As filed with the Securities and Exchange Commission on February 24, 1997
Registration No. 33-22925
811-5279
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-4
REGISTRATION UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __
Post-Effective Amendment No. 15
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 17
CHARTER NATIONAL VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
CHARTER NATIONAL LIFE INSURANCE COMPANY
(Name of Depositor)
8301 Maryland Avenue St. Louis, Missouri 63105
(Address of Depositor's Principal Executive Offices)
(314) 725-7575
(Depositor's Telephone Number, including Area Code)
Richard G. Petitt
Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63105
(Name and Address of Agent for Service)
Copy to:
Stephen E. Roth, Esq.
Sutherland, Asbill & Brennan, L.L.P.
1275 Pennsylvania Avenue, N. W.
Washington, D. C. 20004-2404
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Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of the Registration Statement.
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b)
___ on _____________________ pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(i)
_X_ on May 1, 1997 pursuant to paragraph (a)(i)
___ 75 days after filing pursuant to paragraph (a)(ii)
___ on __________ pursuant to paragraph (a)(ii) of Rule 485
If appropriate check the following box:
______ this Post-Effective Amendment designates a new effective date for a
previously filed Post Effective Amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933. The Registrant filed the Rule 24f-2
Notice for the year ended December 31, 1996 on February 21, 1997.
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Cross Reference Sheet
Pursuant to Rule 481
Showing Location in Part A (Prospectus) and Part B
(Statement of Additional Information) of
Registration Statement of Information Required by Form N-4
PART A
Item of Form N-4 Prospectus Caption
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis or Highlights Summary; Fee Table
4. Condensed Financial
Information Condensed Financial Information;
Calculation of Yields and Total
Returns; Other Performance Data
5. General Description of Registrant,
Depositor, and Portfolio Companies
(a) Depositor Charter National Life Insurance
Company
(b) Registrant Summary; Charter National
Variable Annuity Account
(c) Portfolio Company Summary; Scudder Variable Life
Investment Fund
(d) Fund Prospectus Scudder Variable Life Investment
Fund
(e) Voting Rights Voting Rights
(f) Administrators Records and Reports; Written
Notices and Requests; Owner
Inquiries
6. Deductions and Expenses Summary; Charges and Deductions
(a) General Summary; Mortality and Expense
Risk Charge; Contract
Administration Charge; Records
Maintenance Charge; Premium
Taxes; Other Taxes; Transfer
Charges
(b) Sales Load Summary; Charges and Deductions
(c) Special Purchase Plan Employment-Related Benefit Plans
(d) Commissions Distribution of the Contract
(e) Expenses - Registrant Summary; Other Taxes
(f) Fund Expenses Summary; Scudder Variable Life
Investment Fund; Charges Against
the Fund
(g) Organizational Expenses N/A
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Item of Form N-4 Prospectus Caption
7. General Description of Variable
Annuity Contracts
(a) Persons with Rights Summary; The Contract;
Distributions Under the Contract;
Voting Rights
(b) (I) Allocation of
Premium Payments Summary; Allocation of Payments
(ii) Transfers Summary; Transfers
(iii)Exchanges N/A
(c) Changes Addition, Deletion, or Substitution
of Investments; The Contract
(d) Inquiries Records and Reports; Written
Notices and Requests; Owner
Inquiries
8. Annuity Period Summary; Annuity Payments;
Maturity Date; Annuity Income
Options; State Exception
9. Death Benefit Summary; Death Benefit; Death of
Owner; Employment-Related Benefit
Plans; Annuity Income Options
10. Purchases and Contract Value
(a) Purchases Contract Application and Issuance
of Contracts; Payments; Allocation
of Payments; Account Value;
Contract Ownership
(b) Valuation Account Value
(c) Daily Calculation Account Value
(d) Underwriter Distribution of the Contract
11. Redemptions
(a) By Owner Summary; Full and Partial
Surrender Privileges; Death
Benefit; Annuity Payments;
Annuity Income Options
(b) Texas ORP N/A
(c) Check Delay Deferment of Payment and Transfers
(d) Lapse Contract Expiration
(e) Free Look Examination Period
12. Taxes Summary; Certain Federal Income
Tax Consequences
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Statement
of Additional Information Index to Statement of Additional
Information
PART B
Statement of Additional
Item of Form N-4 Information Caption
15. Cover Page Cover Page
16. Table of Contents Table of Contents
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Statement of Additional
Item of Form N-4 Information Caption
17. General Information and History State Regulation of Charter
18. Services
(a) Fees and Expenses
of Registrant N/A
(b) Management Contracts N/A
(c) Custodian Safekeeping of the Variable
Account's Assets
Independent Public
Accountants Financial Statements; Independent
Accountants
(d) Assets of Registrant N/A
(e) Affiliated Persons N/A
(f) Principal Underwriter Part A -- Distribution of the
Contract
19. Purchase of Securities
Being Offered Part A -- The Contract;
Distribution of the Contract
20. Underwriters Part A -- Distribution of the
Contract
21. Calculation of Performance Data Calculation of Yields and Total
Returns
22. Annuity Payments Part A -- Annuity Payments;
Annuity Income Options
23. Financial Statements Financial Statements
PART C
Item of Form N-4 Part C Caption
24. Financial Statements and Exhibits Financial Statements and Exhibits
(a) Financial Statements (a) Financial Statements
(b) Exhibits (b) Exhibits
25. Directors and Officers of the
Depositor Directors and Officers of the
Depositor
26. Persons Controlled By or Under
Common Control With the
Depositor or Registrant Persons Controlled By or Under
Common Control With the
Depositor or Registrant
27. Number of Contractowners Number of Contractowners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
SIGNATURES
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SCUDDER HORIZON PLAN
PROSPECTUS FOR
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
This Prospectus describes the no sales load Flexible Premium Variable
Deferred Annuity (the "Contract") offered by Charter National Life
Insurance Company ("Charter"), 8301 Maryland Avenue, St. Louis, Missouri
63105. The Contract is designed to provide for accumulation of capital on
a tax-deferred basis for retirement or other long-term purposes. The
Contract is available to individuals, as well as to certain retirement
plans and individual retirement accounts that qualify for special federal
income tax treatment. The Contract also may be purchased for use as an
Individual Retirement Annuity that qualifies for special federal income tax
treatment applicable to "IRAs."
The Contract may be purchased for a minimum initial payment of $2,500.
No commission or sales charge is deducted from the purchase payments or
from amounts payable upon surrender of the Contract. The Owner of a
Contract (the "Owner") may make additional payments subject to certain
conditions and limitations.
An Owner may direct that payments accumulate on a completely variable
basis, a completely fixed basis, or a combination variable and fixed basis.
To the extent that an Owner elects to have payments accumulate on a
variable basis, payments under the Contract will be allocated to one or
more subaccounts (the "Subaccounts") of the Charter National Variable
Annuity Account (the "Variable Account"). Each Subaccount invests
exclusively in mutual fund portfolios of the Scudder Variable Life
Investment Fund, an investment company registered under the Investment
Company Act of 1940, as amended (the "Fund"). The Fund offers one class of
shares for the Money Market Portfolio and two classes of shares (Class A
shares and Class B shares) for the other portfolios. The Subaccounts
invest exclusively in the Money Market Portfolio and Class A shares of the
Bond Portfolio, the Capital Growth Portfolio, the Balanced Portfolio, the
Growth and Income Portfolio, the International Portfolio, and the Global
Discovery Portfolio. (Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of This Prospectus is May 1, 1997
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(Continued from cover page)
Class B shares are subject to a 12b-1 fee or charge equal to an annual rate
of up to 0.25% of the average daily net asset value of its Class B shares
of the applicable portfolio. Class A shares are not subject to such
charges. A more complete description of Class A and Class B shares is set
forth in the attached prospectus for the Fund. Scudder, Stevens & Clark,
Inc. acts as sole investment adviser to the Fund. The Owner bears the
complete investment risk for all payments allocated to the Variable
Account.
Please read this Prospectus carefully and retain it for future
reference. The Prospectus sets forth the information that a prospective
investor should know before investing in a Contract. A Statement of
Additional Information about the Contract and the Variable Account, which
has the same date as this Prospectus, has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. The
Statement of Additional Information is available at no cost by writing to
Charter National Life Insurance Company, 8301 Maryland Avenue, St. Louis,
Missouri 63105 or by calling (800) 242-4402. The table of contents of the
Statement of Additional Information is included at the end of this
Prospectus.
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TABLE OF CONTENTS
Page
DEFINITIONS 1
SUMMARY 4
FEE TABLE 8
CONDENSED FINANCIAL INFORMATION 10
Financial Statements for the Variable Account and Charter 11
CALCULATION OF YIELDS AND TOTAL RETURNS 11
OTHER PERFORMANCE DATA 12
CHARTER AND THE VARIABLE ACCOUNT 13
Charter National Life Insurance Company 13
Charter National Variable Annuity Account 13
SCUDDER VARIABLE LIFE INVESTMENT FUND 14
Addition, Deletion, or Substitution of Investments 16
THE GENERAL ACCOUNT 17
THE CONTRACT 18
Contract Application and Issuance of Contracts 18
Examination Period 19
Payments 20
Allocation of Payments 21
Transfers 22
Account Value 25
Contract Ownership 27
Assignment of Contract 27
State Exceptions 28
DISTRIBUTIONS UNDER THE CONTRACT 28
Full and Partial Surrender Privileges 28
Annuity Payments 30
Annuity Income Options 31
Maturity Date 32
Death Benefit 33
Beneficiary Provisions 33
Death of Owner 34
Employment-Related Benefit Plans 34
CHARGES AND DEDUCTIONS 34
Mortality and Expense Risk Charge 35
Contract Administration Charge 35
Records Maintenance Charge 36
Premium Taxes 36
Other Taxes 36
Transfer Charges 37
Charges Against the Fund 37
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TABLE OF CONTENTS
Page
CERTAIN FEDERAL INCOME TAX CONSEQUENCES 37
Tax Status of the Contract 38
Taxation of Annuities 41
Taxation of Charter 44
GENERAL PROVISIONS 44
The Contract 44
Deferment of Payment and Transfers 44
Contract Expiration 45
Misstatement of Age or Sex 45
Nonparticipating Contract 45
Written Notices and Requests; Owner Inquiries 45
Records and Reports 46
DISTRIBUTION OF THE CONTRACT 46
VOTING RIGHTS 47
LEGAL PROCEEDINGS 48
ADDITIONAL INFORMATION 48
TABLE OF CONTENTS FOR STATEMENT
OF ADDITIONAL INFORMATION 49
If you have any questions about your Contract please call or write our home
office at 8301 Maryland Avenue, St. Louis, Missouri 63105, (800) 242-4402.
The Contract is not available in all States.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALESMAN, OR
OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON.
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DEFINITIONS
Account Value -- The total on any Valuation Date of the amount(s) in the
Subaccount(s) and General Account of a Contract. The Account Value is
referred to in the Contract as the Accumulated Value.
Age -- The Annuitant's age on his or her birthday nearest to the Contract
Anniversary.
Annuitant -- The person whose life is used to determine the duration and
amount of any Annuity Payments and upon whose death prior to the Maturity
Date a Death Benefit under the Contract is paid.
Annuity Income Option -- A method of receiving Annuity Payments.
Annuity Payments -- A series of payments made under the Contract, payable
if the Annuitant is living on the Maturity Date and the Contract is in
force at such time.
Beneficiary -- The person(s) designated under the Contract to receive the
benefits of the Contract if no Owner is living.
Charter -- Charter National Life Insurance Company.
Code -- The Internal Revenue Code of 1986, as amended, or any successor
provision or provisions.
Contract -- The no sales load Flexible Premium Variable Deferred Annuity
offered by Charter and described in this Prospectus. It includes the
Contract, application, riders, and any endorsements.
Contract Anniversary -- The same date in each year as the Contract Date.
Contract Date -- The date set forth in the Contract that is used to
determine Contract Years, Contract Months, and Contract Anniversaries. The
Contract Date will be the same as the Effective Date unless the Effective
Date is the 29th, 30th, or 31st of a month, in which case the Contract Date
will be the 28th of the same month.
Contract Month -- A period beginning on a Monthly Anniversary and ending on
the day immediately preceding the next Monthly Anniversary.
Contract Year -- A period beginning on a Contract Anniversary and ending on
the day immediately preceding the next Contract Anniversary.
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Death Benefit -- An amount equal to the greater of the Account Value or the
Guaranteed Death Benefit, payable under the Contract in the event of the
death of the Annuitant prior to the Maturity Date.
Declaration Period -- A period of time between 1 and 10 years during which
specified rates of interest will be paid on Payments allocated to the
General Account.
Effective Date -- A date within two business days after a completed
application and the full initial Payment have been received by Charter.
Examination Period -- The period of time during which the Owner may cancel
the Contract and receive a refund of the initial Payment plus or minus
gains or losses on investments of the Payment in selected Subaccounts
and/or interest credited on Payment amounts allocated to the General
Account. The Owner may cancel the Contract within 10 days after receipt of
such Contract.
Fund -- The Scudder Variable Life Investment Fund, an open-end, diversified
management investment company in which the Subaccounts invest.
General Account -- The account containing assets of Charter other than
those allocated to the Variable Account or any other separate account of
Charter. By allocating Payments to the General Account the Owner is
entitled to a specified rate of interest for a period of 1 to 10 years.
Guaranteed Death Benefit -- The sum of the Payments made less any partial
surrenders.
Home Office -- The principal office of Charter, located at 8301 Maryland
Avenue, St. Louis, Missouri 63105.
Joint Annuitant -- If Annuity Income Option 2 is selected, the person
designated by the Owner whose life, in addition to the life of the
Annuitant, is used to determine the duration of the Annuity Payments.
Joint Owner -- A person sharing the privileges of ownership as stated in
the Contract. If a Joint Owner is named, Charter will presume ownership to
be as joint tenants with right of survivorship.
Maturity Date -- The date on which Annuity Payments are scheduled to begin
if the Annuitant is living.
Monthly Anniversary -- The same date in each month as the Contract Date.
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Net Payment -- A Payment less any applicable premium taxes.
Nonqualified Contract -- A Contract other than a Qualified Contract.
Owner -- The person having the privileges of ownership stated in the
Contract, including the right to receive Annuity Payments if the Annuitant
is living on the Maturity Date and the Contract is in force.
Payment -- Any amount paid to purchase or increase the investment in the
Contract. Payments are referred to in the Contract as Premiums.
Portfolio -- One of the separate investment portfolios of the Fund in which
the Variable Account invests. They are: the Money Market Portfolio and
Class A shares of the Bond Portfolio, the Capital Growth Portfolio, the
Balanced Portfolio, the Growth and Income Portfolio, the International
Portfolio, and the Global Discovery Portfolio.
Proof of Death -- One of the following: (i) a certified copy of a death
certificate, (ii) a copy of a certified decree of a court of competent
jurisdiction as to the finding of death, or (iii) any other proof
satisfactory to Charter.
Qualified Contract -- A Contract that qualifies as an individual retirement
annuity under Section 408(b) of the Code or a Contract purchased and held
by a retirement plan or as an individual retirement account that qualifies
for special federal income tax treatment under Section 401(a) or 408(a) of
the Code.
SEC -- Securities and Exchange Commission.
Subaccount -- An investment division of the Variable Account. Each
Subaccount invests in shares of a different mutual fund Portfolio.
Unit Value -- The value of each unit which is calculated each Valuation
Period. It is similar to the net asset value of a mutual fund. The Unit
Value for each Subaccount is stated in the section of the prospectus
entitled "CONDENSED FINANCIAL INFORMATION" under the heading "Accumulation
Unit Value".
Valuation Date -- Each day on which valuation of the assets of the Variable
Account is required by applicable law, which currently is each day that the
New York Stock Exchange is open for trading.
Valuation Period -- The period that begins on the close of one Valuation
Date and ends on the close of the succeeding Valuation Date.
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Variable Account -- Charter National Variable Annuity Account, which is a
separate account of Charter consisting of assets allocated under the
Contracts to the Variable Account as well as assets allocated under other
variable annuity contracts issued by Charter.
Written Notice (or Written Request) -- A notice or request in writing by
the Owner or other person to Charter. Such notice or request must be on
the form provided by Charter and/or contain such information as Charter
requires to process the notice or request. All written notices and
requests must be directed to Charter at its Home Office.
1940 Act -- The Investment Company Act of 1940, as amended.
SUMMARY
This summary contains certain basic information about the Contract. The
following questions and answers should be read in conjunction with the more
detailed information appearing elsewhere in this Prospectus.
Why should a person consider purchasing a Contract?
The Contract is designed to provide for accumulation of capital on a tax-
deferred basis for retirement or other long-term purposes.
How can a Contract be purchased?
The Contract may be purchased for a minimum initial Payment of $2,500. No
commission or sales charge is deducted from the purchase price or from
amounts payable upon surrender of the Contract. Payments may be from a
variety of sources, including salary, wages, savings, inheritance, a real
estate sale, and rental or investment income. An Owner may make additional
Payments under the Contract, subject to certain conditions and limitations.
As with the initial Payment, an Owner will not be charged a commission or
sales charge for additional Payments invested in the Contract. (See
"Contract Application and Issuance of Contracts," p. 18 and "Payments," p.
20)
Can this Contract be used as an IRA?
Yes, the Contract is available to certain individuals purchasing individual
retirement annuities. It is also available to certain retirement plans and
retirement accounts that qualify for special federal income tax treatment.
Charter requires that persons purchase separate Contracts if they desire to
invest moneys qualifying for different annuity tax treatment under the
Code.
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What variable investment options are available under the Contract?
Currently, an Owner may invest in the following Subaccounts: Money Market,
Bond, Capital Growth, Balanced, Growth and Income, International, and
Global Discovery. Each Subaccount invests in Class A shares of the
corresponding mutual fund Portfolio. All Portfolios are part of the
Scudder Variable Life Investment Fund. The assets of each Portfolio are
held separately from the other Portfolios and each has separate investment
objectives and policies. The investment objectives and policies are
described more fully in the attached prospectus for the Fund. The
investment adviser for all Portfolios is Scudder, Stevens & Clark, Inc.
(See "Scudder Variable Life Investment Fund," p. 14)
What fixed rate options are available under the Contract?
An Owner may allocate funds to the General Account in order to receive a
specified rate of return. Payments to the General Account will receive
specified rates of interest that are declared and guaranteed by Charter for
periods of between 1 and 10 years. At the end of the Declaration Period,
the Owner has the option to move funds into any available Subaccount or
into another Declaration Period that has a new specified rate of interest,
which is guaranteed to be no less than 3.5%. Scudder, Stevens & Clark,
Inc. provides investment advice to Charter regarding assets in the General
Account derived from Horizon Plan Contracts. (See "The General Account,"
p. 17)
How are Payments allocated under the Contract?
The Owner may allocate amounts to one or more Subaccounts and/or the
General Account. Each Subaccount invests in a separate mutual fund
Portfolio with distinct investment objectives and policies. The Account
Value will vary with the investment performance of the selected Subaccounts
(and corresponding mutual fund Portfolios). Amounts allocated to the
General Account will earn interest at rates declared and guaranteed by
Charter. (See "Allocation of Payments," p. 21, "Charter National Variable
Annuity Account," p. 13 and "The General Account," p. 17)
What is the purpose of the Variable Account?
The Variable Account was established by Charter under the laws of the State
of Missouri on May 15, 1987, to invest payments received under variable
annuities offered by Charter, including the Contracts. Under Missouri law,
the assets in the Variable Account associated with the Contracts are not
affected by, nor chargeable with, liabilities arising out of any other
business conducted by Charter. To the extent that an Owner allocates
Payments to the Variable Account, the Account Value will vary in accordance
with the investment
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performance of the Subaccount(s) selected by the Owner. Therefore, the
Owner bears the entire investment risk under the Contract for any amounts
allocated to the Variable Account. (See "Charter National Variable Annuity
Account," p. 13)
Can assets be transferred within the Contract?
Yes. The Owner has the flexibility to transfer assets within the Contract.
Amounts may be transferred among the Subaccounts and from the Subaccounts
to the General Account at any time. Amounts may be transferred from the
General Account to the Subaccounts or within the General Account at the end
of a Declaration Period. Currently, no charge is being imposed for any
transfers among Subaccounts or the General Account. In the future,
Charter, at its sole discretion, may decide at any time to impose a
transfer charge of $10 from each Subaccount from which funds are
transferred for the third and subsequent transfer requests made during a
Contract Year. (See "Transfers," p. 22)
What are the current charges and deductions associated with the Contract?
Deductions will be made from the Contract's Account Value on a daily
basis for (i) costs incurred by Charter in administering the Contract at an
annual rate of .30% of the value of net assets in each Subaccount, and (ii)
the assumption by Charter of certain mortality and expense risks in
connection with the Contract at an annual rate of .40% of the value of net
assets in each Subaccount. These daily charges are not imposed against the
General Account. (See "Charges and Deductions," p. 34)
Currently, Charter does not charge an annual maintenance fee; however,
the Contract permits Charter to deduct a maximum amount of $40. (See
"Records Maintenance Charge," p. 36)
Upon purchase of the Contract or investment of additional Payments,
Charter may deduct any applicable premium tax. The amount of premium tax
varies from state to state. Currently, most states do not assess a premium
tax. (See "Premium Taxes," p. 36)
The charges noted above are those currently being deducted by Charter.
For a more detailed discussion, including maximum level of charges set
forth in the Contract, see "Charges and Deductions," p. 34.
Finally, the net asset value of the Subaccounts reflects the
investment advisory fee and other expenses incurred by the Fund. (See
"Charges Against the Fund," p. 37)
What are the annuity benefits under the Contract?
If the Annuitant is living on the Maturity Date and the Contract is in
force, Annuity Payments will be made to the Owner in accordance with the
terms of the Contract and the Annuity Income Option selected by the Owner.
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Three Annuity Income Options are currently available: life annuity with
installment refund, joint and survivor life annuity with installment
refund, and installments for life. In addition, an Owner may select any
other Annuity Income Option which is offered by Charter on the Maturity
Date of the Contract. The amount of the Annuity Payments under the Annuity
Income Options will be fixed at the Maturity Date.
What other distributions can be made under the Contract?
A full or partial surrender of the Contract may be made at any time,
subject to certain conditions. No commission or surrender charge is
deducted from the Account Value upon full or partial surrender of the
Contract. No partial or full surrender may be made after the Maturity Date
or the Annuitant's death. (See "Full and Partial Surrender Privileges," p.
28) If the Annuitant dies before the Maturity Date, the greater of the
Account Value or the Guaranteed Death Benefit will be paid to the Owner of
the Contract. (See "Death Benefit," p. 33) If the Owner of a Nonqualified
contract dies before the Maturity Date and prior to the Annuitant's death,
the Account Value will be paid in a lump sum no later than 5 years
following the Owner's death. (See "Death of Owner," p. 34)
What are the federal income tax consequences of investment in the Contract?
With respect to Owners who are natural persons, there should be no federal
income tax payable on increases in the Account Value until there is a
distribution or deemed distribution under the Contract. Generally, a
portion of any distribution resulting from an Annuity Payment or full or
partial surrender of the Contract, or deemed distribution resulting from a
pledge or assignment of the Contract prior to the Maturity Date, will be
taxable as ordinary income. The taxable portion of certain distributions
will be subject to withholding unless the recipient elects otherwise. In
addition, a penalty tax may apply to distributions or deemed distributions
under certain circumstances. (See "Certain Federal Income Tax
Consequences," p. 37)
Can the Contract be returned after it is delivered?
Yes. The Contract contains a provision for an Examination Period, which
permits a purchaser to cancel a Contract by returning the Contract to
Charter at its Home Office within 10 days after receipt of the Contract.
Except as noted in "Examination Period" and "State Exceptions", in the
event of cancellation Charter will return the initial Payment, plus or
minus gains or losses from investment of the Payment in the selected
Subaccount(s) plus interest earned on Payment amounts allocated to the
General Account. (See "Examination Period," p. 19 and "State Exceptions,"
p. 28)
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FEE TABLE
The following illustrates the current charges and deductions under the
Contract, as well as fees and expenses of the Fund for the 1996 calendar
year. The purpose of this table is to assist in understanding the various
cost and expenses that the Owner will bear directly and indirectly.
Information pertaining to the Fund has been provided by the Fund. For more
information see "CHARGES AND DEDUCTIONS" and the Fund's prospectus that is
attached to this Prospectus.
Contract Owner Transaction Expenses
Sales Load Imposed on Payments NONE
Deferred Sales Load NONE
Surrender Fee NONE
Transfer Charge NONE
Annual Records Maintenance Charge NONE
Variable Account Annual Expenses
Mortality and Expense Risk Charge 0.40%
Contract Administration Charge 0.30%
Total Variable Account Annual Expenses 0.70%
Scudder Variable Life Investment Fund Annual Expenses
(as a percentage of average net assets for the 1996 calendar year)
Other Total
Expenses Portfolio
Management (after Reim- Operating
Fees bursement) Expenses
Money Market Portfolio
Bond Portfolio
Capital Growth Portfolio
Balanced Portfolio
International Portfolio
Growth and Income Portfolio
Global Discovery Portfolio
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Example
The following example illustrates the expenses the Owner would pay on a
$1,000 investment, assuming 5% annual return on assets, if the Owner
continued the Contract, surrendered or annuitized at the end of each
period:
1 Year 3 Years 5 Years 10 Years
Money Market Subaccount
Bond Subaccount
Capital Growth Subaccount
Balanced Subaccount
International Subaccount
Growth and Income Subaccount
Global Discovery Subaccount
The fee table and example set forth above are based upon the current level
of charges deducted by Charter. Charter reserves the right to increase the
Mortality and Expense Risk Charge to .70% per year, establish a Records
Maintenance Charge of up to $40 per year and impose a transfer charge of
$10 for the third and each subsequent transfer request made during a
Contract Year. For a more detailed description of all charges set forth in
the Contract, see "CHARGES AND DEDUCTIONS."
Neither the fee table nor the example reflects any premium tax which may be
deducted. See "CHARGES AND DEDUCTIONS -- Premium Taxes."
Charter, as well as other insurance companies whose separate accounts
invest in the Fund, has agreed to reimburse the Fund to the extent that the
total operating expenses exceed .75% for each Portfolio except for the
International and Global Discovery Portfolios, where total operating
expenses are to be reimbursed to the extent they exceed 1.50%.
This example should not be considered representative of past or future
expenses, performance or return. Actual expenses may be greater or less
than those shown. The assumed 5% annual return is hypothetical; past or
future annual returns may be greater or less than the assumed return.
9
<PAGE>
<TABLE>
CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the financial statements of the
Variable Account. The data should be read in conjunction with the financial statements, related notes,
and other financial information included in the Statement of Additional Information.
The following table sets forth certain information regarding the Subaccounts for a Contract for the
period from commencement of business operations through December 31, 1996.
<CAPTION>
Accumulation unit value:
Year Ended December 31, Commencement
Subaccount 1996 1995 1994 1993 1992 1991 1990 1989 1988 Date*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market 18.074 17.316 16.507 16.030 15.740 15.341 14.606 13.683 12.694 12.500
Bond 22.979 22.508 19.181 20.287 18.179 17.109 14.653 13.697 12.392 12.500
Capital Growth 33.863 28.388 22.222 24.773 20.638 19.514 14.096 15.389 12.664 12.500
Balanced 28.326 25.496 20.270 20.840 19.531 18.389 14.592 15.029 12.704 12.500
International 30.987 27.188 24.641 25.027 18.287 19.003 17.174 18.830 13.772 12.500
Growth and Income 20.713 17.075 13.053 N/A N/A N/A N/A N/A N/A 12.500
Global Discovery 13.126 N/A N/A N/A N/A N/A N/A N/A N/A 12.500
* The Money Market, Bond, Capital Growth, Balanced and International Subaccounts commenced operations on
October 6, 1988. The Growth and Income Subaccount commenced operations on May 1, 1994. The Global
Discovery Subaccount commenced operations on May 1, 1996.
</TABLE>
<TABLE>
<CAPTION>
Number of units outstanding at end of period:
Year Ended December 31,
Subaccount 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market 2,615,942 2,260,561 3,197,824 1,491,258 1,380,156 972,042 989,667 344,621 6,238
Bond 764,803 896,538 690,782 755,914 631,581 406,545 210,921 182,698 1,882
Capital Growth 2,729,711 2,884,663 2,683,112 2,351,022 1,798,119 933,120 400,044 227,343 0
Balanced 1,490,127 1,603,656 1,426,280 1,477,645 1,243,891 779,317 492,406 399,068 9,264
International 2,593,037 2,869,930 3,543,387 2,767,700 785,559 446,099 370,916 107,751 1,741
Growth and Income 3,491,709 2,659,025 1,311,518 N/A N/A N/A N/A N/A N/A
Global Discovery 1,025,244 N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
10
<PAGE>
Financial Statements for the Variable Account and Charter
The financial statements and reports of independent certified public
accountants for the Variable Account and Charter are contained in the
Statement of Additional Information.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, Charter may advertise yields and average annual
total returns for the Subaccounts. In addition, Charter may advertise the
effective yield of the Money Market Subaccount for a Contract. These
figures will be based on historical earnings and are not intended to
indicate future performance.
The yield of a Money Market Subaccount for a Contract refers to the
annualized income generated by an investment under a Contract in the
Subaccount over a specified seven-day period. The yield is calculated by
assuming that the income generated for that seven-day period is generated
each seven-day period over a 52-week period and is shown as a percentage of
the investment. The effective yield is calculated similarly but, when
annualized, the income earned by an investment under a Contract in the
Subaccount is assumed to be reinvested. The effective yield will be
slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The yield of a Subaccount (except the Money Market Subaccount) for a
Contract refers to the annualized income generated by an investment under a
Contract in the Subaccount over a specified thirty-day period. The yield
is calculated by assuming that the income generated by the investment
during that thirty-day period is generated each thirty-day period over a 12-
month period and is shown as a percentage of the investment.
The average annual total return of a Subaccount for a Contract refers
to return quotations assuming an investment under a Contract has been held
in the Subaccount for various periods of time including, but not limited
to, a period measured from the date the Subaccount commenced operations.
When a Subaccount has been in operation for 1, 5, and 10 years,
respectively, the average annual total return for these periods will be
provided. The total return quotations for a Contract will represent the
average annual compounded rates of return that would equate an initial
investment of $1,000 under a Contract to the redemption value of that
investment as of the last day of each of the periods for which total return
quotations are provided.
The yield and total return calculations for a Contract do not reflect
the effect of any premium taxes that may be applicable to a particular
Contract. To the extent that a premium tax is applicable to a particular
Contract, the yield and/or total return of that Contract will be reduced.
Because charges differ under different variable annuity contracts funded by
the Subaccounts, the yield and total return calculations for the
Subaccounts will be different for the Contracts than for other such
variable annuity contracts.
11
<PAGE>
For additional information regarding yields and total returns
calculated using the standard formats briefly described above, please refer
to the Statement of Additional Information, a copy of which may be obtained
from Charter.
OTHER PERFORMANCE DATA
Charter may from time to time disclose average annual total return in
non-standard formats and cumulative total return for Contracts funded by
the Subaccounts.
Charter may from time to time also disclose yield, standard total
returns, and non-standard total returns for the Fund's Portfolios,
including such disclosure for periods prior to the date the Variable
Account commenced operations. For periods prior to the date the Variable
Account commenced operations, performance information for Contracts funded
by the Subaccounts will be calculated based on the performance of the
Fund's Portfolios and the assumption that the Subaccounts were in existence
for the same periods as those indicated for the Fund's Portfolios, with the
level of Contract charges that were in effect at the inception of the
Subaccounts for the Contracts.
Non-standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed. For
additional information regarding the calculation of other performance data,
please refer to the Statement of Additional Information, a copy of which
may be obtained from Charter.
Expenses and performance information for the Contract and each
Subaccount may be compared in advertising, sales literature, and other
communications to expenses and performance information of other variable
annuity products tracked by independent services such as Lipper Analytical
Services, Inc. ("Lipper"), Morningstar and the Variable Annuity Research
Data Service ("V.A.R.D.S.") which monitor and rank the performance and
expenses of variable annuity issuers on an industry-wide basis. From time
to time, Charter may also compare using other indices that measure
performance, such as Standard & Poor's 500 Composite ("S & P 500") or the
Dow Jones Industrial Average ("Dow"). Unmanaged indices may assume
reinvestment of dividends that generally do not reflect deductions for
administrative and management cost and expenses.
Charter may also report other information including the effect of tax-
deferred compounding on a Subaccount's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts. All income
and capital gains derived from Subaccount investments are reinvested and
compound tax deferred until distributed. Such tax-deferred compounding can
lead to substantial long-term accumulation of assets, provided that the
underlying Portfolio's investment experience is positive.
12
<PAGE>
CHARTER AND THE VARIABLE ACCOUNT
Charter National Life Insurance Company
Charter is a stock life insurance company incorporated under the laws
of the State of Missouri on December 7, 1955. Charter, with assets of
$3.048 billion as of December 31, 1996, is engaged principally in the
offering of insurance products on a direct marketed basis. Charter is
authorized to conduct business in 49 states, the District of Columbia and
Puerto Rico. The rating of Charter as an insurance company by A. M. Best
may be referred to in sales literature, advertisements or other reports
from time to time. These ratings reflect their current opinion of the
relative financial strength and operating performance of an insurance
company in comparison to the norms of the life/health industry. Best's
Ratings range from A++ to F. An A rating means, in the opinion of A. M.
Best, that the insurer has demonstrated a strong ability to meet its
respective policyholder and other contractual obligations. These ratings
have no bearing on the Variable Accounts investment performance. The
principal offices of Charter are located at 8301 Maryland Avenue, St.
Louis, Missouri 63105, and its telephone number at that address is (800)
242-4402.
Charter also is engaged in the insurance business through various
subsidiary companies. Charter's subsidiaries include the Colonial Penn
Group, Inc. which offers life, health, and auto insurance through its two
life and five casualty subsidiaries. Intramerica Life Insurance Company, a
Colonial Penn subsidiary, offers Scudder Horizon Plan to residents of New
York.
Charter is a wholly owned subsidiary of Leucadia National Corporation
("Leucadia"), a New York corporation. Leucadia is a diversified holding
company, the common stock of which is listed on the New York Stock Exchange
and the Pacific Stock Exchange under the symbol ("LUK").
Campet, Inc., a Leucadia subsidiary owns all of the outstanding stock
of CNL, Inc. ("CNL") the principal underwriter for the Contracts. See
"DISTRIBUTION OF THE CONTRACT."
Charter National Variable Annuity Account
The Variable Account was established by Charter as a separate
investment account under the laws of the State of Missouri on May 15, 1987.
The Variable Account will receive and invest the Payments under the
Contracts. In addition, the Variable Account may receive and invest
payments for other variable annuities offered by Charter.
Under Missouri law, that portion of the assets of the Variable Account
equal to the reserves and other contract liabilities with respect to the
account shall not be chargeable with liabilities arising out of any other
business Charter may conduct. However, assets of the Variable Account will
be available to cover the liabilities of the general account of Charter to
the extent that the assets of the Variable Account exceed its liabilities
arising under the variable
13
<PAGE>
annuity contracts it supports. The obligations under the Contracts are
obligations of Charter.
The Variable Account is divided into Subaccounts. Each Subaccount
invests exclusively in shares of one of the Portfolios of the Fund.
Income, gains, and losses from the assets of each Subaccount are credited
to or charged against such Subaccount without regard to income, gains, or
losses of any other Subaccount or income, gains, or losses arising out of
any other business conducted by Charter.
The Variable Account is registered with the SEC as a unit investment
trust under the 1940 Act and meets the definition of a "separate account"
under the Federal securities laws. Registration with the SEC does not
involve supervision of the management or investment practices or policies
of the Variable Account or Charter by the SEC.
SCUDDER VARIABLE LIFE INVESTMENT FUND
The Variable Account will invest exclusively in shares of the Scudder
Variable Life Investment Fund (the "Fund"). The Fund is registered with
the SEC under the 1940 Act as an open-end, diversified management
investment company. Scudder, Stevens & Clark, Inc. is investment adviser
to the mutual fund Portfolios available under the Contract. The
registration of the Fund does not involve supervision of its management or
investment practices or policies by the SEC. The Fund is designed to
provide an investment vehicle for variable annuity contracts and variable
life insurance policies. Therefore, shares of the Fund are sold only to
insurance company separate accounts, including the Variable Account and
another separate account of Charter. Charter cannot guarantee that the
Fund will always be available for the Contracts, but in the unlikely event
that it is not available, Charter will do everything reasonably practical
to secure the availability of a comparable fund.
In addition to the Variable Account, shares of the Fund are being sold
to variable life insurance and variable annuity separate accounts of other
insurance companies, including an insurance company affiliated with
Charter. In the future, it may be disadvantageous for variable annuity
separate accounts of other life insurance companies, or for both variable
life insurance separate accounts and variable annuity separate accounts, to
invest simultaneously in the Fund, although currently neither Charter nor
the Fund foresees any such disadvantages to either variable annuity owners
or variable life insurance owners. The management of the Fund intends to
monitor events in order to identify any material conflicts between or among
variable annuity owners and variable life insurance owners and to determine
what action, if any, should be taken in response. In addition, if Charter
believes that the Fund's response to any of those events or conflicts
insufficiently protects Owners, it will take appropriate action on its own.
For more information see "Investment Concept of the Fund" in the Fund's
prospectus.
14
<PAGE>
The Fund currently consists of the following Portfolios: the Money
Market Portfolio and Class A shares of the Bond Portfolio, the Capital
Growth Portfolio, the Balanced Portfolio, the Growth and Income Portfolio,
the International Portfolio, and the Global Discovery Portfolio. The
Global Discovery Portfolio commenced operations on May 1, 1996. Each
Portfolio represents, in effect, a separate mutual fund with its own
distinct investment objectives and policies. The income or losses of one
Portfolio generally have no effect on the investment performance of any
other Portfolio.
The investment objectives and policies of the Portfolios available
under the Contracts are summarized below:
Money Market Portfolio: This Portfolio seeks to maintain stability of
capital and, consistent therewith, to maintain liquidity of capital and to
provide current income. This Portfolio seeks to maintain a constant net
asset value of $1.00 per share. It will invest in money market securities
such as U.S. Treasury obligations, commercial paper, and certificates of
deposit and bankers' acceptances of domestic and foreign banks, including
foreign branches of domestic banks, and will enter into repurchase
agreements.
Bond Portfolio: This Portfolio pursues a policy of investing for a
high level of income consistent with a high quality portfolio of debt
securities. It primarily invests in U.S. Government, corporate, and other
notes and bonds.
Capital Growth Portfolio: This Portfolio seeks long-term capital
appreciation and, consistent therewith, current income through a broad and
flexible investment program. The Portfolio seeks to achieve these
objectives by investing primarily in income-producing publicly traded
equity securities, including common stocks and securities convertible into
common stocks.
Balanced Portfolio: This Portfolio seeks a balance of growth and
income from a diversified portfolio of equity and fixed income securities.
The Portfolio also seeks long-term preservation of capital through a
quality-oriented investment approach that is designed to reduce risk.
Growth and Income Portfolio: This Portfolio seeks long-term growth of
capital, current income and growth of income. It primarily invests in
common stocks, preferred stocks, and securities convertible into common
stocks of companies which offer the prospect for growth of earnings while
paying higher than average current dividends.
International Portfolio: This Portfolio seeks long-term growth of
capital primarily through diversified holdings of marketable foreign equity
investments. It invests in companies, wherever organized, which do
business primarily outside the United States. The Portfolio intends to
diversify investments among several countries and not to concentrate
investments in any particular industry.
15
<PAGE>
Global Discovery Portfolio: This Portfolio seeks above-average capital
appreciation over the long term. It primarily invests in equity securities
of small companies located around the world.
There can be no assurance that any Portfolio will achieve its
objective. More detailed information, including a description of the risks
involved in investing in each of the Portfolios, is contained in the
Scudder Variable Life Investment Fund prospectus, a current copy of which
is attached to this Prospectus. Information contained in the Fund's
prospectus should be read carefully before investing in a Contract.
Scudder, Stevens & Clark, Inc. (the "Adviser"), an investment adviser
registered with the SEC under the Investment Advisers Act of 1940, as
amended, manages daily investments and business affairs of the Fund,
subject to the policies established by the Trustees of the Fund. For
rendering advisory services to the Portfolios, the Adviser receives
compensation monthly at annual rates equal to .370%, .475%, .475%, .475%,
.475%, .875%, and .975% of the average daily net asset values of the Money
Market Portfolio, Bond Portfolio, Capital Growth Portfolio, Balanced
Portfolio, Growth and Income Portfolio, International Portfolio, and the
Global Discovery Portfolio, respectively.
For additional information, see the Fund's prospectus, a current copy of
which is attached to this Prospectus.
Addition, Deletion, or Substitution of Investments
Charter retains the right, subject to any applicable law, to make
certain changes in the Variable Account and its investments. Charter
reserves the right to eliminate the shares of any Portfolio and to
substitute shares of another Portfolio of the Fund, or of another
registered open-end management investment company, for the shares of any
Portfolio if the shares of the Portfolio are no longer available for
investment or if, in Charter's judgment, investment in any Portfolio would
be inappropriate in view of the purposes of the Variable Account. To the
extent required by the 1940 Act, substitutions or eliminations of shares
attributable to an Owner's interest in a Subaccount will not be made
without prior notice to the Owner and the prior approval of the SEC.
Nothing contained herein shall prevent the Variable Account from purchasing
other securities for other series or classes of variable annuity contracts,
or from effecting an exchange between series or classes of variable annuity
contracts on the basis of requests made by Owners.
New Subaccounts may be established when, in the sole discretion of
Charter, marketing, tax, investment, or other conditions warrant such
additions. Any new Subaccounts may be made available to existing Owners on
a basis to be determined by Charter. Each additional Subaccount will
purchase shares in a Portfolio of the Fund or in another mutual fund or
investment
16
<PAGE>
vehicle. Charter may also eliminate one or more Subaccounts if, in its
sole discretion, marketing, tax, investment, or other conditions warrant
such elimination. In the event any Subaccount is eliminated, Charter will
notify Owners and request a reallocation of the amounts invested in the
eliminated Subaccount. If no such reallocation is provided by the Owner,
Charter will reinvest the amounts invested in the eliminated Subaccount in
the Subaccount that invests in the Money Market Portfolio (the "Money
Market Subaccount").
In the event of any such substitution, change, or elimination, Charter
may, by appropriate endorsement, make such changes in the Contracts as may
be necessary or appropriate to reflect such substitution, change, or
elimination. Furthermore, if deemed to be in the best interests of persons
having voting rights under the Contracts, the Variable Account may be (i)
operated as a management company under the 1940 Act or any other form
permitted by law, (ii) deregistered under the 1940 Act, in the event such
registration is no longer required, or (iii) combined with one or more
other separate accounts. To the extent permitted by applicable law, Charter
also may transfer the assets of the Variable Account associated with the
Contracts to another separate account.
THE GENERAL ACCOUNT
Payments allocated or transferred to the General Account under the
Contracts become part of the general account assets of Charter, which
support annuity and insurance obligations. The General Account includes
all of Charter's assets, except those assets segregated in separate
accounts. It is Charter's responsibility to invest the assets of the
General Account, subject to applicable law. Scudder, Stevens & Clark, Inc.
assists Charter in managing the assets of the General Account attributable
to the Contracts. Because of exemptive and exclusionary provisions,
interests in the General Account have not been registered under the
Securities Act of 1933 (the "1933 Act"), nor is the General Account
registered as an investment company under the 1940 Act. Accordingly,
neither the General Account nor any interest therein is subject to the
provisions of such statutes, and, as a result, the staff of the SEC has not
reviewed the disclosures in this Prospectus relating to the General
Account. However, disclosures about the General Account may be subject to
certain generally applicable provisions of the federal securities laws
relating to the accuracy and completeness of statements made in
prospectuses.
Charter guarantees that it will credit interest at an effective annual
rate of at least 3.5% compounded monthly. Charter may, at its sole
discretion, declare higher interest rates for amounts allocated or
transferred to the General Account ("Declared Rates"). Each such Declared
Rate will be fixed and guaranteed by Charter and applied to a specific
period of time, which will not be less than one year or more than 10 years
(the "Declaration Period"). An Owner must specify one or more of the
Declaration Periods currently offered
17
<PAGE>
by Charter when allocating or transferring funds to or within the General
Account. At any one time, an Owner may have amounts earning different
Declared Rates within a Declaration Period because amounts were allocated
or transferred to that Declaration Period at different times. Charter will
not accept allocations to the General Account which would increase a
Contract's value in the General Account over $500,000. Subject to
deductions for any applicable charges, Charter guarantees that the value
held in the General Account will equal all amounts allocated or transferred
to the General Account, plus any interest credited thereto, less any
amounts surrendered or transferred from the General Account. An Owner is
not entitled to share in the investment experience of the General Account.
An amount allocated or transferred to the General Account may not be
transferred from or within the General Account prior to the end of the
Declaration Period with which it is associated. Charter will notify Owners
having funds invested in an expiring Declaration Period 30 days prior to
the end of such Declaration Period and will request instructions as to the
reallocation of such amounts. If no instructions are received from the
Owner prior to the end of the Declaration Period, the portion of the
Account Value attributable to such Declaration Period will be transferred
to the Money Market Subaccount at the end of the Declaration Period.
For a discussion of transfer rights and surrender privileges relating
to amounts allocated to the General Account, see "THE CONTRACT --
Transfers" and "DISTRIBUTIONS UNDER THE CONTRACT -- Full and Partial
Surrender Privileges."
THE CONTRACT
The description of the Contract contained in this Prospectus is
qualified in its entirety by reference to the contract for the Flexible
Premium Variable Deferred Annuity, a copy of which has been filed as an
exhibit to the Registration Statement for the Contract and which is
available upon request from Charter.
Contract Application and Issuance of Contracts
The Contract is available to certain retirement plans and individual
retirement accounts that qualify for special federal income tax treatment,
to individuals purchasing individual retirement annuities that qualify for
special federal income tax treatment, and to individuals and entities that
do not qualify for such special tax treatment. The Contract is not
available for use as a "Tax-sheltered Annuity" qualifying under Section
403(b) of the Code. An Owner who purchases a Contract which qualifies as
an individual retirement annuity under Section 408(b) of the Code should be
aware that the Code requires that such a Contract contain certain
restrictive terms. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES -- Tax
Status of the Contract."
18
<PAGE>
Charter, before it will issue a Contract, must receive a properly
completed Contract application and a minimum initial Payment of $2,500.
Upon request, a Premium Receipt form will be mailed to the Owner. The
Annuitant must be named in the Contract application. In the case of a
Contract qualifying as an individual retirement annuity under Section
408(b) of the Code, the Owner must be the Annuitant. See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES -- Tax Status of the Contract." Acceptance of an
application is subject to Charter's sole discretion, and Charter reserves
the right to decline an application for any reason. In the event an
application is declined, the initial Payment will be refunded in full.
After underwriting is completed and the Contract is delivered to the
Owner, the term of the Contract will be deemed to have commenced as of the
Effective Date. The Effective Date is a date within two business days
after a completed application and the full initial Payment have been
received by Charter. The Contract Date will be the same as the Effective
Date unless the Effective Date is the 29th, 30th, or 31st of the month, in
which case the Contract Date will be the 28th day of the same month. The
Contract Date is the date used to determine Contract Years, Contract
Months, and Contract Anniversaries.
Examination Period
The Contract contains a provision for an Examination Period, which
permits the Owner to cancel a Contract, generally within 10 to 30 days
after receipt of such Contract. Depending on the laws of the state of
issue and age of the Owner, Charter will refund the initial Payment in one
of the following methods. See the "Right to Examine" provision of the
Contract and the "State Exceptions" section of this prospectus for state
details.
Return of premium plus or minus investment experience. In most
states, upon return of the Contract, Charter will refund the initial
Payment plus or minus gains or losses from investment of the Payment in the
selected Subaccount(s) plus interest earned on Payments allocated to the
General Account. Charter will calculate such refund as of the date the
Contract is received by Charter. If the Owner allocated all or part of the
Payment to the Variable Account, the amount may be more or less than the
initial Payment, depending upon the investment performance of the selected
Subaccount(s). If all of the Payment was allocated to the General Account,
the amount refunded will always be equal to or greater than the Payment.
See "THE CONTRACT -- Payments, Allocation of Payments and Account Value".
Return of premium. If the Owner of a Contract issued in a state that
requires refund of premium returns the Contract, Charter will refund the
greater of (1) the initial Payment, or (2) the Account Value plus any
amount deducted for taxes or charges from the initial Payment. Charter will
calculate such refund as of the date the Contract is received by Charter.
During the
19
<PAGE>
Examination Period, the portion of the initial Payment allocated to the
Variable Account will be invested in the Money Market Subaccount. Once the
Examination Period expires, generally 10 to 30 days, the Accumulated Value
will be allocated to the Subaccount(s) as specified by the Contract Owner
in the application. See "THE CONTRACT -- Payments and Allocation of
Payments".
Payments
All checks or drafts should be made payable as directed on the
application. Payments also can be made by requesting on the application
that Scudder Investor Services, Inc. redeem shares in an existing Scudder
mutual fund account and apply the proceeds toward a Payment.
Initial Payment. The minimum initial Payment needed to purchase a
Contract is $2,500. The initial Payment is the only Payment required to be
made under the Contract. At the time the initial Payment is made, a
prospective Owner must specify whether the purchase will be a Nonqualified
or Qualified Contract. If the initial Payment is derived from an exchange
or surrender of another annuity contract, Charter may require that the
prospective purchaser provide information with regard to the federal income
tax status of the previous annuity contract. Charter will require that
persons purchase separate Contracts if they desire to invest moneys
qualifying for different annuity tax treatment under the Code. Each such
separate Contract would require a minimum initial Payment of $2,500. The
Company reserves the right to waive the minimum initial Payment amount and
accept less than $2,500 at its discretion.
The initial Net Payment will be credited to the Contract within two
business days after receipt of the Payment if a properly completed Contract
application is received with such Payment, or within two business days
after an application which was incomplete upon receipt by Charter is made
complete. If, for any reason, the Payment is not credited to the
prospective purchaser's account within five business days, the Payment will
be returned immediately to the prospective purchaser unless such
prospective purchaser, after receiving notice of the delay from Charter,
specifically requests that the Payment not be returned.
Additional Payments. While the Annuitant is living and prior to the
Maturity Date, the Owner may, subject to the limitations discussed below,
make additional Payments. Currently, there is no minimum additional
Payment amount nor is there a maximum number of additional Payments that
may be made per Contract Year. The Contract, however, gives Charter the
right to require that each additional Payment be at least $1,000 and to
limit the frequency of additional Payments to a maximum of four per
Contract Year. Charter, at any time, in its discretion, may require
additional Payments to comply with the limitations it is permitted to
impose under the Contract.
20
<PAGE>
Additional Payments with respect to a Contract must qualify for the same
federal income tax treatment as the initial Payment made under the
Contract. Charter will not accept an additional Payment if the federal
income tax treatment of such Payment will be different from that of the
initial Payment. Any additional Payments will be credited to the Contract
upon receipt at Charter's Home Office.
Automatic Investment Plan. The Owner may arrange to make regular
investments ($50 minimum) into any of the variable Subaccounts through
automatic deductions from a checking account. The Automatic Investment
Plan option is not available for allocations into the General Account.
Please call 800-242-4402 for more information and an Automatic Investment
Plan application.
Limitations on Payments. Charter reserves the right to reject any
initial Payment. Charter may require a prospective purchaser to complete a
financial questionnaire for Payments in excess of $250,000. Charter also
may reject any additional Payment that would cause the total Payments made
by the Owner of a Contract to exceed $1,000,000. Charter will reject any
additional Payment that would cause a Contract's value in the General
Account to exceed $500,000. With respect to Contracts that qualify as
individual retirement annuities under Section 408(b) of the Code, the total
Payments (including the initial Payment), with respect to any calendar
year, may not exceed $2,000 unless the portion of such Payments in excess
of $2,000 qualifies as a rollover amount or contribution under Section
402(a)(5) or 408(d)(3) or other applicable provisions of the Code. See
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES -- Tax Status of the Contract."
Allocation of Payments
An Owner may allocate Payments to one or more of the Subaccounts, to
the General Account, or to both the Subaccount(s) and the General Account.
If any portion of a Payment is allocated to the General Account, the Owner
must specify the Declaration Period(s) to which such funds are being
allocated. See "THE GENERAL ACCOUNT." The Owner must specify in the
Contract application the allocations of the Payment. Upon receipt at
Charter's Home Office, the initial Payment will be allocated as directed by
the Owner. During the Examination Period in states that require return of
premium, the portion of the initial Payment allocated to the Variable
Account will be invested in the Money Market Subaccount.
All allocations must be made in whole percentages and must total 100%.
If the allocations do not total 100%, Charter will recompute the
allocations proportionately by dividing the percentage in each Subaccount
selected, as indicated on the application, by the sum of the percentages
21
<PAGE>
indicated. This new percentage will be applied to the Payment. The
following example illustrates how this recomputation will be made.
Example
Indicated Actual
Allocation Allocation
Subaccount #1 25% 25% / 105% = 24%
Subaccount #2 40% 40% / 105% = 38%
Subaccount #3 40% 40% / 105% = 38%
Total 105% 100%
All Payments will be allocated at the time such Payments are credited
to the Owner's Contract.
Additional Payments made directly by the Owner will be allocated to
the Subaccount(s) and/or the General Account in the same proportion as the
initial Payment, unless Written Notice to the contrary is received with
such additional Payments. Once a change in allocation is made, all future
Payments will be allocated in accordance with the new allocation, unless
contrary instructions are received with such additional Payments. However,
if an Owner has funds deducted from a checking account and applied under
the Automatic Investment Plan option, he or she must provide Charter with
Written Notice to change the allocation of future Additional Payments.
Transfers
Subject to certain conditions, amounts may be transferred among the
Subaccounts, between the Subaccounts and the General Account, and between
different Declaration Periods in the General Account.
An amount may be transferred from the General Account to any
Subaccount(s) and to different Declaration Periods in the General Account
only at the end of the Declaration Period to which such amount was
allocated. Transfer of amounts from a Subaccount to the General Account may
be made at any time, provided that such transfer would not cause a
Contract's value in the General Account to exceed $500,000. See "THE
GENERAL ACCOUNT."
Currently, no charge is being imposed for any transfers. The
Contract, however, permits Charter to deduct $10 from each Subaccount from
which funds are transferred for the third and subsequent transfer requests
made during a Contract Year. Charter, in its sole discretion, may impose
the transfer charge for the third and subsequent transfer requests at any
time. For a discussion of transfer charges, see "CHARGES AND DEDUCTIONS --
Transfer Charges."
Transfer requests must be made by sending Written Notice or by
telephone if elected by a currently valid telephone transfer request form
on file with Charter. Charter employs reasonable procedures to confirm that
instructions communicated by telephone are genuine and if it follows such
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procedures it will not be liable for any losses due to unauthorized or
fraudulent instructions. Charter, however, may be liable for such losses if
it does not follow those reasonable procedures. The procedures Charter
follows for telephone transfers include confirming the correct name,
contract number and personal code for each telephone transfer. See
"GENERAL PROVISIONS --Written Notices and Requests; Owner Inquiries."
Transfers will be deemed effective, and values in connection with transfers
will be determined, as of the end of the Valuation Period during which the
transfer request is received, except that Charter may be permitted to delay
the effective date of a transfer in certain circumstances. See "GENERAL
PROVISIONS -- Deferment of Payment and Transfers."
Asset Rebalancing Option. In order to maintain a particular
percentage allocation among the Subaccounts, the Owner may select the asset
rebalancing option. With asset rebalancing, Charter automatically
reallocates the Account Value in the Subaccounts quarterly to the
allocation selected by the Owner. Over a period of time, this method of
investing may help an Owner buy low and sell high although there can be no
assurance of this. This investment method does not assure profits and does
not protect against loss in declining markets.
To elect the asset rebalancing option, the Account Value in the
Contract must be at least $2,500 and a completed Asset Rebalancing Option
form must be received at Charter's Home Office. The Owner must designate
the applicable Subaccounts and the percentage allocations for each of the
applicable Subaccounts to be rebalanced quarterly. If the asset
rebalancing option is elected, all amounts allocated to the variable
Subaccounts must be included in the asset rebalancing option. The Owner
may not participate in dollar cost averaging and asset rebalancing at the
same time. The General Account is not available for the asset rebalancing
option.
Selection of asset rebalancing will result in the transfer of funds to
one or more of the Subaccounts on the date specified by the Owner. If the
Owner has specified, or the form is received on the 29th, 30th or 31st,
Charter will consider the effective date to be the first Valuation Date of
the following month. If no date is specified or if the request is
received after the specified date, Charter will transfer funds on the date
of receipt of the Asset Rebalancing Option form and on the quarterly
anniversary of the applicable date thereafter. The amounts transferred
will receive the Unit Values for the affected Subaccounts at the end of the
Valuation Date on which the transfers occur. If the effective date is not
a Valuation Date, the transfer will occur on the next Valuation Date.
The Owner may terminate this option at any time by Written Notice. In
the event of a transfer by written request or telephone instructions, this
option will terminate automatically. In either event, the amounts in the
Subaccounts that have not been transferred will remain in those Subaccounts
regardless of the percentage allocation unless the Owner instructs
otherwise. If
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the Owner wishes to resume the asset rebalancing option after it has been
canceled, a new Asset Rebalancing Option form must be completed and sent to
Charter's Home Office. Charter may discontinue, modify, or suspend the
asset rebalancing option at any time.
Dollar Cost Averaging. Dollar cost averaging is a systematic method
of investing in which units are purchased in fixed dollar amounts so that
the cost is averaged over time. The Owner may dollar cost average their
allocations in the Subaccounts under the Contract by authorizing Charter to
make periodic transfers from any one Subaccount to one or more other
Subaccounts. Amounts transferred will purchase units in those Subaccounts
at the Unit Value of that Subaccount as of the Valuation Date the transfer
occurs. Since the value of the units will vary, the amounts transferred to
a Subaccount will result in the purchase of a greater number of units when
the Unit Value is low and the purchase of a lesser number of units when the
Unit Value is high. Similarly, the amounts transferred to a Subaccount
will result in the liquidation of a greater number of units when the Unit
Value is low and the liquidation of a fewer number of units when the Unit
Value is high. Dollar cost averaging does not assure a profit and does not
protect against loss in declining markets.
To elect dollar cost averaging, the Account Value in the Contract must
be at least $2,500 and a completed Dollar Cost Averaging form must be
received at Charter's Home Office. The Owner must designate the frequency
and period of time of the transfers, the Subaccount from which transfers
are to be made and the Subaccounts and allocation percentages to which
funds are to be transferred. The Owner may not participate in dollar cost
averaging and asset rebalancing at the same time. The General Account is
not available for the dollar cost averaging option.
After Charter has received a completed Dollar Cost Averaging form,
Charter will transfer the amounts designated by the Owner from the
Subaccount from which transfers are to be made to the Subaccount or
Subaccounts chosen by the Owner. The minimum amount that may be
transferred is $50. Each transfer will occur on the date specified by the
Owner. If the Owner has specified, or the form is received on the 29th,
30th or 31st, Charter will consider the effective date to be the first
Valuation Date of the following month. If no date is specified, funds will
be transferred on the monthly, quarterly, semiannual or annual anniversary,
(whichever corresponds to the frequency selected by the Owner), of the date
of receipt of a completed Dollar Cost Averaging form. The amounts
transferred will receive the Unit Values for the affected Subaccounts at
the end of the Valuation Date on which the transfers occur. If the
anniversary is not a Valuation Date, the transfer will occur on the next
Valuation Date. Dollar cost averaging will terminate when the total amount
elected has been transferred, or when the value in the Subaccount from
which transfers are made is insufficient to transfer the requested amount.
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The Owner may terminate this option at any time by Written Notice.
Upon receipt of Written Notice, the value in the Subaccount from which
transfers were being made will remain in that Subaccount unless the Owner
instructs otherwise. If the Owner wishes to continue transferring on a
dollar cost averaging basis after the expiration of the applicable period,
or the amount in the Subaccount elected is insufficient to transfer the
total requested amount, or after the dollar cost averaging option has been
canceled, a new Dollar Cost Averaging Option form must be completed and
sent to Charter's Home Office. Charter may discontinue, modify, or suspend
the dollar cost averaging option at any time.
Account Value
On the Effective Date, the Account Value equals the initial Payment
less amounts deducted for premium taxes, if any. Thereafter, the Account
Value equals the Account Value from the previous Valuation Date increased
by: (i) any additional Net Payments received by Charter, (ii) any increase
in the Account Value due to investment results of the selected
Subaccount(s), and (iii) any interest earned on that portion of the Account
Value held in the General Account during the Valuation Period; and reduced
by: (i) any decrease in the Account Value due to investment results of the
selected Subaccount(s), (ii) a daily charge to cover the mortality and
expense risks assumed by Charter and the cost of administering the
Contract, (iii) any amounts charged against the Account Value for records
maintenance, (iv) amounts deducted for partial surrenders, and (v) amounts
deducted, if any, for transfer charges with respect to transfers that
occurred during the Valuation Period. See "CHARGES AND DEDUCTIONS."
A Valuation Period is the period between successive Valuation Dates.
It begins at the close of business on each Valuation Date and ends at the
close of business on the next succeeding Valuation Date. A Valuation Date
is each day that the New York Stock Exchange is open for business.
The Account Value is expected to change from Valuation Period to
Valuation Period, reflecting the investment experience of the selected
Subaccount(s) and any interest earned in the General Account, as well as
the deduction of charges. The amount available for distribution of Annuity
Payments is equal to the Account Value on the Maturity Date; a Contract
ceases to accumulate value after the Maturity Date.
Unit Value. Each Subaccount has a distinct value (the "Unit Value").
In addition, because of differences in variable annuity contracts funded by
the Subaccounts, units in a Subaccount attributable to the Contracts will
have different unit values than those attributable to other variable
annuity contracts funded by the Subaccount. When a Payment is allocated or
an amount is transferred to a Subaccount, a number of units is purchased
based on the Unit Value of the Subaccount for the Contracts as of the end
of the Valuation Period
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during which the allocation is made. When amounts are transferred out of,
or deducted from a Subaccount, units are redeemed in a similar manner.
For each Subaccount, the Unit Value for the Contracts on a given
Valuation Date is based on the net asset value of a share of the
corresponding Portfolio in which such Subaccount invests. (For the
calculation of the net asset value with respect to a Portfolio, see the
prospectus for the Fund, a current copy of which is attached to this
Prospectus.) Each Valuation Period has a single Unit Value for each type
of variable annuity contract funded by the Subaccount. This unit value
applies for each day in that period. The Unit Value for the Contracts for
each subsequent Valuation Period is the Investment Experience Factor for
the Contracts (described below) for that Valuation Period multiplied by the
Unit Value for the Contracts for the immediately preceding Valuation
Period.
Investment Experience Factor. The "Investment Experience Factor"
measures the investment performance of a Subaccount during a Valuation
Period. An Investment Experience Factor is calculated separately for the
Contracts for each of the Subaccounts. The Investment Experience Factor of
a Subaccount for the Contracts for a Valuation Period equals (a) divided by
(b), minus (c), where:
(a) is (i) the value of the net assets of the Subaccount at the
end of the preceding Valuation Period, plus
(ii) the investment income and capital gains, realized or
unrealized, credited to the net assets of that Subaccount during the
Valuation Period for which the Investment Experience Factor is being
determined, minus
(iii) the capital losses, realized or unrealized, charged
against those assets during the Valuation Period, minus
(iv) any amount charged against the Subaccount for taxes
or any amount set aside during the Valuation Period by Charter as a
provision for taxes attributable to the operation or maintenance of that
Subaccount (see "CHARGES AND DEDUCTIONS--Other Taxes"); and
(b) is the value of the net assets of that Subaccount at the end
of the preceding Valuation Period; and
(c) is a charge that compensates Charter for certain
administrative expenses and mortality and expense risks which are assumed
by Charter in connection with the Contracts. See "CHARGES AND DEDUCTIONS -
- - Mortality and Expense Risk Charge and Contract Administration Charge."
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Contract Ownership
Subject to certain restrictions discussed below, an Owner may
designate
a new Owner or Joint Owner at any time during the life of the Annuitant.
Under the terms of the Contract, if a Joint Owner is named, unless
otherwise specified by the Owner, Charter will presume the ownership to be
as joint tenants with right of survivorship. If any Owner dies before the
Annuitant and before the Maturity Date, the rights of the Owner will belong
to the Joint Owner, if any, otherwise to the Beneficiary. The interest of
any Owner or Joint Owner may be subject to the rights of any assignee. See
"THE CONTRACT -- Assignment of Contract."
A new Owner or a Joint Owner may not be designated with respect to a
Contract that qualifies as an individual retirement annuity under Section
408(b) of the Code. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES -- Tax
Status of the Contract." An Owner's designation of a new Owner may be
subject to federal income tax. See "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES -- Taxation of Annuities."
An Owner may designate a new Owner by submitting Written Notice to
Charter. The change will take effect as of the date the Written Notice was
signed. Charter will not be liable for any payment made or other action
taken before the Written Notice was received and recorded by Charter.
Assignment of Contract
Except in the case of a Contract that qualifies as an individual
retirement annuity under Section 408(b) of the Code, an Owner may assign:
(i) all or a portion of his or her right to receive Annuity Payments under
the Contract or (ii) the Contract as collateral security. An assignment by
the Owner before the Maturity Date of any portion of the right to receive
Annuity Payments entitles the assignee to receive the assigned Annuity
Payments in a lump sum, as of the Maturity Date. Such lump sum payment
generally will be made within seven days. An assignment by the Owner after
the Maturity Date of any portion of the right to receive Annuity Payments
entitles the assignee to receive the assigned Annuity Payments in
accordance with the Annuity Income Option in effect on the Maturity Date.
The assignee may not select an Annuity Income Option or change an existing
Annuity Income Option. See "THE CONTRACT -- Contract Ownership."
In the case of a Qualified Contract, certain assignments permissible
under the Contract may adversely affect the qualification for special
federal income tax treatment of the underlying retirement plan or
individual retirement account. Potential purchasers of Qualified Contracts
are urged to consult their tax advisers.
If the right to receive Annuity Payments is assigned or the Contract
is assigned as collateral security, the Owner's rights and those of any
Beneficiary will be subject to such assignment. Charter is not responsible
for the adequacy
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of any assignment and will not be bound by the assignment until
satisfactory written evidence of the assignment has been received. In
certain circumstances, an assignment will be subject to federal income tax.
See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES -- Taxation of Annuities."
State Exceptions
The Contracts issued in various states may vary according to the
requirements of specific state insurance departments. At the time of
printing of this prospectus, the following state variations were in effect:
Massachusetts and Montana Residents:
At the time the contract form was filed, the Commonwealth of
Massachusetts and the State of Montana prohibited the use of actuarial
tables that distinguish between men and women in determining benefits for
annuity contracts issued on the lives of residents. Therefore, Contracts
offered by this Prospectus on the lives of Montana and Massachusetts
residents will have Annuity Income Options which are based on actuarial
tables that do not differentiate on the basis of sex. See "DISTRIBUTIONS
UNDER THE CONTRACT -- Annuity Payments and Annuity Income Options."
Missouri, North Carolina, Oklahoma, South Carolina and Utah:
An Owner of a Contract issued in Missouri, North Carolina, Oklahoma,
South Carolina and Utah who cancels the Contract within the Ten Day Right
to Examine the Contract will receive the greater of (1) a full refund of
the initial Payment, or (2) the Account Value plus any amount deducted for
taxes or charges from the initial Payment. See "THE CONTRACT --
Examination Period".
Washington:
An Owner of a Contract issued in Washington who cancels the Contract within
the Ten Day Right to Examine the Contract will receive a refund of the
initial Payment. See "THE CONTRACT -- Examination Period".
DISTRIBUTIONS UNDER THE CONTRACT
Full and Partial Surrender Privileges
A full or partial surrender of the Contract may be made at any time
subject to certain conditions. No full or partial surrenders may be made
after the Maturity Date. The total amount available for any surrender is
the Account Value.
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No commission or redemption charge is deducted from the Account Value
upon full or partial surrender of a Contract.
In addition to the conditions set forth above, the ability of an Owner
to make a partial surrender of a Contract is subject to the further
conditions that:
(i) the minimum amount that can be withdrawn in a partial surrender is $500
and (ii) the Contract must have an Account Value of at least $2,500 after
the surrender. In addition, a partial surrender request must contain
explicit instructions as to the withdrawal of amounts, including the amount
to be withdrawn from each of the selected Subaccounts and/or the General
Account. If any portion of the surrender is to be withdrawn from the
General Account, the amount requested will be deducted proportionately from
each Declaration Period, and will be on a first-in, first-out basis within
the Declaration Period(s). A partial surrender cannot be made in the
absence of specific direction from the Owner with respect to the allocation
of 100% of the surrender amount to be withdrawn from the Subaccount and/or
the General Account.
An Owner may make a partial surrender by sending a Written Request or
by telephone if a currently valid telephone transfer request form is on
file with Charter. An Owner may make a full surrender only by sending a
Written Request to Charter. The Account Value payable to the Owner upon a
full or partial surrender will be calculated at the price next computed
after Charter receives a request for surrender. Charter generally will pay
the Owner any Account Value owed in respect of a full or partial surrender
within seven days of receipt of the request for surrender. If, at the time
an Owner makes a partial or full surrender request, such Owner has not
provided Charter with a written election not to have federal income taxes
withheld, Charter, by law, must withhold such taxes from the taxable
portion of any full or partial surrender. In addition, the Code provides
that a federal penalty tax may be imposed on certain surrenders. See
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES -- Taxation of Annuities."
Because the Owner assumes the investment risk with respect to amounts
allocated to the Variable Account, the total amount paid upon surrender of
the Contract (taking into account any prior withdrawals) may be more or
less than the total Payments made under the Contract. See "THE CONTRACT --
Account Value."
Systematic Withdrawals. Charter currently offers an option under
which partial surrenders of the Contract may be elected by systematic
withdrawals. The Owner may elect to receive systematic withdrawals before
the Maturity Date by sending a completed Systematic Withdrawal form to
Charter at its Home Office. The completed form must include the written
consent of any assignee or irrevocable beneficiary, if applicable. The
Owner may designate the systematic withdrawal amount as a percentage of the
Account Value allocated to the Subaccounts and/or General Account, or as a
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specified dollar amount. The Owner may designate that systematic
withdrawals be made monthly, quarterly, semiannually, or annually. If the
Owner has specified, or the form is received on the 29th, 30th or 31st,
Charter will consider the effective date to be the first Valuation Date of
the following month. If no date is specified, the systematic withdrawal
option will commence on the date of receipt of the form.
Each systematic withdrawal must be at least $250. The systematic
withdrawal option will terminate if the amount to be withdrawn exceeds the
Account Value or would cause the Account Value to be below $2,500. If any
portion of the systematic withdrawal is to be withdrawn from the General
Account, the amount requested will be deducted proportionately from each
Declaration Period, and will be on a first-in, first-out basis within the
Declaration Period(s).
Each systematic withdrawal will occur as of the end of the Valuation
Period during which the withdrawal is scheduled. The systematic withdrawal
will be deducted from the Owner's Account Value in the Subaccounts and/or
the General Account as directed by the Owner.
The Owner may terminate this option at any time by Written Notice. If
this option is terminated, either by Written Notice by the Owner, or if the
amount to be withdrawn has caused the Account Value to be below $2,500, and
the Owner wishes to resume systematic withdrawals, a new Systematic
Withdrawal form must be completed and sent to Charter's Home Office.
Charter may discontinue, modify, or suspend the systematic withdrawal
option at any time. The tax consequences of a systematic withdrawal,
including a 10% penalty tax imposed on withdrawals made prior to the Owner
attaining age 59 1/2 should be carefully considered. See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES -- Taxation of Annuities".
Annuity Payments
If the Annuitant is living on the Maturity Date and the Contract is in
force, Annuity Payments will be made to the Owner in accordance with the
terms of the Contract and the Annuity Income Option selected by the Owner.
The first Annuity Payment will be made within seven days after the Maturity
Date.
The amount of the periodic Annuity Payments will depend upon (i) the
Account Value on the Maturity Date, (ii) the age and sex of the Annuitant
(or, in the case of Annuity Income Option 2, the age and sex of the
Annuitant and the Joint Annuitant) on the Maturity Date, and (iii) the
Annuity Income Option selected. See "DISTRIBUTIONS UNDER THE CONTRACT --
Annuity Income Options" and "THE CONTRACT -- State Exceptions." At the
Maturity Date, the dollar amount of each periodic Annuity Payment under an
Annuity Income Option is fixed and will not change. After the Maturity
Date, the Contract will no longer participate in the Variable Account. If,
at the time of an Annuity Payment, the Owner has not provided Charter with
a written
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election not to have federal income taxes withheld, Charter, by law, must
withhold such taxes from the taxable portion of such Annuity Payment. In
addition, the Code provides that a federal penalty tax may be imposed on
certain premature Annuity Payments. See "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES --Taxation of Annuities."
The amount of the monthly Annuity Payments under Annuity Income
Options 1, 2, and 3, described below, may be determined by dividing the
Account Value on the Maturity Date by 1,000 and multiplying the result by
the appropriate factor contained in the table for the Annuity Income Option
selected. The appropriate factor is based on a guaranteed minimum annual
interest rate of 3.5%. This factor will be determined at the time of
maturity, subject to current market conditions. The annuity tables for
Annuity Income Options 1, 2, and 3 are contained in the Contract.
Information concerning the amount of the periodic payments under additional
Annuity Income Options that become available, if any, will be provided to
the Owner prior to the Maturity Date. See "DISTRIBUTIONS UNDER THE
CONTRACT -- Annuity Income Options" and "THE CONTRACT --State Exceptions."
Annuity Income Options
At any time prior to the Maturity Date, the Owner may designate the
Annuity Income Option under which Annuity Payments are to be made. If the
Owner does not select an Annuity Income Option by the Maturity Date,
monthly Annuity Payments will be made to the Owner (i) for the life of the
Annuitant or (ii) until the sum of the monthly Annuity Payments made under
the Contract equals the Account Value on the Maturity Date, whichever is
longer (Annuity Income Option 1). Except with the consent of Charter or as
otherwise required by state law, Annuity Income Options are not available
if the Account Value is less than $2,500 and is insufficient to produce
monthly payments of at least $100. In such cases, the Account Value will
be paid in a lump sum by Charter.
Subject to the exceptions discussed above, three Annuity Income
Options are available under the Contract. In addition, an Owner may select
any other Annuity Income Option which is offered to Owners by Charter on
the Maturity Date of the Contract. Information concerning the availability
of additional Annuity Income Options, if any, will be provided prior to the
time an Annuity Income Option has to be selected.
The following Annuity Income Options currently are available:
Option 1. Life Annuity with Installment Refund - Monthly Annuity
Payments will be made to the Owner (i) for the life of the Annuitant or
(ii) until the sum of the monthly Annuity Payments made under the Contract
equals the Account Value on the Maturity Date, whichever is longer. If the
Owner dies before the sum of the monthly Annuity Payments made equals the
Account Value on the Maturity Date, the remaining Annuity Payments
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will be made to the Beneficiary designated by the Owner. See
"DISTRIBUTIONS UNDER THE CONTRACT -- Beneficiary Provisions."
Option 2. Joint and Survivor Life Annuity with Installment Refund -
Monthly Annuity Payments will be made to the Owner under the Contract (i)
for as long as either the Annuitant or the Joint Annuitant is living or
(ii) until the sum of the monthly Annuity Payments made under the Contract
equals the Account Value on the Maturity Date, whichever is longer. If all
Owner(s) die before the sum of the monthly Annuity Payments made under the
Contract equals the Account Value on the Maturity Date, the remaining
Annuity Payments will be made to the Beneficiary designated by the Owner.
See "DISTRIBUTIONS UNDER THE CONTRACT --Beneficiary Provisions."
Option 3. Installments for Life - Monthly Annuity Payments will be
made to the Owner for as long as the Annuitant is living. Payments under
this option will end with the last payment made prior to the death of the
Annuitant. It would be possible under this option for the Owner to receive
only one annuity payment if the Annuitant dies prior to the date of the
second payment, two if he or she dies before the third annuity payment
date, etc.
At any time before the Maturity Date, the Owner may select Annuity
Income Option 1, 2, or 3 or may change a prior selection of an Annuity
Income Option by sending Written Notice to Charter. In addition, on the
Maturity Date, an Owner may elect to receive Annuity Payments under any
other Annuity Income Option made available by Charter.
Upon selection of Annuity Income Option 2, the Owner must designate a
Joint Annuitant. The life of the Joint Annuitant also will be used to
determine the duration of Annuity Payments under Annuity Income Option 2.
The amount of the monthly Annuity Payments under Annuity Income Option 2
will be determined by the age and sex of both the Annuitant and the Joint
Annuitant. Prior to the Maturity Date, the Owner may select a new Joint
Annuitant at any time by sending Written Notice to Charter. The Owner may
not select a new Joint Annuitant after the Maturity Date.
In the case of a Contract qualifying as an individual retirement
annuity under Section 408(b) of the Code, an Annuity Income Option may not
be selected with a Period Certain that will guarantee Annuity Payments
beyond the life (or life expectancy) of the Annuitant. See "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES -- Tax Status of the Contract."
Maturity Date
The Owner may specify in the Contract application the Contract
Anniversary on which Annuity Payments are to begin. If no Maturity Date is
specified in the Contract application, the Maturity Date will be the later
of
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the tenth Contract Anniversary or the Contract Anniversary nearest the
Annuitant's 80th birthday.
In the case of a Qualified Contract, other than an individual
retirement annuity qualifying under Section 408(b) of the Code, selection
of certain Maturity Dates permissible under the Contract may adversely
affect the qualification of the underlying retirement plan for special
federal income tax treatment. Potential purchasers of such Qualified
Contracts are urged to consult their tax advisers.
In the case of a Contract qualifying as an individual retirement
annuity under Section 408(b) of the Code, the minimum required distribution
must be no later than April 1 of the calendar year following the calendar
year in which the Annuitant attains age 70-1/2. See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES -- Tax Status of the Contract."
Subject to the preceding discussion, the Owner may advance or defer
the Maturity Date at any time while the Annuitant is living. The new
Maturity Date chosen by the Owner must be a Contract Anniversary not later
than (i) the Contract Anniversary nearest the Annuitant's 80th birthday; or
(ii) ten years from the upcoming Contract Anniversary, whichever is later.
A Maturity Date may be changed only by Written Request to Charter prior to
the scheduled Maturity Date.
Death Benefit
If the Annuitant dies prior to the Maturity Date, a Death Benefit will
be paid to the Owner as specified in the Contract. No Death Benefit is
payable if the Annuitant dies on or after the Maturity Date.
If the Annuitant dies prior to the Maturity Date, a Death Benefit
equal to the greater of (i) the Account Value or (ii) the sum of the
Payments made less the sum of any partial surrenders will be paid in a lump
sum to the Owner. If the Owner is a natural person, the Owner may elect to
continue the Contract and he or she becomes the Annuitant if the deceased
Annuitant was not an Owner. The amount of the Death Benefit will be
calculated at the price next computed after Charter receives Proof of Death
of the Annuitant and will be paid to the Owner within seven days after
Charter receives Proof of Death, or as soon thereafter as Charter has
sufficient information to make the payment.
Beneficiary Provisions
The Beneficiary will receive any amounts payable under the Contract if
the Beneficiary survives the Owner(s). If no Beneficiary is specified, or
if no Beneficiary survives the Owner by 30 days, the estate of the Owner
will receive any remaining amounts payable under the Contract.
While the Annuitant is living, the Owner may change the Beneficiary or
Beneficiaries by sending Written Notice to Charter. Once the notice is
received by Charter, the change will take effect as of the date the Written
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Notice was signed. Charter will not be liable for any payment made or
other action taken before such Written Notice was received and recorded by
Charter
at its Home Office. A Beneficiary named irrevocably may not be changed
without written consent of such Beneficiary. The interest of any
Beneficiary is subject to the rights of any assignee. See "THE CONTRACT --
Assignment of Contract."
Death of Owner
In the case of a Nonqualified Contract in which the Owner or any Joint
Owner (i) is a natural person, (ii) is not the Annuitant, and (iii) dies
before the Maturity Date and prior to the Annuitant's death, the Death
Benefit provisions described above do not apply. The Account Value will
be paid in a lump sum no later than five years following the date of the
Owner's death to the Joint Owner, if applicable; otherwise to the
Beneficiary. See "THE CONTRACT --Contract Ownership." The Account Value
will be calculated at the price next computed after Charter receives Proof
of Death of the Owner. If the Joint Owner, if applicable, or the
Beneficiary is the surviving spouse of the Owner, he or she may elect to
continue the Contract as if he or she were the original Owner.
Employment-Related Benefit Plans
In 1983, the Supreme Court held in Arizona Governing Committee v.
Norris that optional annuity payments provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of
1964, vary between men and women on the basis of sex. The Contract
described in this Prospectus contains Annuity Payment rates for certain
Annuity Income Options that distinguish between men and women.
Accordingly, employers and employee organizations should consider, in
consultation with legal counsel, the impact of Norris, and Title VII
generally, on any employment-related insurance or benefit program for which
a Contract may be purchased.
CHARGES AND DEDUCTIONS
No commissions or sales charges are deducted from Payments invested in
the Contract or from amounts payable to the Owner upon full or partial
surrender of the Contract. Charter pays distribution expenses out of its
own funds.
As more fully described below, certain charges and deductions will be
made in connection with the Contract to compensate Charter for (i)
providing the Annuity Payments, (ii) assuming certain risks in connection
with the Contract, and (iii) administering the Contract.
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Mortality and Expense Risk Charge
Charter deducts a daily charge from the Account Value for certain
mortality and expense risks in connection with the Contracts. A daily rate
of .000010997 of the value of net assets in each Subaccount attributable to
the Contracts is charged currently, which corresponds to an annual rate of
.40%. Of such amount, approximately .30% is charged to cover mortality
risks assumed by Charter in connection with the Contract and approximately
.10% is charged to cover expense risks assumed by Charter in connection
with the Contract. Charter reserves the right at any time to increase the
Mortality and Expense Risk Charge to .70%, which corresponds to a daily
rate of .000019245, the maximum set forth in the Contract. The Mortality
and Expense Risk Charge is applicable only during the period from the
Effective Date to the Maturity Date and is not imposed against the General
Account. This charge is reflected in the Investment Experience Factor for
the Contracts for each Subaccount. The Account Value and Annuity Payments
are not affected by changes in actual mortality experience or by actual
expenses incurred by Charter. The mortality risks assumed by Charter arise
from the contractual obligations to pay Death Benefits prior to the
Maturity Date and to make Annuity Payments for the entire life of the
Annuitant (or, in the case of Annuity Income Option 2, the entire life of
the Annuitant and the Joint Annuitant). Thus, an Owner is assured that
neither the Annuitant's longevity (or, in the case of Annuity Income Option
2, the Annuitant's and the Joint Annuitant's longevity) nor an improvement
in life expectancy in general which is greater than expected, will have an
adverse effect on the Annuity Payments; this eliminates the risk of
outliving the funds accumulated for retirement in instances in which the
Contract is purchased to provide funds for retirement.
With respect to expense risks, Charter assumes the risk that the
actual expenses involved in administering the Contracts, including Contract
maintenance costs, administrative costs, mailing costs, data processing
costs, and costs of other services may exceed the amount recovered from any
administrative charges.
Contract Administration Charge
Charter has primary responsibility for the administration of the
Contract and the Variable Account. Administrative expenses for Charter
include expenses with respect to (i) processing applications, Contract
changes, tax reporting, cash surrenders, death claims, and initial and
subsequent Payments; (ii) annual and semiannual reports to Owners and
regulatory compliance reports; and (iii) overhead costs. Charter deducts a
daily charge from the Account Value for incurring administrative expenses
in connection with the Contract and the Variable Account. A
daily rate of .000008248 of the value of net assets in each Subaccount
attributable to the Contracts is charged;
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this corresponds to an annual rate of .30%. The Contract
Administration Charge is applicable only during the period from the
Effective Date to the Maturity Date and is not imposed against the General
Account. This charge is reflected in the Investment Experience Factor for
the Contracts for each Subaccount.
Records Maintenance Charge
Currently, no charge is being imposed for records maintenance. The
Contract, however, permits Charter to deduct a maximum amount of $40 from
the Account Value for each Contract at the beginning of each Contract Year
to reflect the cost of performing records maintenance for the Contracts.
If this charge were imposed it would be deducted proportionately from each
of the Subaccounts and each of the Declaration Period(s) in the General
Account (on a first-in, first-out basis within each Declaration Period) in
which the Owner has funds allocated. The Records Maintenance Charge, if
deducted, would apply only during the period from the Effective Date to the
Maturity Date and would not be prorated if the Owner surrendered the
Contract during a Contract Year.
Premium Taxes
Most states and political subdivisions do not assess premium taxes.
Where state premium taxes are assessed, Charter will deduct the amount of
tax due from each Payment at rates ranging from a minimum of .5% to a
maximum of 3.5%. Any premium taxes levied by political subdivisions will
likewise be deducted from Payments; such taxes are generally at rates of
less than 1%.
On an initial Payment or an Additional Payment in which the premium
tax exceeds 3.5% of the Payment, Charter will accept the Payment only if
the Owner provides written authorization allowing the deduction from the
Account Value of the applicable premium tax after receiving notice of such
tax.
Other Taxes
No charges currently are made against the Variable Account for
federal, state, or local taxes other than premium taxes. Should Charter
determine that any such taxes may be imposed with respect to the Variable
Account, Charter may deduct such taxes from amounts held in the Variable
Account. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES -- Taxation of
Charter."
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Transfer Charges
Currently, no charge is being imposed for transfers among Subaccounts.
The Contract, however, permits Charter to deduct $10 from each Subaccount
from which funds are transferred for the third and each subsequent transfer
request made by the Owner during a Contract Year. For the purpose of
determining whether a transfer charge is payable, initial allocations of
Payments are not considered transfers, nor are transfers of amounts among
Declaration Periods within the General Account or transfers to any
Subaccount(s) at the end of a Declaration Period. All transfer requests
made at the same time will be treated as one request. No transfer charges
will be imposed for transfers which are not at the Owner's request.
Charter may impose the transfer charge described above at any time. See
"THE CONTRACT -- Transfers."
Charges Against the Fund
Scudder, Stevens & Clark, Inc. provides investment advisory services
for the Portfolios under the investment advisory agreements between the
Fund, on behalf of the Portfolios, and the Adviser. The Fund is
responsible for all of its other expenses. The net assets of the Variable
Account will reflect deductions in connection with the investment advisory
fee and other expenses incurred by the Fund. The investment advisory fees
differ with respect to each of the Portfolios. See "SCUDDER VARIABLE LIFE
INVESTMENT FUND." For more information concerning the investment advisory
fee and other charges against the Portfolios, see the prospectus for the
Fund, a current copy of which is attached to this Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary is a general discussion of certain of the
expected federal income tax consequences of investment in and distributions
with respect to a Contract, based on the Code, proposed and final Treasury
Regulations thereunder, judicial authority, and current administrative
rulings and practice. This summary discusses only certain federal income
tax
consequences to "United States Persons," and does not discuss state, local,
or foreign tax consequences. United States Persons means citizens or
residents of the United States, domestic corporations, domestic
partnerships, and trusts or estates that are subject to United States
federal income tax regardless of the source of their income. This summary
does not discuss the consequences of an exchange of another annuity
contract for a Contract or a surrender of another annuity contract to
provide funds for investment in a Contract. Additional
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information regarding such exchanges or surrenders is contained in the
Statement of Additional Information, which is available at no cost to any
person requesting a copy by writing to Charter or by calling (800) 242-
4402.
The Qualified Contract was designed for use by retirement plans and
individual retirement accounts that qualify for special federal income tax
treatment under Section 401(a) or 408(a) of the Code and individuals
purchasing individual retirement annuities that qualify for special federal
income tax treatment under Section 408(b) of the Code. Certain
requirements must be satisfied in purchasing a Qualified Contract for the
plan, account, or annuity to retain its special tax treatment. This
summary does not discuss such requirements, and assumes that Qualified
Contracts are purchased pursuant to retirement plans or individual
retirement accounts, or are individual retirement annuities, that qualify
for such special tax treatment. Additionally, because any distribution with
respect to a Qualified Contract, other than an individual retirement
annuity qualifying under Section 408(b) of the Code, will be made to an
entity that is exempt from federal income tax, this summary does not
discuss the annuity consequences with respect to Qualified Contracts other
than such individual retirement annuities.
THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY.
EACH POTENTIAL PURCHASER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISER AS
TO THE CONSEQUENCES OF INVESTMENT IN A CONTRACT UNDER FEDERAL AND
APPLICABLE STATE, LOCAL, AND FOREIGN TAX LAWS BEFORE MAKING ANY PAYMENT.
Tax Status of the Contract
Section 817(h) of the Code provides that in order for a variable
contract which is based on a segregated asset account to qualify as an
annuity contract under the Code, the investments made by such account must
be "adequately diversified" in accordance with Treasury regulations. The
Treasury regulations issued under Section 817(h) apply a diversification
formula to each of the Subaccounts. The Variable Account, through the Fund
and its Portfolios, intends to comply with the diversification requirements
of the Treasury regulations. Charter and the Fund have entered into
agreements regarding participation in the Fund that require the Fund and
its Portfolios to be operated in compliance with the Treasury regulations.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of
the separate accounts used to support their contracts. In those
circumstances, income and gains from the separate account assets would be
includible in the variable contract owner's gross income. The IRS has
stated in published rulings that a variable contract owner will be
considered the owner of separate account
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assets if the contract owner 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 Policyowner), 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 subaccounts
without being treated as owners of the underlying assets."
The ownership rights under the Contract are similar to, but different
in certain respects from, those described by the IRS in rulings in which it
was determined that policyowners were not owners of separate account
assets. For example, the Owner has additional flexibility in allocating
premium payments and contract values. These differences could result in an
Owner being treated as the owner of a pro rata portion of the assets of the
Variable Account. In addition, Charter 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. Charter therefore reserves the
right to modify the Contract as necessary to attempt to prevent an Owner
from being considered the owner of a pro rata share of the assets of the
Variable Account.
The Code also requires that Nonqualified Contracts contain specific
provisions for distribution of contract proceeds upon the death of an
Owner. In order to be treated as an annuity contract for federal income tax
purposes, the Code requires that such Contracts provide that (a) if any
Owner dies on or after the Maturity Date and before the entire interest in
the Contract has been distributed, the remaining portion must be
distributed at least as rapidly as under the method in effect on the
Owner's death, or (b) if any Owner dies before the Maturity Date, the
entire interest in the Contract must generally be distributed within five
years after the Owner's date of death. These requirements will be
considered satisfied if the entire interest in the Contract is used to
purchase an immediate annuity under which payments will begin within one
year of the Owner's death and will be made for the life of the "designated
beneficiary" or for a period not extending beyond the life expectancy of
the designated beneficiary. Under Section 72(s) the designated beneficiary
is the person to whom ownership of the Contract passes by reason of death
and must be a natural person in order to take advantage of the exceptions
noted. If the designated beneficiary is the Owner's surviving spouse and
the Owner dies before the Maturity Date, the Contract may be continued with
the surviving spouse as the new Owner. The Nonqualified Contracts contain
provisions intended to comply with these requirements of the Code. No
regulations interpreting these requirements of the Code have yet been
issued, and thus no assurance can be given that the provisions contained in
the Contracts satisfy all
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such Code requirements. The provisions contained in the Nonqualified
Contracts will be reviewed and modified if necessary to assure that they
comply with the Code requirements when clarified by regulation or
otherwise. Similar rules apply to Qualified Contracts. See "DISTRIBUTIONS
UNDER THE CONTRACT -- Death of Owner."
Other rules may apply to Qualified Contracts.
Natural Persons. With respect to Owners who are natural persons, the
Contract should be treated as an annuity contract for federal income tax
purposes, the taxation of which is described below. See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES -- Taxation of Annuities."
Non-natural Persons. Pursuant to Section 72(u) of the Code, an
annuity contract held by a taxpayer other than a natural person generally
will not be treated as an annuity contract under the Code; accordingly, an
Owner who is not a natural person will recognize as ordinary income for a
taxable year the excess of (i) the sum of the Account Value as of the close
of the taxable year and all distributions under the Contract paid in the
taxable year and previous taxable years over (ii) the sum of the Payments
paid for the taxable year and any prior taxable year and the amounts
includible in gross income for any prior taxable year with respect to the
Contract. Section 72(u) of the Code does not apply to (i) a Contract in
which the nominal Owner is not a natural person but the beneficial Owner is
a natural person, (ii) a Qualified Contract, or (iii) a single-payment
annuity the Maturity Date for which is no later than one year from the date
of the single Payment and provides for a series of substantially equal
periodic payments during the annuity period. Instead, such Contracts are
taxed as described below under the heading "Taxation of Annuities."
Individual Retirement Annuities. In order to qualify as an individual
retirement annuity under Section 408(b) of the Code, a Contract must
contain certain provisions, including the following; (i) the Owner must be
the Annuitant; (ii) the Contract may not be transferable by the Owner,
e.g., the Owner may not designate a new Owner or assign the Contract as
collateral security; (iii) the total Payments for any Contract Year may not
exceed $2,000, unless the portion of such Payments in excess of $2,000
qualifies as a rollover amount or contribution under Section 402(a)(5) or
408(d)(3) of the Code; (iv) Annuity Payments must begin no later than April
1 of the calendar year following the calendar year in which the Annuitant
attains age 70-1/2 and meet certain other requirements; (v) an Annuity
Income Option with a Period Certain that will guarantee Annuity Payments
beyond the life expectancy of the Annuitant and the Beneficiary may not be
selected; and (vi) certain payments of Death Benefits must be made in the
event the Annuitant dies prior to the distribution of the Account Value.
Contracts intended to qualify as individual retirement annuities under
Section 408(b) of the Code contain such provisions.
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Other Qualified Contracts. A Contract may be purchased by a trust or
custodial account that forms a retirement plan qualified under Section
401(a) of the Code or an individual retirement account qualified under
Section 408(a) of the Code. The contributions and benefits in respect of a
participant in such a plan or account will be determined by the terms and
conditions of the plan or account, rather than the Contract. Charter shall
be under no obligation either (i) to determine whether any payment,
distribution or other transaction under the Contract complies with the
provisions, terms and conditions of such plan or account or of applicable
law or (ii) to administer such plan or account, including without
limitation any provisions required by the Retirement Equity Act of 1984.
The Contract is intended for use by such plans and accounts solely for the
accumulation of retirement savings. Adverse tax consequences to the plan
or account, the participant or both may result if this Contract is
transferred or assigned by the plan or account to any individual as a means
to provide benefit payments. A qualified tax adviser should be consulted
with respect to the use of the Contract in connection with such a plan or
account.
Taxation of Annuities
The discussion below applies only to those Contracts that qualify as
annuity contracts for federal income tax purposes.
In General. An Owner of a Contract should not be taxed on increases
in the Account Value until distribution occurs either in the form of
amounts received in partial or full surrender or as Annuity Payments under
the Annuity Income Option selected. The taxable portion of any such
distribution generally will be taxed as ordinary income. For this purpose,
the assignment, pledge, or agreement to assign or pledge any portion of the
Account Value (including assignment prior to the Maturity Date of an
Owner's right to receive Annuity Payments) generally will be treated as a
distribution in the amount of such portion of the Account Value.
Additionally, when an Owner designates a new Owner prior to the Maturity
Date without receiving full and adequate consideration, the old Owner
generally will be treated as receiving a distribution under the Contract in
an amount equal to the excess (if any) of the Account Value at the time of
such designation over the Investment in the Contract at such time.
"Investment in the Contract" means (i) the aggregate amount of any Payments
paid by or on behalf of the recipient or deemed recipient minus (ii) the
aggregate amount received under the Contract which was excluded from the
gross income of the recipient or deemed recipient (except that the amount
of any loan secured by a Contract will be disregarded to the extent such
amount is excluded from gross income) plus (iii) the amount of any loan
secured by a Contract to the extent that such amount is included in the
gross income of the Owner. Any such deemed distribution generally will be
taxable in an amount equal to the excess (if any) of the Account Value
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immediately before the distribution is deemed to occur over the Investment
in the Contract at such time. Additionally, the assignment prior to the
Maturity Date of an Owner's right to receive Annuity Payments without full
and adequate consideration generally will be treated as a distribution
under the Contract in an amount equal to the excess of the Account Value at
the time of such assignment over the Investment in the Contract at such
time; any such deemed distribution will be taxable in full.
Surrenders. In the case of a partial surrender under a Nonqualified
Contract, the amount received generally will be taxable in an amount equal
to the excess (if any) of the Account Value immediately before the
surrender over the Investment in the Contract at such time. In the case of
a partial surrender under a Qualified Contract, generally a portion of the
amount received, based on the ratio of the Investment in the Contract to
the Account Value, will be includible in the recipient's taxable income.
In the case of a full surrender under a Nonqualified or Qualified Contract,
the amount received generally will be taxable only to the extent it exceeds
the Investment in the Contract. In the case of a Qualified Contract (i)
the Investment in the Contract may be zero and (ii) certain surrenders will
not be taxed if they qualify under Section 402(a) or 408(d)(3) of the Code
as rollover contributions to certain retirement plans and individual
retirement arrangements.
Annuity Payments. Generally, a portion of each of the Annuity
Payments will be includible in the taxable income of the recipient. There
is, in general, no tax on the portion of each Annuity Payment that bears
the same ratio to the amount of such Annuity Payment as the Investment in
the Contract on the Maturity Date bears to the total "Expected Return"
under the Contract as of the Maturity Date; the remainder of each Annuity
Payment is taxable. Once the aggregate amount received under the Contract
on or after the Maturity Date that was excluded from gross income equals
the Investment in the Contract on the Maturity Date, any additional Annuity
Payments will be included in gross income in their entirety. If, after the
Maturity Date, Annuity Payments cease by reason of the death of the
Annuitant, the excess (if any) of the Investment in the Contract as of the
Maturity Date over the aggregate amount of Annuity Payments received on or
after the Maturity Date that was excluded from gross income is allowable as
a deduction for the last taxable year of the Annuitant.
Penalty Taxes. In the case of a deemed distribution under a
Nonqualified Contract resulting from a pledge, assignment, or agreement to
pledge or assign; a surrender of a Nonqualified Contract; or an Annuity
Payment with respect to a Nonqualified Contract, there may be imposed on
the taxpayer a federal penalty tax equal to 10% of the amount of the
distribution (or deemed distribution) that is includible in gross income.
The penalty tax generally will not apply to any distribution (i) made on or
after the date on
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which the taxpayer attains age 59-1/2; (ii) made as a result of the death
of the Owner; (iii) attributable to the disability of the taxpayer; or (iv)
which is part of a series of substantially equal periodic payments made
(not less frequently than annually) for the life (or life expectancy) of
the taxpayer or the joint lives (or joint life expectancies) of such
taxpayer and his beneficiary. Similar penalties apply to Qualified
Contracts. In addition, if a minimum distribution is required under a
Qualified Contract as a result of the Annuitant's death or attainment of
age 70-1/2, a 50% excise tax will apply to the portion of any such required
minimum distribution that is not actually distributed. In the case of
Qualified Contracts, penalty taxes or other adverse tax consequences may
result if excess contributions are made, if an annual distribution from the
individual retirement annuity and certain other retirement arrangements
exceed specified amounts, or in certain other circumstances.
Transfer of Ownership. A transfer of ownership of a Contract or
assignment of a Contract may result in certain tax consequences to the
Owner that are not discussed herein. An Owner contemplating any such
transfer or assignment of a Contract should contact a competent tax adviser
with respect to the potential tax effects of such a transaction.
Withholding. The portion of any distribution under a Contract that is
includible in gross income will be subject to federal income tax
withholding unless the recipient of such distribution elects not to have
federal income tax withheld. Election forms will be provided at the time
distributions are requested or made. Effective January 1, 1993 certain
distributions from retirement plans qualified under Section 401(a) of the
Code are subject to mandatory withholding.
Multiple Contracts. All nonqualified deferred annuity contracts
entered into after October 21, 1988, that are issued by Charter (or its
affiliates) to the same Contract Owner during any calendar year will be
treated as one annuity contract for purposes of determining the amount
includible in gross income under Section 72(e) of the Code. The Treasury
Department has specific authority to issue regulations that prevent the
avoidance of Section 72(e) through the serial purchase of annuity contracts
or otherwise. There may also be other situations in which the Treasury may
conclude that it would be appropriate to aggregate two or more annuity
contracts purchased by the same Owner. Accordingly, an Owner should
consult a competent tax adviser before purchasing more than one annuity
contract.
Taxation of Death Benefit Proceeds. Amounts may be distributed from a
Contract because of the death of the Owner or the Annuitant. Generally,
such amounts are includible in the income of the recipient as
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follows: (i) if distributed in a lump sum, they are taxed in the same
manner as a full surrender of the Contract, as described above, or (ii) if
distributed under an Annuity Option, they are taxed in the same manner as
Annuity Payments, as described above. For these purposes, the investment
in the Contract is not affected by the Owner's or Annuitant's death. That
is, the investment in the contract remains the amount of any purchase
payments paid which were not excluded from gross income.
Tax Legislation. In past years, legislation has been proposed in the
U.S. Congress which would have adversely modified the federal taxation of
certain annuities. For example, one such proposal would have adversely
affected annuities that do not have "substantial life contingencies" by
taxing income as it is credited to the annuity. Although Congress is not
now actively considering any legislation regarding the taxation of
annuities, there is no way of knowing if legislation affecting the taxation
of annuities will, at some time, be enacted, or the extent to which any
change in the taxation of annuities would be retroactive in effect (i.e.,
effective prior to the date of enactment).
Taxation of Charter
At the present time, Charter makes no charge to the Variable Account
for any Federal, state or local taxes that it incurs which may be
attributable to such Account or to the Contracts. Charter, 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 Variable Account or to the
Contracts.
GENERAL PROVISIONS
The Contract
The Contract, its endorsements, riders, and the Contract application
constitute the entire contract between Charter and the Owner. Only the
President, a Vice President, the Secretary, or an Assistant Secretary of
Charter is authorized to change or waive the terms of a Contract. Any
change or waiver must be in writing and signed by one of those persons.
Deferment of Payment and Transfers
Payment of any amount due from the Variable Account with respect to a
surrender, the Death Benefit, or the death of the Owner of a Nonqualified
Contract generally will occur within seven days from the date Written
Notice is received, except that Charter may be permitted to defer such
payment if: (i)
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the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted; (ii) an
emergency exists as defined by the SEC or the SEC requires that trading be
restricted; or (iii) the SEC permits a delay for the protection of Owners.
In addition, transfers of amounts from the Subaccounts may be deferred
under these circumstances.
Payments and Transfers from the General Account. Charter anticipates
that payments and transfers from the General Account will occur within
seven business days after receipt. In accordance with state insurance law
to the extent any payments are to be made from the General Account, such
payments may be postponed for up to six months in certain circumstances.
Payment Not Honored by Bank. Any Payment which is derived, all or in
part, from any amount paid to Charter by check or draft may be postponed
until such time as Charter determines that such instrument has been
honored.
Contract Expiration
The Contract will expire and be of no effect when the Account Value is
insufficient to cover deductions for the Mortality and Expense Risk Charge,
the Contract Administration Charge, any Records Maintenance Charge which
may be imposed, and transfer charges, if any.
Misstatement of Age or Sex
If the Annuitant's age or sex (and/or the Joint Annuitant's age or
sex, if Annuity Income Option 2 is selected) has been misstated on the
application, Charter will recalculate the Annuity Payments to reflect the
calculations that would have been made had the Annuitant's age and sex
(and/or the Joint Annuitant's age and sex, if Annuity Income Option 2 is
selected) been correctly stated.
Nonparticipating Contract
The Contract does not participate in the divisible surplus of Charter.
No dividends are payable on the Contract.
Written Notices and Requests; Owner Inquiries
Any Written Notice or Written Request required to be sent to Charter
should be sent to 8301 Maryland Avenue, St. Louis, Missouri 63105. Any
notice or request must be on the required form provided by Charter and
contain such information as Charter requires to process such notice or
request,
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including the Contract number and the Owner's full name and signature. Any
notice sent by Charter to an Owner will be sent to the address shown in the
application unless a Written Notice of an address change has been filed
with Charter. All Owner inquiries should be addressed to Charter at its
Home Office or made by calling (800) 242-4402 and should include the
Contract number and the Owner's full name.
Records and Reports
Charter will maintain all records relating to the Variable Account.
At the end of each calendar quarter, Charter will send Owners, at their
last known address of record, statements listing the Account Value,
additional Payments, transfers, any charges, and any partial surrenders
made during the year. Owners will also be sent annual and semiannual
reports for the Fund, which will include a list of the securities held by
each Portfolio as of the current date of the report to the extent required
by the 1940 Act.
DISTRIBUTION OF THE CONTRACT
The principal underwriter of the Contracts is CNL. CNL is registered
with the SEC as a broker-dealer under the Securities Exchange Act of 1934,
as amended (the "1934 Act") and is a member of the National Association of
Securities Dealers, Inc. The principal address of CNL is 8301 Maryland
Avenue, St. Louis, Missouri 63105.
For its services as Principal Underwriter, Charter pays to CNL, on a
monthly basis, .50% of new and additional Payments for the Contracts.
Charter and CNL have also entered into a general expense reimbursement
agreement for expenses incurred by CNL in connection with distribution
expenses relating to the offering of the Contracts and other variable
annuity and variable life insurance contracts issued by Charter.
Commissions relating to the sale of the Contracts totaling $230,970.90,
$189,809.18 and $464,600.72 were paid by Charter to CNL in 1996, 1995 and
1994, respectively.
CNL has contracted with Scudder Investor Services, Inc. ("Scudder")
for Scudder's services in connection with the distribution of the
Contracts. Scudder is registered with the SEC as a broker-dealer under the
1934 Act and is a member of the National Association of Securities Dealers,
Inc. Individuals directly involved in the sale of the Contracts are
registered representatives of Scudder and licensed agents of Charter. The
principal address of Scudder is Two International Place, Boston,
Massachusetts 02110-4103.
CNL is doing business under the following names in the states
indicated: CNL Insurance Marketing, Inc. in California, Florida, Minnesota,
Montana, New Hampshire, and New Jersey; CNL Insurance & Financial Services,
Inc. in Illinois, Kentucky, Maine, Maryland, Nevada, Rhode Island, and
Utah; and CNL, Inc. of Missouri in Vermont.
46
<PAGE>
The Contracts will be offered to the public on a continuous basis, and
neither CNL nor Scudder anticipates discontinuing the offering of the
Contracts. However, both CNL and Scudder reserve the right to discontinue
the offering at any time.
VOTING RIGHTS
To the extent required by law, Charter will vote the Fund's shares
held in the Variable Account at regular and special shareholder meetings of
the Fund in accordance with instructions received from persons having
voting interests in the corresponding Subaccounts. If, however, the 1940
Act or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result Charter determines
that it is permitted to vote the Fund's shares in its own right, it may
elect to do so.
The number of votes that an Owner has the right to instruct will be
calculated separately for each Subaccount. The number of votes for each
Subaccount that an Owner has the right to instruct will be determined by
dividing a Contract's value in a Subaccount by the net asset value per
share of the corresponding Portfolio in which the Subaccount invests.
Fractional shares will be counted. The number of votes of a Portfolio that
the Owner has the right to instruct will be determined as of the date
coincident with the date established by the Fund for determining
shareholders eligible to vote at the meeting of the Fund. Voting
instructions will be solicited by written communications prior to that
meeting in accordance with procedures established by the Fund.
Charter will vote shares of the Fund as to which no timely
instructions are received in proportion to the voting instructions which
are received with respect to all variable annuity contracts (including the
Contracts) issued by Charter and participating in that Portfolio. Charter
also will vote shares it owns that are not attributable to variable annuity
contracts in the same proportion.
Separate accounts of other insurance companies, including insurance
companies affiliated with Charter, may also invest premiums for variable
life and variable annuity contracts in the Fund. It is to be expected that
Fund shares held by those separate accounts will be voted according to the
instructions of the owners of those variable life and variable annuity
contracts. This will dilute the effect of the Owners' voting instructions.
Charter does not see any disadvantages to this dilution.
Each person having a voting interest in a Subaccount will receive
proxy material, reports, and other materials relating to the appropriate
Portfolio.
47
<PAGE>
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a
party or to which the assets of the Variable Account are subject. Charter
is not involved in any litigation that is of material importance in
relation to its total assets or that relates to the Variable Account.
ADDITIONAL INFORMATION
A registration statement has been filed with the SEC under the
Securities Act of 1933, as amended and the 1940 Act with respect to the
Contract offered hereby. This Prospectus does not contain all the
information set forth in the registration statement and the amendments and
exhibits to the registration statement to all of which reference is made
for further information concerning the Variable Account, Charter, and the
Contract offered hereby. Statements contained in this Prospectus as to the
contents of the Contract and other legal instruments are summaries. For a
complete statement of the terms thereof, reference is made to such
instruments as filed.
48
<PAGE>
TABLE OF CONTENTS FOR
STATEMENT OF ADDITIONAL INFORMATION
Prospectus
Page Reference*
STATE REGULATION OF CHARTER 1
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF CERTAIN
EXCHANGES AND SURRENDERS 1 37
SAFEKEEPING OF THE VARIABLE
ACCOUNTS ASSETS 1
CALCULATION OF YIELDS
AND TOTAL RETURNS 2 11
Money Market Subaccount Yields 2
Other Subaccount Yields 3
Total Returns 4
Effect of the Records Maintenance
Charge on Performance Data 5
OTHER PERFORMANCE DATA 6 12
Cumulative Total Returns 6
Comparison of Performance and
Expense Information 7
LEGAL MATTERS 7 48
INDEPENDENT ACCOUNTANTS 7
FINANCIAL STATEMENTS 8 10
* The corresponding section headings may be found in the Prospectus at
the pages indicated.
49
<PAGE>
CHARTER NATIONAL
VARIABLE ANNUITY ACCOUNT
STATEMENT OF
ADDITIONAL INFORMATION
FOR THE FLEXIBLE PREMIUM
VARIABLE DEFERRED ANNUITY
Offered by
CHARTER NATIONAL
LIFE INSURANCE COMPANY
(A Missouri Stock Company)
8301 Maryland Avenue
St. Louis, Missouri 63105
---------------
This Statement of Additional Information expands upon subjects
discussed in the current Prospectus for the Flexible Premium Variable
Deferred Annuity (the "Contract") offered by Charter National Life
Insurance Company. You may obtain a copy of the Prospectus dated May 1,
1997, by calling (800) 225-2470, or writing to Scudder Investment Services,
Inc., Two International Place, Boston, Massachusetts 02110-4103. Terms
used in the current Prospectus for the Contract are incorporated in this
Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
SHOULD BE READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.
Dated May 1, 1997
<PAGE>
TABLE OF CONTENTS
Prospectus
Page Reference*
STATE REGULATION OF CHARTER 1
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF CERTAIN EXCHANGES AND SURRENDERS 1 37
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS 1
CALCULATION OF YIELDS AND TOTAL RETURNS 2 11
Money Market Subaccount Yields 2
Other Subaccount Yields 3
Total Returns 4
Effect of the Records Maintenance Charge
on Performance Data 5
OTHER PERFORMANCE DATA 6 12
Cumulative Total Returns 6
Comparison of Performance and Expense Information 7
LEGAL MATTERS 7 48
INDEPENDENT ACCOUNTANTS 7
FINANCIAL STATEMENTS 8 10
* The section headings corresponding to those contained herein may be
found in the Prospectus at the pages indicated.
<PAGE>
In order to supplement the description in the Prospectus, the
following provides additional information about Charter and the Contract
which may be of interest to an Owner.
STATE REGULATION OF CHARTER
Charter is a stock life insurance company organized under the laws of
Missouri, and is subject to regulation by the Missouri State Department of
Insurance. Quarterly statements are filed with the Missouri Director of
Insurance covering the operations and reporting on the financial condition
of Charter. Periodically, the Missouri Director of Insurance examines the
financial condition of Charter, which examination includes the liabilities
and reserves of the Variable Account and other separate accounts of which
Charter is the depositor.
In addition, Charter is subject to the insurance laws and regulations
of all the states in which it is licensed to operate. The availability of
the Contract and certain contract rights and provisions depends on state
approval and/or filing and review processes. Where required by state law
or regulation, the Contract will be modified accordingly.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF
CERTAIN EXCHANGES AND SURRENDERS
Under Section 1035 of the Code, generally no gain or loss is
recognized on a qualifying exchange of an annuity contract for another
annuity contract. A direct exchange of an annuity contract for a Contract
should qualify as an exchange under Section 1035 of the Code. There are,
however, certain exceptions to this rule. Moreover, although the issue is
not free from doubt, certain surrenders under an annuity contract followed
by an investment in the Contract also may qualify as exchanges under
Section 1035 of the Code. Due to the uncertainty of the rules regarding
the determination of whether a transaction qualifies under Section 1035 of
the Code, prospective purchasers are urged to consult their own tax
advisers.
In addition to being nontaxable events, certain exchanges qualifying
under Section 1035 of the Code may also result in a carry-over of the
federal income tax treatment of the old annuity contract to the new annuity
contract. Due to the complexity of the rules regarding the proper
treatment of an exchange qualifying under Section 1035 of the Code,
however, prospective purchasers are urged to consult their own tax
advisers.
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS
Charter holds the assets of the Variable Account. The assets are kept
segregated and held separate and apart from the general funds of Charter.
Charter maintains records of all purchases and redemptions of the shares of
each Portfolio. A blanket fidelity bond in the amount of $10,000,000
covers all of the officers and employees of Charter.
1
<PAGE>
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, Charter may disclose yields, total returns and
other performance data pertaining to the Contracts for the Subaccounts in
accordance with the standards defined by the Securities and Exchange
Commission. Because of the charges and deductions imposed under a
Contract, the yield for the Subaccounts will be lower than the yield for
their respective Portfolios. Also, because of differences in Variable
Account charges for different variable annuity contracts invested in the
Variable Account, the yields, total returns and other performance data for
the Subaccounts will be different for the Contract than for such other
variable annuity contracts. The calculations of yields, total returns and
other performance data do not reflect the effect of any premium tax that
may be applicable to a particular Contract. Most states and political
subdivisions do not assess premium taxes. Where state premium taxes are
assessed, Charter will deduct the amount of tax due from each payment at
rates ranging from a minimum of .5% to a maximum of 3.5%. Any premium
taxes levied by political subdivisions will likewise be deducted from
payments; such taxes are generally at rates of less than 1%.
The performance data for periods prior to the date the Subaccounts
commenced operations is based on the performance of the Scudder Variable
Life Investment Fund's Portfolios and the assumption that the Subaccounts
were in existence for the same periods as the Fund's Portfolios with a
level of charges equal to those currently assessed against the Subaccounts.
Portfolios and Subaccounts commenced operations as indicated:
Subaccount/Portfolio Subaccount Portfolio
Money Market October, 1988 July, 1985
Bond October, 1988 July, 1985
Balanced October, 1988 July, 1985
Capital Growth October, 1988 July, 1985
International October, 1988 May, 1987
Growth and Income May, 1994 May, 1994
Global Discovery May, 1996 May, 1996
Money Market Subaccount Yields
Based on the method of calculation described below, the Current Yield
and Effective Yield on amounts held in the Money Market Subaccount for the
seven-day period ending December 31, 1996, were as follows:
Current Yield = 4.30%
Effective Yield = 4.39%
The Current Yield is computed by determining the net change (exclusive
of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the seven-day period in the
value of a hypothetical account under a Contract having a balance of 1 unit
of the Money Market Subaccount at the beginning of the period, dividing
such net change in account value by the value
2
<PAGE>
of the account at the beginning of the period to determine the base period
return, and annualizing this quotient on a 365-day basis. The net change
in account value reflects (i) net income from the Portfolio attributable to
the hypothetical account and (ii) charges and deductions imposed under the
Contract which are attributable to the hypothetical account. The charges
and deductions include the per unit charges for the hypothetical account
for the Administration Charge and the Mortality and Expense Risk Charge.
Current Yield is calculated according to the following formula:
Current Yield = ((NCS - ES) / UV) x (365 / 7)
The seven-day Effective Yield is calculated by compounding the
unannualized base period return according to the following formula:
Effective Yield = (1 + ((NCS - ES) / UV))(to the power of 365 / 7) - 1
Where, for both formulas:
NCS = The net change in the value of the Portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized appreciation and
depreciation) for the seven-day period attributable to a hypothetical
account having a balance of one Subaccount unit under a Contract.
ES = Per unit expenses of the Subaccount for the Contracts for the seven-
day period.
UV = The unit value for a Contract on the first day of the seven-day
period.
The Current and Effective Yield on amounts held in the Money Market
Subaccount normally will fluctuate on a daily basis. Therefore, the
disclosed yield for any given past period is not an indication or
representation of future yields or rates of return. The Money Market
Subaccount's actual yield is affected by changes in interest rates on money
market securities, average portfolio maturity, the types and quality of
portfolio securities held, and the operating expenses.
Other Subaccount Yields
Based on the method of calculation described below, for the thirty-day
period ending December 31, 1996, the Yield for the Bond Subaccount was as
follows:
Yield = 5.41%
The 30-Day Yield refers to income generated by the Bond Subaccount
over a specific 30-day period. Because the yield is annualized, the yield
generated during the 30-day period is assumed to be generated each 30-day
period over a 12-month period. The yield is computed by: (i) dividing
the net investment income of the Portfolio attributable to the Subaccount
units less Subaccount expenses attributable to the Contracts for the
period, by (ii) the maximum offering price per unit on the last day of the
period times the daily average number of units outstanding for the period,
by (iii) compounding that yield for a 6-month period, and by (iv)
multiplying that result by 2. Expenses attributable to the Bond
3
<PAGE>
Subaccount for the Contracts include the Administration Charge and the
Mortality and Expense Risk Charge. The 30-Day Yield is calculated
according to the following formula:
30-Day Yield = 2 x ((((NI -ES) / (U x UV)) + 1)(to the power of 6) - 1)
Where:
NI = Net income of the portfolio for the 30-day period attributable to the
Subaccount's units.
ES = Expenses of the Subaccount for the Contracts for the 30-day period.
U = The average daily number of units outstanding attributable to the
Contracts.
UV = The unit value for a Contract at the close (highest) of the last day
in the 30-day period.
The 30-Day Yield on amounts held in the Bond Subaccount normally will
fluctuate over time. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Bond Subaccount's actual yield is affected by the types and
quality of portfolio securities held by the Portfolio, and its operating
expenses.
Total Returns
Based on the method of calculation described below, the Average Annual
Total Returns for the Subaccounts for the periods ending December 31, 1996,
were as follows:
Inception of Inception of One Year Five Year
the Subaccount the Portfolio Period Ending Period Ending
Subaccount to 12/31/96 to 12/31/96 12/31/96 12/31/96
Money Market 4.58% 4.77% 4.38% 3.33%
Bond 7.67% 7.57% 2.09% 6.07%
Balanced 10.44% 10.59% 11.10% 9.01%
Capital Growth 12.85% 13.28% 19.28% 11.64%
International 11.65% 9.04% 13.97% 10.26%
Growth and Income* 20.81% 20.81% 21.30% N/A
Global Discovery** 7.58% 7.58% N/A N/A
* Five Year Average Annual Total Returns are not applicable for the Growth
and Income Subaccount as it commenced operation on May 1, 1994.
** One and Five Year Average Annual Total Returns are not applicable for
the Global Discovery Subaccount as it commenced operation on May 1, 1996.
Charter may disclose Total Returns for one or more of the Subaccounts
for various periods of time. One of the periods of time will include the
period measured from the date the Subaccount commenced operations. When a
Subaccount has been in operation for 1, 5 and 10 years, respectively, the
Total Return for these periods will be provided. Total Returns for other
periods of time may, from time to time, also be disclosed.
4
<PAGE>
Total Returns for a Contract represent the average annual compounded
rates of return that would equate a single investment of $1,000 to the
redemption value of that investment as of the last day of each of the
periods. The ending date for each period for which Total Return quotations
are provided will be for the most recent month end practicable, considering
the type and media of the communication, and will be stated in the
communication.
Total Returns will be calculated using Subaccount Unit Values which
Charter calculates on each Valuation Date based on the performance of the
Subaccount's underlying Portfolio, and the deductions for the Mortality and
Expense Risk Charge, the Contract Administration Charge and (for periods
prior to January 25, 1991) the Records Maintenance Charge. The Records
Maintenance Charge of $35 per year per Contract was deducted at the
beginning of each Contract Year. The Total Return is calculated according
to the following formula:
TR = (ERV / P )(to the power of 1 / N) - 1
Where:
TR = The average annual total return net of Subaccount recurring charges
for the Contracts.
ERV = The ending redeemable value of the hypothetical account at the end of
the period.
P = A hypothetical single payment of $1,000.
N = The number of years in the period.
Effect of the Records Maintenance Charge on Performance Data
The Contract provides for a $40 Records Maintenance Charge to be
deducted annually at the beginning of each Contract Year. As a matter of
current practice, Charter is not deducting a Records Maintenance Charge.
On performance information prior to January 25, 1991, $35 was deducted
annually at the beginning of each Contract Year proportionately from each
Subaccount based on the value of the amounts in each Subaccount. For
purposes of reflecting the Records Maintenance Charge in yield and total
return quotations, Charter converted the $35 annual charge into a per
dollar per day charge based on the average Account Value of all Contracts
on the last day of the period for which quotations were provided and
assumed that the charge would be applied to all Contracts. The per dollar
per day average charge was then adjusted to reflect the basis upon which
the particular quotation was calculated.
The assumed average Records Maintenance Charge was not, except in rare
instances, reflective of its actual effect on a particular Contract.
5
<PAGE>
OTHER PERFORMANCE DATA
Cumulative Total Returns
Based on the method of calculation described below, the Cumulative
Total Returns for the Subaccounts for the periods ending December 31, 1996,
were as follows:
Inception of Inception of One Year Five Year
the Subaccount the Portfolio Period Ending Period Ending
Subaccount to 12/31/96 to 12/31/96 12/31/96 12/31/96
Money Market 44.59% 70.58% 4.38% 17.81%
Bond 83.83% 130.86% 2.09% 34.31%
Balanced 126.61% 217.29% 11.10% 54.04%
Capital Growth 170.90% 317.63% 19.28% 73.53%
International 147.90% 130.84% 13.97% 63.07%
Growth and Income* 65.70% 65.70% 21.30% N/A
Global Discovery** 5.01% 5.01% N/A N/A
* Five Year Returns are not applicable for the Growth and Income
Subaccount as it commenced operation on May 1, 1994.
** One and Five Year Cumulative Total Returns are not applicable for the
Global Discovery Subaccount as it commenced operation on May 1, 1996.
Charter may disclose Cumulative Total Returns in conjunction with the
standard format described above. The Cumulative Total Returns will be
calculated using the following formula:
CTR = (ERV / P) - 1
Where:
CTR = The Cumulative Total Return net of Subaccount recurring charges for
the period.
ERV = The ending redeemable value of the hypothetical investment at the end
of the period.
P = A hypothetical single payment of $1,000.
Charter may also disclose yield and total returns for the Fund's
Portfolios, including such disclosure for periods prior to the date the
Variable Account commenced operations. For periods prior to the date the
Variable Account commenced operations, performance information for the
Subaccounts will be calculated based on the performance of the Fund's
Portfolios and the assumption that the Subaccounts were in existence for
the same periods as those indicated for the Funds Portfolios, with the
level of Contract charges that were in effect at the inception of the
Subaccounts.
All non-standard performance data will only be disclosed if the
standard performance data for the required periods is also disclosed.
6
<PAGE>
Comparison of Performance and Expense Information
Expenses and performance information for the Contract and each
Subaccount may be compared in advertising, sales literature, and other
communications to expenses and performance information of other variable
annuity products tracked by independent services such as Lipper Analytical
Services, Inc. ("Lipper"), Morningstar and the Variable Annuity Research
Data Service ("V.A.R.D.S.") which monitor and rank the performance and
expenses of variable annuity issuers on an industry-wide basis. From time
to time, Charter may also compare using other indices that measure
performance, such as Standard & Poors 500 Composite ("S & P 500") or the
Dow Jones Industrial Average ("Dow"). Unmanaged indices may assume
reinvestment of dividends that generally do not reflect deductions for
administrative and management cost and expenses.
LEGAL MATTERS
Sutherland, Asbill & Brennan, L.L.P. of Washington, D.C. has provided
advice on certain legal matters relating to the Federal Securities Laws.
All matters of Missouri law pertaining to the Contracts, including the
validity of the Contract and Charter's authority to issue the Contract
under Missouri Insurance Law, have been passed upon by Alexis M. Berg,
General Counsel of Charter National Life Insurance Company.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of Charter National Life
Insurance Company and Subsidiaries as of December 31, 1996 and 1995 and
for each of the three years in the period ended December 31, 1996 and the
financial statements of the Charter National Variable Annuity Account as of
December 31, 1996 and for each of the two years in the period ended
December 31, 1996 included in this Registration Statement have been
included herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
FINANCIAL STATEMENTS
The financial statements of Charter, which are included in this
Statement of Additional Information, should be considered only as bearing
on the ability of Charter to meet its obligation under the Contract. They
should not be considered as bearing on the investment performance of the
assets held in the Variable Account.
Financial Statements to be added by amendment.
7
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement.
(b) Exhibits
(1) -- Resolutions of the Board of Directors of Charter National
Life Insurance Company authorizing establishment of the Variable Annuity
Account.
(2) -- Not Applicable.
(3) (a) -- Form of Principal Underwriting Agreement between Charter
National Life Insurance Company on its own behalf and on behalf of Charter
National Variable Annuity Account, and CNL, Inc.
(b) -- Form of Expense Reimbursement Agreement between Charter
National Life Insurance Company and CNL, Inc.
(c) -- Marketing and Solicitation Agreement dated as of
September 30, 1988 among Scudder Investor Services, Inc., Charter National
Life Insurance Company, Charter National Variable Annuity Account, and CNL,
Inc.
(d) -- Principal Underwriting Agreement - Schedule A.
(4) (a) -- Form of Contract for the Flexible Premium Variable
Deferred Annuity.
(b) -- State Variations in Contract Form.
(c) -- General Account Endorsement.
(d) -- Individual Retirement Provision Contract Rider.
(e) -- Change in Ownership and Annuitant Contract Rider.
(f) -- Charges Endorsement.
(5) (a) -- Form of Application for the Flexible Premium Variable
Deferred Annuity.
(b) -- State Variations of Application Form.
(6) (a) -- Articles of Incorporation of Charter National Life
Insurance Company.
(b) -- By-Laws of Charter National Life Insurance Company.
(7) -- Not Applicable.
(8) (a) -- Participation Agreement dated September 3, 1993 between
Scudder Variable Life Investment Fund and Charter National Life Insurance
Company.
(b) -- Reimbursement Agreement dated June 9, 1986 between
Scudder, Stevens & Clark Inc. and Charter National Life Insurance Company.
(c) -- Participating Contract and Policy Agreement and
Amendments thereto dated June 4, 1986 between Scudder Investor Services,
Inc. and CNL, Inc.
(d) -- Amendment to Participating Contract and Policy Agreement
dated February 20, 1996.
(9) (a) -- Opinion and Consent of Counsel.
(b) -- Written consent of Sutherland, Asbill & Brennan. i
(c) -- Written consent of Alexis Berg, General Counsel of
Charter National Life Insurance Company. i
(10) -- Written consent of Independent Accountants. i
(11) -- Not applicable.
(12) -- Not applicable.
(13) -- Schedule for Computation of Performance Data.
(14) -- Power of Attorney
i Incorporated herein by reference to Post-Effective Amendment No. 14 to
Form N-4 for Charter National Variable Annuity Account, Registration File
No. 33-22925, filed on April 24, 1996
C-1
<PAGE>
Item 25. Directors and Officers of the Depositor
Name and Principal Positions and Offices
Business Address* with Depositor
Richard G. Petitt Chairman of the Board,
Colonial Penn Life Insurance Co Director and Chief Executive Officer
399 Market Street
Philadelphia, PA 19181
Gregory R. Barstead President, Director and
Colonial Penn Life Insurance Co Chief Operating Officer
399 Market Street
Philadelphia, PA 19181
Elizabeth A. Clifford Senior Vice President, Controller,
Colonial Penn Life Insurance Co Director and Treasurer
399 Market Street
Philadelphia, PA 19181
Timothy C. Sentner Senior Vice President
Colonial Penn Life Insurance Co.
399 Market Street
Philadelphia, PA 19181
David L. Baxter Senior Vice President and Chief
Colonial Penn Life Insurance Co. Actuary
399 Market Street
Philadelphia, PA 19181
A. Sales Miller Vice President - Marketing
Henry Wulsin Director
Colonial Penn Franklin Insurance Co.
2650 Audubon Road
Norristown, PA 19403
Alexis M. Berg Vice President, Secretary, General
Colonial Penn Life Insurance Co. Counsel and Director
399 Market Street
Philadelphia, PA 19181
Karen M. Henneberg Assistant Vice President - Compliance
Colonial Penn Life Insurance Co.
399 Market Street
Philadelphia, PA 19181
Kathleen A. Urbanowicz Assistant Secretary and Assistant Vice
President - Customer Service
Ian M. Cumming Director
Leucadia National Corporation
529 East South Temple
Salt Lake City, UT 84102
C-2
<PAGE>
Name and Principal Positions and Offices
Business Address* with Depositor
Ruth E. Klindtworth Director and Assistant Secretary
Leucadia National Corporation
315 Park Avenue South
New York, N.Y. 10010
Jesse C. Nichols III Director
Nichols Industries
5001 E. 59th Street
Kansas City, MO 64130
Joseph S. Steinberg Director
Leucadia National Corporation
315 Park Avenue South
New York, N.Y. 10010
Joseph A. Orlando Director
Leucadia National Corporation
315 Park Avenue South
New York, N.Y. 10010
* The principal business address of each person listed, unless otherwise
indicated, is Charter National Life Insurance Company, 8301 Maryland
Avenue, St. Louis, Missouri 63105.
Item 26. Persons Controlled By or Under Common Control With the Depositor
or Registrant
Charter is the depositor of Charter National Variable Account, a separate
account formed in connection with the sale of variable life insurance
policies by Charter. Charter also is the depositor of the Charter National
Variable Annuity Account formed in connection with the sale of variable
annuity contracts by Charter.
As described in the Prospectus, Charter is engaged in the insurance
business through various subsidiary companies. Charter's subsidiaries
include the Colonial Penn Group, Inc. which offers life, health and auto
insurance through its two life and five casualty subsidiaries. Intramerica
Life Insurance Company, a Colonial Penn subsidiary, offers the Contract to
residents of New York.
Charter is a wholly owned subsidiary of Leucadia National Corporation
("Leucadia"), a New York corporation. Campet, Inc., a Leucadia subsidiary
owns all the outstanding stock of CNL, Inc. ("CNL"), the principal
underwriter of the Variable Account. CNL, a Missouri corporation, is
registered with the SEC as a broker-dealer under the 1934 Act, and is a mem
ber of the National Association of Securities Dealers, Inc. Leucadia is a
diversified holding company, the common stock of which is traded on the New
York Stock Exchange and the Pacific Stock Exchange.
Set forth below is certain information concerning each of the active
persons under common control with Charter (other than CNL), including state
of organization, percentage of voting securities owned or other basis of
control and principal business.
C-3
<PAGE>
Percent of
Jurisdiction Voting
of Securities Principal
Name Incorporation Owned* Business
Campet, Inc. Delaware 100% Investments
Centurion Ins. Co. New York 100% Insurance
WMAC Investment Corp. Wisconsin 100% Holding Company
Colonial Penn Madison
Insurance Co. Wisconsin 100% Insurance
Bellpet, Inc. Delaware 100% Holding Company
Baldwin-CIS L.L.C. Delaware 100% Investments
Solana Corporation Utah 100% Holding Company
Baldwin Forest Products
L.L.C. Delaware 100% Investments
Conwed Corporation Delaware 100% Real Estate
Leucadia Film Corporation Utah 100% Film Products
Neward Corporation New York 100% Owner and Operator
of Oil Wells
Rastin Investing Corp. Delaware 100% Investments
HSD Venture California 100% Real Estate
American Investment Company Delaware 100% Holding Company
Leucadia Aviation, Inc. Delaware 100% Aviation
LNC Investments, Inc. Delaware 100% Investments
The Sperry and
Hutchinson Co., Inc. New Jersey 100% Trading Stamps
Leucadia, Inc. New York 100% Manufacturing &
Investments
College Life
Development Corp Indiana 100% Real Estate
Phlcorp, Inc. Pennsylvania 100% Holding Company
Empire Insurance Co. New York 100% Insurance
American Investment
Bank, N.A. Utah 100% Banking
Wedgewood Investments
L.L.C. Delaware 100% Investments
Leucadia Financial
Corporation Utah 100% Real Estate
AIC Financial Corp. Delaware 100% Real Estate
Leucadia Cellars Ltd. Delaware 100% Investments
American Investment
Financial Utah 100% Thrift Loan
Allcity Insurance Co. New York 89.8% Insurance
Charter National Life
Insurance Company Missouri 100% Insurance
Colonial Penn Franklin
Insurance Company Pennsylvania 100% Insurance
Colonial Penn Administrative
Services Delaware 100% Administrator
Colonial Penn Group, Inc. Delaware 100% Holding Company
Bay Colony Insurance
Company California 100% Insurance
Colonial Penn Holdings,
Inc. Delaware 100% Holding Company
Colonial Penn Ins. Co. Pennsylvania 100% Insurance
Colonial Penn Life Ins. Co. Pennsylvania 100% Insurance
CPI Investment, Inc. Delaware 100% Investments
Intramerica Life Ins. Co. New York 100% Insurance
Leucadia Properties, Inc. Utah 100% Real Estate
Terracor II Utah 100% Real Estate
CPAX, Inc. Delaware 100% Holding Company
The Village at Inlet Beach,
Inc. Florida 100% Real Estate
Pennpark Investors L.L.C. Illinois 80% Real Estate
Professional Data
Management, Inc. Indiana 100% Real Estate
C-4
<PAGE>
Percent of
Jurisdiction Voting
of Securities Principal
Name Incorporation Owned* Business
Bayside Casualty
Insurance Company New Jersey 100% Insurance
Leucadia Investors, Inc. New York 100% Investments
Silver Mountain Industries,
Inc. Utah 100% Real Estate
Telluride Properties
Acquisition, Inc. Utah 100% Real Estate
Baldwin Enterprises, Inc. Colorado 100% Holding Company
Commercial Loan Insurance
Company Wisconsin 100% Insurance
NSAC, Inc. Colorado 100% Real Estate
RERCO, Inc. Delaware 100% Finance
330 MAD. PARENT CORP. Delaware 100% Investments
WMAC Credit Insurance Corp. Wisconsin 100% Insurance
Providential Life
Insurance Co. Arkansas 100% Insurance
Andrus Vineyard Co.,
L.L.C. California 95% Vineyard
CDS Devco, Inc. California 80% Investments
San Elijo Ranch, Inc. California 68% Real Estate
RRP, Inc. Colorado 100% Real Estate
CDS Holding Corporation Delaware 100% Holding Company
International Bottlers
L.L.C. Delaware 75% Holding Company
Pepsi International
Bottlers L.L.C. Delaware 75% Holding Company
LUK-REN, Inc. New York 100% Real Estate
Pine Ridge Associates, L.P. Texas 75% Winery
Leucadia Bottling L.L.C. Utah 100% Holding Company
Leucadia Power Holdings,
Inc. Utah 100% Holding Company
Colonial Penn De Mexico,
Inc. Mexico 100% Insurance
* Unless otherwise noted, voting securities are owned by Leucadia. A
number of subsidiaries of Leucadia are not included on this list. Taken
together and considered as a single subsidiary, they would not constitute a
significant subsidiary of Leucadia. More detailed information will be
supplied upon request. In addition, inactive companies are not included on
this list.
Item 27. Number of Contract Owners
As of December 31, 1996, there were 8,997 owners of the flexible premium
variable deferred annuity, of which 8,833 were Non-qualified and 164 were
Qualified, issued by the Variable Account. As of December 31, 1996, there
were 129 owners of the single premium variable deferred annuity, of which
99 were Non-qualified and 30 were Qualified, issued by the Variable
Account.
Item 28. Indemnification
Currently, there are no provisions or arrangements for indemnification of
any individual either by the Registrant or by Charter pursuant to its
Articles of Incorporation or By-Laws. However, Section 351.355 of the
Missouri General and Business Corporation Law, in brief, allows a
corporation to indemnify any person who is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action if he acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interest of
the corporation. Where any person was or is a party or is threatened to be
made a party in an action or suit by or in the right of the corporation to
procure a judgment in its favor, indemnification may not be paid where such
person shall have been adjudged to be liable for negligence or misconduct
in the performance of his duty to the corporation, unless a court
determines that the person is fairly and reasonably entitled to indemnity.
A corporation has the power to give any further indemnity,
C-5
<PAGE>
to any person who is or was a director, officer, employee or agent,
provided for in the Articles of Incorporation or as authorized by any by-
law which has been adopted by vote of the shareholders, provided that no
such indemnity shall indemnify any person whose action was finally adjudged
to have been knowingly fraudulent, deliberately dishonest of the result of
willful misconduct.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers, and controlling persons of Charter
pursuant to the foregoing statute, or otherwise, Charter has been advised
that in the opinion of the SEC such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by Charter of expenses incurred or paid by a director,
officer or controlling person of Charter in successful defense or any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
Charter will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
Item 29. Principal Underwriter
CNL is the principal underwriter of the Variable Account. CNL is also the
principal underwriter for the Charter National Variable Account, a separate
account of Charter formed in connection with the distribution of variable
life insurance policies issued by Charter. The directors and officers of
CNL are as follows:
Name and Principal Positions and Offices
Business Address* with Underwriter
Richard G. Petitt Chairman and Director
Colonial Penn Life Insurance Co.
399 Market Street
Philadelphia, PA 19181
Allen S. Miller President and Director
Gregory R. Barstead Executive Vice President, Treasurer and
Colonial Penn Life Insurance Co. Director
399 Market Street
Philadelphia, PA 19181
Karen M. Henneberg Vice President and Secretary
Colonial Penn Life Insurance Co.
399 Market Street
Philadelphia, PA 19181
Elizabeth A. Clifford Senior Vice President and Controller
Colonial Penn Life Insurance Co.
399 Market Street
Philadelphia, PA 19181
Ronald L. Stitt Assistant Secretary
Colonial Penn Life Insurance Co.
399 Market Street
Philadelphia, PA 19181
Kathleen A. Urbanowicz Vice President and Assistant Secretary
C-6
<PAGE>
Name and Principal Positions and Offices
Business Address* with Underwriter
Alexis M. Berg Director
Colonial Penn Life Insurance Co.
399 Market Street
Philadelphia, PA 19181
* The principal business address of each person listed, unless otherwise
indicated, is Charter National Life Insurance Company, 8301 Maryland
Avenue, St. Louis, Missouri 63105.
Item 30. Location of Accounts and Records
All financial accounts and records required to be maintained by Section
31(a) of the 1940 Act and the rules under it are maintained by Charter at
its Philadelphia Office. All Contract Owner accounts and documents
required to be maintained by Section 31(a) of the 1940 Act and the rules
under it are maintained by Charter at its Home Office.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Charter National Life Insurance Company hereby represents that the fees and
charges deducted under the Contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by Charter National Life Insurance Company.
C-7
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it meets the requirements for
effectiveness of this amended Registration Statement and has duly caused
this amended Registration Statement to be signed on its behalf in the City
of Philadelphia and the State of Pennsylvania, on the 21st day of February,
1997.
Charter National Variable Annuity Account
(Registrant)
(Seal) Charter National Life Insurance Company
(Depositor)
Attest: /S/ Alexis M. Berg By: /S/ Karen M. Henneberg
Alexis M. Berg Karen M. Henneberg
Vice President, Assistant Vice President, Compliance
General Counsel,
Corporate Secretary
& Director
As required by the Securities Act of 1933 this amended Registration
Statement has been signed by the following persons in their capacities on
the dates indicated.
Signature Title Date
*________________________ Chairman of the Board _______
Richard G. Petitt and Director
(Chief Executive Officer)
*________________________ President and Director _______
Gregory R. Barstead (Chief Operating Officer)
*________________________ Director _______
Ian M. Cumming
*________________________ Senior Vice President, Controller, _______
Elizabeth A. Clifford Treasurer and Director
*________________________ Senior Vice President _______
Timothy C. Sentner
<PAGE>
Signature Title Date
*________________________ Senior Vice President and _______
David L. Baxter Chief Actuary
*________________________ Director and Assistant _______
Ruth Klindtworth Secretary
*________________________ Director _______
Jesse C. Nichols III
*________________________ Vice President _______
Mark Hornstein
*________________________ Director _______
Joseph S. Steinberg
*________________________ Vice President _______
A. Sales Miller
*________________________ Director _______
Joseph A. Orlando
*________________________ Director _______
Henry H. Wulsin
*Pursuant to Power of Attorney
(Seal) Date: February 21, 1997
Attest: /S/ Alexis M. Berg By: /S/Karen M. Henneberg
Alexis M. Berg Karen M. Henneberg
Vice President, Assistant Vice President, Compliance
General Counsel,
Corporate Secretary
& Director
PRINCIPAL UNDERWRITING AGREEMENT
AGREEMENT dated September 1, 1988, by and between Charter National
Life Insurance Company ("Charter National"), a Missouri corporation, on its
own behalf and on behalf of Charter National Variable Annuity Account
("Variable Accounts"), and CNL, Inc. ("CNL"), a Missouri corporation.
WITNESSETH:
WHEREAS, the Variable Account is a segregated asset account
established and maintained by Charter National pursuant to the laws of the
State of Missouri for flexible premium variable deferred annuities bearing
a form number of P1258 to be issued by Charter National (the "Contracts"),
under which income, gains, and losses, whether or not realized, from assets
allocated to such account, will be, in accordance with the Contracts,
credited to or charged against such account without regard to other income,
gains, or losses of Charter National; and
WHEREAS, Charter National has registered the Variable Account as a
unit investment trust under the Investment Company Act of 1940 (the
"Investment Company Act"); and
WHEREAS, CNL has registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "Securities Exchange Act") and is a member firm
of the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, Charter National has registered the Contracts under the
Securities Act of 1933 and proposes to issue and sell the Contracts through
CNL acting as its principal underwriter.
NOW, THEREFORE, Charter National and CNL hereby mutually agree as
follows:
1. Underwriter.
(a) Charter National grants to CNL the exclusive right, during
the term of this Agreement, subject to the registration requirements of the
Securities Act of 1933 and the Investment Company Act and the provisions of
the Securities Exchange Act, to be the principal underwriter of the
Contracts. CNL agrees to use its best efforts to distribute the Contracts,
and to undertake to provide sales services relative to the Contracts and
otherwise to perform all duties and functions necessary and proper for the
distribution of the Contracts.
(b) To the extent necessary to offer the Contracts, CNL shall be
duly registered or otherwise qualified under the securities laws of any
state or other jurisdiction. The sales representatives of CNL soliciting
applications for the Contracts shall be duly and appropriately licensed,
registered or otherwise qualified for the sale of such Contracts (and the
riders offered in connection therewith, if any) under the federal
securities laws, any applicable state insurance laws and securities laws of
each state or other jurisdiction in which such Contracts may lawfully be
sold and in which Charter National is licensed to sell Contracts. CNL
shall be responsible for the training, supervision, and control of its
representatives for the purposes of the NASD Rules of Fair Practice and
federal and state securities law requirements applicable in connection with
the offering and sale of the procedures in compliance with NASD Rules of
Fair Practice, Section 27, Paragraph 2177.
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<PAGE>
(c) CNL agrees to offer the Contracts for sale in accordance with
the prospectuses therefor filed with the Securities and Exchange Commission
("Commission") then in effect. CNL is not authorized to give any
information or to make any representations concerning the Contracts other
than those contained in such current prospectus or in such sales literature
as may be authorized by Charter National.
(d) All purchase payments made or other monies payable under the
Contracts shall be paid or remitted by or on behalf of Contractowners
directly to Charter National or its designated servicing agent and shall
become the exclusive property of Charter National. Charter National will
retain all such payments and monies except to the extent such payments and
monies are allocated to the Variable Account.
2. Sales Agreements.
(a) CNL is hereby authorized to enter into separate written
agreements, on such terms and conditions as CNL may determine to be not
inconsistent with this Agreement, with broker/dealers registered as such
under the Securities Exchange Act which agree to participate in the
distribution of the Contracts and to use their best efforts to solicit
applications for the Contracts. All such sales agreements shall provide
that each broker/dealer will assume full responsibility for continued
compliance by itself and its representatives with applicable federal and
state securities laws, and shall be in such form and contain such other
provisions as Charter National may from time to time require. Such
broker/dealer shall assume any legal responsibility of Charter National for
the acts, commissions, or defalcations of such representatives insofar as
they relate to the sale of the Contracts. Such broker/dealers and their
representatives soliciting applications for the Contracts shall be duly and
appropriately licensed, registered, or otherwise qualified for the sale of
such Contracts (and the riders offered in connection therewith, if any)
under the federal securities laws, any applicable state insurance and
securities laws of each state or other jurisdiction in which such Contracts
may be lawfully sold and in which Charter National is licensed to sell the
Contracts. 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 representatives of
such organization soliciting applications for Contracts shall be registered
representatives of a registered broker/dealer and NASD member which is an
affiliate of such organization and which maintains full responsibility for
the training, supervision, and control of the representatives selling the
Contracts.
(b) Applications for the Contracts solicited by such
organizations through their representatives shall be forwarded to Charter
National. All payments for Contracts shall be made by check or money order
payable to "Charter National Life Insurance Company" and remitted promptly
by such organizations to Charter National as agent for CNL. Charter
National will also accept wire transfers via Federal Funds to an account
designated by Charter National. All broker/dealers who agree to
participate in the distribution of the Contracts shall act as independent
contractors and nothing herein contained shall constitute such
broker/dealers or their agents or employees as employees of Charter
National in connection with the sale of the Contracts.
3. Compensation. Charter National shall pay CNL commissions for
performing the sales services set forth herein for Contracts sold under
dealer sales agreements that CNL enters into with other broker/dealers
pursuant to paragraph 2, above, the amount of which commissions are as set
forth in Schedule A to this Agreement, which Schedule may be hereafter
amended from time to time by mutual agreement of Charter National and CNL.
2
<PAGE>
4. Reimbursement Expenses. Upon prior written agreement between
Charter National and CNL, Charter National will reimburse CNL for certain
marketing expenses to which CNL may contractually agree to through sales
agreements with other broker/dealers pursuant to paragraph 2.
5. Administrative Services. Charter National agrees to maintain all
required books of account and related financial records on behalf of CNL.
All such books of account and records shall be maintained and preserved
pursuant to Rules 17a-3 and 17a-4 under the Securities Exchange Act (or the
corresponding provisions of any future federal securities laws or
regulations). In addition, Charter National will maintain records of all
sales commissions paid to sales representatives of CNL in connection with
the sale of the Contracts. All such books and records shall be maintained
by Charter National on behalf of and as agent for CNL whose property they
are and shall remain for all purposes, and shall at all times be subject to
reasonable periodic, special, or other examination by the Commission and
all other regulatory bodies having jurisdiction. Charter National also
agrees to send to CNL's customers all required confirmations on customer
transactions.
6. Reports. CNL shall have the responsibility for maintaining the
records of sales representatives licensed, registered, and otherwise
qualified to sell the Contracts and for furnishing periodic reports thereof
to Charter National.
7. Regulation.
(a) 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 of the NASD, from time to time in
effect, including such exemptions from the Investment Company Act as the
Commission may grant, and the terms hereof shall be interpreted and
construed in accordance therewith. Without limiting the generality of the
foregoing, the term "assigned" shall not include any transactions exempted
from section 15(b)(2) of the Investment Company Act.
(b) CNL shall submit to all regulatory and administrative bodies
having jurisdiction over the present and future operations of Charter
National or Variable Accounts, any information, reports or other material
which any such body by reason of this Agreement may request or require
pursuant to applicable laws or regulations. Without limiting the
generality of the foregoing, CNL shall furnish the State of Missouri
Secretary of State and/or the Director of Insurance with any information or
reports which the Secretary of State and/or the Director of Insurance may
request in order to ascertain whether the variable operations of Charter
National are being conducted in a manner consistent with any other
applicable law or regulations.
8. Suitability. Charter National and CNL each wish to ensure that the
Contracts distributed by CNL will be issued to purchasers for whom the
Contract will be suitable. CNL shall take reasonable steps to ensure that
the various sales representatives appointed by it shall not make
recommendations to an applicant to purchase a Contract in the absence of
reasonable grounds to believe that the purchase of the Contract is suitable
for such applicant. While not limited to the following, a sales
representative after reasonable inquiry of such applicant concerning the
applicant's insurance and investment objectives, financial situation and
needs, and the likelihood of whether the applicant will persist with the
Contract for such a period of time that Charter National's acquisition
costs are amortized over a reasonable period of time. CNL will require
that the applicant complete the Financial Questionnaire, Form #U4134, for
premium amounts in excess of $250,000. At its sole discretion, CNL may
require Form #U4134 for lesser amounts.
3
<PAGE>
9. Prospectuses and Promotional Material. Charter National shall
furnish CNL with Copies of all prospectuses, financial statements, and
other documents and materials which CNL reasonably requests for use in
connection with the distribution of the Contracts. Charter National shall
have responsibility for the preparation, filing, and printing of all
required prospectuses and/or registration statements in connection with the
Contracts, and the payment of all related expenses. CNL and Charter
National shall cooperate fully in designing, drafting, and reviewing sales
promotion materials, and with respect to the preparation of individual
sales proposals related to the sale of the Contracts. CNL shall not use
any such materials not provided or approved by Charter National.
10. Investigation and Proceedings.
(a) CNL and Charter National agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial proceeding
arising in connection with the Contracts distributed under this Agreement.
CNL and Charter National further agree to cooperate fully in any securities
regulatory inspection, inquiry, investigation or proceeding or any judicial
proceeding with respect to Charter National, CNL, their affiliates and
their representatives to the extent that such inspection, inquiry,
investigation or proceeding is in connection with Contracts distributed
under this Agreement. Without limiting the foregoing:
(i) CNL will be notified promptly of any customer complaint
or notice of any regulatory inspection, inquiry, investigation or
proceeding or judicial proceeding received by Charter National with respect
to CNL or any representative or which may affect Charter National's
issuance of any Contracts marketed under this Agreement; and
(ii) CNL will promptly notify Charter National of any
customer complaint or notice of any regulatory inspection, inquiry,
investigation or judicial proceeding received by CNL or any representative
with respect to Charter National or its affiliates in connection with any
Contracts distributed under this Agreement or any activity in connection
with any Contracts.
(b) In the case of a customer complaint, CNL and Charter National
will cooperate in investigating such complaint and shall arrive at a
mutually satisfactory response.
11. Exclusivity. The services of CNL hereunder are not to be deemed
exclusive, and CNL shall be free to render similar services to others so
long as its services hereunder are not impaired or interfered with thereby.
12. Benefit. This Agreement shall inure to the benefit of and be
binding upon the successors of the parties hereto.
13. Notices. All notices and other communications provided for
hereunder shall be in writing and shall be delivered by hand or mailed
first class, postage prepaid, addressed as follows:
(a) If to Charter National -
Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63105
Attention: G. T. Mitchell
4
<PAGE>
(b) If to CNL -
CNL, Inc.
8301 Maryland Avenue
St. Louis, Missouri 63105
Attention: C. M. Butts, Jr.
or to such other address as Charter National or CNL shall designate by
written notice to the other.
14. Amendment. This Agreement may be amended from time to time by the
mutual agreement and consent of the parties hereto.
15. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
16. Termination. This Agreement shall be effective upon its execution.
It 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. This
Agreement shall terminate automatically if it shall be assigned. Upon
termination of this Agreement, all authorizations, rights and obligations
shall cease except (i) the obligation to settle accounts hereunder, issued
pursuant to applications received by Charter National prior to termination
and (ii) the agreements contained in paragraph 9 hereof.
17. Applicable Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Missouri.
18. CounterParts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
shall be deemed one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
(seal)
Attest: CHARTER NATIONAL LIFE INSURANCE COMPANY
________________________ By: ________________________________
/S/ G. T. Mitchell
Title: Secretary Title: Executive Vice President
(seal)
Attest: CNL, INC.
________________________ By: ________________________________
/S/ C. M. Butts, Jr.
Title: Secretary Title: Vice President
5
<PAGE>
SCHEDULE A
Charter National shall pay CNL the following commissions with respect
to the Contracts sold by broker/dealers:
FLEXIBLE PREMIUM DEFERRED ANNUITY
SCHEDULE OF COMMISSIONS
Commissions payable for contracts issued:
A commission equal to an annual rate of .45% of the daily sum of the
accumulated values of all policies bearing a form number of P1258 payable
monthly.
This Schedule of Commissions will take effect on the date shown below.
CHARTER NATIONAL LIFE CNL, INC.
INSURANCE COMPANY
By ___________________________ By ________________________
/S/ G. T. Mitchell /S/ C. M. Butts, Jr.
Title: Executive Vice President Title: Vice President
Effective Date: 09/01/88
6
<PAGE>
EXPENSE REIMBURSEMENT AGREEMENT
This Expense Reimbursement Agreement (the "Agreement") is made and entered
into this 1st day of June, 1988, by and between Charter National Life
Insurance Company, a Missouri corporation ("CHARTER"), and CNL, Inc., a
Missouri corporation("CNL").
WHEREAS, CNL is a wholly owned subsidiary of CHARTER and acts as Principal
Underwriter for the variable insurance products issued by CHARTER; and
WHEREAS, CNL incurs certain expenses associated with the development of new
markets and distribution systems for CHARTER'S variable insurance policies
and contracts, the distribution of commissions earned by the broker-dealers
marketing such variable products, and the maintenance of appropriate
regulatory standing from which to conduct these operations on CHARTER's
behalf; and
WHEREAS, both parties desire to reduce to writing their agreement with
regard to the reimbursement of expenses;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth below, the parties agree as follows:
1. Term. The Agreement shall take effect retroactively as of January 1,
1988, and continue in force until such time as it is terminated.
2. Services. CNL shall: provide assistance in developing markets for
CHARTER's variable insurance products; distribute commissions to broker-
dealers; and maintain registrations and licenses required by various
regulatory authorities.
3. Compensation. Compensation payable for services provided shall be
determined as set out in a Schedule of Expense Reimbursement (the
"Schedule"). A copy of the current Schedule is attached hereto and
incorporated herein by reference.
4. Entire Agreement. The Agreement and the Schedule contain the entire
understanding of the parties hereto.
5. Prior Agreement. The Agreement supersedes and replaces the Expense
Reimbursement Agreement entered into by and between the parties on January
1, 1988, which shall be cancelled retroactive to its stated effective date.
6. Information/Reports. Each party shall furnish information or reports
as requested by any applicable regulatory authority.
7. Amendment. Either party may request amendment of the Agreement or
the Schedule at any time. To become effective, such amendment must be in
writing, dated and signed by both parties.
8. Termination. The Agreement may be terminated at any time on written
notice by either party, with or without cause. Prompt settlement shall be
made of any amount due either party as of the effective date of
termination.
9. Headings. The headings inserted in the Agreement are for convenience
only and shall not affect the interpretation thereof.
<PAGE>
Expense Reimbursement Agreement
June 1, 1988
Page 2
10. Severability. If any part of the Agreement shall be found to be void
or unenforceable for any reason, the remainder of the Agreement shall be
severable and may be enforced accordingly.
11. Applicable Law. The Agreement has been entered into in, and shall be
construed under the laws of, the State of Missouri.
12. Counterparts. The Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
shall be deemed one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers on the date first above written.
CHARTER NATIONAL LIFE INSURANCE COMPANY
Attest:
_________________________ By:____________________________________
/S/ P. M. Frank /S/ David T. Cumming
Secretary President
CNL, INC.
Attest:
____________________________ By:____________________________________
/S/ P. M. Frank /S/ Don Weber
Secretary Vice President
<PAGE>
SCHEDULE OF EXPENSE REIMBURSEMENT
Amounts due under the Expense Reimbursement Agreement (the "Agreement")
executed on June 1, 1988, by and between Charter National Life Insurance
company (CHARTER") and CNL, Inc. ("CNL"), shall be determined at the end of
every month as follows:
Formula
-----------
Compensation due from CHARTER to CNL shall be
calculated based on:
A. Expenses incurred by Regional and Assistant actual amounts
Regional Directors under non-vouchered expense disbursed
allowance agreements
and
B. Services as Principal Underwriter for variable 1.25% of net
policies and contracts issued by CHARTER earned premiums
The amount calculated above shall be offset against any amount otherwise
owned by CNL to CHARTER, with the resulting net amount to be paid by the
proper party on or before the 20th of the following month.
This Schedule shall take effect as of January 1, 1988, and shall remain in
force until amended in accordance with the terms of the Agreement.
Executed by the duly authorized officers of both parties hereto on this 1st
day of June, 1988.
CHARTER NATIONAL LIFE INSURANCE COMPANY
Attest:
_________________________ By:____________________________________
/S/ P. M. Frank /S/ David T. Cumming
Secretary President
CNL, INC.
Attest:
___________________________ By:____________________________________
/S/ P. M. Frank /S/ Don Weber
Secretary Vice President
<PAGE>
MARKETING AND SOLICITATION AGREEMENT
AGREEMENT, dated as of September 30, 1988 by and among Scudder Fund
Distributors, Inc. ("Scudder"), Charter National Life Insurance Company
("Charter National"), Charter National Variable Annuity Account (the
"Variable Account") and CNL, Inc. ("CNL").
WHEREAS, Charter National has created and plans to sell annuity
contracts bearing a form number of P1258 which will invest in the Scudder
Variable Life Investment Fund and which it will call "Flexible Premium
Variable Deferred Annuities" (the "Contracts"), and the Contracts have
been registered under the Securities Act of 1933 (the "Securities Act");
and
WHEREAS, the Variable Account is a segregated asset account
established and maintained by Charter National pursuant to the laws of the
State of Missouri and is a unit investment trust registered with the
Securities and Exchange Commission (the "SEC"), and payments under each
Contract will be allocated at the discretion of the owner of the Contract
(the "Owner") to one or more subaccounts (the "Subaccounts") of the
Variable Account; and
WHEREAS, CNL, a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Securities Exchange Act"), is the principal
underwriter of the Contracts and, as such, wishes to retain Scudder, a
broker-dealer registered under the Securities Exchange Act, to advertise
and be the sole agent in connection with the solicitation of applicants to
purchase the Contracts, and Scudder has agreed to advertise and be the
sole agent in connection with the solicitation of applicants to purchase
the Contracts.
WHEREAS, Charter National, as the insurance company issuing the
Contracts, wishes to appoint Scudder and certain of its subsidiaries
("insurance agency subsidiaries"), which are licensed or qualified to be
licensed as insurance agents, to be its insurance agents in connection
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<PAGE>
with the solicitation of applicants to purchase the Contracts, and Scudder
and the insurance agency subsidiaries have agreed to be insurance agents
of Charter National in connection with the solicitation of applicants to
purchase the Contracts.
WHEREAS, Scudder, in its sole discretion, has chosen to fulfill
certain of its responsibilities and obligations under this Agreement by
acting through the insurance agency subsidiaries or other affiliates, and
Charter National and CNL have no objection to this arrangement.
WHEREAS, Charter National and CNL wish to retain Scudder to perform
certain administrative services for Charter National and CNL and Scudder
wishes to perform such services.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration the sufficiency of which is hereby expressly
acknowledged, the parties hereto agree as follows:
1. Appointment of Scudder.
Charter National, as the insurance company hereby appoints Scudder and the
insurance agency subsidiaries to be its insurance agents in connection
with the solicitation of applicants to purchase the Contracts and Scudder
and the insurance agency subsidiaries accept such appointment. CNL, as
the principal underwriter for the Contracts, hereby appoints Scudder to be
its sole agent in connection with the solicitation of applicants to
purchase the Contracts and Scudder accepts such appointment.
Charter National and CNL hereby appoint Scudder to provide them with
administrative services (the "Subject Services"). The Subject Services
shall include, but not be limited to, assisting applicants who purchase
Contracts in setting up new accounts, assisting in the preparation of
account statements, reports and other communications with Owners,
assisting
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in the transferring of funds between mutual funds associated with
Scudder and the Charter National Variable Account (the "Variable
Account"), and answering customer service inquiries directed to Scudder.
2. Authority and Duties of Scudder.
For purposes of complying with sections 2.1 and 2.2, Scudder shall include
all subsidiaries of Scudder organized to solicit applicants to purchase
the Contracts.
2.1 Authorization.
Scudder is hereby authorized to solicit applications for the purchase of
the Contrasts through direct mail, media advertising and sales personnel
(individually a "Telemarketing Employee" and collectively "Telemarketing
Personnel") in such states where Scudder is qualified to do business and,
where necessary, Scudder and its Telemarketing Personnel are licensed
under the state insurance laws and the state securities authorities. This
authorization is exclusive and is limited to the states in which Charter
National has variable annuity authority and the Contract is approved for
sale. Such states are listed on Schedule A hereto and Scudder shall
notify CNL and Charter in writing of those states in which Scudder intends
to solicit applicants.
2.2 Licensing of Representatives
Charter National and CNL shall assist Scudder in fulfilling the insurance
licensing requirements of any state designated by Scudder and shall assist
Scudder in the licensing of Telemarketing Personnel under applicable
insurance laws to sell the Contracts. Scudder shall assume all costs in
connection with the licensing of Scudder or any of its telemarketing
personnel and will reimburse Charter National for any fees required in the
insurance licensing of Scudder or its Telemarketing Personnel.
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2.3 Applications for Contracts.
All applications for Contracts shall be made on application forms prepared
by Charter National, and shall be sent by the applicants directly to
Charter. All applications are subject to acceptance or rejection by
Charter National at its sole discretion.
2.4 Prospectuses, Etc.
Scudder shall be provided with prospectuses relating to the Contracts and
such other material as Charter National and Scudder determine between them
to be necessary or desirable for use in connection with sales of the
Contracts. No representations in connection with the sales of the
Contracts, other than those contained in the Prospectus, approved sales
literature, or approved advertising applicable to the Contracts, shall be
made by Scudder or its representatives.
2.5 Advertising.
Scudder shall be responsible for promoting and advertising the Contracts
to prospective applicants. The amount and types of sales literature and
advertising employed by Scudder, which may but will not necessarily
include brochures, letters, illustrations and other similar materials
transmitted directly to potential applicants or published in print or
audio-visual media, shall be determined by Scudder, but only after
consultation with and subject to approval by Charter National and CNL,
which approval will not be unreasonably withheld. The sales literature
and advertising employed by Scudder shall not contain any information
regarding Charter National, CNL, the Variable Account or any of their
affiliates other than information, including the prospectus for the
Contracts, supplied to Scudder by Charter National in writing. Scudder
shall be responsible for filing with the NASD any sales literature and
advertising employed and agrees to provide Charter with copies of all
material submitted to the NASD as well as any NASD comments. Charter
National shall be responsible for filing sales and advertising material
with any States which require the receipt or approval of such material.
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2.6 Offering and Advertising Expenses.
Scudder will pay all advertising costs relating to the offering and
advertising of the Contracts. During the first twelve months (or longer
period if agreed by Scudder and Charter National) that this Agreement is
in effect, CNL will reimburse Scudder for 50% of all expenses incurred in
connection with the offering and advertising of the Contracts, which will
include the cost of printing prospectuses. The total reimbursement by CNL
shall not exceed $600,000. During the second, third and fourth years that
this Agreement is in effect, Scudder shall expend not less than 0.40%
times the net asset value of the Variable Account attributable to the
Contracts at the end of the preceding year in connection with the offering
and advertising of the Contracts, including the printing of prospectuses
except those delivered to Owners of the Contracts.
Expenses relating to the preparation of the Scudder Variable Life
Investment Fund prospectus will be paid by Scudder. Expenses relating to
the preparation of the Contracts prospectus will be paid by Charter
National. After this agreement has been in effect for 12 months, Scudder
will pay for the printing of all prospectuses and will be reimbursed by
Charter for those prospectuses to be delivered to Owners of the Contracts.
2.7 Confirmations
CNL, as agent for Scudder, will confirm to the applicant in accordance
with Rule 10b-10 under the Securities Exchange Act the initial allocation
of premiums to the Subaccounts, the issuance of the Contract and such
other information required by Rule 10b-10 or administrative
interpretations thereunder. CNL will also notify the applicant that
Scudder was the broker-dealer through which the applicant was solicited
and confirm certain subsequent Contract transactions.
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2.8 Maintenance of Books and Records.
Charter National, CNL, the Variable Account and Scudder agree to keep all
records required by federal and state laws, to maintain books, accounts
and records so as to clearly and accurately disclose the precise nature
and details of the transactions, and to assist one another in the timely
preparation of records and reports.
2.9 Regulatory matters.
Charter National, CNL, the Variable Account and Scudder shall each submit
to all regulatory and administrative bodies which have jurisdiction over
the Contracts or persons soliciting their purchase any information,
reports or other material required pursuant to applicable laws or
regulations.
2.10 Reporting.
Each party hereto shall promptly furnish to any other party hereto any
reports and information which such other party may request for the purpose
of meeting reporting and recordkeeping requirements under the insurance
laws of the state of Missouri and any other state or jurisdiction and
under the federal or state securities laws or the rules of the National
Association of Securities Dealers, Inc. (the "NASD").
2.11 Notification of Complaints.
Charter National and CNL shall immediately notify Scudder, and Scudder
shall immediately notify Charter National and CNL, at the address in the
notice provision of this Agreement, of any sales-related or other complaint
or grievance relating to the Contracts or the transactions contemplated
herein which shall come to their attention, and shall promptly reduce such
notice to writing if oral. Charter National, CNL and Scudder shall
promptly furnish to the other party all written materials in connection
with any such complaints or grievances and will cooperate with each other
in the investigation of such complaints or grievances.
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2.12 Notification of Regulatory Proceedings.
Charter National shall immediately notify Scudder, at the address in the
notice provision of this Agreement, of (i) the issuance by any regulatory
body of any stop order with respect to the registration statement or any
prospectus relating to the Contracts, (ii) any request by the SEC for any
amendment to such registration statement or any prospectus, or (iii) the
initiation of any proceedings for that purpose or for any other purpose
relating to the registration or offering of the Contracts, and of any
other action or circumstances that may prevent the lawful offer or sale of
any of the Contracts in any state or jurisdiction. Charter National will
make every reasonable effort to prevent the issuance of any stop order and
if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
CNL shall immediately notify Scudder, at the address in the notice
provision of this Agreement, of the issuance by any regulatory body of any
order with respect to the operation or business of CNL, or the initiation
of any proceeding for any purpose relating to the sale of the Contracts,
and of any other actions or circumstances that may prevent the lawful
offer or sale of any of the Contracts in any state or jurisdiction.
Scudder shall immediately notify Charter National, at the address in the
notice provision of this Agreement, of the issuance by any regulatory body
of any order with respect to the operation or business of Scudder, or the
initiation of any proceeding for any purpose relating to the sale of the
Contracts, and of any other actions or circumstances that may prevent the
lawful offer or sale of any of the Contracts in any state or jurisdiction.
In addition, Scudder shall promptly advise Charter National if any of its
Telemarketing Personnel are subject to any proceedings or are sanctioned
or suspended by the NASD or any state or other jurisdiction.
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2.13 Non-Solicitation.
Neither Charter National nor CNL shall, either while this Agreement is in
force or after its termination, 1). contact applicants for the Contracts
solicited by Scudder for the purpose of inducing them to purchase, other
than the Contract described herein, any of its products or those of their
affiliates; 2). advise or induce Owners of Contracts solicited by Scudder
to surrender their Contracts or advise them to purchase other Contracts
whose subaccounts invest in funds which are not managed by Scudder; 3).
sell or disclose in any manner a list, partial or complete, of the
prospective owners of the Contracts solicited by Scudder or its
Telemarketing Personnel; except for as follows:
(a) as may be required pursuant to federal or state laws or
regulations, or NASD rules,
(b) as may occur inadvertently rather than as a pattern of conduct,
(c) with Scudder's prior written consent, or
(d) pursuant to an order of the Securities and Exchange Commission
(including any action taken pursuant to an undertaking required by such
order).
2.14 Relationship Between the Parties.
Charter National, the Variable Account, CNL and Scudder are independent
contractors. Nothing contained in this Agreement shall create, or shall
be construed to create, the relationship of an employer and employee
between any of Charter National, the Variable Account, CNL and Scudder.
2.15 Violation of Law.
Nothing contained in this Agreement shall require Charter National, CNL,
the Variable Account, Scudder or the Fund to do anything which, in its
judgment, would be a violation of any federal or state law or regulation
or NASD rule applicable to it.
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2.16 Consent to Provide Additional Fund Options
While this agreement is in effect and upon mutual consent by Charter
National and Scudder additional Fund options may be made available to
Owners of Contracts solicited by Scudder.
3. Compensation.
3.1 Compensation Payable to Scudder.
(a). CNL shall pay Scudder compensation for the marketing and
solicitation services to be provided by Scudder hereunder, which
compensation shall be equal to .25% on an annual basis of the daily net
asset value of the Variable Account attributable to the Contracts, such
amount to be payable within 30 days after the end of each month.
(b). CNL shall pay Scudder a fee for Scudder's performance of Subject
Services described in Section 1 equal to .15% on an annual basis of the
daily net asset value of the Variable Account attributable to the
Contracts, such amount to be payable within 30 days after the end of each
month.
3.2 Upon Termination.
Scudder shall continue to receive the compensation described in Section
3.1 (a) until such time as all Contracts sold by Scudder under this
agreement cease to have an interest in the Variable Account.
In the event Scudder terminates this agreement or materially breaches this
agreement as described in Section 10.5 prior to fulfilling its obligation
under Section 2.6 to incur marketing expenditures of not less than 0.40%
times the net asset value of the Variable Account attributable to the
Contracts in the second, third and fourth years of this agreement, any
amount not spent by Scudder with respect to this obligation will offset
compensation due Scudder under Section 3.1 (a).
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Scudder and its affiliates retain all rights, whether created by statute
or common law, to the term "Scudder" and to all trademarks, tradenames,
service marks and other similar rights incorporating the term "Scudder."
Charter National agrees that upon termination of this agreement Charter
National will discontinue the use of the term "Scudder" in the marketing
name of the Contracts described herein.
4. Representations and Warranties of Charter National and CNL.
4.1 Authority.
Each of Charter National, CNL and the Variable Account represents and
warrants to Scudder that it has full power and authority to enter into
this Agreement and that it has all appropriate licenses to carry on its
business as contemplated hereby and Charter National represents that it
has full power and authority to issue the Contracts.
4.2 Registration Statements, Prospectuses, the Variable Account and
CNL.
Charter National represents and warrants to Scudder as follows, with
respect to each Contract:
(a) Charter National has filed with the SEC a registration statement
under the Securities Act as described in Schedule B, which has become
effective with the SEC (the "Contracts Registration Statement").
(b) The prospectus and Statement of Additional Information relating
to each Contract contained in the Contracts Registration Statement,
including any supplements or amendments thereto (the "Contracts
Prospectus"), contains all statements and information which are required
to be stated therein by the Securities Act and the Investment Company Act
and the rules and regulations thereunder (the "Regulations") and in all
respects conforms to the requirements thereof, and the Contracts
Prospectus does not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that the
foregoing representations shall
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not apply to information contained in or omitted from the Contracts
Prospectus in reliance upon, and in conformity with, information furnished
to Charter National in writing by Scudder or the Fund specifically for use
in the preparation thereof.
(c) The Variable Account has been duly established and is validly
existing under the Insurance Law of the State of Missouri and is
registered as a unit investment trust with the SEC.
(d) CNL is registered as a broker-dealer under the Securities
Exchange Act and in such states and other jurisdictions as the business
transacted by it requires, is a member in good standing of the NASD, has
obtained any other approvals, licenses, authorizations, orders or consents
which are necessary to enter into and carry out all transactions
contemplated by this Agreement, and is bonded as required by all
applicable laws and regulations.
5. Representations and Warranties of Scudder.
5.1 Authority.
Scudder represents and warrants to Charter National, CNL and the Variable
Account that it has full power and authority to enter into this Agreement.
5.2 Licenses.
Scudder represents and warrants to Charter National, CNL and the Variable
Account that it has notified CNL, pursuant to Section 2.1 hereof, of all
jurisdictions in which Scudder will solicit applicants, and it has taken
all actions in order to qualify to solicit applicants in those states, and
that it is registered as a broker dealer under the Securities Exchange Act
and in such states and other jurisdictions as the business transacted by
it requires, is a member in good standing of the NASD, has obtained any
other approvals, licenses, authorizations, orders or consents which are
necessary to enter into and carry out all transactions contemplated by
this Agreement, and is bonded as required by all applicable laws and
regulations.
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5.3 Qualifications of Telemarketing Personnel.
Scudder represents and warrants to Charter National, CNL and the Variable
Account that each Telemarketing Employee receiving compensation for
soliciting applicants for the Contracts or answering customer inquiries
will be a registered representative or principal of Scudder and shall
possess all licenses necessary or appropriate to sell life insurance
and/or variable contracts in the state of such signing or solicitation,
and will have received an appropriate appointment or license by or through
Scudder insurance agencies or brokers and, where necessary, through
Charter National and a level of qualification with the NASD appropriate
for the Contracts.
5.4 Representations Upon Assignment.
If Scudder assigns this Agreement as provided in paragraph 11.1 below, the
representations made in paragraphs 5.1 through 5.3 above shall be read to
apply to the affiliate where the context so requires.
6. Indemnification.
6.1 Of Scudder With Respect to the Contracts Prospectus.
Charter National will indemnify and hold harmless Scudder and any
insurance agency or broker subsidiaries of Scudder organized to sell the
Contracts against any and all losses, claims, damages or liabilities (or
actions in respect thereof), to which Scudder may become subject, 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 any material fact contained in the Contracts
Prospectus, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will
reimburse Scudder for any legal or other expenses reasonably incurred by
it in connection with investigating or defending against such loss, claim,
damage, liability or action in respect thereof; provided, however, that
Charter National
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shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in the Contracts Registration Statement or any such amendment or
supplement in reliance upon and in conformity with information furnished
in writing by Scudder specifically for use in the preparation thereof.
Charter National shall not indemnify Scudder for any action where an
applicant for any of the Contracts was not furnished or sent or given, at
or prior to written confirmation of the sale of the Contract, a copy of
the appropriate Contracts Prospectus, or if requested, the related
Statement of Additional Information, and any supplements or amendments to
either furnished to Scudder by Charter National.
The foregoing indemnities shall, upon the same terms and conditions,
extend to and inure to the benefit of each director and officer of Scudder
and any person controlling Scudder within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act.
6.2 Of Charter National, CNL and the Variable Account With Respect
to the Scudder Variable Life Investment Fund Prospectus.
Scudder will indemnify and hold harmless Charter National against any and
all losses, claims, damages or liabilities (or actions in respect thereof),
to which Charter National may become subject, 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 any
material fact contained in the Fund Prospectus, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse Charter National for any legal
or other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability or
action in respect thereof.
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The foregoing indemnities shall, upon the same terms and conditions,
extend to and inure to the benefit of each director and officer of Charter
National and any person controlling Charter National within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act.
6.3 Of Charter National, CNL and the Variable Account With Respect
to Negligence.
Scudder shall indemnify and hold harmless Charter National, CNL and the
Variable Account from any losses, claims, damages or liabilities (or
actions in respect thereof) to which Charter National, CNL or the Variable
Account may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or result from
negligent, fraudulent or unauthorized acts or omissions by Scudder, its
employees or Telemarketing Personnel or principals, including but not
limited to negligent, fraudulent or unauthorized solicitation of
applications for the Contracts, except as stated herein.
The foregoing indemnities shall, upon the same terms and conditions,
extend to and inure to the benefit of each director and officer of Charter
National, CNL and the Variable Account and any person controlling Charter
National, CNL and the Variable Account within the meaning of Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act.
6.4 Of Scudder With Respect to Negligence.
Charter National shall indemnify and hold harmless Scudder against any
losses, claims, damages or liabilities (or actions in respect thereof) to
which Scudder may become subject, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or result from
negligent, fraudulent or unauthorized acts or omissions by Charter
National, CNL or the Variable Account or the employees of any of them.
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The foregoing indemnities shall, upon the same terms and conditions,
extend to and inure to the benefit of each director and officer of Scudder
and any person controlling Scudder within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act.
6.5 Of Scudder with Respect to the Contracts.
Charter National shall indemnify and hold harmless Scudder against any
losses, claims, damages or liabilities (or actions in respect thereof) to
which Scudder may become subject, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or result from
Charter National's performance of, or failure to perform, its duties under
the Contracts or Charter National's alleged performance, or alleged
failure to perform, its duties under the Contracts.
6.6 Notice of Actions.
Promptly after receipt by an indemnified party of notice of the
commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may otherwise have to any indemnified party otherwise
than on account of its indemnity agreement contained in this paragraph.
In case any such action shall be brought against any indemnified party,
and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party).
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall
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not be liable to such indemnified party for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
7. Regulations.
All parties agree to observe and comply with the existing laws and rules
or regulations of applicable local, state, or federal regulatory
authorities and with those which may be enacted or adopted during the term
of this Agreement regulating the business contemplated hereby in any
jurisdiction in which the business described herein is to be transacted.
8. Suitability.
CNL will require that the applicant complete the Financial Questionnaire,
Form #U4134, for premium amounts in excess of $250,000. CNL may, at its
sole discretion, require Form #U4134 for lesser amounts.
9. Non-Exclusivity.
The services of Scudder, Charter National, and CNL hereunder are not to be
deemed exclusive, and each party shall be free to render similar services
to others so long as its services hereunder are not impaired or interfered
with thereby. Charter National, CNL, and Scudder agree that none of the
parties to this agreement have any property rights as to marketing
approach or product design.
10. Effectiveness and Termination.
10.1 Effectiveness.
This Agreement shall be effective upon execution by the parties and will
remain in effect unless terminated as provided in paragraph 10.2, 10.3, or
11.1 below.
10.2 Termination.
This Agreement may be terminated by either Charter National or Scudder at
any time by ninety (90) days' written notice to the other.
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10.3 Termination for Cause.
In the event of any material breach (as defined in paragraphs 10.4 and
10.5 below) of this Agreement by any party, the aggrieved party may, at
its option, terminate this Agreement by giving notice of termination,
effective upon the date specified in such termination notice. This remedy
shall be in addition to any other remedies available under this Agreement
or at law.
10.4 Material Breach by Charter National, CNL or the Variable
Account.
Charter National, CNL and the Variable Account shall be deemed to have
materially breached this Agreement and failed to perform hereunder upon
the occurrence of any of the following events:
(a) Charter National, CNL or the Variable Account shall become
insolvent or otherwise admit in writing its inability to pay its debts
when they become due, become bankrupt, seek protection under any law for
the protection of insolvents, or have a receiver or conservator appointed
for it under any law pertaining to the insolvency of Charter, CNL or the
Variable Account; or
(b) Charter National, CNL or the Variable Account shall breach any
material provision of this Agreement and such breach shall remain uncured
for more than thirty (30) days following Charter National's receipt of
Scudder's written notice of such breach.
10.5 Material Breach by Scudder.
Scudder shall be deemed to have materially breached this Agreement and
failed to perform hereunder upon the occurrence of any of the following
events:
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(a) Scudder shall become insolvent or otherwise admit in writing its
inability to pay its debts when they become due, become bankrupt, seek
protection under any law for the protection of insolvents, or have a
receiver or conservator appointed for it under any law pertaining to the
insolvency of Scudder, or
(b) Scudder shall breach any material provision of this Agreement and
such breach shall remain uncured for more than thirty (30) days following
Scudder's receipt of Charter National's written notice of such breach.
10.6 Survival Provisions.
Upon termination of this Agreement, the provisions of the following shall
survive:
(a) paragraphs 2.6, 2.10, 2.11, 2.12, 2.13, 3.1 (a), and 3.2
(b) Sections 4, 5 and 6,
(c) this paragraph 10.6, and
(d) Section 11.
11. Miscellaneous.
11.1 Benefit.
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns, provided that
neither Scudder nor Charter National may assign this Agreement or any
rights or obligations hereunder (except to an affiliate in order to comply
with applicable laws or regulations) and this Agreement will terminate
automatically in the event of a purported assignment by either such party.
If this Agreement is assigned to an affiliate as permitted herein, the
assignor shall not be relieved of its obligations hereunder.
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11.2 Notices.
All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage
prepaid, addressed as follows:
(a) If to Charter National:
Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63105
(b) If to CNL:
CNL, Inc.
8301 Maryland Avenue
St. Louis, Missouri 63105
(c) If to the Variable Account:
Charter National Variable Account
8301 Maryland Ave.
St. Louis, Missouri 63105
(d) If to Scudder
Scudder Funds Distributors, Inc.
175 Federal Street
Boston, Massachusetts 02110
or to such other address as Charter national CNL, the Variable Account or
Scudder shall designate by written notice to the others.
11.3 Limitations.
No party other than Charter National shall have the authority on behalf of
Charter National to make, alter, or discharge any Contract issued by
Charter National; to waive any forfeiture or to grant or permit any
extension of time for making any premium payments; to alter
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the forms which Charter National may prescribe or to substitute other
forms in place of those prescribed by Charter National; or to enter into
any proceeding in a court of law or before a regulatory agency in the name
of or on behalf of Charter National.
11.4 Waiver.
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of
the conditions, but the same shall remain in full force and effect. No
waiver of any of the provisions of this Agreement shall be deemed to or
shall constitute a waiver of any other provisions, whether or not similar,
nor shall any waiver constitute a continuing waiver.
11.5 Applicable Law.
This Agreement and the rights and obligations of the parties created
hereby shall be construed in accordance with the laws of the State of
Massachusetts.
11.6 Enforceability.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
11.7 Entire Agreement.
The parties declare that there are not other oral or other agreements or
understandings among them affecting this Agreement or relating to the
selling or servicing of the Contracts, except as disclosed herein. This
Agreement supersedes all prior agreements among the parties and
constitutes the entire Agreement among the parties.
This Agreement may be modified only if in writing and if executed by those
persons authorized to enter into Agreements on behalf of the parties
hereto.
11.8 Miscellaneous
The headings in this Agreement are for purposes of reference only and
shall not limit or define the meaning hereof.
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This Agreement may be executed in several counterparts, each of which
is an original, but all of which together shall constitute one instrument.
IN WITNESS, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers as of the date first above written.
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SCUDDER FUND DISTRIBUTORS, INC.
By: ______________________________
/S/David S. Lee
Name: David S. Lee
Title: President
CHARTER NATIONAL LIFE INSURANCE COMPANY
By: ______________________________
/S/ G. Thomas Mitchell
G. Thomas Mitchell
Executive Vice President
CNL, Inc.
By: ___________________________
/S/ Charles M. Butts, Jr.
Charles M. Butts, Jr.
Vice President
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CHARTER NATIONAL VARIABLE ANNUITY ACCOUNT
By: CHARTER NATIONAL LIFE INSURANCE COMPANY
By: ____________________________
/S/ David T.Cumming
David T.Cumming
President
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Schedule A
Listing of States in which Charter National has Variable Authority and the
Contract is approved.
Alabama Nebraska
Alaska Nevada
Arizona New Hampshire
Arkansas New Mexico
Colorado North Carolina
Delaware North Dakota
District of Columbia Ohio
Florida Oklahoma
Georgia Oregon
Hawaii Rhode Island
Idaho South Carolina
Indiana South Dakota
Iowa Tennessee
Kansas Utah
Kentucky Vermont
Louisiana Virginia
Maryland Washington
Michigan West Virginia
Minnesota Wisconsin
Mississippi Wyoming
Missouri
September 30, 1988
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SCHEDULE A
Charter National shall pay CNL the following commissions with respect to
the Contracts sold as a percentage of premiums received:
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
Policy Form # 1258
Commissions payable for contracts issued:
A commission of .5% on new and additional payments. The commission is
payable monthly.
This Schedule of Commissions will take effect on the date shown below.
CHARTER NATIONAL LIFE INSURANCE COMPANY
By_______________________________
/S/ Charles M. Butts, Jr.
Title: Senior Vice President
CNL, INC
By_______________________________
/S/ Kathleen A. Urbanowicz
Title: Vice President
Effective Date: 1/25/91
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT (the "Agreement") made by and between SCUDDER
VARIABLE LIFE INVESTMENT FUND (the "Fund"), a Massachusetts business trust
created under a Declaration of Trust dated March 15, 1985, as amended, with
a principal place of business in Boston, Massachusetts and CHARTER NATIONAL
LIFE INSURANCE COMPANY, a Missouri corporation (the "Company"), with a
principal place of business in St. Louis, Missouri, on behalf of Charter
National Variable Annuity Account and Charter National Variable Account,
each a separate account of the Company, and any other separate account of
the Company as designated by the Company from time to time, upon written
notice to the Fund in accordance with Section 10 herein (together, the
"Account").
WHEREAS, the Fund acts as the investment vehicle for the separate
accounts established for variable life insurance policies and variable
annuity contracts (collectively referred to herein as "Variable Insurance
Products") to be offered by insurance companies which have entered into
participation agreements substantially identical to this Agreement
("Participating Insurance Companies") and their affiliated insurance
companies; and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares of beneficial interest ("Shares"), and additional series
of Shares may be established, each designated a "Portfolio" and
representing the interest in a particular managed portfolio of securities;
and
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WHEREAS, - it is in the best interest of Participating Insurance
Companies to make capital contributions if required so that the annual
expenses of each Portfolio of the Fund in which a Participating Insurance
Company is a shareholder will not exceed a fixed percentage of the
Portfolio's average annual net assets; and
WHEREAS, the Parties desire to evidence their agreement as to certain
other matters,
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. Additional Definition.
For the purposes of this Agreement, the following definitions shall
apply:
(a) The "expenses of a Portfolio" for any fiscal year shall mean
the expenses for such fiscal year as shown in the Statement of Operations
(or similar report) certified by the Fund's independent public accountants;
(b) A "Portfolio's average daily net assets" for each fiscal year
shall mean the sum of the net asset values determined throughout the year
for the purpose of determining net asset value per Share, divided by the
number of such determinations during such year;
(c) The Company's "Required Contribution" on behalf of the Account in
respect of a Portfolio for any fiscal year shall mean an amount equal to
the expenses of that Portfolio for such
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year minus the below-indicated percentage of that Portfolio's average daily
net assets for the year:
International Portfolio 1.50%
Each other Portfolio 0.75%
multiplied by a fraction the denominator of which is the average daily net
assets of that Portfolio and the numerator of which is the average daily
net asset value of the Shares of that Portfolio owned by the Account
(referred to herein as a "Participating Shareholder"). The Company's
Required Contribution in respect of a Portfolio shall be pro-rated based on
the number of business days on which this Agreement is in effect for
periods of less than a fiscal year.
(d) The "average daily net asset value of the Shares of the
Portfolio" owned by the Account for any fiscal year of the Fund shall mean
the greater of (i) $500,000 or (ii) the sum of the aggregate net asset
values of the Shares so owned determined during the fiscal year, as of each
determination of the net asset value per Share, divided by the total number
of determinations of net asset value during such year.
(e) "Shares" means shares of beneficial interest, without par
value, of any Portfolio, now or hereafter created, of the Fund.
2. Capitol Contribution.
The Company on behalf of the Account shall, within sixty days after
the end of each fiscal year of the Fund, make a capital contribution to the
Fund in respect of each Portfolio equal to the Required Contribution for
that Portfolio for such year; provided,
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however, that in the event that both clauses (i) and (ii) of paragraph (d)
of Section 1 of this Agreement or similar agreements are applicable to
different Participating Insurance Companies during the same fiscal year,
there shall be a proportionate reduction of the Required Contribution of
each Participating Insurance Company to which said clause (ii) is
applicable so that the total of all required capital contributions to the
Fund on behalf of any Portfolio is not greater than the excess of the
expenses of that Portfolio for that fiscal year less the percentage of that
Portfolio's total expenses set forth in paragraph (c) of Section 1 of this
Agreement for such fiscal year.
3. Duty of Fund to Sell.
The Fund shall make its shares available for purchase at the
applicable net asset value per Share by Participating Insurance
Companies and their affiliates and separate accounts on those days on which
the Fund calculates its net asset value pursuant to rules of the Securities
and Exchange Commission; provided, however, that the Trustees of the Fund
may refuse to sell Shares of any Portfolio to any person, or suspend or
terminate the offering of Shares of any Portfolio, if such action is
required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Trustees, necessary in the best interest of the
shareholders of any Portfolio.
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4. Requirement to Execute Participation Agreement; Requests.
Each Participating Insurance Company shall, prior to purchasing Shares
in the Fund, execute and deliver a participation agreement in a form
substantially identical to this Agreement.
The Fund shall make available, upon written request from the
Participating Insurance Company given in accordance with Paragraph 10, to
each Participating Insurance Company which has executed an Agreement and
which Agreement has not been terminated pursuant to Paragraph 8 (i) a list
of all other Participating Insurance Companies, and (ii) a copy of the
Agreement as executed by any other Participating Insurance Company.
The Fund shall also make available upon request to each Participating
Insurance Company which has executed an Agreement and which Agreement has
not been terminated pursuant to Paragraph 8, the net asset value of any
Portfolio of the Fund as of any date upon which the Fund calculates the net
asset value of its Portfolios for the purpose of purchase and redemption of
Shares.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Fund and
each of its Trustees and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the Securities Act of 1933 (the
"Act") against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses), arising out of the
acquisition of any Shares by any person, to which the Fund or such
Trustees, officers or controlling person may become subject under the Act,
under any other statute, at common law or otherwise, which (i) may be based
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upon any wrongful act by the Company, any of its employees or
representatives, any affiliate of or any person acting on behalf of the
Company or a principal underwriter of its insurance products, or (ii) may
be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement or prospectus covering
Shares or any amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
a statement or omission was made in reliance upon information furnished to
the Fund by the Company, or (iii) may be based on any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement or prospectus covering insurance products sold by the Company or
any insurance company which is an affiliate thereof, or any amendments or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement or statements therein not misleading, unless such statement or
omission was made in reliance upon information furnished to the Company or
such affiliate by or on behalf of the Fund; provided, however, that in no
case (i) is the Company's indemnity in favor of a Trustee or officer or any
other person deemed to protect such Trustee or officer or other person
against any liability to which any such person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard of
obligations and duties under
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this Agreement or (ii) is the Company to be liable under its indemnity
agreement contained in this Paragraph 5 with respect to any claim made
against the Fund or any person indemnified unless the Fund or such person,
as the case may be, shall have notified the Company in writing pursuant to
Paragraph 10 within a reasonable time after the summons or other first
legal process giving information of the nature of the claims shall have
been served upon the Fund or upon such person (or after the Fund or such
person shall have received notice of such service on any designated agent),
but failure to notify the Company of any such claim shall not relieve the
Company from any liability which it has to the Fund or any person against
whom such action is brought otherwise than on account of its indemnity
agreement contained in this Paragraph 5. The Company shall be entitled to
participate, at its own expense, in the defense, or, if it so elects, to
assume the defense of any suit brought to enforce any such liability, but,
if it elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to the Fund, to its officers and
Trustees, or to any controlling person or persons, defendant or defendants
in the suit. In the event that the Company elects to assume the defense of
any such suit and retain such counsel, the Fund, such officers and Trustees
or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Company does not elect to assume the defense of any
such suit, the Company will reimburse the Fund, such officers and Trustees
or
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controlling person or persons, defendant or defendants in such suit, for
the reasonable fees and expenses of any counsel retained by them. The
Company agrees promptly to notify the Fund pursuant to Paragraph 10 of the
commencement of any litigation or proceedings against it in connection with
the issue and sale of any Shares.
(b) The Fund agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the Act against any and all
losses, claims, damages, liabilities or litigation (including legal and
other expenses) to which it or such directors, officers or controlling
person may become subject under the Act, under any other statute, at common
law or otherwise, arising out of the acquisition of any Shares by any
person which (i) may be based upon any wrongful act by the Fund, any of its
employees or representatives or a principal underwriter of the Fund, or
(ii) may be based upon any untrue statement or alleged untrue statement of
a material fact contained in a registration statement or prospectus
covering Shares or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading unless such statement or omission was made in reliance upon
information furnished to the Fund by the Company or (iii) may be based on
any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering insurance
products
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sold by the Company, or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or statements therein
not misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund; provided,
however, that in no case (i) is the Fund's indemnity in favor of a director
or officer or any other person deemed to protect such director or officer
or other person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of his duties or by reason of his reckless
disregard of obligations and duties under this Agreement or (ii) is the
Fund to be liable under its indemnity agreement in this Paragraph 5 with
respect to any claims made against the Company or any such director,
officer or controlling person, as the case may be, shall have notified the
Fund in writing pursuant to Paragraph 10 within a reasonable time after the
summons or other first legal process giving information of the nature of
the claim shall have been served upon it or upon such director, officer or
controlling person (or after the Company or such director, officer or
controlling person shall have received notice of such service on any
designated agent), but failure to notify the Fund of any claim shall not
relieve it from any liability which it may have to the person against whom
such action is brought otherwise than on account of its indemnity agreement
contained in
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this Paragraph. The Fund will be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but if the Fund elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Company, its directors, officers or controlling person
or persons, defendant or defendants, in the suit. In the event the Fund
elects to assume the defense of any such suit and retain such counsel, the
Company, its directors, officers or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and expenses of
any additional counsel retained by them, but, in case the Fund does not
elect to assume the defense of any such suit, it will reimburse the Company
or such directors, officers or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Fund agrees promptly to notify the Company pursuant
to Paragraph 10 of the commencement of any litigation or proceedings
against it or any of its officers or Trustees in connection with the
issuance or sale of any Shares.
6. Procedure for Resolving Irreconcilable Conflicts.
(a) The Trustees of the Fund will monitor the operations of the
Fund for the existence of any material irreconcilable conflict among the
interests of all the contract holders and policy owners of Variable
Insurance Products (the "Participants") of all separate accounts investing
in the Fund. An irreconcilable material conflict may arise, among other
things, from: (a) an action by any
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state insurance regulatory authority; (b) a change in applicable insurance
laws or regulations; (c) a tax ruling or provision of the Internal Revenue
Code or the regulations thereunder; (d) any other development relating to
the tax treatment of insurers, contract holders or policy owners or
beneficiaries of Variable Insurance Products; (e) the manner in which the
investments of any Portfolio are being managed; (f) a difference in voting
instructions given by variable annuity contract holders, on the one hand,
and variable life insurance policy owners, on the other hand, or by the
contract holders or policy owners of different participating insurance
companies; or (g) a decision by an insurer to override the voting
instructions of Participants.
(b) The Company will be responsible for reporting any potential or
existing conflicts to the Trustees of the Fund. The Company will be
responsible for assisting the Trustees in carrying out their
responsibilities under this Paragraph 6(b) and Paragraph 6(a), by providing
the Trustees with all information reasonably necessary for the Trustees to
consider the issues raised. The Fund will also request its investment
adviser to report to the Trustees any such conflict which comes to the
attention of the adviser.
(c) If it is determined by a majority of the Trustees of the Fund,
or a majority of its disinterested Trustees, that a material irreconcilable
conflict exists involving the Company, the Company shall, at its expense,
and to the extent reasonably practicable (as determined by a majority of
the disinterested Trustees), take whatever steps are necessary to eliminate
the irreconcilable
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material conflict, including withdrawing the assets allocable to
some or all of the separate accounts from the Fund or any Portfolio and
reinvesting such assets in a different investment medium, including another
Portfolio of the Fund, offering to the affected Participants the option of
making such a change or establishing a new funding medium including a
registered investment company.
For purposes of this Paragraph 6(c), the Trustees, or the
disinterested Trustees, shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict. In the event of
a determination of the existence of an irreconcilable material conflict,
the Trustees shall cause the Fund to take such action, such as the
establishment of one or more additional Portfolios, as they in their sole
discretion determine to be in the interest of all shareholders and
Participants in view of all applicable factors, such as cost, feasibility,
tax, regulatory and other considerations. In no event will the Fund be
required by this Paragraph 6(c) to establish a new funding medium for any
variable contract or policy.
The Company shall not be required by this Paragraph 6(c) to establish
a new funding medium for any variable contract or policy if an offer to do
so has been declined by a vote of a majority of the Participants materially
adversely affected by the material irreconcilable conflict. The Company
will recommend to its Participants that they decline an offer to establish
a new funding medium only if the Company believes it is in the best
interest of the Participants.
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(d) The Trustees' determination of the existence of an irreconcilable
material conflict and its implications promptly shall be communicated to
all Participating Insurance Companies by written notice thereof delivered
or mailed, first class postage prepaid.
7. Voting Privileges.
The Company shall be responsible for assuring that its separate
account or accounts participating in the Fund shall use a calculation
method of voting procedures substantially the same as the following: those
Participants permitted to give instructions and the number of Shares for
which instructions may be given will be determined as of the record date
for the Fund shareholders' meeting, which shall not be more than 60 days
before the date of the meeting. Whether or not voting instructions are
actually given by a particular Participant, all Fund shares held in any
separate account or sub-account thereof and attributable to policies will
be voted for, against, or withheld from voting on any proposition in the
same proportion as (i) the aggregate record date cash value held in such
sub-account for policies giving instructions, respectively, to vote for,
against, or withhold votes on such proposition, bears to (ii) the aggregate
record date cash value held in the sub-account for all policies for which
voting instructions are received. Participants continued in effect under
lapse options will not be permitted to give voting instructions. Shares
held in any other insurance company general or separate account or sub-
account thereof will be voted in the proportion
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specified in the second preceding sentence for shares attributable to
policies.
8. Duration and Termination.
This Agreement shall remain in force one year from the date of its
execution (such date and any anniversary of such date being hereinafter
called a "Renegotiation Date"), and from year to year thereafter provided
that neither the Company nor the Fund shall have given written notice to
the other within thirty (30) days prior to a Renegotiation Date that it
desires to renegotiate the amount or contribution to capital due hereunder
("Renegotiation Notice"). In the event any other Participating Insurance
Company (which thereafter remains a Participating Insurance Company) shall
cease to be subject to the obligation to make capital contributions under
the terms of their respective Participation Agreement, this agreement will
remain in effect; however, the Company shall discontinue payment of capital
contributions as defined in paragraph (c) of Section 1 of this Agreement.
If a Renegotiation Notice is properly given as aforesaid and the Fund
and the Company shall fail, within sixty (60) days after the renegotiation
date, either to enter into an amendment to this Agreement or a written
acknowledgment that the Agreement shall continue in effect, this Agreement
shall terminate as of the one hundred twentieth day after such
Renegotiation Date. If this Agreement is so terminated, the Fund may, at
any time thereafter, automatically redeem the Shares of any Portfolio held
by a Participating Shareholder. This Agreement may be terminated at any
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time, at the option of either of the Company or the Fund, when neither the
Company, any insurance company nor the separate account or accounts of such
insurance company which is an affiliate thereof which is not a
Participating Insurance Company own any Shares of the Fund or may be
terminated by either party to the Agreement upon a determination by a
majority of the Trustees of the Fund, or a majority of its disinterested
Trustees, following certification thereof by a Participating Insurance
Company given in accordance with Paragraph 10 that an irreconcilable
conflict exists among the interests of (i) all contract holders and policy
holders of Variable Insurance Products of all separate accounts or (ii) the
interests of the Participating Insurance Companies investing in the Fund.
Notwithstanding anything to the contrary in this Agreement or its
termination as provided herein, the Company's obligation to make a capital
contribution to the Fund in accordance with this Agreement at the time in
effect shall continue (i) following a properly given Renegotiation Notice,
in the absence of agreement otherwise, until termination of this Agreement,
and (ii) (except termination due to the existence of an irreconcilable
conflict), following termination of this Agreement, until the later of the
anniversary of the date of this Agreement or the date on which the Company,
its separate account(s) or the separate account(s) of any affiliated
insurance company owns no Shares.
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9. Compliance.
The Fund will comply with the provisions of Section 4240(a) of the New
York Insurance Law.
Each Portfolio of the Fund will comply with the provisions of Section
817(h) of the Internal Revenue Code of 1986, as amended (the "Code"),
relating to diversification requirements for variable annuity, endowment
and life insurance contracts. Specifically, each Portfolio will comply
with either (i) the requirement of Section 817(h)(1) of the Code that its
assets be adequately diversified, or (ii) the "Safe Harbor for
Diversification" specified in Section 817(h)(2) of the Code, or (iii) the
diversification requirement of Section 817(h)(1) of the Code by having all
or part of its assets invested in U.S. Treasury securities which quality
for the "Special Rule for Investments in United States Obligations"
specified in Section 817(h)(3) of the Code.
The provisions of Paragraphs 6 and 7 of this Agreement shall be
interpreted in a manner consistent with any Rule or order of the Securities
and Exchange commission under the Investment Company Act of 1940, as
amended, applicable to the parties hereto.
No shares of any Portfolio of the Fund may be sold to the general
public.
10. Notices.
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party
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set forth below or at such other address as such party may from time to
time specify in writing to the other party.
If to the Fund:
Scudder Variable Life Investment Fund
175 Federal Street
Boston, Massachusetts 02110
(617) 482-3990
Attn.: David B. Watts
If to the Company:
Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63105
Attn.: Gregory R. Barstead
11. Massachusetts Law to Apply.
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
12. Miscellaneous.
The name "Scudder Variable Life Investment Fund" is the designation of
the Trustees for the time being under a Declaration of Trust dated March
15, 1985, as amended, and all persons dealing with the Fund must look
solely to the property of the Fund for the enforcement of any claims
against the Fund as neither the Trustees, officers, agents or shareholders
assume any personal liability for obligations entered into on behalf of the
Fund. No Portfolio shall be liable for any obligations properly
attributable to any other Portfolio.
The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
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This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
13. Entire Agreement.
This Agreement incorporates the entire understanding and agreement
among the parties hereto, and supersedes any and all prior understandings
and agreements between the parties hereto with respect to the subject
matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the 3rd
day of September, 1993.
SEAL SCUDDER VARIABLE LIFE
INVESTMENT FUND
By:__________________________
/S/ David B. Watts
David B. Watts
President
SEAL CHARTER NATIONAL LIFE
INSURANCE COMPANY
BY:___________________________
/S/Gregory R. Barstead
Its: Executive Vice President
<PAGE>
REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT (the "Agreement") made by and between SCUDDER,
STEVENS & CLARK LTD., a Delaware corporation ("SS&C"), with a principal
place of business in Boston, Massachusetts and CHARTER NATIONAL LIFE
INSURANCE COMPANY, a Missouri corporation (the "Company"), with a principal
place of business in St. Louis, Missouri.
WHEREAS, SS&C has caused to be organized Scudder Variable Life
Investment Fund (the "Fund"), a Massachusetts business trust created under
a Declaration of Trust dated March 15, 1985, the beneficial interest in
which is divided into several series, each designated a "Portfolio" and
representing the interest in a particular managed portfolio of securities;
and
WHEREAS, the purpose of the FUND is to act as the investment vehicle
for the separate accounts established for variable life insurance policies
and variable annuity contracts to be offered by insurance companies which
have entered into reimbursement agreements substantially identical to this
Agreement ("Participating Insurance Companies"); and
WHEREAS, it is in the best interest of the parties hereto for
Participating Insurance Companies, including the Company, to assume a
portion of the organization and other expenses incurred by SS&C in
connection with the FUND; and
WHEREAS, the parties desire to express their agreement as to certain
other matters;
<PAGE>
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. Additional Definitions.
For purposes of this Agreement, the following definitions shall apply:
(a) The "average annual net asset value of the Shares of each
Portfolio of the Fund" shall mean the sum of the aggregate net asset values
of the Shares of such Portfolio owned by the Company, the separate account
or accounts of the Company, and any insurance company or the separate
account or accounts of such insurance company which is an affiliate
thereof which is not a Participating Insurance Company (each individually
referred to herein as a "Participating Shareholder" or collectively as the
"Participating Shareholders") determined as of each determination of the
net asset value per Share of the Fund during the fiscal year, divided by
the number of such determinations during such year.
(b) "Shares" means shares of beneficial interest, without par
value, of any Portfolio, now or hereafter created, of the Fund.
2. Initial Reimbursement Fee.
Simultaneously with the execution of this Agreement, the Company has
paid to SS&C a fee ("Reimbursement Fee") in the
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amount of $10,000 in order partially to defray expenses incurred by SS&C in
connection with the organization of the Fund.
3. Annual Reimbursement Fee
For a period of five years from the date of this Agreement, the
Company shall in respect of each fiscal year of the Fund pay to SS&C a sum
equal to (i) $25,000 (or such lesser amount as is provided in the next
subsequent sentence) less (ii) the sum of the average annual net asset
value of the Shares of each Portfolio of the Fund held during such fiscal
year by the Participating Shareholders multiplied by the annual advisory
fee applicable to such Portfolio pursuant to an Investment Advisory
Agreement dated July 12, 1985 between SS&C and the Fund, or any superseding
or amended agreement. If this Agreement commences or terminates on a date
other than the first day of a fiscal year of the Fund, the amount of
$25,000 in the calculation for such year prescribed in the preceding
sentence shall be reduced in the proportion that the number of business
days in such fiscal year during which this Agreement is in effect bears to
the total number of business days in such fiscal year.
4. Fund Exclusive Funding Vehicle until Minimum Size Attained.
Until such time as the aggregate net assets of the Fund shall first
have reach $200,000,000, neither the Company nor any person controlling,
controlled by, or under common control with the Company, shall, during the
term of this Agreement and
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without the express written consent of SS&C, offer any variable life
insurance policy or variable annuity contract which permits the policy or
contract holder to designate that a portion of the premium be invested in,
or represent an investment in, directly or indirectly, securities of a
registered investment company other than the fund.
5. Access to Other Products.
SS&C shall permit a Participating Shareholder to participate in any
registered investment company other than the Fund which is intended as the
funding vehicle for insurance products and for which SS&C or an affiliate
of SS&C acts as investment adviser, on the same basis as other insurance
companies are permitted to participate in such a registered investment
company; This provision shall not require SS&C to make available to the
Company shares of any investment company which is organized solely as the
funding vehicle for insurance products offered by a single insurance
company or a group of affiliated insurance companies.
6. Right to Review and Approve Sales Materials.
The Company shall furnish, or shall cause to be furnished, to SS&C or
its designee, at least twenty days prior to its intended use, each piece of
promotional material in which SS&C or the Fund is named. No such material
shall be used unless SS&C or its designee shall have approved such use in
writing, or 20 days shall have elapsed without approval, rejection or
objection since receipt by SS&C or its designee of such material.
4 5091J
<PAGE>
SS&C shall furnish, or shall cause to be furnished, to the Company or
its designee, at least twenty days prior to its intended use, each piece of
promotional material in which the Company or its separate account(s) is
named. No such material shall be used unless the Company or its designee
shall have approved such use in writing, or 20 days shall have elapsed
without approval, rejection or objection since receipt by the Company or
its designee of such material.
7. Sales Organization Meetings.
Representatives of SS&C or its designee shall meet with the sales
organizations of the Company at such reasonable times and places as may be
agreed upon by the Company and SS&C or its designee for the purpose of
educating sales personnel about the Fund.
8. Duration.
This Agreement shall continue in effect for five (5) years from the
date of its execution, except that the obligation of each party hereto to
indemnify the other party hereto shall continue with respect to all losses,
claims, damages, liabilities or litigation based upon the acquisition of
Shares purchased as the funding vehicle for any variable life insurance
policy or variable annuity contract issued by the Company or any affiliated
insurance company.
9. Indemnification.
The Company agrees to indemnify and hold harmless SS&C and each of its
Directors and officers and each person, if any, who
5 5091J
<PAGE>
controls SS&C within the meaning of Section 15 of the Securities Act of
1933 (the "ACT") or any person, controlled by or under common control with
SS&C ("affiliate") against any and all losses, claims, damages, liabilities
or litigation (including legal and other expenses) to which SS&C or such
Directors, officers or controlling person may become subject under the Act,
under any other statute, at common law or otherwise, arising out of the
acquisition of any Shares by any person which (i) may be based upon any
wrongful act by the Company, any of its employees or representatives, any
affiliate of or any person acting on behalf of the Company or a principal
underwriter of its insurance products, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering Shares or any amendment
thereof or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to SS&C or the Fund by the
Company, provided, however, that in no case (i) is the Company's indemnity
in favor of a Director or officer or other person deemed to protect such
Director or officer or other person against any liability to which any such
person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his duties or by reason of
his reckless disregard of obligations and
6 5091J
<PAGE>
duties under this Agreement or (ii) is the Company to be liable under its
indemnity agreement contained in this Paragraph 9 with respect to any claim
made against SS&C or any person indemnified unless SS&C or such person, as
the case may be, shall have notified the Company in writing pursuant to
Paragraph 11 within a reasonable time after the summons or other first
legal process giving information of the nature of the claims shall have
been served upon SS&C or upon such person (or after SS&C or such person
shall have received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not relieve the
Company from any liability which it has to SS&C or any person against whom
such action is brought otherwise than on account of the indemnity agreement
contained in this Paragraph 9. The Company shall be entitled to
participate, at its own expense, in the defense, or, it is so elects, to
assume the defense of any suit brought to enforce any such liability, but,
if it elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to SS&C, to it officers and
Directors, or to any controlling person or persons, defendant or defendants
in the suit, In the event that the Company elects to assume the defense of
any such suit and retain such counsel, SS&C, such officers and Directors or
controlling person or persons, defendant or defendants in the suit, shall
bear the fees and expenses of any additional counsel retained by them, but,
in case the Company does not elect to assume the
7 5091J
<PAGE>
defense of any such suit, the Company will reimburse SS&C, such officers
and Directors or controlling person or persons, defendant or defendants in
such suit, for the reasonable fees and expenses of any counsel retained by
them. The Company agrees promptly to notify SS&C pursuant to Paragraph 11
of the commencement of any litigation or proceedings against it in
connection with the issue and sale of any Shares.
SS&C agrees to indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the Act against any and all losses,
claims, damages, liabilities or litigation (including legal and other
expenses) to which it or such directors, offices or controlling person may
become subject under the Act, under any other statute, at common law or
otherwise, arising out of the acquisition of any Shares by any person which
(i) may be based upon any wrongful act by SS&C, any of its employees or
representatives or a principal underwriter of the Fund, or (ii) may be
based upon any untrue statement or alleged untrue statement of a material
fact contained in a registration statement or prospectus covering Shares or
any amendment thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such statement
or omission was made in reliance upon information furnished to the Company
by SS&C; provided, however, that in no case (i) is SS&C's indemnity
8 5091J
<PAGE>
in favor of a director or officer or any other person deemed to protect
such director or officer or other person against any liability to which any
such person would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of his duties or by
reason of his reckless disregard of obligations and duties under this
Agreement or (ii) is SS&C to be liable under its indemnity agreement
contained in this Paragraph 9 with respect to any claims made against the
Company or any such director, officer or controlling person unless it or
such director, officer or controlling person, as the case may be, shall
have notified SS&C in writing pursuant to Paragraph 11 within a reasonable
time after the summons or other first legal process giving information of
the nature of the claim shall have been served upon it or upon such
director, officer or controlling person (or after the Company or such
director, officer or controlling person shall have received notice of such
service on any designated agent), but failure to notify SS&C of any claim
shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its
indemnity agreement contained in this Paragraph 9. SS&C will be entitled
to participate at its own expense in the defense, or, if it so elects, to
assume the defense of any suit brought to enforce any such liability, but
if SS&C elects to assume the defense, such defense shall be conducted by
counsel chosen by it an satisfactory to the Company, it directors,
9 5091J
<PAGE>
officers or controlling person or persons, defendant or defendants, in the
suit. In the event SS&C elects to assume the defense of any such suit and
retain such counsel, the Company, its directors, officers or controlling
person or persons, defendant or defendants in the suit, shall bear the fees
and expenses of any additional counsel retained by them, but, in case SS&C
does not elect to assume the defense of any such suit, it will reimburse
the Company, or such directors, officers or controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses
of any counsel retained by them. SS&C agrees promptly to notify the
Company pursuant to Paragraph 11 of the commencement of any litigation or
proceedings against it or any of its officers or Directors in connection
with the issuance or sale of any Shares.
10. Massachusetts Law to Apply
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
11. Notices.
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
10 5091J
<PAGE>
If to SS&C:
Scudder, Stevens & Clark Ltd.
175 Federal Street
Boston, Massachusetts 02110
(617) 482-3990
Attn: David B. Watts
If to the Company:
Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63105
Attn: David T. Cumming
12. Miscellaneous
The captions in the Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect. This Agreement
may be executed simultaneously in two or more counterparts, each of which
taken together shall constitute one and the same instrument.
11 5091J
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the 9th
day of June, 1986.
SEAL SCUDDER, STEVENS & CLARK LTD.
BY___________________________
/S/ David B. Watts
Managing Director
SEAL CHARTER NATIONAL LIFE
INSURANCE COMPANY
BY___________________________
/S/ G. Thomas Mitchell
Its Executive Vice President
12 5091J
<PAGE>
SCUDDER, STEVENS & CLARK
Investment Counsel
175 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
617 482-3990
June 12, 1986
Charter National Life
Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63105
Gentlemen:
Reference is made to the Reimbursement Agreement between Scudder,
Stevens & Clark Ltd. and Charter National Life Insurance Company (the
"Company") dated June 9, 1986 (the "Agreement").
As an additional inducement for the Company entering into the
Agreement, Scudder, Stevens, & Clark Ltd. hereby agrees that Scudder,
Stevens & Clark Ltd. and the Company each has a duty to the other party to
cooperate in any investigation relating to the subject matter of the
Agreement conducted by any regulatory or other governmental body having
jurisdiction.
If the foregoing represents your understanding, please sign the extra
copy of this letter provided and return it to the undersigned.
SCUDDER, STEVENS & CLARK LTD.
By __________________________
/S/David B. Watts
The foregoing represents our understanding.
CHARTER NATIONAL LIFE INSURANCE COMPANY
By __________________________
/S/ G. Thomas Mitchell
<PAGE>
5/22/86
Scudder Fund Distributors, Inc.
175 Federal Street
Boston, Massachusetts 02110
PARTICIPATING CONTRACT AND POLICY AGREEMENT
Dear Sirs:
We (sometimes hereinafter referred to as "SFD") are the Principal
Underwriter of shares of Scudder Variable Life Investment Fund (the
"Fund"), a no-load, open-end, diversified registered management investment
company established in 1985 as a Massachusetts business trust. The Fund is
a series fund consisting of the Money Market Portfolio, Managed Bond
Portfolio, Managed Equity Portfolio, Managed Diversified Portfolio and five
Managed Zero Coupon Portfolios maturing in 1990, 1995, 2000, 2005 and 2010,
respectively (individually or collectively hereinafter referred to as the
"Portfolio" or the "Portfolios"). Additional Portfolios may be created
from time to time. The Fund is the funding vehicle for variable annuity
contracts and variable life insurance policies ("Participating Contracts
and Policies") to be offered to the separate accounts (the "Accounts") of
certain life insurance companies ("Participating Insurance companies").
Owners of Participating Contracts and Policies will designate a portion of
their premium to be invested in insurance company separate accounts or sub-
accounts which invest in, or represent an investment in, directly or
indirectly, shares of beneficial interest ("Shares") of the Portfolios of
the Fund . You are a registered
<PAGE>
broker-dealer which intends to offer and sell Participating Contracts and
Policies. In connection with such offer and sale you will be obligated to
deliver the prospectuses of such Participating Contracts and Policies and,
contemporaneously therewith, the prospectus of the Fund. Sales of Shares
to Participating Insurance Companies or their affiliates or the separate
accounts of either shall be effected solely by us as principal underwriter
of the Fund, and not by you. The relationship between us shall be further
governed by the following terms and conditions:
1. To the extent, if any, that your activities or the activities of
the Participating Insurance Companies in connection with the sale of
Participating Contracts and Policies may constitute the sale of Shares, you
and we agree that (i) we are the sole "principal underwriter" of the Fund
and the sole "underwriter" of the Shares as those terms are defined in the
Investment Company Act of 1940 (the "1940 Act") and the Securities Act of
1933 (the "1933 Act"), respectively, and (ii) neither you nor the
Participating Insurance Companies or the Accounts shall be deemed to be
"principal underwriters" of the Fund or "underwriters" of the Fund within
the meaning of the 1940 Act and the 1933 Act, respectively.
2. You hereby represent and warrant to us as follows:
(a) You are a corporation duly organized and validly existing in
good standing under the laws of the State of Missouri and have full power
and authority to enter into this Agreement.
(b) This Agreement has been duly authorized, executed and delivered
by you and is a valid and binding obligation enforceable against you in
accordance with its terms.
(c) Your compliance with the provisions of this Agreement will not
conflict with or result in a violation of the provisions of your charter or
by-laws, or any stature or any judgment, decree, order, rule or regulation
of any court or governmental agency or body having jurisdiction.
2 5089J
<PAGE>
3. We hereby represent and warrant to you as follows:
(a) A registration statement (File No. 2-96461) on Form N-1A with
respect to the Shares (x) has been prepared by the Fund in conformity with
the requirements of the 1940 Act and the 1933 Act and all applicable
published instructions, rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission"), (y) has been
filed with the Commission, and (z) is currently effective. The
registration statement, including financial statements and exhibits, and
the final prospectus, including the statement of additional information, as
subsequently amended and supplemented, are herein respectively referred to
as the (Registration Statement" and the "Prospectus".
(b) The Registration Statement and the Prospectus and any amendment
or supplement thereto will contain all statements required to be stated
therein and will comply in all material respects with the requirements of
the 1940 Act, the 1933 Act and the Rules and Regulations, and the
Registration Statement and any post-effective amendment thereto will not
contain or incorporate by reference any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and the Prospectus and any
amendment or supplement thereto will not contain or incorporate by
reference any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(c) We are a corporation duly organized and validly existing in
good standing under the laws of The Commonwealth of Massachusetts and have
full power and authority to enter into this Agreement.
(d) This Agreement has been duly authorized, executed and delivered
by us and is a valid and binding obligation enforceable against us in
accordance with its terms.
(e) Our compliance with all of the provisions of this Agreement
will not conflict with or result in a violation of the provisions of our
charter or by laws, or any statute or any judgment, decree, order, rule or
regulation of any court or governmental agency or body having jurisdiction
over us.
3 5089J
<PAGE>
4. You hereby covenant and agree with us as follows:
(a) You shall be an independent contractor and neither you nor any
of your directors, partners, officers or employees as such, is or shall be
an employee of us or of the Fund. You are responsible for your own conduct
and the employment, control and conduct of your agents and employees and
for injury to such agents or employees or to other through your agents or
employees.
(b) You or one or more Participating Insurance Companies will be
responsible for insuring compliance with all applicable laws and
regulations of any regulatory body having jurisdiction over you or
Participating Contracts and Policies.
(c) No person is authorized to make any representations concerning
Shares except those contained in the prospectus and statement of additional
information relating thereto and in such printed information as issued by
us for use as information supplemental to the prospectus. In offering
Participating Contracts and Policies you shall, with respect to the Fund
and the Shares, rely solely on the representations contained in the
prospectus and statement of additional information and in the above-
mentioned supplemental information.
(d) You are not entitled to any compensation whatsoever from us or
the Fund with respect to offers of Participating Contracts and Policies.
5. We hereby covenant and agree with you as follows:
(a) If, at any time when a prospectus relating to the Shares is
required to be delivered under the 1940 Act, the 1933 Act or the Rules and
Regulations, we become aware of the occurrence of any event as a result of
which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact, or omit to state a material fact
necessary to make the statements therein, in light of the circumstances
under which made, not misleading, or if we become aware that it has become
necessary at any time to amend or supplement the Prospectus to comply with
the 1940 Act, the 1933 Act or the Rules and Regulations, we will promptly
notify you and promptly request the Fund to prepare and to file with the
Commission an amendment to the Registration Statement or supplement to the
Prospectus which will correct such statement or omission or an amendment or
supplement which will
4 5089J
<PAGE>
effect such compliance, and deliver to you copies of any such amendment or
supplement.
(b) We will cooperate with you in taking such action as may be
necessary to qualify the Shares for offering and sale under the securities
or Blue Sky laws of any state or jurisdiction as you may request and will
continue such qualification in effect so long as is required by applicable
law in connection with the distribution of Shares.
6. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Shares entirely, as to any person or
generally. We reserve the right to amend this agreement at any time and
you agree that the sale of Participating Contracts and Policies, after
notice of any such amendment has been sent to you, shall constitute your
agreement to any such amendment.
7. If we elect to provide to you for the purpose of your offering
Participating Contracts and Policies copies of any prospectus and statement
of additional information relating to the Shares and printed information
supplemental thereto, we shall furnish you with such copies as you
reasonably request upon the payment of reasonable charges therefor by you
or one or more Participating Insurance Companies. If we elect not to
provide such copies of such documents, you or one or more Participating
Insurance Companies shall bear the entire cost of printing copies for your
use. You shall not use such copies of such documents printed by you or one
or more Participating Insurance Companies until you shall have furnished us
with a copy thereof and we either have given you written approval for use
or twenty days shall have elapsed following our receipt thereof and we have
not objected thereto in writing.
8.
(a) You will indemnify and hold harmless SFD and each of its
directors and officers and each person, if any, who controls SFD within the
meaning of Section 15 of the 1933 Act, against any loss, liability,
damages, claim or expense (including the reasonable cost of investigating
or defending any alleged loss, liability, damages, claim or expense and
reasonable counsel fees incurred in connection therewith), arising by
reason of any person's acquiring any Shares, which may be based upon the
1933 Act or any other statute or
5 5089J
<PAGE>
common law, and which (i) may be based upon any wrongful act by you, any of
your employees or representatives, any affiliate of or any person acting on
behalf of you, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement
or prospectus covering Shares or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in reliance
upon information furnished to us or the Fund by you, or (iii) may be based
on any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering insurance
products sold by you, or any amendments or supplement thereto, or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or statements therein
not misleading, unless such statement or omission was made in reliance upon
information furnished to you or a Participating Insurance Company by or on
behalf of SFD or the Fund; provided, however, that in no case (i) is the
indemnity by you in favor of any person indemnified to be deemed to protect
SFD or any such person against any liability to which SFD or any such
person would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its or his duties or by
reason of its or his reckless disregard of its obligations and duties under
this Agreement, or (ii) are you to be liable under your indemnity agreement
contained in this paragraph with respect to any claim made against SFD or
any person indemnified unless SFD or such person, as the case may be, shall
have notified you in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim
shall have been served upon SFD or upon such person (or after SFD or such
person shall have received notice of such service on any designated agent),
but failure to notify you of any such claim shall not relieve you from any
liability which you may have to SFD or any person against whom such action
is brought otherwise than on account of your indemnity agreement contained
in this paragraph. You shall be entitled to participate, at your own
expense, in the defense, or, if you so elect, to assume the defense of any
suit brought to enforce any such liability, but, if you elect to assume the
defense, such defense shall be conducted by counsel chosen by you and
satisfactory to
6 5089J
<PAGE>
SFD, or to its officers or directors, or to any controlling person or
persons, defendant or defendants in the suit. In the event that you assume
the defense of any such suit and retain such counsel, SFD or such officers
or directors or controlling person or persons, defendant or defendants in
the suit, shall bear the fees and expenses of any additional counsel
retained by them, but, in case you do not elect to assume the defense of
any such suit, you shall reimburse SFD and such officers, directors or
controlling person or persons, defendant or defendants in such suit, for
the reasonable fees and expenses of any counsel retained by them. You
agree promptly to notify SFD of the commencement of any litigation or
proceedings against it in connection with the offer, issue and sale of any
shares.
(b) SFD will indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act, against any loss, liability,
damages, claim or expense (including the reasonable cost of investigating
or defending any alleged loss, liability, damages, claim or expense and
reasonable counsel fees incurred in connection therewith), arising by
reason of any person's acquiring any Shares, which may be based upon the
1933 Act or any other statute or common law, and which (i) may be based
upon any wrongful act by SFD, any of its employees or representatives, or
(ii) may be based upon any untrue statement or alleged untrue statement of
a material fact contained in a registration statement or prospectus
covering Shares or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading unless such statement or omission was made in reliance upon
information furnished to SFD or the Fund by you or (iii) may be based on
any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering insurance
products sold by you, or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or statements therein
not misleading, if such statement or omission was made in reliance upon
information furnished to you by or on behalf of SFD or the Fund; provided,
however, that in no case (i) is the indemnity by SFD in favor of any person
indemnified to be deemed to protect you or any such person against any
7 5089J
<PAGE>
liability to which you or any such person would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of your or his duties or by reason of your or his reckless
disregard of your or his obligations and duties under this Agreement, or
(ii) is SFD to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against you or any person
indemnified unless you or such person, as the case may be, shall have
notified SFD in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall
have been served upon you or upon such person(or after you or such person
shall have received notice of such service on any designated agent), but
failure to notify SFD of any such claim shall not relieve SFD from any
liability which SFD may have to you or any person against whom such action
is brought otherwise than on account of its indemnity agreement contained
in this paragraph. SFD shall be entitled to participate, at its own
expense, in the defense, or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but, if it elects to assume the
defense, such defense shall be conducted by counsel chosen by SFD and
satisfactory to you, or to your officers or directors, or to any
controlling person or persons, defendant or defendants in the suit. In the
event that SFD assumes the defense of any such suit and retains such
counsel, you or such officers or directors or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by it, but, in case SFD does
not elect to assume the defense or any such suit, SFD shall reimburse you
and such officers, directors or controlling person or persons, defendant or
defendants in such suit, for the reasonable fees and expenses of any
counsel retained by it. SFD agrees promptly to notify you of the
commencement of any litigation or proceedings against it in connection with
the offer, issue and sale of any Shares.
9. The indemnities, representations, warranties, covenants and
agreements of each party to this Agreement as set forth in this Agreement
will remain in full force and effect regardless of any investigation made
by or on behalf of either of such parties or any of their respective
officers, directors, partners or any controlling person, and will survive
delivery of and payment for the Shares.
8 5089J
<PAGE>
10. Any provision of this Agreement which may be determined by
competent authority to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by applicable law, each
party hereto waives any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.
11. This Agreement constitutes the entire agreement among the parties
concerning the subject matter hereof, and supersedes any and all prior
understandings.
12. This Agreement shall automatically terminate in the event of its
assignment. This Agreement may be terminated at any time by either party
by written notice given to the other party, provided that the obligation of
each party to indemnify the other party pursuant to paragraph 8 hereof
shall apply with respect to any Shares sold before or after such
termination.
13. Any notice hereunder shall be duly given if mailed or telegraphed
to the other party hereto at the address specified below. This Agreement
shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts.
14. This Agreement may be executed in any number of counterparts
which, taken together shall constitute one and the same instrument. This
Agreement shall become effective upon receipt by us of your acceptance
hereof.
15. This Agreement may not be modified or amended except by a written
instrument duly executed by the parties hereto.
SCUDDER FUND DISTRIBUTORS, INC.
BY_____________________________
/S/ David S. Lee
Authorized Officer
175 Federal Street
Boston, Massachusetts 02210
9 5089J
<PAGE>
The undersigned hereby accepts the
offer set forth in the above
letter.
CNL, Inc.
dated: June 4, 1986 By _______________________________
/S/ G. Thomas Mitchell
Authorized Representative
8301 Maryland Avenue
St. Louis, Missouri 63105
10 5089J
<PAGE>
SCUDDER FUND DISTRIBUTORS, INC.
UNDERWRITER FOR THE SCUDDER FUNDS
175 Federal Street
BOSTON, MASSACHUSETTS 02110
(617)482-3990
June 12, 1986
CNL, Inc.
8301 Maryland Avenue
St. Louis, Missouri 63105
Gentlemen:
Reference is made to the Participating Contract and Policy Agreement
between Scudder Fund Distributors, Inc. ("SFD") and CNL, Inc. ("Dealer")
dated June 4, 1986 (the "Agreement").
As an additional inducement for Dealer entering into the Agreement,
SFD hereby agrees with Dealer, and Dealer hereby agrees with SFD, that SFD
and Dealer each has a duty to the other party to cooperate in any
investigation relating to the subject matter of the Agreement conducted by
any regulatory or other governmental body having jurisdiction.
SFD hereby further agrees to be responsible for ensuring its
compliance with all applicable laws and regulations of any regulatory body
having jurisdiction over SFD with respect to the distribution of shares of
beneficial interest of Scudder Variable Life Investment Fund.
If the foregoing represents your understanding, please sign the extra
copy of this letter provided and return it to the undersigned.
SCUDDER FUND DISTRIBUTORS, INC.
By ____________________________
/S/ David S. Lee
The foregoing represents our understanding.
CNL, INC.
BY ___________________________
/S/ G. Thomas Mitchell
<PAGE>
SCUDDER VARIABLE LIFE INVESTMENT FUND
175 Federal Street
BOSTON, MASSACHUSETTS 02110
(617)482-3990
June 12, 1986
Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63105
Gentlemen:
Reference is made to the Participation Agreement between Scudder
Variable Life Investment Fund (the "Fund") and Charter National Life
Insurance Company (the "Company") dated June 4, 1986 (the "Agreement").
As an additional inducement to enter into the Agreement, the Fund
hereby agrees with the Company, and the Company hereby agrees with the
Fund, that the Fund and the Company each has a duty to the other party to
cooperate in any investigation relating to the subject matter of the
Agreement conducted by any regulatory or other governmental body having
jurisdiction.
The Fund hereby further agrees with the Company that
(i) the Fund will use its best efforts to continue to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code of 1954, as amended, and
(ii) that termination of the Participating Contract and Policy
Agreement dated June 4, 1986 between Scudder Fund Distributors, Inc. and
CNL, Inc. will not affect the effectiveness of the Agreement.
If the foregoing represents your understanding, kindly execute the
additional copy of this letter provided and return it to the undersigned.
SCUDDER VARIABLE LIFE INVESTMENT
FUND
By _____________________________
/S/David B. Watts
The foregoing represents our understanding.
CHARTER NATIONAL LIFE INSURANCE COMPANY
By ____________________________________
/S/ G. Thomas Mitchell
<PAGE>
Scudder Investor Services, Inc.
Two International Place
Boston, Massachusetts 02110
February 20, 1996
CNL, Inc.
8301 Maryland Avenue
St. Louis, MO 63105
Ladies and Gentlemen:
Reference is made to the Participating Contract and Policy Agreement (the
"Agreement") between Scudder Investor Services, Inc. ("SIS"), the principal
underwriter of Shares of Scudder Variable Life Investment Fund (the
"Fund"), and you with respect to the offer and sale of Participating
Contracts and Policies for which the Fund serves as a funding vehicle.
In order to reflect the new multiple class structure and addition of a Rule
12b-1 Plan with respect to Class B Shares of all Portfolios (with the
exception of the Money Market Portfolio) of the Fund, the following
sections of the Agreement are hereby amended or supplemented as follows:
(1) Section 4 of the Agreement is amended to include the following
subsection (e):
With respect to payments to be made to SIS pursuant to a Rule 12b-1 Plan
for the Fund, you will not seek reimbursement for administration and
recordkeeping services under the Fund's Rule 12b-1 Plan that have been or
will be paid for by any fees or charges imposed on owners of participating
Contracts and Policies by a Participating Insurance Company for such
services. This limitation does not, however, apply to profits that you
earn from fees and charges under Participating Contracts and Policies for
your nondistribution-related costs and expenses, such as mortality and
expense risk charges under Participating Contracts and Policies, which
profits may be available for your use to pay distribution and other
expenses incurred by you. Further, this provision does not restrict you
from receiving sales charges on purchases and redemptions, consistent with
applicable law, made under or redemption proceeds from a Participating
Contract or Policy at the same time that you are seeking reimbursement for
expenses under the Fund's Rule 12b-1 Plan.
(2) Section 5 of the Agreement is amended to include the following
subsection (c):
We shall reimburse you, subject to the minimum amounts set forth in the
attached schedule, for those distribution and shareholder servicing-related
expenses that are permitted to be paid for by the Fund under the Fund's
Rule 12b-1 Plan and for which (i) you submit documentation, as may be
requested by us or by the Fund's Board of Trustees, and (ii) we receive
payment for such expenses from the Fund under the Fund's Rule 12b-1 Plan.
We shall remit to you as promptly as reasonably practicable all payments
received by us from the Fund for remittance to you pursuant to the Fund's
Rule 12b-1 Plan.
(3) Section 12 of the Agreement is amended to include the following
sentence at the end of that section:
To the extent we receive payments under any provision of this Agreement
pursuant to a Rule 12b-1 Plan for the Fund, both you and we understand and
agree that this Agreement will be subject to the applicable approval,
reporting and termination requirements set forth in Rule 12b-1.
<PAGE>
This letter constitutes notice of the above amendments. Your first sale of
contracts and/or policies after receipt of this notice and after the
expiration of any applicable minimum notice requirement set forth in the
Agreement constitutes your acceptance of such amendments to the Agreement.
Capitalized terms used in this letter without definition that are defined
in the Agreement shall have the same meaning assigned to them in the
Agreement.
SCUDDER INVESTOR SERVICES, INC.
_______________________________
/S/ David S. Lee
President
Exhibit 6(a)
ARTICLES OF INCORPORATION
OF
CHARTER NATIONAL LIFE INSURANCE COMPANY
ARTICLE I
The name of this corporation is CHARTER NATIONAL LIFE INSURANCE
COMPANY.
ARTICLE II
The place of the principal office for the transaction of the business of
the corporation is City of Clayton, St. Louis County, Missouri.
ARTICLE III
The corporation is formed for the following purposes: to make insurance
upon the lives of individuals and every assurance pertaining thereto or
connected therewith; to grant, purchase, and dispose of annuities and
endowments of every kind and description whatsoever; to provide for
contracts of indemnity against death and for weekly and other periodic
indemnities for disability occasioned by accident or sickness to the person
of the insured, and such accident and health insurance shall be made a
separate department of the business of the corporation; and to such other
things as may be permitted a corporation of this kind by law, and not
prohibited by the 1949 Revised Statues of Missouri, Sections 376.010 to
376.670, both inclusive, as amended.
In order to carry out the purposes for which it is organized, the
corporation shall have the following rights and powers to the extent not
<PAGE>
inconsistent with nor prohibited by the provisions of law applicable to
life insurance companies or applicable to all insurance companies:
(a) to sue and be sued, complain and defend in any court of law or
equity;
(b) to have a corporate seal which may be altered at the pleasure of
the corporation and to use such seal by causing it or a facsimile thereof
to be impressed or affixed or in any manner reproduced;
(c) to purchase, hold or convey such real estate as the purposes of
the corporation shall require, and to take, hold or convey other property,
real, personal or mixed, as shall be necessary in the transaction of its
business, all to the extent permitted by law and more particularly as
provided by Sections 375.320, 375.330 and 375.340 of the 1949 Revised
Statutes of Missouri and all amendments thereto;
(d) to sell, convey, mortgage, loan, pledge or otherwise dispose of
and otherwise use and deal in and with shares, or the interests in or
obligations of other domestic and foreign corporations, associations,
partnerships, or individuals, all to the extent permitted by law to life,
health and accident insurance companies;
(e) to sell, lease, exchange or otherwise dispose of, all or
substantially all, of the property and assets of the corporation, with or
without the goodwill of the corporation, upon such terms and conditions and
for such consideration as may consist in whole or in part, of money or
property, real or personal, including shares of any other domestic or
foreign corporation, subject to all the provisions of law applicable to
such transfer with respect to manufacturing and business corporations, and
subject also to any and all provisions of law applicable to life,
<PAGE>
health and accident insurance companies and provisions of law applicable to
all insurance companies;
(f) to make contracts and incur liabilities which may be appropriate
to enable it to accomplish any or all of its purposes; to issue its notes,
bonds and other obligations; to secure any of its obligations by mortgage,
deed of trust, or pledge of any or all of its property, franchises, or
income; to issue notes or bonds secured or unsecured, which by their terms
are convertible to shares of stock of any class upon such terms and
conditions and at such rates or prices as may be therein provided; to enter
into contracts of reinsurance, either as reinsurer or otherwise, pertaining
to life, health and accident insurance to the extent permitted by law to a
corporation of this kind;
(g) to invest its capital, reserve, and surplus funds of whatever
kind or character from time to time and to lend money for its corporate
purposes, and to take and hold real and personal property as security for
the payment of funds so invested or loaned, all to the extent that such
investments and loans may be permitted by the provisions of law applicable
to life, health and accident insurance companies or applicable to all
insurance companies;
(h) to elect or appoint officers and agents of the corporation; to
enter into agency contracts and to define their duties and fix their
compensation - the officers of the corporation shall be a President, one or
more Vice-Presidents, Secretary, Assistant Secretary, Treasurer and such
other officers as the Board of Directors may deem necessary;
(i) to make and alter By-Laws not inconsistent with the Articles of
Incorporation or with the laws of this State for the administration and
<PAGE>
regulations of the affairs of the corporation;
(j) to terminate its corporate activities and to surrender its
corporate franchises;
(k) to make contributions to corporations or other organizations
formed for civic, charitable or benevolent purposes or to any incorporated
or unincorporated associations, Community Chest or community funds not
operated or used for profit to its members, but operated for the purposes
of raising funds for and of distributing funds to other civic, charitable
or benevolent organizations or agencies;
(l) to transact any lawful business in aid of the United States of
America in the prosecution of war, make donations to associations and
organizations, incorporated or unincorporated, which aid in war activities,
and to lend money to the state and federal governments for war purposes;
(m) to have and exercise all of the powers necessary or convenient to
effect or accomplish any or all of the purposes for which the corporation
was formed; to exercise all powers permitted by law to a corporation of
this character and which at any time thereafter may be granted to or
exercised by a corporation of this character, and not prohibited by
Sections 376.010 to 376.670, both inclusive, of the 1949 Revised Statutes
of Missouri.
ARTICLE IV
This is a joint stock company. The total authorized stock shall be Three
Million Four Hundred Ten Thousand Dollars ($3,410,000.00). The aggregate
number of shares which the corporation shall be authorized to issue shall
be One Hundred Ten Thousand (110,000) shares with a par value
<PAGE>
of Thirty-one Dollars ($31.00) each.
Each share of stock shall be entitled to One (1) vote, and in all elections
for directors, shareholders shall have the right of cumulative voting.
ARTICLE V
Shareholders shall hold regular annual meetings in every fiscal year for
the purpose of electing Directors and for such other business as may come
before the meeting. The names and addresses of the incorporating
shareholders are:
NAME RESIDENCE
M. G. Tallyn Alton, Illinois
M. M. Augustin Kirkwood, Missouri
M. T. Belt Brentwood, Missouri
M. Blanck St. Louis, Missouri
J. E. Gaylor St. Louis, Missouri
E. B. Hagen Affton, Missouri
F. H. Miller St. Louis, Missouri
J. E. Hayes, Jr. Cahokia, Illinois
R. Schloemer St. Louis, Missouri
G. R. Kincer St. Louis, Missouri
M. M. Kern St. Louis, Missouri
V. Langhauser St. Louis, Missouri
D. S. Markeason University City, Missouri
ARTICLE VI
The property and business of the corporation shall be managed and
controlled by the Board of Directors. The Board of Directors shall
<PAGE>
consist of ten (10) members. They shall be elected at the annual meeting
of stockholders, and each Director shall be elected to serve until his
successor shall have been elected and shall qualify. The Board of
Directors shall have authority to fill all vacancies occurring in the Board
until the next annual meeting of stockholders or until a special
stockholders meeting shall be called to fill the vacancy. The Board of
Directors may repeal or amend the By-Laws of this corporation or may adopt
new or additional By-Laws, but such By-Laws shall not be inconsistent with
these Articles of Incorporation nor with the laws of the State of Missouri.
ARTICLE VII
The duration and number of years the corporation is to continue is
perpetual.
ARTICLE VIII
Amendments to the Articles of Incorporation may be submitted by resolution
of the Board of Directors at any regular or special meeting of shareholders
and adopted by the affirmative vote of the majority of outstanding shares
entitled to vote.
<PAGE>
Exhibit 6(b)
CHARTER NATIONAL LIFE INSURANCE COMPANY
BY-LAWS
STOCKHOLDERS' MEETING
Section 1. Annual Meetings. The annual meeting of the stockholders shall
be held on the fourth Thursday in March of each year at the office of the
Company or at such place as may be designated by the stockholders. Notice
of such meeting shall be given in the manner required by the laws of the
State of Missouri or notice of such meeting may be waived by unanimous
consent of the stockholders.
Section 2. Special Meetings. Special meetings of stockholders may be
called at any time by the President or by a majority of the stockholders.
Unless a different notice is required by law, notice of special meetings
shall be given by mailing a notice thereof to each of the stockholders at
his post office address appearing on the records of the Company, at least
ten (10) days before such meeting. Such notice, in addition to stating the
time at which said meeting shall be held, shall briefly state the object of
said meeting and no business not so stated shall be considered at such
meeting except by unanimous consent of all stockholders. Special meetings
of the stockholders may also be held without notice upon the written
consent of all stockholders.
Section 3. Adjourned Meetings. Any stockholders' meeting may be adjourned
from time to time until its business is completed, and the stockholders
present at any meeting or any adjourned meeting, though less than a quorum,
may adjourn from time to time until a quorum shall be obtained.
Section 4. Quorum. At all meetings of stockholders, the stockholders of
record on the books of the Company, holding a majority of the stock issued
and outstanding entitling such stockholders to vote thereon, shall
constitute a quorum.
Section 5. Proxies. At any meeting of the stockholders, the stockholders
entitled to vote at such meeting may be represented by proxy, evidence of
which shall be in writing and exhibited to the proper officers.
Section 6. Waiver of Notice. Any stockholder may waive notice of any
stockholders' meeting either by letter or telegram, and the presence of any
stockholder in person or by proxy at any stockholders' meeting shall be a
waiver of any notice herein or by law provided for, unless said stockholder
shall attend the meeting purely for the purpose of objecting to the notice
thereof.
BOARD OF DIRECTORS
Section 7. Number. The property and business of the corporation shall be
managed and controlled by the Board of Directors. The Board of Directors
shall consist of ten (10) members. They shall be elected at the annual
3/28/77
<PAGE>
meeting of stockholders, and each director shall be elected to serve until
his successor shall have been elected and shall qualify. The Board of
Directors shall have authority to fill all vacancies occurring in the Board
until the next annual meeting of stockholders or until a special
stockholders' meeting shall be called to fill the vacancy. The Board of
Directors may repeal or amend the By-Laws, but such By-Laws shall not be
inconsistent with the Articles of Incorporation nor with the laws of the
State of Missouri.
Section 8. Meetings. The directors may hold their meetings at such tine
and times and place and places as they may deem proper. Notice of such
meetings shall be given by mailing notice thereof to each of the directors
to his post office address as appears upon the records of the Company not
less than three (3) days before such meeting, or notice of such meeting may
be waived on the unanimous consent of all the directors. An annual stated
meeting of the Board shall be held on the fourth Thursday in March,
immediately after the Annual Stockholders' Meeting, at the office of the
Company, for the transaction of all lawful business that may come before
said meeting.
Section 9. Quorum. A majority of the Board of Directors shall constitute
a quorum for the transaction of business, and every decision of a majority
of the persons duly assembled as a Board shall be valid as a corporate act;
and if less than a quorum be present at any meeting, those present may
adjourn, from time to time, and fix dates until a quorum shall be present.
OFFICERS
Section 10. Number. The officers of this Company shall consist of a
Chairman of the Board, a President, one or more Vice Presidents, one or
more Assistant Vice Presidents, a Secretary, one or more Assistant
Secretaries, a Treasurer, a Controller, and one or more Assistant
Controllers. The Board of Directors is hereby authorized to elect such
additional officers or may abstain from electing one or more of the above
enumerated assistant officers, as it may deem wise.
Section 11. Term.- The officers shall hold office from the dates of their
respective elections until the first meeting of the Board of Directors
after the next annual meeting of the stockholders and until their
successors are duly elected and qualified, and any officer elected by the
Board of Directors may be removed at any time with or without cause and in
their absolute discretion by the affirmative vote of a majority of the
whole Board of Directors.
Section 12. Consolidation of Offices. Any two offices except those of
President and Secretary may be held by one and the same person.
Section 13. Election. The officers shall be elected at the first meeting
of the Board of Directors held after the annual meeting of the
stockholders, or as soon thereafter as possible, and a majority of the
votes cast shall be necessary for an election.
Section 14. Salaries. The salaries of all officers and employees shall be
fixed by the President, except the salaries of all officers and the
salaries of all other persons who are to receive an annual salary of
S20,000 or more shall be fixed by the Board of Directors.
3/28/77
<PAGE>
Section 15. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board of Directors.
Section 16. President. The President shall be the Chief Executive Officer
and shall preside at all meetings of stockholders; shall sign all notes,
agreements or other instruments in writing made and entered into for or in
behalf of the corporation, and sign all certificates of stock, and he shall
have general supervision over the business and affairs of the corporation.
All notes shall be countersigned by the Treasurer of the Company in order
to be valid.
Section 17. Vice President. The Vice President shall perform all of the
duties of the President, in the event of the death or disability of the
President, and such other duties, if any, as may be prescribed by the Board
of Directors.
Section 18. Assistant Vice President. The Assistant Vice President shall
perform all of the duties of the Vice President in the event of the death
or disability of the Vice President, and such other duties, if any, as
shall be prescribed by the Board of Directors.
Section 19. Secretary. The Secretary shall keep an accurate record of the
proceedings of the meetings of the stockholders and directors; he shall
give notice of the meetings of the stockholders and of the directors
required by law and these By-Laws; he shall countersign all certificates of
stock, shall attach the corporate seal thereto, and to a11 other
instruments requiring it, and shall perform such other duties as are
usually incident to the office of the Secretary.
Section 20. Assistant Secretary. The Assistant Secretary shall perform
all of the duties of the Secretary, in the event of the death or disability
of the Secretary, and such other duties, if any, as may be prescribed by
the Board of Directors.
Section 21. Treasurer. The Treasurer shall have charge of the funds of
the Company, shall keep an accurate account of all transactions of the
Company, of all moneys received and paid out, and shall deposit or cause to
be deposited all funds of the Company in the Company's name in such banking
institution or institutions as may be designated by the Board of Directors;
and shall make a report to the stockholders at the annual meeting thereof,
and shall make a report to the President and to the Board of Directors
whenever so directed by the President or Board.
Section 22. Assistant Treasurer. The Assistant Treasurer shall perform
all of the duties of the Treasurer, in the event of the death or disability
of the Treasurer and such other duties, if any, as may be prescribed by the
Board of Directors.
Section 22.1. Controller. The Controller shall be in charge of the
accounts of the Company and shall perform such other duties as from time to
time may be assigned by the Board of Directors.
3/28/77
<PAGE>
Section 22.2. Assistant Controller. The Assistant Controller shall assist
the Controller in the performance of the duties of his office and shall
perform such other duties as the Board of Directors may prescribe.
FISCAL YEAR
Section 23. Fiscal Year. The fiscal year of this Company shall begin on
January first of each calendar year an end on December thirty-first of each
calendar year, unless otherwise provided by the Board of Directors.
CHECKS, DRAFTS, ETC.
Section 24. Authorized Signatures. Checks, drafts or other orders for the
payment of money of this Company shall be signed by such officer or
officers as the Board of Directors may provide.
CERTIFICATES OF STOCK AND TRANSFERS
Section 25. Certificates. Each holder of capital stock of this Company
shall be entitled to a certificate certifying the number and character of
shares owned by him. Certificates shall be numbered and registered in the
order issued and shall be signed by the President and by the Secretary.
Transfers of stock shall be made upon the books of the Company either in
person or by attorney upon the return of outstanding certificates, and the
possession of the certificates of stock shall not entitle the holder to any
right of a stockholder, nor shall it be regarded as evidence of ownership
unless it so appears on the books of the Company.
Section 26. Lost Certificates. In case of the loss or destruction of any
certificates of stock, a new certificate may be issued on the following
conditions: the owner shall file with the Secretary an affidavit giving the
facts in relation to the ownership and the loss or destruction of said
certificate, stating its number and the number of shares represented
thereby. The Secretary shall present such affidavit to the Board of
Directors and if the Board of Directors shall be satisfied that such
certificate has been destroyed or lost, and that a new certificate ought to
be issued in lieu thereof, the Board may direct the officers of the Company
to issue a new certificate upon the filing of a bond in such penal sum,
with such conditions, in such forms and with such surety as the Board of
Directors may prescribe, to indemnify and save harmless this Company from
any loss, expense, damage or liability occasioned by the issuance of such
new certificates, and upon the filing of such bond, the proper officers of
this Company shall issue a new certificate for the number of shares to the
owner of the certificate so lost or destroyed.
Section 27. Transfer Books. Proper books shall be kept under the
direction of the Secretary, showing the ownership and transfer of all
certificates of stock, and these books shall constitute the test of the
qualifications of
3/28/77
<PAGE>
voters at any stockholders' meeting; provided that at every election of
directors no person shall be admitted to vote, directly or by proxy, except
those in whose names the shares of stock of the corporation with voting
power shall stand on such books, and shall have stood for at least thirty
days previous to the election.
SEAL
Section 28. Seal. The Corporate Seal shall have inscribed thereon the
words "CHARTER NATIONAL LIFE INSURANCE COMPANY", which shall cover the
outer edge of the circular impression, and inscribed in the center shall be
the words "SEAL" and "MISSOURI". Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
AMENDMENTS
Section 29. Procedure. These By-Laws may be altered, amended or repealed,
and new By-Laws may be adopted by a majority vote of stock of the Company
upon which the holders thereof are entitled to vote, at any regular or
special meeting called as in these By-Laws provided.
3/28/77
June 24, 1988
Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63105
Gentlemen:
You have requested our opinion in connection with the filing of a
registration statement on Form N-4 of Charter National Variable Annuity
Account (the "Variable Account") of Charter National Life Insurance Company
(the "Company") (the "Registration Statement") for an indefinite number of
units of interest in certain flexible premium variable deferred annuity
contracts funded by the Variable Account (the "Contracts").
The Contracts are designed to provide for accumulation of capital on a
tax deferred basis for retirement or other long-term purposes and are to be
offered in the manner described in the prospectus included in the
Registration Statement (the Prospectus").
For the purpose of giving our opinion, we have examined and relied on
the following:
1. An undated draft of the Prospectus, which we have been informed
will be filed with the Securities and Exchange Commission on or about June
28, 1988, and which we assume will substantially conform to the Prospectus
so filed with the Securities and Exchange Commission;
2. The Articles of Incorporation, as amended, and the Bylaws of the
Company certified by the Secretary of the Company;
3. A Certificate of Corporate Good Standing from the State of
Missouri dated June 24, 1988, a copy of which is attached hereto as Exhibit
I;
4. Applicable Resolutions of the Company relating to the Variable
Account, certified by the Secretary of the Company as of June 20, 1988.
5. A sample copy of the Flexible Premium Variable Deferred Annuity
contract (p. 1258) with a contract date of "February 27, 1988," and the
annuitant as "John Doe," which we assume will
<PAGE>
Charter National Life Insurance Company 2 June 24, 1988
conform to the final form of the Contracts issued to the customers of the
Company; and
6. Such provisions of the law and regulations of the State of
Missouri as we have deemed relevant and necessary as a basis for the
opinions set forth herein.
We are of the opinion that:
1. The Company is a corporation duly organized and validly existing
under the laws of the State of Missouri.
2. The Variable Account was duly created pursuant to the provisions
of Section 376.309(1) of the Missouri Revised Statues (1986), as amended,
under which income, if any, and gains and losses, realized or unrealized,
on amounts allocated to the Variable Account are required to be credited to
or charged against the amounts allocated to the Variable Account without
regard to other income, gains or losses of the Company.
3. Pursuant to Section 376.309(1) of the Missouri Revised Statutes
(1986), as amended, assets allocated to the Variable Account will be owned
by the Company.
4. Pursuant to Section 376.309(1) of the Missouri Revised Statutes
(1986), as amended, and under the Contracts, that portion of the assets in
the Variable Account equal to the reserves and other contract liabilities
with respect to the Variable Account shall not be chargeable with
liabilities arising out of any other business the Company may conduct.
5. To the extent Missouri law governs, the Contracts have been duly
authorized by the Company and, when issued as contemplated by the
Registration Statement, will constitute legal, validly issued and binding
obligations of the Company in accordance with their terms, subject to the
insurance company insolvency and liquidation laws of the State of Missouri
and as enforcement thereof may require judicial discretion to grant any
equitable remedy of specific performance.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the heading
"legal Matters" in the Registration Statement.
Sincerely,
LEWIS & RICE
By ____________________________
/S/ Kimball R. McMullin
Attachments: Exhibit I: Certificate of Corporate Good Standing
<PAGE>
Exhibit I
STATE OF MISSOURI
SEAL OF THE SECRETARY OF STATE
MISSOURI
ROY D. BLUNT
SECRETARY OF STATE
CORPORATION DIVISION
CERTIFICATE OF CORPORATE GOOD STANDING
I, ROY D. BLUNT, SECRETARY OF STATE OF THE STATE OF MISSOURI, DO HEREBY
CERTIFY THAT THE RECORDS IN MY OFFICE AND IN MY CARE AND CUSTODY REVEAL
THAT
CHARTER NATIONAL LIFE INSURANCE COMPANY
WAS INCORPORATED UNDER THE LAWS OF THIS STATE ON THE 7TH DAY OF DECEMBER,
1955, AND IS IN GOOD STANDING, HAVING FULLY COMPLIED WITH ALL REQUIREMENTS
OF THIS OFFICE.
IN TESTIMONY WHEREOF, I HAVE SET MY THE GREAT SEAL OF THE
HAND AND IMPRINTED THE GREAT SEAL OF STATE OF MISSOURI
THE STATE OF MISSOURI, ON THIS, THE
24TH DAY OF JUNE, 1988.
____________________________
/S/ Roy D. Blunt
Secretary of State
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each Officer/Director whose signature
appears below hereby constitutes and appoints Karen M. Henneberg and
Gregory R. Barstead of Charter National Life Insurance Company, and each of
them (with power to each of them to act alone), as such person's true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for such person and in such person's name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to the Registration Statements on Form S-6,
(File No. 33-3446), Form N-4, (File No. 33-16482) and Form N-4, (File No.
33-22925) filed under the Securities Act of 1933 and the Investment Company
Act of 1940, and to file all exhibits thereto, and all other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully and to all intents and purposes as such person might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or a substitute or substitutes, may or shall lawfully do or cause
to be done by virtue hereof.
Signature Date Signature Date
__________________________1/24/97 __________________________1/24/97
/S/ Henry H. Wulsin /S/ Mark Hornstein
__________________________1/24/97 __________________________1/24/97
/S/ Judith E. Baylinson /S/ Jeanne Underkofler
CERTIFIED RESOLUTION
OF
CHARTER NATIONAL LIFE INSURANCE COMPANY
The undersigned, Secretary of Charter National Life Insurance Company, a
corporation duly organized and existing under the laws of the State of
Missouri, hereby certifies that the following resolutions were adopted
under Agreement for Action of the Board of Directors Without a Meeting
dated May 15, 1987, and are in full force and effect as of the date of this
Certificate.
BE IT RESOLVED, that the Board of Directors of Charter National Life
Insurance company ("Company"), pursuant to the provisions of Section
376.309 of the Missouri Insurance Statutes, hereby establishes a separate
account designated "Charter National Variable Annuity Account" (hereinafter
"Variable Annuity Account") for the following use and purposes, and subject
to such conditions as hereinafter set forth;
FURTHER RESOLVED, that Variable Annuity Account is established for the
purpose of providing for the issuance by the Company of variable annuity
contracts ("Contracts") and shall constitute a separate account into which
are allocated amounts paid to or held by the Company under such Contracts.
The form of such Contracts shall be kept on file in the Secretary's Office;
FURTHER RESOLVED, that the income, gains, and losses, whether or not
realized, from assets allocated to Variable Annuity Account shall, in
accordance with the Contracts, be credited to or charged against such
account without regard to other income, gains, or losses of the Company;
FURTHER RESOLVED, that that portion of the assets of Variable Annuity
Account equal to the reserves and other contract liabilities with respect
to Variable Annuity Account shall not be chargeable with liabilities
arising out of any other business the Company may conduct;
FURTHER RESOLVED, that Variable Annuity Account shall be divided into
Investment Subaccounts, each of which shall invest in the shares of an
investment company, and net premiums under the Contracts shall be allocated
to the eligible portfolios set forth in the Contracts in accordance with
instructions received from owners of the Contracts.
FURTHER RESOLVED, that the Board of Directors expressly reserves the right
to add, combine, or remove any Investment Subaccount of Variable Annuity
Account as it may hereafter deem necessary or appropriate;
<PAGE>
CERTIFIED RESOLUTION
PAGE 2
FURTHER RESOLVED, that the President, the Executive Vice President, any
Senior Vice President, any Vice President, or the Treasurer, and each of
them, with full power to act without the others, be, and they hereby are,
severally authorized to invest such amount or amounts of the Company's cash
in Variable Annuity Account or in any Investment Subaccount thereof as may
be deemed necessary or appropriate to facilitate the commencement of
Variable Annuity Account's operations and/or to meet any minimum capital
requirements under the Investment Company Act of 1940;
FURTHER RESOLVED, that the President, the Executive Vice President, any
Senior Vice President, any Vice President, or the Treasurer, and each of
them, with full power to act without the others, be, and they hereby are,
severally authorized to transfer cash from time to time between the
Company's general account and Variable Annuity Account as deemed necessary
or appropriate and consistent with the terms of the Contracts;
FURTHER RESOLVED, that the Board of Directors of the Company reserves the
right to change the designation of Variable Annuity Account hereafter to
such other designation as it may deem necessary or appropriate;
FURTHER RESOLVED, that the President, the Executive Vice President, any
Senior Vice President, any Vice President, and each of them, with full
power to act without the others, with such assistance form the Company's
independent certified public accountants, legal counsel, and independent
consultants or others as they may require, be, and they hereby are,
severally authorized and directed to take all action necessary to: (a)
register Variable Annuity Account as a unit investment trust under the
Investment Company Act of 1940, as amended; (b) register the Contracts in
such amounts, which may be an indefinite amount, as the said officers of
the Company shall from time to time deem appropriate under the Securities
Act of 1933; and (c) take all other actions which are necessary in
connection with the offering of said Contracts for sale and the operation
of Variable Annuity Account in order to comply with the Securities Act of
1933, the Securities Exchange Act of 1934, the Investment Company Act of
1940, and other applicable federal laws, including the filing of any
amendments to registration statements, any supplements, any undertakings,
and any applications for exemptions from the Investment Company Act of 1940
or other applicable federal laws as the said officers of the Company shall
deem necessary or appropriate;
FURTHER RESOLVED, that the President, the Executive vice President, any
Senior Vice President, or any Vice President, and each of them, with full
power to act without the others, be, and they hereby are, severally
authorized and empowered to prepare, execute, and cause to be filed with
the Securities
<PAGE>
CERTIFIED RESOLUTION
PAGE 3
and Exchange Commission on behalf of Variable Annuity Account, and by the
Company as sponsor and depositor a Notification of Registration under the
Investment Company Act of 1940, and any and all amendments to the foregoing
on behalf of Variable Annuity Account and the Company and on behalf of and
as attorneys-in-fact for the principal executive officer, the principal
financial officer, the principal accounting officer, and/or any other
officer of the Company;
FURTHER RESOLVED, that D. T. Cumming, President, and G. T. Mitchell,
Executive Vice President, are duly appointed as agents for service under
any such registration statement, duly authorized to receive communications
and notices from the Securities and Exchange Commission with respect
thereto;
FURTHER RESOLVED, that the President, the Executive Vice President, any
Senior Vice President, or any Vice President, and each of them, with full
power to act without the others, be, and they hereby are, severally
authorized on behalf of Variable Annuity Account and on behalf of the
Company to take any and all action that each of them may deem necessary or
advisable in order to offer and sell the Contracts, including any
registrations, filings, and qualifications both of the Company, its
officers, agents and employees, and of the Contracts, under the insurance
and securities laws of any of the states of the United States of America
and other jurisdictions, and in connection therewith to prepare, execute,
deliver, and file all such applications, reports, covenants, resolutions,
applications for exemptions, consents to service of process, and other
papers and instruments as may be required under such laws, and to take any
and all further action which the said officers or legal counsel of the
Company may deem necessary or desirable (including entering into whatever
agreements and contracts may be necessary) in order to maintain such
registrations or qualifications for as long as the said officers or legal
counsel deem it to be in the best interests of Variable Annuity Account and
the Company;
FURTHER RESOLVED, that the President, the Executive Vice President, any
Senior Vice President, or any Vice President, and each of them, with full
power to act without the others, be, and they hereby are, severally
authorized in the names and on behalf of Variable Annuity Account and the
company to execute and file irrevocable written consents on the part of
Variable Annuity Account and of the Company to be used in such states
wherein such consents to service of process may be requisite under the
insurance or securities laws therein in connection with said registration
or qualification of the Contracts and to appoint the appropriate state
official, or such other person as may be allowed by said insurance or
securities laws, agent of Variable Annuity Account and of the Company for
the purpose of receiving and accepting process;
<PAGE>
CERTIFIED RESOLUTION
Page 4
FURTHER RESOLVED, that the President, the Executive Vice President, any
Senior Vice President, or any Vice President, and each of them, with full
power to act without the others, be, and they hereby are, severally
authorized to establish procedures under which the Company will institute
procedures for providing voting rights for owners of the Contracts with
respect to securities owned by Variable annuity Account;
FURTHER RESOLVED, that the President, the Executive Vice President, any
Senior Vice President, or any Vice President, and each of them, with full
power to act without the others, be, and they hereby are, severally
authorized to execute such agreement or agreements as deemed necessary and
appropriate (i) with CNL, Inc. ("CNL") or other qualified entity under
which CNL or such other entity will be appointed principal underwriter and
distributor of the Contracts and (ii) with one or more qualified banks or
other qualified entities to provide administrative and/or custodial
services in connection with the establishment and maintenance of Variable
Annuity Account and the design, issuance, and administration of the
Contracts;
FURTHER RESOLVED, that because it is expected that Variable Annuity Account
will invest solely in the securities issued by one or more investment
companies registered under the Investment Company Act of 1940, the
President, the Executive Vice President, any Senior Vice President, or any
Vice President, and each of them, with full power to act without the
others, be, and they hereby are, severally authorized to execute whatever
agreement or agreements may be necessary or appropriate to enable such
investments to be made;
FURTHER RESOLVED, that the President, the Executive Vice President, any
Senior Vice President, or any Vice President, and each of them, with full
power to act without the others, be, and they hereby are, severally
authorized to execute and deliver such agreements and other documents and
do such acts and things as may be deemed necessary or desirable to carry
out the foregoing resolutions and the intent and purposes thereof.
IN WITNESS WHEREOF, I have hereunto set may hand and the seal of the
corporation this 24th day of June 1988.
________________________
/S/ P. M. Frank
P. M. Frank, Secretary
<PAGE>
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
10-Day Right to Examine Contract - You may return this Contract to Us for
any reason within ten days after it is received. Upon receipt of the
Contract, We will return the premium plus or minus any investment
experience and the Contract will be void as of the Contract Date.
Signed for the Company in St. Louis, Missouri, on the Contract Date.
Alexis M Berg Gregory R. Barstead
Secretary President
This is a Legal Contract Between You and Us. Please Read Your Contract
Carefully.
P1258
<PAGE>
Page 2
CONTRACT SPECIFICATIONS
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
INITIAL PREMIUM
SEPARATE ACCOUNT - CHARTER NATIONAL VARIABLE ANNUITY ACCOUNT
ALLOCATION OF NET PREMIUM
SCUDDER GROWTH AND INCOME SCUDDER MONEY MARKET
SCUDDER BALANCED SCUDDER BOND
SCUDDER INTERNATIONAL SCUDDER CAPITAL GROWTH
SCUDDER GLOBAL DISCOVERY
GENERAL ACCOUNT 1 YEAR GENERAL ACCOUNT 3 YEAR
CONTRACT DATE ANNUITANT
CONTRACT NUMBER AGE AT ISSUE
PREMIUM SEX
MATURITY DATE OWNER
<PAGE>
TABLE OF CONTENTS
Page
Summary 5
Definitions 6-7
Premiums 7
The Variable Annuity Account 8-9
Accumulated Value 10
Annuity Benefit 11
Charges 12
General Provisions 13-14
Beneficiary Provisions 15
Payments on Death 15
Annuity Income Options 16-18
Basis of Calculations 19-20
2570 Page 3
<PAGE>
INDEX
Page
Accounting Procedures 20
Allocation of Net Premium(s) 7
Annuitant 11
Annuity Change Option 11
Annuity Payments 11
Assignment 13
Beneficiary Designation 15
Change in Subaccounts 8
Change of Beneficiary 15
Change of Investment Policy 8
Changes to the Contract 13
Contract, The 13
Contract Administration Charge 12
Contract Date 13
Death of Annuitant 15
Effective Date 13
Full Surrender 10
How Accumulated Value is Calculated 19
Limitations on Additional Premium 7
Maturity Date 11
Misstatements 13
Mortality and Expense Risk Charge 12
Option Conditions 16
Partial Surrender 10
Premium Tax 12
Proof of Death 15
Protection of Death Benefit 15
Records Maintenance Charge 12
Reports to Owner 14
Right to Defer Payment 14
Rights Reserved by the Company 9
Subaccounts 8
Taxes 12
Transfers 10
Variable Annuity Account 8
2571 Page 4
<PAGE>
SUMMARY
This is a flexible premium variable deferred annuity. It provides a Death
Benefit to the Beneficiary if You die before the Maturity Date. It also
provides an Annuity Benefit if You are living on the Maturity Date. The
initial premium for this Contract is shown on Page 2. You may make
additional premium payments subject to the potential limitations described
on Page 7 of this Contract.
The Accumulated Value of this Contract will vary according to how You
allocate the net premium(s). Allocations may be made to one or more of the
subaccounts of the Variable Annuity Account. Each Subaccount invests its
assets in one of a series of registered investment company funds. The
amount of the Accumulated Value will vary with the investment performance
of the subaccount(s) selected.
You may make a partial surrender of this Contract at any time prior to the
Maturity Date. Any such surrender will cause the Annuity Benefit to be
reduced.
This is a brief description of the provisions of this Contract. They are
fully described on the remaining pages of the Contract.
2572 Page 5
<PAGE>
DEFINITIONS
ACCUMULATED VALUE is the total of the value of the amounts in the
subaccount(s) for this Contract as of any
Valuation Date on or before the Maturity Date.
AGE means the age of the Annuitant on the birthday
nearest to the Contract Anniversary.
ANNUITANT, OWNER,
YOU, YOUR is the Owner of this Contract and is the person
whose life is used to determine the duration and
amount of any annuity payments and is shown on
Page 2.
ANNUITY BENEFIT is a series of payments to be made under any
Annuity Income Option scheduled to begin on the
Maturity Date.
ANNUITY INCOME OPTION is any method of receiving annuity payments as
described on Page 16.
BENEFICIARY is the person named in the Application or by later
designation to receive any Death Benefit or any
remaining annuity payments under an Annuity Income
Option.
COMPANY, WE, US, OUR is Charter National Life Insurance Company.
CONTRACT YEAR, MONTH,
AND ANNIVERSARY shall be measured from the Contract Date shown on
Page 2.
DEATH BENEFIT is the amount We will pay to the Beneficiary if
You die before the Maturity Date. It will be equal
to the Accumulated Value on the date We receive
proof of your death.
JOINT ANNUITANT is applicable only if Annuity Option 2 (see Page
16) has been elected by the Owner prior to the
Maturity Date of this Contract.
MATURITY DATE is shown on Page 2 or by later designation. It is
the date the Annuity Benefit is scheduled to begin
if the Annuitant is living.
NET PREMIUM is equal to the premium less premium taxes and the
first year's Records Maintenance Charge.
NONPARTICIPATING means this Contract does not share in the profits
or surplus of the Company, and no dividends are
payable.
2573 Page 6
<PAGE>
DEFINITIONS (Continued)
VALUATION DATE is each day on which valuation of the
subaccount(s) is required by applicable law and
currently includes each day the New York Stock
Exchange is open for trading.
VALUATION PERIOD is the period that starts at the close of a
Valuation Date and ends at the close of the next
succeeding Valuation Date.
VARIABLE ANNUITY
ACCOUNT is a separate account of Charter National Life
Insurance Company as shown on Page 2.
PREMIUMS
ALLOCATION OF NET PREMIUM(S)
You determine the allocation of your Net Premium(s) to one or more of the
subaccounts of the Variable Annuity Account. To the extent You allocate
the Net Premium(s) to each subaccount, your Accumulated Value will vary
with the investment performance. All allocations must be in whole
percentages which add up to 100%.
LIMITATIONS ON ADDITIONAL PREMIUM
You may make additional premium payments at any time prior to the Maturity
Date. Additional premiums will be allocated in the same manner as your
most recent allocation unless We receive other instructions from You.
We reserve the right to:
a) reject any premium payment which would cause the total premiums paid
to exceed $1,000,000;
b) limit the minimum amount of each premium payment to $1,000; and
c) limit the frequency of premium payments to four times per Contract
Year.
2574 Page 7
<PAGE>
THE VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY ACCOUNT
The Variable Annuity Account is a separate investment account established
by Us in accordance with Missouri law. The assets of this account are
owned by Us and will be used to provide values and benefits under this and
similar annuities. The Variable Annuity Account is not charged with
liabilities arising out of any other business that We may conduct.
SUBACCOUNTS
The Variable Annuity Account consists of subaccounts, each of which invests
in shares of a designated registered investment company fund. Shares are
purchased at their net asset value.
Each distribution of income, dividends, and capital gains from a fund will
be reinvested at net asset value in shares of the fund.
The values and benefits of your Contract depend on the investment
performance of any subaccount(s) You select. You bear the investment risk
for amounts allocated to the subaccount(s). We do not guarantee the
investment performance.
CHANGE IN SUBACCOUNTS
We can add, remove, or combine subaccounts as permitted by law. When a
subaccount is removed, We have the right to substitute a different
subaccount.
We can also add, remove, or substitute subaccount investments as permitted
by law.
We will notify You in advance of liquidation of a subaccount in which any
of your Contract values are invested. We will ask You to tell Us how these
funds should be reallocated. In the absence of instructions from You, We
will transfer the amount in the liquidated subaccount to the Money Market
subaccount.
CHANGE OF INVESTMENT POLICY
The investment policy of the Variable Annuity Account will not be changed
unless:
a) the change has been approved by the Director of Insurance of the State
of Missouri, and
b) a statement of the approval process has been filed with the Insurance
Department of the state in which this Contract is delivered.
2575 Page 8
<PAGE>
THE VARIABLE ANNUITY ACCOUNT (Continued)
RIGHTS RESERVED BY THE COMPANY
We reserve the right to take certain actions in compliance with applicable
laws, and, if required, with approval of the Owner. These actions are:
a) to create new separate investment accounts;
b) to combine or substitute separate investment accounts;
c) to transfer all or part of the assets of the Variable Annuity Account
to another separate investment account;
d) to operate the Variable Annuity Account as a management investment
company and to charge investment advisory fees under the Investment Company
Act of 1940 or in any other form permitted by law; and
e) to deregister the Variable Annuity Account under the Investment
Company Act of 1940 if registration is no longer required.
2576 Page 9
<PAGE>
ACCUMULATED VALUE
Your Accumulated Value is the total of the value of the amounts in the
selected subaccount(s) for this Contract on any Valuation Date on or before
the Maturity Date. The amount of the Accumulated Value depends on the
amount of premium(s) paid, the investment performance of your selected
subaccounts, any charges, and any deductions for partial surrenders.
FULL SURRENDER
You may, by written request, surrender this Contract at any time prior to
the Maturity Date. Upon surrender, We will pay the Accumulated Value of
this Contract to You in a lump sum.
PARTIAL SURRENDER
At any time prior to the Maturity Date, You may request a partial surrender
of this Contract. The following conditions will apply:
a) The amount surrendered must be at least $500.
b) The remaining Accumulated Value must be at least $5,000.
c) If You have funds invested in more than one subaccount, You must
instruct Us as to what amount(s) should be withdrawn from which
subaccount(s).
TRANSFERS
You may transfer all or a portion of the Contract's value among the
subaccounts at any time.
All transfers made at the same time will be treated as one request.
Currently, there is no charge for any transfer. We reserve the right,
however, to deduct a charge for the third and subsequent transfer requests
in any Contract Year. The charge will be a $10.00 deduction from each
subaccount from which amounts are transferred.
2577 Page 10
<PAGE>
ANNUITY BENEFIT
ANNUITANT
The Annuitant and the Owner are the same person and cannot be changed. The
Annuitant is the person whose life will be used to determine the duration
and amount of the Annuity Benefit.
MATURITY DATE
The Maturity Date will generally be stated on the Application. If it is
not indicated on the Application, We will use the later of the Contract
Anniversary nearest the Annuitant's age 80 or ten (10) years from the
Contract Date.
ANNUITY CHANGE OPTION
You may elect to change either the Maturity Date or the Annuity Income
Option. Any such request must be made prior to the Maturity Date and in
writing to Us at our Home Office.
The changed Maturity Date may be any future Contract Anniversary not later
than the later of:
a) the Contract Anniversary nearest the Annuitant's 80th birthday; or
b) ten (10) years from the next Contract Anniversary.
ANNUITY PAYMENTS
On the Maturity Date, We will calculate the Accumulated Value of this
Contract. The Annuity Benefit will then be determined based on the Annuity
Income Option elected, age and sex of the Annuitant (and, the age and sex
of the Joint Annuitant if Option 2 is elected), and the amount of
Accumulated Value. If no Annuity Income Option has been elected, We will
pay benefits under Option 1. The first annuity payment will be made to You
within seven (7) days after the Maturity Date. All payments by Us are
payable at our Home Office or by mail from our Home Office.
2578 Page 11
<PAGE>
CHARGES
CONTRACT ADMINISTRATION CHARGE
There will be a Contract Administration Charge deducted from the values in
the subaccount(s) on a daily basis. The charge is .0008260% of the
Contract's value in each such subaccount per day.
MORTALITY AND EXPENSE RISK CHARGE
There will be a Mortality and Expense Risk Charge deducted from the values
in the subaccount(s) on a daily basis. The charge is .0019275% of the
Contract's value in each such subaccount per day.
RECORDS MAINTENANCE CHARGE
At the beginning of each Contract Year, We will deduct a Records
Maintenance Charge of $35.00. This charge will be deducted proportionately
from the values in each subaccount. We reserve the right to increase this
charge to a maximum of $40.00 per Contract Year.
PREMIUM TAX
If any premium tax is payable by Us on this Contract, the tax will be
deducted from each premium.
TAXES
If at any time We incur any tax liability resulting from the assets held by
the Variable Annuity Account, We may charge the Variable Annuity Account
for the tax.
2579 Page 12
<PAGE>
GENERAL PROVISIONS
THE CONTRACT
We have issued this Contract in consideration of the Application and
payment of the initial premium. The Contract with the Application attached
make the entire contract. No statement made by You or on your behalf shall
be used in defense of a claim under the Contract unless it is made with the
intent to commit fraud and it is contained in the written Application.
CHANGES TO THE CONTRACT
This Contract may be changed in writing by mutual agreement between You and
the Company. Only the President, a Vice President, the Secretary, or an
Assistant Secretary of our Company is authorized to change or waive the
terms of the Contract.
EFFECTIVE DATE
The Effective Date will be within two (2) business days after the full
initial premium and completed Application have been received at our Home
Office. You may request a premium receipt signed by the President, a Vice
President, the Secretary, or an Assistant Secretary of our Company. No
coverage will take effect until the check or draft for the premium is
honored.
CONTRACT DATE
The Contract Date will be used to determine Contract Months, Contract
Anniversaries, Contract Years, and age of the Annuitant. The Contract Date
will be the same as the Effective Date unless the Effective Date is the
29th, 30th, or 31st of the month, in which case the Contract Date will be
the 28th of the month.
MISSTATEMENTS
If the Annuitant's age or sex has been misstated on the Application, We
will recalculate the Annuity Benefit to that which the Accumulated Value
would have established had the Annuitant's age or sex been correctly
stated. In the case of Option 2, if the Joint Annuitant's age or sex has
been misstated, the same adjustment will be made.
ASSIGNMENT
The Owner may assign the right to receive annuity payments and also assign
the Contract as collateral security. We are not responsible for the
adequacy of any assignment. When an assignment is filed with and recorded
by Us at our Home Office, your rights and those of the Beneficiary will be
subject to it.
2580 Page 13
<PAGE>
GENERAL PROVISIONS (Continued)
RIGHT TO DEFER PAYMENT
We will ordinarily pay any amount payable as a result of surrender or death
within seven (7) days after We receive a request.
Payment of any Accumulated Value or Death Benefit may be deferred:
a) for any period during which the New York Stock Exchange is closed for
trading (except for normal holiday closing); or
b) when the Securities and Exchange Commission has determined that a
state of emergency exists which may make such payment impractical.
Transfers may also be deferred for the same reasons as given above.
If a recent check or draft has been submitted to Us on this Contract, We
have a right to defer any payment of Accumulated Value or Death Benefit
until such check or draft has been honored.
REPORTS TO OWNER
ANNUAL STATEMENT - You will receive an Annual Statement at the end of each
Contract Year. This Statement will show your Accumulated Value and Death
Benefit as of your current Contract Anniversary. It will also reflect any
additional premium payment(s), any partial surrender(s), and any charges
made during the year.
ANNUAL REPORT OF THE SEPARATE ACCOUNT - You will also receive annually a
report on the Variable Annuity Account. This report will include the
investment record of the subaccounts, any charges made, and any changes to
the subaccounts.
2581 Page 14
<PAGE>
BENEFICIARY PROVISIONS
BENEFICIARY DESIGNATION
The Beneficiary will be as shown in the Application unless changed as
provided in this Contract. If no Beneficiary has been named, your estate
shall be the Beneficiary.
CHANGE OF BENEFICIARY
You may change the Beneficiary by filing a written notice with Us at our
Home Office. A Beneficiary named irrevocably may not be changed without
the written consent of that Beneficiary. When recorded by Us at our Home
Office, the change will take effect on the date the notice was signed. Any
Death Benefit paid before We record a change of Beneficiary will not be
subject to that change.
PAYMENTS ON DEATH
DEATH OF ANNUITANT
If You die prior to the Maturity Date and this Contract has not been
surrendered or expired, We will pay to the Beneficiary the Accumulated
Value calculated on the date We receive proof of your death. This amount
will be paid in a lump sum.
If the Beneficiary dies within thirty (30) days of your death and We have
not yet paid the Death Benefit, it will be paid as if the Beneficiary had
died first.
PROOF OF DEATH
The amount payable on death will be paid when We receive due proof of such
death. Such proof must be submitted to Us at our Home Office. Claim forms
will be made available upon request. All payments by Us are payable at our
Home Office or by mail from our Home Office.
Any assignment made on this Contract prior to the Maturity Date will be
paid to the assignee first in a lump sum. Any balance payable by Us will
then be paid as indicated.
PROTECTION OF DEATH BENEFIT
Except as permitted by law, no payment of the Death Benefit or interest
thereon will be subject to the claim of creditors of the Beneficiary or to
legal process against the Beneficiary.
2582 Page 15
<PAGE>
ANNUITY INCOME OPTIONS
The Accumulated Value of this Contract may be applied under one of the
following Options:
Option 1. LIFE ANNUITY WITH INSTALLMENT REFUND
The amount will be distributed in equal installments to You, as long as You
are living. If You die before the sum of the installments paid equals or
exceeds the Accumulated Value on the Maturity Date, We will continue to pay
installments to your Beneficiary until the sum of such installments does
equal or exceed the Accumulated Value on the Maturity Date.
Option 2. JOINT AND SURVIVOR LIFE WITH INSTALLMENT REFUND
The amount will be distributed in equal installments to You or, upon your
death, to your named Joint Annuitant, for as long as either of You is
living. If both of You die before the sum of the installments paid equals
or exceeds the Accumulated Value on the Maturity Date, We will continue to
pay installments to your Beneficiary until the sum of such installments
does equal or exceed the Accumulated Value on the Maturity Date.
Option 3. OTHER ANNUITY INCOME OPTIONS
Other Annuity Income Options may be available at the time a form of payment
is elected.
OPTION CONDITIONS:
If this Contract is assigned prior to the Maturity Date, We will pay to the
assignee in one sum the amount to which he is entitled. We will then apply
any balance payable to the chosen Annuity Income Option.
Any amount payable under an Annuity Income Option will be subject to the
following conditions:
a) The effective date of an Annuity Income Option will be the Maturity
Date.
b) Annuity Income Options will not be available if the amount to be
applied is less than $5,000 or is insufficient to produce monthly
payments of at least $100.
c) The amount of installment payments will be determined by the age and
sex of the Annuitant (and, if Option 2 is selected, by the age and sex
of the Joint Annuitant) on the Maturity Date.
d) We may require evidence that the Annuitant (or Joint Annuitant, if
applicable) is alive on any scheduled payment date before the payment
is made.
2583 Page 16
<PAGE>
OPTION 1. MONTHLY INSTALLMENTS FOR LIFE - INSTALLMENT REFUND ANNUITY
Per $1,000 of Accumulated Value
Age Male Female Age Male Female Age Male Female
0 3.10 3.05 34 3.67 3.52 68 6.19 5.65
1 3.11 3.06 35 3.70 3.54 69 6.35 5.79
2 3.12 3.07 36 3.73 3.57 70 6.52 5.94
3 3.12 3.07 37 3.77 3.60 71 6.69 6.09
4 3.13 3.08 38 3.81 3.63 72 6.88 6.26
5 3.14 3.09 39 3.84 3.66 73 7.07 6.44
6 3.15 3.10 40 3.88 3.69 74 7.27 6.63
7 3.16 3.10 41 3.92 3.72 75 7.49 6.83
8 3.17 3.11 42 3.97 3.76 76 7.72 7.04
9 3.19 3.12 43 4.01 3.80 77 7.96 7.26
10 3.20 3.13 44 4.06 3.83 78 8.21 7.51
11 3.21 3.14 45 4.11 3.87 79 8.47 7.76
12 3.22 3.15 46 4.16 3.92 80 8.74 8.03
13 3.23 3.16 47 4.21 3.96 81 9.03 8.32
14 3.25 3.17 48 4.26 4.01 82 9.34 8.61
15 3.26 3.19 49 4.32 4.06 83 9.65 8.93
16 3.28 3.20 50 4.38 4.11 84 9.98 9.27
17 3.29 3.21 51 4.45 4.16 85 10.34 9.62
18 3.31 3.22 52 4.51 4.22 86 10.69 9.99
19 3.32 3.24 53 4.58 4.27 87 11.07 10.38
20 3.34 3.25 54 4.66 4.34 88 11.47 10.78
21 3.36 3.26 55 4.73 4.40 89 11.90 11.19
22 3.38 3.28 56 4.81 4.47 90 12.34 11.63
23 3.40 3.29 57 4.90 4.54 91 12.80 12.08
24 3.42 3.31 58 4.99 4.62 92 13.31 12.54
25 3.44 3.33 59 5.08 4.70 93 13.86 13.02
26 3.46 3.35 60 5.18 4.78 94 14.41 13.54
27 3.48 3.36 61 5.29 4.87 95 15.02 14.08
28 3.51 3.38 62 5.40 4.96 96 15.69 14.63
29 3.53 3.40 63 5.51 5.06 97 16.45 15.24
30 3.56 3.42 64 5.63 5.17 98 17.22 15.93
31 3.58 3.45 65 5.76 5.28 99 18.07 16.71
32 3.61 3.47 66 5.90 5.39 l00 19.04 17.51
33 3.64 3.49 67 6.04 5.52
2584 Page 17
<PAGE>
OPTION 2. MONTHLY INSTALLMENTS FOR LIFE - JOINT & SURVIVOR 100%
Per $1,000 of Accumulated Value
Male Female Age
Age 45 46 47 48 49 50 51 52 53
45 3.68 3.71 3.73 3.75 3.77 3.79 3.81 3.83 3.85
46 3.70 3.72 3.74 3.76 3.79 3.81 3.83 3.85 3.87
47 3.71 3.73 3.76 3.78 3.80 3.83 3.85 3.87 3.90
48 3.72 3.75 3.77 3.80 3.82 3.85 3.87 3.89 3.92
49 3.73 3.76 3.79 3.81 3.84 3.86 3.89 3.92 3.94
50 3.75 3.77 3.80 3.83 3.85 3.88 3.91 3.94 3.96
51 3.76 3.79 3.81 3.84 3.87 3.90 3.93 3.96 3.99
52 3.77 3.80 3.83 3.86 3.89 3.92 3.95 3.98 4.01
53 3.78 3.81 3.84 3.87 3.90 3.93 3.96 3.99 4.03
54 55 56 57 58 59 60 61 62
54 4.08 4.11 4.15 4.18 4.21 4.25 4.28 4.31 4.34
55 4.10 4.14 4.17 4.21 4.24 4.28 4.31 4.34 4.38
56 4.12 4.16 4.20 4.23 4.27 4.31 4.34 4.38 4.41
57 4.14 4.18 4.22 4.26 4.30 4.34 4.38 4.41 4.45
58 4.16 4.20 4.24 4.28 4.32 4.37 4.41 4.45 4.49
59 4.18 4.22 4.26 4.31 4.35 4.39 4.44 4.48 4.53
60 4.19 4.24 4.28 4.33 4.37 4.42 4.47 4.51 4.56
61 4.21 4.25 4.30 4.35 4.40 4.45 4.50 4.55 4.60
62 4.22 4.27 4.32 4.37 4.42 4.47 4.52 4.58 4.63
63 64 65 66 67 68 69 70 71
63 4.72 4.77 4.83 4.88 4.93 4.98 5.03 5.08 5.13
64 4.75 4.81 4.87 4.92 4.98 5.04 5.09 5.15 5.20
65 4.78 4.84 4.91 4.97 5.03 5.09 5.15 5.21 5.26
66 4.81 4.88 4.94 5.01 5.07 5.14 5.20 5.27 5.33
67 4.84 4.91 4.98 5.05 5.12 5.19 5.26 5.32 5.39
68 4.87 4.94 5.01 5.09 5.16 5.23 5.31 5.38 5.45
69 4.89 4.97 5.04 5.12 5.20 5.28 5.36 5.43 5.51
70 4.91 4.99 5.07 5.15 5.24 5.32 5.40 5.49 5.57
71 4.93 5.02 5.10 5.18 5.27 5.36 5.45 5.54 5.62
72 73 74 75 76 77 78 79 80
72 5.77 5.86 5.96 6.05 6.13 6.21 6.29 6.37 6.44
73 5.82 5.93 6.02 6.12 6.22 6.31 6.40 6.48 6.55
74 5.88 5.98 6.09 6.19 6.30 6.40 6.49 6.58 6.67
75 5.92 6.04 6.15 6.26 6.37 6.48 6.59 6.69 6.78
76 5.97 6.09 6.21 6.33 6.45 6.56 6.68 6.79 6.89
77 6.01 6.13 6.26 6.39 6.52 6.64 6.76 6.89 7.00
78 6.05 6.18 6.31 6.45 6.58 6.71 6.85 6.98 7.10
79 6.08 6.22 6.36 6.50 6.64 6.78 6.93 7.07 7.20
80 6.11 6.25 6.40 6.54 6.69 6.85 7.00 7.15 7.29
Factors for any other ages and combinations will be provided upon request.
2585 Page 18
<PAGE>
BASIS OF CALCULATIONS
The 1983a Individual Annuity Mortality Table will be used to establish the
reserves and Accumulated Value. The reserves under this Contract are not
less than the minimum required by the insurance laws of the State in which
this Contract has been issued.
The method used in computing reserves and Accumulated Values in the
Variable Annuity Account is in accordance with actuarial procedures that
recognize the variable nature of such an Account. A detailed statement of
the method of calculation of reserves has been filed with the insurance
official of the state in which the Contract is delivered.
HOW ACCUMULATED VALUE IS CALCULATED
On the Effective Date, the Accumulated Value equals the initial premium
minus premium taxes, if any, minus the first year's Records Maintenance
Charge. The Accumulated Value of the Contract can thereafter be determined
on each Valuation Date as follows:
a) The Accumulated Value on the prior Valuation Date; plus
b) The sum of the following (which may be positive or negative for the
Valuation Period):
1) The total net investment experience of the Contract's value in the
elected subaccount(s). For each subaccount, the net investment
experience is the Contract's value in the subaccount as of the
prior Valuation Date times the percentage change in the net asset
value of the shares of the designated fund. It is adjusted for
any distributions made during the Valuation Period;
2) Any charge for tax liability resulting from assets held by the
Variable Annuity Account;
3) Contract Administration Charges;
4) Mortality and Expense Risk Charges;
5) Premiums received less premium taxes deducted;
6) Any charge(s) for transfers (if applicable); and
7) Records Maintenance Charge (if applicable).
2586 Page 19
<PAGE>
ACCOUNTING PROCEDURES:
The Contract's value in each subaccount is maintained in units. A unit
value is determined for each Valuation Date. The Contract's value in any
subaccount is the number of units times the unit value.
Changes in the net asset value of the designated fund, distributions of the
fund, and tax charges, if any, with respect to a fund for the Valuation
Period are taken into account in computing the unit value for each
subaccount.
Administration Charges and Mortality and Expense Risk Charges are accounted
for by a deduction each Valuation Period from the unit values.
All additions to or deductions from a subaccount are made on the basis of
the unit value as of the end of the Valuation Period for which the
transaction is to be effective.
2587 Page 20
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
10-Day Right to Examine Contract - You may return this Contract to Us for
any reason within ten days after it is received. Upon receipt of the
Contract, We will return the premium plus or minus any investment
experience and the Contract will be void as of the Contract Date.
If You have any questions concerning this Contract or if anyone suggests
that You change or replace this Contract, please contact the Home Office of
the Company.
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
P1258
<PAGE>
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
10-Day Right to Cancel Contract - You may cancel this Contract by
delivering or mailing a written notice or sending a telegram to Charter
National Life Insurance Company, 8301 Maryland Avenue, Saint Louis,
Missouri 63105, and by returning the Contract before midnight of the tenth
day after the date You receive the Contract. Notice given by mail and
return of the Contract by mail are effective on being postmarked, properly
addressed and postage prepaid. We will return the premium paid plus or
minus any investment experience within ten days after We receive notice of
cancellation and the returned Contract.
Signed for the Company in St. Louis, Missouri, on the Contract Date.
Alexis M. Berg Gregory R. Barstead
Secretary President
This is a Legal Contract Between You and Us. Please Read Your Contract
Carefully.
P1258(MN)(93)
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
P1258(MN)(93)
<PAGE>
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
10-Day Right to Examine Contract - You may return this Contract to Us for
any reason within ten days after it is received. Upon receipt of the
Contract, We will make a full refund of the greater of (1) the initial
premium, or (2) the Accumulated Value plus any amount deducted for taxes or
charges from the initial premium. The Contract will be void as of the
Contract Date. During this 10 day period, the portion of the initial
premium allocated to the Variable Account will be invested in the Money
Market Subaccount.
Signed for the Company in St. Louis, Missouri, on the Contract Date.
Alexis M. Berg Gregory R. Barstead
Secretary President
This is a Legal Contract Between You and Us. Please Read Your Contract
Carefully.
P1258(MO-MM)
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
10-Day Right to Examine Contract - You may return this Contract to Us for
any reason within ten days after it is received. Upon receipt of the
Contract, We will make a full refund of the greater of (1) the initial
premium, or (2) the Accumulated Value plus any amount deducted for taxes or
charges from the initial premium. The Contract will be void as of the
Contract Date. During this 10 day period, the portion of the initial
premium allocated to the Variable Account will be invested in the Money
Market Subaccount.
If You have any questions concerning this Contract or if anyone suggests
that You change or replace this Contract, please contact the Home Office of
the Company at (800) 242-4402.
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
P1258(MO-MM)
<PAGE>
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
10-Day Right to Examine Contract - You may return this Contract to Us for
any reason within ten days after it is received. Upon receipt of the
Contract, We will make a full refund of the greater of (1) the initial
premium, or (2) the Accumulated Value plus any amount deducted for taxes or
charges from the initial premium. The Contract will be void as of the
Contract Date. During this 10 day period, the portion of the initial
premium allocated to the Variable Account will be invested in the Money
Market Subaccount.
Signed for the Company in St. Louis, Missouri, on the Contract Date.
Alexis Berg Gregory R. Barstead
Secretary President
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
This is a Legal Contract Between You and Us. Please Read Your Contract
Carefully.
P1258(SC-MM)
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
10-Day Right to Examine Contract - You may return this Contract to Us for
any reason within ten days after it is received. Upon receipt of the
Contract, We will make a full refund of the greater of (1) the initial
premium, or (2) the Accumulated Value plus any amount deducted for taxes or
charges from the initial premium. The Contract will be void as of the
Contract Date. During this 10 day period, the portion of the initial
premium allocated to the Variable Account will be invested in the Money
Market Subaccount.
If You have any questions concerning this Contract or if anyone suggests
that You change or replace this Contract, please contact the Home Office of
the Company.
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
P1258(SC-MM)
<PAGE>
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
10-Day Right to Examine Contract - You may return this Contract to Us for
any reason within ten days after it is received. Upon receipt of the
Contract, We will return the premium paid and the Contract will be void as
of the Contract Date.
Payment requests for a Full Surrender or Death Benefit may be deferred for
up to six months if such payment is based on contract values in the General
Account.
Signed for the Company in St. Louis, Missouri, on the Contract Date.
Alexis Berg Gregory R. Barstead
Secretary President
This is a Legal Contract Between You and Us. Please Read Your Contract
Carefully.
P1258(WA)
<PAGE>
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
10-Day Right to Examine Contract - You may return this Contract to Us for
any reason within ten days after it is received. Upon receipt of the
Contract, We will return the premium paid and the Contract will be void as
of the Contract Date.
If You have any questions concerning this Contract or if anyone suggests
that You change or replace this Contract, please contact the Home Office of
the Company.
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
P1258(WA)
<PAGE>
CHARTER NATIONAL LIFE INSURANCE COMPANY
8301 MARYLAND AVENUE - SAINT LOUIS, MISSOURI 63105
FLEXIBLE PREMIUM VARIABLE
DEFERRED ANNUITY
Right to Make Additional Premium Payments Under Limited Conditions.
We Will Pay an Annuity Subject to the Provisions of This
Contract Beginning on the Maturity Date Specified on Page 2.
The Accumulated Value May Increase or Decrease
in Accordance With the Experience of the Selected Subaccounts.
Death Benefits Are Provided Under This Contract Prior to the Maturity Date.
Annuity Benefits Are Not Guaranteed as to Dollar
Amounts Prior to the Maturity Date.
Annuity Income Options Are Available.
Nonparticipating
Upon written request, we will provide within a reasonable time reasonable
factual information regarding the benefits and provisions of this Contract.
10-Day Right to Examine Contract - You may return this Contract to Us for
any reason within ten days after it is received. Upon receipt of the
Contract, We will return the premium plus or minus any investment
experience and the Contract will be void as of the Contract Date.
Signed for the Company in St. Louis, Missouri, on the Contract Date.
Alexis Berg Gregory R. Barstead
Secretary President
This is a Legal Contract Between You and Us. Please Read Your Contract
Carefully.
P1258(AZ)
<PAGE>
C O N T R A C T R I D E R
Effective on the Contract Date, the following language is added to the
contract:
WARNING: Any person who knowingly, and with intent to injure, defraud or
deceive any insurer, makes any claim for the proceeds of an insurance
policy containing any false, incomplete or misleading information is guilty
of a felony.
All other provisions of the Contract remain unchanged.
CHARTER NATIONAL LIFE INSURANCE COMPANY
Alexis M. Berg - Secretary
R 001 (OK)
<PAGE>
THE VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY ACCOUNT
The Variable Annuity Account is a separate investment account established
by Us in accordance with Missouri law. The assets of this account are
owned by Us and will be used to provide values and benefits under this and
similar annuities. The Variable Annuity Account is not charged with
liabilities arising out of any other business that We may conduct.
SUBACCOUNTS
The Variable Annuity Account consists of subaccounts, each of which invests
in shares of a designated registered investment company fund. Shares are
purchased at their net asset value.
Each distribution of income, dividends, and capital gains from a fund will
be reinvested at net asset value in shares of the fund.
The values and benefits of your Contract depend on the investment
performance of any subaccount(s) You select. You bear the investment risk
for amounts allocated to the subaccount(s). We do not guarantee the
investment performance.
CHANGE IN SUBACCOUNTS
We can add, remove, or combine subaccounts as permitted by law. When a
subaccount is removed, We have the right to substitute a different
subaccount.
We can also add, remove, or substitute subaccount investments as permitted
by law.
We will notify You in advance of liquidation of a subaccount in which any
of your Contract values are invested. We will ask You to tell Us how these
funds should be reallocated. In the absence of instructions from You, We
will transfer the amount in the liquidated subaccount to the Money Market
subaccount.
CHANGE OF INVESTMENT POLICY
The investment policy of the Variable Annuity Account will not be changed
unless:
a) the change has been approved by the Director of Insurance of the
State of Missouri, and
b) a statement of the approval process has been filed with and approved
by the Insurance Department of the state in which this Contract is
delivered.
2575 (IA) Page 8
<PAGE>
ANNUITY INCOME OPTIONS
The Accumulated Value of this Contract may be applied under one of the
following Options:
Option 1. LIFE ANNUITY WITH INSTALLMENT REFUND
The amount will be distributed in equal installments to You, as long as You
are living. If You die before the sum of the installments paid equals or
exceeds the Accumulated Value on the Maturity Date, We will continue to pay
installments to your Beneficiary until the sum of such installments does
equal or exceed the Accumulated Value on the Maturity Date.
Option 2. JOINT AND SURVIVOR LIFE WITH INSTALLMENT REFUND
The amount will be distributed in equal installments to You or, upon your
death, to your named Joint Annuitant, for as long as either of You is
living. If both of You die before the sum of the installments paid equals
or exceeds the Accumulated Value on the Maturity Date, We will continue to
pay installments to your Beneficiary until the sum of such installments
does equal or exceed the Accumulated Value on the Maturity Date.
Option 3. OTHER ANNUITY INCOME OPTIONS
Other Annuity Income Options may be available at the time a form of payment
is elected.
OPTION CONDITIONS:
If this Contract is assigned prior to the Maturity Date, We will pay to the
assignee in one sum the amount to which he is entitled. We will then apply
any balance payable to the chosen Annuity Income Option.
Any amount payable under an Annuity Income Option will be subject to the
following conditions:
a) The effective date of an Annuity Income Option will be the Maturity
Date.
b) Annuity Income Options will not be available if the amount to be
applied is insufficient to produce monthly payments of at least $20.
c) The amount of installment payments will be determined by the age of
the Annuitant (and, if Option 2 is selected, by the age of the Joint
Annuitant) on the Maturity Date.
d) We may require evidence that the Annuitant (or Joint Annuitant, if
applicable) is alive on any scheduled payment date before the payment is
made.
2583 (MA) Page 16
<PAGE>
BASIS OF CALCULATIONS
The 1983a Individual Annuity Mortality Table will be used to establish the
reserves and Accumulated Value. The reserves under this Contract are not
less than the minimum required by the insurance laws of the State in which
this Contract has been issued.
The method used in computing reserves and Accumulated Values in the
Variable Annuity Account is in accordance with actuarial procedures that
recognize the variable nature of such an Account. A detailed statement of
the method of calculation of reserves has been filed with the insurance
official of the state in which the Contract is delivered.
HOW ACCUMULATED VALUE IS CALCULATED
On the Effective Date, the Accumulated Value equals the initial premium
minus premium taxes, if any, minus the first year's Records Maintenance
Charge. The Accumulated Value of the Contract can thereafter be determined
on each Valuation Date as follows:
a) The Accumulated Value on the prior Valuation Date; plus
b) The sum of the following (which may be positive or negative for the
Valuation Period):
1) The total net investment experience of the Contract's value in the
elected subaccount(s). For each subaccount, the net investment experience
is the Contract's value in the subaccount as of the prior Valuation Date
times the percentage change in the net asset value of the shares of the
designated fund. It is adjusted for any distributions made during the
Valuation Period; less
2) Any charge for tax liability resulting from assets held by the
Variable Annuity Account; less
3) Contract Administration Charges; less
4) Mortality and Expense Risk Charges; plus
5) Premiums received less premium taxes deducted; less
6) Any charge(s) for transfers (if applicable); and less
7) Records Maintenance Charge (if applicable).
2586 (MD) Page 19
<PAGE>
ACCOUNTING PROCEDURES:
The Contract's value in each subaccount is maintained in units. A unit
value is determined for each Valuation Date. The Contract's value in any
subaccount is the number of units times the unit value.
The unit value is determined by taking the net asset value at the end of
each Valuation Period, deducting any tax charges with respect to a fund for
the Valuation Period and adding any distributions of the fund for the
Valuation Period. The unit value is calculated daily for each subaccount.
Administration Charges and Mortality and Expense Risk Charges are accounted
for by a deduction each Valuation Period from the unit values.
All additions to or deductions from a subaccount are made on the basis of
the unit value as of the end of the Valuation Period for which the
transaction is to be effective.
2587 (MD) Page 20
<PAGE>
TABLE OF CONTENTS
Page
Definitions 5-6
Premiums 7
The Variable Annuity Account 8-9
Accumulated Value 10
Annuity Benefit 11
Charges 12
General Provisions 13-14
Beneficiary Provisions 15
Payments on Death 15
Annuity Income Options 16-18
Basis of Calculations 19-20
2570 (MN) Page 3
<PAGE>
DEFINITIONS
ACCUMULATED VALUE is the total of the value of the amounts in the
subaccount(s) for this Contract as of any
Valuation Date on or before the Maturity Date.
AGE means the age of the Annuitant on the birthday
nearest to the Contract Anniversary.
ANNUITANT, OWNER,
YOU, YOUR is the Owner of this Contract and is the person
whose life is used to determine the duration and
amount of any annuity payments and is shown on
Page 2.
ANNUITY BENEFIT is a series of payments to be made under any
Annuity Income Option scheduled to begin on the
Maturity Date.
ANNUITY INCOME OPTION is any method of receiving annuity payments as
described on Page 16.
BENEFICIARY is the person named in the Application or by later
designation to receive any Death Benefit or any
remaining annuity payments under an Annuity Income
Option.
COMPANY, WE, US, OUR is Charter National Life Insurance Company.
CONTRACT YEAR, MONTH,
AND ANNIVERSARY shall be measured from the Contract Date shown on
Page 2.
DEATH BENEFIT is the amount We will pay to the Beneficiary if
You die before the Maturity Date. It will be equal
to the Accumulated Value on the date We receive
proof of your death.
JOINT ANNUITANT is applicable only if Annuity Option 2 (see Page
16) has been elected by the Owner prior to the
Maturity Date of this Contract.
MATURITY DATE is shown on Page 2 or by later designation. It is
the date the Annuity Benefit is scheduled to begin
if the Annuitant is living.
NET PREMIUM is equal to the premium less premium taxes and the
first year's Records Maintenance Charge.
NONPARTICIPATING means this Contract does not share in the profits
or surplus of the Company, and no dividends are
payable.
2572 (MN) Page 5
<PAGE>
DEFINITIONS (Continued)
VALUATION DATE is each day on which valuation of the
subaccount(s) is required by applicable law and
currently includes each day the New York Stock
Exchange is open for trading.
VALUATION PERIOD is the period that starts at the close of a
Valuation Date and ends at the close of the next
succeeding Valuation Date.
VARIABLE ANNUITY
ACCOUNT is a separate account of Charter National Life
Insurance Company as shown on Page 2.
2573 (MN) Page 6
<PAGE>
PREMIUMS
ALLOCATION OF NET PREMIUM(S)
You determine the allocation of your Net Premium(s) to one or more of the
subaccounts of the Variable Annuity Account. To the extent You allocate
the Net Premium(s) to each subaccount, your Accumulated Value will vary
with the investment performance. All allocations must be in whole
percentages which add up to 100%.
LIMITATIONS ON ADDITIONAL PREMIUM
You may make additional premium payments at any time prior to the Maturity
Date. Additional premiums will be allocated in the same manner as your
most recent allocation unless We receive other instructions from You.
We reserve the right to:
a) reject any premium payment which would cause the total premiums paid
to exceed $1,000,000;
b) limit the minimum amount of each premium payment to $1,000; and
c) limit the frequency of premium payments to four times per Contract
Year.
2574 (MN) Page 7
<PAGE>
BENEFICIARY PROVISIONS
BENEFICIARY DESIGNATION
The Beneficiary will be as shown in the Application unless changed as
provided in this Contract. If no Beneficiary has been named, your estate
shall be the Beneficiary.
CHANGE OF BENEFICIARY
You may change the Beneficiary by filing a written notice with Us at our
Home Office. A Beneficiary named irrevocably may not be changed without
the written consent of that Beneficiary. When recorded by Us at our Home
Office, the change will take effect on the date the notice was signed. Any
Death Benefit paid before We record a change of Beneficiary will not be
subject to that change.
PAYMENTS ON DEATH
DEATH OF ANNUITANT
If You die prior to the Maturity Date and this Contract has not been
surrendered or expired, We will pay to the Beneficiary the Accumulated
Value calculated on the date We receive proof of your death. This amount
will be paid in a lump sum.
If the Beneficiary dies within thirty (30) days of your death and We have
not yet paid the Death Benefit, it will be paid as if the Beneficiary had
died first.
PROOF OF DEATH
The amounts payable on death will be paid within two months after We
receive due proof of such death. Such proof must be submitted to Us at our
Home Office. Claim forms will be made available upon request. All
payments by Us are payable at our Home Office or by mail from our Home
Office.
Any assignment made on this Contract prior to the Maturity Date will be
paid to the assignee first in a lump sum. Any balance payable by Us will
then be paid as indicated.
PROTECTION OF DEATH BENEFIT
Except as permitted by law, no payment of the Death Benefit or interest
thereon will be subject to the claim of creditors of the Beneficiary or to
legal process against the Beneficiary.
2582 (MN) Page 15
<PAGE>
ANNUITY BENEFIT
ANNUITANT
The Annuitant and the Owner are the same person and cannot be changed. The
Annuitant is the person whose life will be used to determine the duration
and amount of the Annuity Benefit.
MATURITY DATE
The Maturity Date will generally be stated on the Application. If it is
not indicated on the Application, We will use the later of the Contract
Anniversary nearest the Annuitant's age 80 or ten (10) years from the
Contract Date.
ANNUITY CHANGE OPTION
You may elect to change either the Maturity Date or the Annuity Income
Option. Any such request must be made prior to the Maturity Date and in
writing to Us at our Home Office.
The changed Maturity Date may be any future Contract Anniversary not later
than the later of:
a) the Contract Anniversary nearest the Annuitant's 80th birthday; or
b) ten (10) years from the next Contract Anniversary.
ANNUITY PAYMENTS
On the Maturity Date, We will calculate the Accumulated Value of this
Contract. The Annuity Benefit will then be determined based on the Annuity
Income Option elected, age of the Annuitant (and, the age of the Joint
Annuitant if Option 2 is elected), and the amount of Accumulated Value. If
no Annuity Income Option has been elected, We will pay benefits under
Option 1. The first annuity payment will be made to You within seven (7)
days after the Maturity Date. All payments by Us are payable at our Home
Office or by mail from our Home Office.
2578 (MT) Page 11
<PAGE>
GENERAL PROVISIONS
THE CONTRACT
We have issued this Contract in consideration of the Application and
payment of the initial premium. The Contract with the Application attached
make the entire contract. No statement made by You or on your behalf shall
be used in defense of a claim under the Contract unless it is made with the
intent to commit fraud and it is contained in the written Application.
CHANGES TO THE CONTRACT
This Contract may be changed in writing by mutual agreement between You and
the Company. Only the President, a Vice President, the Secretary, or an
Assistant Secretary of our Company is authorized to change or waive the
terms of the Contract.
EFFECTIVE DATE
The Effective Date will be within two (2) business days after the full
initial premium and completed Application have been received at our Home
Office. You may request a premium receipt signed by the President, a Vice
President, the Secretary, or an Assistant Secretary of our Company. No
coverage will take effect until the check or draft for the premium is
honored.
CONTRACT DATE
The Contract Date will be used to determine Contract Months, Contract
Anniversaries, Contract Years, and age of the Annuitant. The Contract Date
will be the same as the Effective Date unless the Effective Date is the
29th, 30th, or 31st of the month, in which case the Contract Date will be
the 28th of the month.
MISSTATEMENTS
If the Annuitant's age has been misstated on the Application, We will
recalculate the Annuity Benefit to that which the Accumulated Value would
have established had the Annuitant's age been correctly stated. In the
case of Option 2, if the Joint Annuitant's age has been misstated, the same
adjustment will be made.
ASSIGNMENT
The Owner may assign the right to receive annuity payments and also assign
the Contract as collateral security. We are not responsible for the
adequacy of any assignment. When an assignment is filed with and recorded
by Us at our Home Office, your rights and those of the Beneficiary will be
subject to it.
2580 (MT) Page 13
<PAGE>
ANNUITY INCOME OPTIONS
The Accumulated Value of this Contract may be applied under one of the
following Options:
Option 1. LIFE ANNUITY WITH INSTALLMENT REFUND
The amount will be distributed in equal installments to You, as long as You
are living. If You die before the sum of the installments paid equals or
exceeds the Accumulated Value on the Maturity Date, We will continue to pay
installments to your Beneficiary until the sum of such installments does
equal or exceed the Accumulated Value on the Maturity Date.
Option 2. JOINT AND SURVIVOR LIFE WITH INSTALLMENT REFUND
The amount will be distributed in equal installments to You or, upon your
death, to your named Joint Annuitant, for as long as either of You is
living. If both of You die before the sum of the installments paid equals
or exceeds the Accumulated Value on the Maturity Date, We will continue to
pay installments to your Beneficiary until the sum of such installments
does equal or exceed the Accumulated Value on the Maturity Date.
Option 3. OTHER ANNUITY INCOME OPTIONS
Other Annuity Income Options may be available at the time a form of payment
is elected.
OPTION CONDITIONS:
If this Contract is assigned prior to the Maturity Date, We will pay to the
assignee in one sum the amount to which he is entitled. We will then apply
any balance payable to the chosen Annuity Income Option.
Any amount payable under an Annuity Income Option will be subject to the
following conditions:
a) The effective date of an Annuity Income Option will be the Maturity
Date.
b) Annuity Income Options will not be available if the amount to be
applied is less than $5,000 or is insufficient to produce monthly payments
of at least $100.
c) The amount of installment payments will be determined by the age of
the Annuitant (and, if Option 2 is selected, by the age of the Joint
Annuitant) on the Maturity Date.
d) We may require evidence that the Annuitant (or Joint Annuitant, if
applicable) is alive on any scheduled payment date before the payment is
made.
2583 (MT) Page 16
<PAGE>
OPTION 1. MONTHLY INSTALLMENTS FOR LIFE - INSTALLMENT REFUND ANNUITY
Per $1,000 of Accumulated Value
Age Rate Age Rate Age Rate
0 3.05 34 3.52 68 5.65
1 3.06 35 3.54 69 5.79
2 3.07 36 3.57 70 5.94
3 3.07 37 3.60 71 6.09
4 3.08 38 3.63 72 6.26
5 3.09 39 3.66 73 6.44
6 3.10 40 3.69 74 6.63
7 3.10 41 3.72 75 6.83
8 3.11 42 3.76 76 7.04
9 3.12 43 3.80 77 7.26
10 3.13 44 3.83 78 7.51
11 3.14 45 3.87 79 7.76
12 3.15 46 3.92 80 8.03
13 3.16 47 3.96 81 8.32
14 3.17 48 4.01 82 8.61
15 3.19 49 4.06 83 8.93
16 3.20 50 4.11 84 9.27
17 3.21 51 4.16 85 9.62
18 3.22 52 4.22 86 9.99
19 3.24 53 4.27 87 10.38
20 3.25 54 4.34 88 10.78
21 3.26 55 4.40 89 11.19
22 3.28 56 4.47 90 11.63
23 3.29 57 4.54 91 12.08
24 3.31 58 4.62 92 12.54
25 3.33 59 4.70 93 13.02
26 3.35 60 4.78 94 13.54
27 3.36 61 4.87 95 14.08
28 3.38 62 4.96 96 14.63
29 3.40 63 5.06 97 15.24
30 3.42 64 5.17 98 15.93
31 3.45 65 5.28 99 16.71
32 3.47 66 5.39 l00 17.51
33 3.49 67 5.52
2584 (MT) Page 17
<PAGE>
OPTION 2. MONTHLY INSTALLMENTS FOR LIFE - JOINT & SURVIVOR 100%
Per $1,000 of Accumulated Value
Owner Joint Annuitant Age
Age 45 46 47 48 49 50 51 52 53
45 3.62 3.64 3.65 3.67 3.68 3.70 3.71 3.72 3.74
46 3.64 3.65 3.67 3.69 3.70 3.72 3.73 3.75 3.76
47 3.65 3.67 3.69 3.71 3.72 3.74 3.76 3.77 3.79
48 3.67 3.69 3.71 3.72 3.74 3.76 3.78 3.80 3.81
49 3.68 3.70 3.72 3.74 3.76 3.78 3.80 3.82 3.84
50 3.70 3.72 3.74 3.76 3.78 3.80 3.82 3.84 3.86
51 3.71 3.73 3.76 3.78 3.80 3.82 3.85 3.87 3.89
52 3.72 3.75 3.77 3.80 3.82 3.84 3.87 3.89 3.91
53 3.74 3.76 3.79 3.81 3.84 3.86 3.89 3.91 3.94
54 55 56 57 58 59 60 61 62
54 3.99 4.01 4.04 4.06 4.08 4.10 4.13 4.15 4.17
55 4.01 4.04 4.06 4.09 4.12 4.14 4.16 4.19 4.21
56 4.04 4.06 4.09 4.12 4.15 4.17 4.20 4.22 4.25
57 4.06 4.09 4.12 4.15 4.18 4.21 4.24 4.26 4.29
58 4.08 4.12 4.15 4.18 4.21 4.24 4.27 4.30 4.33
59 4.10 4.14 4.17 4.21 4.24 4.28 4.31 4.34 4.37
60 4.13 4.16 4.20 4.24 4.27 4.31 4.35 4.38 4.41
61 4.15 4.19 4.22 4.26 4.30 4.34 4.38 4.42 4.46
62 4.17 4.21 4.25 4.29 4.33 4.37 4.41 4.46 4.50
63 64 65 66 67 68 69 70 71
63 4.58 4.62 4.66 4.70 4.73 4.77 4.80 4.83 4.86
64 4.62 4.66 4.71 4.75 4.79 4.83 4.87 4.90 4.93
65 4.66 4.71 4.75 4.80 4.85 4.89 4.93 4.97 5.01
66 4.70 4.75 4.80 4.85 4.90 4.95 4.99 5.04 5.08
67 4.73 4.79 4.85 4.90 4.95 5.01 5.06 5.10 5.15
68 4.77 4.83 4.89 4.95 5.01 5.06 5.12 5.17 5.22
69 4.80 4.87 4.93 4.99 5.06 5.12 5.18 5.24 5.29
70 4.83 4.90 4.97 5.04 5.10 5.17 5.24 5.30 5.36
71 4.86 4.93 5.01 5.08 5.15 5.22 5.29 5.36 5.43
72 73 74 75 76 77 78 79 80
72 5.57 5.64 5.71 5.77 5.83 5.89 5.94 5.99 6.03
73 5.64 5.72 5.79 5.87 5.93 6.00 6.06 6.11 6.16
74 5.71 5.79 5.88 5.96 6.03 6.10 6.17 6.23 6.29
75 5.77 5.87 5.96 6.04 6.13 6.21 6.28 6.36 6.42
76 5.83 5.93 6.03 6.13 6.22 6.31 6.40 6.48 6.55
77 5.89 6.00 6.10 6.21 6.31 6.41 6.51 6.60 6.68
78 5.94 6.06 6.17 6.28 6.40 6.51 6.61 6.71 6.81
79 5.99 6.11 6.23 6.36 6.48 6.60 6.71 6.82 6.93
80 6.03 6.16 6.29 6.42 6.55 6.68 6.81 6.93 7.05
Factors for any other ages will be provided upon request.
2585 (MT) Page 18
<PAGE>
INDEX
Page
Accounting Procedures 19
Allocation of Net Premium(s) 7
Annuitant 11
Annuity Change Option 11
Annuity Payments 11
Assignment 13
Beneficiary Designation 15
Change in Subaccounts 8
Change of Beneficiary 15
Change of Investment Policy 8
Changes to the Contract 13
Contract, The 13
Contract Administration Charge 12
Contract Date 13
Death of Annuitant 15
Effective Date 13
Full Surrender 10
Limitations on Additional Premium 7
Maturity Date 11
Misstatements 13
Mortality and Expense Risk Charge 12
Option Conditions 16
Partial Surrender 10
Premium Tax 12
Proof of Death 15
Protection of Death Benefit 15
Records Maintenance Charge 12
Reports to Owner 14
Right to Defer Payment 14
Rights Reserved by the Company 9
Subaccounts 8
Taxes 12
Transfers 10
Variable Annuity Account 8
2571 (PA) Page 4
BASIS OF CALCULATIONS
The 1983a Individual Annuity Mortality Table will be used to establish the
reserves and Accumulated Value. The reserves under this Contract are not
less than the minimum required by the insurance laws of the State in which
this Contract has been issued.
The method used in computing reserves and Accumulated Values in the
Variable Annuity Account is in accordance with actuarial procedures that
recognize the variable nature of such an Account. A detailed statement of
the method of calculation of reserves has been filed with the insurance
official of the state in which the Contract is delivered.
ACCOUNTING PROCEDURES:
On the Effective Date, the Accumulated Value equals the initial premium
minus premium taxes, if applicable. Thereafter, the Accumulated Value is
equal to the sum of the contract's values in each of the subaccounts.
The Contract's value in each subaccount is maintained in units. On the
issue date, the number of units in any subaccount is the dollar amount
allocated to that subaccount divided by the unit value for that subaccount.
The Contract's value at any time in any subaccount is the number of units
times the unit value. Premium taxes, if any, are deducted from the premium
paid prior to allocation to the subaccounts. Transfer charges and a record
maintenance charge, if applicable, are deducted proportionately from each
subaccount and result in a deduction in the number of units from the
affected subaccounts.
The unit value of a subaccount is determined on each Valuation Date as
follows:
a) The unit value on the prior Valuation Date; plus
b) The sum of the following (which may be positive or negative for
the Valuation Period):
1) The total net investment experience of the
subaccount;
2) Any charge for tax liability resulting from assets
held by the Variable Annuity Account;
3) Contract Administration Charges;
4) Mortality and Expense Risk Charges;
The net investment experience of a subaccount is the change in value of the
underlying investments of the subaccount net of fees and expenses incurred
by the Portfolio.
2586 (PA) Page 19
<PAGE>
ACCOUNTING PROCEDURES (Continued):
Additional premiums less premium taxes, if any, are allocated to the
subaccounts in accordance with the most recent instructions received from
the Owner and result in additional units in that subaccount. The number of
additional subaccount units resulting from the allocation of a portion of
an additional premium payment is equal to the amount allocated to a
subaccount divided by that subaccount's unit value.
Partial surrenders, as instructed by the Owner at the time of the request,
will reduce the number of units in each of the subaccounts from which a
withdrawal is requested. The number of subaccount units to be surrendered
is equal to the dollar amount of surrender allocated to that subaccount
divided by that subaccount's unit value.
Transfers, as instructed by the Owner at the time of the transfer, will
increase or reduce the number of units in each of the subaccounts affected.
The number of units transferred to or from a subaccount is equal to the
dollar amount of the transfer request divided by the subaccount's unit
value.
All additions to or deductions from a subaccount are made on the basis of
the unit value as of the end of the Valuation Period for which the
transaction is to be effective.
2587 (PA) Page 20
<PAGE>
CHARGES
CONTRACT ADMINISTRATION CHARGE
There will be a Contract Administration Charge deducted from the values in
the subaccount(s) on a daily basis. The charge is .0008260% of the
Contract's value in each such subaccount per day.
MORTALITY AND EXPENSE RISK CHARGE
There will be a Mortality and Expense Risk Charge deducted from the values
in the subaccount(s) on a daily basis. The charge is .0019275% of the
Contract's value in each such subaccount per day. We guarantee that
subsequent annuity payments will not be affected by variations in our
expenses or mortality experience.
RECORDS MAINTENANCE CHARGE
At the beginning of each Contract Year, We will deduct a Records
Maintenance Charge of $35.00. This charge will be deducted proportionately
from the values in each subaccount. We reserve the right to increase this
charge to a maximum of $40.00 per Contract Year.
PREMIUM TAX
If any premium tax is payable by Us on this Contract, the tax will be
deducted from each premium.
TAXES
If at any time We incur any tax liability resulting from the assets held by
the Variable Annuity Account, We may charge the Variable Annuity Account
for the tax.
2579 (SC) Page 12
<PAGE>
GENERAL PROVISIONS
THE CONTRACT
We have issued this Contract in consideration of the Application and
payment of the initial premium. The Contract with the Application attached
make the entire contract. No statement made by You or on your behalf shall
be used in defense of a claim under the Contract.
CHANGES TO THE CONTRACT
This Contract may be changed in writing by mutual agreement between You and
the Company. Only the President, a Vice President, the Secretary, or an
Assistant Secretary of our Company is authorized to change or waive the
terms of the Contract.
EFFECTIVE DATE
The Effective Date will be within two (2) business days after the full
initial premium and completed Application have been received at our Home
Office. You may request a premium receipt signed by the President, a Vice
President, the Secretary, or an Assistant Secretary of our Company. No
coverage will take effect until the check or draft for the premium is
honored.
CONTRACT DATE
The Contract Date will be used to determine Contract Months, Contract
Anniversaries, Contract Years, and age of the Annuitant. The Contract Date
will be the same as the Effective Date unless the Effective Date is the
29th, 30th, or 31st of the month, in which case the Contract Date will be
the 28th of the month.
MISSTATEMENTS
If the Annuitant's age or sex has been misstated on the Application, We
will recalculate the Annuity Benefit to that which the Accumulated Value
would have established had the Annuitant's age or sex been correctly
stated. In the case of Option 2, if the Joint Annuitant's age or sex has
been misstated, the same adjustment will be made.
ASSIGNMENT
The Owner may assign the right to receive annuity payments and also assign
the Contract as collateral security. We are not responsible for the
adequacy of any assignment. When an assignment is filed with and recorded
by Us at our Home Office, your rights and those of the Beneficiary will be
subject to it.
INCONTESTABILITY
After two years from the Contract Date, this Contract will be incontestable
as to statements made in the application.
2580 (SC) Page 13
<PAGE>
SUMMARY
This is an adjustable premium variable deferred annuity. It provides a
Death Benefit to the Beneficiary if You die before the Maturity Date. It
also provides an Annuity Benefit if You are living on the Maturity Date.
The initial premium for this Contract is shown on Page 2. You may make
additional premium payments subject to the potential limitations described
on Page 7 of this Contract.
The Accumulated Value of this Contract will vary according to how You
allocate the net premium(s). Allocations may be made to one or more of the
subaccounts of the Variable Annuity Account. Each Subaccount invests its
assets in one of a series of registered investment company funds. The
amount of the Accumulated Value will vary with the investment performance
of the subaccount(s) selected.
You may make a partial surrender of this Contract at any time prior to the
Maturity Date. Any such surrender will cause the Annuity Benefit to be
reduced.
This is a brief description of the provisions of this Contract. They are
fully described on the remaining pages of the Contract.
2572 (TN) Page 5
<PAGE>
INDEX
Page
Accounting Procedures 20
Allocation of Net Premium(s) 7
Annuitant 11
Annuity Change Option 11
Annuity Payments 11
Assignment 14
Beneficiary Designation 15
Change in Subaccounts 8
Change of Beneficiary 15
Change of Investment Policy 8
Changes to the Contract 13
Contract, The 13
Contract Administration Charge 12
Contract Date 13
Death of Annuitant 15
Effective Date 13
Full Surrender 10
Limitations on Additional Premium 7
Maturity Date 11
Misstatements 13
Mortality and Expense Risk Charge 12
Option Conditions 16
Partial Surrender 10
Premium Tax 12
Proof of Death 15
Protection of Death Benefit 15
Records Maintenance Charge 12
Reports to Owner 14
Right to Defer Payment 14
Rights Reserved by the Company 9
Subaccounts 8
Taxes 12
Transfers 10
Variable Annuity Account 8
2571 (TX) Page 4
<PAGE>
DEFINITIONS
ACCUMULATED VALUE is the total of the value of the amounts in the
subaccount(s) for this Contract as of any
Valuation Date on or before the Maturity Date.
AGE means the age of the Annuitant on the birthday
nearest to the Contract Anniversary.
ANNUITANT, OWNER,
YOU, YOUR is the Owner of this Contract and is the person
whose life is used to determine the duration and
amount of any annuity payments and is shown on
Page 2.
ANNUITY BENEFIT is a series of payments to be made under any
Annuity Income Option scheduled to begin on the
Maturity Date.
ANNUITY INCOME OPTION is any method of receiving annuity payments as
described on Page 16.
BENEFICIARY is the person named in the Application or by later
designation to receive any Death Benefit or any
remaining annuity payments under an Annuity Income
Option.
COMPANY, WE, US, OUR is Charter National Life Insurance Company.
CONTRACT YEAR, MONTH,
AND ANNIVERSARY shall be measured from the Contract Date shown on
Page 2.
DEATH BENEFIT is the amount We will pay to the Beneficiary if
You die before the Maturity Date. It will be equal
to the Accumulated Value on the date We receive
proof of your death.
JOINT ANNUITANT is applicable only if Annuity Option 2 (see Page
16) has been elected by the Owner prior to the
Maturity Date of this Contract.
MATURITY DATE is shown on Page 2 or by later designation. It is
the date the Annuity Benefit is scheduled to begin
if the Annuitant is living.
NET ASSET VALUE is calculated by dividing the current market value
of the total subaccount assets, less all
liabilities, by the total number of shares
outstanding.
NET PREMIUM is equal to the premium less premium taxes, if
applicable, and the first year's Records
Maintenance Charge.
2573 (TX) Page 6
<PAGE>
DEFINITIONS (Continued)
NONPARTICIPATING means this Contract does not share in the profits
or surplus of the Company, and no dividends are
payable.
VALUATION DATE is each day on which valuation of the
subaccount(s) is required by applicable law and
currently includes each day the New York Stock
Exchange is open for trading.
VALUATION PERIOD is the period that starts at the close of a
Valuation Date and ends at the close of the next
succeeding Valuation Date.
VARIABLE ANNUITY
ACCOUNT is a separate account of Charter National Life
Insurance Company as shown on Page 2.
PREMIUMS
ALLOCATION OF NET PREMIUM(S)
You determine the allocation of your Net Premium(s) to one or more of the
subaccounts of the Variable Annuity Account. To the extent You allocate
the Net Premium(s) to each subaccount, your Accumulated Value will vary
with the investment performance. All allocations must be in whole
percentages which add up to 100%.
LIMITATIONS ON ADDITIONAL PREMIUM
You may make additional premium payments at any time prior to the Maturity
Date. Additional premiums will be allocated in the same manner as your
most recent allocation unless We receive other instructions from You.
We reserve the right to:
a) reject any premium payment which would cause the total premiums paid
to exceed $1,000,000;
b) limit the minimum amount of each premium payment to $1,000; and
c) limit the frequency of premium payments to four times per Contract
Year.
2574 (TX) Page 7
<PAGE>
ACCUMULATED VALUE
Your Accumulated Value is the total of the value of the amounts in the
selected subaccount(s) for this Contract on any Valuation Date on or before
the Maturity Date. The amount of the Accumulated Value depends on the
amount of premium(s) paid, the investment performance of your selected
subaccounts, any charges, and any deductions for partial surrenders.
FULL SURRENDER
You may, by written request, surrender this Contract at any time prior to
the Maturity Date. Upon surrender, We will pay the Accumulated Value of
this Contract to You in a lump sum.
PARTIAL SURRENDER
At any time prior to the Maturity Date, You may request a partial surrender
of this Contract. The following conditions will apply:
a) The amount surrendered must be at least $500.
b) The remaining Accumulated Value must be at least $5,000.
c) If You have funds invested in more than one subaccount, You must
instruct Us as to what amount(s) should be withdrawn from which
subaccount(s).
TRANSFERS
You may transfer all or a portion of the Contract's value among the
subaccounts at any time.
All transfers made at the same time will be treated as one request. A
charge for the third and subsequent transfer requests may be deducted in
any Contract Year. The charge will be a $10.00 deduction from each
subaccount from which amounts are transferred.
2577 (TX) Page 10
<PAGE>
CHARGES
CONTRACT ADMINISTRATION CHARGE
There will be a Contract Administration Charge deducted from the values in
the subaccount(s) on a daily basis. The charge is .0008260% of the
Contract's value in each such subaccount per day.
MORTALITY AND EXPENSE RISK CHARGE
There will be a Mortality and Expense Risk Charge deducted from the values
in the subaccount(s) on a daily basis. The charge is .0019275% of the
Contract's value in each such subaccount per day.
RECORDS MAINTENANCE CHARGE
At the beginning of each Contract Year, We will deduct a Records
Maintenance Charge. This charge will be deducted proportionately from the
values in each subaccount. The maximum charge would be $40.00 per Contract
Year.
PREMIUM TAX
If any premium tax is payable by Us on this Contract, the tax will be
deducted from each premium.
TAXES
If at any time We incur any tax liability resulting from the assets held by
the Variable Annuity Account, We may charge the Variable Annuity Account
for the tax.
2579 (TX) Page 12
<PAGE>
GENERAL PROVISIONS
THE CONTRACT
We have issued this Contract in consideration of the Application and
payment of the initial premium. The Contract with the Application attached
make the entire contract. No statement made by You or on your behalf shall
be used in defense of a claim under the Contract unless it is made with the
intent to commit fraud and it is contained in the written Application.
CHANGES TO THE CONTRACT
This Contract may be changed in writing by mutual agreement between You and
the Company. Only the President, a Vice President, the Secretary, or an
Assistant Secretary of our Company is authorized to change or waive the
terms of the Contract.
EFFECTIVE DATE
The Effective Date will be within two (2) business days after the full
initial premium and completed Application have been received at our Home
Office. You may request a premium receipt signed by the President, a Vice
President, the Secretary, or an Assistant Secretary of our Company. No
coverage will take effect until the check or draft for the premium is
honored.
CONTRACT DATE
The Contract Date will be used to determine Contract Months, Contract
Anniversaries, Contract Years, and age of the Annuitant. The Contract Date
will be the same as the Effective Date unless the Effective Date is the
29th, 30th, or 31st of the month, in which case the Contract Date will be
the 28th of the month.
MISSTATEMENTS
If the Annuitant's age or sex has been misstated on the Application, We
will reschedule the annuity payments to those which the Accumulated Value
would have purchased had the age or sex been correctly stated. If such
misstatement is discovered after payments have begun, We will immediately
pay any underpayment in a lump sum. Any overpayment which has been made
will be deducted from the annuity payments until the amount of overpayment
is recovered. In the case of Option 2, if the Joint Annuitant's age or sex
has been misstated, the same adjustment will be made.
2580 (TX) Page 13
<PAGE>
GENERAL PROVISIONS (Continued)
ASSIGNMENT
The Owner may assign the right to receive annuity payments and also assign
the Contract as collateral security. We are not responsible for the
adequacy of any assignment. When an assignment is filed with and recorded
by Us at our Home Office, your rights and those of the Beneficiary will be
subject to it.
RIGHT TO DEFER PAYMENT
We will ordinarily pay any amount payable as a result of surrender or death
within seven (7) days after We receive a request.
Payment of any Accumulated Value or Death Benefit may be deferred:
a) for any period during which the New York Stock Exchange is closed for
trading (except for normal holiday closing); or
b) when the Securities and Exchange Commission has determined that a
state of emergency exists which may make such payment impractical.
Transfers may also be deferred for the same reasons as given above.
If a recent check or draft has been submitted to Us on this Contract, We
have a right to defer any payment of Accumulated Value or Death Benefit
until such check or draft has been honored.
REPORTS TO OWNER
ANNUAL STATEMENT - You will receive an Annual Statement at the end of each
Contract Year. This Statement will show your Accumulated Value and Death
Benefit as of your current Contract Anniversary. It will also reflect any
additional premium payment(s), any partial surrender(s), and any charges
made during the year.
ANNUAL REPORT OF THE SEPARATE ACCOUNT - You will also receive annually a
report on the Variable Annuity Account. This report will include the
investment record of the subaccounts, any charges made, and any changes to
the subaccounts.
2581 (TX) Page 14
<PAGE>
BASIS OF CALCULATIONS
The 1983a Individual Annuity Mortality Table will be used to establish the
reserves and Accumulated Value. The reserves, Cash Value, paid-up annuity
benefit and any Death Benefit available are not less than the minimum
required by the insurance laws of the State in which this Contract has been
issued.
The method used in computing reserves and Accumulated Values in the
Variable Annuity Account is in accordance with actuarial procedures that
recognize the variable nature of such an Account. A detailed statement of
the method of calculation of reserves has been filed with the insurance
official of the state in which the Contract is delivered.
HOW ACCUMULATED VALUE IS CALCULATED
On the Effective Date, the Accumulated Value equals the initial premium
minus premium taxes, if any, minus the first year's Records Maintenance
Charge. The Accumulated Value of the Contract can thereafter be determined
on each Valuation Date as follows:
a) The Accumulated Value on the prior Valuation Date; plus
b) The sum of the following (which may be positive or negative for the
Valuation Period):
1) The total net investment experience of the Contract's value in the
elected subaccount(s). For each subaccount, the net investment experience
is the Contract's value in the subaccount as of the prior Valuation Date
times the percentage change in the net asset value of the shares of the
designated fund. It is adjusted for any distributions made during the
Valuation Period;
2) Any charge for tax liability resulting from assets held by the
Variable Annuity Account;
3) Contract Administration Charges;
4) Mortality and Expense Risk Charges;
5) Premiums received less premium taxes deducted (if any);
6) Any charge(s) for transfers (if applicable); and
7) Records Maintenance Charge (if applicable).
2586 (TX) Page 19
<PAGE>
ACCOUNTING PROCEDURES:
The Contract's value in any subaccount is maintained in units. A unit
value is determined for each Valuation Date. When the Variable Annuity
Account was established, the initial unit value for each subaccount was
$1.00. The Contract's value at any time in any subaccount is the number of
units times the unit value. The number of units in any subaccount on the
issue date is the allocated amount divided by the unit value as of the end
of the Valuation Date during which the allocation was made. Premium taxes,
if any, are deducted from the premium prior to allocation. Transfer
charges and a records maintenance charge, if applicable, are accounted for
by a deduction in the number of units from the affected subaccounts.
Changes in the net asset value of the designated fund, distributions of the
fund, and tax charges, if any, with respect to a fund for the Valuation
Period are taken into account in computing the unit value for each
subaccount.
The unit value for each Valuation Period is the investment experience
factor (described below) for that Valuation Period multiplied by the unit
value for the immediately preceding Valuation Period.
An investment experience factor is calculated separately for each
subaccount. The investment experience factor of a subaccount for a
Valuation Period equals (a) divided by (b), minus (c), where:
(a) is (i) the value of the net assets of the subaccount at the end of
the preceding Valuation Period, plus
(ii) the investment income and capital gains credited to the net
assets of that subaccount during the Valuation Period, minus
(iii) the capital losses charged against those assets during the
Valuation Period, minus
(iv) any amount charged against the subaccount for taxes or any
amount set aside during the Valuation Period as a provision for taxes; and
(b) is the value of the net assets of the subaccount at the end of the
preceding Valuation Period; and
(c) is a charge that will not exceed .0027535% of the value of net assets
in a subaccount for each day in the Valuation Period.
Administration Charges and Mortality and Expense Risk Charges are accounted
for by a deduction each Valuation Period from the unit values.
All additions to or deductions from a subaccount are made on the basis of
the unit value as of the end of the Valuation Period for which the
transaction is to be effective.
2587 (TX) Page 20
<PAGE>
INDEX
Page
Accounting Procedures 20
Allocation of Net Premium(s) 7
Annuitant 11
Annuity Change Option 11
Annuity Payments 11
Assignment 14
Beneficiary Designation 15
Change in Subaccounts 8
Change of Beneficiary 15
Change of Investment Policy 8
Changes to the Contract 13
Contract, The 13
Contract Administration Charge 12
Contract Date 13
Death of Annuitant 15
Effective Date 13
Full Surrender 10
How Accumulated Value is Calculated 19
Limitations on Additional Premium 7
Maturity Date 11
Misstatements 13
Mortality and Expense Risk Charge 12
Option Conditions 16
Partial Surrender 10
Premium Tax 12
Proof of Death 15
Protection of Death Benefit 15
Records Maintenance Charge 12
Reports to Owner 14
Right to Defer Payment 14
Rights Reserved by the Company 9
Subaccounts 8
Taxes 12
Transfers 10
Variable Annuity Account 8
2571 (WA) Page 4
<PAGE>
GENERAL PROVISIONS
THE CONTRACT
We have issued this Contract in consideration of the Application and
payment of the initial premium. The Contract with the Application attached
make the entire contract. No statement made by You or on your behalf shall
be used in defense of a claim under the Contract unless it is made with the
intent to commit fraud and it is contained in the written Application.
CHANGES TO THE CONTRACT
This Contract may be changed in writing by mutual agreement between You and
the Company. Only the President, a Vice President, the Secretary, or an
Assistant Secretary of our Company is authorized to change or waive the
terms of the Contract.
EFFECTIVE DATE
The Effective Date will be within two (2) business days after the full
initial premium and completed Application have been received at our Home
Office. You may request a premium receipt signed by the President, a Vice
President, the Secretary, or an Assistant Secretary of our Company. No
coverage will take effect until the check or draft for the premium is
honored.
CONTRACT DATE
The Contract Date will be used to determine Contract Months, Contract
Anniversaries, Contract Years, and age of the Annuitant. The Contract Date
will be the same as the Effective Date unless the Effective Date is the
29th, 30th, or 31st of the month, in which case the Contract Date will be
the 28th of the month.
MISSTATEMENTS
If the Annuitant's age or sex has been misstated on the Application, We
will reschedule the annuity payments to that which the Accumulated Value
would have purchased had the age or sex been correctly stated. If such
misstatement is discovered after payments have begun, We will immediately
pay any underpayment in a lump sum. Any overpayment which has been made
will be deducted from the annuity payments until the amount of overpayment
is recovered. In the case of Option 2, if the Joint Annuitant's age or sex
has been misstated, the same adjustment will be made.
2580 (WA) Page 13
<PAGE>
GENERAL PROVISIONS (Continued)
ASSIGNMENT
The Owner may assign the right to receive annuity payments and also assign
the Contract as collateral security. We are not responsible for the
adequacy of any assignment. When an assignment is filed with and recorded
by Us at our Home Office, your rights and those of the Beneficiary will be
subject to it.
RIGHT TO DEFER PAYMENT
We will ordinarily pay any amount payable as a result of surrender or death
within seven (7) days after We receive a request.
Payment of any Accumulated Value or Death Benefit may be deferred:
(a) for any period during which the New York Stock Exchange is closed for
trading (except for normal holiday closing);
(b) when the Securities and Exchange Commission has determined that a state
of emergency exists which may make such payment impractical.
Transfers may also be deferred for the same reasons as given above.
If a recent check or draft has been submitted to Us on this Contract, We
have a right to defer any payment of Accumulated Value or Death Benefit
until such check or draft has been honored.
REPORTS TO OWNER
ANNUAL STATEMENT - You will receive an Annual Statement at the end of each
Contract Year. This Statement will show your Accumulated Value and Death
Benefit as of your current Contract Anniversary. It will also reflect any
additional premium payment(s), any partial surrender(s), and any charges
made during the year.
ANNUAL REPORT OF THE SEPARATE ACCOUNT - You will also receive annually a
report on the Variable Annuity Account. This report will include the
investment record of the subaccounts, any charges made, and any changes to
the subaccounts.
2581 (WA) Page 14
<PAGE>
ANNUITY INCOME OPTIONS
The Accumulated Value of this Contract may be applied under one of the
following Options:
Option 1. LIFE ANNUITY WITH INSTALLMENT REFUND
The amount will be distributed in equal installments to You, as long as You
are living. If You die before the sum of the installments paid equals or
exceeds the Accumulated Value on the Maturity Date, We will continue to pay
installments to your Beneficiary until the sum of such installments does
equal or exceed the Accumulated Value on the Maturity Date.
Option 2. JOINT AND SURVIVOR LIFE WITH INSTALLMENT REFUND
The amount will be distributed in equal installments to You or, upon your
death, to your named Joint Annuitant, for as long as either of You is
living. If both of You die before the sum of the installments paid equals
or exceeds the Accumulated Value on the Maturity Date, We will continue to
pay installments to your Beneficiary until the sum of such installments
does equal or exceed the Accumulated Value on the Maturity Date.
Option 3. OTHER ANNUITY INCOME OPTIONS
Other Annuity Income Options may be available at the time a form of payment
is elected.
OPTION CONDITIONS:
If this Contract is assigned prior to the Maturity Date, We will pay to the
assignee in one sum the amount to which he is entitled. We will then apply
any balance payable to the chosen Annuity Income Option.
Any amount payable under an Annuity Income Option will be subject to the
following conditions:
(a) The effective date of an Annuity Income Option will be the Maturity
Date.
(b) Annuity Income Options will not be available if the amount to be
applied is less than $5,000 or is insufficient to produce monthly payments
of at least $20.
(c) The amount of installment payments will be determined by the age and
sex of the Annuitant (and, if Option 2 is selected, by the age and sex of
the Joint Annuitant) on the Maturity Date.
(d) We may require evidence that the Annuitant (or Joint Annuitant, if
applicable) is alive on any scheduled payment date before the payment is
made.
2583 (WA) Page 16
<PAGE>
THE VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY ACCOUNT
The Variable Annuity Account is a separate investment account established
by Us in accordance with Missouri law. The assets of this account are
owned by Us and will be used to provide values and benefits under this and
similar annuities. The Variable Annuity Account is not charged with
liabilities arising out of any other business that We may conduct.
SUBACCOUNTS
The Variable Annuity Account consists of subaccounts, each of which invests
in shares of a designated registered investment company fund. Shares are
purchased at their net asset value.
Each distribution of income, dividends, and capital gains from a fund will
be reinvested at net asset value in shares of the fund.
The values and benefits of your Contract depend on the investment
performance of any subaccount(s) You select. You bear the investment risk
for amounts allocated to the subaccount(s). We do not guarantee the
investment performance.
CHANGE IN SUBACCOUNTS
We can add, remove, or combine subaccounts as permitted by law. When a
subaccount is removed, We have the right to substitute a different
subaccount.
We can also add, remove, or substitute subaccount investments as permitted
by law.
We will notify You in advance of liquidation of a subaccount in which any
of your Contract values are invested. We will ask You to tell Us how these
funds should be reallocated. In the absence of instructions from You, We
will transfer the amount in the liquidated subaccount to the Money Market
subaccount.
CHANGE OF INVESTMENT POLICY
The investment policy of the Variable Annuity Account will not be changed
unless:
a) the change has been approved by the Director of Insurance of the State
of Missouri, and
b) a statement of the approval process has been filed with and approved
by the Insurance Department of the state in which this Contract is
delivered.
2575 (WI) Page 8
<PAGE>
A M E N D M E N T
The following provisions are hereby added to this Contract:
THE GENERAL ACCOUNT
The General Account is the general account of Charter National Life
Insurance Company, which provides a guaranteed minimum accumulation rate.
Any funds allocated to the General Account will earn interest of not less
than .28709% per month, which equates to a guaranteed minimum rate of 3.5%
per year.
NET PREMIUM ALLOCATION
You may allocate all or a portion of your Net Premium(s) to the General
Account. All allocations to the General Account and selected subaccounts
must be in whole percents which add up to 100%. To the extent You allocate
Net Premium(s) to the General Account, the rate of accumulation will be
fixed and guaranteed. We reserve the right to reject any premium
allocation which would cause your value in the General Account to exceed
$500,000.
DECLARATION OF RATES AND PERIODS
We may declare interest rates greater than the minimum of 3.5%. We will
establish periods of time (Declaration Periods) from one to ten years in
length during which a declared interest rate will be fixed and guaranteed.
You must specify an available Declaration Period if You allocate Net
Premium(s) to the General Account. The declared interest rate in effect on
the day You allocate funds to the General Account will be guaranteed for
the Declaration Period selected. Interest is credited monthly and will
apply to both the amount allocated and the interest previously credited on
such amount. Each allocation to the General Account will have a specified
interest rate and Declaration Period associated with it.
Prior to the expiration of any Declaration Period to which You allocated
funds, You must tell Us how the funds are to be reallocated. If We do not
receive instructions from You by the end of the Declaration Period, We will
transfer such funds to the Money Market subaccount.
ACCUMULATED VALUE
The Accumulated Value includes the value of the amounts in the General
Account for this Contract as of any Valuation Date, prior to the Maturity
Date.
Page 1
2588-END
<PAGE>
BASIS OF CALCULATIONS
The 1983a Individual Annuity Mortality Table will be used to establish the
reserves and Accumulated Values of the General Account.
The reserves under this Contract are not less than the minimum required by
the insurance laws of the State in which this Contract has been issued. A
detailed statement of the method of calculation of reserves has been filed
with the insurance official of the State in which the Contract is
delivered.
TRANSFERS
You may transfer all or a portion of the Contract's value among the
subaccounts or to the General Account at any time. Your value in the
General Account after the transfer may not exceed $500,000. Any charge for
such transfer will be as described on Page 10.
You may only transfer values out of or within the General Account at the
end of the Declaration Period associated with the funds being transferred.
Reallocation of funds from or within the General Account at the end of a
Declaration Period is not considered a transfer for the purpose of imposing
a transfer charge.
PARTIAL SURRENDER
At any time prior to the Maturity Date, You may make a partial surrender
from the General Account. In addition to the conditions stipulated on Page
10 of the Contract, the following will also apply:
(a) You must instruct Us as to what amount should be withdrawn from the
General Account.
(b) Funds will be withdrawn proportionately from all Declaration Periods of
the General Account to which You allocate funds.
(c) Within each Declaration Period, surrenders will be on a first-in, first-
out basis.
CHARGES
The Contract Administration Charge and the Mortality and Expense Risk
Charge are not applicable to the Contract's value in the General Account.
The Records Maintenance Charge will be deducted proportionately from the
values in the subaccounts and the General Account.
All other provisions of this Contract remain unchanged.
CHARTER NATIONAL LIFE INSURANCE COMPANY
Alexis M. Berg - Secretary
2589-END
Page 2
<PAGE>
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
C O N T R A C T R I D E R
This Rider is a part of the Contract to which it is attached. The
provisions of the Rider supersede any provisions of the Contract which are
inconsistent herewith. Notwithstanding anything in the Contract to the
contrary, this Rider is effective on the Contract Date.
INDIVIDUAL RETIREMENT PROVISION
If requested on the Application, this Contract may be used as a means of
establishing an Individual Retirement Annuity as defined in Section 408(b)
of the Internal Revenue Code. To ensure favorable tax treatment if such a
selection is made, this Contract will be subject to the following
restrictions:
a) The Owner must be the Annuitant.
b) The Owner may not name a new Owner or a Contingent Owner to this
Contract.
c) Distributions must begin no later than April 1 following the calendar
year in which the Annuitant attains age 70-1/2 (the "required beginning
date"). Prior to the required beginning date, the Owner shall elect, in a
manner acceptable to the Company, to have the balance in the Contract
distributed in:
1) A single lump sum payment;
2) Equal or substantially equal monthly, quarterly, or annual payments
over the life of the Owner or over the joint and last survivor lives of the
Owner and his or her designated Beneficiary; or
3) Equal or substantially equal annual payments over a specified
period that may not be longer than the Owner's life expectancy or the joint
and last survivor life expectancy of the Owner and his or her designated
Beneficiary.
d) An annuity payment schedule may not be elected with a Period Certain
which will guarantee annuity payments beyond the life expectancy of the
Annuitant and Beneficiary and must be at least annually and in equal
amounts.
e) The Contract may not be transferred, sold, assigned, discounted, or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose to any person other than as a surrender
to the Company.
Page 1
HZ-0912
<PAGE>
f) Premiums, other than qualified rollover contributions, are limited to
the amount allowed in Section 408(b) of the Internal Revenue Code. The
Owner has the sole responsibility for determining whether the premium
qualifies under applicable federal tax requirements.
g) If the Owner dies before the entire interest is distributed to him or
her, the remaining interest shall be distributed as follows:
1) If the Owner dies before the required beginning date, We shall pay
in a lump sum to the named Beneficiary or Beneficiaries the greater of the
Accumulated Value calculated on the date We receive proof of death or the
total of the premium paid less any partial surrenders.
2) If the Owner dies on or after the required beginning date,
distribution must be made at least as rapidly as the method of distribution
in effect at the time of the Owner's death.
h) Distribution under this provision of the Contract must satisfy the
minimum distribution rules of Section 408(b)(3) of the Internal Revenue
Code, including the minimum incidental death benefit requirement of
Treasury Regulation 1.408-8. The Owner or Beneficiary, as applicable, has
the sole responsibility to elect a distribution that will satisfy these
rules.
Annuity payments may not begin before the Annuitant attains the age of 59-
1/2 without incurring a penalty tax except in the situations described in
Section 72(t) of the Internal Revenue Code.
Notwithstanding the provisions of this Contract, the above restrictions
will apply if this provision is applicable.
All other provisions of this Contract remain unchanged.
CHARTER NATIONAL LIFE INSURANCE COMPANY
Alexis M. Berg - Secretary
Page 2
HZ-0912
<PAGE>
ANNUITY INCOME OPTION
The Accumulated Value of the Contract may be applied under Option 3.
INSTALLMENTS FOR LIFE. The amount will be distributed in equal
installments to You only as long as You are living.
OPTION 3. MONTHLY INSTALLMENTS FOR LIFE
Dollar Amount Per $1,000 of Accumulated Value
Age Male Female Age Male Female Age Male Female
0 3.10 3.05 34 3.71 3.54 68 7.02 6.13
1 3.11 3.06 35 3.75 3.57 69 7.26 6.32
2 3.12 3.07 36 3.79 3.60 70 7.52 6.53
3 3.13 3.08 37 3.83 3.63 71 7.80 6.75
4 3.14 3.08 38 3.87 3.66 72 8.09 6.99
5 3.15 3.09 39 3.91 3.69 73 8.41 7.26
6 3.16 3.10 40 3.96 3.73 74 8.75 7.54
7 3.17 3.11 41 4.01 3.76 75 9.12 7.85
8 3.18 3.12 42 4.06 3.80 76 9.51 8.18
9 3.20 3.13 43 4.11 3.84 77 9.92 8.54
10 3.21 3.14 44 4.17 3.89 78 10.37 8.94
11 3.22 3.15 45 4.22 3.93 79 10.85 9.36
12 3.23 3.16 46 4.29 3.98 80 11.37 9.82
13 3.25 3.17 47 4.35 4.03 81 11.92 10.32
14 3.26 3.18 48 4.42 4.08 82 12.50 10.87
15 3.28 3.19 49 4.49 4.14 83 13.12 11.46
16 3.29 3.20 50 4.56 4.20 84 13.78 12.09
17 3.31 3.22 51 4.64 4.26 85 14.47 12.78
18 3.32 3.23 52 4.72 4.32 86 15.20 13.52
19 3.34 3.24 53 4.80 4.39 87 15.98 14.31
20 3.36 3.26 54 4.89 4.46 88 16.79 15.16
21 3.38 3.27 55 4.99 4.54 89 17.66 16.05
22 3.40 3.29 56 5.09 4.62 90 18.58 17.00
23 3.42 3.31 57 5.20 4.71 91 19.56 17.98
24 3.44 3.32 58 5.32 4.80 92 20.61 19.01
25 3.46 3.34 59 5.44 4.90 93 21.74 20.08
26 3.48 3.36 60 5.57 5.00 94 22.97 21.18
27 3.51 3.38 61 5.71 5.11 95 24.29 22.34
28 3.53 3.40 62 5.86 5.23 96 25.73 23.55
29 3.56 3.42 63 6.02 5.36 97 27.30 24.84
30 3.59 3.44 64 6.20 5.49 98 29.05 26.25
31 3.62 3.46 65 6.38 5.64 99 30.99 27.82
32 3.65 3.49 66 6.58 5.79 l00 33.16 29.59
33 3.68 3.51 67 6.79 5.95
Page 3
HZ0912
<PAGE>
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
C O N T R A C T R I D E R
This Rider is a part of the Contract to which it is attached. The
provisions of the Rider supersede any provisions of the Contract which are
inconsistent herewith. Notwithstanding anything in the Contract to the
contrary, this Rider is effective on the Contract Date.
OWNERSHIP
The following provisions apply to Ownership of the Contract.
CHANGE OF OWNER
The Owner may choose a new Owner at any time while the Annuitant is living
by filing a written notice with our Home Office. The change will take
effect on the date the notice was signed. The naming of a new Owner will
void any prior ownership designation. We will not be liable for any
payment which may have been made or action taken before the notice was
recorded at our Home Office. If the Owner dies before the Annuitant, the
ownership rights belong to the Beneficiary.
JOINT OWNERSHIP
If at any time a Joint Owner is named, it will be presumed to be as joint
tenants with right of survivorship, unless otherwise stated.
ANNUITANT
The following provisions apply if the Owner of the Contract names an
Annuitant other than himself or herself in the application for the
Contract.
a) The Annuitant is the person whose life is used to determine the
duration and amount of any annuity payments and is shown on Page 2 of the
Contract.
b) The Contract provides an Annuity Benefit to the Owner if the Annuitant
is living on the Maturity Date. It also provides a Death Benefit to the
Owner if the Annuitant dies before the Maturity Date.
c) While the Annuitant is living, the Owner may make additional premium
payments, subject to and in accordance with the Contract under "Limitations
on Additional Premium."
d) If payment of the Annuity Benefit is contingent upon the Annuitant
being alive, We may require due proof that the Annuitant is alive prior to
any scheduled payment date.
HZ-0911
Page 1
<PAGE>
PAYMENTS ON DEATH
The definition of You and Your throughout the Contract shall mean the Owner
unless specific reference is made to the Annuitant.
DEATH OF ANNUITANT
If the Annuitant dies prior to the Maturity Date and this Contract has not
been surrendered, We will pay to the Owner the greater of the premium(s)
paid less any partial surrenders, or the Accumulated Value calculated on
the date We receive proof of death. This amount will be paid in a lump
sum. With respect to a nonqualified Contract, the Owner may also elect to
continue the Contract and the Owner becomes the Annuitant.
DEATH OF OWNER
If any Owner dies prior to both the Maturity Date and the Annuitant's death
and that Owner is not the Annuitant, We will pay the Accumulated Value
calculated on the date We receive proof of death. This amount will be
distributed in a lump sum no later than five (5) years following the date
of the Owner's death, to the Joint Owner if applicable; otherwise, to the
Beneficiary. If the Joint Owner or Beneficiary is the surviving spouse, he
or she may elect to continue the Contract as if he or she were the original
Owner.
SIMULTANEOUS DEATH OF OWNER AND ANNUITANT
If both the Owner and the Annuitant die at the same time and there is no
surviving Owner and the Contract has not been surrendered, We will pay the
greater of the Accumulated Value calculated on the date We receive proof of
the Annuitant's death or the total of the premiums paid less the total of
all partial surrenders. This amount will be paid in a lump sum to the
Beneficiary. If no Beneficiary is named, We will pay the amount to the
estate of the Owner as of the date We receive proof of the Annuitant's
death.
If the Annuitant dies within thirty (30) days of the Owner's death and We
have not yet paid the Death Benefit, it will be paid as if the Annuitant
had died first.
All other provisions of this Contract remain unchanged.
CHARTER NATIONAL LIFE INSURANCE COMPANY
Alexis M. Berg - Secretary
HZ-0911
Page 2
<PAGE>
FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY
C O N T R A C T E N D O R S E M E N T
This Endorsement is a part of the Contract to which it is attached. The
provisions of this Endorsement supersede the corresponding provisions of
the Contract. This Endorsement is effective on the Contract Date.
CHARGES
The "Charges" section of the Contract to which this Endorsement is attached
is hereby modified to read as follows:
CONTRACT ADMINISTRATION CHARGE
The Contract Administration Charge is deducted from values in the
subaccounts daily. The charge is equal to .0008248% of the Contract's
values in each subaccount per day, which equates to an annual charge of
.30%. The Contract Administration Charge is not deducted from any amounts
allocated to the General Account.
MORTALITY AND EXPENSE RISK CHARGE
The Mortality and Expense Risk Charge is deducted from values in the
subaccounts daily. The charge is equal to .0010997% of the Contract's
value in each subaccount per day, which equates to an annual charge of
.40%. We reserve the right to increase this charge to .0019275% per day,
which equates to a maximum annual charge of .70%. We will notify you in
writing if We change the amount of this daily charge.
RECORDS MAINTENANCE CHARGE
We are not currently charging a Records Maintenance Charge; however, We
reserve the right to deduct such a charge at the beginning of each Contract
Year in the future. This charge would be deducted proportionately from the
values in each subaccount, but would never exceed $40 per Contract Year.
We will notify you in writing if We begin to impose this charge.
All other provisions of this Contract remain unchanged.
CHARTER NATIONAL LIFE INSURANCE COMPANY
Alexis M. Berg - Secretary
2595-END
<PAGE>
SCUDDER
HORIZON
A tax-advantaged asset-building plan
Q2-36
Variable Annuity Application
Charter National Life Insurance Company
8301 Maryland Avenue - St. Louis, Missouri 63105 - 1-800-242-4402
1. OWNER INFORMATION 2. JOINT OWNER INFORMATION,
If Applicable
NAME_______________________________ NAME_______________________________
Last First Middle Last First Middle
ADDRESS____________________________ ADDRESS____________________________
Street Apt.# Street Apt. #
___________________________________ ___________________________________
City State Zip City State Zip
Social Security/Tax ID#____________ Social Security/Tax ID#____________
Birth Date________________ Sex____ Birth Date________________ Sex____
Month Day Year Month Day Year
Phone#s( )__________ ( )_________ Phone#s( )_________ ( )__________
Day Night Day Night
Maturity Date: At Age ____ or ____ Years
from the Contract Date
3. AMOUNT AND ALLOCATION OF PAYMENT
( ) Check payable to "Scudder Horizon Plan" is enclosed in the amount of
$____________ (minimum investment $2,500).
( ) Payment by exchange of Scudder fund shares. (Complete "Authorization
for Exchange" section.)
( ) Payment by 1035 Exchange from another policy.
Type of Annuity:
( )Nonqualified ( )IRA Rollover ( )Pension/Profit Sharing Trust
Please indicate the allocation of payment using whole percentages that
total 100%.
Scudder Money Market ____% Scudder Capital Growth ____%
Scudder Bond ____% Scudder International ____%
Scudder Balanced ____% Scudder Global Discovery ____%
Scudder Growth and Income ____% General Account ____% ____ years
General Account ____% ____ years
4. ANNUITANT INFORMATION, If Other Than Owner
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt.#
________________________________________________
City State Zip
Birth Date _____________________ Sex __________
Month Day Year
5. BENEFICIARY DESIGNATION
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt. #
________________________________________________
City State Zip
Birth Date ______________ _____________________
Month Day Year Relationship to Owner
A1257(97)
<PAGE>
6. TELEPHONE TRANSFER AUTHORIZATION (Personal Identification Number)
I am furnishing to Charter National Life Insurance
Company the four character Personal Identification
Number (PIN) shown at the right to be used as ____ ____ ____ ____
identification for telephone transfer of funds.
I agree to hold Charter National Life harmless as to any action taken when
a telephone transfer call is received with the correct name, policy number,
and personal code. I understand that I may cancel the telephone transfer
privilege by furnishing written notice to Charter National Life. Charter
National Life may cancel the privilege at any time.
7. WILL THIS ANNUITY REPLACE ANY EXISTING LIFE INSURANCE POLICY OR ANNUITY
CONTRACT?
( )No___________ ( )Yes______________________________________________
Company, amount, and type of policy or contract
8. OTHER INFORMATION
____________________________________ _________________________________
Your Employer's Name Your Occupation
____________________________________
Your Employer's Address
Home Office Endorsements Only: (Do not write in this space)
9. SIGNATURES
To the best of my knowledge and belief, all statements made in this
application are true and complete. I understand and agree that Charter may
correct errors and omissions on the application, noting the changes under
"Home Office Endorsements." I will review any such corrections or changes
when the contract is issued. My acceptance of the contract shall
constitute acceptance of the changes. I also understand that where state
insurance regulations require, any amendment as to age at issue, payment
amount, or benefits will be made only with my written consent.
I understand that proof of the annuitant's age must be furnished before
annuity payments begin. Evidence satisfactory to Charter that the
annuitant is living will be furnished when requested by Charter, but not
more than once a year.
The contract will become effective on the contract date assigned by
Charter. In the event that either the payment or this application is not
acceptable to Charter, I understand Charter's liability will be limited to
a return of any payment made.
I UNDERSTAND THAT THE CASH VALUE AND DEATH BENEFIT MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE SUBACCOUNTS.
I have received a current prospectus for this contract and the subaccounts
of the Variable Annuity Account.
I certify that: (a) I have shown my correct taxpayer identification number;
and (b) I am not subject to backup withholding as a result of a failure to
report all interest or dividends.
I ( )do ( )do not want federal income tax withheld from any distribution.
The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.
Dated at_________________ this______ day of______, 19___.
City State
___________________________________ ___________________________________
Owner's Signature Joint Owner's Signature
(if applicable)
For Company Use Only
To your knowledge and belief, will replacement of life insurance or
annuities be involved? ( )Yes ( )No
The above answer and statements are true and complete to the best of my
knowledge and belief.
____________________________________ ____________________________________
Agent's Name (please print) Agent's Signature
<PAGE>
SCUDDER
HORIZON
A tax-advantaged asset-building plan
Q2AZ-1-96
Variable Annuity Application
Charter National Life Insurance Company
8301 Maryland Avenue - St. Louis, Missouri 63105 - 1-800-242-4402
1. OWNER INFORMATION 2. JOINT OWNER INFORMATION,
If Applicable
NAME_______________________________ NAME_______________________________
Last First Middle Last First Middle
ADDRESS____________________________ ADDRESS____________________________
Street Apt.# Street Apt. #
___________________________________ ___________________________________
City State Zip City State Zip
Social Security/Tax ID#____________ Social Security/Tax ID#____________
Birth Date________________ Sex____ Birth Date________________ Sex____
Month Day Year Month Day Year
Phone#s( )__________ ( )_________ Phone#s( )_________ ( )__________
Day Night Day Night
Maturity Date: At Age ____ or ____ Years
from the Contract Date
3. AMOUNT AND ALLOCATION OF PAYMENT
( ) Check payable to "Scudder Horizon Plan" is enclosed in the amount of
$____________ (minimum investment $2,500).
( ) Payment by exchange of Scudder fund shares. (Complete "Authorization
for Exchange" section.)
( ) Payment by 1035 Exchange from another policy.
Type of Annuity:
( )Nonqualified ( )IRA Rollover ( )Pension/Profit Sharing Trust
Please indicate the allocation of payment using whole percentages that
total 100%.
Scudder Money Market ____% Scudder Capital Growth ____%
Scudder Bond ____% Scudder International ____%
Scudder Balanced ____% Scudder Global Discovery ____%
Scudder Growth and Income ____% General Account ____% ____ years
General Account ____% ____ years
4. ANNUITANT INFORMATION, If Other Than Owner
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt.#
________________________________________________
City State Zip
Birth Date _____________________ Sex __________
Month Day Year
5. BENEFICIARY DESIGNATION
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt. #
________________________________________________
City State Zip
Birth Date ______________ _____________________
Month Day Year Relationship to Owner
A1257(AZ)(97)
<PAGE>
6. TELEPHONE TRANSFER AUTHORIZATION (Personal Identification Number)
I am furnishing to Charter National Life Insurance
Company the four character Personal Identification
Number (PIN) shown at the right to be used as ____ ____ ____ ____
identification for telephone transfer of funds.
I agree to hold Charter National Life harmless as to any action taken when
a telephone transfer call is received with the correct name, policy number,
and personal code. I understand that I may cancel the telephone transfer
privilege by furnishing written notice to Charter National Life. Charter
National Life may cancel the privilege at any time.
7. WILL THIS ANNUITY REPLACE ANY EXISTING LIFE INSURANCE POLICY OR ANNUITY
CONTRACT?
( )No___________ ( )Yes______________________________________________
Company, amount, and type of policy or contract
8. OTHER INFORMATION
____________________________________ ___________________________________
Your Employer's Name Your Occupation
____________________________________
Your Employer's Address
Home Office Endorsements Only: (Do not write in this space)
9. SIGNATURES
To the best of my knowledge and belief, all statements made in this
application are true and complete. I understand and agree that Charter may
correct errors and omissions on the application, noting the changes under
"Home Office Endorsements." I will review any such corrections or changes
when the contract is issued. My acceptance of the contract shall
constitute acceptance of the changes. I also understand that where state
insurance regulations require, any amendment as to age at issue, payment
amount, or benefits will be made only with my written consent.
I understand that proof of the annuitant's age must be furnished before
annuity payments begin. Evidence satisfactory to Charter that the
annuitant is living will be furnished when requested by Charter, but not
more than once a year.
The contract will become effective on the contract date assigned by
Charter. In the event that either the payment or this application is not
acceptable to Charter, I understand Charter's liability will be limited to
a return of any payment made.
Upon written request, Charter will provide, within a reasonable time,
factual information regarding the benefits and provisions of the contract.
If, for any reason, you are not satisfied with the contract, you may return
it to Charter within ten days after it is received. Upon receipt of the
contract, Charter will return the premium plus or minus any investment
experience and the contract will be void as of the contract date.
I UNDERSTAND THAT THE CASH VALUE AND DEATH BENEFIT MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE SUBACCOUNTS.
I have received a current prospectus for this contract and the subaccounts
of the Variable Annuity Account.
I certify that: (a) I have shown my correct taxpayer identification number;
and (b) I am not subject to backup withholding as a result of a failure to
report all interest or dividends.
I ( )do ( )do not want federal income tax withheld from any distribution.
The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.
Dated at_________________ this______ day of______, 19___.
City State
___________________________________ ___________________________________
Owner's Signature Joint Owner's Signature
(if applicable)
For Company Use Only
To your knowledge and belief, will replacement of life insurance or
annuities be involved? ( )Yes ( )No
The above answer and statements are true and complete to the best of my
knowledge and belief.
____________________________________ ____________________________________
Agent's Name (please print) Agent's Signature
<PAGE>
SCUDDER
HORIZON
A tax-advantaged asset-building plan
Q4-1-96
Variable Annuity Application
Charter National Life Insurance Company
8301 Maryland Avenue - St. Louis, Missouri 63105 - 1-800-242-4402
1. OWNER INFORMATION 2. JOINT OWNER INFORMATION,
If Applicable
NAME_______________________________ NAME_______________________________
Last First Middle Last First Middle
ADDRESS____________________________ ADDRESS____________________________
Street Apt.# Street Apt. #
___________________________________ ___________________________________
City State Zip City State Zip
Social Security/Tax ID#____________ Social Security/Tax ID#____________
Birth Date________________ Sex____ Birth Date________________ Sex____
Month Day Year Month Day Year
Phone#s( )__________ ( )_________ Phone#s( )_________ ( )__________
Day Night Day Night
Maturity Date: At Age ____ or ____ Years
from the Contract Date
3. AMOUNT AND ALLOCATION OF PAYMENT
( ) Check payable to "Scudder Horizon Plan" is enclosed in the amount of
$____________ (minimum investment $2,500).
( ) Payment by exchange of Scudder fund shares. (Complete "Authorization
for Exchange" section.)
( ) Payment by 1035 Exchange from another policy.
Type of Annuity:
( )Nonqualified ( )IRA Rollover ( )Pension/Profit Sharing Trust
Please indicate the allocation of payment using whole percentages that
total 100%.
Scudder Money Market ____% Scudder Capital Growth ____%
Scudder Bond ____% Scudder International ____%
Scudder Balanced ____% Scudder Global Discovery ____%
Scudder Growth and Income ____% General Account ____% ____ years
General Account ____% ____ years
4. ANNUITANT INFORMATION, If Other Than Owner
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt.#
________________________________________________
City State Zip
Birth Date _____________________ Sex __________
Month Day Year
5. BENEFICIARY DESIGNATION
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt. #
________________________________________________
City State Zip
Birth Date ______________ _____________________
Month Day Year Relationship to Owner
A1257CO(97)
<PAGE>
6. TELEPHONE TRANSFER AUTHORIZATION (Personal Identification Number)
I am furnishing to Charter National Life Insurance
Company the four character Personal Identification
Number (PIN) shown at the right to be used as ____ ____ ____ ____
identification for telephone transfer of funds.
I agree to hold Charter National Life harmless as to any action taken when
a telephone transfer call is received with the correct name, policy number,
and personal code. I understand that I may cancel the telephone transfer
privilege by furnishing written notice to Charter National Life. Charter
National Life may cancel the privilege at any time.
7. WILL THIS ANNUITY REPLACE ANY EXISTING LIFE INSURANCE POLICY OR ANNUITY
CONTRACT?
( )No___________ ( )Yes______________________________________________
Company, amount, and type of policy or contract
8. OTHER INFORMATION
____________________________________ _________________________________
Your Employer's Name Your Occupation
____________________________________
Your Employer's Address
Home Office Endorsements Only: (Do not write in this space)
9. SIGNATURES
To the best of my knowledge and belief, all statements made in this
application are true and complete. I understand and agree that Charter may
correct errors and omissions on the application, noting the changes under
"Home Office Endorsements." I will review any such corrections or changes
when the contract is issued. My acceptance of the contract shall
constitute acceptance of the changes. I also understand that where state
insurance regulations require, any amendment as to age at issue, payment
amount, or benefits will be made only with my written consent.
I understand that proof of the annuitant's age must be furnished before
annuity payments begin. Evidence satisfactory to Charter that the
annuitant is living will be furnished when requested by Charter, but not
more than once a year.
The contract will become effective on the contract date assigned by
Charter. In the event that either the payment or this application is not
acceptable to Charter, I understand Charter's liability will be limited to
a return of any payment made.
I UNDERSTAND THAT THE CASH VALUE AND DEATH BENEFIT MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE SUBACCOUNTS.
I have received a current prospectus for this contract and the subaccounts
of the Variable Annuity Account.
I certify that: (a) I have shown my correct taxpayer identification number;
and (b) I am not subject to backup withholding as a result of a failure to
report all interest or dividends.
I ( )do ( )do not want federal income tax withheld from any distribution.
The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.
Dated at_________________ this______ day of______, 19___.
City State
___________________________________ ___________________________________
Owner's Signature Joint Owner's Signature
(if applicable)
It is unlawful to knowingly provide false, incomplete, or misleading facts
or information to an insurance company for the purpose of defrauding or
attempting to defraud the company. Penalties may include imprisonment,
fines, denial of insurance, and civil damages. Any insurance company or
agent of an insurance company who knowingly provides false, incomplete, or
misleading facts or information to a policyholder or claimant for the
purpose of defrauding or attempting to defraud the policyholder or claimant
with regard to a settlement or award payable from insurance proceeds shall
be reported to the Colorado division of insurance within the department of
regulatory agencies.
For Company Use Only
To your knowledge and belief, will replacement of life insurance or
annuities be involved? ( )Yes ( )No
The above answer and statements are true and complete to the best of my
knowledge and belief.
____________________________________ ____________________________________
Agent's Name (please print) Agent's Signature
<PAGE>
SCUDDER
HORIZON
A tax-advantaged asset-building plan
Q2FL-1-96
Variable Annuity Application
Charter National Life Insurance Company
8301 Maryland Avenue - St. Louis, Missouri 63105 - 1-800-242-4402
1. OWNER INFORMATION 2. JOINT OWNER INFORMATION,
If Applicable
NAME_______________________________ NAME_______________________________
Last First Middle Last First Middle
ADDRESS____________________________ ADDRESS____________________________
Street Apt.# Street Apt. #
___________________________________ ___________________________________
City State Zip City State Zip
Social Security/Tax ID#____________ Social Security/Tax ID#____________
Birth Date________________ Sex____ Birth Date________________ Sex____
Month Day Year Month Day Year
Phone#s( )__________ ( )_________ Phone#s( )_________ ( )__________
Day Night Day Night
Maturity Date: At Age ____ or ____ Years
from the Contract Date
3. AMOUNT AND ALLOCATION OF PAYMENT
( ) Check payable to "Scudder Horizon Plan" is enclosed in the amount of
$____________ (minimum investment $2,500).
( ) Payment by exchange of Scudder fund shares. (Complete "Authorization
for Exchange" section.)
( ) Payment by 1035 Exchange from another policy.
Type of Annuity:
( )Nonqualified ( )IRA Rollover ( )Pension/Profit Sharing Trust
Please indicate the allocation of payment using whole percentages that
total 100%.
Scudder Money Market ____% Scudder Capital Growth ____%
Scudder Bond ____% Scudder International ____%
Scudder Balanced ____% Scudder Global Discovery ____%
Scudder Growth and Income ____% General Account ____% ____ years
General Account ____% ____ years
4. ANNUITANT INFORMATION, If Other Than Owner
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt.#
________________________________________________
City State Zip
Birth Date _____________________ Sex __________
Month Day Year
5. BENEFICIARY DESIGNATION
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt. #
________________________________________________
City State Zip
Birth Date ______________ _____________________
Month Day Year Relationship to Owner
A1257F/O(97)
<PAGE>
6. TELEPHONE TRANSFER AUTHORIZATION (Personal Identification Number)
I am furnishing to Charter National Life Insurance
Company the four character Personal Identification
Number (PIN) shown at the right to be used as ____ ____ ____ ____
identification for telephone transfer of funds.
I agree to hold Charter National Life harmless as to any action taken when
a telephone transfer call is received with the correct name, policy number,
and personal code. I understand that I may cancel the telephone transfer
privilege by furnishing written notice to Charter National Life. Charter
National Life may cancel the privilege at any time.
7. WILL THIS ANNUITY REPLACE ANY EXISTING LIFE INSURANCE POLICY OR ANNUITY
CONTRACT?
( )No___________ ( )Yes______________________________________________
Company, amount, and type of policy or contract
8. OTHER INFORMATION
____________________________________ ___________________________________
Your Employer's Name Your Occupation
____________________________________
Your Employer's Address
Home Office Endorsements Only: (Do not write in this space)
9. SIGNATURES
To the best of my knowledge and belief, all statements made in this
application are true and complete. I understand and agree that Charter may
correct errors and omissions on the application, noting the changes under
"Home Office Endorsements." I will review any such corrections or changes
when the contract is issued. My acceptance of the contract shall
constitute acceptance of the changes. I also understand that where state
insurance regulations require, any amendment as to age at issue, payment
amount, or benefits will be made only with my written consent.
I understand that proof of the annuitant's age must be furnished before
annuity payments begin. Evidence satisfactory to Charter that the
annuitant is living will be furnished when requested by Charter, but not
more than once a year.
The contract will become effective on the contract date assigned by
Charter. In the event that either the payment or this application is not
acceptable to Charter, I understand Charter's liability will be limited to
a return of any payment made.
I UNDERSTAND THAT THE CASH VALUE AND DEATH BENEFIT MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE SUBACCOUNTS.
I have received a current prospectus for this contract and the subaccounts
of the Variable Annuity Account.
I certify that: (a) I have shown my correct taxpayer identification number;
and (b) I am not subject to backup withholding as a result of a failure to
report all interest or dividends.
I ( )do ( )do not want federal income tax withheld from any distribution.
The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.
Dated at_________________ this______ day of______, 19___.
City State
___________________________________ ___________________________________
Owner's Signature Joint Owner's Signature
(if applicable)
Any person who knowingly and with intent to injure, defraud or knowing that
he is facilitating a fraud against an insurer submits an application or
files a claim containing any false, incomplete or misleading information is
guilty of a felony of the third degree.
For Company Use Only
To your knowledge and belief, will replacement of life insurance or
annuities be involved? ( )Yes ( )No
The above answer and statements are true and complete to the best of my
knowledge and belief.
____________________________________ ____________________________________
Agent's Name (please print) Agent's Signature
____________________________________
License Identification Number
<PAGE>
SCUDDER
HORIZON
A tax-advantaged asset-building plan
Q2MN-1-96
Variable Annuity Application
Charter National Life Insurance Company
8301 Maryland Avenue - St. Louis, Missouri 63105 - 1-800-242-4402
1. OWNER INFORMATION 2. JOINT OWNER INFORMATION,
If Applicable
NAME_______________________________ NAME_______________________________
Last First Middle Last First Middle
ADDRESS____________________________ ADDRESS____________________________
Street Apt.# Street Apt. #
___________________________________ ___________________________________
City State Zip City State Zip
Social Security/Tax ID#____________ Social Security/Tax ID#____________
Birth Date________________ Sex____ Birth Date________________ Sex____
Month Day Year Month Day Year
Phone#s( )__________ ( )_________ Phone#s( )_________ ( )__________
Day Night Day Night
Maturity Date: At Age ____ or ____ Years
from the Contract Date
3. AMOUNT AND ALLOCATION OF PAYMENT
( ) Check payable to "Scudder Horizon Plan" is enclosed in the amount of
$____________ (minimum investment $2,500).
( ) Payment by exchange of Scudder fund shares. (Complete "Authorization
for Exchange" section.)
( ) Payment by 1035 Exchange from another policy.
Type of Annuity:
( )Nonqualified ( )IRA Rollover ( )Pension/Profit Sharing Trust
Please indicate the allocation of payment using whole percentages that
total 100%.
Scudder Money Market ____% Scudder Capital Growth ____%
Scudder Bond ____% Scudder International ____%
Scudder Balanced ____% Scudder Global Discovery ____%
Scudder Growth and Income ____% General Account ____% ____ years
General Account ____% ____ years
4. ANNUITANT INFORMATION, If Other Than Owner
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt.#
________________________________________________
City State Zip
Birth Date _____________________ Sex __________
Month Day Year
5. BENEFICIARY DESIGNATION
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt. #
________________________________________________
City State Zip
Birth Date ______________ _____________________
Month Day Year Relationship to Owner
A1257MN(97)
<PAGE>
6. TELEPHONE TRANSFER AUTHORIZATION (Personal Identification Number)
I am furnishing to Charter National Life Insurance
Company the four character Personal Identification
Number (PIN) shown at the right to be used as ____ ____ ____ ____
identification for telephone transfer of funds.
I agree to hold Charter National Life harmless as to any action taken when
a telephone transfer call is received with the correct name, policy number,
and personal code. I understand that I may cancel the telephone transfer
privilege by furnishing written notice to Charter National Life. Charter
National Life may cancel the privilege at any time.
7. WILL THIS ANNUITY REPLACE ANY EXISTING LIFE INSURANCE POLICY OR ANNUITY
CONTRACT?
( )No___________ ( )Yes______________________________________________
Company, amount, and type of policy or contract
8. OTHER INFORMATION
____________________________________ ___________________________________
Your Employer's Name Your Occupation
____________________________________
Your Employer's Address
Home Office Endorsements Only: (Do not write in this space)
9. SIGNATURES
To the best of my knowledge and belief, all statements made in this
application are true and complete. I understand and agree that Charter may
correct errors and omissions on the application, noting the changes under
"Home Office Endorsements." I will review any such corrections or changes
when the contract is issued. My acceptance of the contract shall
constitute acceptance of the changes. I also understand that any amendment
as to age at issue, payment amount, or benefits will be made only with my
written consent.
I understand that proof of the annuitant's age must be furnished before
annuity payments begin. Evidence satisfactory to Charter that the
annuitant is living will be furnished when requested by Charter, but not
more than once a year.
The contract will become effective on the contract date assigned by
Charter. In the event that either the payment or this application is not
acceptable to Charter, I understand Charter's liability will be limited to
a return of any payment made.
I UNDERSTAND THAT THE CASH VALUE AND DEATH BENEFIT MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE SUBACCOUNTS.
I have received a current prospectus for this contract and the subaccounts
of the Variable Annuity Account.
I certify that: (a) I have shown my correct taxpayer identification number;
and (b) I am not subject to backup withholding as a result of a failure to
report all interest or dividends.
I ( )do ( )do not want federal income tax withheld from any distribution.
The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.
Dated at_________________ this______ day of______, 19___.
City State
___________________________________ ___________________________________
Owner's Signature Joint Owner's Signature
(if applicable)
For Company Use Only
To your knowledge and belief, will replacement of life insurance or
annuities be involved? ( )Yes ( )No
The above answer and statements are true and complete to the best of my
knowledge and belief.
____________________________________ ____________________________________
Agent's Name (please print) Agent's Signature
<PAGE>
SCUDDER
HORIZON
A tax-advantaged asset-building plan
Q2-NJOH-1-96
Variable Annuity Application
Charter National Life Insurance Company
8301 Maryland Avenue - St. Louis, Missouri 63105 - 1-800-242-4402
1. OWNER INFORMATION 2. JOINT OWNER INFORMATION,
If Applicable
NAME_______________________________ NAME_______________________________
Last First Middle Last First Middle
ADDRESS____________________________ ADDRESS____________________________
Street Apt.# Street Apt. #
___________________________________ ___________________________________
City State Zip City State Zip
Social Security/Tax ID#____________ Social Security/Tax ID#____________
Birth Date________________ Sex____ Birth Date________________ Sex____
Month Day Year Month Day Year
Phone#s( )__________ ( )_________ Phone#s( )_________ ( )__________
Day Night Day Night
Maturity Date: At Age ____ or ____ Years
from the Contract Date
3. AMOUNT AND ALLOCATION OF PAYMENT
( ) Check payable to "Scudder Horizon Plan" is enclosed in the amount of
$____________ (minimum investment $2,500).
( ) Payment by exchange of Scudder fund shares. (Complete "Authorization
for Exchange" section.)
( ) Payment by 1035 Exchange from another policy.
Type of Annuity:
( )Nonqualified ( )IRA Rollover ( )Pension/Profit Sharing Trust
Please indicate the allocation of payment using whole percentages that
total 100%.
Scudder Money Market ____% Scudder Capital Growth ____%
Scudder Bond ____% Scudder International ____%
Scudder Balanced ____% Scudder Global Discovery ____%
Scudder Growth and Income ____% General Account ____% ____ years
General Account ____% ____ years
4. ANNUITANT INFORMATION, If Other Than Owner
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt.#
________________________________________________
City State Zip
Birth Date _____________________ Sex __________
Month Day Year
5. BENEFICIARY DESIGNATION
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt. #
________________________________________________
City State Zip
Birth Date ______________ _____________________
Month Day Year Relationship to Owner
A1257NJ(97)
<PAGE>
6. TELEPHONE TRANSFER AUTHORIZATION (Personal Identification Number)
I am furnishing to Charter National Life Insurance
Company the four character Personal Identification
Number (PIN) shown at the right to be used as ____ ____ ____ ____
identification for telephone transfer of funds.
I agree to hold Charter National Life harmless as to any action taken when
a telephone transfer call is received with the correct name, policy number,
and personal code. I understand that I may cancel the telephone transfer
privilege by furnishing written notice to Charter National Life. Charter
National Life may cancel the privilege at any time.
7. WILL THIS ANNUITY REPLACE ANY EXISTING LIFE INSURANCE POLICY OR ANNUITY
CONTRACT?
( )No___________ ( )Yes______________________________________________
Company, amount, and type of policy or contract
8. OTHER INFORMATION
____________________________________ ___________________________________
Your Employer's Name Your Occupation
____________________________________
Your Employer's Address
Home Office Endorsements Only: (Do not write in this space)
9. SIGNATURES
To the best of my knowledge and belief, all statements made in this
application are true and complete. I understand and agree that Charter may
correct errors and omissions on the application, noting the changes under
"Home Office Endorsements." I will review any such corrections or changes
when the contract is issued. My acceptance of the contract shall
constitute acceptance of the changes. I also understand that where state
insurance regulations require, any amendment as to age at issue, payment
amount, or benefits will be made only with my written consent.
I understand that proof of the annuitant's age must be furnished before
annuity payments begin. Evidence satisfactory to Charter that the
annuitant is living will be furnished when requested by Charter, but not
more than once a year.
The contract will become effective on the contract date assigned by
Charter. In the event that either the payment or this application is not
acceptable to Charter, I understand Charter's liability will be limited to
a return of any payment made.
I UNDERSTAND THAT THE CASH VALUE AND DEATH BENEFIT MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE SUBACCOUNTS.
I have received a current prospectus for this contract and the subaccounts
of the Variable Annuity Account.
I certify that: (a) I have shown my correct taxpayer identification
number; and (b) I am not subject to backup withholding as a result of a
failure to report all interest or dividends.
I ( )do ( )do not want federal income tax withheld from any distribution.
The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.
Dated at_________________ this______ day of______, 19___.
City State
___________________________________ ___________________________________
Owner's Signature Joint Owner's Signature
(if applicable)
Any person who includes any false or misleading information on an
application for an insurance policy is subject to criminal and civil
penalties.
For Company Use Only
To your knowledge and belief, will replacement of life insurance or
annuities be involved? ( )Yes ( )No
The above answer and statements are true and complete to the best of my
knowledge and belief.
____________________________________ ____________________________________
Agent's Name (please print) Agent's Signature
<PAGE>
SCUDDER
HORIZON
A tax-advantaged asset-building plan
Q2PA-1-96
Variable Annuity Application
Charter National Life Insurance Company
8301 Maryland Avenue - St. Louis, Missouri 63105 - 1-800-242-4402
1. OWNER INFORMATION 2. JOINT OWNER INFORMATION,
If Applicable
NAME_______________________________ NAME_______________________________
Last First Middle Last First Middle
ADDRESS____________________________ ADDRESS____________________________
Street Apt.# Street Apt. #
___________________________________ ___________________________________
City State Zip City State Zip
Social Security/Tax ID#____________ Social Security/Tax ID#____________
Birth Date________________ Sex____ Birth Date________________ Sex____
Month Day Year Month Day Year
Phone#s( )__________ ( )_________ Phone#s( )_________ ( )__________
Day Night Day Night
Maturity Date: At Age ____ or ____ Years
from the Contract Date
3. AMOUNT AND ALLOCATION OF PAYMENT
( ) Check payable to "Scudder Horizon Plan" is enclosed in the amount of
$____________ (minimum investment $2,500).
( ) Payment by exchange of Scudder fund shares. (Complete "Authorization
for Exchange" section.)
( ) Payment by 1035 Exchange from another policy.
Type of Annuity:
( )Nonqualified ( )IRA Rollover ( )Pension/Profit Sharing Trust
Please indicate the allocation of payment using whole percentages that
total 100%.
Scudder Money Market ____% Scudder Capital Growth ____%
Scudder Bond ____% Scudder International ____%
Scudder Balanced ____% Scudder Global Discovery ____%
Scudder Growth and Income ____% General Account ____% ____ years
General Account ____% ____ years
4. ANNUITANT INFORMATION, If Other Than Owner
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt.#
________________________________________________
City State Zip
Birth Date _____________________ Sex __________
Month Day Year
5. BENEFICIARY DESIGNATION
NAME ___________________________________________
Last First Middle
ADDRESS ________________________________________
Street Apt. #
________________________________________________
City State Zip
Birth Date ______________ _____________________
Month Day Year Relationship to Owner
A1257PA(97)
<PAGE>
6. TELEPHONE TRANSFER AUTHORIZATION (Personal Identification Number)
I am furnishing to Charter National Life Insurance
Company the four character Personal Identification
Number (PIN) shown at the right to be used as ____ ____ ____ ____
identification for telephone transfer of funds.
I agree to hold Charter National Life harmless as to any action taken when
a telephone transfer call is received with the correct name, policy number,
and personal code. I understand that I may cancel the telephone transfer
privilege by furnishing written notice to Charter National Life. Charter
National Life may cancel the privilege at any time.
7. WILL THIS ANNUITY REPLACE ANY EXISTING LIFE INSURANCE POLICY OR ANNUITY
CONTRACT?
( )No___________ ( )Yes______________________________________________
Company, amount, and type of policy or contract
8. OTHER INFORMATION
____________________________________ _________________________________
Your Employer's Name Your Occupation
____________________________________
Your Employer's Address
Home Office Endorsements Only: (Do not write in this space)
9. SIGNATURES
To the best of my knowledge and belief, all statements made in this
application are true and complete. I understand and agree that Charter may
correct errors and omissions on the application, noting the changes under
"Home Office Endorsements." I will review any such corrections or changes
when the contract is issued. My acceptance of the contract shall
constitute acceptance of the changes. I also understand that where state
insurance regulations require, any amendment as to age at issue, payment
amount, or benefits will be made only with my written consent.
I understand that proof of the annuitant's age must be furnished before
annuity payments begin. Evidence satisfactory to Charter that the
annuitant is living will be furnished when requested by Charter, but not
more than once a year.
The contract will become effective on the contract date assigned by
Charter. In the event that either the payment or this application is not
acceptable to Charter, I understand Charter's liability will be limited to
a return of any payment made.
I UNDERSTAND THAT THE CASH VALUE AND DEATH BENEFIT MAY INCREASE OR DECREASE
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE SUBACCOUNTS AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNTS.
I have received a current prospectus for this contract and the subaccounts
of the Variable Annuity Account.
I certify that: (a) I have shown my correct taxpayer identification number;
and (b) I am not subject to backup withholding as a result of a failure to
report all interest or dividends.
I ( )do ( )do not want federal income tax withheld from any distribution.
The Internal Revenue Service does not require your consent to any provision
of this document other than the certifications required to avoid backup
withholding.
Dated at_________________ this______ day of______, 19___.
City State
___________________________________ ___________________________________
Owner's Signature Joint Owner's Signature
(if applicable)
Any person who knowingly and with intent to defraud any insurance company
or other person files an application for insurance or statement of claim
containing any materially false information or conceals for the purpose of
misleading, information concerning any fact material thereto commits a
fraudulent insurance act, which is a crime and subjects such person to
criminal and civil penalties.
For Company Use Only
To your knowledge and belief, will replacement of life insurance or
annuities be involved? ( )Yes ( )No
The above answer and statements are true and complete to the best of my
knowledge and belief.
____________________________________ ____________________________________
Agent's Name (please print) Agent's Signature
<PAGE>
MONEY MARKET YIELDS
7-DAY CURRENT YIELD
Current Yield = ((NSC - ES) / UV) x (365 / 7)
Where: NCS = The net change in the value of the Portfolio (exclusive
of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) for the 7-day period attributable to a
hypothetical account having a balance of 1 Subaccount unit.
ES = ADMIN + M&E + RMC
Where: ES = Per unit expenses of the Subaccount for the 7-day period.
ADMIN = Per unit Administration Charges deducted for the 7-day
period.
M&E = Per unit Mortality & Expenses Risk Charges deducted for
the 7-day period.
RMC = Per unit Records Maintenance Charges for the 7-day
period.
RMC = (35 / AAV /365) x AUV x 7
Where: AAV = Average Accumulated Value of Contracts on the last day of
the 7-day period.
AUV = The sum of the unit values on the first and last day of the 7-day
period divided by 2.
UV = The unit value on the first day of the 7-day period.
For Example:
If: NCS = .001342474
AAV = 55,000
AUV = 1.002678
UV = 1.002345
ADMIN = .000059325
M&E = .000135126
1
<PAGE>
Then: RMC = (35 / 55,000 / 365) x 1.002678 x 7, or
RMC = .000012237
ES = .000059325 + .000135126 = .000012237
ES = .000206688
Then: Current Yield = ((.001342474 - .000206688) / 1.002345
x (365 /7)
Current Yield = .059084574
Current Yield = 5.91%
7-DAY EFFECTIVE YIELD
Effective Yield = (1 + (NCS - ES) / UV) to the power of 365/7 -
1
Where: NCS = NCS as calculated for the Current Yield.
ES = ES as calculated for the Current Yield.
UV = UV as calculated for the Current Yield.
For Example:
If: Effective Yield = (1 + (.001342474 - .000206688)
/ 1.002345) to the power of 365/7 - 1
Effective Yield = .06082948
Effective Yield = 6.08%
2
<PAGE>
OTHER SUBACCOUNT YIELDS
30-DAY YIELD
Yield = 2 x ((((NI - ES) / (U x UV)) + 1) to the power of 6 - 1)
Where: NI = Net income of the Portfolio for the 30-day period
attributable to the Subaccount's units.
ES = ADMIN + M&E + RMC
Where: ES = Expenses of the Subaccount for the 30-day period.
ADMIN = Administration Charges deducted from the Subaccount for
the 30-day period.
M&E = Mortality & Expense Risk Charges deducted from the
Subaccount for the 30-day period.
RMC = (35 / AAV / 365) x (U x AUV) x 30
Where: AAV = Average Accumulated Value of Contracts on the last day of
the 30-day period.
U = The average number of units outstanding, which equals the
number of units on the first day of the 30-day period plus the number units
on the last day of the 30-day period the sum of which is divided by 2.
AUV = The sum of the unit values on the first and last day of
the 30-day period divided by 2.
UV = The unit value at the close (highest) of the last day in
the 30-day period.
For Example:
If: NI = 10,000.00
ADMIN = 250.00
M&E = 583.33
AAV= 55,000
U = 1,000,000
AUV = 1.011234
UV = 1.012345
3
<PAGE>
Then: RMC = (35 / 55,000 / 365) x (1,000,000 x 1.011234) x 30
RMC = 52.891442
ES = 250.00 = 583.33 + 52.891442
ES = 886.221442
Then: Yield = 2 x ((((10,000 - 886.221442) / (1,000,000 x
1.012345)) + 1) to the power of 6 -1)
Yield = .110493
Yield = 11.05%
4
<PAGE>
TOTAL RETURN
AVERAGE ANNUAL STANDARD TOTAL RETURNS
TR = ((ERV / P) to the power of 1/N) -1
Where: TR = Average annual total return.
ERV = The ending redeemable value of the hypothetical account at
the end of the period.
P = A hypothetical initial payment of $1,000.
N = Number of years and/or fractions of years in the period.
ERV = (1,000 x ((EUV - BUV) / BUV)) +1,000 - RMC
Where: EUV = Unit value at the end of the period.
BUV = Unit value at the beginning of the period.
RMC = The Records Maintenance Charge attributable to the
hypothetical account for the period.
RMC = (35 / AAV / 365) x (N x 365)
x (1,000 + (1,000 x ((EUV - BUV) / BUV) / 2))
Where: AAV = Average Accumulated Value of Contracts on the last day of
the period.
For Example:
If: P = 1,000
N = 1.25
AAV = 55,000
EUV = 1.123456
BUV = 1.000000
Then: RMC = (35 / 55,000 / 365) x (1.25 x 365)
x (1,000 + (1,000 x ((1.123456 - 1.000000) / 1.000000)
/ 2 ))
RMC = .844556
Then: ERV = (1,000 x ((1.123456 - 1.000000) / 1.000000))
+ 1,000 - .844556
ERV = 1,122.611444
5
<PAGE>
Then: TR = ((1,122.611444 / 1,000) to the power of 1/1.25) -1
TR = .096942
TR = 9.69%
CUMULATIVE TOTAL RETURNS
CTR = (ERV / P) - 1
Where: CTR = Cumulative total return.
ERV = The ending redeemable value of a 1,000 hypothetical
account at the end of the period.
P = A hypothetical intial payment of 1,000.
ERV = (1,000 X ((EUV - BUV) / BUV)) + 1,000 - RMC
Where: EUV = Unit value at the end of the period.
BUV = Unit value at the beginning of the period.
RMC = The Records Maintenance Charge attributable to the
hypothetical account for the period.
RMC = (35 / AAV / 365) x (N x 365)
x (1,000 + (1,000 x ((EUV - BUV) / BUV) / 2))
Where: AAV = Average Accumulated Value of Contracts on the last day of
the period.
6
<PAGE>
EXHIBIT LIST
(1) Resolutions of the Board of Directors of Charter National
Life Insurance Company authorizing establishment of the Variable Annuity
Account.
(3) (a) -- Form of Principal Underwriting Agreement between Charter
National Life Insurance Company on its own behalf and on behalf of Charter
National Variable Annuity Account, and CNL, Inc.
(b) -- Form of Expense Reimbursement Agreement between Charter
National Life Insurance Company and CNL, Inc.
(c) -- Marketing and Solicitation Agreement dated as of September
30, 1988 among Scudder Investor Services, Inc., Charter National Life
Insurance Company, Charter National Variable Annuity Account, and CNL, Inc.
(d) -- Principal Underwriting Agreement - Schedule A.
(4) (a) -- Form of Contract for the Flexible Premium Variable Deferred
Annuity.
(b) -- State Variations in Contract Form.
(c) -- General Account Endorsement.
(d) -- Individual Retirement Provision Contract Rider.
(e) -- Change in Ownership and Annuitant Contract Rider.
(f) -- Charges Endorsement.
(5) (a) -- Form of Application for the Flexible Premium Variable
Deferred Annuity.
(b) -- State Variations of Application Form.
(6) (a) -- Articles of Incorporation of Charter National Life Insurance
Company.
(b) -- By-Laws of Charter National Life Insurance Company.
(8) (a) -- Participation Agreement dated September 3, 1993 between
Scudder Variable Life Investment Fund and Charter National Life Insurance
Company.
(b) -- Reimbursement Agreement dated June 9, 1986 between Scudder,
Stevens & Clark Inc. and Charter National Life Insurance Company.
(c) -- Participating Contract and Policy Agreement and Amendments
thereto dated June 4, 1986 between Scudder Investor Services, Inc. and CNL,
Inc.
(d) -- Amendment to Participating Contract and Policy Agreement
dated February 20, 1996.
(9) (a) -- Opinion and Consent of Counsel.
(13) -- Schedule for Computation of Performance Data.
(14) -- Power of Attorney
