development -
(since August 1990) 1994 - present, The Manufacturers Life
Insurance Company; Vice President, U.S.
Individual Business - 1990 - 1994, The
Manufacturers Life Insurance Company
Theodore Kilkuskie, Jr. (42) Director, Vice President U.S. Vice President, U.S. Individual Insurance -
Individual Insurance January 1997 - present, ManUSA; Vice President,
U.S. Individual Insurance June 1995 - present,
The Manufacturers Life Insurance Company;
Executive Vice President, Mutual Funds -
January 1995 - May 1995, State Street Research,
Vice President, Mutual Funds - 1987 - 1994,
Metropolitan Life Insurance Company
Joseph J. Pietroski (59) Director (since July 1992) Senior Vice President, General Counsel and
Corporate Secretary - 1988 - present, The
Manufacturers Life Insurance Company
John D. Richardson (60) Chairman and Director Executive Vice President and General Manager,
(since January 1995) U.S. Operations - 1995 - present, The
Manufacturers Life Insurance Company; Senior
Vice President and General Manager, Canadian
Operations 1992 - 1994.
John R. Ostler (45) Vice President Financial Vice President - 1992 - present, The
and Treasurer Manufacturers Life Insurance Company.
Douglas H. Myers (43) Vice President, Finance and Assistant Vice President and Controller, U.S.
Compliance Controller Operations - 1988 - present, The Manufacturers
Life Insurance Company
Victor Apps (49) Senior Vice President, Asia Senior Vice President and General Manager,
Greater China Division - 1995 - present, The
Manufacturers Life Insurance Company; Vice
President and General Manager, Greater China
Division - 1993 - 1995, The Manufacturers Life
Insurance Company; International Vice President
- 1988 - 1993, Asia Pacific Division, The
Manufacturers Life Insurance Company.
Robert A. Cook (43) Vice President, Marketing Vice President, Product Management - 1996 -
present, The Manufacturers Life Insurance
Company; Sales and Marketing Director, U.S.
Division - 1994 - 1995, The Manufacturers Life
Insurance Company; Vice President, Corporation
Strategic Review - 1992 - 1993, The
Manufacturers Life Insurance Company
Felix Chee (51) Vice President, Investments Executive Vice President--1997 to present, The
Manufacturers Life Insurance Company; Chief
Investment Officer--1997 to present, The
Manufacturers Life Insurance Company; Senior
Vice President and Treasurer--1993-1994, The
Manufacturers Life Insurance Company; Senior
Vice President, Corporate Finance--April 1993
to September 1993, Ontario Hydro
Hugh C. McHaffie (39) Vice President Vice President, U.S. Annuities and Product
Development--1996 to present, The Manufacturers
Life Insurance Company; Vice President U.S.
Annuities and Development--1994 to present, The
Manufacturers Life Insurance Company of North
America; Product Development Executive--1990
to 1994, The Manufacturers Life Insurance
Company of North America
</TABLE>
45
<PAGE> 51
<TABLE>
<S> <C> <C>
John G. Vrysen (42) Vice President, Appointed Vice President and Chief Financial Officer,
Actuary U.S. Operations--1996 to present, The
Manufacturers Life Insurance Company; Vice
President and Chief Actuary--1996 to present,
The Manufacturers Life Insurance Company of
North America; Vice President and Chief
Actuary, The Manufacturers Life Insurance
Company of North America--1986 to present.
</TABLE>
46
<PAGE> 52
IMPACT OF YEAR 2000
Preparing computer systems to deal with the Year 2000 risk has become a
major issue for businesses throughout the world. Within Manufacturers Life, a
group-wide program has been underway since 1996 to make all critical systems
compliant by the end of 1998 and other systems compliant by the end of 1999.
Included in this program are all system applicable to and shared by the Company
with Manufacturers Life. Based on a detailed assessment, Manufacturers Life
determined that a portion of its software needs to be modified or replaced so
that its computer systems will function properly into the Year 2000 and beyond.
Like most companies, the Year 2000 issue represents a significant challenge for
Manufacturers Life and extensive resources have been dedicated to modifying
existing software and to converting to new software. However, there can be no
assurances that Manufacturers Life's systems, nor those of other companies on
which Manufacturers Life relies, will be fully converted on a timely basis and
therefore that all adverse effect on the Company due to the Year 2000 risk will
be avoided. Manufacturers Life is presently consulting with vendors, customers,
subsidiaries, third-parties and other businesses with which it deals to ensure
that no material aspect of its, or the Company's, operations will be hindered by
the Year 2000 risk.
The costs of the project and the date on which Manufacturers Life plans
to complete the modifications are based on management's best estimates and are
subject to some uncertainty. Manufacturers Life is using both internal and
external resources to reprogram, or replace, and test the software for Year 2000
modifications. The total cost of this program to Manufacturers Life is estimated
to be $64 million, comprised of $55 million for specifically budgeted programs
and $9 million for general contingencies. Manufacturers Life has incurred $15
million as at December 31, 1997 of which the Company will receive an allocation
due to its shared systems. The costs allocated are not expected to have a
material effect on the net operating income of the Company.
DEATH BENEFIT SCHEDULE WITH FLEXIBLE TERM INSURANCE OPTION
A Policy can be issued with a schedule of death benefits which may vary by
Policy Year. The entire schedule is called the Death Benefit Schedule. The Death
Benefit Schedule will provide flexible term insurance to age 100. The amount of
death benefit shown in the Death Benefit Schedule for any Policy Year is called
the Scheduled Annual Death Benefit for that Policy Year. Any amount of Scheduled
Annual Death Benefit over and above the death benefit provided by the Policy
will be provided by Flexible Term Insurance (the "Rider"). The combined death
benefit of the Policy and Rider may be the Scheduled Annual Death Benefit alone
(similar to Death Benefit Option 1), or the Scheduled Annual Death Benefit plus
the Policy Value (similar to Death Benefit Option 2).
A Policy may be combined with the Rider to result in an initial Scheduled Annual
Death Benefit equal to the same Face Amount that could be acquired under the
Policy alone. Depending upon the amount of premium paid into the Policy,
combining the Policy and the Rider may result in a surrender charge for the
Policy that is lower than the surrender charge provided under the Policy alone.
In addition, current cost of insurance rates for the Rider are less than those
for the Policy in the first fifteen Policy years, but greater than the rates for
the Policy in Policy Year 16 and later.
A policyholder may, upon written request, change the Death Benefit Schedule. A
written request for a change which results in a decrease to the Scheduled Annual
Death Benefit must be received at least 30 days prior to the first day of a
policy month for the change to take effect as of that policy month. A written
request for a change which results in an increase to the Scheduled Annual Death
Benefit in any Policy Year will take effect at the beginning of the month
following the date the Company approves the request. Increases in the Death
Benefit Schedule are subject to evidence of insurability satisfactory to the
Company, A requested decrease in the Schedule will require a decrease in the
Policy's Face Amount if the new Death Benefit Schedule in any year is less than
the Face Amount. In this case, the Face Amount will be reduced to the Scheduled
Annual Death Benefit. If a decrease in Face Amount is required,
47
<PAGE> 53
Surrender Charges will be assessed as provided under "Decrease in Face Amount -
Surrender Charges Assessed on a Decrease".
If the policyholder changes the Death Benefit Option of the Policy from
Death Benefit Option 2 to Death Benefit Option 1 and if the Face Amount of the
Policy after the change would be greater than the Scheduled Annual Death Benefit
in effect at the time of the change, then the Face Amount after the change will
be equal to the Scheduled Annual Death Benefit.
If the Face Amount of the Policy is increased then the Scheduled Annual
Death Benefit for all Policy Years after and including the effective date of the
change will be increased by the same amount. If the Face Amount of the Policy is
decreased then the Scheduled Annual Death Benefit for all Policy Years after and
including the effective date of the change will be decreased by the same amount.
This provision does not apply to increases or decreases in Face Amount due to a
change in the Death Benefit Option.
If in any Policy Year, the Face Amount is greater than the Scheduled
Annual Death Benefit for that Policy Year, the Face Amount will be reduced to be
equal to the Scheduled Annual Death Benefit. If the Face Amount is decreased,
Surrender Charges will be assessed as provided under "Decrease in Face Amount -
Surrender Charged Assessed on a Decrease."
Year to year changes within the Death Benefit Schedule, as well as a change in
the Death Benefit Schedule itself, may also have an effect on the maximum amount
of premium that a policyholder may pay into a Policy. The Company will inform
you of any such change. The Company reserves the right to limit a change in the
Death Benefit Schedule so as to prevent the Policy from failing to qualify as
life insurance for tax purposes.
The Rider is subject to the same Incontestability, Misstatement of Age or Sex,
and Suicide Exclusion provisions as the Policy.
The Rider terminates on the termination date of the Policy. The policyholder
may, however, terminate the Rider prior to the termination date of the Policy by
sending the Company a written request to terminate the Rider. The Rider will
then terminate at the end of the month in which the Company receives the
request.
ILLUSTRATIONS
The following tables illustrate the way in which a Policy's Death Benefit,
Policy Value, and Cash Surrender Value could vary over an extended period of
time.
ASSUMPTIONS
- - Hypothetical gross annual investment returns for the Portfolios (i.e.,
investment income and capital gains and losses, realized or unrealized)
equivalent to constant gross annual rates of 0%, 6%, and 12% over the
periods indicated.
- - An Insured who is a male, Issue Age 45, non-smoker.
- - A Face Amount of $365,000 in all Policy Years.
- - Payment of an annual premium of $20,000 each year for the first seven
Policy Years.
- - Premiums are paid on the Policy Anniversary. All Premiums are allocated
to and remain in the Variable Account for the entire period shown.
- - There are no transfers, partial withdrawals, or policy loans.
- - Tables 1, 2, and 3 assume regular underwriting. Tables 4, 5, and 6
assume short form underwriting.
- - The Cash Value Accumulation Test is used.
- - The illustrations assume all charges currently assessed against the
Policy, including monthly cost of insurance charges and administrative
charges and mortality and expense risk charges. The first set of
columns in each table, under the heading "Current Charges", assumes
cost of insurance rates
48
<PAGE> 54
currently expected to be charged. The second set of columns, under the
heading "Guaranteed Charges", assumes maximum cost of insurance rates.
- - The amounts shown in the Tables also take into account the Portfolios'
advisory fees and operating expenses, which are assumed to be at an
annual rate of 0.954% of the average daily net assets of the portfolio.
The Death Benefits, Policy Values, and Cash Surrender Values would be different
from those shown if the returns averaged 0%, 6%, and 12%, but fluctuated over
and under those averages throughout the years. The values would also be
different depending on the allocation of a Policy's total Policy Value among the
sub-accounts, if the actual rates of return averaged 0%, 6%, or 12%, but the
rates of each Portfolio varied above and below such averages.
The gross annual rates of returns correspond to net annual rates of return
according to the table below:
Gross Rate of Return
Policy Year 0.00% 6.00% 12.00%
Net Rate 1-10 -1.692% 4.206% 10.105%
of Return 11+ -1.346% 4.574% 10.493%
Current cost of insurance charges are not guaranteed and may be changed.
Upon request, Manufacturers Life of America will furnish a comparable
illustration based on the proposed life insured's Issue Age, sex and risk class,
any additional ratings and the death benefit option, Face Amount, Death Benefit
Schedule (if applicable), and planned premium requested. Illustrations for
smokers would show less favorable results than the illustration shown in this
prospectus.
From time to time, in advertisements or sales literature for the Policies that
quote performance data of one or more of the Portfolios, the Company may include
cash surrender values and death benefit figures computed or using the same
methodology as that used in the following illustrations, but with the average
annual total return of the Portfolio for which performance data is shown in the
advertisement replacing the hypothetical rates of return shown in the following
tables.
The Policies were first sold to the public on [ ]. However, total return data
may be advertised for as long a period of time as the underlying Portfolio has
been in existence. The results for any period prior to the Policies being
offered would be calculated as if the Policies had been offered during that
period of time, with all charges assumed to be the same as for the first full
year the Policies were offered.
49
<PAGE> 55
<TABLE>
<CAPTION>
Table 1
Regular Underwriting
Hypothetical Gross Investment Return of 0.00%
Current Charges
--------------------------------------------------------------------------------
Premiums Policy Plus Less Less Plus Policy Net Cash Death
Policy Annual Accum Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 0 19,600 144 732 -324 18,400 2,000 16,400 365,000
2 20,000 43,050 18,400 19,600 144 980 -633 36,243 3,000 33,243 365,000
3 20,000 66,203 36,243 19,600 144 1,198 -933 53,569 3,000 50,569 365,000
4 20,000 90,513 53,569 19,600 144 1,285 -1,225 70,514 4,000 66,514 365,000
5 20,000 116,038 70,514 19,600 144 1,320 -1,512 87,138 5,000 82,138 365,000
6 20,000 142,840 87,138 19,600 144 1,381 -1,792 103,421 5,000 98,421 365,000
7 20,000 170,982 103,421 19,600 144 1,432 -2,068 119,378 4,000 115,378 365,000
8 0 179,531 119,378 0 144 1,598 -2,004 115,631 3,000 112,631 365,000
9 0 188,508 115,631 0 144 1,794 -1,939 111,754 2,000 109,754 365,000
10 0 197,933 111,754 0 144 2,035 -1,871 107,704 0 107,704 365,000
11 0 207,830 107,704 0 144 2,082 -1,433 104,045 0 104,045 365,000
12 0 218,221 104,045 0 144 2,089 -1,384 100,427 0 100,427 365,000
13 0 229,132 100,427 0 144 2,042 -1,336 96,906 0 96,906 365,000
14 0 240,589 96,906 0 144 1,859 -1,289 93,614 0 93,614 365,000
15 0 252,619 93,614 0 144 1,518 -1,248 90,704 0 90,704 365,000
16 0 265,249 90,704 0 144 1,680 -1,207 87,673 0 87,673 365,000
17 0 278,512 87,673 0 144 1,855 -1,165 84,508 0 84,508 365,000
18 0 292,438 84,508 0 144 2,049 -1,121 81,194 0 81,194 365,000
19 0 307,059 81,194 0 144 2,248 -1,075 77,727 0 77,727 365,000
20 0 322,412 77,727 0 144 2,455 -1,027 74,101 0 74,101 365,000
25 0 411,489 57,002 0 144 4,371 -734 51,752 0 51,752 365,000
30 0 525,176 24,565 0 144 8,479 -268 15,675 0 15,675 365,000
Guaranteed Charges
--------------------------------------------------------------------------------
Policy Plus Less Less Plus Policy Net Cash Death
Policy Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0 19,600 144 1,570 -316 17,570 2,000 15,570 365,000
2 17,570 19,600 144 1,612 -613 34,800 3,000 31,800 365,000
3 34,800 19,600 144 1,653 -904 51,700 3,000 48,700 365,000
4 51,700 19,600 144 1,687 -1,190 68,279 4,000 64,279 365,000
5 68,279 19,600 144 1,723 -1,470 84,542 5,000 79,542 365,000
6 84,542 19,600 144 1,753 -1,745 100,499 5,000 95,499 365,000
7 100,499 19,600 144 1,792 -2,015 116,148 4,000 112,148 365,000
8 116,148 0 144 1,986 -1,946 112,072 3,000 109,072 365,000
9 112,072 0 144 2,210 -1,875 107,843 2,000 105,843 365,000
10 107,843 0 144 2,466 -1,801 103,432 0 103,432 365,000
11 103,432 0 144 2,747 -1,371 99,170 0 99,170 365,000
12 99,170 0 144 3,057 -1,311 94,658 0 94,658 365,000
13 94,658 0 144 3,389 -1,248 89,877 0 89,877 365,000
14 89,877 0 144 3,755 -1,181 84,797 0 84,797 365,000
15 84,797 0 144 4,158 -1,110 79,386 0 79,386 365,000
16 79,386 0 144 4,616 -1,034 73,592 0 73,592 365,000
17 73,592 0 144 5,140 -952 67,356 0 67,356 365,000
18 67,356 0 144 5,748 -864 60,600 0 60,600 365,000
19 60,600 0 144 6,457 -767 53,231 0 53,231 365,000
20 53,231 0 144 7,272 -662 45,153 0 45,153 365,000
25 3,597 0 48 3,544 -5 0 0 0 0
30 0 0 0 0 0 0 0 0 0
- - THE POLICY VALUE, CASH SURRENDER VALUE, AND THE DEATH BENEFIT WILL DIFFER IF PREMIUMS ARE PAID IN
DIFFERENT AMOUNTS OR FREQUENCIES.
- - IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE
POLICYHOLDER, AND THE INVESTMENT RETURN FOR THE PORTFOLIOS OF MANUFACTURERS INVESTMENT TRUST.
- - THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT
ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS.
- - NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE> 56
<TABLE>
<CAPTION>
Table 2
Regular Underwriting
Hypothetical Gross Investment Return of 6.00%
Current Charges
--------------------------------------------------------------------------------
Premiums Policy Plus Less Less Plus Policy Net Cash Death
Policy Annual Accum Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 0 19,600 144 731 805 19,529 2,000 17,529 365,000
2 20,000 43,050 19,529 19,600 144 973 1,621 39,633 3,000 36,633 365,000
3 20,000 66,203 39,633 19,600 144 1,179 2,462 60,372 3,000 57,372 365,000
4 20,000 90,513 60,372 19,600 144 1,246 3,332 81,914 4,000 77,914 365,000
5 20,000 116,038 81,914 19,600 144 1,253 4,238 104,355 5,000 99,355 365,000
6 20,000 142,840 104,355 19,600 144 1,272 5,182 127,722 5,000 122,722 365,000
7 20,000 170,982 127,722 19,600 144 1,273 6,165 152,070 4,000 148,070 372,571
8 0 179,531 152,070 0 144 1,370 6,362 156,918 3,000 153,918 373,464
9 0 188,508 156,918 0 144 1,486 6,564 161,851 2,000 159,851 375,495
10 0 197,933 161,851 0 144 1,620 6,768 166,855 0 166,855 375,424
11 0 207,830 166,855 0 144 1,598 7,589 172,702 0 172,702 378,218
12 0 218,221 172,702 0 144 1,547 7,857 178,869 0 178,869 380,991
13 0 229,132 178,869 0 144 1,457 8,142 185,410 0 185,410 383,798
14 0 240,589 185,410 0 144 1,288 8,445 192,423 0 192,423 388,694
15 0 252,619 192,423 0 144 1,030 8,772 200,020 0 200,020 394,040
16 0 265,249 200,020 0 144 1,111 9,118 207,883 0 207,883 399,136
17 0 278,512 207,883 0 144 1,195 9,475 216,020 0 216,020 403,957
18 0 292,438 216,020 0 144 1,284 9,845 224,437 0 224,437 408,475
19 0 307,059 224,437 0 144 1,389 10,228 233,132 0 233,132 414,974
20 0 322,412 233,132 0 144 1,499 10,623 242,112 0 242,112 421,274
25 0 411,489 280,777 0 144 2,308 12,782 291,106 0 291,106 451,215
30 0 525,176 334,652 0 144 3,682 15,213 346,038 0 346,038 487,914
Guaranteed Charges
--------------------------------------------------------------------------------
Policy Plus Less Less Plus Policy Net Cash Death
Policy Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0 19,600 144 1,568 786 18,674 2,000 16,674 365,000
2 18,674 19,600 144 1,602 1,570 38,098 3,000 35,098 365,000
3 38,098 19,600 144 1,627 2,387 58,314 3,000 55,314 365,000
4 58,314 19,600 144 1,637 3,237 79,370 4,000 75,370 365,000
5 79,370 19,600 144 1,638 4,123 101,310 5,000 96,310 365,000
6 101,310 19,600 144 1,620 5,046 124,193 5,000 119,193 365,000
7 124,193 19,600 144 1,592 6,009 148,066 4,000 144,066 365,000
8 148,066 0 144 1,702 6,186 152,406 3,000 149,406 365,000
9 152,406 0 144 1,824 6,366 156,805 2,000 154,805 365,000
10 156,805 0 144 1,960 6,548 161,249 0 161,249 365,000
11 161,249 0 144 2,097 7,320 166,328 0 166,328 365,000
12 166,328 0 144 2,236 7,549 171,496 0 171,496 365,287
13 171,496 0 144 2,372 7,782 176,762 0 176,762 365,897
14 176,762 0 144 2,513 8,019 182,124 0 182,124 367,891
15 182,124 0 144 2,658 8,261 187,583 0 187,583 369,539
16 187,583 0 144 2,815 8,507 193,132 0 193,132 370,813
17 193,132 0 144 2,981 8,757 198,764 0 198,764 371,688
18 198,764 0 144 3,158 9,010 204,472 0 204,472 372,138
19 204,472 0 144 3,379 9,266 210,215 0 210,215 374,183
20 210,215 0 144 3,616 9,523 215,977 0 215,977 375,800
25 239,240 0 144 4,768 10,822 245,149 0 245,149 379,982
30 268,399 0 144 6,391 12,116 273,979 0 273,979 386,311
- - THE POLICY VALUE, CASH SURRENDER VALUE, AND THE DEATH BENEFIT WILL DIFFER IF PREMIUMS ARE PAID IN
DIFFERENT AMOUNTS OR FREQUENCIES.
- - IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE
POLICYHOLDER, AND THE INVESTMENT RETURN FOR THE PORTFOLIOS OF MANUFACTURERS INVESTMENT TRUST.
- - THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT
ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS.
- - NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
Table 3
Regular Underwriting
Hypothetical Gross Investment Return of 12.00%
Current Charges
--------------------------------------------------------------------------------------
Premiums Policy Plus Less Less Plus Policy Net Cash Death
Policy Annual Accum Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 0 19,600 144 730 1,933 20,659 2,000 18,659 365,000
2 20,000 43,050 20,659 19,600 144 967 4,008 43,157 3,000 40,157 365,000
3 20,000 66,203 43,157 19,600 144 1,158 6,271 67,726 3,000 64,726 365,000
4 20,000 90,513 67,726 19,600 144 1,203 8,751 94,730 4,000 90,730 365,000
5 20,000 116,038 94,730 19,600 144 1,176 11,482 124,492 5,000 119,492 365,000
6 20,000 142,840 124,492 19,600 144 1,188 14,489 157,250 5,000 152,250 397,842
7 20,000 170,982 157,250 19,600 144 1,357 17,790 193,140 4,000 189,140 473,192
8 0 179,531 193,140 0 144 1,479 19,430 210,946 3,000 207,946 502,053
9 0 188,508 210,946 0 144 1,619 21,222 230,405 2,000 228,405 534,540
10 0 197,933 230,405 0 144 1,769 23,180 251,672 0 251,672 566,262
11 0 207,830 251,672 0 144 1,785 26,301 276,044 0 276,044 604,537
12 0 218,221 276,044 0 144 1,783 28,859 302,976 0 302,976 645,339
13 0 229,132 302,976 0 144 1,766 31,686 332,752 0 332,752 688,796
14 0 240,589 332,752 0 144 1,701 34,814 365,721 0 365,721 738,756
15 0 252,619 365,721 0 144 1,617 38,279 402,238 0 402,238 792,409
16 0 265,249 402,238 0 144 1,940 42,093 442,247 0 442,247 849,115
17 0 278,512 442,247 0 144 2,318 46,270 486,056 0 486,056 908,925
18 0 292,438 486,056 0 144 2,762 50,843 533,993 0 533,993 971,866
19 0 307,059 533,993 0 144 3,315 55,842 586,376 0 586,376 1,043,749
20 0 322,412 586,376 0 144 3,954 61,304 643,582 0 643,582 1,119,832
25 0 411,489 930,031 0 144 8,221 97,129 1,018,795 0 1,018,795 1,579,133
30 0 525,176 1,459,981 0 144 16,745 152,268 1,595,360 0 1,595,360 2,249,458
Guaranteed Charges
--------------------------------------------------------------------------------------
Policy Plus Less Less Plus Policy Net Cash Death
Policy Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0 19,600 144 1,566 1,888 19,779 2,000 17,779 365,000
2 19,779 19,600 144 1,591 3,886 41,529 3,000 38,529 365,000
3 41,529 19,600 144 1,600 6,083 65,468 3,000 62,468 365,000
4 65,468 19,600 144 1,582 8,503 91,844 4,000 87,844 365,000
5 91,844 19,600 144 1,541 11,170 120,930 5,000 115,930 365,000
6 120,930 19,600 144 1,505 14,112 152,994 5,000 147,994 387,074
7 152,994 19,600 144 1,889 17,332 187,893 4,000 183,893 460,337
8 187,893 0 144 2,134 18,865 204,480 3,000 201,480 486,663
9 204,480 0 144 2,430 20,526 222,432 2,000 220,432 516,043
10 222,432 0 144 2,746 22,323 241,865 0 241,865 544,197
11 241,865 0 144 3,118 25,199 263,803 0 263,803 577,729
12 263,803 0 144 3,533 27,478 287,604 0 287,604 612,597
13 287,604 0 144 3,974 29,952 313,438 0 313,438 648,817
14 313,438 0 144 4,491 32,634 341,437 0 341,437 689,703
15 341,437 0 144 5,054 35,541 371,780 0 371,780 732,407
16 371,780 0 144 5,680 38,690 404,646 0 404,646 776,921
17 404,646 0 144 6,374 42,101 440,228 0 440,228 823,227
18 440,228 0 144 7,148 45,792 478,728 0 478,728 871,284
19 478,728 0 144 8,111 49,778 520,251 0 520,251 926,047
20 520,251 0 144 9,183 54,076 565,000 0 565,000 983,100
25 781,355 0 144 15,979 81,099 846,331 0 846,331 1,311,813
30 1,156,814 0 144 28,264 119,817 1,248,223 0 1,248,223 1,759,995
- - THE POLICY VALUE, CASH SURRENDER VALUE, AND THE DEATH BENEFIT WILL DIFFER IF PREMIUMS ARE PAID IN
DIFFERENT AMOUNTS OR FREQUENCIES.
- - IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE
POLICYHOLDER, AND THE INVESTMENT RETURN FOR THE PORTFOLIOS OF MANUFACTURERS INVESTMENT TRUST.
- - THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT
ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS.
- - NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
Table 4
Short Form Issue
Hypothetical Gross Investment Return of 0.00%
Current Charges
--------------------------------------------------------------------------------
Premiums Policy Plus Less Less Plus Policy Net Cash Death
Policy Annual Accum Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 0 19,600 144 840 -323 18,293 2,000 16,293 365,000
2 20,000 43,050 18,293 19,600 144 1,023 -631 36,095 3,000 33,095 365,000
3 20,000 66,203 36,095 19,600 144 1,236 -930 53,386 3,000 50,386 365,000
4 20,000 90,513 53,386 19,600 144 1,455 -1,221 70,167 4,000 66,167 365,000
5 20,000 116,038 70,167 19,600 144 1,624 -1,503 86,496 5,000 81,496 365,000
6 20,000 142,840 86,496 19,600 144 1,678 -1,779 102,496 5,000 97,496 365,000
7 20,000 170,982 102,496 19,600 144 1,686 -2,050 118,216 4,000 114,216 365,000
8 0 179,531 118,216 0 144 1,841 -1,982 114,249 3,000 111,249 365,000
9 0 188,508 114,249 0 144 2,031 -1,914 110,160 2,000 108,160 365,000
10 0 197,933 110,160 0 144 2,248 -1,842 105,926 0 105,926 365,000
11 0 207,830 105,926 0 144 2,287 -1,408 102,087 0 102,087 365,000
12 0 218,221 102,087 0 144 2,276 -1,356 98,310 0 98,310 365,000
13 0 229,132 98,310 0 144 2,222 -1,306 94,639 0 94,639 365,000
14 0 240,589 94,639 0 144 2,044 -1,258 91,193 0 91,193 365,000
15 0 252,619 91,193 0 144 1,723 -1,214 88,113 0 88,113 365,000
16 0 265,249 88,113 0 144 1,873 -1,171 84,925 0 84,925 365,000
17 0 278,512 84,925 0 144 2,036 -1,127 81,618 0 81,618 365,000
18 0 292,438 81,618 0 144 2,207 -1,081 78,187 0 78,187 365,000
19 0 307,059 78,187 0 144 2,372 -1,034 74,637 0 74,637 365,000
20 0 322,412 74,637 0 144 2,541 -985 70,967 0 70,967 365,000
25 0 411,489 53,902 0 144 4,415 -692 48,650 0 48,650 365,000
30 0 525,176 21,397 0 144 8,557 -225 12,471 0 12,471 365,000
Guaranteed Charges
--------------------------------------------------------------------------------
Policy Plus Less Less Plus Policy Net Cash Death
Policy Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0 19,600 144 1,570 -316 17,570 2,000 15,570 365,000
2 17,570 19,600 144 1,612 -613 34,800 3,000 31,800 365,000
3 34,800 19,600 144 1,653 -904 51,700 3,000 48,700 365,000
4 51,700 19,600 144 1,687 -1,190 68,279 4,000 64,279 365,000
5 68,279 19,600 144 1,723 -1,470 84,542 5,000 79,542 365,000
6 84,542 19,600 144 1,753 -1,745 100,499 5,000 95,499 365,000
7 100,499 19,600 144 1,792 -2,015 116,148 4,000 112,148 365,000
8 116,148 0 144 1,986 -1,946 112,072 3,000 109,072 365,000
9 112,072 0 144 2,210 -1,875 107,843 2,000 105,843 365,000
10 107,843 0 144 2,466 -1,801 103,432 0 103,432 365,000
11 103,432 0 144 2,747 -1,371 99,170 0 99,170 365,000
12 99,170 0 144 3,057 -1,311 94,658 0 94,658 365,000
13 94,658 0 144 3,389 -1,248 89,877 0 89,877 365,000
14 89,877 0 144 3,755 -1,181 84,797 0 84,797 365,000
15 84,797 0 144 4,158 -1,110 79,386 0 79,386 365,000
16 79,386 0 144 4,616 -1,034 73,592 0 73,592 365,000
17 73,592 0 144 5,140 -952 67,356 0 67,356 365,000
18 67,356 0 144 5,748 -864 60,600 0 60,600 365,000
19 60,600 0 144 6,457 -767 53,231 0 53,231 365,000
20 53,231 0 144 7,272 -662 45,153 0 45,153 365,000
25 3,597 0 48 3,544 -5 0 0 0 0
30 0 0 0 0 0 0 0 0 0
- - THE POLICY VALUE, CASH SURRENDER VALUE, AND THE DEATH BENEFIT WILL DIFFER IF PREMIUMS ARE PAID IN
DIFFERENT AMOUNTS OR FREQUENCIES.
- - IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE
POLICYHOLDER, AND THE INVESTMENT RETURN FOR THE PORTFOLIOS OF MANUFACTURERS INVESTMENT TRUST.
- - THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT
ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS.
- - NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
Table 5
Short Form Issue
Hypothetical Gross Investment Return of 6.00%
Current Charges
--------------------------------------------------------------------------------
Premiums Policy Plus Less Less Plus Policy Net Cash Death
Policy Annual Accum Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 0 19,600 144 839 802 19,419 2,000 17,419 365,000
2 20,000 43,050 19,419 19,600 144 1,017 1,615 39,474 3,000 36,474 365,000
3 20,000 66,203 39,474 19,600 144 1,216 2,454 60,168 3,000 57,168 365,000
4 20,000 90,513 60,168 19,600 144 1,411 3,320 81,534 4,000 77,534 365,000
5 20,000 116,038 81,534 19,600 144 1,541 4,216 103,665 5,000 98,665 365,000
6 20,000 142,840 103,665 19,600 144 1,546 5,147 126,721 5,000 121,721 365,000
7 20,000 170,982 126,721 19,600 144 1,495 6,118 150,800 4,000 146,800 369,461
8 0 179,531 150,800 0 144 1,573 6,304 155,387 3,000 152,387 369,822
9 0 188,508 155,387 0 144 1,674 6,495 160,064 2,000 158,064 371,350
10 0 197,933 160,064 0 144 1,780 6,689 164,830 0 164,830 370,867
11 0 207,830 164,830 0 144 1,743 7,493 170,435 0 170,435 373,253
12 0 218,221 170,435 0 144 1,669 7,751 176,372 0 176,372 375,673
13 0 229,132 176,372 0 144 1,568 8,025 182,685 0 182,685 378,158
14 0 240,589 182,685 0 144 1,398 8,318 189,461 0 189,461 382,710
15 0 252,619 189,461 0 144 1,148 8,634 196,802 0 196,802 387,700
16 0 265,249 196,802 0 144 1,213 8,968 204,413 0 204,413 392,473
17 0 278,512 204,413 0 144 1,282 9,314 212,302 0 212,302 397,004
18 0 292,438 212,302 0 144 1,349 9,674 220,482 0 220,482 401,278
19 0 307,059 220,482 0 144 1,425 10,046 228,959 0 228,959 407,547
20 0 322,412 228,959 0 144 1,505 10,432 237,741 0 237,741 413,670
25 0 411,489 275,728 0 144 2,258 12,553 285,879 0 285,879 443,112
30 0 525,176 328,684 0 144 3,601 14,942 339,881 0 339,881 479,232
Guaranteed Charges
----------------------------------------------------------------------------------
Policy Plus Less Less Plus Policy Net Cash Death
Policy Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0 19,600 144 1,568 786 18,674 2,000 16,674 365,000
2 18,674 19,600 144 1,602 1,570 38,098 3,000 35,098 365,000
3 38,098 19,600 144 1,627 2,387 58,314 3,000 55,314 365,000
4 58,314 19,600 144 1,637 3,237 79,370 4,000 75,370 365,000
5 79,370 19,600 144 1,638 4,123 101,310 5,000 96,310 365,000
6 101,310 19,600 144 1,620 5,046 124,193 5,000 119,193 365,000
7 124,193 19,600 144 1,592 6,009 148,066 4,000 144,066 365,000
8 148,066 0 144 1,702 6,186 152,406 3,000 149,406 365,000
9 152,406 0 144 1,824 6,366 156,805 2,000 154,805 365,000
10 156,805 0 144 1,960 6,548 161,249 0 161,249 365,000
11 161,249 0 144 2,097 7,320 166,328 0 166,328 365,000
12 166,328 0 144 2,236 7,549 171,496 0 171,496 365,287
13 171,496 0 144 2,372 7,782 176,762 0 176,762 365,897
14 176,762 0 144 2,513 8,019 182,124 0 182,124 367,891
15 182,124 0 144 2,658 8,261 187,583 0 187,583 369,539
16 187,583 0 144 2,815 8,507 193,132 0 193,132 370,813
17 193,132 0 144 2,981 8,757 198,764 0 198,764 371,688
18 198,764 0 144 3,158 9,010 204,472 0 204,472 372,138
19 204,472 0 144 3,379 9,266 210,215 0 210,215 374,183
20 210,215 0 144 3,616 9,523 215,977 0 215,977 375,800
25 239,240 0 144 4,768 10,822 245,149 0 245,149 379,982
30 268,399 0 144 6,391 12,116 273,979 0 273,979 386,311
- - THE POLICY VALUE, CASH SURRENDER VALUE, AND THE DEATH BENEFIT WILL DIFFER IF PREMIUMS ARE PAID IN
DIFFERENT AMOUNTS OR FREQUENCIES.
- - IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE
POLICYHOLDER, AND THE INVESTMENT RETURN FOR THE PORTFOLIOS OF MANUFACTURERS INVESTMENT TRUST.
- - THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT
ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS.
- - NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
Table 6
Short Form Issue
Hypothetical Gross Investment Return of 12.00%
Current Charges
--------------------------------------------------------------------------------------
Premiums Policy Plus Less Less Plus Policy Net Cash Death
Policy Annual Accum Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Premium at 5% Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 0 19,600 144 837 1,928 20,546 2,000 18,546 365,000
2 20,000 43,050 20,546 19,600 144 1,010 3,995 42,987 3,000 39,987 365,000
3 20,000 66,203 42,987 19,600 144 1,195 6,252 67,500 3,000 64,500 365,000
4 20,000 90,513 67,500 19,600 144 1,362 8,720 94,314 4,000 90,314 365,000
5 20,000 116,038 94,314 19,600 144 1,446 11,425 123,749 5,000 118,749 365,000
6 20,000 142,840 123,749 19,600 144 1,440 14,401 156,166 5,000 151,166 395,099
7 20,000 170,982 156,166 19,600 144 1,613 17,667 191,676 4,000 187,676 469,607
8 0 179,531 191,676 0 144 1,727 19,269 209,074 3,000 206,074 497,597
9 0 188,508 209,074 0 144 1,867 21,019 228,083 2,000 226,083 529,152
10 0 197,933 228,083 0 144 2,002 22,933 248,869 0 248,869 559,956
11 0 207,830 248,869 0 144 2,016 25,994 272,704 0 272,704 597,222
12 0 218,221 272,704 0 144 2,003 28,496 299,054 0 299,054 636,984
13 0 229,132 299,054 0 144 1,977 31,263 328,196 0 328,196 679,365
14 0 240,589 328,196 0 144 1,901 34,325 360,476 0 360,476 728,161
15 0 252,619 360,476 0 144 1,794 37,719 396,256 0 396,256 780,624
16 0 265,249 396,256 0 144 2,110 41,456 435,457 0 435,457 836,078
17 0 278,512 435,457 0 144 2,475 45,549 478,387 0 478,387 894,584
18 0 292,438 478,387 0 144 2,899 50,031 525,375 0 525,375 956,183
19 0 307,059 525,375 0 144 3,399 54,934 576,766 0 576,766 1,026,643
20 0 322,412 576,766 0 144 3,984 60,294 632,932 0 632,932 1,101,301
25 0 411,489 914,629 0 144 8,085 95,521 1,001,921 0 1,001,921 1,552,977
30 0 525,176 1,435,788 0 144 16,467 149,744 1,568,921 0 1,568,921 2,212,178
Guaranteed Charges
--------------------------------------------------------------------------------------
Policy Plus Less Less Plus Policy Net Cash Death
Policy Value Net Admin Cost of Invest Value Sur Surrender Benefit
Year Beg Yr Premium Fees Ins Earnings End Yr Charges Value End Yr
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0 19,600 144 1,566 1,888 19,779 2,000 17,779 365,000
2 19,779 19,600 144 1,591 3,886 41,529 3,000 38,529 365,000
3 41,529 19,600 144 1,600 6,083 65,468 3,000 62,468 365,000
4 65,468 19,600 144 1,582 8,503 91,844 4,000 87,844 365,000
5 91,844 19,600 144 1,541 11,170 120,930 5,000 115,930 365,000
6 120,930 19,600 144 1,505 14,112 152,994 5,000 147,994 387,074
7 152,994 19,600 144 1,889 17,332 187,893 4,000 183,893 460,337
8 187,893 0 144 2,134 18,865 204,480 3,000 201,480 486,663
9 204,480 0 144 2,430 20,526 222,432 2,000 220,432 516,043
10 222,432 0 144 2,746 22,323 241,865 0 241,865 544,197
11 241,865 0 144 3,118 25,199 263,803 0 263,803 577,729
12 263,803 0 144 3,533 27,478 287,604 0 287,604 612,597
13 287,604 0 144 3,974 29,952 313,438 0 313,438 648,817
14 313,438 0 144 4,491 32,634 341,437 0 341,437 689,703
15 341,437 0 144 5,054 35,541 371,780 0 371,780 732,407
16 371,780 0 144 5,680 38,690 404,646 0 404,646 776,921
17 404,646 0 144 6,374 42,101 440,228 0 440,228 823,227
18 440,228 0 144 7,148 45,792 478,728 0 478,728 871,284
19 478,728 0 144 8,111 49,778 520,251 0 520,251 926,047
20 520,251 0 144 9,183 54,076 565,000 0 565,000 983,100
25 781,355 0 144 15,979 81,099 846,331 0 846,331 1,311,813
30 1,156,814 0 144 28,264 119,817 1,248,223 0 1,248,223 1,759,995
- - THE POLICY VALUE, CASH SURRENDER VALUE, AND THE DEATH BENEFIT WILL DIFFER IF PREMIUMS ARE PAID IN
DIFFERENT AMOUNTS OR FREQUENCIES.
- - IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN
THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE
POLICYHOLDER, AND THE INVESTMENT RETURN FOR THE PORTFOLIOS OF MANUFACTURERS INVESTMENT TRUST.
- - THE POLICY VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT
ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS.
- - NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<PAGE> 61
FINANCIAL STATEMENTS
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
Six months ended June 30, 1998
(with December 31, 1997 comparative)
<PAGE> 62
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET UNITS NAV PER
ASSETS VALUE OUTSTANDING UNIT
<S> <C> <C> <C> <C>
Investment in Manufacturers Investment Trust
at market value
Emerging Growth Trust, 2,490,957 shares (cost $52,574,158 ) $62,946,479 944,272 66.66
Quantitative Equity Trust, 1,667,582 shares (cost $29,395,669 ) 38,170,961 808,932 47.19
Real Estate Securities Trust, 1,407,557 shares (cost $22,428,162 ) 23,717,338 594,529 39.89
Balanced Trust, 3,000,009 shares (cost $49,244,893 ) 55,800,175 1,723,913 32.37
Capital Growth Bond Trust, 1,275,407 shares (cost $14,124,154 ) 14,794,726 663,447 22.30
Money Market Trust, 1,176,946 shares (cost $11,769,459 ) 11,769,460 716,717 16.42
International Stock Trust, 750,148 shares (cost $9,117,393 ) 9,766,918 725,896 13.45
Pacific Rim Emerging Markets Trust, 333,785 shares (cost $3,363,471 ) 2,022,732 322,031 6.28
Equity Index Trust, 812,870 shares (cost $10,788,098 ) 11,705,332 659,237 17.76
International Small Cap Trust 60,640 shares (cost $941,082 ) 1,007,228 66,144 15.23
Equity Trust, 379,282 shares (cost $7,783,589 ) 7,543,912 505,886 14.91
Value Equity Trust, 572,958 shares (cost $9,482,099 ) 9,923,631 642,881 15.44
Growth and Income Trust, 504,806 shares (cost $11,712,843 ) 13,215,822 738,331 17.90
U.S. Government Securities Trust, 62,625 shares (cost $835,921 ) 832,285 73,605 11.31
Conservative Asset Allocation Trust, 59,411 shares (cost $683,708 ) 676,696 55,003 12.30
Moderate Asset Allocation Trust, 218,743 shares (cost $2,767,057 ) 2,804,281 207,623 13.51
Aggressive Asset Allocation Trust, 147,182 shares (cost $2,161,809 ) 2,147,387 147,168 14.59
Blue Chip Growth Trust, 588,762 shares (cost $9,103,504 ) 10,156,152 545,481 18.62
Science & Technology Trust, 281,943 shares (cost $4,151,923) 4,502,631 275,129 16.37
Pilgram Baxter Growth Trust, 28,972 shares (cost $367,744 ) 379,530 25,105 15.12
Small / Mid Cap Trust, 90,711 shares (cost $1,466,517 ) 1,677,245 92,270 18.18
Worldwide Growth Trust, 8,482 shares (cost $127,444 ) 134,353 8,764 15.33
Global Equity Trust, 51,918 shares (cost $1,090,705 ) 1,061,215 65,122 16.30
Growth Trust, 103,546 shares (cost $1,820,521 ) 2,039,854 115,263 17.70
Value Trust, 311,317 shares (cost $4,746,175 ) 4,850,323 321,097 15.11
International Growth & Income Trust, 16,763 shares (cost $204,367 ) 198,637 14,181 14.01
High Yield Trust, 152,839 shares (cost $2,144,314 ) 2,155,034 150,344 14.33
Strategic Bond Trust, 103,462 shares (cost $1,249,085 ) 1,228,097 88,518 13.87
Global Government Bond Trust, 5,615 shares (cost $78,109 ) 72,548 5,463 13.28
Investment Quality Bond Trust, 155,009 shares (cost $1,864,788 ) 1,850,812 131,723 14.05
Lifestyle Aggressive 1000 Trust, 38,622 shares (cost $523,381 ) 536,458 34,775 15.43
Lifestyle Growth 820 Trust, 231,374 shares (cost $3,233,289 ) 3,271,629 214,514 15.25
Lifestyle Balanced 640 Trust, 88,012 shares (cost $1,186,191 ) 1,205,772 80,928 14.90
Lifestyle Moderate 460 Trust, 6,553 shares (cost $87,558 ) 89,641 6,107 14.68
Lifestyle Conservative 280 Trust, 250 shares (cost $3,321 ) 3,255 227 14.34
Small Company Value Trust 2,996 shares (cost $37,871 ) 37,301 3,998 9.33
===============
TOTAL $304,295,850
===============
</TABLE>
<PAGE> 63
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
FOR PERIOD ENDING JUNE 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Emerging Growth Quantitative Equity Real Estate Securities Balanced
Sub-Account Sub-Account Sub-Account Sub-Account
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Dividend Income $879,733 $4,420,030 $2,921,055 $6,701,569
Expenses
Mortality and expense risk charge 200,249 120,149 77,283 173,612
------------------------------------------------------------------------------
Net investment income (loss) 679,484 4,299,881 2,843,772 6,527,957
------------------------------------------------------------------------------
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 5,750,469 2,665,659 1,809,568 2,048,850
Cost of securities sold 4,645,612 1,751,313 1,428,564 1,624,763
------------------------------------------------------------------------------
Net realized gain (loss) 1,104,857 914,346 381,004 424,087
------------------------------------------------------------------------------
Unrealized appreciation (depreciation)
of Investments
Beginning of Year 8,747,614 9,076,188 5,733,444 8,870,245
End of Period 10,372,322 8,775,292 1,289,176 6,555,280
------------------------------------------------------------------------------
Net unrealized depreciation
during the period 1,624,708 (300,896) (4,444,268) (2,314,965)
------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 2,729,565 613,450 (4,063,264) (1,890,878)
------------------------------------------------------------------------------
Net increase (decrease) in net
assets derived from operations $3,409,049 $4,913,331 ($1,219,492) $4,637,079
==============================================================================
</TABLE>
See accompanying notes.
<PAGE> 64
<TABLE>
<CAPTION>
International Pacific Rim
Capital Growth Money Market Stock Emerging Markets
Bond Sub-Account Sub-Account Sub-Account Sub-Account
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
$789,202 $262,635 $477 $0
45,961 33,345 27,453 7,616
- -----------------------------------------------------------------------------
743,241 229,290 (26,976) (7,616)
- -----------------------------------------------------------------------------
522,637 5,257,223 2,385,911 288,309
509,890 5,257,223 2,126,262 474,147
- -----------------------------------------------------------------------------
12,747 0 259,649 (185,838)
- -----------------------------------------------------------------------------
969,325 0 (52,878) (1,155,601)
670,572 0 649,527 (1,340,740)
- -----------------------------------------------------------------------------
(298,753) 0 702,405 (185,139)
- -----------------------------------------------------------------------------
(286,006) 0 962,054 (370,977)
- -----------------------------------------------------------------------------
$457,235 $229,290 $935,078 ($378,593)
============================================================================
</TABLE>
<PAGE> 65
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
FOR PERIOD ENDING JUNE 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
International Value
Equity Index Small Cap Equity Equity
Sub-Account Sub-Account Sub-Account Sub-Account
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Dividend Income $196,554 $1,473 $1,580,782 $439,236
Expenses
Mortality and expense risk charge 31,390 1,991 26,862 24,920
-----------------------------------------------------------------------
Net investment income (loss) 165,164 (518) 1,553,920 414,316
-----------------------------------------------------------------------
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 1,455,159 315,945 2,324,502 744,053
Cost of securities sold 1,108,316 289,311 2,397,820 587,099
-----------------------------------------------------------------------
Net realized gain (loss) 346,843 26,634 (73,318) 156,954
-----------------------------------------------------------------------
Unrealized appreciation (depreciation)
of Investments
Beginning of Year 13,995 (15,134) 292,111 659,769
End of Period 917,232 66,147 (239,675) 441,531
-----------------------------------------------------------------------
Net unrealized depreciation
during the period 903,237 81,281 (531,786) (218,238)
------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 1,250,080 107,915 (605,104) (61,284)
-----------------------------------------------------------------------
Net increase (decrease) in net
assets derived from operations $1,415,244 $107,397 $948,816 $353,032
=======================================================================
</TABLE>
See accompanying notes.
<PAGE> 66
<TABLE>
<CAPTION>
Growth U.S. Government Conservative Moderate Aggressive
and Income Securities Asset Allocation Asset Allocation Asset Allocation
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$687,431 $34,788 $61,639 $276,382 $445,314
34,861 2,237 2,035 7,746 11,277
- ---------------------------------------------------------------------------------------------
652,570 32,551 59,604 268,636 434,037
- ---------------------------------------------------------------------------------------------
1,046,064 137,927 20,693 91,375 2,677,310
744,837 136,305 18,608 81,810 2,567,473
- ---------------------------------------------------------------------------------------------
301,227 1,622 2,085 9,565 109,837
- ---------------------------------------------------------------------------------------------
926,995 9,987 17,238 94,990 100,678
1,502,981 (3,635) (7,013) 37,224 (14,421)
- ---------------------------------------------------------------------------------------------
575,986 (13,622) (24,251) (57,766) (115,099)
- ---------------------------------------------------------------------------------------------
877,213 (12,000) (22,166) (48,201) (5,262)
- ---------------------------------------------------------------------------------------------
$1,529,783 $20,551 $37,438 $220,435 $428,775
=============================================================================================
</TABLE>
<PAGE> 67
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
FOR PERIOD ENDING JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Science and Pilgram
Blue Chip Growth Technology Baxter Growth Small/Mid Cap
Sub-Account Sub-Account Sub-Account Sub-Account
--------------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C>
Dividend Income $163,206 $0 $0 $0
Expenses
Mortality and expense risk charge 25,951 8,337 1,129 6,546
------------------------------------------------------------------
Net investment income (loss) 137,255 (8,337) (1,129) (6,546)
------------------------------------------------------------------
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 1,097,257 108,456 43,406 1,008,646
Cost of securities sold 876,153 107,605 39,221 929,571
------------------------------------------------------------------
Net realized gain (loss) 221,104 851 4,185 79,075
------------------------------------------------------------------
Unrealized appreciation (depreciation)
of Investments
Beginning of Year 235,927 (31,717) (1,826) (41,211)
End of Period 1,052,647 350,710 11,786 210,728
------------------------------------------------------------------
Net unrealized depreciation
during the period 816,720 382,427 13,612 251,939
------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 1,037,824 383,278 17,797 331,014
------------------------------------------------------------------
Net increase (decrease) in net
assets derived from operations $1,175,079 $374,941 $16,668 $324,468
==================================================================
</TABLE>
See accompanying notes.
<PAGE> 68
<TABLE>
<CAPTION>
Worldwide International Growth
Growth Global Equity Growth Value and Income High Yield Strategic Bond
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$0 $283,512 $88,404 $0 $2,310 $3,120 $41,408
602 11,252 6,753 10,895 294 4,020 2,168
- ------------------------------------------------------------------------------------------------------------------
(602) 272,260 81,651 (10,895) 2,016 (900) 39,240
- ------------------------------------------------------------------------------------------------------------------
189,623 3,622,876 711,780 422,563 4,476 223,942 36,429
169,139 3,245,520 637,625 371,627 4,223 218,019 34,465
- ------------------------------------------------------------------------------------------------------------------
20,484 377,356 74,155 50,936 253 5,923 1,964
- ------------------------------------------------------------------------------------------------------------------
(1,636) 142,878 42,938 (5,269) (1,097) (22,649) 10,671
6,910 (29,491) 219,334 104,147 (5,730) 10,720 (20,989)
- ------------------------------------------------------------------------------------------------------------------
8,546 (172,369) 176,396 109,416 (4,633) 33,369 (31,660)
- ------------------------------------------------------------------------------------------------------------------
29,030 204,987 250,551 160,352 (4,380) 39,292 (29,696)
- ------------------------------------------------------------------------------------------------------------------
$28,428 $477,247 $332,202 $149,457 ($2,364) $38,392 $9,544
=================================================================================================================
</TABLE>
<PAGE> 69
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
FOR PERIOD ENDING JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Global Government Investment Lifestyle Aggressive
Bond Quality Bond 1000
Sub-Account Sub-Account Sub-Account
---------------------------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividend Income $5,515 $62,454 $26,598
Expenses
Mortality and expense risk charge 175 3,663 1,609
-----------------------------------------------------------
Net investment income (loss) 5,340 58,791 24,989
-----------------------------------------------------------
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 842 166,517 90,919
Cost of securities sold 838 164,930 84,732
-----------------------------------------------------------
Net realized gain (loss) 4 1,587 6,187
-----------------------------------------------------------
Unrealized appreciation (depreciation)
of Investments
Beginning of Year 186 5,485 1,104
End of Period (5,560) (13,976) 13,076
-----------------------------------------------------------
Net unrealized depreciation
during the period (5,746) (19,461) 11,972
-----------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (5,742) (17,874) 18,159
-----------------------------------------------------------
Net increase (decrease) in net
assets derived from operations $(402) $40,917 $43,148
===========================================================
</TABLE>
See accompanying notes.
<PAGE> 70
<TABLE>
<CAPTION>
Lifestyle Growth Lifestyle Balanced Lifestyle Moderate Lifestyle Conservative
820 640 460 280
Sub-Account Sub-Account Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
$151,143 $56,358 $4,450 $142
9,054 3,400 333 6
- --------------------------------------------------------------------------------
142,089 52,958 4,117 136
- --------------------------------------------------------------------------------
129,836 13,214 22,583 265
121,168 12,370 21,990 270
- --------------------------------------------------------------------------------
8,668 844 593 (5)
- --------------------------------------------------------------------------------
7,721 17,177 361 0
38,343 19,580 2,083 (66)
- --------------------------------------------------------------------------------
30,622 2,403 1,722 (66)
- --------------------------------------------------------------------------------
39,290 3,247 2,315 (71)
- --------------------------------------------------------------------------------
$181,379 $56,205 $6,432 $65
================================================================================
</TABLE>
<PAGE> 71
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF OPERATIONS
FOR PERIOD ENDING JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
**Small Company
Value Trust
Sub-Account TOTAL
----------------------------------------------
<S> <C> <C>
Investment income:
Dividend Income $0 $20,586,920
Expenses
Mortality and expense risk charge 16 925,190
-----------------------------------------------
Net investment income (loss) (16) 19,661,730
-----------------------------------------------
Realized and unrealized gain (loss) from
security transactions:
Proceeds from sales 83 37,435,367
Cost of securities sold 87 32,788,906
-----------------------------------------------
Net realized gain (loss) (4) 4,646,461
-----------------------------------------------
Unrealized appreciation (depreciation)
of Investments
Beginning of Year 0 34,648,009
End of Period (570) 31,635,482
-----------------------------------------------
Net unrealized depreciation
during the period (570) (3,012,527)
-----------------------------------------------
Net realized and unrealized gain (loss)
on investments (574) 1,633,934
-----------------------------------------------
Net increase (decrease) in net
assets derived from operations $(590) $21,295,664
===============================================
</TABLE>
** Reflects the period from commencement of operations May 1, 1998 through
June 30, 1998.
See accompanying notes.
<PAGE> 72
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDING JUNE 30, 1998 AND DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Quantitative
Emerging Growth Equity
Sub-Account Sub-Account
------------------------------------------------------------------
Period Ended Year Ended Period Ended Year Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $679,484 $(373,014) $4,299,881 $(197,730)
Net realized gain (loss) 1,104,857 942,356 914,346 1,013,649
Unrealized appreciation (depreciation)
of investments during the period 1,624,708 8,161,227 (300,896) 6,681,076
------------------------------------------------------------------
Increase (decrease) in net assets
derived from operations 3,409,049 8,730,569 4,913,331 7,496,995
------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 4,962,989 10,968,515 1,909,881 5,269,678
Transfer of terminations (5,145,992) (5,398,115) (1,808,822) (3,038,289)
Transfer of policy loans (185,848) (624,209) (128,072) (229,614)
Net interfund transfers (2,176,689) (10,114,334) (1,328,199) (447,386)
------------------------------------------------------------------
(2,545,540) (5,168,143) (1,355,212) 1,554,389
------------------------------------------------------------------
Net increase in net assets 863,509 3,562,426 3,558,119 9,051,384
NET ASSETS
Beginning of Year 62,082,970 58,520,544 34,612,842 25,561,458
------------------------------------------------------------------
End of Period $62,946,479 $62,082,970 $38,170,961 $34,612,842
==================================================================
</TABLE>
See accompanying notes.
<PAGE> 73
<TABLE>
<CAPTION>
Real Estate
Securities Balanced Capital Growth Bond
Sub-Account Sub-Account Sub-Account
- ------------------------------------------------------------------------------------------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$2,843,772 $(138,789) $6,527,957 $(312,899) $743,241 $(88,739)
381,004 409,362 424,087 1,177,705 12,747 (166,789)
(4,444,268) 3,375,616 (2,314,965) 6,637,188 (298,753) 1,292,079
- -------------------------------------------------------------------------------------------------------
(1,219,492) 3,646,189 4,637,079 7,501,994 457,235 1,036,551
- -------------------------------------------------------------------------------------------------------
1,671,062 3,087,313 4,410,308 7,548,194 1,108,695 1,927,024
(1,225,978) (2,187,862) (2,443,099) (5,118,735) (544,690) (1,630,139)
(85,811) (150,861) (50,849) (520,775) (36,205) (60,413)
15,125 1,362,290 (359,934) (5,272,252) 106,969 (1,458,915)
- -------------------------------------------------------------------------------------------------------
374,398 2,110,880 1,556,426 (3,363,568) 634,769 (1,222,443)
- -------------------------------------------------------------------------------------------------------
(845,094) 5,757,069 6,193,505 4,138,426 1,092,004 (185,892)
24,562,432 18,805,363 49,606,670 45,468,244 13,702,722 13,888,614
- -------------------------------------------------------------------------------------------------------
$23,717,338 $24,562,432 $55,800,175 $49,606,670 $14,794,726 $13,702,722
=======================================================================================================
</TABLE>
<PAGE> 74
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDING JUNE 30, 1998 AND DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Pacific Rim
Money Market International Stock Emerging Markets
Sub-Account Sub-Account Sub-Account
-------------------------------------------------------------------------------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
-------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $229,290 $316,526 $(26,976) $60,175 $(7,616) $(15,403)
Net realized gain (loss) 0 (275,816) 259,649 265,602 (185,838) (93,881)
Unrealized appreciation (depreciation)
of investments during the period 0 275,826 702,405 (284,063) (185,139) (1,160,926)
-------------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from operations 229,290 316,536 935,078 41,714 (378,593) (1,270,210)
-------------------------------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 6,376,047 3,105,289 2,117,289 2,524,804 355,836 858,191
Transfer of terminations (398,781) (1,271,291) (477,262) (503,518) (93,660) (808,786)
Transfer of policy loans (197,414) 17,308 (21,881) (88,083) (4,102) (65,080)
Net interfund transfers (756,515) (2,379,177) 502,611 871,148 (200,213) (58,053)
-------------------------------------------------------------------------------------------
5,023,337 (527,871) 2,120,757 2,804,351 57,861 (73,728)
-------------------------------------------------------------------------------------------
Net increase in net assets 5,252,627 (211,335) 3,055,835 2,846,065 (320,732) (1,343,938)
NET ASSETS
Beginning of Year 6,516,833 6,728,168 6,711,083 3,865,018 2,343,464 3,687,402
-------------------------------------------------------------------------------------------
End of Period $11,769,460 $6,516,833 $9,766,918 $6,711,083 $2,022,732 $2,343,464
===========================================================================================
</TABLE>
See accompanying notes.
<PAGE> 75
<TABLE>
<CAPTION>
International Value
Equity Index Small Cap Equity Equity
Sub-Account Sub-Account Sub-Account Sub-Account
- ------------------------------------------------------------------------------------------------------------------------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$165,164 $847,432 $(518) $(2,769) $1,553,920 $1,034,760 $414,316 $381,070
346,843 36,960 26,634 10,150 (73,318) 24,440 156,954 74,851
903,237 (32,178) 81,281 (15,134) (531,786) 21,454 (218,238) 497,341
- ------------------------------------------------------------------------------------------------------------------------------------
1,415,244 852,214 107,397 (7,753) 948,816 1,080,654 353,032 953,262
- ------------------------------------------------------------------------------------------------------------------------------------
3,075,746 3,106,131 81,870 78,736 1,044,855 3,023,077 2,074,383 856,465
(914,124) (166,672) (33,314) (20,504) (378,393) (778,177) (422,305) (394,553)
(178,882) (3,054) (9,234) (2,010) (8,503) (30,340) (6,054) (21,910)
1,392,649 1,961,503 306,221 505,819 (2,076,652) 582,252 2,323,019 2,113,454
- ------------------------------------------------------------------------------------------------------------------------------------
3,375,389 4,897,908 345,543 562,041 (1,418,693) 2,796,812 3,969,043 2,553,456
- ------------------------------------------------------------------------------------------------------------------------------------
4,790,633 5,750,122 452,940 554,288 (469,877) 3,877,466 4,322,075 3,506,718
6,914,699 1,164,577 554,288 0 8,013,789 4,136,323 5,601,556 2,094,838
- ------------------------------------------------------------------------------------------------------------------------------------
$11,705,332 $6,914,699 $1,007,228 $554,288 $7,543,912 $8,013,789 $9,923,631 $5,601,556
====================================================================================================================================
</TABLE>
<PAGE> 76
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDING JUNE 30, 1998 AND DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Growth U.S. Government
and Income Securities
Sub-Account Sub-Account
--------------------------------------------------------------
Period Ended Year Ended Period Ended Year Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
--------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $652,570 $241,574 $32,551 $17,253
Net realized gain (loss) 301,227 206,751 1,622 10,335
Unrealized appreciation (depreciation)
of investments during the period 575,986 781,276 (13,622) 6,207
--------------------------------------------------------------
Increase (decrease) in net assets
derived from operations 1,529,783 1,229,601 20,551 33,795
--------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 1,806,189 2,327,523 116,052 112,190
Transfer of terminations (892,502) (494,932) (23,565) (28,622)
Transfer of policy loans (10,780) (11,939) (467) (10,083)
Net interfund transfers 2,546,194 3,120,002 58,862 378,086
--------------------------------------------------------------
3,449,101 4,940,654 150,882 451,571
--------------------------------------------------------------
Net increase in net assets 4,978,884 6,170,255 171,433 485,366
NET ASSETS
Beginning of Year 8,236,938 2,066,683 660,852 175,486
--------------------------------------------------------------
End of Period $13,215,822 $8,236,938 $832,285 $660,852
=============================================================
</TABLE>
See accompanying notes.
<PAGE> 77
<TABLE>
<CAPTION>
Conservative Moderate Aggressive
Asset Allocation Asset Allocation Asset Allocation Blue Chip Growth
Sub-Account Sub-Account Sub-Account Sub-Account
- ------------------------------------------------------------------------------------------------------------------------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$59,604 $32,395 $268,636 $89,913 $434,037 $57,231 $137,255 $48,890
2,085 774 9,565 34,682 109,837 18,481 221,104 (12,123)
(24,251) 10,030 (57,766) 58,528 (115,099) 80,807 816,720 235,927
- ----------------------------------------------------------------------------------------------------------------------------------
37,438 43,199 220,435 183,123 428,775 156,519 1,175,079 272,694
- ----------------------------------------------------------------------------------------------------------------------------------
53,790 107,136 517,319 887,517 789,131 2,451,770 4,331,335 3,002,085
(20,897) (13,120) (113,681) (176,631) (141,132) (230,373) (378,540) (121,898)
0 0 1,352 (10) (647) (296) (10,109) (545)
40,438 285,503 318,592 254,676 (2,139,807) 471,051 521,319 1,364,732
- ---------------------------------------------------------------------------------------------------------------------------------
73,331 379,519 723,582 965,552 (1,492,455) 2,692,152 4,464,005 4,244,374
- ---------------------------------------------------------------------------------------------------------------------------------
110,769 422,718 944,017 1,148,675 (1,063,680) 2,848,671 5,639,084 4,517,068
565,927 143,209 1,860,264 711,589 3,211,067 362,396 4,517,068 0
- ----------------------------------------------------------------------------------------------------------------------------------
$676,696 $565,927 $2,804,281 $1,860,264 $2,147,387 $3,211,067 $10,156,152 $4,517,068
=================================================================================================================================
</TABLE>
<PAGE> 78
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDING JUNE 30, 1998 AND DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Science and Pilgram
Technology Baxter Growth
Sub-Account Sub-Account
-----------------------------------------------------------------
Period Ended *Period Ended Period Ended *Period Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
-----------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income (loss) $(8,337) $22,028 $(1,129) $(764)
Net realized gain (loss) 851 1,545 4,185 433
Unrealized appreciation (depreciation)
of investments during the period 382,427 (31,717) 13,612 (1,826)
-----------------------------------------------------------------
Increase (decrease) in net assets
derived from operations 374,941 (8,144) 16,668 (2,157)
-----------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 1,476,335 1,280,093 60,529 52,430
Transfer of terminations (133,409) (8,796) 217 (3,413)
Transfer of policy loans (3,320) 0 (10,357) 0
Net interfund transfers 1,338,769 186,162 22,928 242,685
-----------------------------------------------------------------
2,678,375 1,457,459 73,317 291,702
-----------------------------------------------------------------
Net increase in net assets 3,053,316 1,449,315 89,985 289,545
NET ASSETS
Beginning of Year 1,449,315 0 289,545 0
-----------------------------------------------------------------
End of Period $4,502,631 $1,449,315 $379,530 $289,545
=================================================================
</TABLE>
* Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997
See accompanying notes.
<PAGE> 79
<TABLE>
<CAPTION>
Worldwide
Small/Mid Cap Growth Global Equity Growth
Sub-Account Sub-Account Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------------
Period Ended *Period Ended Period Ended *Period Ended Period Ended *Period Ended Period Ended *Period Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(6,546) $(1,669) $(602) $1,584 $272,260 $(2,697) $81,651 $(1,748)
79,075 (767) 20,484 25 377,356 1,042 74,155 464
251,939 (41,211) 8,546 (1,636) (172,369) 142,878 176,396 42,938
- -------------------------------------------------------------------------------------------------------------------------------
324,468 (43,647) 28,428 (27) 477,247 141,223 332,202 41,654
- ------------------------------------------------------------------------------------------------------------------------------
272,384 1,504,311 25,868 3,589 639,692 3,088,398 369,523 1,408,136
(71,728) (24,555) (24,656) (385) (90,322) (47,709) (39,275) (22,975)
(6,816) 0 0 0 (12,390) 0 (3,926) 0
(638,615) 361,443 (96,563) 198,099 (3,351,518) 216,594 (373,192) 327,707
- -------------------------------------------------------------------------------------------------------------------------------
(444,775) 1,841,199 (95,351) 201,303 (2,814,538) 3,257,283 (46,870) 1,712,868
- -------------------------------------------------------------------------------------------------------------------------------
(120,307) 1,797,552 (66,923) 201,276 (2,337,291) 3,398,506 285,332 1,754,522
1,797,552 0 201,276 0 3,398,506 0 1,754,522 0
- -------------------------------------------------------------------------------------------------------------------------------
$1,677,245 $1,797,552 $134,353 $201,276 $1,061,215 $3,398,506 $2,039,854 $1,754,522
===============================================================================================================================
</TABLE>
<PAGE> 80
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDING JUNE 30, 1998 AND DECEMBER 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
International Growth
Value and Income
Sub-Account Sub-Account
----------------------------------------------------------------------
Period Ended *Period Ended Period Ended *Period Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) ($10,895) $40,098 $2,016 ($61)
Net realized gain (loss) 50,936 1,134 253 (260)
Unrealized appreciation (depreciation)
of investments during the period 109,416 (5,269) (4,633) (1,097)
----------------------------------------------------------------------
Increase (decrease) in net assets
derived from operations 149,457 35,963 (2,364) (1,418)
----------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 2,775,319 811,955 24,499 1,816
Transfer of terminations (183,463) (29,096) (185) (376)
Transfer of policy loans (5,184) (4,630) 0 0
Net interfund transfers 741,256 558,746 155,629 21,036
----------------------------------------------------------------------
3,327,928 1,336,975 179,943 22,476
----------------------------------------------------------------------
Net increase in net assets 3,477,385 1,372,938 177,579 21,058
NET ASSETS
Beginning of Year 1,372,938 0 21,058 0
----------------------------------------------------------------------
End of Period $4,850,323 $1,372,938 $198,637 $21,058
======================================================================
</TABLE>
* Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997
See accompanying notes.
<PAGE> 81
<TABLE>
<CAPTION>
Global Government Investment
High Yield Strategic Bond Bond Quality Bond
Sub-Account Sub-Account Sub-Account Sub-Account
- ------------------------------------------------------------------------------------------------------------------------------------
Period Ended *Period Ended Period Ended *Period Ended Period Ended *Period Ended Period Ended *Period Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
($900) $30,182 $39,240 ($827) $5,340 ($17) $58,791 ($391)
5,923 4,384 1,964 286 4 3 1,587 67
33,369 (22,649) (31,660) 10,671 (5,746) 186 (19,461) 5,485
- ---------------------------------------------------------------------------------------------------------------------------------
38,392 11,917 9,544 10,130 (402) 172 40,917 5,161
- ---------------------------------------------------------------------------------------------------------------------------------
503,854 563,344 225,364 174,730 6,754 185 713,478 298,577
(45,774) (17,818) (19,710) (7,767) (2,362) (187) (51,531) (8,387)
(3,714) (2,703) (7,847) (83) 0 (52) (7,581) 0
823,383 284,153 613,796 229,940 60,472 7,968 685,716 174,462
- ---------------------------------------------------------------------------------------------------------------------------------
1,277,749 826,976 811,603 396,820 64,864 7,914 1,340,082 464,652
- ---------------------------------------------------------------------------------------------------------------------------------
1,316,141 838,893 821,147 406,950 64,462 8,086 1,380,999 469,813
838,893 0 406,950 0 8,086 0 469,813 0
- ---------------------------------------------------------------------------------------------------------------------------------
2,155,034 $838,893 $1,228,097 $406,950 $72,548 $8,086 $1,850,812 $469,813
=================================================================================================================================
</TABLE>
<PAGE> 82
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDING JUNE 30, 1998 AND DECEMBER 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
Lifestyle Aggressive Lifestyle Growth
1000 820
Sub-Account Sub-Account
------------------------------------------------------------------------
Period Ended *Period Ended Period Ended *Period Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $24,989 $156 $142,089 $10,545
Net realized gain (loss) 6,187 1,617 8,668 6,507
Unrealized appreciation (depreciation)
of investments during the period 11,972 1,104 30,622 7,721
----------------------------------------------------------------------
Increase (decrease) in net assets
derived from operations 43,148 2,877 181,379 24,773
----------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 33,310 33,139 165,990 104,216
Transfer of terminations (19,236) (7,521) (165,014) (42,295)
Transfer of policy loans (9,792) (10,340) 76,453 (91,693)
Net interfund transfers 18,321 452,552 698,488 2,319,332
----------------------------------------------------------------------
22,603 467,830 775,917 2,289,560
----------------------------------------------------------------------
Net increase in net assets 65,751 470,707 957,296 2,314,333
NET ASSETS
Beginning of Year 470,707 0 2,314,333 0
----------------------------------------------------------------------
End of Period $536,458 $470,707 $3,271,629 $2,314,333
======================================================================
</TABLE>
* Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997
See accompanying notes.
<PAGE> 83
<TABLE>
<CAPTION>
Lifestyle Balanced Lifestyle Moderate Lifestyle Conservative
640 460 280
Sub-Account Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------
Period Ended *Period Ended Period Ended *Period Ended Period Ended *Period Ended
June 30/98 Dec. 31/97 June 30/98 Dec. 31/97 June 30/98 Dec. 31/97
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$52,958 $4,341 $4,117 $621 $136 $0
844 440 593 (2) (5) 0
2,403 17,177 1,722 361 (66) 0
- ----------------------------------------------------------------------------------------------------------------
56,205 21,958 6,432 980 65 0
- ----------------------------------------------------------------------------------------------------------------
106,531 30,549 8,428 890 4,110 0
(16,415) (8,966) (2,636) (274) (920) 0
0 0 (20,717) 0 0 0
209,234 806,676 702 95,836 0 0
- ----------------------------------------------------------------------------------------------------------------
299,350 828,259 (14,223) 96,452 3,190 0
- ----------------------------------------------------------------------------------------------------------------
355,555 850,217 (7,791) 97,432 3,255 0
850,217 0 97,432 0 0 0
- ----------------------------------------------------------------------------------------------------------------
$1,205,772 $850,217 $89,641 $97,432 $3,255 $0
================================================================================================================
</TABLE>
<PAGE> 84
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDING JUNE 30, 1998 AND DECEMBER 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
**Small Company
Value Trust TOTAL
Sub-Account
------------------------------------------------------
Period Ended Period Ended Year Ended
June 30/98 June 30/98 Dec. 31/97
------------------------------------------------------
<S> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) ($16) $19,661,730 $2,099,257
Net realized gain (loss) (4) 4,646,461 3,694,407
Unrealized appreciation (depreciation)
of investments during the period (570) (3,012,527) 26,745,397
---------------------------------------------------
Increase (decrease) in net assets
derived from operations (590) 21,295,664 32,539,061
---------------------------------------------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums 9,866 44,224,611 60,597,996
Transfer of terminations 60 (16,323,096) (22,612,737)
Transfer of policy loans 0 (948,697) (1,911,415)
Net interfund transfers 27,965 30,761 23,790
---------------------------------------------------
37,891 26,983,579 36,097,634
--------------------------------------------------
Net increase in net assets 37,301 48,279,243 68,636,695
NET ASSETS
Beginning of Year 0 256,016,607 187,379,912
--------------------------------------------------
End of Period $37,301 $304,295,850 $256,016,607
===================================================
</TABLE>
** Reflects the period from commencement of operations May 1, 1998 through
June 30, 1998
See accompanying notes.
<PAGE> 85
Separate Account Four of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements
June 30, 1998
1. ORGANIZATION
Separate Account Four of The Manufacturers Life Insurance Company of America
(the "Separate Account") is a unit investment trust registered under the
Investment Company Act of 1940, as amended. The Separate Account is comprised of
investment sub-accounts available for allocation of net premiums under variable
universal life insurance policies (the "policies") issued by The Manufacturers
Life Insurance Company of America ("Manufacturers Life of America"). The
Separate Account was established by Manufacturers Life of America, a life
insurance company organized in 1983 under Michigan law. Manufacturers Life of
America is an indirect, wholly-owned subsidiary of The Manufacturers Life
Insurance Company ("Manulife Financial"), a Canadian mutual life insurance
company. On January 1, 1996, Manulife Financial merged with North American Life
Assurance Company and, as a result, acquired control of NASL Series Trust which,
effective October 31, 1997, was renamed Manufacturers Investment Trust. Each
investment sub-account invests solely in shares of a particular Manufacturers
Investment Trust and, prior to the merger, Manulife Series Fund are registered
under the Investment Company Act of 1940 as open-end management investment
companies.
The Small Company Value Trust was added to the Separate Account on May 1, 1998,
and the International Small Cap and Blue Chip Growth Trusts were added to the
Separate Account on January 1, 1997 as investment options for variable universal
life policy holders of Manufacturers Life of America. The Science & Technology,
Pilgram Baxter Growth, Small/Mid Cap, Worldwide Growth, Global Equity, Growth,
Value, International Growth and Income, High Yield, Strategic Bond, Global
Government Bond, Investment Quality Bond, Lifestyle Aggressive 1000, Lifestyle
Growth 820, Lifestyle Balanced 640 and Lifestyle Moderate 460 Trusts were added
to the Separate Account on May 1, 1997 as investment options for variable
universal life policy holders of Manufacturers Life of America.
The Equity Index Fund, Equity, Value Equity, Growth and Income, U.S. Government
Securities, Conservative Asset Allocation, Moderate Asset Allocation and
Aggressive Asset Allocation Trusts were added to the Separate Account on
February 14, 1996 as investment options for policy holders of Manufacturers Life
of America.
Effective December 31, 1996, Manulife Series Fund, Inc. was merged into the
Manufacturers Investment Trust (formerly the NASL Series Trust). As a result,
the following sub-accounts of the Separate Account were renamed to correspond
with the fund names of the Manufacturers Investment Trust.
<PAGE> 86
Separate Account Four of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
1. ORGANIZATION (continued)
MANULIFE SERIES FUND, INC. MANUFACTURERS INVESTMENT TRUST
SUB-ACCOUNTS SUB-ACCOUNTS
Emerging Growth Equity Fund Emerging Growth Trust
Common Stock Fund Quantitative Equity Trust
Real Estate Securities Fund Real Estate Securities Trust
Balanced Asset Fund Balanced Trust
Capital Growth Bond Fund Capital Growth Bond Trust
Money Market Fund Money Market Trust
International Fund International Stock Trust
Pacific Rim Emerging Markets Fund Pacific Rim Emerging Markets Trust
Equity Index Fund Equity Index Trust
All references hereinafter to Manufacturers Investment Trust would have been to
Manulife Series Fund, Inc. prior to December 31, 1996.
Manufacturers Life of America is the legal owner of the Separate Account.
Manufacturers Life of America is required to maintain assets in the Separate
Account with a total market value at least equal to the reserves and other
liabilities relating to the variable benefits under all policies participating
in the Separate Account. These assets may not be charged with liabilities which
arise from any other business Manufacturers Life of America conducts. However,
all obligations under the variable policies are general corporate obligations of
Manufacturers Life of America.
Additional assets are held in Manufacturers Life of America's general account to
cover the contingency that the guaranteed minimum death benefit might exceed the
death benefit which would have been payable in the absence of such guarantee.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Separate Account in preparation of its financial statements:
a. Valuation of Investments - Investments are made among the thirty-six
Trusts of Manufacturers Investment Trust and are valued at the reported
net asset values of these Trusts. Transactions are recorded on the
trade date. Net investment income and net realized gains on investments
in Manufacturers Investment Trust are reinvested.
<PAGE> 87
Separate Account Four of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
b. Realized gains and losses on the sale of investments are computed on
the first-in, first-out basis.
c. Dividend income is recorded on the ex-dividend date.
d. Federal Income Taxes - Manufacturers Life of America, the Separate
Account's sponsor, is taxed as a "life insurance company" under the
Internal Revenue Code. Under these provisions of the Code, the
operations of the Separate Account form part of the sponsor's total
operations and are not taxed separately.
The current year's operations of the Separate Account are not expected
to affect the sponsor's tax liabilities and, accordingly, no charges
were made against the Separate Account for federal, state and local
taxes. However, in the future, should the sponsor incur significant tax
liabilities related to the Separate Account's operations, it intends to
make a charge or establish a provision within the Separate Account for
such taxes.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. MORTALITY AND EXPENSE RISKS CHARGE
Manufacturers Life of America deducts from the assets of the Separate Account a
daily charge equivalent to an annual rate of 0.65% of the average net value of
the Separate Account's assets for mortality and expense risks.
4. PREMIUM DEDUCTIONS
Manufacturers Life of America deducts certain charges for state, local and
federal taxes from the gross single premium and any additional premiums before
placing the remaining net premiums in the sub-accounts.
<PAGE> 88
Separate Account Four of
The Manufacturers Life Insurance Company of America
Notes to Financial Statements (continued)
5. PURCHASES AND SALES OF MANUFACTURERS INVESTMENT TRUST SHARES
Purchases and sales of the shares of common stock of Manufacturers Investment
Trust for the period ended June 30, 1998 were $63,493,756 and $37,435,367
respectively, and for the year ended December 31, 1997 were $82,099,182 and
$43,206,372 respectively.
6. RELATED PARTY TRANSACTIONS
ManEquity, Inc., a registered broker-dealer and indirect wholly-owned subsidiary
of Manulife Financial, acts as the principal underwriter of the Policies
pursuant to a Distribution Agreement with Manufacturers Life of America.
Registered representatives of either ManEquity, Inc. or other broker-dealers
having distribution agreements with ManEquity, Inc. who are also authorized as
variable life insurance agents under applicable state insurance laws, sell the
Policies. Registered representatives are compensated on a commission basis.
Manufacturers Life of America has a formal service agreement with its
affiliates, Manulife Financial and The Manufacturers Life Insurance Company
(U.S.A.), which can be terminated by either party upon two months notice. Under
this Agreement, Manufacturers Life of America pays for legal, actuarial,
investment and certain other administrative services.
<PAGE> 89
Financial Statements
Separate Account Four of
The Manufacturers Life Insurance
Company of America
Three years ended December 31, 1997
with Report of Independent Auditors
F-1
<PAGE> 90
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
FINANCIAL STATEMENTS
Three years ended December 31, 1997
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors.............................. F-3
Audited Financial Statements
Statement of Assets and Liabilities......................... F-4
Statements of Operations.................................... F-6
Statements of Changes in Net Assets......................... F-16
Notes to Financial Statements............................... F-25
</TABLE>
F-2
<PAGE> 91
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
We have audited the accompanying statement of assets and liabilities of Separate
Account Four of The Manufacturers Life Insurance Company of America as of
December 31, 1997 and the related statements of operations and changes in net
assets for each of the three years in the period then ended. These financial
statements are the responsibility of The Manufacturers Life Insurance Company of
America's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1997, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Separate Account Four of The
Manufacturers Life Insurance Company of America at December 31, 1997 and the
results of its operations and the changes in its net assets for each of the
three years in the period then ended, in conformity with generally accepted
accounting principles.
/S/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
January 30, 1998
F-3
<PAGE> 92
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
SUB-ACCOUNT
NET ASSET UNITS NET ASSET
VALUE OUTSTANDING VALUE PER UNIT
------------ ----------- --------------
<S> <C> <C> <C>
Assets
Investment in NASL Series Trust -- at market value:
Emerging Growth Trust, 2,572,854 shares (cost
$53,335,356) .......................................... $ 62,082,970 985,538 $62.99
Quantitative Equity Trust, 1,538,349 shares (cost
$25,536,654)........................................... 34,612,842 838,471 41.28
Real Estate Securities Trust, 1,223,838 shares (cost
$18,828,988)........................................... 24,562,432 585,031 41.98
Balanced Trust, 2,566,305 shares (cost $40,736,425)...... 49,606,670 1,673,314 29.65
Capital Growth Bond Trust, 1,156,348 shares ($12,733,397) 13,702,722 634,378 21.60
Money Market Trust, 651,683 shares (cost $6,516,833)..... 6,516,833 405,767 16.06
International Stock Trust 585,099 shares (cost
$6,763,961)............................................ 6,711,083 564,394 11.89
Pacific Rim Emerging Markets Trust, 327,300 shares (cost
$3,499,065)............................................ 2,343,464 314,757 7.45
Equity Index Trust, 554,062 shares (cost $6,900,704)..... 6,914,699 456,400 15.15
Equity Trust, 372,734 shares (cost $7,721,678)........... 8,013,789 598,385 13.39
Value Equity Trust, 324,916 shares (cost $4,941,787)..... 5,601,556 384,812 14.56
Growth and Income Trust, 344,786 shares (cost $7,309,943) 8,236,938 534,426 15.41
U.S. Government Securities Trust, 48,952 shares (cost
$650,865).............................................. 660,852 60,219 10.97
Conservative Asset Allocation Trust, 48,041 shares (cost
$548,689).............................................. 565,927 48,861 11.58
Moderate Asset Allocation Trust, 143,650 shares (cost
$1,765,274)............................................ 1,860,264 151,848 12.25
Aggressive Asset Allocation Trust, 223,612 shares (cost
$3,110,389)............................................ 3,211,067 249,829 12.85
International Small Cap Trust, 40,459 shares (cost
$569,422).............................................. 554,288 44,121 12.56
Blue Chip Growth Trust, 301,138 shares (cost
$4,281,141)............................................ 4,517,068 283,306 15.94
Science & Technology Trust, 106,411 shares (cost
$1,481,032)............................................ 1,449,315 103,504 14.00
Pilgram Baxter Growth Trust, 23,164 shares (cost
$291,371) ............................................. 289,545 20,008 14.47
Small/Mid Cap Trust, 116,648 shares (cost $1,838,763).... 1,797,552 118,271 15.20
Worldwide Growth Trust, 14,336 shares (cost $202,912).... 201,276 14,765 13.63
Global Equity Trust, 175,361 shares (cost $3,255,628).... 3,398,506 234,026 14.52
Growth Trust, 101,948 shares (cost $1,711,584)........... 1,754,522 117,710 14.91
Value Trust, 92,766 shares (cost $1,378,207)............. 1,372,938 95,372 14.40
International Growth and Income Trust, 1,913 shares (cost
$22,155)............................................... 21,058 1,694 12.43
High Yield Trust, 61,865 shares (cost $861,542).......... 838,893 60,819 13.79
Strategic Bond Trust, 32,872 shares (cost $396,279)...... 406,950 30,002 13.56
Global Government Bond Trust, 575 shares (cost $7,900)... 8,086 615 13.15
Investment Quality Bond Trust, 38,731 shares (cost
$464,328).............................................. 469,813 34,727 13.53
Lifestyle Aggressive 1000 Trust, 34,945 shares (cost
$469,603).............................................. 470,707 33,008 14.26
Lifestyle Growth 820 Trust, 168,071 shares (cost
$2,306,612)............................................ 2,314,333 163,331 14.17
Lifestyle Balanced 640 Trust, 62,700 shares (cost
$833,040) ............................................. 850,217 60,557 14.04
Lifestyle Moderate 460 Trust, 7,298 shares (cost
$97,071)............................................... 97,432 7,065 13.79
------------
Net assets................................................. $256,016,607
============
</TABLE>
See accompanying notes.
F-4
<PAGE> 93
(This page intentionally left blank.)
F-5
<PAGE> 94
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
EMERGING GROWTH QUANTITATIVE EQUITY
SUB-ACCOUNT SUB-ACCOUNT
-------------------------------------- ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/95
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income................................. $ -- $ 8,843,524 $1,225,634 $ -- $3,890,071 $ --
Expenses:
Mortality and expense risks charge.............. 373,014 368,823 270,835 197,730 151,076 105,143
----------- ----------- ---------- ---------- ---------- ----------
Net investment (loss) income...................... (373,014) 8,474,701 954,799 (197,730) 3,738,995 (105,143)
----------- ----------- ---------- ---------- ---------- ----------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security transactions:
Proceeds from sales........................... 10,933,692 6,561,190 2,832,896 3,733,685 3,065,148 1,361,365
Cost of securities sold....................... 9,991,336 4,628,761 2,206,988 2,720,036 2,226,724 1,152,296
----------- ----------- ---------- ---------- ---------- ----------
Net realized gain (loss)........................ 942,356 1,932,429 625,908 1,013,649 838,424 209,069
----------- ----------- ---------- ---------- ---------- ----------
Unrealized appreciation (depreciation) of
investments:
Beginning of year............................. 586,387 8,388,250 111,061 2,395,112 3,250,703 (784,068)
End of year................................... 8,747,614 586,387 8,388,250 9,076,188 2,395,112 3,250,703
----------- ----------- ---------- ---------- ---------- ----------
Net unrealized appreciation (depreciation)
during the year............................... 8,161,227 (7,801,863) 8,277,189 6,681,076 (855,591) 4,034,771
----------- ----------- ---------- ---------- ---------- ----------
Net realized and unrealized gain (loss) on
investments..................................... 9,103,583 (5,869,434) 8,903,097 7,694,725 (17,167) 4,243,840
----------- ----------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets derived from
operations...................................... $ 8,730,569 $ 2,605,267 $9,857,896 $7,496,995 $3,721,828 $4,138,697
=========== =========== ========== ========== ========== ==========
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997.
See accompanying notes.
F-6
<PAGE> 95
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
REAL ESTATE SECURITIES BALANCED CAPITAL GROWTH BOND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------------------------ -------------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/95
---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ -- $3,089,196 $ 226,773 $ -- $ 6,191,018 $ 46,122 $ -- $ 813,220 $ 886,880
138,789 97,165 78,656 312,899 274,346 212,093 88,739 86,787 68,677
---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- -----------
(138,789) 2,992,031 148,117 (312,899) 5,916,672 (165,971) (88,739) 726,433 818,203
---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- -----------
2,341,949 2,069,989 1,615,880 7,720,982 3,782,322 3,475,264 2,670,789 2,257,680 933,993
1,932,587 1,848,111 1,447,729 6,543,277 3,146,020 3,283,870 2,837,578 2,354,529 952,316
---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- -----------
409,362 221,878 168,151 1,177,705 636,302 191,394 (166,789) (96,849) (18,323)
---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- -----------
2,357,828 829,392 (567,347) 2,233,057 4,756,710 (2,255,674) (322,754) 29,751 (1,013,152)
5,733,444 2,357,828 829,392 8,870,245 2,233,057 4,756,710 969,325 (322,754) 29,751
---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- -----------
3,375,616 1,528,436 1,396,739 6,637,188 (2,523,653) 7,012,384 1,292,079 (352,505) 1,042,903
---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- -----------
3,784,978 1,750,314 1,564,890 7,814,893 (1,887,351) 7,203,778 1,125,290 (449,354) 1,024,580
---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- -----------
$3,646,189 $4,742,345 $1,713,007 $7,501,994 $ 4,029,321 $ 7,037,807 $1,036,551 $ 277,079 $ 1,842,783
========== ========== ========== ========== =========== =========== ========== ========== ===========
</TABLE>
F-7
<PAGE> 96
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
MONEY MARKET INTERNATIONAL STOCK
SUB-ACCOUNT SUB-ACCOUNT
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/95
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income................................... $ 363,575 $ 522,633 $ 268 $ 91,567 $102,007 $ 42,811
Expenses:
Mortality and expense risks charge................ 47,049 38,258 36,426 31,392 18,357 7,535
---------- ---------- ---------- ---------- -------- --------
Net investment (loss) income........................ 316,526 484,375 (36,158) 60,175 83,650 35,276
---------- ---------- ---------- ---------- -------- --------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security transactions:
Proceeds from sales............................. 6,596,321 4,574,935 3,529,055 1,816,518 481,615 71,517
Cost of securities sold......................... 6,872,137 4,366,887 3,419,405 1,550,916 416,277 69,179
---------- ---------- ---------- ---------- -------- --------
Net realized gain (loss).......................... (275,816) 208,048 109,650 265,602 65,338 2,338
---------- ---------- ---------- ---------- -------- --------
Unrealized appreciation (depreciation) of
investments:
Beginning of year............................... (275,826) 165,832 (31,424) 231,185 110,424 (924)
End of year..................................... -- (275,826) 165,832 (52,878) 231,185 110,424
---------- ---------- ---------- ---------- -------- --------
Net unrealized appreciation (depreciation) during
the year........................................ 275,826 (441,658) 197,256 (284,063) 120,761 111,348
---------- ---------- ---------- ---------- -------- --------
Net realized and unrealized gain (loss) on
investments....................................... 10 (233,610) 306,906 (18,461) 186,099 113,686
---------- ---------- ---------- ---------- -------- --------
Net increase (decrease) in net assets derived from
operations........................................ $ 316,536 $ 250,765 $ 270,748 $ 41,714 $269,749 $148,962
========== ========== ========== ========== ======== ========
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997.
See accompanying notes.
F-8
<PAGE> 97
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
PACIFIC RIM
EMERGING MARKETS EQUITY INDEX EQUITY VALUE EQUITY VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------------------- -------------------------- -------------------------- ------------ -------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96
------------ ----------- ---------- ---------- ------------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 6,802 $ 152,468 $ 16,639 $868,880 $ 79,858 $1,074,319 $ 37,137 $406,015 $ 14,881
22,205 18,290 5,651 21,448 4,113 39,559 12,389 24,945 6,019
----------- --------- -------- -------- -------- ---------- -------- -------- --------
(15,403) 134,178 10,988 847,432 75,745 1,034,760 24,748 381,070 8,862
----------- --------- -------- -------- -------- ---------- -------- -------- --------
1,610,390 936,603 56,135 170,943 42,748 1,651,482 646,845 573,549 90,317
1,704,271 774,951 56,923 133,983 39,927 1,627,042 622,356 498,698 88,968
----------- --------- -------- -------- -------- ---------- -------- -------- --------
(93,881) 161,652 (788) 36,960 2,821 24,440 24,489 74,851 1,349
----------- --------- -------- -------- -------- ---------- -------- -------- --------
5,325 114,318 (5,485) 46,173 -- 270,657 -- 162,428 --
(1,155,601) 5,325 114,318 13,995 46,173 292,111 270,657 659,769 162,428
----------- --------- -------- -------- -------- ---------- -------- -------- --------
(1,160,926) (108,993) 119,803 (32,178) 46,173 21,454 270,657 497,341 162,428
----------- --------- -------- -------- -------- ---------- -------- -------- --------
(1,254,807) 52,659 119,015 4,782 48,994 45,894 295,146 572,192 163,777
----------- --------- -------- -------- -------- ---------- -------- -------- --------
$(1,270,210) $ 186,837 $130,003 $852,214 $124,739 $1,080,654 $319,894 $953,262 $172,639
=========== ========= ======== ======== ======== ========== ======== ======== ========
</TABLE>
F-9
<PAGE> 98
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
U.S. GOVERNMENT CONSERVATIVE
GROWTH AND INCOME SECURITIES ASSET ALLOCATION
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------------- -------------------------- --------------------------
YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96
---------- ------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income.......................... $ 274,008 $ 461 $ 19,990 $ -- $34,960 $ --
Expenses:
Mortality and expense risks charge....... 32,434 4,797 2,737 849 2,565 685
---------- -------- -------- -------- ------- -------
Net investment (loss) income............... 241,574 (4,336) 17,253 (849) 32,395 (685)
---------- -------- -------- -------- ------- -------
Realized and unrealized gain (loss) on
investments:
Realized gain (loss) from security
transactions:
Proceeds from sales.................... 912,556 376,632 590,817 322,161 13,446 43,255
Cost of securities sold................ 705,805 332,811 580,482 317,325 12,672 40,504
---------- -------- -------- -------- ------- -------
Net realized gain (loss)................. 206,751 43,821 10,335 4,836 774 2,751
---------- -------- -------- -------- ------- -------
Unrealized appreciation (depreciation) of
investments:
Beginning of year...................... 145,719 -- 3,780 -- 7,208 --
End of year............................ 926,995 145,719 9,987 3,780 17,238 7,208
---------- -------- -------- -------- ------- -------
Net unrealized appreciation
(depreciation) during the year......... 781,276 145,719 6,207 3,780 10,030 7,208
---------- -------- -------- -------- ------- -------
Net realized and unrealized gain (loss) on
investments.............................. 988,027 189,540 16,542 8,616 10,804 9,959
---------- -------- -------- -------- ------- -------
Net increase (decrease) in net assets
derived from operations.................. $1,229,601 $185,204 $ 33,795 $ 7,767 $43,199 $ 9,274
========== ======== ======== ======== ======= =======
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997.
See accompanying notes.
F-10
<PAGE> 99
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
**PILGRAM
MODERATE AGGRESSIVE INTERNATIONAL BLUE CHIP **SCIENCE & BAXTER
ASSET ALLOCATION ASSET ALLOCATION SMALL CAP GROWTH TECHNOLOGY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------------------- ----------------------------- ------------- ------------- ------------- -------------
YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 98,004 $ -- $ 63,599 $ 2,110 $ 46 $ 55,879 $ 22,881 $ --
8,091 2,050 6,368 1,342 2,815 6,989 853 764
-------- ------- -------- ------- -------- -------- -------- -------
89,913 (2,050) 57,231 768 (2,769) 48,890 22,028 (764)
-------- ------- -------- ------- -------- -------- -------- -------
474,116 31,213 294,332 86,943 461,080 205,667 19,777 4,772
439,434 29,641 275,851 82,784 450,930 217,790 18,232 4,339
-------- ------- -------- ------- -------- -------- -------- -------
34,682 1,572 18,481 4,159 10,150 (12,123) 1,545 433
-------- ------- -------- ------- -------- -------- -------- -------
36,462 -- 19,871 -- -- -- -- --
94,990 36,462 100,678 19,871 (15,134) 235,927 (31,717) (1,826)
-------- ------- -------- ------- -------- -------- -------- -------
58,528 36,462 80,807 19,871 (15,134) 235,927 (31,717) (1,826)
-------- ------- -------- ------- -------- -------- -------- -------
93,210 38,034 99,288 24,030 (4,984) 223,804 (30,172) (1,393)
-------- ------- -------- ------- -------- -------- -------- -------
$183,123 $35,984 $156,519 $24,798 $ (7,753) $272,694 $ (8,144) $(2,157)
======== ======= ======== ======= ======== ======== ======== =======
</TABLE>
F-11
<PAGE> 100
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
**GLOBAL
**SMALL/MID **WORLDWIDE EQUITY **GROWTH
CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT
SUB-ACCOUNT SUB-ACCOUNT ----------- -----------
------------ ------------ PERIOD PERIOD
PERIOD ENDED PERIOD ENDED ENDED ENDED
DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Dividend income........................................ $ -- $ 1,726 $ -- $ --
Expenses:
Mortality and expense risks charge..................... 1,669 142 2,697 1,748
-------- ------- -------- -------
Net investment (loss) income................................ (1,669) 1,584 (2,697) (1,748)
-------- ------- -------- -------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) from security transactions:
Proceeds from sales............................... 95,793 3,228 28,974 4,007
Cost of securities sold........................... 96,560 3,203 27,932 3,543
-------- ------- -------- -------
Net realized gain (loss)............................... (767) 25 1,042 464
-------- ------- -------- -------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................. -- -- -- --
End of year....................................... (41,211) (1,636) 142,878 42,938
-------- ------- -------- -------
Net unrealized appreciation (depreciation) during the
year................................................. (41,211) (1,636) 142,878 42,938
-------- ------- -------- -------
Net realized and unrealized gain (loss) on investments...... (41,978) (1,611) 143,920 43,402
-------- ------- -------- -------
Net increase (decrease) in net assets derived from
operations................................................ $(43,647) $ (27) $141,223 $41,654
======== ======= ======== =======
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997.
See accompanying notes.
F-12
<PAGE> 101
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
**INTERNATIONAL **GLOBAL
GROWTH AND **STRATEGIC GOVERNMENT **INVESTMENT
**VALUE INCOME **HIGH YIELD BOND BOND QUALITY BOND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- ------------ --------------- ------------ ------------ ------------ ------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97
- ------------ --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$42,077 $ -- $ 31,277 $ -- $ -- $ --
1,979 61 1,095 827 17 391
------- ------- -------- ------- ---- ------
40,098 (61) 30,182 (827) (17) (391)
------- ------- -------- ------- ---- ------
10,858 4,308 80,117 6,519 131 2,867
9,724 4,568 75,733 6,233 128 2,800
------- ------- -------- ------- ---- ------
1,134 (260) 4,384 286 3 67
------- ------- -------- ------- ---- ------
-- -- -- -- -- --
(5,269) (1,097) (22,649) 10,671 186 5,485
------- ------- -------- ------- ---- ------
(5,269) (1,097) (22,649) 10,671 186 5,485
------- ------- -------- ------- ---- ------
(4,135) (1,357) (18,265) 10,957 189 5,552
------- ------- -------- ------- ---- ------
$35,963 $(1,418) $ 11,917 $10,130 $172 $5,161
======= ======= ======== ======= ==== ======
</TABLE>
F-13
<PAGE> 102
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
**LIFESTYLE **LIFESTYLE **LIFESTYLE **LIFESTYLE
AGGRESSIVE GROWTH BALANCED MODERATE
1000 820 640 460
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
------------ ------------ ------------ ------------ ---------------------------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/96 DEC. 31/95
------------ ------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income........... $ 954 $ 16,099 $ 6,641 $653 $ 3,479,952 $23,738,584 $ 2,445,127
Expenses:
Mortality and expense
risks charge............ 798 5,554 2,300 32 1,380,695 1,085,346 785,016
------ -------- ------- ---- ----------- ----------- -----------
Net investment (loss)
income.................... 156 10,545 4,341 621 2,099,257 22,653,238 1,660,111
------ -------- ------- ---- ----------- ----------- -----------
Realized and unrealized gain
(loss) on investments:
Realized gain (loss) from
security transactions:
Proceeds from sales..... 22,090 139,748 10,642 227 43,206,372 25,369,596 13,876,105
Cost of securities
sold.................. 20,473 133,241 10,202 229 39,511,965 21,316,576 12,588,706
------ -------- ------- ---- ----------- ----------- -----------
Net realized gain
(loss).................. 1,617 6,507 440 (2) 3,694,407 4,053,020 1,287,399
------ -------- ------- ---- ----------- ----------- -----------
Unrealized appreciation
(depreciation) of
investments:
Beginning of year....... -- -- -- -- 7,902,612 17,645,380 (4,547,013)
End of year............. 1,104 7,721 17,177 361 34,648,009 7,902,612 17,645,380
------ -------- ------- ---- ----------- ----------- -----------
Net unrealized
appreciation
(depreciation) during
the year................ 1,104 7,721 17,177 361 26,745,397 (9,742,768) 22,192,393
------ -------- ------- ---- ----------- ----------- -----------
Net realized and unrealized
gain (loss) on
investments............... 2,721 14,228 17,617 359 30,439,804 (5,689,748) 23,479,792
------ -------- ------- ---- ----------- ----------- -----------
Net increase (decrease) in
net assets derived from
operations................ $2,877 $ 24,773 $21,958 $980 $32,539,061 $16,963,490 $25,139,903
====== ======== ======= ==== =========== =========== ===========
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997.
See accompanying notes.
F-14
<PAGE> 103
(This page intentionally left blank)
F-15
<PAGE> 104
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EMERGING GROWTH QUANTITATIVE EQUITY
SUB-ACCOUNT SUB-ACCOUNT
---------------------------------------- ---------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/95
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment (loss)
income..................... $ (373,014) $ 8,474,701 $ 954,799 $ (197,730) $ 3,738,995 $ (105,143)
Net realized gain (loss)..... 942,356 1,932,429 625,908 1,013,649 838,424 209,069
Net unrealized appreciation
(depreciation) of
investments during the
year....................... 8,161,227 (7,801,863) 8,277,189 6,681,076 (855,591) 4,034,771
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
net assets derived from
operations................. 8,730,569 2,605,267 9,857,896 7,496,995 3,721,828 4,138,697
------------ ----------- ----------- ----------- ----------- -----------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums... 10,968,515 14,023,834 15,756,405 5,269,678 4,853,989 5,345,309
Transfer of terminations... (5,398,115) (5,184,577) (4,775,355) (3,038,289) (1,960,658) (2,397,088)
Transfer of policy loans... (624,209) (629,038) (383,960) (229,614) (199,046) (139,168)
Net interfund transfers.... (10,114,334) (4,559,177) 808,068 (447,386) (1,140,965) 601,941
------------ ----------- ----------- ----------- ----------- -----------
(5,168,143) 3,651,042 11,405,158 1,554,389 1,553,320 3,410,994
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
net assets................. 3,562,426 6,256,309 21,263,054 9,051,384 5,275,148 7,549,691
NET ASSETS
Beginning of year............ 58,520,544 52,264,235 31,001,181 25,561,458 20,286,310 12,736,619
------------ ----------- ----------- ----------- ----------- -----------
End of year.................. $ 62,082,970 $58,520,544 $52,264,235 $34,612,842 $25,561,458 $20,286,310
============ =========== =========== =========== =========== ===========
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997.
See accompanying notes.
F-16
<PAGE> 105
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
REAL ESTATE SECURITIES BALANCED CAPITAL GROWTH BOND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------------------- --------------------------------------- ---------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/95
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ (138,789) $ 2,992,031 $ 148,117 $ (312,899) $ 5,916,672 $ (165,971) $ (88,739) $ 726,433 $ 818,203
409,362 221,878 168,151 1,177,705 636,302 191,394 (166,789) (96,849) (18,323)
3,375,616 1,528,436 1,396,739 6,637,188 (2,523,653) 7,012,384 1,292,079 (352,505) 1,042,903
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
3,646,189 4,742,345 1,713,007 7,501,994 4,029,321 7,037,807 1,036,551 277,079 1,842,783
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
3,087,313 2,765,182 4,283,407 7,548,194 8,726,978 10,932,103 1,927,024 2,665,999 3,119,374
(2,187,862) (1,467,190) (1,478,397) (5,118,735) (3,748,227) (3,544,462) (1,630,139) (923,256) (1,316,692)
(150,861) (101,471) (43,920) (520,775) (345,242) (305,026) (60,413) (81,852) (67,747)
1,362,290 (1,015,253) (1,220,289) (5,272,252) (2,422,119) (1,831,364) (1,458,915) (809,388) 730,548
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
2,110,880 181,268 1,540,801 (3,363,568) 2,211,390 5,251,251 (1,222,443) 851,503 2,465,483
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
5,757,069 4,923,613 3,253,808 4,138,426 6,240,711 12,289,058 (185,892) 1,128,582 4,308,266
18,805,363 13,881,750 10,627,942 45,468,244 39,227,533 26,938,475 13,888,614 12,760,032 8,451,766
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$24,562,432 $18,805,363 $13,881,750 $49,606,670 $45,468,244 $39,227,533 $13,702,722 $13,888,614 $12,760,032
=========== =========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
F-17
<PAGE> 106
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MONEY MARKET INTERNATIONAL STOCK
SUB-ACCOUNT SUB-ACCOUNT
-------------------------------------- ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/95
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment (loss)
income...................... $ 316,526 $ 484,375 $ (36,158) $ 60,175 $ 83,650 $ 35,276
Net realized gain (loss)...... (275,816) 208,048 109,650 265,602 65,338 2,338
Net unrealized appreciation
(depreciation) of
investments during the
year........................ 275,826 (441,658) 197,256 (284,063) 120,761 111,348
----------- ----------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets derived from
operations.................. 316,536 250,765 270,748 41,714 269,749 148,962
----------- ----------- ---------- ---------- ---------- ----------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums.... 3,105,289 2,628,791 2,577,889 2,524,804 870,119 468,861
Transfer of terminations.... (1,271,291) (956,767) (782,380) (503,518) (194,570) (114,292)
Transfer of policy loans.... 17,308 (13,756) (36,007) (88,083) (27,661) (8,567)
Net interfund transfers..... (2,379,177) (1,146,057) (642,476) 871,148 1,135,964 1,045,046
----------- ----------- ---------- ---------- ---------- ----------
(527,871) 512,211 1,117,026 2,804,351 1,783,852 1,391,048
----------- ----------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets...................... (211,335) 762,976 1,387,774 2,846,065 2,053,601 1,540,010
NET ASSETS
Beginning of year............. 6,728,168 5,965,192 4,577,418 3,865,018 1,811,417 271,407
----------- ----------- ---------- ---------- ---------- ----------
End of year................... $ 6,516,833 $ 6,728,168 $5,965,192 $6,711,083 $3,865,018 $1,811,417
=========== =========== ========== ========== ========== ==========
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997.
See accompanying notes.
F-18
<PAGE> 107
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
PACIFIC RIM
EMERGING MARKETS EQUITY INDEX EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/95 DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96
----------- ---------- ---------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (15,403) $ 134,178 $ 10,988 $ 847,432 $ 75,745 $1,034,760 $ 24,748
(93,881) 161,652 (788) 36,960 2,821 24,440 24,489
(1,160,926) (108,993) 119,803 (32,178) 46,173 21,454 270,657
----------- ---------- ---------- ---------- ---------- ---------- ----------
(1,270,210) 186,837 130,003 852,214 124,739 1,080,654 319,894
----------- ---------- ---------- ---------- ---------- ---------- ----------
858,191 683,676 339,577 3,106,131 279,042 3,023,077 961,034
(808,786) (201,928) (84,460) (166,672) (38,180) (778,177) (85,993)
(65,080) (20,049) (7,956) (3,054) (3,251) (30,340) (8,149)
(58,053) 1,647,145 839,514 1,961,503 802,227 582,252 2,949,537
----------- ---------- ---------- ---------- ---------- ---------- ----------
(73,728) 2,108,844 1,086,675 4,897,908 1,039,838 2,796,812 3,816,429
----------- ---------- ---------- ---------- ---------- ---------- ----------
(1,343,938) 2,295,681 1,216,678 5,750,122 1,164,577 3,877,466 4,136,323
3,687,402 1,391,721 175,043 1,164,577 -- 4,136,323 --
----------- ---------- ---------- ---------- ---------- ---------- ----------
$ 2,343,464 $3,687,402 $1,391,721 $6,914,699 $1,164,577 $8,013,789 $4,136,323
=========== ========== ========== ========== ========== ========== ==========
</TABLE>
F-19
<PAGE> 108
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
U.S. GOVERNMENT
VALUE EQUITY GROWTH AND INCOME SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------- --------------------------- ---------------------------
YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96
---------- ------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment (loss) income........ $ 381,070 $ 8,862 $ 241,574 $ (4,336) $ 17,253 $ (849)
Net realized gain (loss)............ 74,851 1,349 206,751 43,821 10,335 4,836
Net unrealized appreciation
(depreciation) of investments
during the year................... 497,341 162,428 781,276 145,719 6,207 3,780
---------- ---------- ---------- ---------- -------- ---------
Net increase (decrease) in net
assets derived from operations.... 953,262 172,639 1,229,601 185,204 33,795 7,767
---------- ---------- ---------- ---------- -------- ---------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums.......... 856,465 351,584 2,327,523 316,929 112,190 18,521
Transfer of terminations.......... (394,553) (35,519) (494,932) (36,051) (28,622) (299,154)
Transfer of policy loans.......... (21,910) (4,090) (11,939) (439) (10,083) --
Net interfund transfers........... 2,113,454 1,610,224 3,120,002 1,601,040 378,086 448,352
---------- ---------- ---------- ---------- -------- ---------
2,553,456 1,922,199 4,940,654 1,881,479 451,571 167,719
---------- ---------- ---------- ---------- -------- ---------
Net increase (decrease) in net
assets............................ 3,506,718 2,094,838 6,170,255 2,066,683 485,366 175,486
NET ASSETS
Beginning of year................... 2,094,838 -- 2,066,683 -- 175,486 --
---------- ---------- ---------- ---------- -------- ---------
End of year......................... $5,601,556 $2,094,838 $8,236,938 $2,066,683 $660,852 $ 175,486
========== ========== ========== ========== ======== =========
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997.
See accompanying notes.
F-20
<PAGE> 109
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE INTERNATIONAL BLUE CHIP
ASSET ALLOCATION ASSET ALLOCATION ASSET ALLOCATION SMALL CAP GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------------- -------------------------- -------------------------- ------------- -----------
YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED *PERIOD ENDED YEAR ENDED YEAR ENDED
DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/96 DEC. 31/97 DEC. 31/97
---------- ------------- ---------- ------------- ---------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 32,395 $ (685) $ 89,913 $ (2,050) $ 57,231 $ 768 $ (2,769) $ 48,890
774 2,751 34,682 1,572 18,481 4,159 10,150 (12,123)
10,030 7,208 58,528 36,462 80,807 19,871 (15,134) 235,927
-------- -------- ---------- -------- ---------- -------- -------- ----------
43,199 9,274 183,123 35,984 156,519 24,798 (7,753) 272,694
-------- -------- ---------- -------- ---------- -------- -------- ----------
107,136 44,311 887,517 131,528 2,451,770 67,783 78,736 3,002,085
(13,120) (5,606) (176,631) (12,696) (230,373) (10,117) (20,504) (121,898)
-- -- (10) (1,206) (296) (1,206) (2,010) (545)
285,503 95,230 254,676 557,979 471,051 281,138 505,819 1,364,732
-------- -------- ---------- -------- ---------- -------- -------- ----------
379,519 133,935 965,552 675,605 2,692,152 337,598 562,041 4,244,374
-------- -------- ---------- -------- ---------- -------- -------- ----------
422,718 143,209 1,148,675 711,589 2,848,671 362,396 554,288 4,517,068
143,209 -- 711,589 -- 362,396 -- -- --
-------- -------- ---------- -------- ---------- -------- -------- ----------
$565,927 $143,209 $1,860,264 $711,589 $3,211,067 $362,396 $554,288 $4,517,068
======== ======== ========== ======== ========== ======== ======== ==========
</TABLE>
F-21
<PAGE> 110
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
**PILGRAM
**SCIENCE & BAXTER **SMALL/MID **WORLDWIDE **GLOBAL
TECHNOLOGY GROWTH CAP GROWTH EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------ ------------ ------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment (loss) income..................... $ 22,028 $ (764) $ (1,669) $ 1,584 $ (2,697)
Net realized gain (loss)......................... 1,545 433 (767) 25 1,042
Net unrealized appreciation (depreciation) of
investments during the year.................... (31,717) (1,826) (41,211) (1,636) 142,878
---------- -------- ---------- -------- ----------
Net increase (decrease) in net assets derived
from operations................................ (8,144) (2,157) (43,647) (27) 141,223
---------- -------- ---------- -------- ----------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums....................... 1,280,093 52,430 1,504,311 3,589 3,088,398
Transfer of terminations....................... (8,796) (3,413) (24,555) (385) (47,709)
Transfer of policy loans....................... -- -- -- -- --
Net interfund transfers........................ 186,162 242,685 361,443 198,099 216,594
---------- -------- ---------- -------- ----------
1,457,459 291,702 1,841,199 201,303 3,257,283
---------- -------- ---------- -------- ----------
Net increase (decrease) in net assets............ 1,449,315 289,545 1,797,552 201,276 3,398,506
NET ASSETS
Beginning of year................................ -- -- -- -- --
---------- -------- ---------- -------- ----------
End of year...................................... $1,449,315 $289,545 $1,797,552 $201,276 $3,398,506
========== ======== ========== ======== ==========
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997
See accompanying notes.
F-22
<PAGE> 111
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
**INTERNATIONAL **GLOBAL
GROWTH AND **HIGH **STRATEGIC GOVERNMENT
**GROWTH **VALUE INCOME YIELD BOND BOND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- ------------ ------------ --------------- ------------ ------------ ------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97
- ------------ ------------ --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ (1,748) $ 40,098 $ (61) $ 30,182 $ (827) $ (17)
464 1,134 (260) 4,384 286 3
42,938 (5,269) (1,097) (22,649) 10,671 186
---------- ---------- ------- -------- -------- ------
41,654 35,963 (1,418) 11,917 10,130 172
---------- ---------- ------- -------- -------- ------
1,408,136 811,955 1,816 563,344 174,730 185
(22,975) (29,096) (376) (17,818) (7,767) (187)
-- (4,630) -- (2,703) (83) (52)
327,707 558,746 21,036 284,153 229,940 7,968
---------- ---------- ------- -------- -------- ------
1,712,868 1,336,975 22,476 826,976 396,820 7,914
---------- ---------- ------- -------- -------- ------
1,754,522 1,372,938 21,058 838,893 406,950 8,086
-- -- -- -- -- --
---------- ---------- ------- -------- -------- ------
$1,754,522 $1,372,938 $21,058 $838,893 $406,950 $8,086
========== ========== ======= ======== ======== ======
</TABLE>
F-23
<PAGE> 112
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
**LIFESTYLE **LIFESTYLE **LIFESTYLE **LIFESTYLE
**INVESTMENT AGGRESSIVE GROWTH BALANCED MODERATE
QUALITY BOND 1000 820 640 460
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
------------- ------------ ------------ ------------ ------------ ------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED
DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97 DEC. 31/97
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment (loss) income...... $ (391) $ 156 $ 10,545 $ 4,341 $ 621 $ 2,099,257
Net realized gain (loss).......... 67 1,617 6,507 440 (2) 3,694,407
Net unrealized appreciation
(depreciation) of investments
during the year................. 5,485 1,104 7,721 17,177 361 26,745,397
-------- -------- ---------- -------- ------- ------------
Net increase (decrease) in net
assets derived from
operations...................... 5,161 2,877 24,773 21,958 980 32,539,061
-------- -------- ---------- -------- ------- ------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums........ 298,577 33,139 104,216 30,549 890 60,597,996
Transfer of terminations........ (8,387) (7,521) (42,295) (8,966) (274) (22,612,737)
Transfer of policy loans........ -- (10,340) (91,693) -- -- (1,911,415)
Net interfund transfers......... 174,462 452,552 2,319,332 806,676 95,836 23,790
-------- -------- ---------- -------- ------- ------------
464,652 467,830 2,289,560 828,259 96,452 36,097,634
-------- -------- ---------- -------- ------- ------------
Net increase (decrease) in net
assets.......................... 469,813 470,707 2,314,333 850,217 97,432 68,636,695
NET ASSETS
Beginning of year................. -- -- -- -- -- 187,379,912
-------- -------- ---------- -------- ------- ------------
End of year....................... $469,813 $470,707 $2,314,333 $850,217 $97,432 $256,016,607
======== ======== ========== ======== ======= ============
<CAPTION>
TOTAL
---------------------------
YEAR ENDED YEAR ENDED
DEC. 31/96 DEC. 31/95
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment (loss) income...... $ 22,653,238 $ 1,660,111
Net realized gain (loss).......... 4,053,020 1,287,399
Net unrealized appreciation
(depreciation) of investments
during the year................. (9,742,768) 22,192,393
------------ ------------
Net increase (decrease) in net
assets derived from
operations...................... 16,963,490 25,139,903
------------ ------------
FROM CAPITAL TRANSACTIONS
Additions (deductions) from:
Transfer of net premiums........ 39,389,300 42,822,925
Transfer of terminations........ (15,160,489) (14,493,126)
Transfer of policy loans........ (1,436,456) (992,351)
Net interfund transfers......... 35,877 330,988
------------ ------------
22,828,232 27,668,436
------------ ------------
Net increase (decrease) in net
assets.......................... 39,791,722 52,808,339
NET ASSETS
Beginning of year................. 147,588,190 94,779,851
------------ ------------
End of year....................... $187,379,912 $147,588,190
============ ============
</TABLE>
* Reflects the period from commencement of operations February 14, 1996 through
December 31, 1996.
** Reflects the period from commencement of operations May 1, 1997 through
December 31, 1997.
See accompanying notes.
F-24
<PAGE> 113
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. ORGANIZATION
Separate Account Four of The Manufacturers Life Insurance Company of America
(the "Separate Account") is a unit investment trust registered under the
Investment Company Act of 1940, as amended. The Separate Account is comprised of
investment sub-accounts available for allocation of net premiums under variable
universal life insurance policies (the "Policies") issued by The Manufacturers
Life Insurance Company of America ("Manufacturers Life of America"). The
Separate Account was established by Manufacturers Life of America, a life
insurance company organized in 1983 under Michigan law. Manufacturers Life of
America is an indirect, wholly-owned subsidiary of The Manufacturers Life
Insurance Company ("Manulife Financial"), a Canadian mutual life insurance
company. On January 1, 1996, Manulife Financial merged with North American Life
Assurance Company and, as a result, acquired control of the NASL Series Trust
which, effective October 31, 1997, was renamed Manufacturers Investment Trust.
Each investment sub-account invests solely in shares of a particular
Manufacturers Investment Trust or, prior to the merger, a Manulife Series Fund.
Manufacturers Investment Trust and, prior to the merger, Manulife Series Fund
are registered under the Investment Company Act of 1940 as open-end management
investment companies.
The International Small Cap and Blue Chip Growth Trusts were added to the
Separate Account on January 1, 1997 as investment options for variable universal
life policy holders of Manufacturers Life of America. The Science & Technology,
Pilgram Baxter Growth, Small/Mid Cap, Worldwide Growth, Global Equity, Growth,
Value, International Growth and Income, High Yield, Strategic Bond, Global
Government Bond, Investment Quality Bond, Lifestyle Aggressive 1000, Lifestyle
Growth 820, Lifestyle Balanced 640 and Lifestyle Moderate 460 Trusts were added
to the Separate Account on May 1, 1997 as investment options for valuable
universal life policy holders of Manufacturers Life of America.
The Equity Index Fund, Equity, Value Equity, Growth and Income, U.S. Government
Securities, Conservative Asset Allocation, Moderate Asset Allocation, and
Aggressive Asset Allocation Trusts, were added to the Separate Account on
February 14, 1996 as investment options for policy holders of Manufacturers Life
of America.
Effective December 31, 1996, Manulife Series Fund, Inc. was merged into the
Manufacturers Investment Trust (formerly the NASL Series Trust). As a result,
the following sub-accounts of the Separate Account were renamed to correspond
with the fund names of the Manufacturers Investment Trust.
<TABLE>
<CAPTION>
MANULIFE SERIES FUND, INC. MANUFACTURERS INVESTMENT TRUST
SUB-ACCOUNTS SUB-ACCOUNTS
-------------------------- ------------------------------
<S> <C>
Emerging Growth Equity Fund Emerging Growth Trust
Common Stock Fund Quantitative Equity Trust
Real Estate Securities Fund Real Estate Securities Trust
Balanced Assets Fund Balanced Trust
Capital Growth Bond Fund Capital Growth Bond Trust
Money Market Fund Money Market Trust
International Fund International Stock Trust
Pacific Rim Emerging Markets Fund Pacific Rim Emerging Markets Trust
Equity Index Fund Equity Index Trust
</TABLE>
All references hereinafter to Manufacturers Investment Trust would have been to
Manulife Series Fund, Inc. prior to December 31, 1996.
F-25
<PAGE> 114
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Manufacturers Life of America is the legal owner of the Separate Account.
Manufacturers Life of America is required to maintain assets in the Separate
Account with a total market value at least equal to the reserves and other
liabilities relating to the variable benefits under all policies participating
in the Separate Account. These assets may not be charged with liabilities which
arise from any other business Manufacturers Life of America conducts. However,
all obligations under the variable policies are general corporate obligations of
Manufacturers Life of America.
Additional assets are held in Manufacturers Life of America's general account to
cover the contingency that the guaranteed minimum death benefit might exceed the
death benefit which would have been payable in the absence of such guarantee.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Separate Account in preparation of its financial statements:
a. Valuation of Investments -- Investments are made among the thirty-four
Trusts of Manufacturers Investment Trust and are valued at the reported net
asset values of these Trusts. Transactions are recorded on the trade date.
Net investment income and net realized gains on investments in
Manufacturers Investment Trust are reinvested.
b. Realized gains and losses on the sale of investments are computed on the
first-in, first-out basis.
c. Dividend income is recorded on the ex-dividend date.
d. Federal Income Taxes -- Manufacturers Life of America, the Separate
Account's sponsor, is taxed as a "life insurance company" under the
Internal Revenue Code. Under these provisions of the Code, the operations
of the Separate Account form part of the sponsor's total operations and are
not taxed separately.
The current year's operations of the Separate Account are not expected to
affect the sponsor's tax liabilities and, accordingly, no charges were made
against the Separate Account for federal, state and local taxes. However,
in the future, should the sponsor incur significant tax liabilities related
to the Separate Account's operations, it intends to make a charge or
establish a provision within the Separate Account for such taxes.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. MORTALITY AND EXPENSE RISKS CHARGE
Manufacturers Life of America deducts from the assets of the Separate Account a
daily charge equivalent to an annual rate of 0.65% of the average net value of
the Separate Account's assets for mortality and expense risks.
4. PREMIUM DEDUCTIONS
Manufacturers Life of America deducts a sales charge of 3% and a charge of 2% to
cover state premium taxes from the gross single premium and any additional
premiums before placing the remaining net premiums in the sub-accounts.
F-26
<PAGE> 115
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. PURCHASES AND SALES OF MANUFACTURERS INVESTMENT TRUST SHARES
Purchases and sales of the shares of common stock of Manufacturers Investment
Trust for the year ended December 31, 1997 were $82,099,182 and $43,206,372,
respectively, and for the year ended December 31, 1996 were $70,957,210 and
$25,369,596, respectively.
6. RELATED PARTY TRANSACTIONS
ManEquity, Inc., a registered broker-dealer and indirect wholly-owned subsidiary
of Manulife Financial, acts as the principal underwriter of the Policies
pursuant to a Distribution Agreement with Manufacturers Life of America.
Registered representatives of either ManEquity, Inc. or other broker-dealers
having distribution agreements with ManEquity, Inc. who are also authorized as
variable life insurance agents under applicable state insurance laws, sell the
Policies. Registered representatives are compensated on a commission basis.
Manufacturers Life of America has a formal service agreement with its
affiliates, Manulife Financial and The Manufacturers Life Insurance Company
(U.S.A.), which can be terminated by either party upon two months notice. Under
this Agreement, Manufacturers Life of America pays for legal, actuarial,
investment and certain other administrative services.
F-27
<PAGE> 116
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
WITH REPORT OF INDEPENDENT AUDITORS
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors.............................. F-29
Audited Consolidated Financial Statements
Consolidated Balance Sheets................................. F-30
Consolidated Statements of Income........................... F-31
Consolidated Statements of Changes in Capital And Surplus... F-32
Consolidated Statements of Cash Flows....................... F-33
Notes to Consolidated Financial Statements.................. F-34
</TABLE>
F-28
<PAGE> 117
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
We have audited the accompanying consolidated balance sheets of The
Manufacturers Life Insurance Company of America as of December 31, 1997 and
1996, and the related consolidated statements of income, changes in capital and
surplus and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Manufacturers
Life Insurance Company of America at December 31, 1997 and 1996, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
March 20, 1998
F-29
<PAGE> 118
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS AT DECEMBER 31
-----------------------
1997 1996
---------- ----------
<S> <C> <C>
ASSETS ($ THOUSANDS)
Investments:
Securities available-for-sale, at fair value: (note 4)
Fixed maturity (amortized cost: 1997 $66,565; 1996
$50,456).............................................. $ 67,893 $ 51,708
Equity (cost: 1997 $20,153; 1996 $19,450).............. 19,460 21,572
Mortgage loans......................................... 131 645
Policy loans........................................... 14,673 9,822
Cash and short-term investments........................ 22,012 17,493
---------- ----------
Total investments........................................... $ 124,169 $ 101,240
========== ==========
Guaranteed annuity contracts (note 5)....................... $ -- $ 171,691
Deferred acquisition costs (note 6)......................... 130,355 102,610
Income taxes recoverable.................................... 5,679 10,549
Deferred income taxes (note 7).............................. -- 1,041
Other assets................................................ 9,364 7,378
Separate account assets..................................... 897,044 668,094
---------- ----------
Total assets................................................ $1,166,611 $1,062,603
========== ==========
LIABILITIES, CAPITAL AND SURPLUS ($ THOUSANDS)
Liabilities:
Policyholder liabilities and accruals.................. $ 94,477 $ 91,915
Bonds payable (note 5)................................. -- 158,760
Notes payable (note 8)................................. 41,500 8,500
Due to affiliates...................................... 13,943 11,122
Deferred income taxes (note 7)......................... 1,174 --
Other liabilities...................................... 11,704 7,582
Separate account liabilities........................... 897,044 668,094
---------- ----------
Total liabilities........................................... $1,052,842 $ 945,973
Capital and Surplus:
Common shares (note 9)................................. $ 4,502 $ 4,502
Preferred shares (note 9).............................. 10,500 10,500
Contributed surplus.................................... 98,569 98,569
Retained earnings (deficit)............................ (1,910) 1,726
Foreign currency translation adjustment................ (5,272) --
Net unrealized gains on securities available-for-sale
(note 4).............................................. 380 1,333
---------- ----------
Total capital and surplus................................... $ 106,769 $ 116,630
---------- ----------
Total liabilities, capital and surplus...................... $1,166,611 $1,062,603
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-30
<PAGE> 119
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------
1997 1996 1995
--------- --------- ---------
($ THOUSANDS)
<S> <C> <C> <C>
Revenue:
Premiums............................................... $ 5,334 $ 12,898 $ 15,293
Fee income............................................. 41,955 40,434 24,986
Net investment income (note 4)......................... 8,275 19,651 18,729
Realized investment gains (losses)..................... 118 (119) 3,084
Other.................................................. 544 668 82
------- -------- --------
Total Revenue............................................... $56,226 $ 73,532 $ 62,174
------- -------- --------
Benefits and expenses:
Policyholder benefits and claims....................... $ 6,733 $ 14,473 $ 16,905
Operating costs and expenses........................... 41,742 34,581 30,728
Commissions............................................ 2,838 10,431 5,859
Amortization of deferred acquisition costs (note 6).... 4,860 13,240 5,351
Interest expense....................................... 2,750 12,251 12,251
Policyholder dividends................................. 1,416 872 1,886
------- -------- --------
Total benefits and expenses................................. 60,339 85,848 72,980
------- -------- --------
Loss before income taxes.................................... (4,113) (12,316) (10,806)
------- -------- --------
Income tax benefit (note 7)................................. 477 3,909 3,960
------- -------- --------
Net loss.................................................... $(3,636) $ (8,407) $ (6,846)
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-31
<PAGE> 120
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
NET
UNREALIZED FOREIGN TOTAL
RETAINED GAINS (LOSSES) CURRENCY CAPITAL
CAPITAL CONTRIBUTED EARNINGS ON SECURITIES TRANSLATION AND
STOCK SURPLUS (DEFICIT) AVAILABLE-FOR-SALE ADJUSTMENT SURPLUS
------- ----------- --------- ------------------ ----------- --------
($ THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31
1997
Balance, January 1.................... $15,002 $98,569 $ 1,726 $1,333 -- $116,630
Net loss during the year......... (3,636) (3,636)
Change in unrealized gain (loss)
net of taxes (note 4).......... (953) (953)
Other............................ (5,272) (5,272)
------- ------- ------- ------ ------- --------
Balance, December 31 (Note 9)......... $15,002 $98,569 $(1,910) $ 380 $(5,272) $106,769
------- ------- ------- ------ ------- --------
1996
Balance, January 1.................... $15,002 $83,569 $10,133 $1,816 -- $110,520
Net loss during the year......... (8,407) (8,407)
Change in unrealized gain (loss),
net of taxes (note 4).......... (483) (483)
Issuance of shares (note 9)...... 15,000 15,000
------- ------- ------- ------ ------- --------
Balance, December 31.................. $15,002 $98,569 $ 1,726 $1,333 -- $116,630
------- ------- ------- ------ ------- --------
1995
Balance, January 1.................... $15,002 $70,999 $16,979 $(1,141) -- $101,839
Net loss during the year......... (6,846) (6,846)
Change in unrealized gain (loss),
net of taxes................... 0 2,957 2,957
Issuance of shares (note 9)...... 12,570 12,570
------- ------- ------- ------ ------- --------
Balance, December 31.................. $15,002 $83,569 $10,133 $1,816 -- $110,520
------- ------- ------- ------ ------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-32
<PAGE> 121
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
--------------------------------
1997 1996 1995
--------- --------- --------
($ THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Loss.................................................... $ (3,636) $ (8,407) $ (6,846)
Adjustments to reconcile net loss to net cash used in
operating activities:
Additions (decreases) to policy liabilities............ (2,147) 3,287 7,329
Deferred acquisition costs............................. (33,544) (36,024) (28,147)
Amortization of deferred acquisition costs............. 4,860 13,240 5,351
Realized (gains) losses on investments................. (118) 119 (3,084)
Decreases to deferred income taxes..................... 2,730 777 1,168
Other.................................................. 7,144 6,540 (5,336)
--------- --------- --------
Net cash used in operating activities....................... (24,711) (20,468) (29,565)
INVESTING ACTIVITIES:
Fixed maturity securities sold.............................. 73,772 120,234 67,507
Fixed maturity securities purchased......................... (89,763) (108,401) (76,402)
Equity securities sold...................................... 10,586 25,505 6,500
Equity securities purchased................................. (11,289) (22,203) (1,726)
Mortgage loans repaid....................................... 514 6,669 77,086
Policy loans advanced....................................... (4,851) (2,867) (2,461)
Guaranteed annuity contracts................................ 171,691 (16,356) (79,710)
--------- --------- --------
Cash provided by (used in) investing activities............. 150,660 2,581 (9,206)
FINANCING ACTIVITIES:
Receipts from variable life and annuity policies credited to
policyholder account balances............................. 7,582 5,493 9,017
Withdrawals of policyholder account balances on variable
life and annuity policies................................. (3,252) (2,994) (3,173)
Bonds payable repaid........................................ (158,760) -- --
Issuance of shares.......................................... -- 15,000 12,570
Issuance of promissory note................................. 33,000 -- --
Issuance of surplus notes................................... -- -- 8,500
--------- --------- --------
Cash provided by (used in) financing activities............. (121,430) 17,499 26,914
--------- --------- --------
CASH AND SHORT-TERM INVESTMENTS:
Increase (decrease) during the year......................... 4,519 (388) (11,857)
Balance, beginning of year.................................. 17,493 17,881 29,738
--------- --------- --------
BALANCE, END OF YEAR........................................ $ 22,012 $ 17,493 $ 17,881
========= ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-33
<PAGE> 122
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(IN THOUSANDS OF DOLLARS)
1. ORGANIZATION
The Manufacturers Life Insurance Company of America ("ManAmerica" or the
"Company") is a wholly-owned subsidiary of The Manufacturers Life Insurance
Company (U.S.A.) ("ManUSA" or the "Parent"), which is in turn an indirectly
owned subsidiary of The Manufacturers Life Insurance Company ("Manulife
Financial"), a Canadian-based mutual life insurance company. The Company markets
variable annuity and variable life products in the United States and traditional
insurance products in Taiwan.
2. BASIS OF PRESENTATION
a) Adoption of Generally Accepted Accounting Principles
The accompanying consolidated financial statements of The Manufacturers Life
Insurance Company of America and its wholly-owned subsidiaries have been
prepared in accordance with generally accepted accounting principles ("GAAP").
Prior to 1996, the Company prepared its financial statements in conformity with
statutory accounting practices prescribed or permitted by the Insurance
Department of the State of Michigan which practices were considered GAAP for
mutual life insurance companies and their wholly-owned direct and indirect
subsidiaries. Financial Accounting Standard Board Interpretation 40,
"Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises" ("FIN 40") as amended, which is effective for
1996 annual financial statements and thereafter, no longer permits statutory
based financial statements to be described as being prepared in conformity with
GAAP. Accordingly, the Company has adopted GAAP including Statement of Financial
Accounting Standards 120 ("FAS 120"), "Accounting and Reporting by Mutual Life
Insurance Enterprises and by Insurance Enterprises for Certain Long Duration
Participating Contracts", which addresses the accounting for long-duration
insurance and reinsurance contracts, including all participating business.
Pursuant to the requirements of FIN 40 and FAS 120, the effect of the changes in
accounting have been applied retroactively and the previously issued 1995
financial statements have been restated for the change.
The adoption had the effect of increasing net income for 1995 by approximately
$6,859.
b) Recent Accounting Standards
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("FAS") No. 129 "Disclosure of Information about
Capital Structure," FAS No. 130 "Reporting Comprehensive Income," and FAS No.
131 "Disclosures about Segments of an Enterprise and Related Information." These
new accounting standards, which will be effective for the 1998 financial
statements, will result primarily in additional disclosures in the Company's
financial statements and are not expected to have a material effect on the
Company's financial position and results of operations.
c) Reorganization
On December 20, 1995, Manulife Reinsurance Corporation (U.S.A.) ("MRC")
transferred to the Company all of the common and preferred shares of
Manufacturers Adviser Corporation ("MAC"), an investment adviser registered
under the Investment Advisers Act of 1940.
On December 31, 1996, ManUSA transferred to the Company all of the common and
preferred shares of Manulife Holding Corporation ("Holdco"), an investment
holding company. Holdco has primarily two wholly-owned subsidiaries, ManEquity
Inc., a registered broker/dealer, and the Manufacturers Life Mortgage
F-34
<PAGE> 123
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Securities Corporation ("MLMSC"), an issuer of mortgage-backed US Dollar bonds.
The Company then transferred all the common and preferred shares of MAC to
Holdco for two shares of $1 common stock of Holdco.
These transfers have been accounted for using the pooling-of-interests method of
accounting. Under this method, the assets, liabilities, capital and surplus,
revenues and expenses of each separate entity are combined retroactively at
their historical carrying values to form the financial statements of the Company
for all periods presented to give effect to the reorganization as if the
structure in place at December 31, 1996 had been in place as of the earliest
period presented in these consolidated financial statements. The accounts of all
subsidiary companies are therefore combined and all significant inter-company
balances and transactions are eliminated on combination. In addition, the
capital and surplus of the Company has been restated retroactively to reflect
the capital structure in place at December 31, 1996.
The revenues and net income reported by the separate entities and the combined
amounts presented in the accompanying consolidated financial statements are as
follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31
-------------------
1996 1995
-------- --------
($ THOUSANDS)
<S> <C> <C>
Revenue:
ManAmerica................................... $54,404 $45,655
Holdco....................................... 15,543 13,828
MAC.......................................... 3,585 2,691
------- -------
Total revenue.................................. $73,532 $62,174
======= =======
Net Income (loss):
ManAmerica................................... $(8,676) $(7,402)
Holdco....................................... (670) (10)
MAC.......................................... 939 566
------- -------
Total net loss................................. $(8,407) $(6,846)
======= =======
</TABLE>
In October 1997, MLMSC was absorbed into Holdco subsequent to the maturity and
repayment of the mortgage-backed US dollar bonds. All assets and liabilities of
MLMSC were transferred to Holdco at their respective book values.
3. SIGNIFICANT ACCOUNTING POLICIES
a) Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from reported results using those estimates.
b) Investments
The Company classifies all of its fixed maturity and equity securities as
available-for-sale and records these securities at fair value. Realized gains
and losses on sales of securities classified as available-for-sale are
recognized in net income using the specific identification method. Changes in
the fair value of securities available-for-sale are reflected directly in
surplus after adjustments for deferred taxes and deferred acquisition costs.
Discounts and premiums on investments are amortized using the effective interest
method.
F-35
<PAGE> 124
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Mortgage loans are reported at amortized cost, net of a provision for losses.
The provision for losses is established for mortgage loans which are considered
to be impaired when the Company has determined that it is probable that all
amounts due under contractual terms will not be collected. Impaired loans are
reported at the lower of unpaid principal or fair value of the underlying
collateral.
Policy loans are reported at aggregate unpaid balances which approximate fair
value.
Short-term investments include investments with maturities of less than one year
at the date of acquisition.
c) Deferred Acquisition Costs (DAC)
Commissions and other expenses which vary with and are primarily related to the
production of new business are deferred to the extent recoverable and included
as an asset. DAC associated with variable annuity and variable life insurance
contracts is charged to expense in relation to the estimated gross profits of
those contracts. The amortization is adjusted retrospectively when estimates of
current or future gross profits are revised. DAC associated with traditional
life insurance policies is charged to expense over the premium paying period of
the related policies. DAC is adjusted for the impact on estimated future gross
profits assuming the unrealized gains or losses on securities had been realized
at year-end. The impact of any such adjustments is included in net unrealized
gains (losses) in Capital and Surplus. DAC is reviewed annually to determine
recoverability from future income and, if not recoverable, it is immediately
expensed.
d) Policyholder Liabilities
For variable annuity and variable life contracts, reserves equal the
policyholder account value. Account values are increased for deposits received
and interest credited and are reduced by withdrawals, mortality charges and
administrative expenses charged to the policyholders. Policy charges which
compensate the Company for future services are deferred and recognized in income
over the period earned, using the same assumptions used to amortize DAC.
Policyholder liabilities for traditional life insurance policies sold in Taiwan
are computed using the net level premium method and are based upon estimates as
to future mortality, persistency, maintenance expense and interest rate yields
that were established in the year of issue.
e) Separate Accounts
Separate account assets and liabilities represent funds that are separately
administered, principally for variable annuity and variable life contracts, and
for which the contract holder, rather than the Company, bears the investment
risk. Separate account contract holders have no claim against the assets of the
general account of the Company. Separate account assets are recorded at market
value. Operations of the separate accounts are not included in the accompanying
financial statements.
f) Revenue Recognition
Fee income from variable annuity and variable life insurance policies consists
of policy charges for the cost of insurance, expenses and surrender charges that
have been assessed against the policy account balances. Policy charges that are
designed to compensate the company for future services are deferred and
recognized in income over the period benefited, using the same assumptions used
to amortize DAC. Premiums on long-duration life insurance contracts are
recognized as revenue when due. Investment income is recorded when due.
F-36
<PAGE> 125
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
g) Expenses
Expenses for variable annuity and variable life insurance policies include
interest credited to policy account balances and benefit claims incurred during
the period in excess of policy account balances.
h) Reinsurance
The Company is routinely involved in reinsurance transactions in order to
minimize exposure to large risks. Life reinsurance is accomplished through
various plans including yearly renewable term, co-insurance and modified
co-insurance. Reinsurance premiums and claims are accounted for on a basis
consistent with that used in accounting for the original policies issued and the
terms of the reinsurance contracts. Premiums and claims are reported net of
reinsured amounts. Amounts paid with respect to ceded reinsurance contracts are
reported as reinsurance receivables in other assets.
i) Foreign Exchange
The Company's Taiwanese branch balance sheet and statement of income are
translated at the current exchange and average exchange rates for the year
respectively. The resultant translation adjustments are included as a separate
component in capital and surplus. In prior years, there were no reported
translation adjustments as there were no significant movements in foreign
currency exchange rates.
j) Income Tax
Income taxes have been provided for in accordance with Statement of Financial
Accounting Standards 109 ("FAS109") "Accounting for Income Taxes." The Company
joins ManUSA, MRC, Capitol Bankers Life Insurance Company and Manulife
Reinsurance Limited ("MRL") in filing a U.S. consolidated income tax return as a
life insurance group under provisions of the Internal Revenue Code. In
accordance with an income tax sharing agreement, the Company's income tax
provision (or benefit) is computed as if the Company filed a separate income tax
return. Tax benefits from operating losses are provided at the U.S. statutory
rate plus any tax credits attributable to the Company, provided the consolidated
group utilizes such benefits currently. Deferred income taxes result from
temporary differences between the tax basis of assets and liabilities and their
recorded amounts for financial reporting purposes. Income taxes recoverable
represents amounts due from ManUSA in connection with the consolidated return.
4. INVESTMENTS AND INVESTMENT INCOME
a) Fixed Maturity and Equity Securities
At December 31, 1997, all fixed maturity and equity securities have been
classified as available-for-sale and reported at fair value. The amortized cost
and fair value is summarized as follows:
<TABLE>
<CAPTION>
GROSS
GROSS UNREALIZED
AMORTIZED COST UNREALIZED GAINS LOSSES FAIR VALUE
----------------- ----------------- --------------- -----------------
1997 1996 1997 1996 1997 1996 1997 1996
------- ------- ------- ------- ------- ----- ------- -------
($ THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AS AT DECEMBER 31,
Fixed maturity securities:
U.S. government......... $51,694 $ 9,219 $ 937 $ 386 $ (135) $ (98) $52,496 $ 9,507
Foreign governments..... 6,922 9,227 203 221 (14) (8) 7,111 9,440
Corporate............... 7,949 32,010 415 981 (78) (230) 8,286 32,761
------- ------- ------ ------ ------- ----- ------- -------
Total fixed maturity
securities........... $66,565 $50,456 $1,555 $1,588 $ (227) $(336) $67,893 $51,708
Equity securities....... $20,153 $19,450 $1,496 $2,134 $(2,189) $ (12) $19,460 $21,572
------- ------- ------ ------ ------- ----- ------- -------
</TABLE>
F-37
<PAGE> 126
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Proceeds from sales of fixed maturity securities during 1997 were $73,772 (1996
$120,234; 1995 $67,507). Gross gains of $955 and gross losses of $837 were
realized on those sales (1996 $1,858 and $1,837; 1995 $2,630 and $218
respectively).
Proceeds from sale of equity securities during 1997 were $10,586 (1996 $25,505;
1995 $6,500). Gross gains of $NIL and gross losses of $NIL were realized on
those sales (1996 $NIL and $140; 1995 $785 and $113 respectively).
The contractual maturities of fixed maturity securities at December 31, 1997 are
shown below. Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without
prepayment penalties. Corporate requirements and investment strategies may
result in the sale of investments before maturity.
<TABLE>
<CAPTION>
AMORTIZED COST FAIR VALUE
-------------- ----------
($ THOUSANDS)
<S> <C> <C>
Fixed maturity securities
One year or less................................ $ 1,654 $ 1,651
Greater than 1; up to 5 years................... 3,876 3,953
Greater than 5; up to 10 years.................. 50,353 50,655
Due after 10 years.............................. 10,682 11,634
------- -------
Total fixed maturity securities................... $66,565 $67,893
======= =======
</TABLE>
UNREALIZED GAINS (LOSSES) ON SECURITIES AVAILABLE-FOR-SALE
Net unrealized gains (losses) on fixed maturity and equity securities included
in capital and surplus were as follows:
<TABLE>
<CAPTION>
AS AT DECEMBER 31
---------------------
1997 1996
------- -------
($ THOUSANDS)
<S> <C> <C>
Gross unrealized gains............................ $ 3,051 $ 3,722
Gross unrealized losses........................... (2,416) (348)
DAC and other fair value adjustments.............. (50) (1,321)
Deferred income taxes............................. (205) (720)
------- -------
Net unrealized gains (losses) on securities
available-for-sale.............................. $ 380 $ 1,333
------- -------
</TABLE>
F-38
<PAGE> 127
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
b) Investment Income
Income by type of investment was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
----------------------------------
1997 1996 1995
------ ------- -------
($ THOUSANDS)
<CAPTION>
<S> <C> <C> <C>
Fixed maturity securities............................ $4,545 $ 4,447 $ 4,430
Mortgage loans....................................... 67 278 3,076
Equity securities.................................... 331 671 646
Guaranteed annuity contracts......................... 2,796 13,196 9,691
Other investments.................................... 705 1,419 1,235
------ ------- -------
Gross investment income.............................. 8,444 20,011 19,078
------ ------- -------
Investment expenses.................................. 169 360 349
------ ------- -------
Net Investment Income................................ $8,275 $19,651 $18,729
====== ======= =======
</TABLE>
5. GUARANTEED ANNUITY CONTRACTS AND BONDS PAYABLE
The Company's wholly-owned subsidiary, Manufacturers Life Mortgage Securities
Corporation, has historically invested amounts received as repayments of
mortgage loans in annuities issued by ManUSA. These annuities were collateral
for the 8 1/4% mortgage-backed bonds payable. On March 1, 1997 the annuities
matured and the proceeds were used to repay the bonds payable.
In October 1997, MLMSC was absorbed into Manulife Holding Corporation.
6. DEFERRED ACQUISITION COSTS
The components of the change in DAC were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------
1997 1996 1995
--------- --------- ---------
($ THOUSANDS)
<S> <C> <C> <C>
Balance at January 1,................................. $102,610 $ 78,829 $ 60,124
Capitalization........................................ 33,544 36,024 28,147
Accretion of interest................................. 9,357 6,344 4,992
Amortization.......................................... (16,864) (19,159) (10,852)
Effect of net unrealized gains (losses) on securities
available for sale.................................. 1,268 996 (4,091)
Other................................................. 440 (424) 509
-------- -------- --------
Balance at December 31................................ $130,355 $102,610 $ 78,829
======== ======== ========
</TABLE>
F-39
<PAGE> 128
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES
Components of income tax benefit were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------
1997 1996 1995
--------- --------- ---------
($ THOUSANDS)
<S> <C> <C> <C>
Current expense (benefit)................... $(3,207) $(4,686) $(5,128)
Deferred expense (benefit).................. 2,730 777 1,168
------- ------- -------
Total Benefit............................... $ (477) $(3,909) $(3,960)
======= ======= =======
</TABLE>
The Company's deferred income tax liability, which results from tax effecting
the differences between financial statement values and tax values of assets and
liabilities at each balance sheet date, relates to the following:
<TABLE>
<CAPTION>
AS OF DECEMBER 31
-------------------
1997 1996
-------- --------
($ THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Differences in computing policy reserves.......... $34,291 $28,508
Policyholder dividends payable.................... 240 283
Investments....................................... 793 --
------- -------
Deferred tax assets.................................... $35,324 $28,791
======= =======
Deferred tax liabilities:
Deferred acquisition costs........................ $30,682 $25,522
Investments....................................... 166 928
Other deferred tax liabilities.................... 5,650 1,300
------- -------
Deferred tax liabilities............................... 36,498 27,750
------- -------
Net deferred tax assets (liabilities).................. $(1,174) $ 1,041
======= =======
</TABLE>
The Company and its US insurance affiliates have available capital loss
carryforwards of $4,800 which will begin to expire in 1999 and can only be used
by Capitol Bankers Life Insurance Company.
8. NOTES PAYABLE
a) The Company has an outstanding surplus debenture in the amount of
$8,500 plus interest at 6.7% issued on December 31, 1995 to ManUSA which
matures on December 31, 2005. Payments of principal and interest cannot be
made without prior approval of the Insurance Commissioner of the State of
Michigan and the Company's Board of Directors, and to the extent the
Company has sufficient unassigned surplus on a statutory basis available
for such payment.
b) The Company has an outstanding promissory note in the amount of
$33,000 plus interest at 6.95% issued on December 5, 1997 payable to ManUSA
which matures on February 1, 2007.
F-40
<PAGE> 129
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. CAPITAL AND SURPLUS
The Company has two classes of capital stock, as follows:
<TABLE>
<CAPTION>
AS OF DECEMBER 31:
-------------------------
1997 1996
----------- -----------
($ THOUSANDS)
<S> <C> <C>
Authorized:
5,000,000 Common shares, Par value $1.00
5,000,000 Preferred shares, Par value $100.00
Issued and Outstanding:
4,501,860 Common shares.......................... $ 4,501,860 $ 4,501,860
105,000 Preferred shares......................... 10,500,000 10,500,000
----------- -----------
Total.............................................. $15,001,860 $15,001,860
=========== ===========
</TABLE>
During 1996, the Company issued two common shares to its Parent Company in
return for a capital contribution of $15,000.
During 1995, the Company issued one common share to its Parent Company in return
for a capital contribution of $12,570.
The Company is subject to statutory limitations on the payment of dividends to
its Parent. Under Michigan Insurance Law, the payment of dividends to
shareholders is restricted to the surplus earnings of the Company, unless prior
approval is obtained from the Michigan Insurance Bureau.
The aggregate statutory capital and surplus of the Company at December 31, 1997
was $56,598 (1996 $76,202). The aggregate statutory net loss of the Company for
the year ended 1997 was $2,550 (1996 $15,961; 1995 $13,705). State regulatory
authorities prescribe statutory accounting practices that differ in certain
respects from generally accepted accounting principles followed by stock life
insurance companies. The significant differences relate to investments, deferred
acquisition costs, deferred income taxes, non-admitted asset balances and
reserve calculation assumptions.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values and the estimated fair values of certain of the Company's
financial instruments at December 31, 1997 were as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
-------- --------
($ THOUSANDS)
<S> <C> <C>
Assets:
Fixed maturity and equity securities............ $87,353 $87,353
Mortgage loans.................................. 131 131
Policy loans.................................... 14,673 14,673
Liabilities:
Promissory note................................. 33,000 33,000
Surplus note.................................... 8,500 8,220
</TABLE>
The following methods and assumptions were used to estimate the fair values of
the above financial instruments:
F-41
<PAGE> 130
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
UNAUDITED FINANCIAL STATEMENTS
Consolidated Balance Sheets as at June 30, 1998 and December 31, 1997
Consolidated Statements of Income for the three and six month periods ended
June 30, 1998 and 1997
Statement of Cash Flows for the six months ended June 30, 1998 and 1997
Notes to Financial Statements
<PAGE> 131
The Manufacturers Life Insurance Company of America
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
As at As at
June 30 December 31
ASSETS ($ thousands) 1998 1997
- ---------------------------------------------------------------------------------------------------
INVESTMENTS: (UNAUDITED)
<S> <C> <C>
Securities available-for-sale, at fair value:
Fixed maturity (amortized cost: 1998 $48,248; 1997 $66,565) $ 50,421 $ 67,893
Equity (cost: 1998 $20,419; 1997 $20,153) 20,642 19,460
Mortgage loans 85 131
Policy loans 16,978 14,673
Cash and short-term investments 22,106 22,012
- ---------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $ 110,232 $ 124,169
- ---------------------------------------------------------------------------------------------------
Deferred acquisition costs 149,112 130,355
Income taxes recoverable 3,488 5,679
Other assets 9,205 9,364
Separate account assets 1,014,979 897,044
- ---------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,287,016 $ 1,166,611
===================================================================================================
LIABILITIES, CAPITAL AND SURPLUS ($ thousands) 1998 1997
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
Policyholder liabilities and accruals $ 96,625 $ 94,477
Notes payable 8,500 41,500
Due to affiliates 10,195 13,943
Deferred income taxes 2,762 1,174
Other liabilities 14,330 11,704
Separate account liabilities 1,014,979 897,044
- ---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 1,147,391 $ 1,059,842
===================================================================================================
CAPITAL AND SURPLUS:
Common shares 4,502 4,502
Preferred shares 10,500 10,500
Contributed surplus 132,887 98,569
Retained earnings (deficit) (3,573) (1,910)
Foreign currency translation adjustment (6,061) (5,272)
Net unrealized gain on securities
available-for-sale 1,370 380
- ---------------------------------------------------------------------------------------------------
TOTAL CAPITAL AND SURPLUS 139,625 106,769
- ---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES, CAPITAL AND SURPLUS $ 1,287,016 $ 1,166,611
===================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 132
The Manufacturers Life Insurance Company of America
Consolidated Statements of Income (unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
($ thousands) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE:
Premiums $ 2,208 $ 1,687 $ 4,158 $ 3,642
Fee income 13,344 11,674 26,011 22,405
Net investment income 985 3,406 2,619 6,688
Realized investment gains (losses) 74 (371) (8) (205)
Other 47 48 104 143
- --------------------------------------------------------------------------------------------------
TOTAL REVENUE $ 16,658 $ 16,444 $ 32,884 $ 32,673
==================================================================================================
BENEFITS AND EXPENSES:
Policyholder benefits and claims $ 2,406 $ (1,054) $ 7,582 $ 1,693
Operating costs and expenses 9,117 7,538 19,473 16,064
Commissions 743 1,013 1,296 2,346
Amortization of deferred acquisition costs 3,158 3,724 4,486 7,324
Interest expense 976 -- 1,884 2,156
Policyholder dividends 138 411 794 1,233
- --------------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES $ 16,538 $ 11,632 $ 35,515 $ 30,816
- --------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 120 4,812 (2,631) 1,857
- --------------------------------------------------------------------------------------------------
INCOME TAX BENEFIT (EXPENSE) (22) (2,096) 968 (1,060)
- --------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 98 $ 2,716 $ (1,663) $ 797
- --------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 133
The Manufacturers Life Insurance Company of America
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
($ thousands) 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (1,663) $ 797
Adjustments to reconcile net income to net cash used in operating activities:
Additions (decreases) to policy liabilities 304 (835)
Deferred acquisition costs (24,055) (15,209)
Amortization of deferred acquisition costs 4,486 7,324
Realized losses on investments 8 205
Decreases to deferred income taxes 1,110 77
Other 2,674 (6,086)
- --------------------------------------------------------------------------------------------------------
Net cash used in operating activities $ (17,136) $ (13,727)
- --------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Fixed maturity securities sold $ 23,438 $ 60,461
Fixed maturity securities purchased (5,538) (46,244)
Equities sold 4,922 4,359
Equities purchased (5,177) (4,555)
Mortgage loans repaid 46 (43)
Policy loans advanced, net (2,305) (2,868)
Guaranteed annuity contracts -- 171,691
- --------------------------------------------------------------------------------------------------------
Cash provided by investing activities $ 15,386 $ 182,801
- --------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Receipts from variable life and annuity policies
credited to policyholder account balances $ 4,080 $ 4,048
Withdrawals of policyholder account balances on
variable life and annuity policies (2,236) (1,219)
Repayment of bonds payable -- (158,760)
Reduction of notes payable (34,318) --
Conversion of notes payable to contributed surplus 34,318 --
- --------------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities $ 1,844 $(155,931)
- --------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS:
Increase during the period $ 94 $ 13,143
Balance, beginning of year 22,012 17,493
- --------------------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD $ 22,106 $ 30,636
========================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 134
The Manufacturers Life Insurance Company of America
Notes to Consolidated Financial Statements
June 30, 1998
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of The
Manufacturers Life Insurance Company of America and its wholly-owned
subsidiaries have been prepared in accordance with generally accepted
accounting principles ("GAAP"), except that they do not contain
complete notes. However, in the opinion of management, these statements
include all normal recurring adjustments necessary for a fair
presentation of the results. These financial statements should be read
in conjunction with the financial statements and the related notes
included in ManAmerica's annual report on Form 10-K for the year ended
December 31, 1997. Operating results for the six months ended June 30,
1998 are not necessarily indicative of the results that may be expected
for the full year ending December 31, 1998.
2. COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards (SFAS)
130, "Reporting Comprehensive Income". SFAS 130 establishes standards
for reporting and displaying comprehensive income and its components in
a full set of general-purpose annual financial statements.
Comprehensive income includes all changes in capital and surplus during
a period except those resulting from investments by, and distributions
to shareholders. The adoption of SFAS 130 resulted in revised and
additional disclosures but had no effect on the financial position,
results of operations, or liquidity of the Company.
Total comprehensive income for the six months ended June 30, 1998 and
1997 was as follows:
SIX MONTHS ENDED
JUNE 30
COMPREHENSIVE INCOME: 1998 1997
- -------------------------------------------------------------------------------
NET INCOME (LOSS) $(1,663) $ 797
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized holding gains
on available-for-sale securities 990 1,068
Foreign currency translation (789) -
- -------------------------------------------------------------------------------
Other comprehensive income $ 201 $1,068
- -------------------------------------------------------------------------------
COMPREHENSIVE INCOME (LOSS) $(1,462) $1,865
- -------------------------------------------------------------------------------
Other comprehensive income is reported net of taxes of $533 and $575
respectively for the six months ended June 30, 1998 and 1997.
6
<PAGE> 135
3. CAPITAL CONTRIBUTION
On June 30, 1998 an outstanding promissory note issued by the Company
on December 5, 1997 to ManUSA in the amount of $34.3 million ($33
million principal plus $1.3 million accrued interest) was converted to
capital and reported as contributed surplus.
4. COMPARATIVE FIGURES
Certain amounts in the 1997 financial statements have been reclassified
to conform to the 1998 financial statement presentation.
7
<PAGE> 136
PART II. OTHER INFORMATION
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940
The Manufacturers Life Insurance Company of America hereby represents that the
fees and charges deducted under the contract 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.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The Prospectus, consisting of 54 pages
Representation pursuant to Section 26 of the Investment Company Act of
1940; the Signatures; Written consents of the following persons:
Ernst & Young LLP
Vic Bertolozzi (Actuary)
James D. Gallagher,
Secretary and General Counsel of the Company
The following exhibits are filed herewith or are incorporated herein by
reference to the designated filings:
1. Copies of all exhibits required by paragraph A of the instructions as to
exhibits in Form N-8B-2 are set forth below under designations based on
such instructions:
A(1) Resolutions of Board of Directors of The Manufacturers Life
Insurance Company of America establishing Separate Account
Four. Filed herewith.
A(3)(a)(i) Distribution Agreement between The Manufacturers Life
Insurance Company of America and ManEquity, Inc. dated August
11, 1987. Filed herewith.
A(3)(a)(ii) Amendment to Distribution Agreement between The Manufacturers
Life Insurance Company of America and ManEquity, Inc. dated
July 2, 1991. Filed herewith.
A(3)(a)(iii) Supplemental Agreement to Distribution Agreement between The
Manufacturers Life Insurance Company of America and ManEquity,
Inc. dated October 1, 1992. Filed herewith.
A(3)(b)(i) Specimen agreement between ManEquity, Inc. and registered
representatives. Filed herewith.
A(3)(b)(ii) Specimen agreement between The Manufacturers Life Insurance
Company of America and registered representatives. Filed
herewith.
A(3)(b)(iii) Specimen agreement between ManEquity, Inc. and dealers. Filed
herewith.
A(3)(b)(iv) Specimen agreement between The Manufacturers Life Insurance
Company of America and dealers. Filed herewith.
A(3)(c) Schedule of Sales Commissions. Filed herewith.
<PAGE> 137
A(5)(a) Form of Flexible Premium Variable Universal Life Insurance
Policy FTIO Rider form 121 and Unisex endorsement form.
Previously filed as Exhibit A(5)(a) to the initial
registration statement on Form S-6, file number 333-51293,
filed April 29, 1998.
A(6)(a) Restated Articles of Redomestication of the Company.
Incorporated by reference to Exhibit A(6)(a) to post-effective
amendment no. 20 to the registration statement on Form S-6,
file number 33-13774, filed April 26, 1996.
A(6)(b) By-Laws of the Company. Incorporated by reference to Exhibit
A(6)(b) to post-effective amendment no. 20 to the registration
statement on Form S-6, file number 33-13774, filed April 26,
1996.
A(8)(a)(i) Service Agreement between The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company of
America dated June 1, 1988. Filed herewith.
A(8)(a)(ii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated December 31, 1992. Filed herewith.
A(8)(a)(iii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated May 31, 1993. Filed herewith.
A(8)(a)(iv) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated June 30, 1993. Filed herewith.
A(8)(a)(v) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated December 31, 1996. Filed herewith.
A(8)(a)(vi) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated May 31, 1998. Filed herewith.
A(8)(b) Stoploss Reinsurance Agreement between The Manufacturers Life
Insurance Company of America and The Manufacturers Life
Insurance Company dated January 1, 1988. Filed herewith.
A(8)(c)(i) Service Agreement between The Manufacturers Life Insurance
Company and ManEquity, Inc. dated January 2, 1991. Filed
herewith.
A(8)(c)(ii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and ManEquity, Inc. dated March 1, 1994.
Filed herewith.
A(8)(d) Service Agreement with McCamish Systems, L.L.C. Filed
herewith.
A(10) Form of Application for Flexible Premium Variable Life
Insurance Policy. Filed herewith.
2. Consents of the following are filed herewith:
A. Opinion and consent of James D. Gallagher, Esq.,
Secretary and General Counsel of the Manufacturers Life
Insurance Company of America.
B. Consent of Vic Bertolozzi, Actuary.
C. Consent of Ernst & Young, LLP.
<PAGE> 138
3 No financial statements are omitted from the prospectus pursuant to
instruction 1(b) or (c) of Part I.
4 Not Applicable
6 Memorandum Regarding Issuance, Face Amount Increase, Redemption and
Transfer Procedures for the Policies. Filed herewith.
7 Power of Attorney. Incorporated by reference to Exhibit 12 to
post-effective amendment no. 10 to the registration statement on
Form S-6, file number 33-52310, filed February 28, 1997.
<PAGE> 139
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant and the Depositor have caused this amendment to their Registration
Statement to be signed on their behalf in the City of Toronto, Province of
Ontario, Canada, on this 27th day of August, 1998.
SEPARATE ACCOUNT FOUR OF
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
(Depositor)
By: /s/ DONALD A. GULOIEN
--------------------------------
DONALD A. GULOIEN
President
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
By: /s/ DONALD A. GULOIEN
--------------------------------
DONALD A. GULOIEN
President
<PAGE> 140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
amended Registration Statement has been signed by the following persons in the
capacities indicated on this 27th day of August, 1998.
Signature Title
*___________________________________ Chairman and Director
JOHN D. RICHARDSON
*___________________________________ President and Director
DONALD A. GULOIEN (Principal Executive Officer)
*___________________________________ Director
SANDRA M. COTTER
/s/ JAMES D. GALLAGHER Director
____________________________________
JAMES D. GALLAGHER
*___________________________________ Director
BRUCE GORDON
*___________________________________ Director
JOSEPH J. PIETROSKI
*___________________________________ Director
THEODORE KILKUSKIE, JR.
*___________________________________ Vice President, Finance
DOUGLAS H. MYERS (Principal Financial and
Accounting Officer)
* /s/ JAMES D. GALLAGHER
_______________________________
JAMES D. GALLAGHER
Pursuant to Power of Attorney
<PAGE> 141
EXHIBIT INDEX
Item No. Description
A(1) Resolutions of Board of Directors of The Manufacturers Life
Insurance Company of America establishing Separate Account
Four
A(3)(a)(i) Distribution Agreement between The Manufacturers Life
Insurance Company of America and ManEquity, Inc. dated August
11, 1987
A(3)(a)(ii) Amendment to Distribution Agreement between The Manufacturers
Life Insurance Company of America and ManEquity, Inc. dated
July 2, 1991
A(3)(a)(iii) Supplemental Agreement to Distribution Agreement between The
Manufacturers Life Insurance Company of America and ManEquity,
Inc. dated October 1, 1992
A(3)(b)(i) Specimen agreement between ManEquity, Inc. and registered
representatives
A(3)(b)(ii) Specimen agreement between The Manufacturers Life Insurance
Company of America and registered representatives
A(3)(b)(iii) Specimen agreement between ManEquity, Inc. and dealers
A(3)(b)(iv) Specimen agreement between The Manufacturers Life Insurance
Company of America and dealers
A(3)(c) Schedule of Sales Commissions
A(8)(a)(i) Service Agreement between The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company of
America dated June 1, 1988
A(8)(a)(ii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated December 31, 1992
A(8)(a)(iii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated May 31, 1993
A(8)(a)(iv) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated June 30, 1993
A(8)(a)(v) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated December 31, 1996
A(8)(a)(vi) Amendment to Service Agreement between The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
of America dated May 31, 1998
A(8)(b) Stoploss Reinsurance Agreement between The Manufacturers Life
Insurance Company of America and The Manufacturers Life
Insurance Company dated January 1, 1988.
A(8)(c)(i) Service Agreement between The Manufacturers Life Insurance
Company and ManEquity, Inc. dated January 2, 1991
A(8)(c)(ii) Amendment to Service Agreement between The Manufacturers Life
Insurance Company
<PAGE> 142
and ManEquity, Inc. dated March 1, 1994
A(8)(d) Service Agreement with McCamish Systems, L.L.C.
A(10) Form of Application for Flexible Premium Variable Life
Insurance Policy
2A Opinion and Consent of James D. Gallagher, Esq., Secretary
and General Counsel of The Manufacturers Life Insurance
Company of America
2B Consent of Vic Bertolozzi, Actuary
2C Consent of Ernst & Young, LLP
6. Memorandum Regarding Issuance, Face Amount Increase,
Redemption and Transfer Procedures for the Policies
<PAGE> 1
Exhibit (A) (i)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
RECORD OF UNANIMOUS ACTION OF THE BOARD OF DIRECTORS
MARCH 17, 1987
We, the undersigned, being all the Directors of The Manufacturers Life
Insurance Company of America, a Pennsylvania Corporation (the "Company"), hereby
unanimously consent to the adoption of the following resolution as and for the
action of the Board of Directors taken in lieu of a meeting:
RESOLVED, That a Separate Account designated "separate Account Four"
be, and it is hereby established, in accordance with the provisions of
Section 406.2, Chapter 2, Title 31, of the Pennsylvania Code, for the
purpose of providing a funding medium to support reserves under
flexible premium variable life insurance policies as may be issued by
the Company and as the Officers may designate for such purpose. The
Officers may, from time to time, change the designation of "Separate
Account Four" to such other designation as they may deem necessary and
appropriate.
FURTHER RESOLVED, That the income, gains and losses (whether or not
realized) from assets allocated to Separate Account Four shall, in
accordance with any single premium variable life insurance policies
issued by the Company, be credited to or charged against such Separate
Account without regard to the other income gains or losses of the
Company.
FURTHER RESOLVED, That the fundamental investment policy of Separate
Account Four shall be to invest or reinvest the assets of Separate
Account Four in securities issued by an investment company or
investment companies registered under the Investment Company Act of
1940, as amended, as the Officers may designate pursuant to the
provisions of the single premium variable life insurance policies
issued by the Company.
FURTHER RESOLVED, That the Officers are hereby authorized and directed
to take all actions to register Separate Account Four as a unit
investment trust under the Investment Company Act of 1940, as amended,
and to take such related actions as they deem necessary and appropriate
to carry out the foregoing.
FURTHER RESOLVED, That the Officers are authorized to establish
criteria by which the Company shall institute procedures to provide for
a pass-through of voting rights to the owners of any flexible premium
variable life insurance policies issued by the Company as required by
applicable laws with respect to the shares of any investment companies
which are held in Separate Account Four.
FURTHER RESOLVED, That Stephen C. Nesbitt, Secretary and General
Counsel of this Company, be and is hereby constituted and appointed
agent for service of process for this Company to receive notices and
communications from the Securities and Exchange Commission with respect
to such registration statements as may be filed on behalf of the
Company concerning Separate Account Four and to exercise the powers
given to such
<PAGE> 2
agent in the rules and regulations of the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
FURTHER RESOLVED, That the Officers be, and they are hereby authorized
to do or cause to be done all things necessary or desirable, as may be
advised by counsel to comply with , or obtain exemptions from, Federal
and State laws and regulations that may be applicable to the issuance
and sale of single premium variable life insurance by the Company.
FURTHER RESOLVED, That in order that a suitable custodian may be
designated to hold the assets allocated to Separate Account Four in
connection with the issuance of any single premium variable life
insurance policies by the Company, the Officers are authorized in their
discretion either to:
1. Enter into such agreements as may be necessary in order to
obtain regulatory approval for the Company or the Company's
parent, The Manufacturers Life Insurance Company, to serve as
custodian for the assets of Separate Account Four pursuant to
the Investment Company Act of 1940, as amended; or
2. Enter into an agreement with a banking institution, which the
Officers find to be suitable, whereby such bank will act as
custodian and depository for assets allocated to Separate
Account Four;
all of such terms are subject to the conditions as the officers deem
necessary or appropriate to effectuate the foregoing.
FURTHER RESOLVED, That the Officers are authorized to do all things as
they deem necessary and appropriate to carry out any of the foregoing
resolutions.
IN WITNESS WHEREOF, the undersigned, being all the Directors of The
Manufacturers Life Insurance Company of America have hereunto set our hands this
17th day of March, 1987.
/s/ FREDERICK A. SIMONS /s/ JACQUELINE B. DiGIOVANNI
- --------------------------- ------------------------------
Frederick A. Simons Jacqueline B. Digiovanni
/s/ L. ELVON HARRIS /s/ JAMES D. GALLAGHER
- --------------------------- ------------------------------
L. Elvon Harris James D. Gallagher
/s/ JOSEPH J. PIETROSKI /s/ STEPHEN C. NESBITT
- --------------------------- ------------------------------
Joseph J. Pietroski Stephen C. Nesbitt
<PAGE> 1
Exhibit (A)(3)(a)(i)
DISTRIBUTION AGREEMENT
AGREEMENT made this 11th day of August, 1987 between The Manufacturers
Life Insurance Company of America ("ManuLife America") a stock life insurance
company domiciled in the Commonwealth of Pennsylvania, on its own behalf and on
behalf of Separate Account Four ("Account") of ManuLife America and ManEquity,
Inc., ("ManEquity"), a Colorado corporation;
WITNESSETH
WHEREAS, the Account is an account established and maintained by
ManuLife America pursuant to the laws of the Commonwealth of Pennsylvania for
flexible premium variable life insurance policies issued by ManuLife America
(the "Policies"), under which income, gains and losses, whether or not realized,
from assets allocated to such account, are, in accordance with the Policies,
credited to or charged against such account without regard to other income,
gains, or losses of ManuLife America;
WHEREAS, ManuLife America has filed a registration statement for the
Account as a unit investment trust under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, ManEquity is registered as a broker-dealer under the
Securities Exchange Act of 1934 ("Securities Exchange Act") and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, ManuLife America has filed a registration statement for the
policies under the Securities Act of 1933 (the "Securities Act") and proposes to
issue and sell the Policies through the Account to the public through ManEquity
acting as principal underwriter for the Account;
<PAGE> 2
NOW, THEREFORE in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
parties do hereby agree as follows:
Section 1. Principal Underwriter
(a) Appointment.
ManuLife America grants to ManEquity the exclusive right during the
term of this Agreement, subject to the registration requirements of the
Securities Act and the Investment Company Act and the provisions of the
Securities Exchange Act, to be the distributor and principal underwriter of the
Policies issued through the Account in each state or other jurisdiction where
the Policies may legally be sold, including any supplementary benefits which
ManuLife America may make available in connection therewith. ManEquity shall
offer the Policies for sale and distribution at premium rates to be set by
ManuLife America.
(b) Responsibilities.
ManEquity will assume full responsibility for the securities activities
of, and for securities law compliance by, its associated persons, (as that term
is defined in Section 3(a)(18) of the Securities Exchange Act) including, as
applicable, compliance with the NASD Rules of Fair Practice and Federal and
State Laws and Regulations. ManEquity, directly or through ManuLife America as
its agent, will:
(i) make timely filings with the SEC, NASD, and other
regulatory authorities, of any sales literature or materials relating to the
Account, as required by law to be filed; and
<PAGE> 3
(ii) make available to ManuLife America copies of any
agreements or plans intended for use in connection with the sale of the Policies
in sufficient number and in adequate time for clearance by the appropriate
regulatory authorities before they are used, and it is agreed that the parties
will use their best efforts to obtain such clearance by the appropriate
regulatory authorities before they are used and that the parties will use their
best efforts to obtain such clearance as expeditiously as reasonably possible.
ManEquity will train the associated persons, use its best efforts to
prepare them to complete satisfactorily any and all applicable NASD and state
qualification examinations, register the associated persons as its registered
representatives before they engage in securities activities, and supervise and
control them in the performance of such activities.
ManEquity shall be under no obligation to effectuate any particular
amount of sales of Policies or to promote or make sales, except to the extent
ManEquity deems advisable or to the extent otherwise mutually agreed to by
ManEquity and ManuLife America.
Section 2. Dealer Agreements.
(a) Authority
ManEquity is hereby authorized to enter into separate written dealer
agreements, on such terms and conditions as ManEquity may determine not
inconsistent with the Agreement, with organizations which agree to participate
in the distribution of the Policies and to use their best efforts to solicit
applications for the Policies. Such organizations and their agents or
representatives soliciting applications for Policies shall be duly and
appropriately licensed, registered or otherwise qualified for the sale of such
Policies (and the riders and other policies offered in connection therewith)
under the Insurance Laws and any applicable Blue Sky Laws of each state or other
jurisdiction in which such Policies may be lawfully sold and in which ManuLife
America is licensed to
<PAGE> 4
sell the Policies. Each such organization shall be both registered as a
broker/dealer under the Securities Exchange Act and a member of the NASD, or if
not so registered or not such a member, then the agents and representatives of
such organization soliciting applications for the Policies shall be agents and
registered representatives of a broker/dealer and NASD member which is the
parent of such organization and which maintains full responsibility for the
training, supervision, and control of the agents or representatives selling the
Policies.
(b) Responsibilities.
ManEquity shall have the responsibility for the supervision of all such
organizations to the extent required by law and shall assume any legal
responsibilities of ManuLife America for the acts, commissions, or defalcations
of any such organizations. Applications for the Policies solicited by such
organizations through their agents or representatives shall be forwarded to
ManEquity. All payments for the Policies shall be made by check to ManuLife
America and remitted promptly by such organizations to ManEquity.
Section 3. Payments and Costs.
In connection with the sale of the Policies, ManEquity is responsible
for all amounts (including the sales commissions described in the prospectus for
the Policies) due to the sales representatives or to broker/dealers who have
entered into dealer agreements with ManEquity.
(b) As between ManuLife America and ManEquity, ManuLife America will
bear the cost of all services and expenses, including legal services and
expenses and registration, filing and other fees, in connection with:
<PAGE> 5
(i) registering and qualifying the Account, the Policies and
(to the extent requested by ManEquity) the associated persons with Federal and
state regulatory authorities and the NASD, and (ii) printing and distributing
all registration statements and prospectuses (including amendments), Policies,
notices, periodic reports, proxy solicitation material, sales literature and
advertising filed or distributed in connection with the sale of the Policies.
Section 4. Life Insurance Agents.
(a) ManEquity is authorized to appoint the organizations described in
Section 2(a) above as independent general agents of ManuLife America for the
sale of the Policies and any supplementary benefits or policies in connection
therewith. ManuLife America will undertake to apply for life insurance agent
licenses in the appropriate states or jurisdictions of the designated agents or
representatives of those organizations so appointed by ManEquity; provided that
ManuLife America reserves the right to refuse to appoint any proposed agent, or
once appointed to terminate the same.
(b) ManuLife America retains the right to appoint and discharge any
life insurance agents, general agents or organizations appointed by ManuLife
America.
(c) Anyone or any party selling the Policies must be duly licensed
insurance producers. ManuLife America shall have the responsibility for
arranging for such licenses.
(d) All premium funds collected by ManEquity or any organization
appointed by ManEquity pursuant to Section 2(a) above, or their representatives,
shall be held at all times in a fiduciary capacity and promptly be forwarded to
ManuLife America. ManEquity will advise ManuLife America of the amount of gross
premiums received.
<PAGE> 6
Section 5. Suitability.
(a) ManuLife America wishes to ensure that the Policies distributed by
ManEquity will be issued to purchasers for whom the Policy will be suitable.
ManEquity shall take reasonable steps to ensure that the various agents
appointed by it or by organizations appointed by ManEquity pursuant to 2(a)
above shall not make recommendations to an applicant to purchase a Policy and
shall not issue a Policy in the absence of reasonable grounds to believe that
the purchase of the Policy is suitable for such applicant. ManEquity shall
adhere to the Standards of Suitability for the Policy adopted by ManuLife
America. The Standards of Suitability are set forth in Schedule A, which
schedule is incorporated herein. While not limited to the following, a
determination of suitability shall be based on information furnished to an agent
after reasonable inquiry of such applicant concerning the applicant's insurance
and investment objectives, financial situation and needs, and the likelihood
that the applicant will persist with the Policy for such a period of time that
ManuLife America's acquisition costs are amortized over a reasonable period to
time.
(b) ManuLife America, however, retains the ultimate right of control
over and responsibility for, marketing the Policies.
(c) ManuLife America also retains the right to reject applications for
the Policies and maintains responsibility for all insurance underwriting aspects
in connection with such applications.
Section 6. Promotion Materials.
ManEquity shall have the responsibility for consulting with respect to
the design and the drafting and legal review and filing of sales promotion
materials, and for the preparation of individual sales proposals related to the
sale of the Policies. All sales and
<PAGE> 7
promotional materials for the Policies must first be reviewed and approved by
ManuLife America. ManEquity and any organization appointed by ManEquity pursuant
to Section 2(a) above shall not give any information or make any representations
concerning any aspect of the Policies or ManuLife America's operations to any
person or entity unless such information or representations are contained in the
prospectuses for the Policies, or are contained in sales or promotional
materials approved by ManuLife America.
Section 7. Reports.
ManEquity shall have the responsibility for: maintaining the records of
agents licensed, registered and otherwise qualified to sell the Policies;
calculating and furnishing periodic reports to ManuLife America of the
commissions and service fees payable to agents, brokers, general agents and
sales managers of ManuLife America and its affiliates; and for furnishing
periodic reports to ManuLife America as to the sale of Policies made pursuant to
this Agreement.
Section 8. Records.
ManEquity shall maintain and preserve such accounts, books, and other
documents as are required of it by applicable laws and regulations. The books,
accounts and records of ManuLife America, the Account and ManEquity as to all
transactions hereunder shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions, including such accounting
information as necessary to support the reasonableness of the amounts to be paid
by ManuLife America hereunder. Without limiting the foregoing, ManEquity will:
(a) maintain and preserve in accordance with Rules 17a-3 and
17a-4 under the Securities Exchange Act all books and records required to be
maintained in connection with the offer and sale of the Policies, which books
and records shall remain the property of ManEquity and shall be subject to
inspection by the securities and
<PAGE> 8
Exchange Commission ("SEC") in accordance with Section 17(a) of the Securities
Exchange Act; and
(b) before or upon completion of each transaction for which a
confirmation is legally required, send a written confirmation for each such
transaction reflecting the facts of the transaction.
Section 9. Compensation.
For the services rendered, expenses assumed and the continuing
obligations set forth herein, ManEquity shall receive from ManuLife America such
amounts and at such times as may from time to time be agreed upon by ManEquity
and ManuLife America.
Section 10. Liability for Other Party.
Neither party to this Agreement shall be liable to the other for any
action taken or omitted by it, or any of its officers, agents or employees, in
performing their responsibilities under this Agreement in good faith and without
gross negligence, willful misfeasance or reckless disregard of such
responsibilities, unless otherwise mutually agreed in writing.
Section 11. Notification of Parties.
Both parties to this Agreement shall advise the other promptly of:
(a) Any action of the SEC or any authorities of any state or
other jurisdiction, of which it has knowledge, affecting registration or
qualification of the Account or the Policies, or the right to offer the Policies
for sale; and
<PAGE> 9
(b) the happening of any event which makes untrue any
statement, or which requires the making of any change, in the registration
statements or prospectuses in order to make the statements therein not
misleading.
Section 12. Investigation and Proceedings.
(a) ManEquity and ManuLife America agree to cooperate fully in
any insurance regulatory investigation or proceeding or judicial proceeding
arising in connection with the Policies distributed under this Agreement.
ManEquity and ManuLife America further agree to cooperate fully in any
securities regulatory investigation or proceeding or judicial proceeding with
respect to ManuLife America, ManEquity, their affiliates and their agents or
representatives to the extent that such investigation or proceeding is in
connection with Policies distributed under this Agreement. Without limiting the
foregoing:
(i) ManEquity will be notified promptly of any
customer complaint or notice of any regulatory
investigation or proceeding or judicial proceeding
received by ManuLife America with respect to
ManEquity or any agent or representative or which may
affect ManuLife America's issuance of any Policy
marketed under this Agreement;
(ii) ManEquity will promptly notify ManuLife America
of any customer complaint or notice of any regulatory
investigation or proceeding received by ManEquity or
its affiliates with respect to ManEquity or any agent
or representative in connection with any Policy
distributed under this Agreement or any activity in
connection with any such Policy.
(b) In the case of a customer complaint, ManEquity
and
<PAGE> 10
ManuLife America will cooperate in investigating such complaint and any response
to such complaint will be sent to the other party to this Agreement for approval
not less than five business days prior to its being sent to the customer or
regulatory authority, except that if a more prompt response is required, the
proposed response shall be communicated by telephone or fax.
Section 13. Guarantee.
ManuLife America undertakes to guarantee the performance of any
obligations ManEquity may have pursuant to Section 27(f) of the Investment
Company Act, as amended, and paragraph (b) of Rule 27d-2 adopted by the
Securities and Exchange Commission, to make refunds of charges required of the
principal underwriter of Policies issued in connection with the Account.
Section 14. Termination.
This Agreement shall terminate automatically if it shall be assigned.
This Agreement may be terminated at any time by either party hereto on 60 days'
written notice to the other party hereto, without the payment of any penalty.
Upon termination of this Agreement all authorizations, rights and obligations
shall cease except:
(a) the obligation to settle accounts hereunder, including
commissions on premiums subsequently received for Policies in effect at the time
of termination; and
(b) the agreements contained in paragraphs 11 and 12 hereof.
Section 15. Regulation.
This Agreement shall be subject to the provisions of the Investment
Company Act and the Securities Exchange Act and the rules, regulations, and
rulings thereunder and to
<PAGE> 11
the NASD, from time to time in effect, including such exemptions from the
Investment Company Act as the SEC may grant, and the terms hereof shall be
interpreted and construed in accordance therewith.
ManEquity shall submit to all regulatory and administrative bodies
having jurisdiction over the operations of the Account, present or future, any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
Section 16. Severability.
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained therein.
Section 17. Governing Law.
This Agreement shall be construed in accordance with, and governed by,
the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized officers as of the date first
mentioned above.
Attest: THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
______________________________ By: _______________________________
Its: ______________________________
<PAGE> 12
Attest: MANEQUITY, INC.
______________________________ By: _______________________________
Its: ______________________________
<PAGE> 1
Exhibit (A)(3)(a)(ii)
AMENDMENT TO DISTRIBUTION AGREEMENT
This amendment made this 2nd day of July, 1991 to the Distribution
Agreement between The Manufacturers Life Insurance Company of America ("Manulife
America") on its own behalf and on behalf of Separate Account Four (the
"Account") of Manulife America and ManEquity, Inc. ("ManEquity") dated August
11, 1987 (the "Agreement").
Manulife America and ManEquity agree to amend the Agreement as follows:
There shall be added to Section 8 of the Agreement, after the
conclusion of clause (b) thereof, the following paragraph:
"Manulife America shall have access to the books and records maintained
by ManEquity pursuant to this Agreement and shall have the right to inspect,
audit, and copy same."
All other terms and conditions of the Agreement shall remain unchanged
and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized officers as of the date first
above-mentioned.
THE MANUFACTURERS LIFE INSURANCE
Attest: COMPANY OF AMERICA
______________________________ By: _______________________________
<PAGE> 2
Its: ______________________________
Attest: MANEQUITY, INC.
______________________________ By: _______________________________
Its: ______________________________
<PAGE> 1
Exhibit (A)(3)(a)(iii)
SUPPLEMENTAL AGREEMENT TO DISTRIBUTION AGREEMENT
This Supplemental Agreement is made this 1st day of October, 1992 to
the Distribution Agreement between The Manufacturers Life Insurance Company of
America ("Manulife America") on its own behalf of Separate Account Four (the
"Account") of Manulife America and ManEquity, Inc. ("ManEquity") dated August
11, 1987 (the "Agreement").
WHEREAS, Manulife America will file a registration statement on Form
S-1 under the Securities Act of 1933 to permit it to offer flexible payment
variable annuity contracts with certain fixed account options and guarantees
("Combination Policies"); and
WHEREAS, assets attributable to the fixed accounts will be maintained
in a non-unitized, non-registered Separate Account established under the laws of
Michigan; and
WHEREAS, other non-unitized separate accounts may be established in the
future to account for fixed assets supporting the Policies;
WHEREAS, Manulife America desires to make subject to the Agreement the
underwriting and distribution of the Combination Policies issued by it; and
WHEREAS, Manulife America has filed an application to redomesticate
under the laws of the State of Michigan;
NOW THEREFORE Manulife America and ManEquity agree as follows:
<PAGE> 2
1. Section 16 of the Agreement shall be amended effective upon the
approval of the redomestication of Manulife America from Pennsylvania to
Michigan to read as follows:
"Section 16. Governing Law.
This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Michigan".
2. All other terms and conditions of the Agreement shall remain unchanged
and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized officers as of the date first
above-mentioned.
THE MANUFACTURERS LIFE INSURANCE
Attest: COMPANY OF AMERICA
______________________________ By: _______________________________
Its: ______________________________
Attest: MANEQUITY, INC.
______________________________ By: _______________________________
Its: ______________________________
<PAGE> 1
Exhibit (A)(3)(b)(i)
Manulife Logo MANEQUITY, INC. AGREEMENT
THIS AGREEMENT made this ______________________ day of _______________ 19______
BETWEEN:
MANEQUITY, INC., a Colorado corporation with its Home Office at Toronto, Canada
(hereinafter called the "Company")
(hereinafter called the "Sales Representative")
WITNESSETH:___________________________________________________________________
WHEREAS, the Sales Representative agrees to sell and the Company agrees to
authorize him/her to sell such securities as the Sales Representative is
licensed to sell with the Company and the Company desires to and has the lawful
authority to sell.
NOW, THEREFORE, in consideration of these premises, it is hereby agreed between
the parties as follows:
1. Warranty of Qualification
The Sales Representative hereby represents and warrants that all
representations made on all Federal, State and National Association of
Securities Dealers, Inc. (NASD) Registration Forms are current, accurate and
correct and that he/she has read, understands and agrees to abide by the
provisions of this Agreement to the extent that such terms and conditions
govern his/her performance within his/her respective registration category.
The authority of the Sales Representative is limited by the registration
category designated by the Sales Representative with respect to his/her
association with the Company as indicated on all Federal, State and NASD
Registration Forms.
The Sales Representative hereby represents and warrants that he/she is a
Registered Representative in good standing with the NASD and is duly
authorized and licensed under the applicable state securities laws.
The Sales Representative further represents and warrants that he/she is
thoroughly familiar with the Securities Laws, Codes and Rules and Regulations
of the United States and of the state(s) in which he/she is qualified to do
business and of the Rules and Regulations of the NASD and Regulations of the
Company, and as such that he/she shall transact all authorized Company
business in strict accordance therewith.
2. Sales Practices
The Sales Representative agrees to adhere strictly to the NASD Rules of the
Association with regard to sales literature and other advertising material.
All such literature must be submitted to and approved by the Company prior to
its use by the Sales Representative.
The Sales Representative is not authorized to and may not send any written
correspondence to customers of the Company or prospective investors unless
he/she forwards, on a quarterly basis for review and approval by a Registered
Principal, copies of all such correspondence to the Home Office of the
Company.
It is also agreed and understood that the Sales Representative shall keep and
maintain such records as will comply with the Rules and Regulations of the
NASD and shall open such records to inspections and review by the Company as
the Company shall deem advisable from time to time. The Sales
Page 1 of 4
- --------------------------------------------------------------------------------
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, and ManEquity, Inc.
Form AG0176US(0797)
<PAGE> 2
Representative in addition acknowledges receipt of the ManEquity Policy
Statement and agrees to follow the rules and regulations contained therein.
Said Policy Statement and other publications, as amended and modified from
time to time, are incorporated in this Agreement by reference as though fully
set out herein.
3. License Fees
All initial and renewal license and registration fees shall be paid by the
Sales Representative
4. (a)Authority
The Sales Representative shall be free to exercise his/her discretion as
to the manner, time and place and the persons from whom he/she shall
choose to solicit and sell securities as aforesaid subject only to the
provisions of this Agreement and such Rules and Regulations herein before
set forth and as may be prescribed from time to time hereafter. The Sales
Representative further agrees not to engage in the business of selling
securities for any other broker/dealer during the term of this Agreement
without the expressed written consent of each employing broker/dealer.
(b)Status
The Sales Representative shall have no greater than is herein expressly
granted and no greater authority shall be implied from the grant or denial
of authority specifically mentioned herein. Nothing herein contained shall
be construed to create the relationship of employer and employee between
the Company and the Sales Representative.
5. (a)Limit of Warranty
The Sales Representative shall have no authority of any kind for or on
behalf of the Company to accept any transactions of any kind or to make,
modify or discharge contracts on behalf of the Company or in any way to
bind the Company to any statement, promise, or representation, or to waive
any of the Company's rights or requirements, rules or regulations, or to
receive any money due or to become due to the Company except payments,
made pursuant to sales solicited by him/her in the manner prescribed by
the Company or except as may be authorized by the Company in writing. The
Sales Representative shall have no power to bind the credit of the Company
in any manner and further agrees to pay any and all expenses incurred by
him/her in the performance of this Agreement. The Sales Representative
shall have no authority to make any settlement or agreement regarding any
claim that may be made against the Company unless specifically authorized
in writing by an Officer of the Company in each such case. All orders for
the purchase of any security shall be subject to the acceptance thereof by
the Company at its Home Office in Toronto, Canada. The Sales
Representative shall have no authority to appoint or employ on behalf of
the Company other Sales Representatives or employees without the prior
written consent of an Officer of the Company and any such appointee shall
have no authority to incur any expense or obligation of any kind or nature
in the name or on behalf of the Company.
(b)Indemnification
The Sales Representative shall have no authority to settle or institute
any legal proceeding for any cause in connection with a transaction of the
Company's business unless such action shall have been approved in advance
in writing by an Officer of the Company and it is agreed and understood
that the Sales Representative shall indemnify and save the Company
harmless from any and all expenses, costs and damages resulting from or
growing out of any unauthorized acts or transactions by said Sales
Representative.
6. Bond Requirement
The Sales Representative shall furnish a bond, or bonds, as the Company may
require. Upon failure or inability of the Sales Representative to renew such
bond or bonds at any time as the Company may
Page 2 of 4
- --------------------------------------------------------------------------------
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, and ManEquity, Inc.
Form AG0176US(0797)
<PAGE> 3
require, this Agreement shall automatically terminate. the Sales
Representative agrees in addition to the foregoing, to promote the best
interests of the Company as contemplated by this Agreement and so to conduct
himself/herself as not to affect adversely the business, good standing or
reputation of himself/herself or the Company.
7. Return of Records and Material
Upon Termination of this Agreement, the Sales Representative shall return to
the Company any and all sales materials, records, correspondence and other
data belonging to the Company.
8. Statement of Account
The Company will furnish to the Sales Representative a statement of his/her
sales and all compensation earned together with payment for all compensation
due and payable in accordance with such statement less any indebtedness due
to the Company as indicated by said statement or other instrument.
9. Amendments
It is expressly agreed and understood that the Company retains the right to
amend or modify this Agreement in writing to the Sales Representative as it
shall deem necessary from time to time.
10. Transmittal of Monies, Orders and Applications
The Sales Representative shall transmit to the Company or its designated
fiduciary, immediately upon receipt, all monies, orders and applications
received from all sales. The Sales Representative may not under any
circumstances commingle monies received from sales with any other monies.
11. (a) Compensation
For all sales sold by the Sales Representative and for all other
services rendered by him/her under this Agreement, the Company shall
pay to the Sales Representative the compensation set out in the
attached schedule(s). Such schedule(s), as modified or amended from
time to time, is/are incorporated in this Agreement by reference as
though fully set out.
(b) The Sales Representative hereby agrees that, upon termination of this
Agreement, he/she will be entitled to receive commissions on variable
life and annuity policies sold by the Sales Representative to the
extent that such commissions are payable under the terms of his/her
Agreement with the insurance company issuing such policies and to the
extent permitted by federal or state laws.
12. Provisions Not Waived
Failure of the Company at any time to declare a breach or termination of this
Agreement because of any violation or violations of its provisions shall not
be deemed a waiver or waivers of said provisions on the part of the Company
in case of any subsequent violations by the Sales Representatives.
13. Assignment
This Agreement is not transferable. No rights or interest issuing herefrom
shall be subject to assignment, except with the prior written consent of an
Officer of the Company.
14. Termination and Amendment - Effective Notice
This Agreement may be terminated by either party hereto, or amended by the
Company, at any time, with or without cause, upon 10 days written notice
given to the other party, provided that if the Sales Representative shall at
any time fail in the performance of any of the conditions, promises or
agreements contained herein upon his/her part to be performed, then at the
option of the Company, this Agreement may be terminated immediately and
without notice. In the event the Company terminates the Agreement with notice
or amends this Agreement in writing, said notice or amendment shall be
Page 3 of 4
- --------------------------------------------------------------------------------
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, and ManEquity, Inc.
Form AG0176US(0797)
<PAGE> 4
delivered personally or mailed to the last known address of the Sales
Representative appearing on the Company's records and shall be an effective
notice of termination or amendment of this Agreement as of the time the
notice of amendment is deposited in the United States Mail or the time of
actual receipt, if earlier. In the event the Sales Representative terminates
this Agreement, the notice of said termination shall be delivered personally
or addressed and mailed to the Home Office of the Company in Toronto, Canada,
with a copy to the Sales Representative's NASD Supervisor and shall be an
effective notice of termination of this Agreement as of the time the same is
deposited in the United States Mail, or the time of actual receipt, if
earlier.
15. Execution and Interpretation of Entire Agreement
This Agreement shall take effect upon the date of the execution hereof and
shall revoke and cancel all prior Agreements which have existed between the
parties hereto relative to the sale of securities. The construction and
interpretation of this Agreement shall be determined in accordance with the
laws of the State of Colorado and any and all representations made by the
parties hereto unless otherwise amended as provided herein.
16. Effective Date
This Agreement become effective the ___________day of _____________ 19 _____
IN WITNESS WHEREOF the parties hereto affix their signatures on the year and
day first above written.
______________________________
Sales Representative
______________________________
NASD Supervisor
Accepted by ManEquity, Inc., this _________________ day of ____________ 19 ____
By __________________________
Page 4 of 4
- --------------------------------------------------------------------------------
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries:
The Manufacturers Life Insurance Company (U.S.A.), The Manufacturers Life
Insurance Company of America, and ManEquity, Inc.
Form AG0176US(0797)
<PAGE> 1
Exhibit (A)(3)(b)(ii)
Producer Agreement
(Manulife Logo)
THIS AGREEMENT made this _______________day of __________________ ________
Year
BETWEEN:
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
(hereinafter called the "Company")
-and-
(herein after called the "Producer")
Witness that in consideration of the mutual covenants of the parties herein
contained, the parties hereto agree as follows:
1. STATUS
The Producer is hereby appointed an agent of the Company. It is understood
that nothing in this Agreement shall be construed to create an
employer-employee relationship between the Company and the Producer.
In creating this Agreement, the parties do not contemplate that the Producer
will solicit insurance primarily for the Company. Nothing in this Agreement
shall be construed to prohibit the Producer from selling policies or
contracts issued by any other insurance company.
If the Producer desires to sell any variable life, annuity, or endowment
products ("variable products") produced currently or in the future by the
Company or one of its affiliates, he/she must also hold a valid ManEquity,
Inc. Agreement and a valid Manufacturers Life Insurance Company (U.S.A)
Producer Agreement.
2. RESPONSIBILITIES
(a) The Producer shall be authorized to secure applications for insurance
and services offered by the Company and collect, in exchange for
receipts furnished by the Company, money due or to become due to the
Company in respect to such applications of policies.
(b) The Producer shall comply with all applicable insurance laws and
regulations. The Producer is required to obtain, and from time to time
renew, a license to sell insurance within the states(s) in which the
Producer intends to carry on business. If the Producer desires to sell
any variable products offered by the Company, additional licensing is
required under his/her ManEquity, Inc. Agreement.
(c) When requested by the Company, the Producer shall also purchase errors
and omissions coverage in an amount acceptable to the Company.
(d) The Producer shall be free to exercise his own judgment as to the
persons from whom he will solicit applications for insurance and
services offered by the Company and the time and place of solicitation.
Page 1 of 5
<PAGE> 2
(e) The Producer shall provide his own facilities including office space and
furnishings. The Producer shall not be entitled to be reimbursed by the
Company for the cost of such facilities. In the event the Company offers
the Producer use of a portion of its office space and/or furnishings,
the Producer shall pay to the Company a fair market rental for such
office space and/or furnishings.
3. GENERAL CONDUCT AND REPRESENTATIONS
(a) The Producer shall not transact any business for the Company unless duly
licensed as required by law. The Producer shall transact any variable
products business for the Company unless contracted to do so by Man
Equity, Inc.
(b) The Producer is not authorized to make contracts on behalf of the
Company, or to alter or amend any of the provisions of the Company's
contracts, or to waive forfeitures or bind the Company in any way not
specifically authorized in writing by the Company. The Producer is not
authorized to pay any premium or premiums or other payments on behalf of
an applicant, policyholder, or beneficiary.
(c) The Producer shall not induce other producers, agents or brokers to
leave the Company, or persuade policyholders to discontinue their
policies, or otherwise do anything prejudicial to the Company's interest
or that of it's policyholders.
4. COMPENSATION
(a) Subject to clause 5 "Regulations Governing Compensation and Credit" and
Clause 6 "Joint Business", compensation shall be determined and shall be
payable to the Producer while this Agreement is in force in accordance
with (1) the Company's Schedule of Commissions in force when an
application for insurance is submitted to the Company and (2) any
Schedule of Supplemental Income which may be entered into by the
Producer and the Company and any amendments or supplements to those
schedules.
(b) The Producer's basic compensation shall be by commission which shall be
determined in accordance with the Schedule of Commissions. Other forms
of compensation above and beyond those set out in the Schedule of
Commissions and in the Schedule of Supplemental Income, if any, may be
specifically provided for or allowed as an option by the Company at its
discretion. Commissions earned on the sale of variable products are paid
on behalf of ManEquity. Inc.
(c) The Schedule of Commissions and the Schedule of Supplemental Income, if
any, and any amendments or supplements thereto, are subject to change by
the Company at any time. No change shall affect commissions on
individual insurance products offered by the Company for which
applications were submitted to the Company prior to the effective date
of the change.
5. REGULATIONS GOVERNING COMPENSATION AND CREDIT
(a) When a policy is changed, the compensation, if any, shall be determined
by the Company.
(b) The Company shall determine the compensation on any new policy when:
i) A policy issued by the Company on the same life has been surrendered
or lapsed within six (6) months of the application for the new
policy; or
ii) The new policy appears to have replaced an existing policy or part
of a policy within six (6) months of the date of application.
Page 2 of 5
<PAGE> 3
The Producer shall immediately refund to the Company any excess
compensation received on the new policy.
(c) If the Company returns any part of or all of any premiums(s) paid in
respect to an issued policy, the Producer shall lose all right to any
compensation of such premiums. The Producer shall also immediately
refund to the Company the amount of any compensation received on the
returned premium.
(d) Where a policy has lapsed and the premium remains unpaid for sixty (60)
days beyond the expiration of the grace period, the Company shall have
the right to take such policy out of the Producer's account of business.
The Producer shall immediately refund any compensation paid in relation
to such premiums not received by the Company and no further compensation
shall be payable to the Producer thereon.
(e) Where a policy has lapsed the Producer shall immediately refund to the
Company any compensation received on the lapsed policy pursuant to the
Bonus provisions of the Schedule of Supplemental Income, if any.
(f) The Company may adjust compensation so that compensation paid does not
exceed the sales and surrender charges permitted by federal and state
securities laws.
6. JOINT BUSINESS
(a) Any policy other than those policies issued by the Company that are
deemed to be securities subject to regulation by the Security and
Exchange Commission, effected by the Producer in conjunction with any
other producer, agent or broker of the Company shall be considered as
joint business and, unless otherwise agreed to, the amount of
compensation shall be apportioned equally to each producer, agent or
broker. The Company requires written notice from the agent of record of
any such joint business and of the existence of any Agreement providing
for unequal apportionment of compensation.
(b) Any policy issued by the Company that is deemed a security subject to
regulation by the Securities and Exchange Commission may not be sold
jointly with any individual or firm not registered with the National
Association if Security Dealers and not contracted with ManEquity, Inc.
Any joint cases must be specified as such at the time the application is
delivered to the Company.
7. RIGHT OF OFFSET
The Company may set off against any claims by the Producer under this
Agreement, and/or any attachment thereto, any debt or obligation or
liability due at any time to the Company or any affiliates, from the
Producer as agent or otherwise, including, but not limited to, compensation
due the Company pursuant to Clause 5 of this Agreement.
The Producer shall be personally liable for the portion of any debit balance
to advances unearned compensation which appears in the Producer's Advance.
Said portion of the debit balance shall be payable by the Producer upon
demand of the Company. At the option of the Company, interest at the maximum
rate permissible by state law will accrue on said portion of the debit
balance from the time a debit balance occurs in such account.
The ledger account of the Company shall be competent and conclusive evidence
of the state of accounts between the parties concerned. The right of offset
shall be in addition to and shall not limit the Company's use of any other
remedy available to it.
Page 3 of 5
<PAGE> 4
8. COMPANY RECORDS
The Producer shall promptly deliver to the Company all applications whether
reported on favorably of unfavorably by the medical examiner and shall keep
regular and accurate accounts of all transactions with or for the Company.
All books of accounts, letters, documents, vouchers, status and service
notices and other books and papers connected with the business of the
Company and maintained by or in possession of the Producer shall be open to
the Company or its representative for the purpose of examination.
9. COLLECTIONS AND REMITTANCES
The Producer shall immediately remit to the Company all monies received or
collected by the Producer on behalf of the Company. The Producer shall not
use any such monies for any other purpose whatsoever.
10. TERMINATION
Either party may terminate this Agreement at any time with or without cause
by giving the other party fifteen (15) days' notice in writing. Termination
shall not, however, release the Producer from any debt due the Company and
until such debt shall have been paid, the obligations and covenants of the
Producer as set out in this Agreement shall remain in full force and effect.
The Producer agrees that, in addition to the foregoing, the happening of any
of the following events will also cause termination of this Agreement:
(a) The death of the Producer;
(b) The bankruptcy or insolvency of the Producer;
(c) The Producer ceasing to hold a valid state license to sell insurance
products for the Company;
(d) The Producer ceasing to have his/her license sponsored by the Company;
(e) The Producer ceasing to hold a valid Agreement with ManEquity, Inc., or
with The Manufacturers Life Insurance Company (U.S.A.)
11. EFFECT OF TERMINATION ON COMPENSATION
To the extent permitted by federal or state securities laws, upon
termination of this Agreement, the Company shall pay the Producer or his/her
successors and assigns, or his/her estate commissions premiums paid to the
Company after the termination of this Agreement on any policies put in force
by the Producer under this Agreement.
12. ASSIGNMENT
No rights or interest of the Producer in or under or by virtue of this
Agreement shall be merged, or assigned, or subject to sale or assignment
without the prior written consent of the Company.
13. MEDICAL EXAMINATION AND FEES
All medical examinations shall be made by a duly appointed medical examiner
of the Company and the Company shall pay only such medical fees as are
authorized by it.
14. CURRENCY
All amounts payable under this Agreement shall be payable in the lawful
currency of the United States of America.
Page 4 of 5
<PAGE> 5
15. EFFECT
The Company shall have no responsibility for the effect this Agreement may
have on federal, state or local taxes of the Producer. It is further agreed
that the Producer is not relying on the Company for any advice relating to
the effect of this Agreement on such taxes.
16. EXISTING AGREEMENTS
In consideration of this Agreement, all existing agreements between the
Company and the Producer shall terminate from the effective date of this
Agreement, except as to compensation payable in accordance with such
agreements.
17. APPLICABLE LAW
This Agreement shall be governed by and construed according to the laws of
the state of __________.
18. EFFECTIVE DATE
This Agreement becomes effective the ______________day of_____________ _____
Year
IN WITNESS WHEREOF the parties to this Agreement have set their hands as of the
day and year first above written.
WITNESS:_______________________________ ________________________________
Authorized signature
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF AMERICA
WITNESS:_______________________________ ________________________________
Producer
Page 5 of 5
<PAGE> 1
Exhibit (A)(3)(b)(iii)
Manulife Logo
ManEquity, Inc. MANEQUITY BROKER/DEALER AGREEMENT
THIS AGREEMENT made this _____________________ day of ___________________ 19____
BETWEEN:
MANEQUITY, INC. ("MANEQUITY")
a Colorado Corporation
- and -
________________________________________________________________________________
("Broker")
a _________________________________________________________________ Corporation.
WITNESSETH
WHEREAS, The Manufactures Life Insurance Company of America ("Manufacturers Life
of America") has granted to ManEquity, the exclusive right to be the distributor
and principal underwriter of its Variable Life, Variable Annuity, Single Premium
Variable Life, and Variable Universal Life Policies ("Policies" or "Policy")
issued through Separate Account One, Two, Three and Four, of Manufacturers Life
of America or any other Separate Accounts which Manufacturers Life of America
may create in the future ("Accounts") or by or in conjunction with Manufacturers
Life of America in each state or other jurisdiction where the Policies may
legally be sold;
WHEREAS, ManEquity is authorized by Manufacturers Life of America to enter into
separate written agreements with organizations which agree to participate in the
distribution of the Policies and to use their best efforts to solicit
applications for the Policies;
AND WHEREAS, Broker, a registered broker-dealer with the Securities and Exchange
Commission under the Securities Act of 1934 and a member of the National
Association of Securities Dealers, Inc. wishes to participate in the
distribution of the Policies and to use its best efforts to solicit applications
for the Policies;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained and other good and valuable consideration, the parties do hereby agree
as follows:
SECTION 1 - DEFINITION
(a) REGISTRATION STATEMENTS - the respective Registration Statements and
amendments thereto relating to each of the Policies, the Accounts,
including financial statements and all exhibits.
(b) PROSPECTUS OR PROSPECTUSES - the Prospectuses included within the
Registration Statements.
(c) 1933 ACT - the Securities Act of 1933, as amended.
(d) 1934 ACT - the Securities Exchange Act of 1934, as amended.
(e) 1940 ACT - the Investment Company Act of 1940, as amended.
(f) SEC - the Securities and Exchange Commission.
(g) NASD - the National Association of Securities Dealers, Inc.
Page 1 of 6
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Form AG0164US(0397)
<PAGE> 2
SECTION 2 - BROKER
(a) APPOINTMENT
Pursuant to the authority granted to it by Manufacturers Life of
America, ManEquity hereby authorizes Broker during the term of this
Agreement to solicit from eligible persons, applications for Polices,
including any riders Manufacturers Life of America may make available
in connection with any of the Policies. Broker hereby accepts such
appointment and agrees to use its best efforts to find purchasers for
the Policies acceptable to Manufacturers Life of America. Before the
Broker solicits applications for Policies there must be effective
Registration Statement for the Policies and Brokers must have been
notified by ManEquity that the Policies are qualified for sale under
all applicable securities and insurance laws of the state or other
jurisdiction in which application will be solicited.
(b) RESPONSIBILITIES
(i) Broker agrees that all agents or representative of Broker who
will be soliciting applications for the Policies will be duly
registered representatives of Broker having achieved an
appropriate NASD designation for the sale of the Policies and
duly licensed under any applicable state securities law. No
agent or representative of Broker shall solicit applications
for any of the Policies until duly licensed and appointed by
Manufacturers Life of America as a Life Insurance and Variable
Contracts Broker or Agent in the appropriate states or other
jurisdiction.
(ii) Broker shall be responsible for the training, supervision and
control of all of its agents or representatives soliciting
applications for the Policies so as to ensure compliance with
all applicable provisions of, any rules and regulations under,
Federal and State Securities Laws and State Insurance Laws and
with all applicable rules of the NASD.
(iii) In connection with its performance under this Agreement,
Broker shall, during the term of this Agreement, engage in the
following activities:
(a) Utilize only sales and promotional materials which
have either been provided or approved in writing by
Manufacturers Life of America;
(b) Establish and implement reasonable procedures for
periodic inspection and supervision of sales
practices of its agents or representatives and submit
reports to ManEquity as may be requested on the
results of such inspections and the compliance with
such procedures; and
(c) Take reasonable steps to insure the various
representatives appointed by it shall not make
recommendations to an applicant to purchase any of
the Policies in the absence of reasonable grounds to
believe that the purchase of any such Policy is
suitable for such applicant. Determination of
suitability for variable life policies shall be made
at least in compliance with Manufacturers Life of
America's established Standards of SUITABILITY, which
are set forth in Schedule A, which Schedule is
incorporated herein.
(iv) All payments for the Policies collected by agents or
representatives of Broker shall be held at all times in a
fiduciary capacity and shall be promptly, but in no event more
than two business days after receipt, remitted in full
together with such applications, forms and other required
documentation to an office of Manufacturers Life of America
designated by ManEquity. Broker, its agents or
representatives, shall not withhold or deduct any part of any
payments it shall receive for any reason. Checks representing
any payments shall be drawn to the order of "The Manufacturers
Life Insurance Company of America" or "Manufacturers Life of
America". Cash is not an acceptable form of payment under any
circumstances.
(v) Broker acknowledges that Manufacturers Life of America retains
the ultimate right to control the sale of the Policies and
that ManEquity or Manufacturers Life of America shall have the
unconditional right to reject, in whole or part, any
application for any of the Policies. In the event
Manufacturers Life of America or ManEquity rejects an
application, Manufacturers Life of America will immediately
return all payments to the applicant and Broker will be
notified of such action. In the event that any Policyowner or
applicant for any Policy elects to surrender or return any
such Policy pursuant to the Policy's provisions or nay
applicable Federal or State Law, including but not limited to
rule 6e-2(b)(13)(viii) and Rule 6e-3(T)(13)(vii) or (viii) of
the 1940 Act or any amendments or successor rules thereto, any
payment required to be refunded will be refunded directly to
the purchaser.
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Form AG0164US(0397)
<PAGE> 3
(vi) Broker shall act as an independent contractor, and nothing
herein contained shall constitute Broker, its agents or
representatives, or any employees thereof as employees of
Manufacturers Life of America or ManEquity in connection with
the solicitation of applications for Policies. Broker, its
agents or representatives, and its employees shall not hold
themselves out to be employees of Manufacturers Life of
America or ManEquity in this connection or in any dealings
with the public and, except as specifically provided otherwise
in this Agreement, Broker shall not possess or exercise any
authority on behalf of Manufacturers Life of America,
ManEquity or the Accounts.
(vii) Solicitation and other activities by Broker shall be only in
accordance with applicable laws and regulations. Broker
understands and acknowledges that neither it nor its agents or
representatives are authorized by ManEquity or Manufacturers
Life of America to give any information or make any
representation in connection with the offering of the Policies
other than those contained in Prospectuses or other
solicitation material authorized by Manufacturers Life of
America.
(viii) Broker shall not have authority on behalf of ManEquity or
Manufacturers Life of America to:
(a) Make, alter or discharge any Policy or other form;
(b) Waive any forfeiture or extend the time of paying any
premium; or
(c) Receive any monies or payments to Manufacturers Life
of America, except as set forth in Section 2(b)(iv)
of this Agreement.
(ix) Broker shall have the responsibility for maintaining the
records of its representatives engaged in the sale of the
Policies. Broker shall maintain and preserve such accounts,
books, and other documents as are required of it by applicable
laws and regulations. Without limiting the foregoing, such
books, accounts, and records shall be maintained so as to
clearly and accurately disclose the nature and details of the
transactions. Broker shall keep confidential any information
obtained pursuant to this Agreement and shall disclose such
information, only if such disclosure is expressly required by
applicable Federal or State authorities.
SECTION 3 - MANEQUITY
During the term of this Agreement, ManEquity will notify Broker of the issuance
by the SEC of any stop order with respect to any of the Registration Statements,
or any amendments thereto, or the institution of any proceedings for that
purpose or for any other purpose relating to any such registration and or
offering of the policies and of any action or circumstances that may prevent the
lawful sale of any of the Policies in any state or jurisdiction. During the term
of this Agreement, ManEquity shall advise Broker of any amendment to any of the
Registration Statement or any amendment or supplement to any Prospectus.
SECTION 4 - COMPENSATION
ManEquity shall cause Manufacturers Life of America to arrange for the payment
of commissions to Broker as compensation for the sale of each Policy sold by a
registered representative of Broker. The amount of compensation shall be based
on a schedule to be determined by Agreement of Manufacturers Life of America,
ManEquity, and Broker. Manufacturers Life of America shall identify to Broker
with each such payment, the name of the registered representative of Broker who
solicited each Policy covered by the payment. Any such compensation received by
Broker on account of any Policy which is tendered for redemption within seven
(7) business days after acceptance of the Policy application shall be returned
promptly to Manufacturers Life of America.
SECTION 5 - COMPLAINTS AND INVESTIGATIONS
Broker and ManEquity agree to co-operate fully in any insurance regulatory
investigation or proceeding or judicial proceeding arising in connection with
the Policies distributed under this Agreement. Broker and ManEquity further
agree to co-operate fully in any securities regulatory investigation or
proceeding or judicial proceeding with respect to Broker, ManEquity, their
affiliates and their agents or representatives to the extent that such
investigation or proceeding is in connection with policies distributed under
this Agreement. Broker shall furnish applicable Federal and State regulatory
authorities with any information or reports in connection with its services
under this Agreement which such authorities may
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Form AG0164US(0397)
<PAGE> 4
request in order to ascertain whether Manufacturers Life of America's operations
are being conducted in a manner consistent with any applicable law or
regulation. Without limiting the foregoing:
(a) Broker will promptly notify ManEquity of any customer
complaint (as defined by Section IM-3110(e) of the NASD Rules
of the Association) or notice of any regulatory investigation
or proceeding or judicial proceeding received by Broker with
respect to the policies distributed under this Agreement or
which may affect Manufacturers Life of America's issuance of
any of the policies distributed under this Agreement:;
(b) ManEquity will promptly notify Broker of any customer
complaint or notice of any regulatory investigation or
proceeding received by ManEquity or its affiliates with
respect to Broker or any agent or representative in connection
with any of the Policies distributed under this Agreement.
(c) In the case of a customer complaint, ManEquity and Broker will
co-operate in investigating such complaint and any response to
such complaint will be sent to the other party to this
Agreement for approval not less than five business days prior
to it being sent to the customer or regulatory authority,
except that if a more prompt response is required, the
proposed response shall be communicated by telephone or
telecopy.
SECTION 6 - INDEMNITY
(a) ManEquity agrees to indemnify and hold-harmless Broker and
each other officer, director or employee of Broker against any
losses, claims, damages or liabilities, joint or several, to
which Broker or such officer of director become subject under
the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof)arise
out of or are based upon any untrue statement or alleged
untrue statement of a material fact, required to be stated
therein or necessary to make the statements therein not
misleading, contained in any of the Registration Statements,
Prospectuses, supplements to the Prospectuses, or sale and
promotional materials approved by Manufacturers Life of
America.
(b) Broker agrees to indemnify and hold harmless Manufacturers
Life of America and ManEquity and each of their current and
former directors, officers and employees and each person, if
any, who controls or has controlled Manufacturers Life of
America or ManEquity within the meaning of the 1933 Act or the
1934 Act, against any losses, claims, damages or liabilities
to which Manufacturers Life of America or ManEquity or any
such director, officer, employee or controlling person may
become subject, under the 1933 Act of otherwise, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) Any unauthorized use of sales and promotional
materials or any verbal or written misrepresentations
or any unlawful sales practices or other improper
conduct concerning any of the Policies by Broker, its
agents or representatives;
(ii) Claims by agents or representatives or employees of
Broker for commissions, service fees, development
allowances or other compensation or remuneration of
any type; or
(iii) The failure of Broker, its officers, employees,
agents or representatives to comply with the
provisions of this Agreement.
Broker will reimburse Manufacturers Life of America
and ManEquity and any director, officer, employee or
controlling person of them for any legal or other
expenses reasonably incurred by Manufacturers Life of
America, ManEquity, or such director, officer,
employee, or controlling person of either for any
legal or other expenses reasonably incurred by
Manufacturers Life of America, ManEquity, or such
director, officer, employee, or controlling person in
connection with investigating or defending any such
loss, claim, damage, liability or action.
This indemnity Agreement will be in addition to any
liability which Broker may otherwise have.
SECTION 7 - REGULATION
This Agreement shall be subject to the provisions of the 1940 Act, the 1934 Act
and the rules , regulations, and rulings thereunder and of the NASD, from time
to time in effect including such exemptions or other relief from such Acts as
the SEC may grant, and the terms hereof shall be interpreted and construed in
accordance therewith. Broker shall submit to all
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Form AG0164US(0397)
<PAGE> 5
regulatory and administrative bodies having jurisdiction over the sales of the
Policies or operations of the Accounts, present or future, any information,
reports or other material which any such body by reason of this Agreement may
request or require pursuant to applicable laws and regulations.
SECTION 8 - SEVERABILITY
Should any portion of this Agreement for any reason be held to be void in law or
in equity, the Agreement shall be construed, insofar as is possible, as if such
portion had never been contained therein.
SECTION 9 - TERMINATION
This Agreement shall continue in force for one year from its effective date and
thereafter shall automatically be renewed every year for a further one-year
period, provided that wither party hereto may terminate this Agreement on sixty
(60) days' written notice to the other party hereto, without the payment of any
penalty. Upon termination of this Agreement all authorizations, rights and
obligations shall cease except:
(a) The obligation to settle accounts hereunder, including
commissions on payments subsequently received for Policies in
effect at the time of termination; and
(b) The Agreements contained in Sections 5, 6,7, and the last
sentence of Section 4 hereof.
SECTION 10 - ASSIGNMENT
Unless Broker and ManEquity specifically agree in writing, this Agreement shall
not be assigned.
SECTION 11 - GOVERNING LAW
This Agreement shall be construed in accordance with and governed by, the laws
of the Commonwealth of Colorado.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed under seal by their duly authorized officers as of the date first
mentioned above.
ManEquity, Inc.
By___________________________________________
Its
Broker
By ___________________________________________
Its
Broker Tax I.D. # __________________________________________
Page 5 of 6
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Form AG0164US(0397)
<PAGE> 6
Exhibit A
STANDARD'S OF SUITABILITY
VARIABLE LIFE POLICIES
Resolved, that the following Standards of Suitability which express the policy
of the Company with respect to determining the suitability for applicants for
variable life insurance policies be adopted:
(a) No recommendations shall be made to a potential applicant to
purchase a variable life insurance policy and no variable life
insurance policy shall be issued in the absence of reasonable
grounds to believe that the purchase of such policy is not
unsuitable for such applicant on the basis of information
furnished after reasonable inquiry of such applicant
concerning the applicant's insurance and investment
objectives, financial situation and needs, and any other
information known to the Company or to the agent making the
recommendation.
(b) Lapse rates for variable life insurance within the first two
policy years which are significantly higher than both those
encountered by the Company or any Affiliates for corresponding
fixed benefit life insurance policies and lapse rates of other
insurers issuing variable life insurance policies shall be
considered in determining whether the above guidelines adopted
by the Company are reasonable and also whether the Company and
its agents are engaging as a general business practice in the
sale of variable life insurance to persons for whom it is
unsuitable. For purposes of this Clause (2), conversions from
variable life insurance to fixed benefit insurance policies
pursuant to the NAIC Model Variable Life Insurance Regulation
shall not be considered lapses.
Page 6 of 6
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Form AG0164US(0397)
<PAGE> 1
Exhibit (A)(3)(b)(iv)
Manulife Logo BROKER/DEALER PRODUCER AGREEMENT
THIS AGREEMENT made this _____________ day of ____________19___________ BETWEEN:
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
(HEREINAFTER CALLED THE "COMPANY")
- AND -
________________________________________________________________________________
(hereinafter called the "Producer")
Witness that in consideration of the mutual covenants of the parties herein
contained, the parties hereto agree as follow:
1. STATUS
The Producer is hereby appointed an agent of the Company. It is understood
and agreed that there is no corporate affiliation between the Company and
the Producer and nothing contained herein shall be construed to create such
relationship.
In this Agreement, "Representative" refers to an individual who is a
shareholder, associate or employee of the Producer, and who acts in the
name of and on behalf of the Producer in soliciting, negotiating, or
accepting from the public applications for life insurance products offered
by the Company.
In order for the Producer to remain sponsored by the Company, the Producer
must have at least one (1) full-time Representative at all times. All
Representative(s) of the Producer must hold appropriate licenses and must
be appointed by the Company at all times.
If the Producer through any of its Representative(s) desires to sell any
variable life, annuity, or endowment products ("variable products")
produced currently or in the future by the Company or one of its
affiliates, it must also hold a valid dealer agreement with ManEquity, Inc.
2. RESPONSIBILITIES
(a) The Producer through its Representative(s) shall canvass for
applications for insurance and services offered by the Company and
collect, in exchange for receipts furnished by the Company, money due
or to become due to the Company in respect to applications and policies
obtained by or through the Producer.
(b) All applications for insurance products and services shall be signed by
a licensed Representative(s) of the Agency.
(c) The Producer shall ensure that its Representative(s) maintain a
standard of knowledge and competence in the sale of the Company's
products which is satisfactory to the Company.
(d) The Producer and its Representative(s) shall comply with all applicable
insurance laws and regulations. The Producer is required to obtain, and
from time to time renew, a license to sell insurance within the
state(s) in which the Producer intends to carry on business. The
Producer shall also be required to obtain, and from time to time renew,
a license for all of its Representative(s). If the Producer desires to
sell any variable products offered by the Company, additional licensing
is required under a ManEquity, Inc. dealer agreement.
Page 1 of 5
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Form AG0189US(0397)
<PAGE> 2
(e) When requested by the Company, the Producer and/or its
Representative(s) shall also purchase errors and omissions coverage in
an amount acceptable to the Company.
3. GENERAL CONDUCT AND REPRESENTATIVES
(a) The Producer and its Representative(s) shall not transact any business
for the Company unless duly licensed as required by law. The Producer
and its Representative(s) shall not transact any variable products
business for the Company unless contracted to do so by ManEquity, Inc.
(b) The Producer and its Representative(s) are not authorized to make
contracts on behalf of the Company, or to alter or amend any of the
provisions of the Company's contracts, or to waive forfeitures or bind
the Company in any way not specifically authorized in writing by the
Company. The Producer and its Representative(s) are not authorized to
pay any premium or premiums or other payments on behalf of an
applicant, policyholder, or beneficiary.
(c) Neither the Producer not its Representative(s) shall induce producers,
agents or brokers to leave the Company, or persuade policyholders to
discontinue their policies, or otherwise do anything prejudicial to the
Company's interest or that of its policyholders.
4. COMPENSATION
(a) Subject to Clause 5 "Regulations Governing Compensation and Credit"
and Clause 6 "Joint Business", compensation shall be determined and
shall be payable to the Producer while this Agreement is in force, in
accordance with (1) the Company's Schedule of Commissions in force
when an application for insurance is submitted to the Company and (2)
any Schedule of Supplemental Income which may be entered into by the
Producer and the Company and any amendments or supplements to those
schedules.
(b) The Producer's basic compensation shall be by commission which shall
be determined in accordance with the Schedule of Commissions. Other
forms of compensation above and beyond those set out in the Schedule
of Commissions and the Schedule of Supplemental Income, if any, may be
specifically provided for or allowed as an option by the Company at
its discretion. Commissions earned on the sale of variable products
are paid by or on the behalf of ManEquity, Inc.
(c) The Schedule of Commissions and the Schedule of Supplemental Income,
if any, and any amendments or supplements thereto, are subject to
change by the Company at any time. No change shall affect commissions
on Individual insurance products offered by the Company for which
applications were submitted to the Company prior to the effective date
of the change.
5. REGULATIONS GOVERNING COMPENSATION AND CREDIT
(a) When a policy is changed, the compensation, if any, shall be determined
by the Company.
(b) The Company shall determine the compensation on any new policy when:
i) A policy on the same life has been surrendered or; lapsed
within six (6) months of the application for the new policy; or
ii) The new policy appears to have replaced an existing policy or part
of a policy within six (6) months of the date of application.
The Producer shall immediately refund to the Company any excess
compensation received on the new policy.
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Form AG0189US(0397)
<PAGE> 3
(c) If the Company returns any part of or all of premium(s) paid in respect
to an issued policy, the Producer shall lose all right to any
compensation on such premiums. The Producer shall also immediately
refund to the Company the amount of any compensation received on the
returned premium.
(d) Where a policy has lapsed and the premium remains unpaid sixty (60)
days beyond the expiration of the grace period, the Company shall have
the right to take such policy out of the Producer's account of
business. The Producer shall immediately refund any compensation paid
in relation to such premiums not received by the Company and no further
compensation shall be payable to the Producer thereon.
(e) Where a policy has lapsed, the Producer shall immediately refund to the
Company any compensation received on the lapsed policy pursuant to the
Bonus provisions of the Schedule of Supplemental Income, if any.
(f) The Company may adjust compensation so that compensation does not
exceed the sales and surrender charges permitted by federal and state
securities laws.
6. JOINT BUSINESS
(a) Any policy other than those policies issued by the Company that are
deemed to be securities subject to regulation by the Securities and
Exchange Commission, effected by the Producer in conjunction with any
other producer, agent or broker of the Company, shall be considered as
joint business and, unless otherwise agreed to, the amount of
compensation shall be apportioned equally to each producer, agent or
broker. The Company requires written notice from the agent of record of
any such joint business and of the existence of any Agreement providing
for unequal apportionment of compensation.
(b) Any policy issued by the Company that is deemed a security subject to
regulation by the Securities and Exchange Commission may not be sold
jointly with any individual or firm not registered with the National
Association of Securities Dealers and contracted with ManEquity, Inc.
Any joint cases must be specified as such at the time the application
is delivered to the company.
7. RIGHT OF OFFSET
The Company may set off against any claims by the Producer under this
Agreement, and/or any attachment thereto, any debt or obligation or
liability due at any time to the Company, or any of its affiliates,
from the Producer as agent or otherwise, including but not limited to,
compensation due the Company pursuant to Clause 5 of this Agreement.
The Producer and/or its Representative(s) will become personally liable
for the portion of any debit balance equal to advances on unearned
compensation which appears in the Producer's Advance Account. Said
portion of the debit balance shall be payable by the Producer upon
demand of the Company. At the option of the Company, interest at the
maximum rate permissible by state law will accrue on said portion of
the debit balance from the time a debit balance occurs in such an
account. The ledger account of the Company shall be competent and
conclusive evidence of the state of accounts between the parties
concerned. This right of offset shall be in addition to and shall not
limit the Company's use of any other remedy available to it.
8. COMPANY RECORDS
The Producer shall promptly deliver to the Company all applications
whether reported on favorably or unfavorably by the medical examiner
and shall keep regular and accurate accounts of
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Form AG0189US(0397)
<PAGE> 4
all transactions with or for the Company. All books of account,
letters, documents, vouchers, status and service notices and other
books and papers connected with the business of the Company and
maintained by or in the possession of the Producer shall be open to the
Company or its representative for the purposes of examination.
9. COLLECTIONS AND REMITTANCES
The Producer shall immediately remit to the Company all monies received
or collected by the Producer on behalf of the Company. The Producer
shall not use any such monies for any other purpose.
10. LICENSED REPRESENTATIVE(S)
The Producer undertakes to notify the Company immediately in writing of
any new Representative(s) or of any change in the employment status of
any of the Producer's Representative(s). The Producer shall not add any
new Representative(s) without first notifying the Company.
Should the Company cease to sponsor the license of a Representative of
the Producer for any reason, the Company shall give the Producer and
the Representative fifteen (15) days notice in writing. Upon the
effective date of the notice, the Representative shall immediately
cease to act on behalf of, or in the name of, the Producer.
11. TERMINATION
Either party may terminate this Agreement at any time with or without
cause by giving the other party fifteen (15) days' notice in writing.
Termination shall not, however, release the Producer from any debt due
the Company and until such debt shall have been paid, the obligations
and covenants of the Producer as set out in this Agreement shall remain
in force and effect.
The Producer agrees that, in addition to the foregoing, the happening
of any of the following events will also cause termination of this
Agreement:
(a) the bankruptcy or insolvency of the Producer;
(b) the winding up or dissolution of the Producer;
(c) the Producer ceasing to have its license sponsored by the
Company;
(d) the Producer ceasing to hold a valid state license to sell
insurance products for the Company;
(e) the Producer ceasing to hold a valid dealer agreement with
ManEquity, Inc.
12. EFFECT OF TERMINATION OF COMPENSATION
To the extent permitted by federal or state security laws, upon
termination of this Agreement, the Company shall pay the Producer or
his/her successors and assigns, or his/her estate commissions on
premiums paid to the Company after the termination of this Agreement on
any policies put in force by the Producer under this Agreement.
13. ASSIGNMENT
No rights or interest of the Producer in or under or by virtue of this
Agreement shall be merged, or subject to sale or assignment without the
prior consent of the Company.
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<PAGE> 5
14. MEDICAL EXAMINATION AND FEES
All medical examination shall be made by a duly appointed medical
examiner of the Company and the Company shall pay only such medical
fees as are authorized by it.
15. CURRENCY
All amounts payable under this Agreement shall be payable in the lawful
currency of the United States of America.
16. EFFECT
The Company shall have no responsibility for the effect this Agreement
may have on the federal, state or local taxes of the Producer. It is
further agreed that the Producer is not relying on the Company for any
advice relating to the effect of this Agreement on such taxes.
17. EXISTING AGREEMENTS
In consideration of this Agreement, all existing agreements between the
Company and the Producer shall terminate from the effective date of
this Agreement, except as to compensation payable in accordance with
such agreements.
18. APPLICABLE LAW
This Agreement shall be governed by and construed according to the laws
of the state of CT .
19. EFFECTIVE DATE
This Agreement becomes effective the _________ day of _________ 19____
IN WITNESS WHEREOF the parties to this Agreement have set their hands as of the
day and year first written above.
WITNESS:____________________________ ________________________________________
Authorized Signature
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF AMERICA
WITNESS:____________________________ ________________________________________
Producer Signature
By: ____________________________________
Name/Title
Page 5 of 5
- --------------------------------------------------------------------------------
Form AG0189US(0397)
<PAGE> 1
EXHIBIT (A)(3)(C)
COMMISSION SCHEDULE
First Year Two schedules will be available.
Commission Schedule II will be available to
qualifying producers only:
Schedule I:
10% of premiums paid up to the Target
Premium in each of policy years 1-5.
Schedule II:
12.25% of premiums paid up to the
Target Premium in policy year 1. 9.25%
of premiums paid up to the Target
Premium in each of policy years 2 - 5.
Renewal 2.5% of premiums paid in excess of the
Commission Target Premium in policy years 1 - 5.
2.5% of all premiums paid in policy
years 6 and later.
Per Policy $100 per policy, paid at the beginning
Service Fee of each policy year.
Asset Builder A percentage of the non-loaned policy
Compensation value at the beginning of the year.
This percentage varies by policy year
as follows:
Policy Year Percentage
1-5 0.00%
6-10 0.10%
11+ 0.20%
Commission on First year commission at the rate
Increases shown above is paid on premium
allocated to the increase up to the
Target Premium for the increase.
<PAGE> 1
Exhibit (A)(8)(a)(i)
SERVICE AGREEMENT
THIS AGREEMENT, effective as of 12:01 A.M. (EDT), June 1, 1988, between
The Manufacturers Life Insurance Company, a mutual life insurance company
organized under the laws of Canada ("Manufacturers"), and The Manufacturers Life
Insurance Company of America, a stock life insurance company domiciled in the
Commonwealth of Pennsylvania ("Manufacturers of America").
WITNESSETH
WHEREAS, Manufacturers carries on the business of life insurance and
it's related products;
AND WHEREAS, Manufacturers of America carries on the business of life
insurance and its related products and is an indirect wholly-owned subsidiary of
Manufacturers;
AND WHEREAS, Manufacturers of America wishes to have Manufacturers
service its life insurance business operations, including both general account
and separate account operations;
AND WHEREAS, Manufacturers and Manufacturers of America desire that an
agreement be made between them concerning the operation of their businesses for
their mutual benefit;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter expressed, and other good and valuable consideration, the
Parties agree as follows:
Section 1. GENERAL SERVICES.
Manufacturers shall provide Manufacturers of America, as required by
Manufacturers of America, with the services of both Manufacturers' departments
and branches, including but not limited to, data processing, claims, legal, tax,
accounting, internal audit, corporate compliance, human resources, payroll,
purchasing and supply, office planning, printing and art, reinsurance,
investments, marketing and actuarial.
Section 2. PERSONNEL.
(a) Manufacturers shall determine which of its employees are
available to perform services for Manufacturers of America and
Manufacturers of America shall designate certain of these
employees as employees, officers or directors of Manufacturers
of America. Manufacturers shall pay the full salaries and
benefits of Manufacturers of America's staff.
(b) It is understood and agreed that the employees of
Manufacturers (including those who are also employees,
officers or directors of Manufacturers of America) in
performing services pursuant to this Agreement for
Manufacturers of America shall, with respect to all other
forms of their compensation, be acting as employees of
Manufacturers. The remuneration of such directors, officers
and employees received from Manufacturers shall constitute
payment in full for any services they perform for
Manufacturers of America and in no event shall such officers
and employees have a claim for remuneration from Manufacturers
of America. Manufacturers agrees to hold-harmless and
indemnify Manufacturers of America as a result of any claim
for remuneration by any officer or employee of Manufacturers.
Section 3. OFFICE SPACE, EQUIPMENT AND SUPPLIES.
Manufacturers shall provide Manufacturers of America with and pay for
certain office space, equipment, supplies and data processing services as may be
required by Manufacturers of America from time to time. Manufacturers also shall
directly pay certain operating expenses and miscellaneous business expenses of
Manufacturers of America as may be required by Manufacturers of America and
agreed to at
<PAGE> 2
the time by Manufacturers. Manufacturers shall also provide Manufacturers of
America with office equipment which both Parties determine to be necessary for
the operation of Manufacturers of America.
Section 4. ADMINISTRATIVE SERVICES.
(a) Subject to the provisions of Section 10 herein, Manufacturers
agrees to act, in the name of Manufacturers of America, as
Administrative Manager for Manufacturers of America with
respect to the business of life insurance and its related
products (both general account and separate account) carried
on by Manufacturers of America and to perform all
administrative, marketing and technical functions in
connection with the development, management, marketing and
processing of the business related thereto including, by not
limited to, billing and collection of premiums, processing of
claims, answering policyowner correspondence, maintenance of
necessary data processing and other records, payment of
producer's commissions (including the responsibility for an
expense of computation of any contingent commissions),
underwriting, appointment and cancellation of agencies and
cancellation of policies. Manufacturers shall manage the
investment of all general account assets of Manufacturers of
America.
(b) Manufacturers and Manufacturers of America shall not sell the
same policy simultaneously in the same jurisdiction.
Furthermore, Manufacturers shall not knowingly be in a
position of having conflicting interests with Manufacturers of
America due to activities which actually amount to business
competition with Manufacturers of America.
(c) Premiums collected by Manufacturers on behalf of Manufacturers
of America shall be held by Manufacturers in fiduciary
capacity with respect to Manufacturers of America and shall be
paid over to Manufacturers of America immediately following
collection.
Section 5. RECORDS.
(a) Manufacturers of America shall own and control all files,
documents, correspondence, papers and other records of every
kind and description maintained and prepared by Manufacturers
in connection with the services provided by Manufacturers
hereunder and Manufacturers shall prepare and maintain such
basic policy records and other business records as are usual
and customarily prepared and necessary for Manufacturers of
America to perform in its proper function as an insurer and to
meet all regulatory requirements. Manufacturers shall not
disclose or use any records prepared by reason of this
Agreement in any manner except as expressly authorized herein
or directed by Manufacturers of America and shall keep
confidential any information obtained by reason of this
Agreement. Upon termination of this Agreement and if requested
by Manufacturers of America, Manufacturers shall promptly
return to Manufacturers of America or its designee all such
records.
(b) Manufacturers shall furnish the Commissioner of Insurance of
Pennsylvania (the "Commissioner") with any information or
reports in connection with any of the services provided
hereunder which the Commissioner may request.
(c) Manufacturers of America shall have access to the books and
records of Manufacturers and shall have the right to examine
and audit the books and records pertaining to the business
operations serviced under this agreement.
<PAGE> 3
Section 6. COMPLIANCE WITH LAW.
In the performance of such services as described in Section 1, 4 and
5(a) herein, Manufacturers shall comply with applicable laws, rules and
regulations of the Pennsylvania Insurance Department and the insurance
regulatory authorities of other jurisdictions in which the policies serviced
under this Agreement are issued. Manufacturers shall submit to all regulatory
and administrative bodies having jurisdiction over the services provided
pursuant to this Agreement, present of future, any information, reports or other
material which any such body by reason of this Agreement may request or require
pursuant to applicable laws and regulations.
Section 7. PERFORMANCE OF SERVICES.
The services to be performed by Manufacturers hereunder will be
performed at the Home Office of Manufacturers in Toronto, Ontario, Canada as
well as the United States Branch Offices of Manufacturers. In the event
Manufacturers of America wishes to directly perform the functions handled by
Manufacturers under this Agreement, Manufacturers of America shall be entitled
to terminate this Agreement at any time.
Section 8. COMPENSATION.
(a) Manufacturers of America shall reimburse Manufacturers for the
reasonable cost of the services provided by Manufacturers'
internal departments and branches under Sections 1, 4, and
5(a) hereof. Manufacturers of America shall also fully
reimburse Manufacturers for the expenses it reasonable incurs
or payments it reasonably makes on behalf of Manufacturers of
America under any provisions of this Agreement.
(b) Manufacturers shall submit statements from time to time, but
no less often than annually, to Manufacturers of America for
all amounts payable under the terms of this Agreement, and
payment shall be made by Manufacturers of America as soon
thereafter as is reasonably possible.
Section 9. CLAIM SETTLEMENT.
Pursuant to claim settlement policies utilized by Manufacturers of
America and subject to Manufacturers of America's right to review at any time
the procedures followed by Manufacturers in implementing said settlement
policies, Manufacturers shall be authorized to pay, compromise or settle any
claim or other cause of action arising from the insurance operations serviced
hereby.
Section 10. RESERVATION OF AUTHORITY.
(a) Manufacturers is not authorized by this Agreement to (i)
extend credit for Manufacturers of America nor (ii) alter,
waive or modify any of the terms, conditions, or limitations
of any policy serviced hereunder.
(b) The officers and Board of Directors of Manufacturers of
America retain the right to supervise and control all
functions performed by Manufacturers on behalf of
Manufacturers of America.
(c) Manufacturers of America shall retain custody of
responsibility for and control of all investments while
Manufacturers manages the investment of all general account
assets of Manufacturers of America.
(d) Manufacturers of America has the ultimate right to control all
matters relating to policy development, underwriting,
marketing, cancellation of policies, cancellation of agency
appointments and the determination of agents commissions.
(e) Any duties not delegated to Manufacturers hereunder are
retained by Manufacturers of America.
<PAGE> 4
Section 11. LIABILITY.
Manufacturers shall be liable for its own misconduct, negligence and
gross negligence in providing the services set forth in this Agreement.
Section 12. ASSIGNMENT.
The rights, obligations, and interests of the Parties under this
Agreement shall not be assignable in whole or in part.
Section 13. SEVERABILITY.
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, so far as is possible, as
if such portion had never been contained herein.
Section 14. ENTIRE AGREEMENT.
This Agreement contains the entire understanding of the Parties and may
not be amended except by an agreement in writing of subsequent date signed by
the Parties.
Section 15. HEADINGS.
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part thereof.
Section 16. TERMINATION.
Either Party may terminate this Agreement without penalty, by 60 days'
notice in writing, delivered personally or addressed to the other at its Home
Office. In any event, however, this Agreement shall terminate no later than five
years after its effective date.
Section 17. GOVERNING LAW.
This Agreement shall be governed by and construed according to the laws
of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, The Manufacturers Life Insurance Company and The
Manufacturers Life Insurance Company of America have caused this Agreement to be
executed and their Corporate Seals affixed hereto effective the date first
mentioned above.
THE MANUFACTURERS LIFE INSURANCE COMPANY
By:_____________________________________
Its:
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
By:_____________________________________
Its:
<PAGE> 1
Exhibit (A)(8)(a)(ii)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to the Service Agreement dated as of June 1, 1988 is
entered into this 31st day of December, 1992 between The Manufacturers Life
Insurance Company, a mutual life insurance company organized under the laws of
Canada ("Manufacturers") and The Manufacturers Life Insurance Company of
America, a stock life insurance company domiciled in the Commonwealth of
Pennsylvania ("Manufacturers of America").
WITNESSETH
WHEREAS, Manufacturers of America is in the process of redomesticating
from the Commonwealth of Pennsylvania to the State of Michigan; and
WHEREAS, Manufacturers of America is introducing new products which may
involve the use of non-insulated, non-unitized separate accounts; and
WHEREAS, under Michigan law these non-insulated, non-unitized separate
accounts are subject to the same investment laws as the general account;
NOW THEREFORE Manufacturers and Manufacturers of America hereby agree
as follows:
1. Effective upon approval of the redomestication of Manufacturers of
America to the State of Michigan, Section 17 of the Agreement shall be deemed to
be amended to read as follows:
"Section 17. Governing Law.
This Agreement shall be governed by and construed according to the laws
of the State of Michigan".
2. Effective upon the date Manufacturers of America first offers to the
public products registered on Form S-1 of the Securities and Exchange
Commission, the last sentence of Section 4(a) of the Agreement shall be deemed
to be amended to read as follows:
"Manufacturers shall manage the investment of all general account
assets of Manufacturers of America and assets of any separate accounts
which are subject to the same investment regulations as the general
account".
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal by their duly authorized officers as of the date first
above-mentioned.
THE MANUFACTURERS LIFE INSURANCE
[Seal] COMPANY
_________________________________ By:__________________________________
Its:_________________________________
THE MANUFACTURERS LIFE INSURANCE
[Seal] COMPANY OF AMERICA
_________________________________ By:__________________________________
Its:_________________________________
<PAGE> 1
Exhibit (A)(8)(a)(iii)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to the Service Agreement dated as of June 1, 1988 is
entered into this 31st day of May, 1993 between The Manufacturers Life Insurance
Company, a mutual life insurance company organized under the laws of Canada
("Manufacturers") and The Manufacturers Life Insurance Company of America, a
stock life insurance company domiciled in the State of Michigan ("Manufacturers
of America").
WITNESSETH
WHEREAS, the Service Agreement is scheduled to terminate May 31, 1993;
and
WHEREAS, Manufacturers and Manufacturers of America wish to extend the
term of the Service Agreement;
NOW THEREFORE Manufacturers and Manufacturers of America hereby agree
as follows:
1. Effective as of 12:01 A.M. (EDT), June 1, 1993, Section 16 of the
Agreement shall be deemed to be amended to read as follows:
"SECTION 16. TERMINATION.
Either party may terminate this Agreement without penalty, by 60 days'
notice in writing, delivered personally or addressed to the other at
its home office. In any event, however, this Agreement shall terminate
no later than five years after its effective date."
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal by their duly authorized officers as of the date first
above-mentioned.
THE MANUFACTURERS LIFE INSURANCE
COMPANY
By:_________________________________
Its:________________________________
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
By:_________________________________
Its:________________________________
<PAGE> 1
Exhibit (A)(8)(a)(iv)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to the Service Agreement dated as of June 1, 1988 is
entered into this 30th day of June, 1993 between The Manufacturers Life
Insurance Company, a mutual life insurance company organized under the laws of
Canada ("Manufacturers") and The Manufacturers Life Insurance Company of
America, a stock life insurance company domiciled in the State of Michigan
("Manufacturers of America").
WITNESSETH
WHEREAS, Manufacturers of America has redomesticated from the
Commonwealth of Pennsylvania to the State of Michigan;
NOW THEREFORE Manufacturers and Manufacturers of America hereby agree
as follows:
1. Section 5(b) of the Agreement shall be deemed to be amended to read as
follows:
"SECTION 5. RECORDS.
Manufacturers shall furnish the Commissioner of Insurance of Michigan
(the "Commissioner") with any information or reports in connection with
any of the services provided hereunder which the Commissioner may
request."
2. Section 6 of the Agreement shall be deemed to be amended by
substituting "Michigan Insurance Department" for "Pennsylvania Insurance
Department" in the third line thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal by their duly authorized officers as of the date first
above-mentioned.
THE MANUFACTURERS LIFE INSURANCE
[Seal] COMPANY
_________________________________ By:_________________________________
Its:________________________________
THE MANUFACTURERS LIFE INSURANCE
[Seal] COMPANY OF AMERICA
_________________________________ By:_________________________________
Its:________________________________
<PAGE> 1
Exhibit (A)(8)(a)(v)
AMENDMENT TO SERVICE AGREEMENT
BETWEEN
THE MANUFACTURERS LIFE INSURANCE COMPANY
AND
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
THIS AMENDMENT is made as of December 31, 1996;
WHEREAS, THE MANUFACTURERS LIFE INSURANCE COMPANY ("Manulife") and THE
MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA ("ManAmerica") entered into a
Service Agreement dated June 1, 1988 (the "Agreement") under which Manulife
provided certain services to ManAmerica both in the United States and at
Manulife's head office in Toronto, Ontario;
NOW THEREFORE, the parties hereto agree as follows:
1. Except as otherwise expressly provided herein, capitalized terms used
herein which are defined in the Amendment shall have the meanings
specified for such terms in the Agreement (as amended by the
Amendment).
2. The Agreement is hereby amended by adding The Manufacturers Life
Insurance Company (U.S.A.) ("Manulife (USA)") as a party to the
Agreement.
3. All Services previously performed in the United States by Manulife
shall now be performed by Manulife (USA).
4. This Amendment is not intended to increase the services provided to
ManAmerica under the Agreement.
5. Manulife and Manulife (USA) shall provide a single accounting for all
services provided under the Agreement which shall separately identify
the services and costs associated with such services provided by each
company.
6. The services provided under this Amendment shall be provided at cost.
7. Except as amended herein, the Agreement shall continue in full force
and effect.
8. This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument, and all signatures need not
appear on any one counterpart.
<PAGE> 2
IN WITNESS WHEREOF, each party hereto has executed this Amendment by its duly
authorized officer as of the date first written above.
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF AMERICA
By:_________________________________________
Name:
Title:
THE MANUFACTURERS LIFE INSURANCE
COMPANY
By:_________________________________________
Name:
Title:
Accepted on the date first above written by:
THE MANUFACTURERS LIFE INSURANCE
COMPANY (U.S.A.)
By:_________________________________________
Name:
Title:
<PAGE> 1
Exhibit (A)(8)(a)(vi)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to the Service Agreement dated as of June 1, 1988 is
entered into as of the 31st day of May, 1998 between The Manufacturers Life
Insurance Company ("Manufacturers"), a mutual life insurance company organized
under the laws of Canada, The Manufacturers Life Insurance Company (U.S.A.)
("Manufacturers USA") and The Manufacturers Life Insurance Company of America
("Manufacturers of America"), both of which being a stock life insurance company
domiciled in the State of Michigan.
WITNESSETH
WHEREAS, Manufacturers and Manufacturers USA have entered into a
Service Agreement with Manufacturers of America (the "Service Agreement")
pursuant to which Manufacturers or Manufacturers USA will provide to
Manufacturers of America all issue, administrative, investment, general services
and recording functions with respect to all of its insurance policies; and
WHEREAS by an agreement dated May 31, 1993, the Service Agreement was
extended for a period of 5 years, which extension is due to expire on May 31,
1998;
WHEREAS, the Board of Directors of Manufacturers of America voted to
extend the terms of the Agreement
NOW, THEREFORE, Manufacturers, Manufacturers USA and Manufacturers of
America hereby agree that the Agreement shall be extended for 5 years effective
as of 12:01 A.M. (EDT), June 1, 1998 and shall expire at Midnight, May 31, 2003
provided that either party may terminate the Agreement prior thereto without
penalty, by 60 days' notice in writing, delivered personally or addressed to the
other at its home office.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal by their duly authorized officers as of the 31st day of
May, 1998.
THE MANUFACTURERS LIFE INSURANCE COMPANY
By: __________________________________
Its: ________________________________
<PAGE> 2
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
By: _____________________________________________
Its: ___________________________________________
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
By: _____________________________________________
Its: ___________________________________________
<PAGE> 1
EXHIBIT A(8)(b)
STOPLOSS REINSURANCE AGREEMENT
BETWEEN
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
(The Ceding Company, hereinafter referred to as "ManAmerica")
AND
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF TORONTO, ONTARIO, CANADA
(The Reinsuring Company, hereinafter referred to as
"Manufacturers Life")
<PAGE> 2
I - SCOPE
This Agreement applies to stop-loss reinsurance of standard and
substandard insurance arising from Base Plan and attaching Benefit
Riders issued by ManAmerica, as described in Schedule A and later
referred to as Flexible Premium Variable Life (FPVL).
II - AUTOMATIC REINSURANCE
This coverage is automatically provided for all FPVL policies issued by
ManAmerica, up to the amounts shown in Schedule B, and sold in any
calendar year starting at the effective date specified in section XV.
Amounts over those shown in Schedule B will be submitted facultatively
to Manufacturers Life.
III - LIABILITY
For reinsurance under this Agreement, the exposure to liability of
Manufacturers Life will commence simultaneously with the liability of
ManAmerica. Subject to the provisions of this section and section VII
and conditional to the payment of reinsurance premiums as provided for
in section VI of this Agreement, Manufacturers Life's exposure will
continue as long as ManAmerica is liable under the original policies
and shall cease when the liability of ManAmerica ceases.
IV - PLAN OF REINSURANCE
Manufacturers Life will reimburse the total death claims less the
associated policy values plus 100% of the total monthly deductions
waived on the policies reinsured in excess of the Attachment Point, as
set in Schedule C, on a calendar quarter basis in arrears.
Manufacturers Life shall not reimburse surrender benefits paid by
ManAmerica. Death claims shall exclude any amounts reimbursed under any
other reinsurance agreement on the policies reinsured hereunder.
V - PREMIUMS
The reinsurance premiums will be computed for each calendar quarter in
arrears as set out in Schedule D attached hereto.
If there is a reduction in liability due to any other reinsurance
agreement on the policies reinsured hereunder, the total premium will
be reduced by the premium associated with that liability.
VI - PAYMENTS/REPORTING
Within 15 days after the end of each calendar quarter, ManAmerica will
send to Manufacturers Life an itemized statement of account, in
substantial accord with Schedule E, together with any remittance for
the balance due to Manufacturers Life as stated therein. Manufacturers
Life will have 15 days after receipt of the statement of account to pay
any amounts owing to ManAmerica.
2
<PAGE> 3
ManAmerica will supply Manufacturers Life with details as outlined in
Schedule E. All policy details will be housed with ManAmerica.
VII - OVERSIGHTS
It is expressly understood and agreed that if non-payment of premiums
or failure to comply with any terms of this contract is shown to be
unintentional and the result of misunderstanding or oversights on the
part of either Manufacturers Life or ManAmerica, both Manufacturers
Life and ManAmerica shall be restored to the position they would have
occupied had no such error or oversights occurred.
VIII - CLAIMS
ManAmerica shall give Manufacturers Life a copy of the total death
benefit claims, the policy value of those policies as well as total
monthly deductions waived on the policies reinsured hereunder net of
any amount reimbursed under any other reinsurance agreement.
Manufacturers Life shall be liable to ManAmerica for the total claims
in excess of the Attachment Point as defined in Schedule C. Any
liability of Manufacturers Life shall be settled in one lump-sum.
IX - CURRENCY
Reinsurance under this Agreement will be effected on an original
currency basis whereby the risk and premium amounts will be expressed
in U.S. Dollars. Settlements for all amounts due to either party by the
other as a result of transactions under the provisions of this
Agreement shall be paid in U.S. Dollars.
X - INSOLVENCY
In the event of the insolvency of ManAmerica, all reinsurance under
this Agreement will be paid by Manufacturers Life directly to
ManAmerica, its liquidator, receiver or statutory successor, on the
basis of the liability of ManAmerica under the policies reinsured
without diminution because of the insolvency of ManAmerica, or because
the Company has failed to pay all or a portion of any claims.
XI - INSPECTION OF RECORDS
Manufacturers Life shall have the right, at any reasonable time, at the
office of ManAmerica to examine all books and documents relating to
reinsurance under this Agreement.
XII - ARBITRATION
All disputes and differences between the two contracting parties upon
which an amicable understanding cannot be reached are to be decided by
arbitration and the arbitrators, one is to be appointed by ManAmerica,
the second by Manufacturers Life and the third is to be selected by
these two representatives. Should the two arbitrators be unable to
agree on the choice of a third, the appointment shall be left to the
President of the American Council of Life insurance, or its successor.
3
<PAGE> 4
The arbitrators are not bound by any rules of law. They shall decide by
a majority of votes and from their written decision there can be no
appeal. The cost of arbitration, including the fees of the arbitrators,
shall be shared by each party unless the arbitrators shall decide
otherwise.
XIII - SEVERABILITY
In the event that any of the provisions herein contained shall be
invalid or unenforceable, such declaration or adjudication shall in no
manner affect or impair the validity or the enforceability of the other
provisions and the remaining provisions shall remain in full force and
effect as though such invalid or unenforceable provisions or clauses
had not been herein included or made part of the Agreement.
XIV - DURATION OF AGREEMENT
This Agreement will be effective on and after the effective date stated
in section XV.
This Agreement may be amended only be mutual consent of ManAmerica and
Manufacturers Life.
ManAmerica and Manufacturers Life may terminate this Agreement by
giving ninety (90) days prior written notice of termination. The day
the notice is received in the mail at the other party's Home Office,
or, if the mail is not used, the day it is delivered to the other
party's Home Office or to an Officer of the other party, as the case
may be, shall be the first day of the ninety (90) day period.
During the ninety (90) day period, this Agreement shall continue to
operate in accordance with its terms.
Manufacturers Life and ManAmerica shall remain liable after
termination, in accordance with the terms and conditions of this
Agreement, with respect to all reinsurance which was effective prior to
termination of this Agreement.
4
<PAGE> 5
XV - EXECUTION
In witness of the above, this Agreement is signed in duplicate on the
dates and at the places indicated below.
The effective date of this Agreement is, the 1st day of January, 1988.
Date: ___________________________ For: ___________________________
Place ___________________________ By: ____________________________
Attest: _________________________ Title: _________________________
Date: ___________________________ For: ___________________________
Place ___________________________ By: ____________________________
Attest: _________________________ Title: _________________________
5
<PAGE> 6
SCHEDULE A
POLICY SUBJECT TO REINSURANCE
Base Plan: Flexible Premium Variable Life
Riders: - Accidental Death Benefit
- Guaranteed Insurability Benefit
- Additional Life Benefit
- Supplementary Insurance Benefit
- Contingent Life Benefit
- Total Disability Waiver of Monthly Deductions Benefit
6
<PAGE> 7
SCHEDULE B
RETENTION LIMITS OF MANUFACTURERS LIFE
Life $7,500,000
Aviation Risk $5,000,000
Accidental Death $1,000,000
Total Disability Waiver
of Monthly Deductions $5,000 per month
7
<PAGE> 8
SCHEDULE C
ATTACHMENT POINT
The Attachment Point shall be 110% of the expected claims. Expected
claims, for a given period, are defined as 75% of the total insurance
charges for the base plan and riders, as described in Schedule A,
deducted during that period for the coverages reinsured hereunder.
8
<PAGE> 9
SCHEDULE D
REINSURANCE PREMIUMS
Reinsurance premiums shall be paid at the end of each calendar quarter,
in arrears, and shall be computed as 5% of the expected claims as
defined in Schedule C.
9
<PAGE> 10
SCHEDULE E
STOPLOSS REINSURANCE AGREEMENT BETWEEN MANAMERICA
AND MANUFACTURERS LIFE
Statement of account for the period
XX/XX/XX TO XX/XX/XX
A. Total insurance charges (base plans and riders)
deducted during the period: X,XXX.xx
B. Expected claims (75% of A): X,XXX.xx
C. Attachment point (110% of B): X,XXX.xx
D. Actual claims: X,XXX.xx
E. Policy values of policies at time of death X,XXX.xx
F. Reinsured claims (excess, if any, of D-E) over C X,XXX.xx
G. Reinsurance premium (5% of B): X,XXX.xx
Net amount due (owing) = F-G X,XXX.xx
========
10
<PAGE> 1
Exhibit (A)(8)(c)(i)
SERVICE AGREEMENT
AGREEMENT, made this 2nd day of January, 1991 between The Manufacturers
Life Insurance Company, a mutual life insurance company organized under the laws
of Canada ("Manulife Financial"), and ManEquity, Inc., a Colorado corporation
("ManEquity");
W I T N E S S E T H:
WHEREAS, ManEquity is an indirect wholly-owned subsidiary of Manulife
Financial;
AND WHEREAS, ManEquity is registered as a broker/dealer under the
Securities Exchange Act of 1934 (the "Securities Exchange Act") and is a member
of the National Association of Securities Dealers Inc. (the "NASD");
AND WHEREAS, ManEquity sponsors as its registered representatives
producers for Manulife Financial (including producers associated with Manulife
Financial's affiliate, The Manufacturers Life Insurance Company of America
("Manufacturers of America")), as may be selected by Manulife Financial or
Manufacturers of America and approved by ManEquity;
AND WHEREAS, ManEquity assumes the responsibility to direct the
training and supervision of such producers with respect to their sales through
ManEquity of certain variable contracts issued by Manufacturers America;
AND WHEREAS, ManEquity is the principal underwriter of certain variable
contracts issued by Manufacturers of America;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
parties do hereby agree as follows:
Section 1. Termination of Prior Agreements.
This Agreement cancels and terminates, as of its effective date, all
prior agreements between the parties hereto covering any of the services covered
hereby.
Section 2. Sales and Training Material.
Both parties agree to submit all applicable sales and training material
to the other for approval prior to use. With respect to sales literature or
material prepared by Manulife Financial used in connection with variable
contracts issued by Manufacturers of America and distributed by ManEquity,
ManEquity shall make timely filings with the Securities and Exchange Commission,
NASD, and other regulatory authorities.
Section 3. Appointment of Registered Representatives.
ManEquity agrees that, unless otherwise agreed to by Manulife
Financial, it will appoint as registered representatives only individuals who
are employed by Manulife Financial or are
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under contract with Manulife Financial or Manufacturers of America as life
insurance producers, agents, or brokers.
Section 4. Duties of Manulife Financial.
(a) Personnel, Office Space, Equipment, and Reimbursement of
Variable Contract Costs. Manulife Financial shall provide
ManEquity with its personnel, office space, supplies and
equipment as required by ManEquity. Manulife Financial shall
determine which of its employees is available to perform
services for ManEquity and shall pay the full salaries and
benefits of all employees who provide services for ManEquity.
Manulife Financial may, but is not obligated to, pay the cost
of training and qualifying Manulife Financial's employees and
procedures and agents of Manulife Financial or Manufacturers
of America to become registered representatives or registered
principals of ManEquity. Manulife Financial may, but is not
obligated to, reimburse ManEquity for all reasonable costs
incurred in connection with ManEquity's administrative and
operational performance as a principal underwriter of variable
contracts issued by Manufacturers of America.
(b) Manufacturers of America Variable Contract Sales Commissions.
On ManEquity's behalf, Manulife Financial shall pay the sales
commissions earned by registered representatives selling
variable contracts issued by Manufacturers of America and
distributed by or through ManEquity and shall prepare and
maintain all necessary records of such payments. On
ManEquity's behalf, Manulife Financial shall calculate and
furnish periodic reports to Manufacturers of America of the
commissions and service fees payable to agents, brokers,
general agents and sales managers of Manufacturers of America
in connection with sales of variable contracts issued by
Manufacturers of America.
Manulife Financial is not authorized to offset any debit
balances owed by agents or producers of Manulife Financial or
Manufacturers of America by crediting commissions earned by
such agents of producers in connection with their sales of
variable contracts issued by Manufacturers of America, except
for debit balances related to sales by Manufacturers of
America agents and producers of variable contracts issued by
Manufacturers of America. Payment of advances against sales of
variable contracts issued by Manufacturers of America is
prohibited.
(c) Records. Manulife Financial shall prepare and maintain all
books and records required to be prepared and maintained by
ManEquity with respect to variable contracts issued by
Manufacturers of America and distributed by or through
ManEquity. Such records shall include the records required to
be maintained and preserved by Rules 17a-3 and 17a-4 under the
Securities Exchange Act.
ManEquity shall own and control all files, documents,
correspondence, records and papers of every kind and
description prepared and maintained by Manulife Financial in
connection with the services provided by Manulife Financial's
personnel hereunder. Manulife Financial shall submit to all
regulatory and administrative bodies having jurisdiction over
the services provided pursuant to this Agreement, present or
future, any information, reports or other material which any
such body by reason of this Agreement may request or require
pursuant to applicable laws and
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regulations. Manulife Financial and its personnel shall not
disclose or use any records prepared by reason of this
Agreement in any manner except as expressly authorized herein
or directed by ManEquity and shall keep confidential any
information obtained by reason of this Agreement. Unless
otherwise directed by ManEquity, upon termination of this
Agreement, Manulife Financial shall promptly return to
ManEquity or its designee all such records maintained and
prepared by reason of this Agreement.
(d) Confirmation Procedures: Policies Issued by Manufacturers of
America. Pursuant to Rule 10b-10 under the Securities Exchange
Act, ManEquity and Manufacturers of America must confirm the
receipt and allocation of premiums payable under variable life
and variable annuity policies issued by Manufacturers of
America. Manulife Financial shall prepare these confirmation
statements in accordance with the applicable rules and
regulations on behalf of ManEquity and Manufacturers of
America and prepare and maintain all necessary books and
records in connection with such procedures. ManEquity and
ManAmerica shall approve the form of any such statement used
by Manulife Financial.
If a Policyowner wishes to change his allocation, an
appropriate form or instructions for utilizing Manulife
Financial's telephone request line will be provided by
Manulife Financial. Within seven days after receipt of such
request, Manulife Financial will send the Policyowner a
statement setting forth the revised allocation.
If a Policyowner wishes to transfer amounts attributable to
his policy from one subaccount of a Separate Account to
another, he may do so by completing a form furnished for that
purpose by Manulife Financial or by utilizing Manulife
Financial's telephone request line. Within seven days of
receipt of a request to transfer, a statement will be sent to
the Policyowner by Manulife Financial showing the amount
allocated to each subaccount of the appropriate Separate
Account before and after the transfer.
Manulife Financial shall also send any and all other notices
required by law or by contract.
Section 5. Duties of ManEquity.
ManEquity shall remit all sales commissions in connection with sales of
variable contracts issued by Manufacturers of America to Manulife Financial for
proper disbursement by Manulife Financial on behalf of ManEquity in accordance
with the terms of this Agreement.
Section 6. Compensation.
(a) Personnel, Office Space and Equipment. ManEquity shall
reimburse Manulife Financial for the reasonable cost of
services provided by Manulife Financial's personnel and for
the costs related to ManEquity's use of office space, supplies
and equipment provided by Manulife Financial. Manulife
Financial shall submit statements from time to time, but no
less often than annually, to ManEquity for all costs payable
in connection with these services provided by Manulife
Financial
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under the terms of this Agreement, and payment shall be made
by ManEquity as soon thereafter as is reasonably possible.
(b) No Additional Compensation. This Agreement does not entitle
Manulife Financial to any compensation beyond reimbursement
for payment of sales commissions and its costs in providing
services, supplies, equipment and office space.
Section 7. Compliance With Law.
In the performance of such services as are provided for hereunder,
Manulife Financial's personnel shall comply with applicable laws, rules and
regulations, including but not limited to the Securities and Exchange Act.
Section 8. Reservation of Control and Authority.
ManEquity retains the ultimate responsibility and authority for
direction and control of the services provided by Manulife Financial pursuant to
this Agreement.
Section 9. Limitation of Liability of Manulife Financial.
Manulife Financial will not be liable as a result of any error of
judgment or mistake of law for any loss suffered by ManEquity in connection with
the matters dealt with under this Agreement. Nothing contained in this Agreement
shall be construed to protect Manulife Financial against liability to which
Manulife Financial shall otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of its duties to ManEquity,
reckless disregard of Manulife Financial's obligations and duties under this
Agreement, or the violation of any applicable law.
Section 10. Termination of Agreement.
This Agreement shall become effective as of the date first above written. This
Agreement may be terminated at any time without the payment of any penalty, by
ManEquity or by Manulife Financial, on sixty days' written notice to the other
party.
Section 11. Headings
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part thereof.
Section 12. Entire Agreement.
This Agreement contains the entire understanding and agreement of the
parties.
Section 13. Severability.
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained therein.
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Section 14. Governing Law.
This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
execute under seal by their duly authorized officers as of the date first
mentioned above.
THE MANUFACTURERS LIFE
INSURANCE COMPANY
Attest: By:___________________________
Title:
MANEQUITY, INC.
Attest: By:___________________________
Title:
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Exhibit (A)(8)(c)(ii)
AMENDMENT TO SERVICE AGREEMENT
BETWEEN THE MANUFACTURERS LIFE INSURANCE COMPANY
AND MANEQUITY, INC.
This Amendment to the Service Agreement dated January 2, 1991 is
entered into this 1st day of March, 1994 between The Manufacturers Life
Insurance Company, a mutual life insurance company organized under the laws of
Canada ("Manufacturers") and ManEquity, Inc., a Colorado Corporation
("ManEquity").
WITNESSETH
WHEREAS, Manufacturers and ManEquity hereby mutually agree to amend the
terms of the Service Agreement;
NOW THEREFORE Manufacturers and ManEquity hereby agree as follows:
1. Section 5 of the Agreement is hereby amended to read as follows:
"SECTION 5. DUTIES OF MANEQUITY
ManEquity shall remit all sales commissions in connection with sales of
variable contracts issued by Manufacturers of America to Manulife Financial for
proper disbursement by Manulife Financial on behalf of ManEquity in accordance
with the terms of this Agreement; provided, however, ManEquity shall not be
required to remit to Manulife Financial any sales commissions it has not
received from Manufacturers of America.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal by their duly authorized officers as of the date first
above-mentioned.
THE MANUFACTURERS LIFE
INSURANCE COMPANY
By: _________________________
Its: _________________________
MANEQUITY, INC.
By: __________________________
Its: __________________________
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Exhibit (A)(8)(d)
MASTER ADMINISTRATION AGREEMENT
between
McCamish Systems, L.L.C.
and
The Manufacturers Life Insurance Company (U.S.A.) and its subsidiaries,
including, but not limited to
The Manufacturers Life Insurance Company of America
and The Manufacturers Life Insurance Company of New York
dated as of _________ __, 1998
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TABLE OF CONTENTS
SECTION 1 Definitions ................................................... 1
1.01 Books and Records ............................................. 1
1.02 Case .......................................................... 2
1.03 End User ...................................................... 2
1.04 Effective Date ................................................ 2
1.05 Initial Term .................................................. 2
1.06 Policy Administration Services ................................ 2
1.07 Plan Administration Services .................................. 3
1.08 Policies ...................................................... 3
1.09 Products ...................................................... 3
1.10 Participants .................................................. 3
SECTION 2 Term .......................................................... 3
SECTION 3 Policy or Plan Administration ................................. 3
3.01 Administrative Services ....................................... 4
3.02 Performance Criteria .......................................... 4
3.03 Authorized Personnel .......................................... 4
3.04 Records ....................................................... 4
SECTION 4 Fees and Expenses ............................................. 5
4.01 Administration Fees ........................................... 5
4.02 Expenses ...................................................... 5
4.03 System Enhancements ........................................... 6
4.04 Payment ....................................................... 6
SECTION 5 Representations and Warranties of McCamish .................... 7
SECTION 6 Representations and Warranties of Company ..................... 8
7.01 Independent Contractor ........................................ 9
7.02 Confidentiality and Disclosure ................................ 9
7.03 Indemnification ............................................... 11
7.04 Arbitration ................................................... 12
7.05 Compliance .................................................... 12
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7.06 Actions ....................................................... 13
7.07 Records ....................................................... 14
7.08 Audit ......................................................... 14
7.09 Security of Operations ........................................ 14
7.10 Insurance Coverage ............................................ 14
SECTION 8 Termination of Agreement ...................................... 15
8.01 By Mutual Agreement ........................................... 15
8.02 By Non-renewal ................................................ 15
8.03 For Cause ..................................................... 15
SECTION 9 Assignment .................................................... 16
9.01 Assignment by Company ......................................... 16
9.02 Assignment by McCamish ........................................ 16
SECTION 10 Miscellaneous ................................................. 16
10.01 Governing Law ................................................. 16
10.02 Notices ....................................................... 16
10.03 Entire Agreement .............................................. 17
10.04 Binding Effect ................................................ 17
10.05 Severability .................................................. 17
10.06 No Third Party Beneficiaries .................................. 18
10.07 Headings ...................................................... 18
10.08 Counterparts .................................................. 18
10.09 Waiver ........................................................ 18
10.10 Construction .................................................. 18
10.11 Taxes ......................................................... 19
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TABLE OF EXHIBITS
A Policy Administration Services
B Plan Administration Services
C Performance Criteria
D Fee Schedule
E Products
F Schedule of Authorized Personnel
G Insurance Coverage
H Sample Escrow Agreement
I Sample Software License Agreement for Escrow Agreement
K Sample Software License Agreement
L Schedule of Authorized Personnel
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MASTER ADMINISTRATION AGREEMENT
This MASTER ADMINISTRATION AGREEMENT is made and entered into as of the
__ day of _________, 1998, by and among McCamish Systems, L.L.C., a Georgia
limited liability company, having its principal address and place of business at
6425 Powers Ferry Road, Third Floor, Atlanta, Georgia, 30339 (hereinafter
referred to as "McCamish"); and, The Manufacturers Life Insurance Company
(U.S.A.) and its subsidiaries, including, but not limited to The Manufacturers
Life Insurance Company of America and The Manufacturers Life Insurance Company
of New York, a stock company registered under the laws of the state of Michigan,
having its principal place of business at 200 Bloor Street East, Toronto,
Ontario, Canada (hereinafter collectively referred to as "Manulife (U.S.A.)").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to enter into this Agreement to
provide for the provision by McCamish, as an independent subcontractor, of
insurance policy administration services and non-qualified plan administration
services to Manulife (U.S.A.) on the terms and conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto hereby agree as follows:
SECTION 1 DEFINITIONS.
As used in this Agreement, the following terms shall have the meaning
set forth:
1.01 BOOKS AND RECORDS. "Books and Records" means all books and
records in the possession or control of McCamish that contain information
related to the Policies (defined in Section 1.09 below) and Participants
Policies (defined in Section 1.11 below), including without limitation, to the
extent any of the following exist, (i) hard copy and microfiche records; (ii)
all paper files; (iii) all electronic images; (iv) all computer data files; (v)
all correspondence between
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McCamish and owners of Policies; (vi) administrative records; (vii) claim
records; (viii) sales records; (ix) reinsurance records, (x) underwriting
records and (xi) accounting records; provided, however, that Books and Records
shall not include any of McCamish's internal documentation of its own programs,
systems and procedures or any of McCamish's books and records which are not
directly related to the Policies.
1.02 CASE. "Case" means a group of Policies that have a common
owner and payor, have a common corporate objective, and/or a group of
Participants that are part of a common benefit plan.
1.03 CPI INDEX. "CPI Index" means the Consumer Price Index - All
Urban Consumers, Metropolitan Atlanta, Georgia, Area, Services (1982 to 1984 =
100), as published by the United States Bureau of Labor Statistics; provided,
however, that if such Consumer Price Index shall cease to be published or
issued, Manulife (U.S.A.) and McCamish shall agree on a reasonable substitute
therefor.
1.04 END USER. "End User" means a party for whom Manulife (U.S.A.)
has agreed to provide Plan Administration Services which are the subject of this
Agreement.
1.05 EFFECTIVE DATE. "Effective Date" means the date stated in the
first paragraph of this Agreement.
1.06 INITIAL TERM. "Initial Term" means the five (5) year period
commencing on the Effective Date of this Agreement and ending at 11:59 p.m. on
the day prior to the fifth anniversary of the Effective Date.
1.07 POLICY ADMINISTRATION SERVICES. "Policy Administration
Services" means the services set forth in EXHIBIT A attached hereto and
designated as "Policy Administration Services".
1.08 PLAN ADMINISTRATION SERVICES. "Plan Administration Services"
means the services set forth in EXHIBIT B attached hereto and designated as
"Plan Administration Services".
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1.09 POLICIES. "Policies" means, collectively, the insurance
policies included within one of the Products and "Policy" means any one of the
Policies.
1.10 PRODUCTS. "Products" means the insurance products described in
Exhibit E attached hereto and made a part hereof. A "Product" is limited to a
single policy form of an insurance company. Exhibit E may be amended during the
Term by mutual written agreement of the parties hereto.
1.11 PARTICIPANT. "Participant" means, collectively, the
individuals included within a non-qualified benefit plan for which service is
provided under terms of this Agreement.
SECTION 2 TERM.
2.01 TERM. This Agreement shall commence on the Effective Date and
shall continue in effect for the Initial Term; thereafter this Agreement shall
continue in full force and effect from year to year until terminated as herein
provided, each such additional year being an "Additional Term" of this
Agreement. The Initial Term and any Additional Terms hereunder are herein
collectively referred to as the "Term".
2.02 CONVERSION OPTION. At any time after the first year of this
Agreement, Manulife (U.S.A.) may, at its sole option, choose to convert this
Agreement to a software system license agreement on substantially the terms and
conditions set out in Exhibit K, attached hereto. The license fees shall be
based on McCamish's then current fee schedule.
SECTION 3 ADMINISTRATION SERVICES.
3.01 ADMINISTRATION SERVICES. During the Term, McCamish shall
perform Policy Administration Services. At its option, Manulife (U.S.A.) can
request, in writing, for McCamish to perform Plan Administration Services for an
individual Case. Policy Administration Services and Plan Administration Services
are collectively sometimes referred to as the "Administration Services".
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3.02 PERFORMANCE CRITERIA. The manner and method of performing
Administration Services is set forth in EXHIBIT C.
3.03 AUTHORIZED PERSONNEL. At any time McCamish may apply to a
person indicated on the "Schedule of Authorized Personnel", attached hereto as
EXHIBIT F, as a person authorized to give instructions under this section with
respect to any matter arising in connection with this Agreement. McCamish shall
not be liable for, and shall be indemnified and held harmless by Manulife
(U.S.A.) against any loss, cost, damage or expense arising from, any action
taken or omitted by McCamish to the extent McCamish can demonstrate that the
action or omission was taken or omitted in good faith in reliance upon such
instruction.
Manulife (U.S.A.) may at any time provide McCamish with written notice
of any change of authority of persons authorized and enumerated in EXHIBIT F to
provide McCamish with instructions or directions relating to services to be
performed by McCamish under this Agreement.
The McCamish employees listed on Exhibit L attached hereto, shall be
the sole authorized individuals in the performance of the Policy Administration
Services and Plan Administration Services and any other services or matters
arising under this Agreement. This list and any changes thereto shall be
approved in writing by Manulife (U.S.A.) prior to any performance hereunder.
McCamish shall provide Manulife (U.S.A.) with written notice of any change to
Exhibit L. Manulife (U.S.A.) reserves the right to review and approve any change
to Exhibit L prior to the implementation of such change.
3.04 RECORDS. During the Term, McCamish shall keep true and correct
Books and Records relating to the performance of all Administration Services
hereunder. McCamish shall deliver the Books and Records and copies thereof to
Manulife (U.S.A.) both in hard copy and in machine readable form, if so
requested by Manulife (U.S.A.), within thirty (30) days upon termination of this
Agreement. Anything herein to the contrary notwithstanding, McCamish shall be
allowed to make and retain copies of the Books and Records, at its own expense,
upon termination of this Agreement. It is acknowledged and agreed that any such
Books and Records may be maintained on magnetic media, electronic media,
microfiche, CD and other non-paper media. It is acknowledged and
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agreed that the copies of the Books and Records retained by McCamish on
termination of this agreement shall be sealed and shall only be used for such
purposes required by law.
SECTION 4 FEES AND EXPENSES.
4.01 ADMINISTRATION FEES.
(a) During the Initial Term of this Agreement, provided that a
minimum of one (1) policy has been entered into the System,
Manulife (U.S.A.) shall pay to McCamish, as compensation for
all Administration Services rendered pursuant to this
Agreement, the amounts set forth on EXHIBIT D. In no event,
except as provided below, will the fees payable by Manulife
(U.S.A.) to McCamish hereunder be less than the fees
determined by the application of the Minimum Charges set forth
on EXHIBIT D.
(b) At least one hundred and eighty (180) days prior to the end of
the Initial Term or any Additional Term, McCamish shall
provide Manulife (U.S.A.) with a schedule of compensation for
Administrative Services, such fees and charges as shall be
agreed to by the parties and attached hereto as an amended
EXHIBIT D prior to commencement of such Additional Term. For
each Additional Term of this Agreement, Manulife (U.S.A.)
shall pay to McCamish, as compensation for all Administration
Services rendered pursuant to this Agreement, such fees and
charges.
4.02 EXPENSES. Manulife (U.S.A.) will promptly reimburse McCamish
for all reasonable out-of-pocket expenses incurred by McCamish in the
performance of this Agreement. Out-of-pocket expenses include, but are not
limited to the following:
(a) Travel related costs for travel requested by Manulife
(U.S.A.).
(b) Postage and forms cost of special mailings requested by
Manulife (U.S.A.),
(c) Charges for telephone line(s) dedicated to service of Manulife
(U.S.A.) customers, agents and brokers.
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(d) Charges for dedicated voice/data lease line(s) providing wide
area network access from Manulife (U.S.A.) site(s) to McCamish
site(s).
4.03 SYSTEM ENHANCEMENTS. Requests by Manulife (U.S.A.) for
enhancements to systems or procedures for support of new products or new
functional capabilities will be performed and billed by McCamish to Manulife
(U.S.A.) on a time and expense basis at the then current rates in effect.
McCamish agrees that any increase in consulting rates shall not exceed the
percentage increase in the Consumer Price Index, Urban Consumers, Metropolitan
Atlanta, Georgia Area, Services (1982-1984=100) as published by the Bureau of
Labor Statistics (the "CPI Index") since the last increase in consulting;
provided, however, that if the CPI Index shall cease to be published during the
term hereof, the parties shall agree on a reasonable substitute therefor. Such
Manulife (U.S.A.) requests will be in writing. McCamish will provide, in
writing, a design specification which will include a detailed description of the
requested enhancement, an estimate of cost and an estimated implementation
schedule. McCamish will undertake the project upon receipt of the signed
acceptance of the design specification by Manulife (U.S.A.).
4.04 PAYMENT. During the Term of this Agreement, Manulife (U.S.A.)
shall pay McCamish within thirty (30) days of the date of McCamish's invoice.
Late payments shall be subject to McCamish's standard late payment charges as
set forth on McCamish's invoice.
SECTION 5 REPRESENTATIONS AND WARRANTIES OF MCCAMISH.
McCamish hereby represents and warrants to Manulife (U.S.A.) as
follows:
(a) It is a limited liability company duly organized and existing and in
good standing under the laws of the State of Georgia.
(b) It is empowered under applicable laws and by its articles of
organization and operating agreement to enter into and perform the
services contemplated in this Agreement.
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(c) All requisite proceedings have been taken to authorize it to enter into
and perform the services contemplated in, and execute and deliver, this
Agreement.
(d) It has duly executed and delivered this Agreement and such execution
and delivery nor the performance by it of any of its obligations under
any Agreement will (i) violate any provision of its certificate of
incorporation or by-laws, (ii) result in a violation or breach of, or
constitute a default or an event of default under, any indenture,
mortgage, bond or other contract, license, agreement, permit,
instrument or other commitment or obligation to which it is a party or
(iii) violate any law, rule or regulation of any governmental body,
writ, judgment, injunction or court decree (collectively, "Laws")
applicable to it or its business.
(e) It has all licenses, permits, registrations and other governmental
approvals necessary or advisable for the performance of its obligations
under this Agreement.
(f) Its business operations have been conducted, are now, and will continue
to be in compliance in all material respects with all Laws.
(g) In its reasonable business judgment, it has the facilities, equipment
and personnel necessary to carry out its duties and obligations under
this Agreement.
(h) That the Software, as defined in Exhibit I attached hereto, is designed
to be used prior to, during and after the year 2000 and that the
Software will operate during each such time period without error
relating to date data, specifically including any error relating to, or
the product of, date data which represents or references different
centuries or more than one century. Without limiting the foregoing,
McCamish also represents and warrants that the Software will not
abnormally end or provide invalid or incorrect results as a result of
date data and it has been designed to ensure year 2000 compatibility
including, but not limited to, date data century recognition,
calculations which accommodate same century and multi-century formulas
and date values and date data interface values that reflect the
century. The above warranty shall not be
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subject to any disclaimer or exclusion of warranties or to any
limitation of McCamish's liability under this Agreement.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF MANULIFE (U.S.A.).
Manulife (U.S.A.) hereby represents and warrants to McCamish as
follows:
(a) It is a registered stock life insurance company organized and
existing and in good standing under the laws of the State of
Michigan.
(b) It is empowered under the applicable laws and regulations and
by its governing documents to enter into and perform this
Agreement.
(c) All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement.
(d) It has duly executed and delivered this Agreement and neither
such execution and delivery nor the performance by it of any
of its obligations under any Agreement will (i) violate any
provision of its governing documents, (ii) result in a
violation or breach of, or constitute a default or an event of
default under, any indenture, mortgage, bond or other
contract, license, agreement, permit, instrument or other
commitment or obligation to which it is a party or (iii)
violate any Law applicable to it or its business.
SECTION 7 ADDITIONAL COVENANTS.
7.01 INDEPENDENT CONTRACTOR. It is understood and agreed that all
Administration Services performed hereunder by McCamish shall be performed
solely for Manulife (U.S.A.) by McCamish in the capacity of an independent
sub-contractor of Manulife (U.S.A.). Nothing contained herein shall be construed
to create between McCamish and Manulife (U.S.A.) a partnership, joint venture,
association or other legal entity or relationship other than that of independent
sub-contractor.
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7.02 CONFIDENTIALITY AND DISCLOSURE.
(a) Each Party ("Disclosing Party") may disclose to the other
("Recipient") certain proprietary and confidential information
including, without limitation, policyholder information,
procedures, Manulife (U.S.A.) customer lists, prospect lists,
contracted broker and agent lists, and material related to
policy design, pricing, filings, marketing and sales
administration and systems information ("Information").
(b) Recipient agrees to maintain, during the Term and thereafter,
the Information of the Disclosing Party in confidence using at
least the same degree of care as it uses in maintaining as
secret its own trade secret, confidential and proprietary
information, but always at least a reasonable degree of care.
(c) Disclosing Party agrees that Recipient shall have no
obligation under the provisions of this Section 7.02 with
respect to any Information which:
1. is now or hereafter becomes publicly known other than
through a breach hereof,
2. is disclosed to Recipient by a third party that
Recipient reasonably believes is legally entitled to
disclose such information,
3. is known by Recipient prior to its receipt of the
Information, without any obligation of
confidentiality with respect thereto,
4. subject to paragraph (g) below, is disclosed with the
Disclosing Party's written consent,
5. is disclosed by the Disclosing Party to a third party
without the same or similar restrictions as set forth
herein,
9
<PAGE> 14
6. is required to be disclosed by Recipient by a court
of competent jurisdiction, administrative agency or
governmental body, or by law, rule or regulation, or
by applicable regulatory or professional standards,
7. is disclosed by Recipient in connection with any
judicial or other legal proceeding involving this
Agreement, or
8. subject to paragraph (g) below, is not identified or
marked as "Confidential and Proprietary" as provided
in paragraph (a).
(d) Recipient shall use reasonable efforts to limit access to
Information received from the Disclosing Party to only those
personnel of Recipient who have need of such access for the
performance of any obligation of Recipient under this
Agreement.
(e) Information shall be used by Recipient only for purposes of
fulfilling its obligations under this Agreement.
(f) Except as expressly provided in this Agreement, Disclosing
Party grants no license, right or interest to Recipient under
any copyrights, patents, trademarks, trade secrets or other
property rights of Disclosing Party by reason of the
disclosure of the Information.
(g) Each party acknowledges that some Information may, under
applicable law, be deemed to be confidential information of
third parties (such as natural persons whose lives are insured
under a Policy) and agrees to preserve the confidentiality of
all Information which under applicable Law must be treated as
confidential.
The terms and conditions of this SECTION 7.02 shall survive the
termination of this Agreement.
7.03 INDEMNIFICATION. Each party shall indemnify and hold harmless
the other party and its officers, directors, partners, principals, independent
contractors,
10
<PAGE> 15
employees, member firms, subcontractors and affiliates and their respective
personnel from and against any and all liabilities, losses, damages, costs,
expenses (including, without limitation, reasonable attorneys' fees and court
costs), interest, penalties or other loss directly or indirectly arising out of,
in connection with or with respect to any breach of this Agreement or any
fraudulent, criminal, negligent and/or bad faith acts or omissions by such party
or its officers, directors, partners, principals, independent contractors,
employees, member firms, subcontractors and affiliates and their respective
personnel under this Agreement.
If a party is named in any lawsuit or other proceeding for which such
party believes it may be entitled to indemnification hereunder (other than any
action or proceeding described in Section 7.06), such party shall promptly give
notice thereof to the other party, such notice to include a description in
reasonable detail of such lawsuit or proceeding and the basis for such party's
belief that it may be entitled to indemnification hereunder. The parties shall
cooperate in all reasonable respects with each other in defending such lawsuit
or proceeding. McCamish agrees not to settle any such lawsuit or proceeding
without the written consent of Manulife (U.S.A.).
The terms and conditions of this SECTION 7.03 shall survive the
termination of this Agreement.
7.04 ARBITRATION. In the event of any dispute between Manulife
(U.S.A.) and McCamish with respect to the subject matter of this Agreement or
the enforcement of rights hereunder, either party may, by written notice to the
other, require such dispute or difference to be submitted to arbitration. This
provision, however, shall not be applicable to any dispute that involves a claim
by or against a Third Party. The arbitrator or arbitrators shall be selected by
agreement of the parties or, if they cannot agree on an arbitrator or
arbitrators within twenty (20) days after the notice of such party's desire to
have the question settled by arbitration, then the arbitrator or arbitrators
shall be selected by the American Arbitration Association (the "AAA") in
Atlanta, Georgia. The determination reached, or award granted, in such
arbitration shall be final and binding, to the extent not in violation of law or
public policy, on all parties hereto. Enforcement of the arbitration award or
determination may be sought in any court of competent jurisdiction. The
arbitrators shall not be bound by judicial formalities and may abstain from
following the strict rules of evidence. The parties hereby mutually instruct the
arbitrators to limit the time and scope of discovery to the greatest extent
practicable and request the arbitrators to provide a decision as rapidly as
practicable, in each case
11
<PAGE> 16
consistent with the interests of justice, it being the intention of the parties
that any arbitration under this Section 7.04 be commenced, conducted and
completed, and a decision rendered, as rapidly as practicable. Pending such
decision, each party will continue to perform its obligations under this
Agreement. Unless otherwise agreed by the parties, any such arbitration shall be
conducted in accordance with the rules of the AAA.
In the event of any litigation or arbitration as provided under this
Agreement, or the enforcement of rights hereunder, each party shall bear its own
costs and expenses relating to such litigation or arbitration, including
reasonable attorney's fees and expenses, unless otherwise provided by the
arbitration award or determination. In no event shall the arbitrators have the
right or authority to award consequential, incidental, indirect, special or
punitive damages relating to this Agreement.
The terms and conditions of this SECTION 7.04 shall survive the
termination of this Agreement.
7.05 COMPLIANCE. McCamish shall provide staff with the skills
necessary to perform the Administration Services, as determined by McCamish
using its reasonable business judgment. McCamish shall obtain and maintain for
itself, all licenses necessary for performance under this Agreement.
7.06 ACTIONS.
(a) Each party (the "Notifying Party") shall promptly notify the
other party of any threatened or pending lawsuit or
governmental or regulatory agency inquiry or complaint
relating to Policies of which the Notifying Party has actual
knowledge and shall promptly transmit to such other party a
copy of any applicable service of process or other instrument
related to a court proceeding or any correspondence or other
document transmitted to or from any governmental or regulatory
agency relating to the Policies which shall be actually
received by the Notifying Party.
12
<PAGE> 17
(b) McCamish shall make no response to any governmental or
regulatory agency's inquiry or complaint relating to Policies
without first obtaining MANULIFE (U.S.A.)'s approval and
consent to the response to such inquiry or complaint;
provided, however, that if MANULIFE (U.S.A.) fails to give its
approval or consent or delays its approval or consent and such
failure or delay would subject McCamish to any fine, penalty,
liability or sanction, then McCamish may make a response.
(c) Manulife (U.S.A.) reserves the right to control the defense of
any litigation, threatened or pending, by or against it, or to
respond on its own behalf to any governmental or regulatory
agency's inquiry or complaint; provided, however, that if
MANULIFE (U.S.A.) shall exercise this right in such a manner
as shall subject McCamish to any fine, penalty, liability or
sanction for failure to follow procedure, or otherwise in a
manner which, in the reasonable opinion of McCamish or its
legal counsel may have a material adverse effect on McCamish,
then McCamish shall have the right to defend itself with
counsel of its choice at its own expense.
(d) McCamish reserves the right to control the defense of any
litigation, threatened or pending, by or against it, or,
subject to subsection (b) above, to respond on its own behalf
to any governmental or regulatory agency's inquiry or
complaint; provided, however, that if McCamish shall exercise
this right in such a manner as shall subject MANULIFE (U.S.A.)
to any fine, penalty, liability or sanction for failure to
follow procedure, or otherwise in a manner which, in the
reasonable opinion of MANULIFE (U.S.A.) or its legal counsel
may have a material adverse effect on MANULIFE (U.S.A.), then
MANULIFE (U.S.A.) shall have the right to defend itself with
counsel of its choice at its own expense.
(e) The parties shall cooperate with each other in responding to
or defending any such lawsuit, threat, demand, inquiry,
complaint, administrative or regulatory investigation or
proceeding.
7.07 RECORDS. Each party to this Agreement shall maintain,
following the termination of this Agreement for any reason, its Books and
Records with respect to business
13
<PAGE> 18
produced under this Agreement for such period of time as may be required by law.
It is acknowledged and agreed that any such books and records may be maintained
on magnetic media, electronic media, microfiche or other non-paper media.
7.08 INSPECTION. Upon forty-eight (48) hours advanced notice to
McCamish, Manulife (U.S.A.) will have the right under this Agreement to perform
on-site inspection and analyses of the Books and Records in accordance with
reasonable procedures and at reasonable frequencies. At the request of Manulife
(U.S.A.), McCamish will make available to Manulife (U.S.A.) representatives of
the appropriate regulatory agencies all reasonable requested Books and Records
and access to operating procedures.
7.09 SECURITY OF OPERATIONS. McCamish shall maintain such off-site
backup of its systems, procedures, and Books and Records as Manulife (U.S.A.)
may reasonably request. McCamish shall maintain at all times during the Term a
disaster recovery capability materially consistent with that currently
maintained by McCamish.
7.10 INSURANCE COVERAGE. McCamish shall use its reasonable efforts
to continue in effect the insurance coverages described in Exhibit G attached
hereto provided that such coverage is available from a domestic insurance
carrier at a reasonable cost to McCamish. McCamish shall not voluntarily cause
any termination, reduction, or alteration of these coverages without 30 days
prior written notice to Manulife (U.S.A.).
SECTION 8 TERMINATION OF AGREEMENT.
8.01 BY MUTUAL AGREEMENT. This Agreement may be terminated or
amended by mutual written agreement of the parties at any time.
8.02 BY NON-RENEWAL. At least one hundred and eighty (180) days
prior to the end of the Initial Term and any Additional Term hereof, either
party may give the other notice if the party delivering such notice desires to
change any term of this Agreement. If McCamish and Manulife (U.S.A.) do not
agree in writing with respect to the matters described in such notice
14
<PAGE> 19
before the end of the Term during which such notice is given by McCamish, this
Agreement shall terminate at the end of such Term.
8.03 FOR CAUSE. If either of the parties hereto shall materially
breach this Agreement or be materially in default hereunder (the Defaulting
Party), the other party hereto may give written notice thereof to the Defaulting
Party and if such default or breach shall not have been remedied within thirty
(30) days after such written notice is given, then the party giving such written
notice may terminate this Agreement by giving thirty (30) days written notice of
such termination to the Defaulting Party. Termination of this Agreement by
default or breach by a party shall not constitute a waiver of any rights of the
other party in reference to services performed prior to such termination, rights
to be reimbursed for out-of-pocket expenditures or any other rights such other
party might have under this Agreement at law, in equity or otherwise. Material
default under this Agreement includes, but is not limited to, the material
breach of any provision of this Agreement, insolvency, a declaration of
bankruptcy or an assignment for the benefit of creditors.
SECTION 9 ASSIGNMENT.
9.01 ASSIGNMENT BY MANULIFE (U.S.A.). Manulife (U.S.A.) shall not,
directly or indirectly, in whole or in part, assign any of its rights or
obligations hereunder without the prior written consent of McCamish, which
consent shall not be unreasonably withheld.
9.02 ASSIGNMENT BY MCCAMISH. McCamish shall not directly or
indirectly, in whole or in part, delegate its duties or assign its rights under
this Agreement without the prior written consent of Manulife (U.S.A.), which
consent shall not be unreasonably withheld.
SECTION 10 MISCELLANEOUS.
10.01 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Georgia, without giving
effect to the principles of conflicts of laws thereof.
15
<PAGE> 20
10.02 NOTICES. Any notice, consent, approval or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, or sent by facsimile transmission, overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, and
addressed as follows:
(a) If to McCamish:
McCamish Systems, L.L.C.
6425 Powers Ferry Road
Third Floor
Atlanta, GA 30339
Attention: President
Facsimile Number: (770) 690-1800
(b) If to Manulife (U.S.A.):
The Manufacturers Life Insurance Company (U.S.A.),
for it and its subsidiaries including, but not
limited to The Manufacturers Life Insurance Company
of America and The Manufacturers Life Insurance
Company of New York
200 Bloor Street East
Toronto, ON
Attention: Maureen Beechinor
Facsimile Number: (416) 926-5353
Any such notice shall be deemed given when so delivered (in the case of
personal delivery or overnight courier service) or sent by facsimile
transmission or, if mailed, upon receipt as evidenced by the return receipt. If
the address of any party hereunto is changed, written notice of such change
shall be given to the other party, in accordance with this Section, and said new
address shall be used for purposes of this Agreement.
10.03 ENTIRE AGREEMENT. This Agreement, the Exhibits which are
attached hereto and made a part hereof, and the documents executed pursuant
hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and thereof and no
16
<PAGE> 21
representation, warranty, covenant or agreement not embodied herein or therein,
oral or otherwise, shall be of any force or effect whatsoever with respect to
the subject matter hereof or thereof. Further, no change, amendment or
modification of this Agreement shall be effective unless in writing and signed
by both parties hereto.
10.04 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
10.05 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
10.06 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended or shall be construed to give any person, other than the parties
hereto, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
10.07 HEADINGS. The Section headings of this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
10.08 COUNTERPARTS. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original but all of which
will constitute one and the same document.
17
<PAGE> 22
10.09 WAIVER.
(a) A waiver of any default or breach hereunder granted by any
party hereto shall not constitute a waiver by such party of
any other default or breach or a waiver by such party of the
same default or breach at a later time. Further, to be
effective, any such waiver must be in writing and be signed by
the party granting such waiver.
(b) Subject to the last sentence of Section 10.09(a), the
forbearance or neglect by Manulife (U.S.A.) or McCamish to
insist upon strict compliance with any of the provision of
this Agreement, or to declare a forfeiture or termination,
shall not be construed as a waiver of any right or privilege
hereunder. No waiver of any right or privilege arising from
any default or failure of performance hereunder shall affect
the rights or privileges of either party in the event of a
further default or failure of performance hereunder.
10.10 CONSTRUCTION. All parties hereto have participated, directly
or indirectly, in the negotiations and preparation of this Agreement. In no
event shall this Agreement be construed more or less stringently against any
party hereto by reason of either party being construed as the principal drafting
party hereto.
10.11 TAXES. All sales, use, excise or other similar taxes or duties
which may be or become payable on account of goods or services provided
hereunder shall be payable by Manulife (U.S.A.) to McCamish Systems upon the
receipt by Manulife (U.S.A.) of McCamish Systems' invoice therefor. In lieu of
paying such taxes, Manulife (U.S.A.) may provide McCamish Systems with a tax
exemption certificate acceptable in form and substance to the appropriate taxing
authorities.
10.12 SOFTWARE ESCROW AGREEMENT. As soon as is practicable after the
execution of this Agreement, (i) the parties hereto shall execute and deliver an
Escrow Agreement substantially in the form of Exhibit H attached hereto and made
a part hereof (the "Escrow Agreement") for the purpose of protecting Manulife
(U.S.A.) in the event of a breach of this Agreement
18
<PAGE> 23
by McCamish or the termination of this Agreement by Manulife (U.S.A.) for Cause,
pursuant to Section 8 hereof, prior to the end of the Term; and (ii) upon
execution of the Escrow Agreement by all parties thereto, McCamish shall deposit
with the Escrow Agent a copy of the Software to be held in accordance with the
terms and conditions of the Escrow Agreement.
10.13 SOFTWARE LICENSE IN ESCROW. As soon as is practicable after
execution of the Escrow Agreement, the parties hereto shall execute and deliver
to the Escrow Agent, to be held in accordance with the terms and conditions of
the Escrow Agreement, a License Agreement substantially in the form of Exhibit I
attached hereto and made a part hereof (the "License Agreement"), which shall
provide that in the event the Software shall be released by the Escrow Agent to
Manulife (U.S.A.), upon the occurrence of a Release Event (as defined in the
Escrow Agreement), but only in such event, McCamish grants to Manulife (U.S.A.),
effective upon receipt of the Software from the Escrow Agent, a license to use
the Software (and such modifications, enhancements, improvements, updates,
corrections or changes as Manulife (U.S.A.) shall elect to make to the Software)
(the "Software License") for a period of twenty-four months following the
termination of this Agreement, solely on the terms and conditions of the License
Agreement. At the expiration of the license term, the Manulife (U.S.A.) shall
have no further rights with respect to the Software.
IN WITNESS WHEREOF, the parties hereto have caused this Administration
Agreement to be executed and delivered by their duly authorized partners and
officers, all as of the date first above written.
McCamish Systems, L.L.C.
By:___________________________
Manulife (U.S.A.)
By:___________________________
19
<PAGE> 1
EXHIBIT (A)(10)
APPLICATION FOR FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE
THE MANUFACTURERS
LIFE INSURANCE COMPANY
OF AMERICA
[MANULIFE LOGO]
Manulife Financial and the block design are registered
service marks of The Manufacturers Life Insurance Company
and are used by it and its subsidiaries.
NB0777UA(0296)
<PAGE> 2
EXHIBIT
INSTRUCTIONS TO REGISTERED REPRESENTATIVE
1. The agent or broker using this form must be a Registered Representative
of an NASD firm.
2. This package contains the following forms: a) Application for Life
Insurance including a Request for Taxpayer Identification Number b)
Authorization to Obtain Information and the Notice of Disclosure of
Information c) Temporary Life Insurance Agreement and Receipt d)
General Avocation Questionnaire e) Request form for Automatic Premium
Payment
3. All questions on the application must be answered. If a CHANGE is made
to an answer given by the Proposed Life Insured, the CHANGE MUST BE
INITIALLED BY THE PROPOSED LIFE INSURED. The same holds true for
questions answered by the Proposed Owner.
4. Whenever the PROPOSED POLICY IS TO BE OWNED BY SOMEONE OTHER THAN THE
PROPOSED LIFE INSURED, the Proposed Owner must sign the application. If
the proposed Owner is a CORPORATION, the application must be signed by
one of the corporation's Officers. In addition, under the signature,
the corporation's exact name and the title of the signing officer must
be PRINTED or the Corporate seal stamped. The Proposed Life Insured may
only sign if he/she is the majority stockholder and signs a such (e.g.
"President and majority stockholder of the XYZ corporation").
5. The AUTHORIZATION to OBTAIN INFORMATION must always be signed by the
Proposed Life Insured, or by the parent or guardian in the case of
juvenile insurance. The Notice of Disclosure of Information MUST always
be given to the Proposed Life Insured, or to the parent or guardian of
a Juvenile Proposed Insured.
6. To qualify for TEMPORARY LIFE INSURANCE, the Proposed Life Insured must
be able to answer all 3 questions on the Notice Portion "No" and the
Proposed Life Insured must be age 70 or younger. If ANY answer is "Yes"
and/or the Proposed Life Insured is over age 70, DO NOT collect any
money and DO NOT detach the receipt. If the Proposed Life Insured
qualifies for Temporary Life Insurance, collect at least one-twelfth of
the annual premium, complete the ENTIRE NOTICE AND RECEIPT PORTION,
detach the RECEIPT PORTION and give it to the Proposed Owner. IN ALL
CASES, answer the appropriate question in the "Registered
Representative" Section, so that the Service Office knows whether the
agreement has been issued or not.
NOTE: COVERAGE UNDER THE TEMPORARY LIFE INSURANCE AGREEMENT IS LIMITED
TO A MAXIMUM OF $1,000,000 ON INDIVIDUAL LIFE PLANS, $5,000,000 ON
SURVIVORSHIP PLANS, AND $200,000 FOR INSURANCE ON JUVENILES.
7. Life Insurance applications on JUVENILES must be completed by one of
the child's parents or a legally appointed guardian. All questions
pertaining to the Proposed Life Insured and Owner must be answered. If
the payor applies for disability waiver benefit, a separate and full
application must be completed by him/her, including the medical
section, as well as any applicable questionnaires. If neither the owner
nor the payor is one of the child's parents or a legal guardian, then a
PARENT OR GUARDIAN MUST CONSENT to the application by signing on the
last line of the "Signatures" section on page 6 of the application
and check off the appropriate box to show whether mother, father or
guardian.
NOTE: APPLICATIONS WILL NOT BE ACCEPTED UNTIL THE CHILD IS AT LEAST 15
DAYS OLD.
8. The Request for TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION must
be completed as part of every application. The Internal Revenue Service
requires life insurance companies and other financial institutions that
make interest and/or dividend payments to maintain a file of certified
Tax Identification Numbers for all policyowners.
APPLICATION SUPPLEMENT FOR INVESTMENT ALLOCATION AND INVESTOR SUITABILITY,
FORM NB0031UA, MUST BE COMPLETED AND SUBMITTED WITH THIS APPLICATION
<PAGE> 3
EXHIBIT
APPLICATION FOR LIFE INSURANCE TO
THE MANUFACTURERS LIFE INSURANCE COMPANY OF AMERICA
[MANULIFE LOGO] (hereinafter referred to as The Company)
APPLICATION NO.
PLEASE PRINT & USE BLACK INK.
ANY CHANGES MUST BE
INITIALLED BY THE PROPOSED
INSURED AND/OR OWNER. POLICY NO. | | | | | | | | | |
--------------------
<TABLE>
PROPOSED LIFE INSURED
<S> <C> <C> <C>
1a. Name (first, middle, last) 1b. Date of Birth (mmm/dd/yyyy) 1c. Place of Birth 1d. Soc. Sec. No./Tax I.D. No.
- ---------------------------------------------------------------------------------------------------------------------------
1e. Sex 1f. Occupation 1g. Specific Duties 1h. How Long?
- ---------------------------------------------------------------------------------------------------------------------------
1i. Home Address City State Zip 1j. How Long?
- ---------------------------------------------------------------------------------------------------------------------------
1k. Employer Name and Address City State Zip 1l. How Long?
- ---------------------------------------------------------------------------------------------------------------------------
OWNER IF OTHER THAN PROPOSED LIFE INSURED
2a. Name (first, middle, last)
- ---------------------------------------------------------------------------------------------------------------------------
2b. Date of Birth (mmm/dd/yyyy) 2c. Occupation 2d. Relationship to Proposed Life Insured
- ---------------------------------------------------------------------------------------------------------------------------
2e. Address City State Zip
- ---------------------------------------------------------------------------------------------------------------------------
2f. Employer Name and Address City State Zip
- ---------------------------------------------------------------------------------------------------------------------------
2g. If home address or employer has changed in last 2 years, give details:
- ---------------------------------------------------------------------------------------------------------------------------
SUCCESSOR OWNER - RECOMMENDED FOR JUVENILE INSURANCE - NOT RECOMMENDED FOR BUY-SELL OR CORPORATE-OWNED
3a. Name 3b. Relationship to Owner 3c. Soc. Sec. No./Tax I.D. No.
- ---------------------------------------------------------------------------------------------------------------------------
BENEFICIARY(IES) SUBJECT TO CHANGE BY OWNER
4a. Primary 4b. Relationship to Proposed Life Insured
- ---------------------------------------------------------------------------------------------------------------------------
4c. Secondary 4d. Relationship to Proposed Life Insured
- ---------------------------------------------------------------------------------------------------------------------------
SEND PREMIUM NOTICES TO:
5a. / / Insured / / Owner / / Business / / Residence / / Other (give details below):
5b. Name Address City State Zip
- ---------------------------------------------------------------------------------------------------------------------------
LIFE INSURANCE IN FORCE:
6a. Total insurance in force on the Proposed Life Insured's life $
-------------------------------------
6b. Total insurance currently pending with all companies, including this application $ . Of this
-----------------
total, what amount of insurance do you intend to accept? $__________________________________
6c. LIST POLICIES IN FORCE YEAR OF ACCIDENTAL GI OPTION
COMPANY ISSUE GROUP? FACE AMOUNT DEATH AMOUNT BUSINESS PERSONAL
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
YES NO
7. Have you ever been declined for insurance, or been offered
insurance with restricted benefits or at other than standard rates? / / / /
8. Is this insurance to replace, or will it cause a change in, or
involve a loan under, any insurance or annuity policy
on any Proposed Life Insured's life or in any insurance or
annuity policy owned by the ?
IF "YES", TO EITHER 7 OR 8, GIVE DETAILS BELOW: / / / /
PAGE 1
Manulife Financial and the block design are registered service marks of The
Manufacturers Life Insurance Company and are used by it and its subsidiaries.
NB0777UA(0296)
<PAGE> 4
EXHIBIT
APPLICATION NO. PLEASE PRINT
- --------------------------------------------------------------------------------
POLICY APPLIED FOR:
9a. Plan:
------------------------------------
9b. Face Amount (policy only, excluding Supplementary Benefits): $ -----------
9c. If an additional or optional policy is being applied for in a separate
application, state plan and amount.
- --------------------------------------------------------------------------------
9d. Loan Interest Rate (Check / / loan rate applicable
to the policy being applied for) / / 5.75% / / 8% / / Variable
9e. If a supplementary benefit applied for cannot be approved,
should the policy be issued without it? / / Yes / /No / / Not Applicable
9f. Is a policy guarantee being applied for? / /Yes / /No / / Not Applicable
If "Yes", indicate type of policy guarantee: / / No Lapse Guarantee
/ / Death Benefit Guarantee
SUPPLEMENTARY BENEFITS
SINGLE-LIFE PLANS
10. / / Total Disability Waiver of Monthly Deductions
/ / Guaranteed Policy Value
/ / Additional Life (number of lives maximum 6)
------------
(complete application NB0573UA for each additional life)
/ / Other (state which)
------------------------------------
--------------------------------------------------------
SURVIVORSHIP PLANS
11. / / Policy Split Option
/ / Four Year Term (EPR)
/ / Other (state which)
-----------------------------------
----------------------------------------------------------
PREMIUMS
11a. FREQUENCY: / /Annual / /Semi / /Quarterly / /Monthly
11b. If monthly, / / ManuMatic Transfer
11c. Planned Premium $
------------------------
11d. Additional "once only" premium $
--------------------
11e. Amount paid with application $
--------------------
DEATH BENEFIT
12. / / OPTION 1: Face Amount / / OPTION 2: Face Amount Plus Policy Value
SPECIAL REQUESTS
13.
HOME OFFICE CORRECTIONS OR AMENDMENTS (NOT APPLICABLE IN WEST VIRGINIA)
14.
Page 2
<PAGE> 5
EXHIBIT
APPLICATION NO. PLEASE PRINT
SMOKING QUESTIONS
YES NO
15a. Have you used tobacco in any form during the past 2 years
(including cigars, cigarillos, a pipe, chewing tobacco
or cigarettes)? .............................................. / / / /
If "Yes" what type of tobacco?
------------------------------
15b. Do you use any medication or product containing nicotine? ... / / / /
If "Yes", give details:
-----------------------------------
15c. Have you smoked any cigarettes during the past 12 months?
If "Yes", how many? ......................................... / / / /
15d. Were you previously a cigarette smoker but have now stopped? / / / /
If "Yes", when did you stop? Give month and year:
-----------
AVOCATION QUESTIONS
YES NO
16a. Do you have any part-time or seasonal occupation? ........... / / / /
16b. Do you expect to change your occupation? .................... / / / /
16c. Do you expect to change your country of residence? .......... / / / /
If "Yes", give details:
------------------------------------- / / / /
17a. Have you flown as a student pilot, licensed pilot or crew
member in any aircraft (including ultralight planes) in
the past 2 years? ........................................... / / / /
17b. Are any such flights planned in the future? ................. / / / /
17c. Have you engaged in any form of motor vehicle or power
boat racing, sky diving, skin or scuba diving,
parachuting, hang-gliding, mountain climbing or ballooning
in the last 2 years? ........................................ / / / /
18a. What is your Drivers License Number? State / / / /
----------------- --
18b. Have you been convicted of 3 or more moving violations
within the past 3 years? .................................... / / / /
18c. Have you been convicted of driving while intoxicated
or while otherwise impaired? If "Yes", give details. / / / /
FINANCIAL QUESTIONS
COMPLETE WHEN AMOUNT OF INSURANCE IS $250,000 AND MORE, OR WHEN APPLYING FOR
BUSINESS INSURANCE FOR ANY AMOUNT, OR INSURANCE ON THE LIFE OF A JUVENILE FOR
ANY AMOUNT.
19. What is the purpose of this insurance? (e.g. estate conservation,
buy-sell, keyman)
--------------------------------------------------------
20. How was the need for this amount determined? (Please submit copies
of financial statement(s), estate analysis, contractual
agreements, etc.)
--------------------------------------------------------
21a. Gross annual earned income (salary, commissions,
bonuses, etc.) $
---------------------------------------------------------
21b. Gross annual unearned income (dividends, interest,
net real estate income, etc.) $
-------------------------------------------
21c. Total Assets $ 21d. Total Liabilities? $
-------------- ------------------
21e. Personal Net Worth?$
------------------------
JUVENILE INSURANCE:
22a. Are all brothers and sisters equally insured? / / Yes / / No
If "No", give details:
---------------------------------------------------
22b. Are parent(s) / guardian covered by life insurance? / / Yes / / No
If "Yes", how much is in force?
-----------------------------------------
If "No", why not?
-------------------------------------------------------
BUSINESS INSURANCE: Provide the following information on your company
<TABLE>
<CAPTION>
Current Year Previous Year
<S> <C> <C>
23a. Assets $ $
23b. Liabilities $ $
23c. Gross Sales $ $
23d. Net Income after taxes $ $
23e. Fair Market Value of the business $
</TABLE>
23f. What percentage of the business is owned by the proposed
Life Insured? %
-----------
23g. Are other partners/owners/executives being insured?
Give details:
-----------------------------------------------------------
24. In the past 5 years, has the Proposed Life Insured or the
business had any major financial problems (bankruptcy,
etc.)? / /Yes / / No
If "Yes", give details:
------------------------------------------------
- -------------------------------------------------------------------------------
Page 3
<PAGE> 6
EXHIBIT
APPLICATION NO. PLEASE PRINT
MEDICAL QUESTIONS: Please provide details to "Yes" answers in the space below
25. Have 2 or more of your immediate family members (parents, brothers
and sisters) prior to age 65, died of or been diagnosed as having
coronary artery disease, stroke or kidney disease? / / Yes / / No
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
26. FAMILY HISTORY AGE GIVE DETAILS OF PRESENT HEALTH AGE CAUSE OF DEATH
- ---------------------------------------------------------------------------------------------------------------------------
Father L D
I E
Mother V C
I E
Brothers N A
and G S
Sisters E
D
</TABLE>
27a. Your Height 27b. Your Weight
------------ ------------
27c. Any weight loss in the last year? / /Yes / /No
28a. Name and address of personal or attending doctor:
------------------------
28b. Date last consulted?
--------------------
28c. Reason and any medication/treatment given:
------------------------------
28d. List any medications you are taking currently:
---------------------------
YES NO
29. SO FAR AS YOU KNOW, WITHIN THE LAST 10 YEARS HAVE YOU HAD
OR BEEN TOLD BY A DOCTOR THAT YOU HAD:
a.) Chest pain, shortness of breath, heart murmur, high
blood pressure, stroke, irregular heart beat, or any other
disease or disorder of the heart or arteries? ................ / / / /
b.) Diabetes or disease of any glands? ........................... / / / /
c.) Mental or emotional disorder, nervous breakdown, convulsions,
epilepsy, paralysis or any other disorder of the brain or
nervous system? .............................................. / / / /
d.) Arthritis, gout, or any bone, joint, muscle or skin disorder? / / / /
e.) Asthma, bronchitis, pneumonia, emphysema or any lung disorder? / / / /
f.) Cirrhosis, hepatitis, ulcer, colitis, diverticulitis,
ileitis, or other disease of the liver, gall bladder,
pancreas, stomach or intestines? ............................. / / / /
g.) Prostate or testicular disease, disease of the uterus,
ovaries or breast? ........................................... / / / /
h.) Anemia, leukemia, clotting disorders, platelet disorders,
infections, or sources of blood loss? ........................ / / / /
i.) Disorder of the urinary tract or kidneys - sugar, albumin
or blood in the urine? ....................................... / / / /
j.) Cancer or tumors? ............................................ / / / /
k.) An operation or admission to a hospital or any other health
care facility for observation, treatment of any illness or
diagnostic tests (including treadmill stress test
for insurance)? .............................................. / / / /
l.) Any other health impairment or medically treated condition? .. / / / /
m.) Treatment or advice from a physician, or licensed
practitioner, regarding alcohol or drug use? ................. / / / /
30. Within the last 10 years have you been diagnosed by a
doctor as having Acquired Immune Deficiency Syndrome (Aids)? . / / / /
PLEASE PROVIDE DETAILS TO ANY "YES" ANSWERS (IF MORE SPACE IS REQUIRED, USE THE
MEDICAL QUESTIONS CONTINUATION SHEET)
<TABLE>
<CAPTION>
QUESTION NAME, ADDRESS AND PHONE NO. OF DURATION
NUMBER DATE ATTENDING DOCTOR AND HOSPITAL OF CONDITION REASON AND ANY TREATMENT GIVEN
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 4
<PAGE> 7
EXHIBIT
APPLICATION NO.
REQUEST FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION
(TO BE COMPLETED BY OWNER/TAXPAYER)
In order to comply with IRS regulations regarding Tax Identification Numbers and
Backup Tax Withholding, individuals and sole proprietors MUST give their Social
Security Number. Other entities MUST give their Employer Identification Number.
Social Security Number
___________-___________-___________
If you have no number or you have applied for a number and are waiting for one
to be issued, write "APPLIED FOR" in the boxes. You then have 60 days to supply
your TIN number to us. After 60 days, The Company must begin Backup Tax
Withholding.
Employer Identification Number
___________-______________________
CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct taxpayer identification
number (or I am waiting for a number to be issued to me), AND
(2) I am not subject to Backup Tax Withholding either because I have not
been notified by the Internal Revenue Service (IRS) that I am subject
to Backup Tax Withholding as a result of a failure to report all
interest or dividends, or the IRS has notified me that I am no longer
subject to Backup Tax Withholding (does not apply to real estate
transactions, mortgage interest paid, the acquisition or abandonment of
secured property, contributions to an individual retirement arrangement
(IRA), and payments other than interest and dividends).
CERTIFICATION INSTRUCTIONS - You MUST cross out item (2) above if you have been
notified by the IRS that you are currently subject to Backup Tax Withholding
because of underreporting interest or dividends on your tax return.
Signed at_________________________________this___________day of__________ ______
City / State Month Year
(X)_______________________________________
SIGNATURE OF OWNER / TAXPAYER
Page 5
<PAGE> 8
EXHIBIT
APPLICATION NO.
SIGNATURES
THE PROPOSED LIFE INSURED (OR PARENT OR GUARDIAN) HAS READ THE STATEMENTS AND
ANSWERS TO THE MEDICAL EVIDENCE PORTION AND THEY ARE COMPLETE AND TRUE TO THE
BEST OF HIS/HER KNOWLEDGE AND BELIEF. THE PROPOSED LIFE INSURED HEREBY AGREES
THAT THEY SHALL FORM PART OF THE APPLICATION FOR LIFE INSURANCE FOR WHICH SUCH
MEDICAL EVIDENCE WAS REQUIRED BY THE COMPANY.
THE PROPOSED LIFE INSURED (OR PARENT OR GUARDIAN) ACKNOWLEDGES RECEIPT OF THE
NOTICE OF DISCLOSURE OF INFORMATION.
THE PROPOSED LIFE INSURED AND OWNER (OR PARENT OR GUARDIAN) AGREE THAT: 1.) THE
STATEMENTS AND ANSWERS IN THIS APPLICATION ARE COMPLETE AND TRUE TO THE BEST OF
THEIR KNOWLEDGE AND BELIEF. 2.) UNLESS THE TERMS AND CONDITIONS OF THE TEMPORARY
LIFE INSURANCE AGREEMENT ARE SATISFIED SO THAT INSURANCE IS PROVIDED UNDER THAT
AGREEMENT, INSURANCE UNDER ANY POLICY ISSUED ON THE APPLICATION WILL BECOME
EFFECTIVE ONLY WHEN THE FIRST PREMIUM HAS BEEN PAID IN FULL AND THE POLICY HAS
BEEN DELIVERED; PROVIDED THAT AT THE TIME OF DELIVERY THERE HAS BEEN NO
DETERIORATION IN THE INSURABILITY OF ANY PERSON PROPOSED FOR LIFE INSURANCE AS
STATED IN THE APPLICATION, SINCE THE DATE OF THE APPLICATION. THEY ARE AWARE THE
COMPANY HAS UNDERWRITING RULES TO DETERMINE INSURABILITY. 3.) (NOT APPLICABLE IN
WEST VIRGINIA) ACCEPTANCE OF THE POLICY WILL, WHERE PERMITTED BY LAW, CONSTITUTE
AGREEMENT TO ITS TERMS AND RATIFICATION OF ANY CHANGES SPECIFIED BY THE COMPANY
IN THE POLICY, EXCEPT THAT ANY CHANGE OF AMOUNT, CLASSIFICATION, PLAN, BENEFITS
OR AGE AT ISSUE WILL BE MADE ONLY WITH THE OWNER'S WRITTEN CONSENT.
THE PROPOSED LIFE INSURED AND OWNER (OR PARENT OR GUARDIAN) UNDERSTAND THAT
UNDER THE POLICY APPLIED FOR, THE AMOUNT OF THE INSURANCE BENEFITS, THE DURATION
OF THE INSURANCE COVERAGE, AND THE POLICY VALUE MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT EXPERIENCE OF THE CHOSEN INVESTMENT ACCOUNT AND ARE
NOT GUARANTEED AS TO DOLLAR AMOUNT.
ANY PERSON WHO KNOWINGLY PRESENTS A FALSE OR FRAUDULENT CLAIM FOR PAYMENT OF A
LOSS OR BENEFIT OR KNOWINGLY PRESENTS FALSE INFORMATION IN AN APPLICATION FOR
INSURANCE IS GUILTY OF A CRIME AND MAY BE SUBJECT TO FINES AND CONFINEMENT IN
PRISON.
Signed at ______________________________ this __________ day of __________ _____
City / State Month Year
(X)___________________________________ (X)___________________________________
WITNESS SIGNATURE OF PROPOSED LIFE INSURED
(X)___________________________________ (X)___________________________________
WITNESS SIGNATURE OF OWNER, IF OTHER THAN
PROPOSED LIFE INSURED
(X)___________________________________ (X)___________________________________
WITNESS SIGNATURE OF ANY PROPOSED JUVENILE
LIFE INSURED OVER AGE 10
(X)___________________________________ (X)___________________________________
SIGNATURE OF REGISTERED REPRESENTATIVE CONSENT OF PARENT OR GUARDIAN,
IF OTHER THAN WITNESS IF OTHER THAN OWNER
[ ]FATHER [ ]MOTHER [ ]GUARDIAN
All other Registered Representatives sharing commissions for this policy must
also sign here.
(X)___________________________________ (X)___________________________________
SIGNATURE OF REGISTERED REPRESENTATIVE Place and Date
(X)___________________________________ (X)___________________________________
SIGNATURE OF REGISTERED REPRESENTATIVE Place and Date
(X)___________________________________
COUNTERSIGNATURE OF LICENSED RESIDENT AGENT
(WHERE REQUIRED BY LAW)
Page 6
<PAGE> 9
EXHIBIT
APPLICATION NO. PLEASE PRINT
To be answered by the Registered Representative (Required for ALL applications)
1. If the Owner is a Corporation, Partnership, Trust or other legal
entity, the NASD requires such entity to provide The Company with
documentation detailing the name(s) of all individuals authorized to
transact business on behalf of the entity. This requirement will be
satisfied by submitting a copy of the Corporation Resolution,
Partnership Agreement, or Certification by Trustee form.
List the name(s) of individual(s) authorized to transact business on
behalf of the entity:
______________________________________________________________________
______________________________________________________________________
2. Temporary Life Insurance Agreement Issued? [ ] Yes [ ] No
3. TO THE BEST OF YOUR KNOWLEDGE, IS THIS INSURANCE INTENDED TO REPLACE,
OR WILL IT CAUSE A CHANGE IN, OR INVOLVE A LOAN UNDER, ANY INSURANCE OR
ANNUITY POLICY ON THE LIFE OF ANY PROPOSED LIFE INSURED OR IN ANY
INSURANCE OR ANNUITY POLICY OWNED BY THE OWNER?
[ ] YES [ ] NO
IF "YES", GIVE DETAILS AND COMPLETE ANY REPLACEMENT FORMS THAT ARE
REQUIRED. ADVISE WHETHER ANY POLICY BEING REPLACED WAS ITSELF A
REPLACEMENT POLICY WITHIN THE PAST 5 YEARS.
4. Is this a 1035 exchange? [ ] Yes [ ] No
If "Yes", how many policies will be exchanged?________________________
LIST POLICIES:
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________
Type of Contract
Company Name Policy No. (Annuity, Life, Term, Annuitant / Insured Owner
Endowment)
___________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
</TABLE>
5. Additional information to be used in assessing suitability. (Please
give explanation if annual premium is more than 3% of annual income, if
spouse's income is to be included in determining suitability, if
answers to income and net worth have not been provided, etc.):
6. If you are sharing the commissions for this policy with another
agent(s) or entity(ies), please complete the following:
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________
NAME OF AGENT / ENTITY AGENT CODE SHARE REMARKS
___________________________________________________________________________________________________________________________
<S> <C> <C> <C>
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
TOTAL 100%
__________
</TABLE>
I certify that I have truly and accurately recorded on the application all the
information supplied by the Proposed Life Insured (or Parent or Guardian).
I CERTIFY THAT A CURRENT PROSPECTUS (AND ANY SUPPLEMENT) FOR THE POLICY APPLIED
FOR HAS BEEN GIVEN TO THE PROPOSED LIFE INSURED, AND TO THE OWNER IF OTHER THAN
THE PROPOSED LIFE INSURED, AND THAT NO SALES MATERIALS OTHER THAN THOSE APPROVED
BY THE APPROPRIATE REGULATING AUTHORITIES HAVE BEEN USED.
(X)________________________________ (X)________________________________
SIGNATURE OF REGISTERED REPRESENTATIVE Place and Date
All other Registered Representatives sharing commissions for this policy must
also sign here.
(X)________________________________ (X)________________________________
SIGNATURE OF REGISTERED REPRESENTATIVE Place and Date
(X)________________________________ (X)________________________________
SIGNATURE OF REGISTERED REPRESENTATIVE Place and Date
OFFICE OF SUPERVISORY JURISDICTION
Has this application been approved by the Office of Supervisory Jurisdiction?
[ ] Yes [ ] No
If answer is "No", explain:
_______________________________________________________________________________
_______________________________________________________________________________
_____________________ ______________________________ _____________________
NAME OF BROKER/DEALER REGISTERED PRINCIPAL SIGNATURE DATE (Month/ Day/ Year)
Page 7
<PAGE> 1
EXHIBIT 2A
The Manufacturers Life Insurance Company of America
200 Bloor Street East
Toronto, Ontario, Canada M4W 1E5
August 27, 1998
To whom it may concern,
This opinion is written in reference to the flexible premium variable universal
life insurance contract (the "Contract") that will be offered and sold by The
Manufacturers Life Insurance Company of America (the "Company") with respect to
the variable portion of which a Registration Statement on Form S-6 (the
"Registration Statement") is being filed under the Securities Act of 1933, as
amended (the "Act").
As Counsel to the Company, I have examined such records and documents and
reviewed such question of law as I deemed necessary for purposes of this
opinion.
1. The Company has been duly incorporated under the laws of the state of
Michigan and is a validly existing corporation.
2. Separate Account Four of The Manufacturers Life Insurance Company of America
(the "Variable Life Account") is a separate account of the Company and is duly
created and validly existing pursuant to The Insurance Code of 1956.
3. The portion of the assets to be held in Separate Account Four of the Company
tequal to the reserves and other liabilities under the Policy is not chargeable
with liabilities arising out of any other business the Company may conduct.
4. The Policy, when issued in accordance with the prospectus contained in the
effective Registration Statement and upon compliance with applicable local law,
will be legal and binding obligations of the Company.
I consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement on Form S-6.
Very truly yours,
/s/ JAMES D. GALLAGHER
James D. Gallagher
Secretary and General Counsel
<PAGE> 1
August 27, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Actuarial Opinion on Illustrations in Registration Statement
Dear Sirs:
This opinion is furnished in connection with the registration statement under
the Securities Act of 1933, as amended, of a flexible premium variable universal
life insurance contract (the "Contract") that will be offered and sold by The
Manufacturers Life Insurance Company of America.
The hypothetical illustrations of death benefits, contract values and surrender
values used in this registration statement are consistent with the provisions of
the Contract and the Company's administrative procedures. The rate structure of
the contract has not been designed so as to make the relationship between
premiums and benefits, as shown in the illustrations, appear disproportionately
more favorable to a prospective purchaser of the contract for the age and risk
class illustrated than for any other prospective purchaser. The particular
illustrations shown are for a commonly used risk class and for premium amounts
and ages appropriate to the markets in which the contract is sold.
I hereby consent to the use of this opinion as an exhibit to the Securities Act
Registration Statement on Form S-6.
Sincerely,
Vic Bertolozzi
Vic Bertolozzi, FSA, MAAA
Actuary
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 20, 1998 accompanying the financial statements of
The Manufacturers Life Insurance Company of America and to the use of our
report dated January 30, 1998 accompanying the financial statements of Separate
Account Four of The Manufacturers Life Insurance Company of America, in
Pre-Effective Amendment No. 1 to the Registration Statement No. 333-51293 on
Form S-6 and related prospectus of Seperate Account Four of The Manufacturers
Life Insurance of America.
Ernst & Young LLP
Philadelphia, Pennsylvania
August 27, 1998
<PAGE> 1
Exhibit 6
EXHIBIT A.(11)
THE MANUFACTURERS INSURANCE COMPANY OF AMERICA
DESCRIPTION OF PURCHASE, TRANSFER AND REDEMPTION PROCEDURES
This document sets forth, as required by Rule 6e-3(T)(b)(12)(ii), the
administrative procedures that will be followed by The Manufacturers
Insurance Company of America (the "Company") and any office the Company
designates for the receipt of payments and processing of policyholder
requests (the "Service Office") in connection with the issuance of its
flexible premium variable universal life insurance contract described
in this registration statement (1933 Act file no. 333-51293) (the
"Policy"), the transfer of assets held thereunder, and the redemption
by contract owners of their interests in said Policy.
I. ISSUING A POLICY
A. Premiums
This Policy is a flexible premium variable universal life
insurance contract. The Policy permits the policyholder to
pay flexible premiums. After payment of the initial premium,
premiums may be paid at any time and in any amount during
the lifetime of the insured. A Policy will be issued with a
planned premium, which is based on the amount of premium the
policyholder wished to pay. In no event may the total of all
premiums paid exceed the then-current maximum premium
limitations established by federal income tax law for a
Policy to qualify as life insurance. If, at any time, a
premium is paid which would result in total premiums
exceeding the above maximum premium limitation, the Company
will only accept that portion of the premium which will make
the total premiums equal to the maximum. Any part of the
premium in excess of that amount will be returned and no
further premiums will be accepted until allowed by the
then-current maximum premium limitation.
B. Underwriting
The Polices are offered on three underwriting bases,
which vary by the amount of information required of the
prospective insured. These are described in more detail
below. Regardless of which underwriting procedure is used,
the acceptance of an application is subject to the Company's
underwriting rules, and the Company reserves the right to
request additional information or to reject an application
for any reason.
Generally, the availability of short form underwriting
depends on the characteristics of the case, such as the
number of lives to be insured and the amounts of insurance.
Under Short Form underwriting, a proposed insured is
required to answer qualifying questions in the application,
but is not required to submit to a medical or paramedical
exam. Short form underwriting is generally available only up
to issue age 65.
<PAGE> 2
Like short form underwriting the availability of simplified
underwriting depends on the characteristics of the case.
Under Simplified Underwriting, the proposed insured is
required to respond satisfactorily to certain health
questions in the application. Medical records, such as
"Attending Physician's Statements" (APS's) are generally
required. In some instances, a blood test may also be
required.
If the requirements for short form or simplified underwriting
are not satisfied, the Company will require satisfactory
evidence of insurability. This may include medical exams and
other information. Persons failing to meet standard
underwriting classification may be eligible for a Policy with
an additional rating assigned to it.
C. Application
To purchase a Policy, an applicant must submit a completed
application. A Policy will not be issued until the
underwriting process has been completed to the Company's
satisfaction.
Policies may be issued on a basis which does not distinguish
between the insured's sex and/or smoking status, with prior
approval from the Company. A Policy will only be issued on
the lives of insureds from ages 20 through 80.
Each Policy is issued with a Policy Date, an Effective Date
and an Issue Date. The Policy Date is the date from which
the first monthly deductions are calculated and from which
Policy Years, Policy Months and Policy Anniversaries are
determined. The Effective Date is the date the Company
becomes obligated under the Policy and when the first
monthly deductions are deducted from the Policy Value. The
Issue Date is the date from which the suicide and
incontestability provisions are measured.
If an application is accompanied by a check for the initial
premium and the application is accepted:
(i) the Policy Date will be the date the application and
check were received at the Service Office (unless a special
Policy Date is requested (See "Backdating a Policy" below);
(ii) the Effective Date will be the date the Company's
underwriters approve issuance of the Policy; and
(iii) the Issue Date will be the date the Company issues the
Policy.
If an application accepted by the Company is not accompanied
by a check for the initial premium:
(i) the Policy Date will be the date the Company issues the
Policy (unless a special Policy Date is requested (See
"Backdating a Policy" below);
2
<PAGE> 3
(ii) the Effective Date will be the date the Service Office
receives the initial premium; and
(iii) the Issue Date will be the date the Company issues the
Policy.
The initial premium must be received within 60 days after
the Policy Date. If the premium is not paid or if the
application is rejected, the Policy will be cancelled and
any partial premiums paid will be returned to the applicant.
D. Minimum Initial Face Amount
The Company will issue a Policy only if it has a Face Amount
of at least $50,000.
E. Backdating a Policy
Under limited circumstances, the Company may backdate a
Policy, upon request, by assigning a Policy Date earlier
than the date the application is signed. However, in no
event will a Policy be backdated earlier than the earliest
date allowed by state law, which is generally three months
to one year prior to the date of application for the Policy.
Monthly deductions will be made for the period the Policy
Date is backdated. Regardless of whether or not a policy is
backdated, Net Premiums (premium paid less premium load)
received prior to the Effective Date of a Policy will be
credited with interest from the date of receipt at the rate
of return then being earned on amounts allocated to the
Money Market portfolio. As of the Effective Date, the
premiums paid plus interest credited, net of the premium
load, will be allocated among the Investment Accounts (as
described below under ("Policy Value Investment Accounts")
and/or Guaranteed Interest Account in accordance with the
policyholder's instructions unless such amount is first
allocated to the Money Market portfolio for the duration of
the Right to Examine period described below.
F. Temporary Insurance
In accordance with the Company's underwriting practices,
temporary insurance coverage may be provided under the
terms of a Temporary Insurance Agreement. Generally,
temporary life insurance may not exceed $1,000,000 and may
not be in effect for more than 90 days. This temporary
insurance coverage will be issued on a conditional receipt
basis, which means that any benefits under such temporary
coverage will only be paid if the life insured meets the
Company's usual and customary underwriting standards for
the coverage applied for.
G. Right to Examine the Policy
3
<PAGE> 4
A Policy may be returned for a refund within 10 days after
it is received. Some states provide a longer period of time
to exercise this right. The Policy will indicate if the
policyholder has a longer time. The Policy can be mailed or
delivered to the Company's agent who sold it or to the
Service Office. Immediately on such delivery or mailing, the
Policy shall be deemed void from the beginning. Within seven
days after receipt of the returned Policy at its Service
Office, the Company will refund to the policyholder an
amount equal to:
(a) the difference between payments made and amounts
allocated to separate account which supports the Policies
(the "Separate Account") and the Guaranteed Interest
Account; plus
(b) the value of the amount allocated to the Separate
Account and the Guaranteed Interest Account as of the date
the returned Policy is received by the Company; minus
(c) any partial withdrawals made and policy loans taken.
Some state laws require the refund of all premiums paid,
without adjustment for the investment gains and losses of
the Separate Account. In these states, all Net Premiums will
be allocated to the Money Market Trust during the right to
examine period, and the policyholder will receive a refund
of all payments made less any partial withdrawals and policy
loans taken.
If a policyholder requests an increase in face amount which
results in new surrender charges, he or she will have the
same rights as described above to cancel the increase. If
cancelled, the Policy Value and the surrender charges will
be recalculated to the amounts they would have been had the
increase not taken place. A policyholder may request a
refund of all or any portion of premiums paid during the
free look period, and the Policy Value and the surrender
charges will be recalculated to the amounts they would have
been had the premiums not been paid.
The Company reserves the right to delay the refund of any
premium paid by check until the check has cleared.
H. Premium Allocation
No premiums will be accepted prior to receipt of a completed
application by the Company. All premiums received prior to
the Effective Date of the Policy will be held in the general
account of the Company and credited with interest from the
date of receipt at the rate of return then being earned on
amounts allocated to the Money Market Trust.
On the Effective Date, the Net Premiums paid plus interest
credited will be allocated among the Investment Accounts or
the Guaranteed Interest Account in accordance with the
policyholder's instructions.
4
<PAGE> 5
All Net Premiums received on or after the Effective Date
will be allocated among Investment Accounts or the
Guaranteed Interest Account as of the date the premiums were
received at the Service Office. Monthly deductions are due
on the Policy Date and at the beginning of each policy month
thereafter. However, if due prior to the Effective Date,
they will be taken on the Effective Date instead of the
dates they were due.
Some state laws require the refund of all premiums paid,
without adjustment for gains and losses of the Separate
Account, if a Policy is returned during the right to examine
period. In these states, all Net Premiums will be allocated
to the Money Market Trust during the right to examine
period. At the end of this period, the Policy Value in the
Money Market Trust will be allocated among the Investment
Accounts or the Guaranteed Interest Account. The Policy will
state if a return of premiums is required.
Premiums may be allocated to either the Guaranteed Interest
Account for accumulation at a rate of interest equal to at
least 4% or to one or more of the Investment Accounts for
investment in the Portfolio shares held by the corresponding
sub-account of the Separate Account. Allocations among the
Investment Accounts and the Guaranteed Interest Account are
made as a percentage of the premium. The percentage
allocation to any account may be any number between zero and
100, provided the total allocation equals 100.
Alternatively, a policyholder may specify the allocation of
a specific premium payment in dollar amounts, so long as the
total allocation among the Investment Accounts equals the
Net Premium paid. A policyholder may change the way in which
premiums are allocated at any time without charge. The
change will take effect on the date a written request for
change satisfactory to the Company is received at the
Service Office.
II. DEATH BENEFIT OPTION CHANGES
The death benefit option may be changed on the first day of
any Policy month. The change will occur on the first day of
the next Policy month which is 30 days after a written
request for a change is received at the Service Office. The
Company reserves the right to limit a request for a change
if the change would cause the Policy to fail to qualify as
life insurance for tax purposes.
A change in the death benefit option will result in a change
in the Policy's Face Amount, in order to avoid any change in
the amount of the death benefit, as follows:
Change from Option 1 to Option 2
The new Face Amount will be equal to the Face Amount prior
to the change minus the Policy Value on the date of the
change. The Policy will not be assessed a surrender charge
for a reduction in Face Amount solely due to a change in the
death benefit option.
Change from Option 2 to Option 1
5
<PAGE> 6
The new Face Amount will be equal to the Face Amount prior
to the change plus the Policy Value on the date of the
change. No new surrender charges will apply to an increase
in Face Amount solely due to a change in the death benefit
option.
III. FACE AMOUNT CHANGES
Subject to the limitations stated in this Prospectus, a
policyholder may, upon written request, increase or decrease
the Face Amount of the Policy. The Company reserves the
right to limit a change in Face Amount so as to prevent the
Policy from failing to qualify as life insurance for tax
purposes.
A. Increase in Face Amount
Increases in Face Amount are subject to satisfactory
evidence of insurability. An increase will become effective
at the beginning of the Policy month following the date the
Company approves the requested increase. The Company
reserves the right to refuse a requested increase if the
life insured's Attained Age (life insured's age on the
birthday closer to the Policy Date plus the number of
completed Policy Years*) at the effective date of the
increase would be greater than the maximum Issue Age for new
Policies at that time.
*Policy Year is a period beginning on a Policy Anniversary
and ending on the day immediately preceding the next Policy
Anniversary.
B. New Surrender Charges for an Increase
An increase in Face Amount will result in the Policy's being
subject to new surrender charges. The new surrender charges
will be computed as if a new Policy were being purchased for
the increase in Face Amount. For purposes of determining the
new surrender charges a portion of the premiums paid on or
subsequent to the increase will be deemed to be premiums
attributable to the increase. The portion attributable to
the increase in any Policy Year will be the amount of
premiums in excess of the sum of the Target Premiums for the
(i) initial Face Amount during the first five Policy Years
and (ii) all prior increases that are in effect at the time
of the increase in Face Amount and have been in effect for
less than five years.
C. Increase with Prior Decreases
If, at the time of the increase, there have been prior
decreases in Face Amount, these prior decreases will be
restored first. There will be no new surrender charges
associated with these increases, since surrender charges
will have already been assessed at the time of the prior
decrease.
D. Decrease in Face Amount
A written request from a policyholder for a decrease in the
Face Amount must be received by Manufacturers Life of
America at least 30 days prior to the first day of a policy
month for the change to take effect on the first day of that
policy month. If there have been previous increases in Face
Amount, the decrease will be applied to the most recent
increase first and thereafter to the next most recent
increases successively.
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E. Surrender Charges Assessed on a Decrease
A portion of a Policy's surrender charge will be deducted
from the Policy Value on a decrease in Face Amount. Since
surrender charges are determined separately for the initial
Face Amount and each Face Amount Increase, the portion of
the surrender charges to be deducted with respect to each
level of insurance coverage will be determined separately.
The portion of the surrender charge deducted with respect to
a level of coverage will be equal to:
(a) the amount of the decrease; divided by
(b) the amount of the coverage prior to the decrease;
multiplied by
(c) the surrender charge for the coverage.
The charges will be allocated among the Investment Accounts
and the Guaranteed Interest Account in the same proportion
as the Policy Value in each bears to the Net Policy Value
(Policy Value less the value in the Loan Account).
Whenever a portion of the surrender charges are deducted as
a result of a decrease in Face Amount, the Policy's
remaining surrender charges will be reduced in the same
proportion that the surrender charge deducted bears to the
total surrender charge immediately prior to the decrease in
Face Amount.
IV. POLICY VALUE
A. Determination of the Policy Value
A Policy has a Policy Value, a portion of which is available
to the policyholder by making a policy loan or partial
withdrawal, or upon surrender of the Policy. The Policy
Value may also affect the amount of the death benefit. The
Policy Value at any time is equal to the sum of the values
in the Investment Accounts, the Guaranteed Interest Account,
and the Loan Account.
B. Investment Accounts
An Investment Account is established under each Policy for
each sub-account of the Separate Account to which net
premiums or transfer amounts have been allocated. Each
Investment Account under a Policy measures the interest of
the Policy in the corresponding sub-account. The value of
the Investment Account established for a particular
sub-account is equal to the number of units of that
sub-account credited to the Policy times the value of such
units.
C. Guaranteed Interest Account
Amounts in the Guaranteed Interest Account do not vary with
the investment performance of any sub-account. Instead,
these amounts are credited with interest at a rate
determined by the Company.
D. Loan Account
Amounts borrowed from the Policy are transferred to the Loan
Account. Amounts in the Loan Account do not vary with the
investment performance of any sub-account. Instead, these
amounts are credited with interest at a rate
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which is equal to the amount charged on the outstanding
Policy Debt (the aggregate amount of policy loans, including
borrowed and accrued interest, less any loan repayments)
less the Loan Spread set forth in the Policy.
E. Units and Unit Values
Crediting and Canceling Units
Units of a particular sub-account are credited to a Policy
when Net Premiums are allocated to that sub-account or
amounts are transferred to that sub-account. Units of a
sub-account are cancelled whenever amounts are deducted,
transferred or withdrawn from the sub-account. The number of
units credited or cancelled for a specific transaction is
based on the dollar amount of the transaction divided by the
value of the unit on the Business Day on which the
transaction occurs. The number of units credited with
respect to a premium payment will be based on the applicable
unit values for the Business Day on which the premium is
received at the Service Office, except for any premiums
received before the Effective Date. For premiums received
before the Effective Date, the values will be determined on
the Effective Date.
Units are valued at the end of each Business Day. When an
order involving the crediting or canceling of units is
received after the end of a Business Day, or on a day which
is not a Business Day, the order will be processed on the
basis of unit values determined on the next Business Day.
Similarly, any determination of Policy Value, Investment
Account value or death benefit to be made on a day which is
not a Business Day will be made on the next Business Day.
Unit Values
The value of a unit of each sub-account was initially fixed
at $10.00. For each subsequent Business Day the unit value
for that sub-account is determined by multiplying the unit
value for the immediately preceding Business Day by the net
investment factor for the that sub-account on such
subsequent Business Day.
The net investment factor for a sub-account on any Business
Day is equal to (a) divided by (b) minus (c), where:
(a) is the net asset value of the underlying Portfolio
shares of Manufacturers Investment Trust held by that
sub-account as of the end of such Business Day before any
policy transaction are made on that day;
(b) is the net asset value of the underlying Portfolio
shares held by that sub-account as of the end of the
immediately preceding Business Day after all policy
transaction were made for that day; and
(c) is a charge not exceeding the daily mortality and
expense risk charge.
The value of a unit may increase, decrease, or remain the
same, depending on the investment performance of a
sub-account from one Business Day to the next.
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Due to the fact that the daily mortality and expense risk
charge varies by Policy Years, two unit values will be
calculated for each sub-account commencing 10 years after
the effective date of the first Policy.
V. TRANSFER OF POLICY VALUE
A. General Transfers
At any time, a policyholder may transfer policy value from
one sub-account to another or to the Guaranteed Interest
Account. Transfer requests must be in writing in a format
satisfactory to the Company, or by telephone if a currently
valid telephone transfer authorization form is on file.
These transfer privileges are subject to the Company's
consent. The Company reserves the right to impose
limitations on transfers, including the maximum amount that
may be transferred. In addition, transfer privileges are
subject to any restrictions that may be imposed by
Manufacturers Investment Trust.
If a transfer would result in more than a 5% reduction in
the number of shares outstanding at the close of the
previous business day in the Equity Index sub-account, the
Company may decline the transfer. If at a later date you
wish to make a previously declined transfer, the Company
will require a new transfer request.
A policyholder may make up to twelve transfers each policy
year free of charge. Additional transfers in each policy
year may be made at a cost of per transfer as set forth in
the currently effective prospectus. This charge will be
allocated among the Investment Accounts and the Guaranteed
Interest Account in the same proportion as the amount
transferred from each bears to the total amount transferred.
All transfer requests received by the Company on the same
Business Day are treated as a single transfer request.
The maximum amount that may be transferred from the
Guaranteed Interest Account in any one policy year is the
greater of $500 or 15% of the Guaranteed Interest Account
Value at the previous Policy Anniversary. Any transfer which
involves a transfer out of the Guaranteed Interest Account
may not involve a transfer to the Investment Account for the
Money Market Trust.
Although failure to follow reasonable procedures may result
in the Company being liable for any losses resulting from
unauthorized or fraudulent telephone transfers,
Manufacturers Life of America will not be liable for
following instructions communicated by telephone that the
Company reasonably believes to be genuine. The Company will
employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures shall
consist of confirming that a valid telephone authorization
form is on file, tape recording of all telephone
transactions and providing written confirmation thereof.
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VI. POLICY SURRENDER AND PARTIAL WITHDRAWALS
A. Policy Surrender
A Policy may be surrendered for its Net Cash Surrender Value
at any time while the life insured is living. The Net Cash
Surrender Value is equal to the Policy Value less any
surrender charges and outstanding monthly deductions due
(the "Cash Surrender Value") minus the Policy Debt. The Net
Cash Surrender Value will be determined at the end of the
Business Day on which Manufacturers Life of America receives
the Policy and a written request for surrender at its
Service Office. After a Policy is surrendered, the insurance
coverage and all other benefits under the Policy will
terminate.
A policyholder may make a partial withdrawal of the Net Cash
Surrender Value. The policyholder may specify the portion of
the withdrawal to be taken from each Investment Account and
the Guaranteed Interest Account. In the absence of
instructions, the withdrawal will be allocated among such
accounts in the same proportion as the Policy Value in each
account bears to the Net Policy Value.
If Death Benefit Option 1 is in effect when a partial
withdrawal is made, the Face Amount of the Policy will be
reduced by the amount of the withdrawal plus any applicable
Surrender Charges. Reductions in Face Amount resulting from
partial withdrawals will not incur any surrender charges
above the surrender charges applicable to the withdrawal.
If the death benefit is based upon the Policy Value times
the minimum death benefit percentage, the Face Amount will
be reduced only to the extent that the amount of the
withdrawal plus the portion of the Surrender Charge assessed
exceeds the difference between the death benefit and the
Face Amount. When the Face Amount of a Policy is based on
one or more increases subsequent to issuance of the Policy,
a reduction resulting from a partial withdrawal will be
applied in the same manner as a requested decrease in Face
Amount, i.e., against the Face Amount provided by the most
recent increase, then against the next most recent increases
successively and finally against the initial Face Amount.
As long as the Policy is in force, Manufacturers Life of
America will ordinarily pay any policy loans, surrenders,
partial withdrawals or insurance benefit within seven days
after receipt at its Service Office of all the documents
required for such a payment. The Company may delay the
payment of any policy loans, surrenders, partial
withdrawals, or insurance benefit that depends on Guaranteed
Interest Account values for up to six months or in the case
of any Investment Account for any period during which (i)
the New York Stock Exchange is closed for trading (except
for normal weekend and holiday closings), (ii) trading on
the New York Stock Exchange is restricted (iii) an emergency
exists as a result of which disposal of securities held in
the Separate Account is not reasonably practicable or it is
not reasonably practicable to determine the value of the
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Separate Account's net assets or (iv) the SEC, by order, so
permits for the protection of security holders; provided
that applicable rules and regulations of the SEC shall
govern as to whether the conditions described in (2) and (3)
exist.
B. Surrender Charges
The Company will deduct a Surrender Charge if during the
first 10 years following the Policy date, or the effective
date of a Face Amount increase:
- the Policy is surrendered for its Net Cash Surrender
Value,
- a partial withdrawal is made in excess of the Free
Partial Withdrawal Amount,
- the Face Amount is decreased, or
- the Policy lapses.
The surrender charge is expressed as a percentage of the
total premiums paid from the Effective Date. However,
premiums paid in any Policy Year in excess of the target
premium, and premiums paid after the fifth Policy Year, are
not counted in the determination of total premiums paid.
Therefore, the timing of premium payments may affect the
amount of the surrender charge. The percentages vary by
Policy Year as follows:
Policy Year Percentage
1 10.00%
2 7.50%
3 5.00%
4 5.00%
5 5.00%
6 5.00%
7 4.00%
8 3.00%
9 2.00%
10+ 0.00%
Surrender Charges on a Partial Withdrawal
A partial withdrawal will result in the assessment of a
portion of the surrender charges to which the Policy is
subject. The portion of the surrender charges assessed will
be based on the ratio of the amount of the withdrawal which
exceeds the Free Withdrawal Amount (defined below) to the
Net Cash Surrender Value of the Policy immediately prior to
the withdrawal. The Surrender Charges will be deducted on a
pro-rata basis from each of the Investment Accounts and the
Guaranteed Interest Account. If the amount in the accounts
are not sufficient to pay the surrender charges assessed,
then the amount of the withdrawal will be reduced.
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Whenever a portion of the surrender charges are deducted as
a result of a partial withdrawal, the Policy's remaining
surrender charges will be reduced in the same proportion
that the surrender charge deducted bears to the total
surrender charge immediately before the partial withdrawal.
Free Withdrawal Amount
The Free Withdrawal Amount is equal to 10% of the Net Cash
Surrender Value at the time of the withdrawal. In
determining what, if any, portion of a partial withdrawal is
in excess of the Free Withdrawal Amount, all previous
partial withdrawals that have occurred in the current Policy
Year are included.
VII. LAPSE AND REINSTATEMENT
A. Lapse
A Policy will go into default if at the beginning of any
policy month the Policy's Net Cash Surrender Value would go
below zero after deducting the monthly deduction then due.
The Company will notify the policyholder of the default and
will allow a 61 day grace period in which the policyholder
may make a premium payment sufficient to bring the Policy
out of default. The required payment will be equal to the
amount necessary to bring the Net Cash Surrender Value to
zero, if it was less than zero on the date of default, plus
the monthly deductions due at the date of default and
payable at the beginning of each of the two policy months
thereafter, plus any applicable premium load. If the
required payment is not received by the end of the grace
period, the Policy will terminate with no value.
Death During Grace Period
If the life insured should die during the grace period, the
Policy Value used in the calculation of the death benefit
will be the Policy Value as of the date of default and the
insurance benefit will be reduced by any outstanding monthly
deductions due at the time of death.
B. Reinstatement
A policyholder can reinstate a Policy which has terminated
after going into default at any time within the five year
period following the date of termination subject to the
following conditions:
(a) The Policy must not have been surrendered for its Net
Cash Surrender Value;
(b) Evidence of the life insured's insurability satisfactory
to the Company is furnished to the Company; and
(c) A premium equal to the payment required during the grace
period following default to keep the Policy in force is paid
to the Company.
VIII. POLICY LOANS
At any time while this Policy is in force, a policyholder
may borrow against the Policy Value of the Policy. The
Policy serves as the only security for the loan.
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A. Maximum Loan
The amount of any loan cannot exceed the amount which would
cause the Policy Debt to equal the Loan Value of the Policy
on the date of the loan.
B. Loan Value
The Loan Value is equal to the Policy's Cash Surrender Value
less the monthly deductions due to the next Policy
Anniversary.
C. Interest Charged on Policy Loans
Interest on the Policy Debt will accrue daily and be payable
annually on the Policy Anniversary. The rate of interest
charged will be an effective annual rate of 5.00%.
D. Loan Account
When a loan is made, an amount equal to the loan will be
deducted from the Investment Accounts or the Guaranteed
Interest Account and transferred to the Loan Account. The
policyholder may designate how the amount to be transferred
to the Loan Account is allocated among the accounts from
which the transfer is to be made. In the absence of
instructions, the amount to be transferred will be allocated
to each account in the same proportion as the value in each
Investment Account and the Guaranteed Interest Account bears
to the Net Policy Value. A transfer from an Investment
Account will result in the cancellation of units of the
underlying sub-account equal in value to the amount
transferred from the Investment Account. However, since the
Loan Account is part of the Policy Value, transfers made in
connection with a loan will not change the Policy Value.
E. Interest Credited to the Loan Account
Interest will be credited to amounts in the Loan Account at
an effective annual rate of at least 4.00%. The actual rate
credited is equal to the rate of interest charged on the
policy loan less the Loan Spread. The Loan Spread varies by
Policy Year as follows:
Policy Year Loan Spread
1-10 1.00%
11-20 0.50%
21+ 0.25%
F. Loan Account Adjustments
On the first day of each policy month the difference between
the Loan Account and the Policy Debt is transferred to the
Loan Account from the Investment Accounts or the Guaranteed
Interest Account. Amounts transferred from the Loan Account
will be allocated to the Investment Accounts and the
Guaranteed Interest Account in the same proportion as the
value in each Investment Account and the Guaranteed Interest
Account bears to the Net Policy Value.
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G. Loan Repayments
Policy Debt may be repaid in whole or in part at any time
prior to the death of the life insured, provided that the
Policy is in force. When a repayment is made, the amount is
credited to the Loan Account and transferred to the
Guaranteed Interest Account or the Investment Accounts. Loan
repayments will be allocated to the Guaranteed Interest
Account and each Investment Account in the same proportion
as the value in each Investment Account and the Guaranteed
Interest Account bears to the Net Policy Value.
Amounts paid to the Company not specifically designated in
writing as loan repayments will be treated as premiums.
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