As filed with the Securities and Exchange Commission on April 26, 1996
File No. 33-83354
File No. 811-8732
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
---
Post-Effective Amendment No. 2 [X]
---
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3
FIRST CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
(Exact Name of Registrant)
FIRST CITICORP LIFE INSURANCE COMPANY
(Name of Depositor)
One Court Square
24th Floor
Long Island City, New York 11120
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (718) 248-5505
Richard M. Zuckerman, Esq.
Associate General Counsel
First Citicorp Life Insurance Company
800 Silver Lake Boulevard
Dover, Delaware 19904
(Name and Address of Agent for Service of Process)
Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
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It is proposed that this filling will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on 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.
DECLARATION PURSUANT TO RULE 24f-2
The registrant has previously filed a declaration of indefinite registration of
its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940. The
registrant filed a Rule 24f-2 Notice on February 27, 1996 for its most recent
fiscal year ended December 31, 1995.
<PAGE>
Cross Reference Sheet
Pursuant to Rules 481(a) and 495(a)
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 ....................... Expense Tables; Summary
4. Condensed Financial
Information .................. Condensed Financial Information;
Yields and Total Returns
5. General
(a) Depositor ................ First Citicorp Life
Insurance Company
(b) Registrant ............... The Separate Account
(c) Portfolio Company ........ The Funds
(d) Fund Prospectus .......... The Funds
(e) Voting Rights ............ Voting Privileges
(f) Administrators ........... N/A
6. Deductions and Expenses
(a) General .................. Charges and Deductions; Summary
(b) Sales Load ............... Charges and Deductions; Summary
(c) Special Purchase Plan .... N/A
(d) Commissions .............. Distribution of the Contracts
(e) Expenses - Registrant .... Charges and Deductions; Summary
(f) Fund Expenses ............ Charges and Deductions
(g) Organizational Expenses .. N/A
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7. Contracts
(a) Persons with Rights ...... Summary; Addition, Deletion or
Substitution of Investments;
Description of the Contract; Annuity
Payment Options; Voting Privileges;
Death Benefit Before the Annuity
Income Date; Modification; Election
of Annuity Payment Options
(b) (i) Allocation of
Purchase Payments ... Summary; Purchase Payments;
Free-Look Period; Allocation of
Purchase Payments
(ii) Transfers ........... Summary; Transfer Privileges
(iii) Exchanges ........... Transfers, Assignments
(c) Changes .................. Additions, Deletions or
Substitutions of Investments;
Description of the Contract;
Modification;
(d) Inquiries ................ Cover page; Inquiries
8. Annuity Period ................. Summary; Annuity Payment Options
9. Death Benefit .................. Death Benefit Before the
Annuity Date
10. Purchases and Contract Value
(a) Purchases ................ Summary; Issuance of a Contract;
Purchase Payments; Free Look Period;
Allocation of Purchase Payments;
Variable Contract Value; Transfer
Privileges
(b) Valuation ................ Definitions; Variable Contract
Value;
(c) Daily Calculation ........ Definitions; Variable Contract
Value;
(d) Underwriter .............. Issuance of a Contract;
Distribution of the Contracts
11. Redemptions
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(a) - By Owners .............. Summary; Transfer Privilege;
Surrenders and Partial Withdrawals;
Annuity Payments on the Annuity
Date; Payments; Annuity Payment
Options; Federal Tax Matters
- By Annuitant ........... Summary; Transfer Privilege;
Surrenders and Partial Withdrawals;
Proceeds on the Annuity Date;
Payments; Annuity Payment Options;
Federal Tax Matters
(b) Texas ORP ................ N/A
(c) Check Delay .............. Purchase Payments
(d) Lapse .................... N/A
(e) Free Look ................ Summary; Free Look Period
12. Taxes .......................... Summary; Federal Tax Matters
13. Legal Proceedings .............. Legal Proceedings
14. Table of Contents for the
Statement of Additional
Information ................... Statement of Additional Information
Table of Contents
<PAGE>
PART B
Item of Form N-4 Part B Caption
15. Cover Page ...................... Cover Page
16. Table of Contents ............... Table of Contents
17. General Information and
History ........................ N/A
18. Services
(a) Fees and Expenses of
Registrant ................ Charges and Deductions (prospectus)
(b) Management Contracts ...... N/A
(c) Custodian ................. N/A
Independent Public
Accountant ................ Experts
(d) Assets of Registrant ...... The Separate Account
(e) Affiliated Persons ........ First Citicorp Life Insurance
Company (prospectus)
(f) Principal Underwriter ..... Distribution of the Contracts
(prospectus)
19. Purchase of Securities
Being Offered .................. Distribution of the Contracts
(prospectus)
Offering Sales Load ............ N/A
20. Underwriters .................... Distribution of the Contracts
(prospectus)
21. Calculation of Performance
Data ............................ Calculation of Yields and Total
Returns; Yields and Total Returns
(prospectus)
22. Annuity Payments ................ Variable Annuity Payments; Annuity
Payment Options (prospectus)
23. Financial Statements ............ Financial Statements
<PAGE>
PART C -- OTHER INFORMATION
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 First
Citicorp Life Insurance Company
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 owners
28. Indemnification ................. Indemnification
29. Principal Underwriters .......... Principal Underwriter
30. Location of Accounts
and Records ..................... Location of Books and Records
31. Management Services ............. Management Services
32. Undertakings .................... Undertakings and Representations
Signature Page .................. Signatures
<PAGE>
PART A
PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
INDIVIDUAL FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY CONTRACT
FIRST CITICORP LIFE INSURANCE COMPANY
One Court Square
24th Floor
Long Island City, New York 11120
Telephone: (800) 497-4857
PROSPECTUS
May 1, 1996
- --------------------------------------------------------------------------------
<PAGE>
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
FIRST CITICORP LIFE INSURANCE COMPANY
One Court Square
24th Floor
Long Island City, New York 11120
Telephone: (800) 497-4857
This Prospectus describes the individual flexible premium deferred variable
annuity contract (the "Contract") being offered by First Citicorp Life Insurance
Company. The Contract may be sold to or in connection with retirement plans,
including those that qualify for special federal tax treatment under Sections
403(b) or 408 of the Internal Revenue Code.
Purchase payments and Contract Values are allocated, as designated by you,
to one or more of the subaccounts of First Citicorp Life Variable Annuity
Separate Account (the "Separate Account"), or to the Fixed Account, or both. The
assets of each subaccount will be invested in a corresponding portfolio of the
Landmark VIP Funds, the Fidelity Variable Insurance Products Fund, the AIM
Variable Insurance Funds, Inc., or the MFS Variable Insurance Trust (the
"Funds"). The available portfolios of the Landmark VIP Funds include the
Landmark VIP U.S. Government Fund, the Landmark VIP Equity Fund, the Landmark
VIP Balanced Fund and the Landmark VIP International Equity Fund, and are
available for investment under the Contract. The Growth Portfolio of the
Fidelity Variable Insurance Products Fund, the AIM V.I. Capital Appreciation
Fund of the AIM Variable Insurance Funds, Inc. and the MFS World Government
Series and the MFS Money Market Series of the MFS Variable Insurance Trust are
also available for investment under the Contract. The accompanying prospectuses
for the Funds describe the investment objectives of the available portfolio. The
Contract Value prior to the Annuity Income Date, except for amounts in the Fixed
Account, will vary according to the investment performance of the portfolios in
which the selected subaccounts are invested. You bear the entire investment risk
on amounts allocated to the Separate Account.
This Prospectus sets forth basic information about the Contract and the
Separate Account that a prospective investor should know before investing.
Additional information about the Contract and the Separate Account is contained
in the Statement of Additional Information, which has been filed with the
Securities and Exchange Commission. The Statement of Additional Information has
the same date as this Prospectus and is incorporated herein by reference. The
table of contents for the Statement of Additional Information is on page __ of
this prospectus. You may obtain a copy of the Statement of Additional
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Information free of charge by writing to or calling the Company at the address
or phone number shown above.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS MUST BE ACCOMPANIED BY CURRENT PROSPECTUSES FOR THE LANDMARK VIP
FUNDS, THE FIDELITY VARIABLE INSURANCE PRODUCTS FUND, THE AIM VARIABLE INSURANCE
FUNDS, INC. AND THE MFS VARIABLE INSURANCE TRUST.
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.
CONTRACTS AND SHARES OF THE FUNDS ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK
GUARANTEED. THEY ARE SUBJECT TO MARKET FLUCTUATION, REINVESTMENT RISK AND
POSSIBLE LOSS OF PRINCIPAL INVESTED.
YOUR RIGHT TO LOOK TO A DELAWARE BANK OR TRUST COMPANY FOR PAYMENT ON ANY
INSURANCE POLICY IS LIMITED BY LAW. INSURANCE POLICIES ISSUED BY THE
SUBSIDIARIES OR DIVISIONS OF DELAWARE BANKS OR TRUST COMPANIES ARE NOT DIRECT
LIABILITIES OF SUCH BANKS OR TRUST COMPANIES. ONLY THE ASSETS OF THE INSURANCE
DIVISION OR SUBSIDIARY ISSUING A POLICY ARE APPLICABLE TO THE PAYMENT AND
SATISFACTION OF SUCH POLICY OR CLAIMS MADE THEREUNDER.
INSURANCE POLICIES ISSUED BY A SUBSIDIARY OR DIVISION OF A DELAWARE BANK OR
TRUST COMPANY ARE NOT BANK DEPOSITS AND ARE NOT FDIC INSURED.
May 1, 1996
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TABLE OF CONTENTS
DEFINITIONS
EXPENSE TABLES
SUMMARY
The Contract
Charges and Deductions
Annuity Provisions
Federal Tax Status
CONDENSED FINANCIAL INFORMATION
THE COMPANY, THE SEPARATE ACCOUNT AND THE FUNDS
First Citicorp Life Insurance Company
First Citicorp Life Variable Annuity Separate Account
The Funds
Addition, Deletion or Substitution of Investments
DESCRIPTION OF THE CONTRACT
Issuance of a Contract
Purchase Payments
Free-Look Period
Allocation of Purchase Payments
Variable Contract Value
Transfer Privileges
Surrenders and Partial Withdrawals
Death Benefit Before the Annuity Income Date
Annuity Payments on the Annuity Income Date
Payments
Modification
Owner
Reports to Owners
Inquiries
THE FIXED ACCOUNT
Fixed Account Value
CHARGES AND DEDUCTIONS
Surrender Charge (Contingent Deferred Sales Charge)
Annual Contract Fee
Asset-Based Administration Charge
Transfer Processing Fee
Mortality and Expense Risk Charge
Fund Expenses
Premium Taxes
Other Taxes
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ANNUITY PAYMENT OPTIONS
Election of Annuity Payment Options
Fixed Annuity Payments
Legal Developments Regarding Unisex Actuarial Tables
Variable Annuity Payments
Description of Annuity Payment Options
YIELDS AND TOTAL RETURNS
FEDERAL TAX MATTERS
Introduction
Tax Status of the Contract
Taxation of Annuities
Transfers, Assignments or Exchange of a Contract
Withholding
Multiple Contracts
Taxation of Qualified Plans
Possible Charge for the Company's Taxes
Other Tax Consequences
DISTRIBUTION OF THE CONTRACTS
LEGAL PROCEEDINGS
VOTING PRIVILEGES
COMPANY HOLIDAYS
FINANCIAL STATEMENTS
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
5
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DEFINITIONS
Account Any of the subaccounts or the Fixed
Account.
Accumulation Unit A unit of measure used to calculate
Variable Contract Value. We use
Accumulation Units to calculate the value
of a subaccount before annuity payments.
Age Your age on your last birthday.
Annuitant The Annuitant is the person upon whose
life annuity benefits are based and to
whom payments are made under this
contract, commencing on the Annuity
Income Date. The Annuitant must be a
natural person.
Annuity Income Date The date on which annuity payments begin.
Annuity Unit A unit of measure used to calculate
variable annuity payments.
Attained Age Your age on the prior Contract
Anniversary.
Beneficiary The person who becomes the Owner of the
Contract upon any Owner's death prior to
the Annuity Income Date and who receives
the Death Benefit. The Contingent
Beneficiary is the person who will become
the Beneficiary if the named Beneficiary
is not living. An Irrevocable Beneficiary
is one whose consent is necessary to
change Beneficiaries and exercise certain
other rights under the Contract.
The Code The Internal Revenue Code of 1986, as
amended.
Contract Anniversary The same date each year after the
Contract Date.
Contract Date The Contract Date is the date the
Contract becomes effective.
Contract Owner The person(s) who owns the Contract and
who is entitled to exercise all rights
and privileges provided in the Contract.
Contract Value The total amount invested under the
Contract. It is the sum of the Variable
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Contract Value and the value of the
Contract in the Fixed Account.
Dollar Cost Averaging A series of systematic monthly transfers
from either the Money Market Subaccount
or the Fixed Account to the available
subaccounts.
Fixed Account An allocation option under our General
Account. Under the Fixed Account, we
credit any portion of the initial
purchase payment allocated to the Fixed
Account with the Initial Fixed Account
Interest Rate shown in the Contract
Schedule. We may declare different
initial interest rates for each
subsequent purchase payment or transfer
to the Fixed Account. After the initial
one year period, the interest rate earned
will be the Current Fixed Account
Interest Rate. The Current Fixed Account
Interest Rate is determined by us in our
discretion and is guaranteed for one
year.
General Account Our assets other than those allocated to
the Separate Account or any other
separate account.
Home Office Our principal office at One Court Square,
24th Floor, Long Island City, NY 11120.
"In writing" and
"written request" A written form satisfactory to us and
received by us at our Home Office. We
have the right to require a signature
guarantee from an institution qualified
to give such a guarantee before acting on
any written request.
Net Asset Value
per Share The share value of any portfolio as of
any Valuation Day reflecting investment
performance and decreased by any expenses
and fees assessed against the portfolio.
Net Investment Factor An index used to measure the investment
performance of a subaccount from one
Valuation Period to the next.
Non-Qualified Contract A Contract that is not a "qualified
contract."
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Premium Taxes Taxes charged by a state or municipality
on purchase payments. We deduct premium
taxes from the Contract Value either: (1)
at the time the Contract is surrendered;
(2) on the Annuity Income Date; or (3) at
such other date as the taxes are
assessed.
Qualified Contract A Contract that is issued in connection
with retirement plans that qualify for
special federal income tax treatment
under Sections 403(b) or 408 of the Code.
SEC U.S. Securities and Exchange Commission.
Subaccount A subdivision of the Separate Account,
the assets of which are invested in a
corresponding portfolio.
Surrender Value The Contract Value less any applicable
surrender charges payable, premium taxes
not previously deducted and the Annual
Contract Fee for that year.
Valuation Day For each subaccount, each day on which
both we and the New York Stock Exchange
are open for business.
Valuation Period The period that starts following the
close of regular trading on the New York
Stock Exchange on any Valuation Day and
ends at the close of regular trading on
the next succeeding Valuation Day.
Separate Account First Citicorp Life Variable Annuity
Separate Account. Assets of the Separate
Account equal to the reserves and other
contract liabilities with respect to the
Separate Account are separate from our
other assets and are not chargeable with
liabilities arising out of any other
business we may conduct.
Variable Contract
Value The value of the Contract in the Separate
Account.
"We", "Our","Us"
and the "Company" First Citicorp Life Insurance Company.
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"You" and "Your" The Owner of the Contract. In the event
of Joint Ownership, you and your apply
equally to either Joint Owner unless the
context clearly indicates otherwise.
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EXPENSE TABLES
The following expense information assumes that the entire Contract Value is
Variable Contract Value.
Owner Transaction Expenses
Sales Charge Imposed on Purchase Payments None
Maximum Surrender Charge (contingent
deferred sales charge) as a percentage
of the premium payment withdrawn 7%
Surrender Fee None*
Transfer Processing Fee None**
Annual Contract Fee $30***
Separate Account Annual Expenses
(as a percentage of net assets)
Mortality and Expense Risk Charge 1.25%
Administration Charge 0.15%
Total Separate Account Expenses 1.40%
Annual Fund Expenses****
(as percentage of average net assets)
Landmark VIP U.S. Government Fund
---------------------------------
Management Fees (investment advisory fees) 0.40%
Other Expenses (after fee waivers and reimbursements) 0.20%
Total Annual Fund Expenses (after fee winers 0.60%
and reimbursements)
* We reserve the right to assess a processing charge equal to the lesser of
$25.00 or 2% of the amount withdrawn for each withdrawal (including the final
surrender) after the first 12 withdrawals in any Contract Year. See "Charges and
Deductions."
** We reserve the right to charge a $25 transfer fee on each transfer after
the first 12 transfers in any Contract Year. See "Charges and Deductions."
*** We will waive the Annual Contract Fee in its entirety if, at the time
this charge would be deducted, the Contract Value is at least $25,000.
**** Certain of the unaffiliated investment advisers reimburse First Citicorp
Life for administrative costs incurred in connection with administering the
funds as variable funding options. These reimbursements are paid out of the
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advisers' investment advisory fees as a percentage of assets under management.
Landmark VIP Equity Fund
------------------------
Management Fees (investment advisory fees) 0.50%
Other Expenses (after fee waivers and reimbursements) 0.25%
Total Annual Fund Expenses (after fee waivers 0.75%
and reimbursements)
Landmark VIP Balanced Fund
--------------------------
Management Fees (investment advisory fees) 0.40%
Other Expenses (after fee waivers and reimbursements) 0.30%
Total Annual Fund Expenses (after fee waivers 0.70%
and reimbursements)
Landmark VIP International Equity Fund
--------------------------------------
Management Fees (investment advisory fees) 1.00%
Other Expenses (after fee waivers and reimbursements) 0.20%
Total Annual Fund Expenses (after fee waivers 1.20%
and reimbursements)
Fidelity Growth Portfolio
-------------------------
Management Fees (investment advisory fees) 0.61%
Other Expenses 0.09%
Total Annual Fund Expenses 0.70%
AIM V.I. Capital Appreciation Fund
----------------------------------
Management Fees (investment advisory fees) 0.65%
Other Expenses 0.10%
Total Annual Fund Expenses 0.75%
MFS World Governments Series
----------------------------
Management Fees (investment advisory fees) 0.75%
Other Expenses (after fee reduction) 0.25%
Total Annual Fund Expenses (after fee reduction) 1.00%
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MFS Money Market Series
-----------------------
Management Fees (investment advisory fees) 0.50%
Other Expenses (after fee reduction) 0.10%
Total Annual Fund Expenses (after fee reduction) 0.60%
Premium taxes may be applicable, depending on the laws of various
jurisdictions. Various states and other governmental entities levy a premium
tax, currently ranging up to 3.5%, on annuity contracts issued by insurance
companies.
The above tables are intended to assist the Owner in understanding the costs
and expenses that he or she will bear directly or indirectly. The tables reflect
fiscal year 1995 expenses for the Separate Account and fiscal year 1995 expenses
for the Landmark VIP U.S. Government Fund, the Landmark VIP Equity Fund, the
Landmark VIP Balanced Fund, the Landmark VIP International Equity Fund, the
Fidelity Growth Portfolio, the AIM V.I. Capital Appreciation Fund, the MFS World
Governments Series and the MFS Money Market Series. Absent fee waivers and
reimbursements, "Other Expenses" and "Total Annual Fund Expenses" incurred for
fiscal year 1995 were: Landmark VIP U.S. Government Fund - 8.67% and 9.07%;
Landmark VIP Equity Fund - 7.33% and 7.83%; Landmark VIP Balanced Fund - 6.92%
and 7.32%; Landmark VIP International Equity Fund - 3.84% and 4.84%, MFS World
Governments Series 1.24% and 1.99% and MFS Money Market Series 21.04% and
21.54%, respectively. There can be no assurance that the fee waivers and
reimbursements reflected in the table will continue at their reflected levels.
However, the MFS Investment Advisor has agreed to bear, subject to
reimbursement, until December 31, 2004, expenses such that the aggregate
expenses of the MFS World Governments Series and the MFS Money Market Series do
not exceed, on an annualized basis 1.00% and 0.60% of the average daily net
assets, respectively. For a more complete description of the various costs and
expenses see "Charges and Deductions" and the prospectuses for the Funds.
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Examples
An owner would pay the following expenses on a $1,000 investment, assuming a
5% annual return on assets:
1. If the Contract is surrendered or annuitized under an annuity option not
providing a life annuity or a life annuity with a period certain of at least
five years at the end of the applicable time period:
Subaccount 1 Year 3 Years 5 Years 10 Years
- ---------- ------ ------- ------- --------
Landmark VIP U.S. Government Fund $ 89 $ 122 $ 157 $ 270
Landmark VIP Equity Fund $ 90 $ 127 $ 165 $ 285
Landmark VIP Balanced Fund $ 90 $ 125 $ 162 $ 280
Landmark VIP International Equity $ 94 $ 140 $ 187 $ 330
Fund
Fidelity Growth Portfolio $ 90 $ 125 $ 162 $ 280
AIM V.I. Capital Appreciation Fund $ 91 $ 127 $ 165 $ 285
MFS World Governments Series $ 92 $ 134 $ 177 $ 311
MFS Money Market Series $ 89 $ 122 $ 157 $ 270
2. If the Contract is annuitized under an annuity option providing either a
life annuity or a life annuity with a period certain of at least five years at
the end of the applicable time period:
Subaccount 1 Year 3 Years 5 Years 10 Years
- ---------- ------ ------- ------- --------
Landmark VIP U.S. Government Fund $ 24 $ 74 $ 126 $ 270
Landmark VIP Equity Fund $ 26 $ 79 $ 134 $ 285
Landmark VIP Balanced Fund $ 25 $ 77 $ 132 $ 280
Landmark VIP International Equity $ 30 $ 92 $ 157 $ 330
Fund
Fidelity Growth Portfolio $ 25 $ 77 $ 132 $ 280
AIM V.I. Capital Appreciation Fund $ 26 $ 79 $ 134 $ 285
MFS World Governments Series $ 28 $ 86 $ 147 $ 311
MFS Money Market Series $ 24 $ 74 $ 126 $ 270
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3. If the Contract is not surrendered or annuitized at the end of the
applicable time period:
Subaccount 1 Year 3 Years 5 Years 10 Years
- ---------- ------ ------- ------- --------
Landmark VIP U.S. Government Fund $ 24 $ 74 $ 126 $ 270
Landmark VIP Equity Fund $ 26 $ 79 $ 134 $ 285
Landmark VIP Balanced Fund $ 25 $ 77 $ 132 $ 280
Landmark VIP International Equity $ 30 $ 92 $ 157 $ 330
Fund
Fidelity Growth Portfolio $ 25 $ 77 $ 132 $ 280
AIM V.I. Capital Appreciation Fund $ 26 $ 79 $ 134 $ 285
MFS World Governments Series $ 28 $ 86 $ 147 $ 311
MFS Money Market Series $ 24 $ 74 $ 126 $ 270
The examples provided above assume that no transfer charges or premium taxes
have been assessed. The examples also assume that the Annual Contract Fee is $30
and that the average Contract Value is $10,000, which translates the Annual
Contract Fee into an assumed .30% charge for the purposes of the examples based
on a $1,000 investment.
The examples should not be considered a representation of past or future
expenses. The assumed 5% annual rate of return is hypothetical and should not be
considered a representation of past or future annual returns, which may be
greater or less than this assumed rate.
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SUMMARY
UNLIKE BANK ACCOUNTS, CONTRACT VALUE IS NOT INSURED. INVESTMENT OF CONTRACT
VALUE INVOLVES CERTAIN RISKS INCLUDING LOSS OF PURCHASE PAYMENTS (PRINCIPAL).
CONTRACT VALUE IS NOT DEPOSITED IN OR GUARANTEED BY ANY BANK AND IS NOT
GUARANTEED BY ANY GOVERNMENT AGENCY.
The Contract
Issuance of a Contract. Contracts may be issued in connection with retirement
plans that may or may not qualify for special federal tax treatment under the
Code. The maximum age for Owners on the Contract date is 90. (See "Issuance of a
Contract.")
Free Look Period. You have the right to return the Contract within 10 days
(or longer in certain states) after you receive it. We will consider the
Contract received five days after it is mailed to your last known address. The
returned Contract will become void. We will return to you an amount equal to the
Contract Value on the date the Contract is received either at our home office or
by the sales representative who sold it, plus any premium taxes deducted. Where
required, we will instead return the greater of the Contract Value or purchase
payment(s) (See "Free-Look Period.")
Purchase Payments. The minimum amount we will accept as an initial purchase
payment is $5,000 for Non-Qualified Contracts and $2,000 for Qualified
Contracts. Subsequent purchase payments may be paid under the Contract at any
time before the Annuity Income Date; however, we reserve the right not to accept
payments less than $500 for Non-Qualified Contracts and less than $100 for
Qualified Contracts. Our approval is required for payments that exceed
$1,000,000 per Contract Year. (See "Purchase Payments", page 23.)
Allocation of Purchase Payments. Purchase payments under a Contract will be
allocated, as designated by you, to one or more of the subaccounts of the
Separate Account or to the Fixed Account or to both. In states where we must
refund purchase payments in the event you exercise the free-look right, any
portion of the initial net purchase payment to be allocated to any subaccount
will be allocated to the subaccount investing in the MFS Money Market Series
(the "Money Market Subaccount") during the "free-look" period. At the end of
that period, the value in the Money Market Subaccount will be allocated to the
subaccounts as selected by you. The assets of each subaccount will be invested
solely in a corresponding portfolio. The Contract Value, except for amounts in
the Fixed Account, will vary according to the investment performance of the
portfolio(s) in which the selected subaccount(s) is invested. Interest will be
credited to amounts in the Fixed Account at a guaranteed minimum rate of 3% per
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year, or a higher current interest rate declared by us. (See "Allocation of
Purchase Payments.") The Fixed Account may not be available in all states.
Transfers. On or before the Annuity Income Date, you may transfer all or part
of the value in a subaccount or the Fixed Account to another subaccount or the
Fixed Account subject to certain restrictions.
The maximum amount that may be transferred from the Fixed Account during any
Contract Year equals the greatest of: (1) 25% of the Fixed Account Value as of
the later of the Contract Date or last Contract Anniversary; (2) the Contract
Value in the Fixed Account attributable to interest earnings; or (3) the
greatest transfer from the Fixed Account during the prior Contract Year. We
reserve the right to defer transfers from the Fixed Account for up to 6 months
following the date of request.
Currently, a $25 fee is assessed on the 19th and each subsequent transfer
during a Contract Year. We reserve the right, however, to charge this fee for
the 13th and each subsequent transfer during a Contract Year. (See "Transfer
Privilege.")
Partial Withdrawal. Before the Annuity Income Date, you may, by written
notice, withdraw part of the surrender value subject to certain limitations. Any
withdrawal request must be in writing and must specify from which Account(s) the
withdrawal will be made. (See "Partial Withdrawals.")
Surrender. Upon written notice before the Annuity Income Date, you may
surrender the Contract and receive its surrender value. (See "Surrender.")
Charges and Deductions
The following charges and deductions are assessed under the Contract:
Surrender Charge (Contingent Deferred Sales Charge). No charge for sales
expenses is deducted from purchase payments at the time purchase payments are
made. However, a surrender charge may be deducted from amounts surrendered or
withdrawn. A surrender charge also may be deducted from amounts applied to
annuity payment options not providing a life annuity or a life annuity with a
period certain of at least five years. Surrender charges are not deducted upon
payment of a death benefit.
The surrender charge imposed on partial withdrawals, surrenders and upon
application of proceeds to certain annuity options equals a specified percentage
of the purchase payments withdrawn or applied. The surrender charge is
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calculated by multiplying the applicable specified percentages by the purchase
payments withdrawn. For purchase payments withdrawn or surrendered within one
year of having been paid, the charge is 7% of the amount of purchase payments
withdrawn or surrendered. For each purchase payment, the surrender charge
decreases each full year that has elapsed since the payment was made. Surrenders
and withdrawals are considered to come first from earnings and then from the
oldest purchase payment, then the next oldest payment, and so forth. No
surrender charge is assessed upon the withdrawal or surrender of earnings or
purchase payments made more than 5 years prior to the withdrawal or surrender.
(See "Charges for Surrender or Partial Withdrawals.")
During each Contract Year, up to 10% of purchase payments less any prior
withdrawal of purchase payments may be withdrawn without a Surrender Charge.
The surrender charge also may be waived in certain circumstances as provided
in the Contracts. (See "Waiver of Surrender Charge.")
We reserve the right to assess a processing charge equal to the lesser of
$25.00 or 2% of the amount withdrawn for each withdrawal (including the final
surrender) after the first 12 withdrawals in any Contract Year.
Annual Contract Fee. On the 1st day of each Contract Year prior to the
Annuity Income Date, or the surrender of the Contract, if earlier, we will
deduct an Annual Contract Fee of $30 from the Contract Value. A pro-rated
portion of the fee is deducted from all active Accounts. (See "Annual Contract
Fee.")
The Annual Contract Fee will be waived in its entirety if, at the time of
deduction, the Contract Value is $25,000 or more.
Mortality and Expense Risk Charge. We deduct a daily mortality and expense
risk charge to compensate us for assuming certain mortality and expense risks.
The charge is deducted from the assets of the Separate Account at an annual rate
of 1.25% (approximately 0.50% for mortality risk and 0.75% for expense risks).
(See "Mortality and Expense Risk Charge.")
Asset Based Administration Charge. We deduct a daily administration charge to
compensate us for certain expenses we incur in administration of the Contract
and the Separate Account. The charge is deducted from the assets of the Separate
Account at an annual rate of 0.15%. (See "Asset Based Administration Charge".)
We do not expect to make a profit from this charge.
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Premium Taxes. If state or other premium taxes are applicable to a Contract,
they will be deducted from the Contract Value. Premium taxes will be deducted
from the Contract Value either: (1) at the time the Contract is surrendered; (2)
on the Annuity Income Date; or (3) at such other date as the taxes are assessed.
Annuity Provisions
The Annuity Income Date may be elected by you at the time of application or
anytime thereafter. If no Annuity Income Date is elected, it will be the first
day of the calendar month following the Annuitant's 65th birthday or ten years
after the Contract Date, if later. The Annuity Income Date may not be later than
the first day of the month following the Annuitant's 85th birthday.
On the Annuity Income Date, the Contract Value (adjusted as described below)
will be applied to an Annuity Income Option, unless you choose to receive the
surrender value in a lump sum. The Contract Value is adjusted by deducting
applicable premium tax not yet deducted, and for annuity options other than a
life annuity or a life annuity with a period certain of at least five years,
less any applicable surrender charge. (See "Annuity Payment Options.")
Federal Tax Status
Generally, a distribution (including a surrender, partial withdrawal or death
benefit payment) may result in taxable income. In certain circumstances, a 10%
penalty tax may apply. For a further discussion of the federal income status of
variable annuity contracts, see "Federal Tax Status."
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CONDENSED FINANCIAL INFORMATION
The following table sets forth certain information pertaining to the net
assets of the Separate Account, as represented by the accumulation unit values
and accumulation units, as of December 31, 1995. This condensed financial
information is derived from the financial statements of the Separate Account and
should be read in conjunction with the financial statements, related notes and
other financial information contained in the Statement of Additional
Information. The accumulation unit values shown for the beginning of the period
are as of the date of commencement of business, which was February 21, 1995.
<TABLE>
<CAPTION>
Accumulation Unit Accumulation
Value Units
------------------------- -----------------
Beginning End of End of
of Period Period Period
Subaccount (2/21/95) (12/31/95) (12/31/95)
- -------------------------------------------------------- ------------ ---------------
<S> <C> <C> <C>
Landmark VIP U.S. Government Fund 1.00 1.07 207,248
Landmark VIP Equity Fund 1.00 1.15 649,011
Landmark VIP Balanced Fund 1.00 1.11 640,046
Landmark VIP International Equity Fund 1.00 1.03 377,945
Fidelity Growth Portfolio 1.00 1.31 1,237,930
AIM V.I. Capital Appreciation Fund 1.00 1.29 1,345,513
MFS World Governments Series 1.00 1.10 241,914
MFS Money Market Series 1.00 1.03 115,908
</TABLE>
THE COMPANY, THE SEPARATE ACCOUNT AND THE FUNDS
First Citicorp Life Insurance Company
First Citicorp Life Insurance Company is a stock life insurance company
organized under the laws of the State of New York in 1978. First Citicorp Life
is wholly owned by Citicorp Life Insurance Company, an Arizona insurer, which in
turn, is wholly owned by Citibank Delaware. Citibank Delaware is a wholly owned
subsidiary of Citicorp Holdings Inc., which in turn, is a wholly owned
subsidiary of Citicorp, one of the world's largest bank holding companies.
First Citicorp Life primarily engages in the reinsurance of credit life
insurance issued by other insurance companies. First Citicorp Life also issues
modest amounts of term life insurance and fixed annuities on a direct basis.
As of December 31, 1995, First Citicorp Life Insurance Company had
statutory assets in excess of $200,416,000. First Citicorp Life Insurance
Company's financial statements can be found in the Statement of Additional
Information and should
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only be considered in the context of its ability to meet any obligations it may
have under the Contract.
First Citicorp Life Variable Annuity Separate Account
The Separate Account was established by us as a separate account on July 6,
1994. The Separate Account will receive and invest purchase payments made under
the Contracts. In addition, the Separate Account may receive and invest purchase
payments for other variable annuity contracts we may issue in the future.
Although the assets in the Separate Account are our property, the assets in
the Separate Account attributable to the Contracts are not chargeable with
liabilities arising out of any other business that we may conduct. The assets of
the Separate Account are available to cover our general liabilities only to the
extent that the Separate Account's assets exceed the liabilities arising under
the Contracts and any other contracts supported by the Separate Account. We have
the right to transfer to the General Account any assets of the Separate Account
which are in excess of reserves and other contract liabilities. All obligations
arising under the Contracts are our general corporate obligations.
The Separate Account currently is divided into eight subaccounts but may, in
the future, include additional subaccounts. Each subaccount invests exclusively
in shares of a single corresponding portfolio. The income, gains and losses,
realized or unrealized, from the assets allocated to each subaccount are
credited to or charged against that subaccount without regard to income, gains
or losses from any other subaccount.
The Separate Account has been registered with the SEC as a unit investment
trust under the Investment Company Act of 1940 (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 Separate Account by the SEC. The Separate Account
is also subject to the laws of the State of New York which regulate the
operations of insurance companies domiciled in New York.
The Funds
The Separate Account invests in shares of the Landmark VIP Funds, the
Fidelity Variable Insurance Products Fund, the AIM Variable Insurance Funds,
Inc. and the MFS Variable Insurance Trust. The Funds are management investment
companies of the series type with one or more investment portfolios. Each Fund
is registered with the SEC as an open-end, management investment company. Such
registration does not involve supervision of the management or investment
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practices or policies of the Company or the portfolios by the SEC.
The Funds may, in the future, create additional portfolios that may or may
not be available as investment options under the Contracts. Each portfolio has
its own investment objectives and the income and losses for each portfolio are
determined separately for that portfolio.
The investment objectives and policies of each portfolio are summarized
below. There is no assurance that any portfolio will achieve its stated
objectives. More detailed information, including a description of risks and
expenses, may be found in the prospectuses for the Funds which must accompany or
precede this prospectus and which should be read carefully and retained for
future reference.
Landmark VIP Funds. The Landmark VIP Funds currently include four funds
available as investment options under the Contracts. The Landmark VIP Funds
include the Landmark VIP U.S. Government Fund, the Landmark VIP Equity Fund, the
Landmark VIP Balanced Fund and the Landmark VIP International Equity Fund.
Landmark VIP U.S. Government Fund. This portfolio seeks current income
as well as preservation of capital by investing, under normal
circumstances, at least 65% of its assets in obligations issued or
guaranteed as to principal and interest by the U.S Government or any of
its agencies and instrumentalities and repurchase agreements involving
U.S. Government securities.
Landmark VIP Equity Fund. This portfolio seeks long-term capital
growth. Dividend income, if any, is incidental to the fund's investment
objective of increasing long-term value. Under normal circumstances, at
least 65% of the fund's total assets are invested in equity securities.
Investments are primarily in common stocks of domestic companies with
medium to large market capitalizations, i.e. $750 million or more, and
seasoned management teams. Appreciation may be sought in other types of
securities such as fixed income securities, convertible and
non-convertible bonds, preferred stocks and warrants.
Landmark VIP Balanced Fund. This portfolio seeks to earn high current
income by investing in a broad range of securities, to preserve
capital, and to provide growth potential with reduced risk. The fund is
invested in a broadly diversified portfolio of income producing
securities, including common stocks, preferred stocks and bonds. Under
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normal circumstances, at least 25% of the portfolio's total assets are
invested in fixed income securities.
Landmark VIP International Equity Fund. This portfolio seeks long-term
capital growth. Dividend income, if any, is incidental to the
portfolio's investment objective of increasing long-term value.
Investments are primarily in common stocks in countries other than the
United States. Under normal circumstances, at least 65% of the fund's
assets are invested in equity securities. Appreciation may be sought in
other types of securities such as fixed income securities, convertible
and non-convertible bonds, preferred stocks and warrants.
Citibank, N.A. serves as investment adviser to these portfolios and manages
their assets in accordance with general policies and guidelines established by
the trustees of the Landmark VIP Funds.
Fidelity Variable Insurance Products Fund. The Fidelity Variable Insurance
Products Fund currently has five portfolios, one of which, the Fidelity Growth
Portfolio, is available as an investment option under the Contracts.
Fidelity Growth Portfolio. This portfolio seeks to achieve capital
appreciation. The portfolio normally purchases common stocks, although
its investments are not restricted to any one type of security. Capital
appreciation may also be found in other types of securities, including
bonds and preferred stocks.
Fidelity Management & Research Company serves as investment adviser to this
portfolio and manages its assets in accordance with general policies and
guidelines established by the trustees of the Fidelity Variable Insurance
Products Fund.
AIM Variable Insurance Funds, Inc. AIM Variable Insurance Funds, Inc.
currently has nine portfolios, one of which, the AIM V.I. Capital Appreciation
Fund, is available as an investment option under the Contracts.
AIM V.I. Capital Appreciation Fund. This portfolio seeks capital
appreciation through investments in common stocks, with emphasis on
medium-sized and smaller emerging growth companies.
AIM Advisors, Inc. serves as investment adviser to this portfolio and manages
its assets in accordance with general policies and guidelines established by the
trustees of the AIM V.I. Capital Appreciation Fund.
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<PAGE>
MFS Variable Insurance Trust. MFS Variable Insurance Trust currently has
twelve portfolios, two of which, the MFS World Governments Series and the MFS
Money Market Series, are available as investment options under the Contracts.
MFS World Governments Series. This portfolio seeks preservation and
growth of capital, together with moderate current income. Objectives
are achieved through an internationally diversified portfolio
consisting primarily of debt securities (normally at least 80%) and to
a lesser extent equity securities.
MFS Money Market Series. This portfolio seeks as high a level of
current income as is considered consistent with the preservation of
capital and liquidity. Objectives are achieved by investing primarily
(normally at least 80%) in U.S. Government Securities, obligations of
banks, commercial paper and short-term corporate obligations. An
investment in the Money Market Series is neither insured nor guaranteed
by the U.S. Government, and there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1 per share.
Massachusetts Financial Services Company serves as investment adviser to
these portfolios and manages their assets in accordance with general policies
and guidelines established by the trustees of the MFS World Governments Series
and the MFS Money Market Series.
Addition, Deletion or Substitution of Investments
We reserve the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares of a portfolio that are held in
the Separate Account or that the Separate Account may purchase. If the shares of
a portfolio are no longer available for investment or if, in our judgment,
further investment in any portfolio should become inappropriate, we may redeem
the shares, if any, of that portfolio and substitute shares of another
portfolio. We will not substitute any shares attributable to a Contract's
interest in a subaccount without notice and prior approval of the SEC and state
insurance authorities, to the extent required by the 1940 Act or other
applicable law.
We also reserve the right to establish additional subaccounts of the Separate
Account, each of which would invest in shares of a new corresponding portfolio
having a specified investment objective. We may, in our sole discretion,
establish new subaccounts or eliminate or combine one or more subaccounts if
marketing needs, tax considerations or investment conditions warrant. Any new
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<PAGE>
subaccounts may be made available to existing Contract Owners on a basis to be
determined by us. Subject to obtaining any approvals or consents required by
applicable law, the assets of one or more subaccounts may be transferred to any
other subaccount if, in our sole discretion, marketing, tax, or investment
conditions warrant.
In the event of any such substitution or change, we may (by appropriate
endorsement, if necessary) change the Contract to reflect the substitution or
change. If we consider it to be in the best interest of Owners and Annuitants,
and subject to any approvals that may be required under applicable law, the
Separate Account may be operated as a management investment company under the
1940 Act, it may be deregistered under that Act if registration is no longer
required, it may be combined with other separate accounts, or its assets may be
transferred to another separate account. In addition, we may, when permitted by
law, restrict or eliminate any voting privileges of Owners or other persons who
have such privileges under the Contracts.
DESCRIPTION OF THE CONTRACT
Issuance of a Contract
In order to purchase a Contract, application must be made to us through our
licensed representative who is also a registered representative of Citicorp
Investment Services, Inc., a registered broker-dealer which has a selling
agreement with The Landmark Funds Broker-Dealer Services, Inc. Contracts may be
sold to or in connection with retirement plans that do not qualify for special
tax treatment as well as retirement plans that qualify for special tax treatment
under the Code. The maximum age for Owners on the Contract Date is 90.
Purchase Payments
The minimum amount that we will accept as an initial purchase payment is
$5,000 for Non-Qualified Contracts, $2,000 for Qualified Contracts. Subsequent
purchase payments may be paid at any time during the Annuitant's lifetime and
before the Annuity Income Date.
We reserve the right not to accept purchase payments in excess of $1 million
per Contract Year. We also reserve the right not to accept payments of less than
$500 for Non-Qualified Contracts or less than $100 for Qualified Contracts.
Under our automatic purchase payment plan, you can select a monthly payment
schedule pursuant to which purchase payments will be automatically deducted from
a bank account or other source. We reserve the right not to accept such monthly
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<PAGE>
payments if less than $500 for Non-Qualified Contracts or less than $100 for
Qualified Contracts.
Free-Look Period
The Contract provides for an initial "free-look" period. You have the right
to return the Contract within 10 days of receiving it. In some jurisdictions,
this period may be longer than 10 days. When we receive the returned Contract at
our home office or when the sales representative who sold the Contract receives
it before the end of this period, we will cancel the Contract and refund to you
an amount equal to the Contract Value as of the date the returned Contract is
received plus any premium taxes deducted. This amount may be more or less than
the aggregate amount of purchase payments made up to that time. In certain
jurisdictions, we instead return the greater of the Contract Value plus any
premium tax deducted or aggregate purchase payment(s) less any prior
withdrawals. In those cases, we will allocate initial purchase payments to the
Money Market Subaccount for the free-look period following the Contract Date.
The free-look period begins on the date following your receipt of the Contract.
We will consider the Contract received five days after it is mailed to your last
known address.
Allocation of Purchase Payments
At the time of application, you select the allocation of the initial net
purchase payment among the subaccounts and the Fixed Account. Any allocation
must be for at least the greater of $100 or 10% of a purchase payment and be in
whole percentages.
If the application for a Contract is properly completed and is accompanied by
all the information necessary to process it, including payment of the initial
purchase payment, the initial purchase payment will be allocated, as designated
by you, to one or more of the subaccounts or to the Fixed Account within two
valuation days of receipt of such purchase payment by us at our home office. If
the application is not properly completed, we reserve the right to retain the
purchase payment for up to five valuation days while we attempt to complete the
application. If the application is not complete at the end of the 5-day period,
we will inform the applicant of the reason for the delay and the initial
purchase payment will be returned immediately, unless the applicant specifically
consents to our retaining the purchase payment until the application is
complete. Once the application is complete, the initial purchase payment will be
allocated as designated by you within two valuation days.
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<PAGE>
Notwithstanding the foregoing, in jurisdictions where we must refund the
greater of aggregate purchase payments or Contract Value in the event you
exercise the free-look right, any portion of the initial purchase payment to be
allocated to a subaccount will be allocated to the Money Market Subaccount for
the free-look period following the Contract Date. At the end of that period, the
amount in the Money Market Subaccount will be allocated to the subaccounts as
designated by you based on the proportion that the allocation percentage for
each such subaccount bears to the sum of the allocation percentages set forth in
the purchase payment allocation schedule then in effect.
Any subsequent purchase payments will be allocated as of the end of the
valuation period in which the subsequent purchase payment is received by us and
will be allocated in accordance with the purchase payment allocation schedule in
effect at the time the purchase payment is received. However, you may direct
individual payments to a specific subaccount or to the Fixed Account (or any
combination thereof) without changing the existing allocation schedule. The
allocation schedule may be changed by you at any time by written notice.
Changing the purchase payment allocation schedule will not change the allocation
of existing Contract Value among the subaccounts or the Fixed Account.
The Contract Values allocated to a subaccount will vary with that
subaccount's investment experience, and you bear the entire investment risk. You
should periodically review your purchase payment allocation schedule in light of
market conditions and your overall financial objectives.
Variable Contract Value
The Variable Contract Value will reflect the investment experience of the
selected subaccounts, any purchase payments paid, any surrenders or partial
withdrawals, any transfers, and any charges assessed in connection with the
Contract. There is no guaranteed minimum Variable Contract Value, and, because a
Contract's Variable Contract Value on any future date depends upon a number of
variables, it cannot be predetermined.
Calculation of Variable Contract Value. The Variable Contract Value is
determined at the end of each valuation period prior to the Annuity Income Date.
The value will be the aggregate of the values attributable to the Contract in
each of the subaccounts, determined for each subaccount by multiplying that
subaccount's accumulation unit value for the relevant valuation period by the
number of accumulation units of that subaccount allocated to the Contract.
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<PAGE>
Determination of Number of Accumulation Units. Prior to the Annuity Income
Date, any amounts allocated or transferred to the subaccounts will be converted
into subaccount accumulation units. The number of accumulation units to be
credited to a Contract is determined by dividing the dollar amount being
allocated or transferred to a subaccount by the accumulation unit value for that
subaccount at the end of the valuation period during which the amount is
allocated or transferred. The number of accumulation units in any subaccount
will be increased at the end of the valuation period by any purchase payments
allocated to the subaccount during the current valuation period and by any
amounts transferred to the subaccount from another subaccount or from the Fixed
Account during the current valuation period.
Any amounts transferred, surrendered or deducted from a subaccount will be
processed by cancelling or liquidating accumulation units. The number of
accumulation units to be cancelled is determined by dividing the dollar amount
being removed from a subaccount by the accumulation unit value for that
subaccount at the end of the valuation period during which the amount was
removed. The number of accumulation units in any subaccount will be decreased at
the end of the valuation period by: (a) any amounts transferred (and any
applicable transfer fee) from that subaccount to another subaccount or to the
Fixed Account; (b) any amounts withdrawn or surrendered during that valuation
period; (c) any surrender charge, Annual Contract Fee or premium tax assessed
upon a partial withdrawal or surrender; and (d) the Annual Contract Fee, if
assessed during that valuation period.
Determination of Accumulation Unit Value. The accumulation unit value for
each subaccount's first Valuation Period was set at $1.00. The accumulation unit
value for a subaccount is calculated for each subsequent Valuation Period by
multiplying that subaccount's accumulation unit value on the preceding Valuation
Day by the net investment factor for that sub-account for the Valuation Period
then ended.
The net investment factor for each subaccount for any Valuation Period is
calculated by dividing (1) by (2) and subtracting (3) from the result, where:
(1) Is the net asset value per share of the corresponding portfolio at the
end of the Valuation Period plus the per share amount of any declared
and unpaid dividends or capital gains accruing to that portfolio plus
(or minus) a per share credit (or charge) for any taxes resulting from
the investment operations of the subaccount.
(2) Is the portfolio's net asset value per share at the beginning of the
Valuation Period; and
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<PAGE>
(3) Is a factor representing the daily mortality and expense risk charge
and the administration charge deducted from the subaccount.
Transfer Privileges
General. Before the Annuity Income Date and subject to the restrictions
described below, you may transfer all or part of the amount in a subaccount or
the Fixed Account to another subaccount or the Fixed Account.
The maximum amount transferable from the Fixed Account during any Contract
Year is limited to the greater of: (1) 25% of the Fixed Account Value as of the
later of the Contract Date or last Contract Anniversary; (2) the Contract Value
in the Fixed Account attributable to interest earnings; and (3) the greatest
transfer from the Fixed Account during the prior Contract Year. We also reserve
the right to defer transfers from the Fixed Account for up to 6 months following
the date of the request.
If the value remaining in any Account after a transfer is less than $100, we
have the right to transfer the entire amount instead of the requested amount. In
the absence of any other directions, such transfer will be allocated in the same
proportion as the transfer request resulting in this action.
Subject to the foregoing restrictions, there currently is no limit on the
number of transfers that can be made among or between subaccounts or to or from
the Fixed Account.
Transfers may be made based upon instructions given by written request or by
telephone. We will only honor telephone transfer requests if we have a currently
valid telephone transfer authorization form on file signed by you. A telephone
transfer authorization form received by us at our home office is valid until it
is rescinded or revoked in writing by you or until a subsequently dated form
signed by you is received at our home office. You may provide a telephone
transfer authorization with the application or pursuant to a written request
after the Contract Date.
We employ reasonable procedures to confirm that instructions communicated by
telephone are genuine and if we follow such procedures we will not be liable for
any losses due to unauthorized or fraudulent instructions. We, however, may be
liable for such losses if we do not follow those reasonable procedures. The
procedures we follow for telephone transfers include confirming the correct
name, contract number and social security number code for each telephone
transfer.
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We reserve the right to modify, restrict, suspend or eliminate the transfer
privileges (including the telephone transfer facility) at any time, for any
class of Contracts, for any reason. In particular, we reserve the right to not
honor transfers requested by a third party holding a power of attorney from an
Owner where that third party requests simultaneous transfers on behalf of the
Owners of two or more Contracts.
Transfer Fee. Currently, a $25 fee is assessed on the 19th and each
subsequent transfer during a Contract Year. We reserve the right, however, to
charge $25 for the 13th and each subsequent transfer during a Contract Year.
(See "Charges and Deductions".)
Dollar-Cost Averaging. If elected at the time of the application and at any
time thereafter by written request, you may systematically or automatically
transfer (on a monthly basis) specified dollar amounts from the Money Market
Subaccount or the Fixed Account, but not from both Accounts at the same time, to
other subaccounts for any period of time greater than six months. This is known
as the dollar-cost averaging method of investment. The fixed dollar amount will
purchase more accumulation units of a subaccount when their value is lower and
fewer units when their value is higher. Over time, the cost per unit averages
out to be less than if all purchases of units had been made at the highest value
and greater than if all purchases had been made at the lowest value. The
dollar-cost averaging method of investment reduces the risk of making purchases
only when the price of accumulation units is high. It does not assure a profit
or protect against a loss in declining markets.
The minimum transfer amount to a subaccount for dollar-cost averaging is $100
per month (or the equivalent). Each transfer from the Money Market Subaccount
must be equal to or less than 1/6 of the Money Market Subaccount value at the
time the automatic transfers begin. The maximum per transfer amount for transfer
from the Fixed Account is 1/48 of the Fixed Account value at the time the
automatic transfers begin. Once elected, dollar-cost averaging remains in effect
for a Contract until the Contract Value in the Money Market Subaccount or the
Fixed Account is inadequate to execute the requested transfers or until you
cancel the election by providing us with at least 6 days prior written notice.
You may exercise your right to cancel the election at any time. There is no
additional charge for using dollar-cost averaging. However, automatic transfers
will be treated as any other transfer in determining the number of transfers in
any Contract Year. We reserve the right to discontinue offering the dollar-cost
averaging facility at any time and for any reason. A dollar-cost averaging
program in effect at the time of such discontinuance will continue unless
terminated by the Contract Owner.
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Surrenders and Partial Withdrawals
Surrender. At any time before the Annuity Income Date, you may surrender the
Contract for its surrender value. The surrender value will be determined as of
the end of the Valuation Period during which written notice requesting surrender
is received at our home office. The surrender value will be paid in a lump sum.
A surrender may have adverse federal income tax consequences, including a
penalty tax. (See "Taxation of Annuities.")
Partial Withdrawals. At any time before the Annuity Income Date, you may make
partial withdrawals of the surrender value. Partial withdrawal requests must be
in writing and specify from which Account(s) the withdrawal is to be made. The
amount withdrawn must equal at least $500 except for systematic withdrawals.
When a withdrawal is made, you will receive the amount requested to be withdrawn
less any applicable surrender charge. If a partial withdrawal request would
reduce the Contract Value to less than $2,000, we may pay the full Contract
Value and terminate the Contract. We will withdraw the amount requested from the
Contract Value as of the end of the Valuation Period during which written notice
requesting the partial withdrawal is received. (See "Surrender Charge.")
A partial withdrawal may have adverse federal income tax consequences,
including a penalty tax. (See "Taxation of Annuities.")
We currently do not impose a processing charge for withdrawals, however, we
reserve the right to assess a processing charge equal to the lesser of $25.00 or
2% of the amount withdrawn for the 13th and each subsequent withdrawal during a
Contract Year. The processing charge will be in addition to any applicable
surrender charge. This charge will be deducted from the Account from which the
withdrawal is made and will reduce the Account value available for withdrawal
accordingly. If a withdrawal is made from more than one Account at the same
time, the processing charge would be deducted pro-rata from the remaining
Contract Value in such Account(s).
Surrender and Partial Withdrawal Restrictions. Your right to make surrenders
and partial withdrawals is subject to any restrictions imposed by applicable law
or employee benefit plan. We may defer payments from the Fixed Account for up to
six months.
Restrictions on Distributions from Certain Types of Contracts. There are
certain restrictions on surrenders of and partial withdrawals from Contracts
used as funding vehicles for Code Section 403(b) retirement programs. Section
403(b)(11) of the Code restricts the distribution under Section 403(b) annuity
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contracts of: (i) elective contributions made in years beginning after December
31, 1988; (ii) earnings on those contributions; and (iii) earnings in such years
on amounts held as of the last year beginning before January 1, 1989.
Distributions of those amounts may only occur upon the death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Systematic Withdrawals. You may elect in writing at the time of the
application or any time after the first Contract Anniversary to receive periodic
partial withdrawals under our systematic withdrawal plan. Under the systematic
withdrawal plan, we will make partial withdrawals on a monthly, quarterly,
semi-annual or annual basis from designated Accounts as specified by you.
Withdrawals from an Account must be at least $50 each.
The withdrawals may be requested on the following basis: (1) as a specified
dollar amount; and (2) as a specified whole percent of Contract Value.
Participation in the systematic withdrawal plan will terminate on the
earliest of the following events: (1) the value in an Account from which partial
withdrawals are being made becomes zero; (2) a termination date specified by you
is reached; or (3) you request that your participation in the plan cease.
Withdrawals under the systematic withdrawal plan are subject to a surrender
charge. (See "Surrender Charge").
Systematic withdrawals may have adverse federal income tax consequences and
you should, therefore, consult with your tax adviser before electing to
participate in the plan. We reserve the right to discontinue offering the
systematic withdrawal plan at any time. A systematic withdrawal plan in effect
at the time of such discontinuance will continue unless terminated by the
Contract owner.
Death Benefit Before the Annuity Income Date
Death of the Owner. Upon receipt of due proof of your death (or in the case
of Joint Owners, the death of the first Joint Owner to die) while the Contract
is in force and before the Annuity Income Date, we will pay the Beneficiary the
Death Benefit. In the case of Joint Owners, the surviving Joint Owner will be
the primary beneficiary. You may specify the manner in which the Death Benefit
is to be paid. If you do not specify how the Death Benefit is to be paid, the
Beneficiary may elect the manner in which the Death Benefit is to be
distributed.
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In either case, the Death Benefit under a Non-Qualified Contract must be
distributed in full within 5 years after the deceased Owner's death unless:
1. The benefit is paid as a life annuity or an annuity with a period certain
not exceeding the Beneficiary's life expectancy with payments beginning
within one year of the deceased Owner's death; or
2. The Beneficiary is the surviving spouse of the deceased Owner, in which
case he or she may continue this Contract as the Owner.
If the Beneficiary is not a natural person, the benefit must be distributed
within 5 years of your death. Similar rules apply to Qualified Contracts.
Death Benefit. If you die prior to age 75, the Death Benefit will be the
greatest of:
1. The Contract Value on the date we receive due proof of your death;
2. The Contract Value on the most recent 5th Contract Anniversary immediately
preceding the date of death, increased by the dollar amount of any
purchase payments and reduced by the dollar amount of any withdrawals made
since that Contract Anniversary; or
3. 100% of all purchase payments made less the dollar amount of any purchase
payment withdrawals since the date this Contract was issued.
If you die on or after your 75th birthday, the Death Benefit will equal the
greater of:
1. The Contract Value on the date we receive due proof of your death; or
2. The Death Benefit on your 75th birthday, less the dollar amount of any
subsequent withdrawals.
3. 100% of all purchase payments made less the dollar amount of any purchase
payment withdrawals since the date this Contract was issued.
If the Death Benefit is paid immediately in one lump sum, the Contract will
end on the date of payment. If the Death Benefit is not taken immediately in one
lump sum, the Death Benefit will become the new Contract Value. Any resulting
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increase in the Contract Value will be allocated to each Account in proportion
to the distribution of the Contract Value on the date we receive due proof of
your death.
If you die (or in the case of Joint Owners, the first Owner to die) prior to
the Annuity Income Date and there are two or more Beneficiaries, each
Beneficiary will receive an equal share of the Death Benefit unless you specify
otherwise in writing. If a named Beneficiary dies before you, the interest of
that Beneficiary will end on his or her death. If no Beneficiary is named or no
Beneficiary survives you, the commuted value of the Death Benefit will be paid
to your estate.
Death of the Annuitant Prior to the Annuity Income Date: If the Annuitant
dies prior to the Annuity Income Date, you may designate a new Annuitant. If no
new Annuitant is named within 30 days after the death of the Annuitant, you will
become the Annuitant under the Contract. If you are the Annuitant, upon receipt
of due proof of your death, we will pay the Beneficiary the Death Benefit, as
described above.
Annuity Payments on the Annuity Income Date
The Annuity Income Date may be elected by you at the time of the application
or any time thereafter. You may change the Annuity Income Date at any time
provided you give us 30 days prior written notice. If no Annuity Income Date is
elected, it will be the first day of the calendar month following the
Annuitant's 65th birthday or ten years after the Contract Date, if later. The
Annuity Income Date may not be later than the first day of the month following
the Annuitant's 85th birthday.
On the Annuity Income Date, the Contract Value, less any applicable prior
undeducted premium taxes, will be applied under the life income annuity payment
option with ten years guaranteed, unless you elect to have the proceeds paid
under another payment option or to receive the surrender value in a lump sum.
(See "Annuity Payment Options.") Unless you instruct us otherwise, amounts in
the Fixed Account will be used to provide a fixed-annuity payment option and
amounts in the Separate Account will be used to provide a variable annuity
payment option.
Any time prior to the Annuity Income Date, you may designate or change the
payee (Annuitant) to receive payments under the applicable annuity payment
option.
Payments
Any surrender, partial withdrawal, or death benefit will usually be paid
within seven days of receipt of a written request, any information or
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documentation reasonably necessary to process the request, and (in the case of a
Death Benefit) receipt and filing of due proof of death. However, payments may
be postponed if:
1. the New York Stock Exchange is closed, other than customary weekend and
holiday closings, or trading on the exchange is restricted as determined
by the SEC; or
2. the SEC permits by an order the postponement for the protection of
Contract Owners; or
3. the SEC determines that an emergency exists that would make the disposal
of securities held in the subaccount or the determination of the value of
the subaccount's net assets not reasonably practicable.
If a recent check or draft has been submitted, we have the right to delay
payment until we have assured ourselves that the check or draft has been
honored.
We have the right to defer payment of any surrender or partial withdrawal or
transfer from the Fixed Account for up to six months from the date of receipt of
written notice for such a surrender or transfer. If payment is not made within
10 days after receipt of documentation necessary to complete the transaction,
interest will be added to the amount paid from the date of receipt of
documentation at the minimum rate required by law or the Current Fixed Account
Interest Rate, if greater.
Modification
Upon notice to you, or the Annuitant, we may modify the Contract if:
1. necessary to permit the Contract or the Separate Account to comply with
any applicable law or regulation issued by a government agency; or
2. necessary to reflect a change in the operation of the Separate Account or
a subaccount; or
3. necessary to add, delete or modify an Account; or
4. necessary to add, modify or delete subaccounts or portfolios.
In the event of most such modifications, we will make appropriate endorsement
to the Contract.
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Owner
You are the Owner of the Contract. You are also the Annuitant unless a
different Annuitant is named. Any Joint Owner must be your spouse unless we
agree otherwise. For Qualified Contracts, the Owner must be the Annuitant and
Joint Owners are not permitted. Before the Annuity Income Date you have all the
rights under the Contract, subject to the rights of any assignee of record. This
includes the right to:
1. Transfer values between Accounts and designate or change the allocation of
purchase payments to each Account;
2. Name and/or change the Beneficiaries, Owner or Annuitant;
3. Surrender the Contract in whole or in part for cash;
4. Assign the Contract Value, in whole or in part;
5. Designate and change the Annuity Income Date; and
6. Elect or change the Annuity Payment Option.
All elections, authorizations and change requests must be made to us in
writing. Upon receipt by us, any change will be effective as of the date it was
signed by you, except that any values or amounts payable under the Contract will
be determined as of the Valuation Day on or next following the date of receipt.
Payment made or action taken by us prior to the time written notice is received
will discharge our liability under this Contract to the extent of such action or
payment. The consent of any irrevocable Beneficiary is required to exercise any
right. If Joint Owners are named, both must consent to any change.
Reports to Owners
At least annually, we will mail to each Owner, at such Owner's last known
address of record, a report setting forth the Contract Value, subaccount values,
and Fixed Account Value, as well as your current purchase payment allocation
directions. We will also provide you with shareholder reports of the Funds as
well as other notices, reports or documents as required by law.
Inquiries
Inquiries regarding a Contract may be made by writing to us at our home
office.
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THE FIXED ACCOUNT
You may allocate some or all of the purchase payments and transfer some or
all of the Contract Value to the Fixed Account, which is part of our General
Account and pays interest at declared rates guaranteed for one year. Our General
Account supports our insurance and annuity obligations. Since the Fixed Account
is part of the General Account, we assume the risk of investment gain or loss on
this amount. All assets in the General Account are subject to our general
liabilities from business operations. The Fixed Account may not be available in
all states.
The Fixed Account has not been, and is not required to be, registered with
the SEC under the Securities Act of 1933, and neither the Fixed Account nor our
General Account has been registered as an investment company under the 1940 Act.
Therefore, neither our General Account, the Fixed Account, nor any interests
therein are generally subject to regulation under the 1933 Act or the 1940 Act.
The disclosures relating to the Fixed Account which are included in this
prospectus are for your information and have not been reviewed by the SEC.
However, such disclosures may be subject to certain generally applicable
provisions of federal securities laws relating to the accuracy and completeness
of statements made in prospectuses.
Fixed Account Value
The Fixed Account Value is credited with interest, as described below. The
Fixed Account Value reflects interest credited, the allocation of purchase
payments, transfers of Contract Value from the Fixed Account, surrenders and
partial withdrawals from the Fixed Account and charges assessed in connection
with the Contract. The Fixed Account Value is guaranteed to accumulate at a
minimum effective annual interest rate of 3%.
Beginning on the date we issue the Contract, we will credit any portion of
the initial purchase payment allocated to the Fixed Account with a specified
interest rate, known as the Initial Fixed Account Interest Rate. We may declare
different initial interest rates for each subsequent purchase payment or
transfer into the Fixed Account. We will guarantee the initial rate credited for
one year from the date the purchase payment is received or transfer is
effective. Thereafter, the interest rate earned will be the applicable Current
Fixed Account Interest Rate as we may declare.
The Current Fixed Account Interest Rate is a rate we establish from time to
time for all amounts under the Contract that have been allocated to the Fixed
Account for more than one year. We may change the Current Fixed Account Interest
Rate from time to time to reflect prevailing market conditions but not more
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often than once every twelve months. The Initial Fixed Account Interest Rate and
the Current Fixed Account Interest Rate will vary but will always be equal to or
greater than an effective annual rate of 3%.
The maximum amount transferable from the Fixed Account during any Contract
Year is limited to the greatest of: (1) 25% of the Fixed Account Value as of the
later of the Contract Date or last Contract Anniversary; (2) the Contract Value
in the Fixed Account attributable to interest earnings; and (3) the greatest
transfer from the Fixed Account during the prior Contract Year. If the value
remaining in the Fixed Account after a transfer is less than $100, we have the
right to transfer the entire amount instead of the requested amount. We also
reserve the right to defer transfers from the Fixed Account for up to 6 months
following the date of the request.
CHARGES AND DEDUCTIONS
Surrender Charge (Contingent Deferred Sales Charge)
General. No charge for sales expenses is deducted from purchase payments at
the time purchase payments are paid. However, a surrender charge may be deducted
upon surrender or partial withdrawal of purchase payments. A surrender charge
also may be deducted from amounts applied to annuity options not providing a
life annuity or a life annuity with a period certain of at least five years.
Surrender charges are not deducted upon payment of a death benefit or from
withdrawals or surrender of earnings under the Contract. (See "Annuity Payments
on the Annuity Income Date".)
In the event surrender charges are not sufficient to cover sales expenses,
the loss will be borne by us; conversely, if the amount of such charges proves
more than enough to cover such expenses, the excess will be retained by us. We
do not currently believe that the surrender charges imposed will cover the
expected costs of distributing the Contracts. Any shortfall will be made up from
our general assets which may include amounts derived from the mortality and
expense risk charge.
Charge for Partial Withdrawal or Surrender. A charge is imposed on partial
withdrawals and surrenders equal to a specified percentage of the purchase
payments withdrawn. The surrender charge is calculated by multiplying the
applicable percentages specified in the table below by the purchase payments
withdrawn. The number of years since the date of a purchase payment being
withdrawn will determine the surrender charge percentage that will apply to that
purchase payment. The surrender charge is calculated using the assumption that
all earnings are withdrawn first and then all purchase payments are withdrawn on
a first-in-first-out basis.
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Number of Years Since Charge as Percentage
Date of Purchase Payment of Purchase Payment Withdrawn
------------------------ -----------------------------
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5+ 0%
Any applicable surrender charge is deducted from the amount withdrawn.
Amounts Not Subject to Surrender Charge. During each Contract Year, up to 10%
of all purchase payments not previously withdrawn, less any prior withdrawal of
purchase payments, may be withdrawn without the imposition of a surrender
charge. Purchase payments surrendered or withdrawn in excess of this 10% will be
assessed a surrender charge. This right is not cumulative from Contract Year to
Contract Year.
Annual Contract Fee
On the last day of each Contract Year prior to the Annuity Income Date, we
deduct from the Contract Value an Annual Contract Fee of $30 to reimburse us for
administrative expenses relating to the Contract. The fee will be charged by
reducing the value of all active Accounts on a pro-rata basis. With respect to
each subaccount, we deduct this fee by cancelling accumulation units. The number
of accumulation units deducted from each subaccount will be determined by
dividing the pro-rata portion of the fee applicable to that subaccount by the
accumulation unit value of that subaccount on the date the fee is assessed. We
do not expect to make a profit on this fee. The annual contract fee also is
deducted upon surrender of a Contract if other than on the last day of each
Contract Year. We do not deduct the annual contract fee under Contracts with a
Contract Value of $25,000 or more on the date of deduction.
Asset-Based Administration Charge
We deduct a daily administration charge to compensate us for certain expenses
we incur in administration of the Contract and the Separate Account. The charge
is deducted from the assets of the Separate Account at an annual rate of 0.15%.
We do not expect to make a profit from this charge.
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Transfer Processing Fee
We reserve the right to charge $25 for the 13th and each subsequent transfer
during a Contract Year. Currently, no fee is assessed until the 19th transfer
during a Contract Year. For the purpose of assessing such a transfer fee, each
transfer from any Account, including monthly transfers under the dollar-cost
averaging facility, would be considered to be one transfer, regardless of the
number of subaccounts into which value is transferred. The transfer fee would be
deducted from the Account from which the transfer is made and will reduce the
Account Value available for transfer accordingly. If a transfer is made from
more than one Account at the same time, separate transfer fees would be deducted
from the remaining Contract Value in each Account.
Mortality and Expense Risk Charge
To compensate us for assuming mortality and expense risks, we deduct a daily
mortality and expense risk charge from the assets of the Separate Account. The
charge is at a daily rate of 0.0034462%. If applied on an annual basis this rate
would be 1.25% (approximately 0.50% for mortality risk and 0.75% for expense
risk).
The mortality risk we assume is that Annuitants may live for a longer period
of time than estimated when the guarantees in the Contract were established.
Because of these guarantees, each payee is assured that longevity will not have
an adverse effect on the annuity payments received. The mortality risk that we
assume also includes a guarantee to pay a Death Benefit if an Owner dies before
the Annuity Income Date. The expense risk that we assume is the risk that the
administrative fees and transfer fees (if imposed) may be insufficient to cover
actual future expenses.
If the mortality and expense risk charge is insufficient to cover the actual
cost of the mortality and expense risks undertaken by us, we will bear the
shortfall. Conversely, if the charge proves more than sufficient, the excess
will be profit to us and will be available for any proper corporate purpose
including, among other things, payment of sales expenses.
Fund Expenses
Because the Separate Account purchases shares or units of the Landmark VIP
Funds, the Fidelity Variable Insurance Products Fund, the AIM Variable Insurance
Funds, Inc. and the MFS Variable Insurance Trust, the net assets of each
subaccount of the Separate Account will reflect the investment advisory fees and
other operating expenses incurred by the corresponding portfolio of the relevant
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Fund. See the accompanying current Prospectuses for the Funds.
Premium Taxes
A state and other governmental entities may levy a premium tax, currently
ranging up to 3.5%, on annuity contracts issued by insurance companies. Premium
tax rates are subject to change from time to time by legislative and other
governmental action. In addition, other government units within a state may levy
such taxes.
The timing of tax levies varies from one taxing authority to another. If
premium taxes are applicable to a Contract, we will deduct such premium taxes
against Contract Value in a manner determined by us in compliance with
applicable state law. Premium taxes deducted from Contract Value currently are
assessed either: (1) at the time the Contract is surrendered; (2) on the Annuity
Income Date; or (3) at such other date as the taxes are assessed.
Other Taxes
Currently, no charge is made against the Separate Account for any federal,
state or local taxes (other than premium taxes) that we incur or that may be
attributable to the Separate Account or the Contracts. We may, however, make
such a charge in the future from surrender value, death benefits or annuity
payments, as appropriate. Such taxes may include taxes (levied by any government
entity) which we determine to have resulted from: (1) the establishment or
maintenance of the Separate Account; (2) receipt by us of purchase payments; (3)
issuance of the Contracts; or (4) the payment of annuity payments.
ANNUITY PAYMENT OPTIONS
Election of Annuity Payment Options
On the Annuity Income Date, the Contract Value less any premium tax
previously unpaid and less any applicable surrender charge will be applied under
an annuity payment option. (See "Annuity Payments on the Annuity Income Date.")
If an election of an annuity payment option is not on file at our home office on
the Annuity Income Date, the proceeds will be paid as a life income annuity with
payments for ten years guaranteed. The value of each subaccount will be applied
to provide a variable annuity and the value of the Fixed Account shall be
applied to provide a fixed dollar annuity. An annuity payment option may be
elected, revoked, or changed by you at any time before the Annuity Income Date
upon 30 days prior written notice. You may elect to apply any portion of the
Contract Value less any premium tax previously unpaid to provide either variable
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annuity payments or fixed annuity payments or a combination of both. The annuity
payment options available are described below. In addition, you may elect any
other method of payment that is mutually agreeable to you and us.
We reserve the right to refuse the election of an annuity payment option
other than paying the Contract Value, less any applicable surrender charge and
premium tax previously unpaid, in a lump sum if the total amount applied to an
annuity payment option would be less than $2,000. If the amount of any annuity
payment for each affected Account would be or becomes less than $50.00, we may
reduce the frequency of payments to an interval that would result in payments of
at least $50.00
Fixed Annuity Payments
Fixed annuity payments are periodic payments from us to the designated payee,
the amount of which is fixed and guaranteed by us. The amount of each payment
depends only on the form and duration of the annuity payment option chosen, the
age of the Annuitant, the sex of the Annuitant (if applicable), the amount
applied to purchase the annuity payments and the applicable annuity purchase
rates in the Contract. The annuity purchase rates in the Contract are based on a
minimum guaranteed interest rate of 3.0%. We may, in our sole discretion, make
annuity payments in an amount based on a higher interest rate.
Legal Developments Regarding Unisex Actuarial Tables
In 1983, the United States Supreme Court held in Arizona Governing Committee
v. Norris that optional annuity benefits provided under an employee'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. In addition, legislative,
regulatory, or decisional authority of some states may prohibit use of
sex-distinct mortality tables under certain circumstances. Accordingly,
employers and employee organizations should consider, in consultation with legal
counsel, the impact of these authorities on any employment-related insurance or
benefits program before purchasing the Contract.
Variable Annuity Payments
The dollar amount of the first monthly variable annuity payment is determined
by dividing the Value of the Accounts to be applied to a variable annuity on the
Annuity Income Date by 1,000 and multiplying the result by the appropriate
factor in the annuity tables provided in the Contract. The appropriate factor is
based on annual net investment return of 3.0%. The amount of each payment will
depend on the age of the Annuitant(s) at the time the first payment is due, and
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the sex of the Annuitant(s), if applicable, unless otherwise required by law.
The net investment performance of a subaccount is translated into a variation
in the amount of variable annuity payments through the use of annuity units. The
amount of the first variable annuity payment associated with each subaccount is
applied to purchase subaccount annuity units at the annuity unit value for the
subaccount on the Annuity Income Date. The number of annuity units of each
subaccount attributable to a Contract then remains fixed. Each subaccount has a
separate subaccount annuity unit value that changes with each valuation period
in substantially the same manner as do accumulation units of the subaccount.
The dollar value of each variable annuity payment after the first is equal to
the sum of the amounts determined by multiplying the number of subaccount
annuity units under a Contract for a particular subaccount by the annuity unit
value for the subaccount for the valuation period which ends no earlier than the
fifth Valuation Day preceding the date of each such payment. If the net
investment return of the subaccount for a payment period is equal to the
pro-rated portion of the 3.0% annual assumed investment rate, the variable
annuity payment attributable to that subaccount for that period will equal the
payment for the prior period. To the extent that such net investment return
exceeds an annualized rate of 3.0% for a payment period, the payment for that
period will be greater than the payment for the prior period and to the extent
that such return for a period falls short of an annualized rate of 3.0%, the
payment for that period will be less than the payment for the prior period.
Once every three months, after the Annuity Income Date, the Annuitant may
elect, in writing, to transfer among the selected subaccount(s) on which
variable annuity payments are based. If such a transfer is elected, the number
of annuity units will change and be determined by "a" times "b," less any
applicable fees, divided by "c" where:
"a" is the number of annuity units being transferred;
"b" is the subaccount annuity unit value from which the transfer is made; and
"c" is the annuity unit value of the subaccount to which the transfer is
made.
Thereafter, the number of annuity units will remain fixed until transferred.
After the Annuity Income Date, no transfers may be made between the subaccounts
and the Fixed Account.
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Description of Annuity Payment Options
Option 1: Income for a Fixed Period. We will make annuity payments to a payee
each month for a fixed number of years. The number of years must be at least
5 and no more than 30. If the Annuitant dies before the end of the designated
period, payments will continue to be made to the person(s) named by the
Annuitant to receive such guaranteed payments for the remainder of the fixed
period. If no such person is named or none survive the Annuitant, the
remainder of the guaranteed payments will be paid to the Annuitant's estate.
This option is available only as a fixed dollar annuity and only if the
Contract has been in force for 5 years, unless we agree otherwise.
Option 2: Life Annuity. We will make annuity payments to a payee each month
as long as the Annuitant is alive. When the Annuitant dies, all payments will
cease.
Option 3: Life Annuity with Period Certain. We will make annuity payments to
a payee each month as long as the Annuitant is alive. If the Annuitant dies
prior to the end of the guaranteed period, payments will continue to be made
to the person(s) named by the Annuitant to receive such guaranteed payments
for the remainder of the fixed period. If no such person is named or none
survive the Annuitant, the remainder of the guaranteed payments will be paid
to the Annuitant's estate.
Option 4: Joint and Survivor Annuity. We will make annuity payments to a
payee each month for the joint lifetime of the Annuitant and another person.
At the death of either, payments will continue to be made to the payee. When
the survivor dies, all payments will cease.
The amount of each payment will be determined from the tables in the Contract
that apply to the particular option using the Annuitant's age and sex (if
applicable). Age will be determined from the last birthday at the due date of
the first payment.
Note Carefully: Under annuity payment options 2 and 4 it would be possible
for only one annuity payment to be made if the Annuitant(s) were to die
before the due date of the second annuity payment; only two annuity payments
if the Annuitant(s) were to die before the due date of the third annuity
payment; and so forth.
Alternate Payment Option. In lieu of one of the above options, the Contract
Value, less any applicable surrender charge and premium taxes previously unpaid,
or Death Benefit, as applicable, may be applied to any other payment option made
available by us or requested and agreed to by us. However, such method must
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provide for the payment of any benefits remaining due at the Annuitant's death
(or Contract owner's death after the Annuity Income Date) to be paid at least as
rapidly as the method in effect at the date of death.
YIELDS AND TOTAL RETURNS
From time to time, we may advertise or include in sales literature yields,
effective yields and total returns for the subaccounts of the Separate Account.
These figures are based on historical earnings and do not indicate or project
future performance. We also may, from time to time, advertise or include in
sales literature subaccount performance relative to certain performance rankings
and indices compiled by independent organizations. More detailed information as
to the calculation of performance appears in the Statement of Additional
Information.
Effective yields and total returns for the subaccounts are based on the
investment performance of the corresponding portfolio. The performance of a
portfolio in part reflects its expenses. See the prospectuses for the
portfolios.
The yield of the Money Market Subaccount refers to the annualized income
generated by an investment 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 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) refers to the
annualized income generated by an investment in the subaccount over a specified
30-day or one-month period. The yield is calculated by assuming that the income
generated by the investment during that 30-day or one-month period is generated
each period over a 12-month period and is shown as a percentage of the
investment.
The total return of a subaccount refers to return quotations assuming an
investment under a Contract has been held in the subaccount for various periods
of time. For periods prior to the date the Separate Account commenced
operations, performance information will be calculated based on the performance
of the corresponding portfolios and the assumption that the subaccounts were in
existence for the same periods as those indicated for the portfolios, with the
level of Contract charges that were in effect at the inception of the
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subaccounts. When a subaccount or portfolio has been in operation for one, five,
and ten years, respectively, the total return for these periods will be
provided.
The average annual total return quotations 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. Average
annual total return information shows the average annual percentage change in
the value of an investment in the subaccount from the beginning date of the
measuring period to the end of that period. This standardized version of average
annual total return reflects all historical investment results, less all charges
and deductions applied against the subaccount (including any surrender charge
that would apply if an Owner terminated the Contract at the end of each period
indicated, but excluding any deductions for premium taxes).
In addition to the standard version described above, total return performance
information computed on two different non-standard bases may be used in
advertisements or sales literature. Average annual total return information may
be presented, computed on the same basis as described above, except deductions
will not include the surrender charge. In addition, we may from time to time
disclose cumulative total return for Contracts funded by subaccounts.
From time to time, yields, standard average annual total returns, and
non-standard total returns for the portfolios may be disclosed, including such
disclosures for periods prior to the date the Separate Account commenced
operations.
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.
In advertising and sales literature, the performance of each subaccount may
be compared with the performance of other variable annuity issuers in general or
to the performance of particular types of variable annuities investing in mutual
funds, or investment portfolios of mutual funds with investment objectives
similar to the subaccount. Lipper Analytical Services, Inc. ("Lipper"), Variable
Annuity Research Data Service ("VARDS") and Morningstar, Inc. ("Morningstar")
are independent services which monitor and rank the performance of variable
annuity issuers in each of the major categories of investment objectives on an
industry-wide basis.
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Lipper's and Morningstar's rankings include variable life insurance issuers
as well as variable annuity issuers. VARDS rankings compare only variable
annuity issuers. The performance analyses prepared by Lipper, VARDS and
Morningstar each rank such issuers on the basis of total return, assuming
reinvestment of distributions, but do not take sales charges, redemption fees,
or certain expense deductions at the separate account level into consideration.
In addition, VARDS prepares risk rankings, which consider the effects of market
risk on total return performance. This type of ranking provides data as to which
funds provide the highest total return within various categories of funds
defined by the degree of risk inherent in their investment objectives.
Advertising and sales literature may also compare the performance of each
subaccount to the Standard & Poor's Index of 500 Common Stocks, a widely used
measure of stock performance. This unmanaged index assumes the reinvestment of
dividends but does not reflect any "deduction" for the expense of operating or
managing an investment portfolio. Other independent ranking services and indices
may also be used as a source of performance comparison.
We 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 can lead to substantial
long-term accumulation of assets, provided that the subaccount investment
experience is positive.
FEDERAL TAX MATTERS
The Following Discussion is General and
Is Not Intended as Tax Advice
Introduction
This discussion is not intended to address the tax consequences resulting
from all of the situations in which a person may be entitled to or may receive a
distribution under the annuity contract issued by us. Any person concerned about
these tax implications should consult a competent tax advisor before initiating
any transaction. This discussion is based upon our understanding of the present
federal income tax laws, as they are currently interpreted by the Internal
Revenue Service ("IRS"). No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
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The Contract may be purchased on a non-qualified basis or purchased and used
in connection with plans qualifying for favorable tax treatment. The Qualified
Contract is designed for use by individuals whose purchase payments are
comprised solely of proceeds from and/or contributions under retirement plans
which are intended to qualify as plans entitled to special income tax treatment
under Sections 403(b), or 408 of the Code. The ultimate effect of federal income
taxes on the amounts held under a Contract, or annuity payments, and on the
economic benefit to you, the Annuitant, or the Beneficiary depends on the type
of retirement plan, on the tax and employment status of the individual
concerned, and on the Company's tax status. In addition, certain requirements
must be satisfied in purchasing a Qualified Contract with proceeds from a
tax-qualified plan and receiving distributions from a Qualified Contract in
order to continue receiving favorable tax treatment. Therefore, purchasers of
Qualified Contracts should seek competent legal and tax advice regarding the
suitability of a Contract for their situation, the applicable requirements, and
the tax treatment of the rights and benefits of a Contract. The following
discussion assumes that Qualified Contracts are purchased with proceeds from
and/or contributions under retirement plans that qualify for the intended
special federal income tax treatment.
Tax Status of the Contract
Diversification Requirements. Section 817(h) of the Code provides that
separate account investment underlying a contract must be "adequately
diversified" in accordance with Treasury regulations in order for the contract
to qualify as an annuity contract under Section 72 of the Code. The Separate
Account, through each underlying portfolio, intends to comply with the
diversification requirements prescribed in regulations under Section 817(h) of
the Code, which affect how the assets in the various subaccounts may be
invested. Although we do not have direct control over the portfolios in which
the Separate Account invests, we believe that each portfolio in which the
Separate Account owns shares will meet the diversification requirements, and
therefore, the Contract will be treated as an annuity contract under the Code.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate account assets would be includible in the variable
annuity 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
assets if the contract owner possesses incident 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
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concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor (i.e., the
contract owner), rather than the insurance company, to be treated as the owner
of the assets in the account." This announcement also states that guidance will
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 Contracts are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of separate account assets.
These differences could result in an owner being treated as the owner of the
assets of the Separate Account. In addition, we do 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. We therefore reserve the right to
modify the Contract as necessary to attempt to prevent the contract owner from
being considered the owner of any portion of the assets of the Separate Account.
Required Distributions. In order to be treated as an annuity contract for
federal income tax purposes, Section 72(s) of the Code requires any
Non-Qualified Contract to provide that: (a) if any owner dies on or after the
Annuity Income Date but prior to the time the entire interest in the contract
has been distributed, the remaining portion of such interest will be distributed
at least as rapidly as under the method of distribution being used as of the
date of that owner's death; and (b) if any owner dies prior to the Annuity
Income Date, the entire interest in the Contract will be distributed within five
years after the date of the owner's death. These requirements will be considered
satisfied as to any portion of the owner's interest which is payable to or for
the benefit of a "designated beneficiary" and which is distributed over the life
of such beneficiary or over a period not extending beyond the life expectancy of
that beneficiary, provided that such distributions begin within one year of that
owner's death. The owner's "designated beneficiary" is the individual designated
by the owner as a beneficiary and to whom ownership of the contract passes by
reason of deathof the owner. However, if the owner's "designated beneficiary" is
the surviving spouse of the deceased owner, the Contract may be continued with
the surviving spouse as the new owner.
The Non-Qualified Contracts contain provisions which are intended to comply
with the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. The Company intends to
review such provisions and modify them if necessary to assure that they comply
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with the requirements of Code Section 72(s) when clarified by regulation or
otherwise.
Other rules may apply to Qualified Contracts.
The following discussion assumes that the Contracts will qualify as annuity
contracts for federal income tax purposes.
Taxation of Annuities
In General. Section 72 of the Code governs taxation of annuities in general.
We believe that an owner who is a natural person is not taxed on increases in
the value of a Contract until distribution occurs by withdrawing all or part of
the Contract Value (e.g., partial withdrawals and surrenders) or as annuity
payments under the payment option elected. For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Contract Value (and
in the case of a Qualified Contract, any portion of an interest in the qualified
plan) generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a single sum payment or payment option) is taxable
as ordinary income.
The owner of any annuity contract who is not a natural person generally must
include in income any increase in the excess of the contract value over the
"investment in the contract" during the taxable year. There are some exceptions
to this rule, and a prospective owner that is not a natural person may wish to
discuss these with a competent tax advisor.
The following discussion generally applies to Contracts owned by natural
persons.
Partial Withdrawals. In the case of a partial withdrawal from a Qualified
Contract, under Section 72(e) of the Code, a ratable portion of the amount
received is taxable, generally based on the ratio of the "investment in the
contract" to the participant's total accrued benefit or balance under the
retirement plan. The "investment in the contract" generally equals the portion,
if any, of any purchase payments paid by or on behalf of the individual under a
Contract which was not excluded from the individual's gross income. For
Contracts issued in connection with qualified plans, the "investment in the
contract" can be zero. Special tax rules may be available for certain
distributions from Qualified Contracts.
In the case of a partial withdrawal (including systematic withdrawals) from a
Non-Qualified Contract, under Section 72(e), any amounts received are generally
first treated as taxable income to the extent that the contract value
immediately before the partial withdrawal exceeds the "investment in the
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contract" at that time. Any additional amount withdrawn is not taxable.
In the case of a full surrender under a Qualified or Non-Qualified Contract,
the amount received generally will be taxable only to the extent it exceeds the
"investment in the contract."
Exchanges. Section 1035 of the Code generally provides that no gain or loss
shall be recognized on the exchange of one annuity contract for another. If the
surrendered contract was issued prior to August 14, 1982, the tax rules formerly
provided that the surrender was taxable only to the extent the amount received
exceeds the owner's investment in the contract will continue to apply to amounts
allocable to investments in that contract prior to August 14, 1982. In contrast,
contracts issued after January 19, 1985 in a Code Section 1035 exchange are
treated as new contracts for purposes of the penalty and distribution-at-death
rules. Special rules and procedures apply to Section 1035 transactions.
Prospective owners wishing to take advantage of Section 1035 should consult
their tax adviser.
Annuity Payments. Although tax consequences may vary depending on the payment
option elected under an annuity contract, under Code Section 72(b), generally
(prior to recovery of the investment in the contract) gross income does not
include that part of any amount received as an annuity under an annuity contract
that bears the same ratio to such amount as the investment in the contract bears
to the expected return at the annuity starting date. For variable annuity
payments, the taxable portion is generally determined by an equation that
establishes a specific dollar amount of each payment that is not taxed. The
dollar amount is determined by dividing the "investment in the contract" by the
total number of expected periodic payments. However, the entire distribution
will be taxable once the recipient has recovered the dollar amount of his or her
"investment in the contract." For fixed annuity payments, in general, there is
no tax on the portion of each payment which represents the same ratio that the
"investment in the contract" bears to the total expected value of the annuity
payments for the term of the payments; however, the remainder of each annuity
payment is taxable until the recovery of the investment in the contract, and
thereafter the full amount of each annuity payment is taxable. If death occurs
before full recovery of the investment in the contract, the unrecovered amount
may be deducted on the Annuitant's final tax return.
Taxation of Death Benefit Proceeds. Amounts may be distributed from a
Contract because of the death an owner. Generally, such amounts are includible
in the income of the recipient as follows: (i) if distributed in a lump sum,
they are taxed in the same manner as a full surrender of the contract or (ii) if
distributed under a payment option, they are taxed in the same way as annuity
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payments. For these purposes, the investment in the Contract is not affected by
the owner's death. That is, the investment in the Contract remains the amount of
any purchase payments paid which were not excluded from gross income.
Penalty Tax on Certain Withdrawals. In the case of a distribution pursuant to
a Non-Qualified Contract, there may be imposed a federal penalty tax equal to
10% of the amount treated as taxable income. In general, however, there is no
penalty on distributions:
1. made on or after the taxpayer reaches age 59 1/2;
2. made on or after the death of the holder (or if the holder is not an
individual, the death of the primary annuitant);
3. attributable to the taxpayer's becoming disabled;
4. a part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the
taxpayer and his or her designated beneficiary;
5. made under certain annuities issued in connection with structured
settlement agreements; and
6. made under an annuity contract that is purchased with a single purchase
payment when the Annuity Income Date is no later than a year from
purchase of the annuity and substantially equal periodic payments are
made, not less frequently than annually, during the annuity payment
period.
Other tax penalties may apply to certain distributions under a Qualified
Contract.
Possible Changes in Taxation. In past years, legislation has been proposed
that would have adversely modified the federal taxation of certain annuities.
For example, one such proposal would have changed the tax treatment of
non-qualified annuities that did not have "substantial life contingencies" by
taxing income as it is credited to the annuity. As of the date of this
prospectus, Congress is not entertaining legislation that would change the
taxation of annuities; there is always the possibility that the tax treatment of
annuities could change by legislation or other means (such as IRS regulations,
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revenue rulings, judicial decisions, etc.). Moreover, it is also possible that
any change could be effective prior to the date of the change.
Transfers, Assignments or Exchanges of a Contract
A transfer of ownership of a Contract, the designation of an annuitant, payee
or other beneficiary who is not also the owner, the selection of certain Annuity
Income Dates or the exchange of a Contract may result in certain tax
consequences to the owner that are not discussed herein. An owner contemplating
any such transfer, assignment, or exchange of a Contract should contact a
competent tax advisor with respect to the potential tax effects of such a
transaction.
Withholding
Pension and annuity distributions generally are subject to withholding for
the recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. Effective January 1, 1993, distributions from certain qualified
plans are generally subject to mandatory withholding. Certain states also
require withholding of state income tax whenever federal income tax is withheld.
Multiple Contracts
All non-qualified deferred annuity contracts entered into after October 21,
1988 that are issued by us (or our affiliates) to the same owner during any
calendar year are treated as one annuity Contract for purposes of determining
the amount includible in gross income under Section 72(e). The effects of this
rule are not yet completely clear; however, it could affect the time when income
is taxable and the amount that might be subject to the 10% penalty tax described
above. In addition, 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, you should
consult a competent tax advisor before purchasing more than one annuity contract
in any calendar year.
Taxation of Qualified Plans
The Contracts are designed for use with several types of qualified plans. The
tax rules applicable to participants in these qualified plans vary according to
the type of plan and the terms and conditions of the plan itself. Special
favorable tax treatment may be available for certain types of contributions and
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distributions. Adverse tax consequences may result from contributions in excess
of specified limits; distributions prior to age 59 1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; aggregate distributions in excess of a specified
annual amount; and in other specified circumstances. Therefore, no attempt is
made to provide more than general information about the use of the Contracts
with the various types of qualified retirement plans. Contract Owners, the
Annuitants, and Beneficiaries are cautioned that the rights of any person to any
benefits under these qualified retirement plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the Contract, but we shall not be bound by the terms and conditions of such
plans to the extent such terms contradict the Contract, unless we consent. Some
retirement plans are subject to distribution and other requirements that are not
incorporated into our Contract administration procedures. Owners, participants
and beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts comply with
applicable law. Brief descriptions follow of the various types of qualified
retirement plans in connection with a Contract. We will amend the Contract as
necessary to conform it to the requirements of the Code.
Individual Retirement Annuities. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
"Individual Retirement Annuity" or "IRA". These IRAs are subject to limits on
the amount that may be contributed, the persons who may be eligible, and on the
time when distributions may commence. Also, distributions from certain other
types of qualified retirement plans may be "rolled over" on a tax-deferred basis
into an IRA. Sales of the Contract for use with IRAs may be subject to special
requirements of the Internal Revenue Service. Employers may establish Simplified
Employee Pension (SEP) Plans to provide IRA contributions on behalf of their
employees.
Tax Sheltered Annuities. Section 403(b) of the Code allows employees of
certain Section 501(c)(3) organizations and public schools to exclude from their
gross income the purchase payments paid, within certain limits, on a Contract
that will provide an annuity for the employee's retirement. These purchase
payments may be subject to FICA (social security) tax.
Restrictions Under Qualified Plans. Other restrictions with respect to the
election, commencement or distribution of benefits may apply under Qualified
Contracts or under the terms of the plan in respect of which Qualified Contracts
are issued.
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Possible Charge for the Company's Taxes
At the present time, we make no charge to the subaccounts for any Federal,
state, or local taxes that we incur which may be attributable to such
subaccounts or the Contracts. We, however, reserve 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 we determine to be properly attributable to the
subaccounts or to the Contracts.
Other Tax Consequences
As noted above, the foregoing comments about the Federal tax consequences
under these Contracts are not exhaustive, and special rules are provided with
respect to other tax situations not discussed in the Prospectus. Further, the
Federal income tax consequences discussed herein reflect our understanding of
current law and the law may change. Federal estate and state and local estate,
inheritance and other tax consequences of ownership or receipt of distributions
under a Contract depend on the individual circumstances of each owner or
recipient of the distribution. A competent tax advisor should be consulted for
further information.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be offered to the public on a continuous basis. We do not
anticipate discontinuing the offering of the Contracts, but reserve the right to
do so. Applications for Contracts are solicited by agents who are licensed by
applicable state insurance authorities to sell our variable annuity contracts
and who are also registered representatives of Citicorp Investment Services,
Inc. which entered into a selling agreement with The Landmark Funds
Broker-Dealer Services, Inc. Citicorp Investment Services, Inc. is registered
with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is
a member of the National Association of Securities Dealers, Inc.
The Landmark Funds Broker-Dealer Services, Inc. acts as the principal
underwriter, as defined in the 1940 Act, of the Contracts for the Separate
Account pursuant to an Underwriting Agreement with us. The Landmark Funds
Broker-Dealer Services, Inc. is not obligated to sell any specific number of
Contracts. The Landmark Funds Broker-Dealer Services, Inc. principal business
address is 6 St. James Avenue, Suite 900, Boston, Massachusetts 02116.
We may pay sales commissions to broker-dealers up to an amount equal to 6% of
the purchase payments paid under a Contract. These broker-dealers are expected
to compensate sales representatives in varying amounts from these commissions.
We also may pay other distribution expenses such as production incentive
bonuses, agent's insurance and pension benefits, and agency expense allowances.
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These distribution expenses do not result in any additional charges under the
Contracts that are not described under "Charges and Deductions."
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or
the assets of the Separate Account are subject. The Company is not involved in
any litigation that is of material importance in relation to its total assets or
that relates to the Separate Account.
VOTING PRIVILEGES
In accordance with our view of current applicable law, we will vote portfolio
shares held in the Separate Account at regular and special shareholder meetings
of the portfolios 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, or we otherwise determine that we are allowed to vote the
shares in our right, we may elect to do so.
The number of votes that an Owner or Annuitant has the right to instruct will
be calculated separately for each subaccount of the Separate Account, and may
include fractional votes. Prior to the Annuity Income Date, an Owner holds a
voting interest in each subaccount to which the Contract Value is allocated.
After the Annuity Income Date, the Annuitant has a voting interest in each
subaccount from which variable annuity payments are made.
For each Owner, the number of votes attributable to a subaccount will be
determined by dividing the contract value attributable to that Owner's Contract
in that subaccount by the net asset value per share of the portfolio in which
that subaccount invests. For each Annuitant, the number of votes attributable to
a subaccount will be determined by dividing the liability for future variable
annuity payments to be paid from that subaccount by the net asset value per
share of the portfolio in which that subaccount invests. This liability for
future payments is calculated on the basis of the mortality assumptions, the
3.0% assumed investment rate used in determining the number of annuity units of
that subaccount credited to the Annuitant's Contract and annuity unit value of
that subaccount on the date that the number of votes is determined. As variable
annuity payments are made to the Annuitant, the liability for future payments
decreases as does the number of votes.
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The number of votes available to an Owner or Annuitant will be determined as
of the date coincident with the date established by the portfolio for
determining shareholders eligible to vote at the relevant meeting of the
portfolio's shareholders. Voting instructions will be solicited by written
communication prior to such meeting in accordance with procedures established
for the portfolio. Each Owner or Annuitant having a voting interest in a
subaccount will receive proxy materials and reports relating to any meeting of
shareholders of the portfolio in which that subaccount invests.
Portfolio shares as to which no timely instructions are received and shares
held by us in a subaccount as to which no Owner or Annuitant has a beneficial
interest will be voted in proportion to the voting instructions which are
received with respect to all Contracts participating in that subaccount. Voting
instructions to abstain on any item to be voted upon will be applied to reduce
the total number of votes eligible to be cast on a matter.
COMPANY HOLIDAYS
We are closed on the following holidays: New Years Day, Civil Rights Day
(Martin Luther King Day), President's Day, Memorial Day, Independence Day, Labor
Day, Columbus Day, Thanksgiving Day, Day After Thanksgiving and Christmas Day.
Holidays which fall on a Saturday will be recognized on the previous Friday.
Holidays which fall on a Sunday will be recognized on the following Monday.
FINANCIAL STATEMENTS
The audited Statutory Financial Statements of the Company as of December 31,
1995 and 1994 and for the years ended December 31, 1995, 1994, and 1993 as well
as the Independent Auditors' Report are contained in the Statement of Additional
Information. The Statement of Additional Information also contains financial
Statements for the Separate Account as of December 31, 1995.
YOUR RIGHT TO LOOK TO A DELAWARE BANK OR TRUST COMPANY FOR PAYMENT ON ANY
INSURANCE POLICY IS LIMITED BY LAW. INSURANCE POLICIES ISSUED BY THE
SUBSIDIARIES OR DIVISIONS OF DELAWARE BANKS OR TRUST COMPANIES ARE NOT DIRECT
LIABILITIES OF SUCH BANKS OR TRUST COMPANIES. ONLY THE ASSETS OF THE INSURANCE
DIVISION OR SUBSIDIARY ISSUING A POLICY ARE APPLICABLE TO THE PAYMENT AND
SATISFACTION OF SUCH POLICY OR CLAIMS MADE THEREUNDER.
INSURANCE POLICIES ISSUED BY A SUBSIDIARY OR DIVISION OF A DELAWARE BANK OR
TRUST COMPANY ARE NOT BANK DEPOSITS AND ARE NOT FDIC INSURED.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
ADDITIONAL CONTRACT PROVISIONS
The Contract
Incontestability
Misstatement of Age or Sex
Participation
Assignment
DISTRIBUTION OF THE CONTRACTS
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Subaccount Yields
Other Subaccount Yields
Average Annual Total Returns
Effect of the Annual Contract Fee on Performance Data
VARIABLE ANNUITY PAYMENTS
Assumed Investment Rate
Amount of Variable Annuity Payments
Annuity Unit Value
LEGAL MATTERS
EXPERTS
OTHER INFORMATION
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
If you would like a free copy of the Statement of Additional Information for
this prospectus, please fill out this form and mail it to First Citicorp Life
Insurance Company, 800 Silver Lake Boulevard, P.O. Box 7031, Dover, Delaware
19903.
Please send a copy of the Statement of Additional Information pertaining
to the First Citicorp Life Insurance Company Variable Annuity and the
First Citicorp Life Variable Annuity Separate Account to:
Name:
----------------------------------------------------------
Mailing Address:
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PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF
ADDITIONAL INFORMATION
First Citicorp Life Insurance Company
One Court Square
24th Floor
Long Island City, NY 11120
(800) 497-4857
FIRST CITICORP LIFE VARIABLE
ANNUITY SEPARATE ACCOUNT
INDIVIDUAL FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY CONTRACT
May 1, 1996
- --------------------------------------------------------------------------------
1
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STATEMENT OF ADDITIONAL INFORMATION
First Citicorp Life Insurance Company
One Court Square
24th Floor
Long Island City, NY 11120
(800) 497-4857
FIRST CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
This Statement of Additional Information contains information in addition
to the information described in the Prospectus for the flexible premium deferred
variable annuity contract (the "Contract") offered by First Citicorp Life
Insurance Company ("we", "our" and "us"). This Statement of Additional
Information is not a prospectus, and it should be read only in conjunction with
the prospectuses for the Contract, the Landmark VIP Funds the Fidelity Variable
Insurance Products Fund, the AIM Variable Insurance Funds, Inc. and the MFS
Variable Insurance Trust. The Prospectus for the Contract is dated the same as
this Statement of Additional Information. You may obtain a copy of the
prospectuses by writing or calling us at our address or phone number shown
above.
May 1, 1996
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
ADDITIONAL CONTRACT PROVISIONS
The Contract
Incontestability
Misstatement of Age or Sex
Participation
Assignment
DISTRIBUITION OF THE CONTRACTS
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Subaccount Yields
Other Subaccount Yields
Average Annual Total Returns
Effect of the Annual Contract Fee on Performance Data
VARIABLE ANNUITY PAYMENTS
Assumed Investment Rate
Amount of Variable Annuity Payments
Annuity Unit Value
LEGAL MATTERS
EXPERTS
OTHER INFORMATION
FINANCIAL STATEMENTS
3
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ADDITIONAL CONTRACT PROVISIONS
The Contract
The application, endorsements and all other attached papers are part of the
Contract. The statements made in the application are deemed representations and
not warranties. We will not use any statement in defense of a claim or to void
the Contract unless it is contained in the application.
Incontestability
We will not contest the Contract.
Misstatement of Age or Sex
If the age or sex (if applicable) of the payee has been misstated, the
amount which will be paid is that which the proceeds would have purchased at the
correct age and sex (if applicable). Any underpayments, plus interest credited
thereto at an annual rate of 3.0%, will be included with the next benefit
payment. Any overpayments, credited thereto at an annual rate of 3.0%, will be
deducted from future benefit payments until the overpayments are repaid in full.
Participation
The Contract does not participate in our divisible surplus.
Assignment
Upon written notice to us, you may assign your rights under this Contract.
We assume no responsibility for the validity of any such assignment. Assignments
will not apply to any payments or actions taken prior to the time it is recorded
by us.
DISTRIBUTION OF THE CONTRACTS
The Landmark Funds Broker-Dealer Services, Inc. acts as the principal
underwriter and distributor of the Contract, pursuant to an Underwriting
Agreement with us. Applications for the Contracts are solicited by agents who
are licensed by applicable state insurance authorities to sell our variable
annuity contracts and who are also licensed representatives of Citicorp
Insurance Services, Inc. which entered into a selling agreement with The
Landmark Funds Broker-Dealer Services, Inc.
The Landmark Funds Broker Dealer Services, Inc is an indirect wholly owned
subsidiary of Citicorp and an affiliate of First Citicorp Life Insurance
Company. For fiscal year 1995, no underwriting commissions were paid to, or
retained by, The Landmark Funds Broker-Dealer Services, Inc.
4
<PAGE>
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, we may disclose yields, total returns, and other
performance data pertaining to the Contracts for a subaccount. Such performance
data will be computed, or accompanied by performance data computed, in
accordance with the standards defined by the SEC.
Money Market Subaccount Yields
From time to time, advertisements and sales literature may quote the
current annualized yield of the Money Market Subaccount for a seven-day period
in a manner which does not take into consideration any realized or unrealized
gains or losses on shares of the MFS Money Market Series or on that portfolio's
securities.
This current annualized 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 subaccount value by the value of the hypothetical 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 subaccount value reflects: 1) net income from
the portfolio attributable to the hypothetical account; and 2) 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: 1) the annual contract fee; 2) the mortality and
expense risk charge; and (3) the asset-based administration charge. For purposes
of calculating current yields for a Contract, an average per unit contract fee
is used based on the $30 annual contract fee deducted at the end of each
Contract Year. Current Yield is calculated according to the following formula:
Current Yield = ((NCS - ES)/UV) X (365/7)
Where:
NCS = the net change in the value of the MFS Money Market Series
(exclusive of realized gains or losses on the sale of securities
and unrealized appreciation and depreciation) for the seven-day
5
<PAGE>
period attributable to a hypothetical account having a balance of 1
subaccount unit.
ES = per unit expenses attributable to the hypothetical account for the
seven-day period.
UV = the unit value for the first day of the seven-day period.
Effective Yield = (1 + ((NCS-ES)/UV)) 365/7 - 1
Where:
NCS = the net change in the value of the MFS Money Market Series
(exclusive of realized gains or 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 1
subaccount unit.
ES = per unit expenses attributable to the hypothetical account for the
seven-day period.
UV = the unit value for the first day of the seven-day period.
Because of the charges and deductions imposed under the Contract, the yield
for the Money Market Subaccount is lower than the yield for the MFS Money Market
Series.
The current and effective yields on amounts held in the Money Market
Subaccount normally 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 of the MFS Money Market Series, the types and quality of
portfolio securities held by the MFS Money Market Series and the MFS Money
Market Series' operating expenses. Yields on amounts held in the Money Market
Subaccount may also be presented for periods other than a seven-day period.
Yield calculations do not take into account the surrender charge under the
Contract equal to a maximum of 7% of the amount of purchase payments withdrawn
for certain withdrawals. During each Contract Year, up to 10% of all purchase
payments, less any prior withdrawal of purchase payments, may be withdrawn
without the imposition of a surrender charge.
6
<PAGE>
Other Subaccount Yields
From time to time, sales literature or advertisements may quote the current
annualized yield of one or more of the subaccounts (except the Money Market
Subaccount) for a Contract for 30-day or one-month periods. The annualized yield
of a subaccount refers to income generated by the subaccount during a 30-day or
one-month period and is assumed to be generated each period over a 12-month
period.
The yield is computed by: 1) dividing the net investment income of the
portfolio attributable to the subaccount units less subaccount expenses for the
period; by 2) 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 3)
compounding that yield for a six-month period; and by 4) multiplying that result
by 2. Expenses attributable to the subaccount include the annual contract fee,
the asset-based administration charge and the mortality and expense risk charge.
The yield calculation assumes a contract fee of $30 per year per Contract
deducted at the end of each Contract Year. For purposes of calculating the
30-day or one-month yield, an average contract fee based on the average Contract
Value in the Separate Account is used to determine the amount of the charge
attributable to the subaccount for the 30-day or one-month period. The 30-day or
one-month yield is calculated according to the following formula:
Yield = 2 X (((NI - ES)/(U X UV)) + 1)6 - 1)
Where:
NI = net income of the portfolio for the 30-day or one-month period
attributable to the subaccount's units.
ES = expenses of the subaccount for the 30-day or one-month period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last day in the 30-day
or one-month period.
Because of the charges and deductions imposed under the Contracts, the
yield for the subaccount is lower than the yield for the corresponding
portfolio.
The yield on the amounts held in the subaccounts normally fluctuates over
time. Therefore, the disclosed yield for any given past period is not an
7
<PAGE>
indication or representation of future yields or rates of return. A subaccount's
actual yield is affected by the types and quality of portfolio securities held
by the corresponding portfolio and that portfolio's operating expenses.
Yield calculations do not take into account the surrender charge under the
Contract equal to a maximum of 7% of the amount of purchase payments withdrawn
for certain withdrawals. During each Contract Year, up to 10% of all purchase
payments, less any prior withdrawal of purchase payments, may be withdrawn
without the imposition of a surrender charge.
Average Annual Total Returns
From time to time, sales literature or advertisements may also quote
average annual total returns for one or more of the subaccounts for various
periods of time.
When a subaccount or portfolio has been in operation for 1, 5, and 10
years, respectively, the average annual total return for these periods will be
provided. Average annual total returns for other periods of time may, from time
to time, also be disclosed.
Standard average annual total returns 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. The ending date for each period for which total return
quotations are provided will be for the most recent calendar quarter-end
practicable, considering the type of the communication and the media through
which it is communicated.
Standard average annual total returns are calculated using subaccount unit
values which we calculate on each Valuation Day based on the performance of the
subaccount's underlying portfolio, the deductions for the mortality and expense
risk charge, the deductions for the asset-based administration charge and the
annual contract fee. The calculation assumes that the contract fee is $30 per
year per Contract deducted at the end of each Contract Year. For purposes of
calculating average annual total return, an average per-dollar per-day contract
fee attributable to the hypothetical account for the period is used. The
calculation also assumes surrender of the Contract at the end of the period for
the return quotation. Total returns will therefore reflect a deduction of the
surrender charge for any period less than five years since the date of the
purchase payment being withdrawn. The total return is calculated according to
the following formula:
8
<PAGE>
TR = ((ERV/P)1/N) - 1
Where:
TR = the average annual total return net of subaccount recurring charges.
ERV = the ending redeemable value (net of any applicable surrender
charge) of the hypothetical account at the end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
From time to time, sales literature or advertisements may also quote
average annual total returns that do not reflect the surrender charge. These are
calculated in exactly the same way as average annual total returns described
above, except that the ending redeemable value of the hypothetical account for
the period is replaced with an ending value for the period that does not take
into account any charges on amounts surrendered or withdrawn.
We may disclose cumulative total returns in conjunction with the standard
formats 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.
Effect of the Annual Contract Fee on Performance Data
The Contract provides for a $30 annual contract fee to be deducted annually
at the end of each Contract Year from the Accounts based on the proportion of
the Contract Value invested in each such Account. For purposes of reflecting the
contract fee in yield and total return quotations, the annual charge is
converted into a per-dollar per-day charge based on the average Contract Value
of all Contracts on the last day of the period for which quotations are
9
<PAGE>
provided. The per-dollar per-day average charge will then be adjusted to reflect
the basis upon which the particular quotation is calculated.
VARIABLE ANNUITY PAYMENTS
Assumed Investment Rate
The discussion concerning the amount of variable annuity payments which
follows is based on an assumed investment rate of 3.0% per year. The assumed net
investment rate is used merely in order to determine the first monthly payment
per thousand dollars of applied value. This rate does not bear any relationship
to the actual net investment experience of the Separate Account or of any
subaccount.
Amount of Variable Annuity Payments
The amount of the first variable annuity payment is determined by dividing
the Contract Value on the Annuity Income Date by 1,000 and multiplying the
result by the appropriate factor in the annuity tables provided in the Contract.
These tables are based upon the 1983 IAM Tables (promulgated by the Society of
Actuaries). The appropriate factor is based on the annual net investment return
of 3.0%. The amount of each payment will depend on the age of the Annuitant(s)
at the time the first payment is due, and the sex of the Annuitant(s).
The dollar amount of the second and subsequent variable annuity payments
will vary and is determined by multiplying the number of subaccount annuity
units by the subaccount annuity unit value as of a date no earlier than the
fifth Valuation Day preceding the date the payment is due. The number of such
units will remain fixed during the annuity period, assuming you or the
Annuitant, if you are deceased, make no exchanges of annuity units for annuity
units of another subaccount or to provide a fixed annuity payment. Once every 3
months after annuity payments have commenced, the Annuitant may elect in
writing, to transfer among any subaccounts. After the Annuity Income Date, no
transfers may be made between the subaccounts and the Fixed Account.
The annuity unit value will increase or decrease from one payment to the
next in proportion to the net investment return of the subaccount or subaccounts
supporting the variable annuity payments, less an adjustment to neutralize the
3.0% assumed net investment rate referred to above. Therefore, the dollar amount
of annuity payments after the first will vary with the amount by which the net
investment return of the appropriate subaccounts is greater or less than 3.0%
10
<PAGE>
per year. For example, for a Contract using only one subaccount to generate
variable annuity payments, if that subaccount has a cumulative net investment
return of 5% over a one year period, the first annuity payment in the next year
will be approximately 2% greater than the payment on the same date in the
preceding year. If such net investment return is 1% over a one year period, the
first annuity payment in the next year will be approximately 2 percentage points
less than the payment on the same date in the preceding year. (See also
"Variable Annuity Payments" in the Prospectus.)
Fixed annuity payments are determined at annuitization by multiplying the
values allocated to the Fixed Account by a rate to be determined by First
Citicorp Life which is no less than the rate specified in the annuity tables in
the Contract. The annuity payment will remain level for the duration of the
annuity.
The annuity payments will be made on the fifteenth day of each month. The
annuity unit value used in calculating the amount of the variable annuity
payments will be based on an annuity unit value determined as of the close of
business on a day no earlier than the fifth Valuation Day preceding the date of
the annuity payment.
Annuity Unit Value
The annuity unit value is calculated at the same time that the value of an
accumulation unit is calculated and is based on the same values for portfolio
shares and other assets and liabilities. (See "Variable Contract Value" in the
Prospectus.) The annuity unit value for each subaccount's first valuation period
was set at $1.00. The annuity unit value for a subaccount is calculated for each
subsequent Valuation Period by multiplying the subaccount annuity unit value on
the preceding day by the product of 1 times 2 where:
(1) is the subaccount's net investment factor on the Valuation Day the
Annuity Unit Value is being calculated; and
(2) is 0.999919 (which is the daily factor that will produce the 3.0%
annual investment rate assumed in the annuity tables), adjusted by the
number of days since the previous Valuation Day.
The following illustration shows, by use of hypothetical example, the
method of determining the annuity unit value.
11
<PAGE>
Illustration of Calculation of Annuity Unit Value
-------------------------------------------------
1. Net Investment Factor for period............................. 1.003662336
2. Adjustment for 3% Assumed Investment
Rate......................................................... 0.999919016
3. 2x1.......................................................... 1.003581055
4. annuity unit value, beginning of
valuation period............................................. 10.743769
5. annuity unit value, end of valuation
period (3x4)................................................. 10.782243
12
<PAGE>
LEGAL MATTERS
All matters relating to New York law pertaining to the Contracts, including
the validity of the Contracts and our authority to issue the Contracts, have
been passed upon by Alan Liebowitz, General Counsel of the Company. Sutherland,
Asbill & Brennan of Washington, D.C. has provided advice on certain matters
relating to the federal securities laws.
EXPERTS
The statutory financial statements of First Citicorp Life Insurance Company
as of December 31, 1995 and 1994, and for each of the years in the three-year
period ended December 31, 1995, and the financial statements for the Separate
Account as of December 31, 1995, have been included herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering the financial statements of
First Citicorp Life Insurance Company contains an explanatory paragraph which
states that the financial statements are presented in conformity with accounting
practices prescribed or permitted by the Department of Insurance of the State of
New York. These practices differ in some respects from generally accepted
accounting principles. The financial statements do not include any adjustments
that might result from the differences.
OTHER INFORMATION
A registration statement has been filed with the SEC under the Securities
Act of 1933, as amended, with respect to the Contracts discussed in this
Statement of Additional Information. Not all the information set forth in the
registration statement, amendments and exhibits thereto has been included in
this Statement of Additional Information. Statements contained in this Statement
of Additional Information concerning the content of the Contracts and other
legal instruments are intended to be summaries. For a complete statement of the
terms of these documents, reference should be made to the instruments filed with
the SEC.
13
<PAGE>
FINANCIAL STATEMENTS
The Statutory Financial Statements of the Company as of December 31, 1995
and 1994 and for the years ended December 31, 1995, 1994, and 1993, which are
included in this Statement of Additional Information, should be considered only
as bearing on our ability to meet our obligations under the Contracts. They
should not be considered as bearing on the investment performance of the assets
held in the Separate Account. This Statement of Additional Information also
contains financial statements for the Separate Account as of December 31, 1995.
14
<PAGE>
[LOGO - KPMG Peat Marwick LLP]
Independent Auditors' Report
----------------------------
The Board of Directors
First Citicorp Life Insurance Company and Policyholders
of First Citicorp Life Insurance Company Variable
Annuity Separate Account:
We have audited the accompanying statements of net assets, including the
schedule of investments, of the Landmark Equity Fund, Landmark U.S. Government
Securities Fund, Landmark International Equity Fund, Landmark Balanced Fund,
A.I.M. V.I. Capital Appreciation Fund, Fidelity Growth Portfolio, M.F.S. Money
Market Series, and M.F.s. World Governments Series Portfolios of First Citicorp
Life Insurance Company Variable Annuity Separate Account as of December 31,
1995, and related statements of operations and changes in net assets for the
period March 6, 1995 (Inception) to December 31, 1995. These financial
statements are the responsibility of First Citicorp Life Insurance Company
Variable Annuity Separate Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments owned at December 31, 1995 by
correspondence with the Landmark Variable Insurance Products Fund, Fidelity
Variable Insurance Products Fund, A.I.M. Variable Insurance Funds, Inc., and
M.F.S. Variable Insurance Trust. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Landmark Equity Fund,
Landmark U.S. Government Securities Fund, Landmark International Equity Fund,
Landmark Balanced Fund, A.I.M. V.I. Capital Appreciation Fund, Fidelity Growth
Portfolio, M.F.S. Money Market Series, and M.F.S. World Governments Series
Portfolios of First Citicorp Life Insurance Company Variable Annuity Separate
Account as of December 31, 1995, and the results of their operations and
changes in their net assets for the period March 6, 1995 (Inception) to
December 31, 1995, in conformity with generally accepted accounting principles.
s/ KPMG Peat Marwick LLP
Chicago, Illinois
February 16, 1996
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<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
Statement of Net Assets
December 31, 1995
<TABLE>
<CAPTION>
Landmark U.S. Landmark A.I.M. V.I. MFS MFS
Landmark Government International Landmark Capital Fidelity Money World
Equity Securities Equity Balanced Appreciation Growth Market Governments
Fund Fund Fund Fund Fund Portfolio Series Series
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at Market Value
(See Schedule of Investments) $746,885 $222,279 $390,287 $711,616 $1,731,795 $1,619,874 $118,935 $265,283
Payable to First Citicorp Life
Insurance Company 485 143 254 468 1,113 1,052 77 169
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Net Assets $746,400 $222,136 $390,033 $711,148 $1,730,682 $1,618,822 $118,858 $265,114
======== ======== ======== ======== ========== ========== ======== ========
Total Net Assets Represented By:
Variable Annuity Cash Value
Invested in Separate
Account 746,400 222,136 390,033 711,148 1,730,682 1,618,822 118,858 265,114
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Net Assets $746,400 $222,136 $390,033 $711,148 $1,730,682 $1,618,822 $118,858 $265,114
======== ======== ======== ======== ========== ========== ======== ========
Total Units Held 649,011 207,248 377,945 640,046 1,345,513 1,237,930 115,908 241,914
Net Unit Value $1.15 $1.07 $1.03 $1.11 $1.29 $1.31 $1.03 $1.10
Cost of Investments $697,010 $214,771 $390,651 $676,333 $1,666,344 $1,586,049 $118,935 $282,166
======== ======== ======== ======== ========== ========== ======== ========
</TABLE>
See Notes to Financial Statements.
118
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
For the Period from March 6, 1995 (Inception) to December 31, 1995
<TABLE>
<CAPTION>
Landmark U.S. Landmark A.I.M. V.I. MFS MFS
Landmark Government International Landmark Capital Fidelity Money World
Equity Securities Equity Balanced Appreciation Growth Market Governments
Fund Fund Fund Fund Fund Portfolio Series Series
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends $7,954 $7,213 $4,819 $13,858 $365 -- $2,873 $24,564
Expenses:
Mortality & Expense Risk Fees 2,782 1,097 1,812 3,140 8,518 $7,953 781 1,291
Daily Administrative Charges 328 130 218 371 989 925 92 154
------- ------- ------ ------- ------- ------- ------ -------
Total Expenses 3,110 1,227 2,030 3,511 9,507 8,878 873 1,445
------- ------- ------ ------- ------- ------- ------ -------
Net Investment
Income (Loss) 4,844 5,986 2,789 10,347 (9,142) (8,878) 2,000 23,119
------- ------- -------- ------- ------- ------- ------ -------
Realized and Unrealized Gain
(Loss) on Investments:
Realized Gain on Sale of
Investments 399 82 373 1,230 15,496 6,321 -- 488
Net Unrealized Gain (Loss)
on Investments 49,875 7,508 (364) 35,283 65,451 33,825 -- (16,883)
------- ------- ------ ------- ------- ------- ------ -------
Net Gain (Loss) on Investments 50,274 7,590 9 36,513 80,947 40,146 -- (16,395)
------- ------- ------ ------- ------- ------- ------ -------
Increase in Net Assets
Resulting from Operations $55,118 $13,576 $2,798 $46,860 $71,805 $31,268 $2,000 $6,724
======= ======= ====== ======= ======= ======= ====== =======
</TABLE>
See Notes to Financial Statements.
119
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
For the Period from March 6, 1995 (Inception) to December 31, 1995
<TABLE>
<CAPTION>
Landmark U.S. Landmark A.I.M. V.I. MFS MFS
Landmark Government International Landmark Capital Fidelity Money World
Equity Securities Equity Balanced Appreciation Growth Market Governments
Fund Fund Fund Fund Fund Portfolio Series Series
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss) $4,844 $5,986 $2,789 $10,347 $(9,142) $(8,878) $2,000 $23,119
Realized Gain on Sale of
Investments 399 82 373 1,230 15,496 6,321 -- 488
Change in Unrealized
Appreciation
(Depreciation) of
Investments 49,875 7,508 (364) 35,283 65,451 33,825 -- (16,883)
-------- -------- -------- -------- ---------- ---------- -------- --------
Increase in Net Assets
Resulting from
Operations 55,118 13,576 2,798 46,860 71,805 31,268 2,000 6,724
-------- -------- -------- -------- ---------- ---------- -------- --------
Capital Transactions:
Contract Deposits 687,397 211,010 398,496 661,835 1,733,060 1,567,401 175,629 266,180
Transfers Between Funds 1,553 (1,393) (1,565) 8,693 22,034 31,479 (58,771) (2,030)
Transfers from First Citicorp
Life Insurance Company 3,103 -- 1,000 2,801 9,603 17,277 -- --
Contract Withdrawals (771) (1,057) (10,696) (9,041) (105,820) (28,603) -- (5,760)
-------- -------- -------- -------- ---------- ---------- -------- --------
Increase in Net Assets
Resulting from Capital
Transactions 691,282 208,560 387,235 664,288 1,658,877 1,587,554 116,858 258,390
-------- -------- -------- -------- ---------- ---------- -------- --------
Total Increase in Net Assets 746,400 222,136 390,033 711,148 1,730,682 1,618,822 118,858 265,114
Net Assets, at Beginning of Period -- -- -- -- -- -- -- --
-------- -------- -------- -------- ---------- ---------- -------- --------
Net Assets, at End of Period $746,400 $222,136 $390,033 $711,148 $1,730,682 $1,618,822 $118,858 $265,114
======== ======== ======== ======== ========== ========== ======== ========
</TABLE>
See Notes to Financial Statements.
120
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. History
The First Citicorp Life Insurance Company Variable Annuity Separate Account
(the "Account") is a separate account maintained under the provisions of New
York Insurance Law by First Citicorp Life Insurance Company (the "Company"), a
subsidiary of Citicorp Life Insurance Company. The Account operates as a unit
investment trust registered under the Investment Company Act of 1940, as
amended, and supports the operations of the Company's individual flexible
premium deferred variable annuity contracts (the "contracts"). The Account
invests in Portfolios of the Landmark Variable Insurance Products Funds, the
A.I.M. Variable Insurance Funds, Inc., the Fidelity Variable Insurance Products
Fund, and the M.F.S. Variable Insurance Trust (the "Funds"). The available
Portfolios of the Landmark Variable Insurance Products Funds include the
Landmark Equity Fund, the Landmark U.S. Government Fund, the Landmark
International Equity Fund and the Landmark Balanced Fund. The A.I.M. V.I.
Capital Appreciation Fund of the A.I.M. Variable Insurance Funds, Inc., the
Growth Portfolio of the Fidelity Investments Variable Insurance Products Fund,
the MFS Money Market Series and the MFS World Governments Series of the M.F.S.
Variable Insurance Trust are also available for investment.
The Account had no assets or operations until March 6, 1995, when the initial
investment was made.
The assets of the Account are the property of the Company. The portion of the
Account's assets applicable to the contracts are not chargeable with
liabilities arising out of any other business conducted by the Company.
In addition to the Account, a contract owner may also allocate funds to the
General Account, which is part of the Company's general account. Amounts
allocated to the General Account are credited with a guaranteed rate for one
year. Because of exemptive and exclusionary provisions, interests in the
General Account have not been registered under the Securities Act of 1933 and
the General Account has not been registered as an investment company under the
Investment Company Act of 1940.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Account in preparation of the financial statements in conformity with generally
accepted accounting principles.
A. Investment Valuation -- The investments of the Portfolios within the Account
are stated at market value, which is the net asset value of each of the
respective series as determined at the close of business on the last working
day of the period.
B. Accounting for Investments -- Investment transactions are accounted for on
the trade date. Dividend income is recorded on the ex-dividend date.
C. Federal Income Taxes -- The Company is taxed under federal law as a life
insurance company. The Account is part of the Company's total operations and
is not taxed separately. Under current Federal income tax law, no taxes are
payable on investment income or realized capital gains of the Account
Contractholders.
D. Use of Estimates -- The preparation of financial statements in conformity
with Generally Accepted Accounting Principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of increase and
decrease in net assets from operations during the period. Actual results
could differ from those estimates.
121
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FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
3. Contract Charges
Daily charges for mortality and expense risks assumed by the Company are
assessed through the daily unit value calculation and are equivalent on an
annual basis to 1.25% of the value of the contracts.
An annual contract fee of $30 is assessed against each contract on its
anniversary date by surrendering units. Daily charges for administrative
expenses are assessed through the daily unit value calculation and are
equivalent on an annual basis to 0.15% of the value of the contracts.
The contracts provide that in the event that a contract owner withdraws all or
a portion of the contract value within five contract years there will be
assessed a deferred sales charge. The deferred sales charge is based on a table
of charges of which the maximum charge is currently 7% of the contract value.
During each contract year, up to 10% of purchase payments less any prior
withdrawal of purchase payments may be withdrawn without a deferred sales
charge.
Premium taxes may be applicable, depending on the laws of various
jurisdictions. Various states and other government entities levy a premium tax
on annuity contracts issued by insurance companies.
4. Purchases and Sales of Investments
For the period ended December 31, 1995, investment activity in the Account was
as follows:
<TABLE>
<CAPTION>
Cost of Proceeds
Shares of Purchases from Sales
- --------- --------- ----------
<S> <C> <C>
Landmark Variable Insurance Products Funds:
Landmark Equity Fund $703,333 $6,722
Landmark U.S. Government Fund 219,741 5,052
Landmark International Equity Fund 404,330 14,052
Landmark Balanced Fund 693,896 18,793
A.I.M. Variable Insurance Funds, Inc.:
A.I.M. V.I. Capital Appreciation Fund 1,745,083 94,235
Fidelity Investments Variable Insurance Products Fund:
Growth Portfolio 1,610,347 30,619
M.F.S. Variable Insurance Trust:
MFS Money Market Series 191,969 73,034
MFS World Governments Series 294,749 13,071
</TABLE>
5. Net Increase in Accumulation Units
For the period ended December 31, 1995, transactions in accumulation units of
the Account were as follows:
<TABLE>
<CAPTION>
Landmark U.S. Landmark A.I.M. V.I. MFS MFS
Landmark Government International Landmark Capital Fidelity Money World
Equity Securities Equity Balanced Appreciation Growth Market Governments
Fund Fund Fund Fund Fund Portfolio Series Series
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units Purchased 645,474 209,726 388,739 637,592 1,407,226 1,223,339 173,434 249,273
Units Withdrawn (737) (1,009) (10,290) (8,504) (85,419) (21,324) -- (5,455)
Units Transferred Between Funds 4,274 (1,469) (504) 10,958 23,706 35,915 (57,526) (1,904)
------- ------- ------- ------- --------- --------- ------- -------
Net Increase 649,011 207,248 377,945 640,046 1,345,513 1,237,930 115,908 241,914
Units, at Beginning of Period -- -- -- -- -- -- -- --
------- ------- ------- ------- --------- --------- ------- -------
Units, at End of Period 649,011 207,248 377,945 640,046 1,345,513 1,237,930 115,908 241,914
======= ======= ======= ======= ========= ========= ======= =======
</TABLE>
122
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
VARIABLE ANNUITY SEPARATE ACCOUNT
SCHEDULE OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
Number Market
of Shares Value Cost
--------- ---------- ----------
<S> <C> <C> <C>
Landmark Variable Insurance Products Funds:
Landmark Equity Fund 64,890 $746,885 $697,010
Landmark U.S. Government Fund 21,210 222,279 214,771
Landmark International Equity Fund 37,855 390,287 390,651
Landmark Balanced Fund 64,575 711,616 676,333
A.I.M Variable Insurance Funds, Inc.:
AI.M. V.I. Capital Appreciation Fund 104,640 1,731,795 1,666,344
Fidelity Variable Products Fund:
Growth Portfolio 55,475 1,619,874 1,586,049
M.F.S. Variable Insurance Trust:
MFS Money Market Series 118,935 118,935 118,935
MFS World Governments Series 26,085 265,283 282,166
</TABLE>
123
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
(A Wholly Owned Subsidiary of
Citicorp Life Insurance Company)
Statutory Financial Statements
December 31, 1995, 1994, and 1993
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Board of Directors
First Citicorp Life Insurance Company:
We have audited the accompanying statutory statements of admitted assets,
liabilities, and capital and surplus of First Citicorp Life Insurance Company (a
wholly owned subsidiary of Citicorp Life Insurance Company) as of December 31,
1995 and 1994, and the related statutory statements of operations, capital and
surplus, and cash flow for each of the years in the three-year period ended
December 31, 1995. These statutory financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these statutory financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in note 1, the statutory financial statements have been prepared in
conformity with accounting practices prescribed or permitted by the Department
of Insurance of the State of New York. These practices differ in some respects
from generally accepted accounting principles (note 10). Accordingly, the
financial statements referred to above are not intended to present, and in our
opinion do not present, fairly the financial position, results of operations,
and cash flow in conformity with generally accepted accounting principles.
Also, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the admitted assets, liabilities, and
capital and surplus of First Citicorp Life Insurance Company as of December 31,
1995 and 1994, and the results of its operations and its cash flow for each of
the years in the three-year period ended December 31, 1995 on the basis of
accounting as described in note 1.
/s/KPMG Peat Marwick LLP
April 19, 1996
1
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Admitted Assets,
Liabilities, and Capital and Surplus
December 31, 1995 and 1994
- --------------------------------------------------------------------------------
Admitted Assets 1995 1994
- --------------------------------------------------------------------------------
Cash and investments:
Bonds $174,969,621 92,787,403
Mortgage loans 1,818,256 1,983,477
Cash on hand and on deposit 2,743,765 419,896
Short-term investments 10,005,937 12,450,294
- --------------------------------------------------------------------------------
Total cash and investments 189,537,579 107,641,070
Net deferred and uncollected premiums 625,339 623,747
Due from reinsurers 433,947 266,767
Accrued investment income 2,965,823 1,850,525
Due from affiliates 996,558 361,689
Other assets 50,777 --
Separate account assets 5,806,955 --
Total admitted assets $200,416,978 110,743,798
- --------------------------------------------------------------------------------
Liabilities and Capital and Surplus
- --------------------------------------------------------------------------------
Liabilities:
Future policy benefit reserves:
Life insurance 2,268,107 2,183,476
Accident and health insurance 235,764 229,600
Policyholder account balances
- annuities 165,379,392 83,708,333
Supplementary contracts
without life contingencies 683,521 687,009
Policy and contract claim reserves:
Life insurance 1,266,321 852,348
Accident and health insurance 800,961 569,621
Federal income taxes due to parent 2,121,596 868,473
Asset valuation reserve 570,021 312,989
Interest maintenance reserve 1,380,857 352,352
OtherEliabilities 2,152,590 2,950,592
Separate account liabilities 5,606,744 --
- --------------------------------------------------------------------------------
Total liabilities 182,465,874 92,714,793
- --------------------------------------------------------------------------------
Commitments and contingencies
Capital and surplus:
Capital stock - $5 par value per share;
400,000 shares authorized, issued,
and outstanding 2,000,000 2,000,000
Surplus:
Paid-in 4,000,000 4,000,000
Assigned D separate account 200,211 --
Unassigned 11,750,893 12,029,005
- --------------------------------------------------------------------------------
Total capital and surplus 17,951,104 18,029,005
- --------------------------------------------------------------------------------
Total liabilities and capital and surplus $200,416,978 110,743,798
- --------------------------------------------------------------------------------
See accompanying notes to statutory financial statements.
2
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Operations
Years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Premiums and annuity considerations:
Life insurance $ 5,062,237 4,252,856 3,188,165
Annuities 97,941,558 69,438,348 19,048,334
Accident and health insurance 5,315,100 4,971,002 2,741,166
Supplementary contracts without life contingencies 22,000 733,131 --
- ------------------------------------------------------------------------------------------------------------------
Total premium and annuity considerations 108,340,895 79,395,337 24,977,665
Net investment income 10,684,469 4,628,190 1,220,880
Amortization of interest maintenance reserve 31,453 21,437 21,276
Other 51,735 -- 5,976
- ------------------------------------------------------------------------------------------------------------------
Total revenues 119,108,552 84,044,964 26,225,796
- ------------------------------------------------------------------------------------------------------------------
Benefits and expenses:
Death and other policy benefits:
Life insurance 3,547,882 1,843,452 2,279,592
Accident and health insurance 1,494,215 1,257,468 732,839
Annuities 1,516,385 486,033 --
Surrenders 12,946,447 5,183,339 81,744
Payments on supplementary contracts 80,134 60,980 --
Change in future policy benefits:
Annuities 81,671,059 65,015,197 18,993,415
Life insurance 84,631 (222,714) (441,339)
Accident and health insurance 6,164 93,829 35,741
Change in reserves for supplementary contracts (3,488) 687,009 --
Other operating costs and expenses:
Commissions 5,381,049 3,341,317 759,791
General insurance expenses and taxes, licenses and fees 4,546,822 4,231,252 2,690,725
Net transfer to separate accounts 5,734,793 -- --
Other 13 497 1,170
- ------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 117,006,106 81,977,659 25,133,678
- ------------------------------------------------------------------------------------------------------------------
Income from operations before federal income tax expense and
net realized capital gains 2,102,446 2,067,305 1,092,118
Federal income tax expense 2,123,528 701,760 379,540
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from operations before net realized capital gains (21,082) 1,365,545 712,578
Net realized capital gains, net of IMR transfers -- 138,956 194,848
- ------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (21,082) 1,504,501 907,426
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to statutory financial statements.
3
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Capital and Surplus
Years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital and surplus at beginning of year $18,029,005 16,699,332 15,873,153
Net income (loss) (21,082) 1,504,501 907,426
Change in nonadmitted assets -- 57 (197)
Change in asset valuation reserve (257,030) (174,885) (81,050)
Change in surplus in separate accounts 200,211 -- --
- ---------------------------------------------------------------------------------------------
Capital and surplus at end of year $17,951,104 18,029,005 16,699,332
- ---------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to statutory financial statements.
4
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Statutory Statements of Cash Flow
Years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash provided:
From operations:
Premiums and annuity considerations $108,317,303 78,600,081 24,831,359
Net investment income received 9,672,813 3,705,941 1,230,720
Other income received 51,735 -- --
Life and accident and health claims,
and other benefits paid (18,939,748) (8,882,383) (2,584,831)
Commissions, other expenses, and taxes paid (9,783,511) (7,710,111) (3,369,418)
Federal income taxes paid (870,405) (1,050,117) (630,767)
Other 22,000 733,131 5,976
Net transfers to separate accounts (5,734,793) -- --
- ------------------------------------------------------------------------------------------------------------------
Net cash from operations 82,735,394 65,396,542 19,483,039
- ------------------------------------------------------------------------------------------------------------------
Proceeds from investments sold, matured, or repaid:
Bonds 34,097,195 1,490,126 32,255,088
Mortgage loans 165,221 406,651 48,094
Other 184 (76) 2,678
- ------------------------------------------------------------------------------------------------------------------
Total investment proceeds 34,262,600 1,896,701 32,305,860
- ------------------------------------------------------------------------------------------------------------------
Other cash provided 868,187 1,917,033 1,067,351
- ------------------------------------------------------------------------------------------------------------------
Total cash provided 117,866,181 69,210,276 52,856,250
- ------------------------------------------------------------------------------------------------------------------
Cash applied:
Cost of investments acquired - bonds 115,323,283 61,710,007 49,205,497
Other cash applied 2,663,386 615,148 305,339
- ------------------------------------------------------------------------------------------------------------------
Total cash applied, net 117,986,669 62,325,155 49,510,836
- ------------------------------------------------------------------------------------------------------------------
Net change in cash on hand and on deposit and short-term
investments (120,488) 6,885,121 3,345,414
Cash on hand and on deposit and short-term investments,
beginning of year 12,870,190 5,985,069 2,639,655
- ------------------------------------------------------------------------------------------------------------------
Cash on hand and on deposit and short-term investments,
end of year $ 12,749,702 12,870,190 5,985,069
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to statutory financial statements.
5
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
December 31, 1995, 1994, and 1993
- --------------------------------------------------------------------------------
(1) BASIS OF PRESENTATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
First Citicorp Life Insurance Company (the Company) is a wholly owned
subsidiary of Citicorp Life Insurance Company (the Parent), which is a
third tier wholly owned subsidiary of Citicorp. The Company issues term
life insurance, single and flexible premium deferred annuity policies,
variable deferred annuity policies, and accident and health policies. The
majority of the Company's business is generated through customers of
Citicorp and its subsidiaries. The Company also assumes credit life
insurance policies. The Company is licensed to issue insurance in the State
of New York. The accompanying statutory financial statements have been
prepared in accordance with insurance accounting practices prescribed or
permitted by the Department of Insurance of the State of New York, which
vary in some respects from generally accepted accounting principles as
discussed more fully in note 10. The preparation of statutory financial
statements requires management to make estimates and assumptions which
affect the reported amounts of assets and liabilities as of the date of the
financial statements. Actual results could differ from these estimates.
The significant statutory accounting policies are as follows:
o Revenues and Expenses - Life premiums are reflected as earned on the policy
anniversary date. Accident and health premiums are reported as revenue when
due and earned on a pro rata basis over the period covered by the policy.
Deferred life premiums represent modal premiums (other than annual) to be
billed in the year subsequent to the commencement of the policy year.
Uncollected premiums represent premiums due less accident and health
premiums over 90 days past due. Expenses, including acquisition costs
related to acquiring new business and interest credited to policyholder
account balances, are charged to operations as incurred. Investment income
is recognized as earned.
o Policy Reserves - The liability for future life policy benefits is based on
statutory mortality and interest requirements without consideration of
withdrawals. The mortality table and interest assumptions currently
utilized is the 1980 Commissioners Standard Ordinary (CSO) table, with
interest rates ranging from 4.5% to 6% for ordinary business, and from 5.5%
to 6% for credit business. For new business, the interest assumptions are
5.5% for credit business, and from 4.5% to 5.5% for ordinary business. Life
reserves are generally calculated on either the net level or Commissioners
Reserve Valuation Method (CRVM) basis.
For deferred annuities, reserves are computed on the Commissioners Annuity
Reserve Valuation Method (CARVM) using appropriate issue-year interest
rates ranging from 5.5% to 6.5%.
The Company provides a liability for accident and health policies which
represents an estimate of the ultimate costs of unpaid claims incurred
through December 31 of each year. Management believes this liability will
be adequate to cover such costs; however, the ultimate liability may be
more or less than the estimated liability.
o Investments - Bonds and short-term investments, which consist primarily of
U.S. Treasury, corporate, and mortgage-backed securities, are valued as
prescribed by the National Association of Insurance Commissioners (NAIC)
and are generally carried at amortized cost as the Company has the ability
and intent to hold such items to maturity. First mortgage loans are stated
at the unpaid principal balance and represent first liens on residential
properties located in the United States.
6
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
- --------------------------------------------------------------------------------
Life insurance companies are required to establish an Asset Valuation
Reserve (AVR) and an Interest Maintenance Reserve (IMR). The AVR provides
for a standardized statutory investment valuation reserve for bonds,
preferred stocks, short-term investments, mortgage loans, common stocks,
real estate, and other invested assets and is recorded as a direct charge
to surplus in accordance with statutory accounting principles. The IMR is
designed to defer net realized capital gains and losses resulting from
changes in the level of interest rates in the market and to amortize them
into income over the remaining life of the bond or mortgage loan sold. The
IMR represents the unamortized portion not yet taken into income.
o Capital Gains and Losses - The cost of investments sold is generally
determined on the first-in, first-out method and includes the effects of
any related amortization of premium or accretion of discount. Realized
investment gains and losses are reported net of income taxes of $-0-,
$138,956, and $33,782, for the years ended DecemberE31, 1995, 1994, and
1993, respectively, and are included in the determination of net income.
Realized investment gains in 1995, 1994, and 1993 of $1,059,958, $2,236,
and $254,198, respectively, were excluded from net income by a transfer to
the IMR, net of federal income taxes.
o Separate Account Assets and Liabilities - The assets and liabilities of the
separate account represent segregated funds administered and invested by
the Company for purposes of funding variable annuity contracts for the
exclusive benefit of variable annuity contractholders. The Company receives
administrative fees from the separate accounts and retains varying amounts
of withdrawal charges to cover expenses in the event of early withdrawals
by contractholders. The amount of the asset balance in excess of
liabilities included within surplus represents policy surrender charges
which are permitted to be recorded to surplus under statutory accounting
practices. The assets and liabilities of the separate accounts are carried
at fair value.
o Nonadmitted Assets - Assets included in the statutory statements of
admitted assets, liabilities, and capital and surplus are at "admitted
asset values." Nonadmitted assets, principally capitalized expenditures for
furniture and equipment, are excluded from the accompanying statutory
financial statements through a charge against unassigned surplus.
o Federal Income Taxes - Federal income taxes are charged to operations based
on income that is currently taxable. No charge to operations is made or
liability established for the tax effects of temporary differences between
the financial reporting and tax basis of assets and liabilities.
o Fair Market Disclosures - Fair value disclosures are required under SFAS
No.E107, Disclosures About Fair Value of Financial Instruments. Such fair
value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument. Although fair value estimates are calculated using
assumptions that management believes are appropriate, changes in
assumptions could significantly affect the estimates and such estimates
should be used with care. The following assumptions were used to estimate
the fair market value of each class of financial instrument for which it
was practicable to estimate fair value:
Investment securities - Fixed maturities are valued using quoted market
prices.
7
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
- --------------------------------------------------------------------------------
Mortgage loans - First mortgages on real estate are carried at the unpaid
principal balance. As discussed in note 3, the Company bears no credit risk
as all mortgage loans were purchased, with recourse, from an affiliate. The
carrying value of mortgage loans approximates fair value.
Policyholder account balances - The liability for policyholder account
balances is related to investment-type annuity contracts for which
crediting rates are subject to adjustment annually, based on interest rates
currently being offered for similar contracts with maturities consistent
with those remaining for the contracts being valued. The carrying value
approximates fair value at DecemberE31, 1995 and 1994, respectively.
Cash and short-term investments - The carrying amount is a reasonable
estimate of fair value.
o Cash and cash equivalents - For purposes of reporting cash flows, cash and
cash equivalents represent demand deposits and highly liquid short-term
investments, which include U.S. Treasury bills, commercial paper, and
repurchase agreements with original or remaining maturities of 90 days or
less when purchased.
o Reclassifications - Certain reclassifications have been made to the 1994
information to conform with the 1995 presentation.
(2) REINSURANCE
Insurance is assumed from other companies in areas where the Company had or
has limited authority to write business. Normally, a commission based on
net written premiums is charged by the ceding company under the terms of
the agreement.
The effect of reinsurance on premiums for the years ended DecemberE31,
1995, 1994, and 1993 is as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Direct premiums and annuity considerations:
Annuities $ 97,941,558 69,438,348 19,048,334
Life 4,733,194 1,758,727 1,350,111
Accident and health 4,086,697 3,059,108 2,741,166
Supplementary contracts without life contingencies 22,000 733,131 --
Premiums assumed - life 720,312 2,826,260 2,116,640
Premiums assumed - accident and health 1,228,403 1,911,894 --
Premiums ceded - life (391,269) (332,131) (278,586)
- ---------------------------------------------------------------------------------------------------------------
Net premiums earned $108,340,895 79,395,337 24,977,665
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Reserve credits taken with respect to risks ceded to other companies
amounted to $60,651 and $61,548 at December 31, 1995 and 1994,
respectively. The Company remains contingently liable with respect to any
reinsurance ceded and would become actually liable if the assuming company
was unable to meet its obligations under the reinsurance treaty.
8
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
- --------------------------------------------------------------------------------
(3) INVESTMENTS
Major categories of net investment income for the years ended December 31,
1995, 1994, and 1993 consist of the following:
- -----------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------
Bonds $10,097,496 4,393,500 1,159,184
Mortgage loans 154,856 137,228 153,775
Short-term investments 633,415 301,124 85,904
Other -- 5,993 7,188
- -----------------------------------------------------------------------
Total investment revenue 10,885,767 4,837,845 1,406,051
Investment expense 201,298 209,655 185,171
- -----------------------------------------------------------------------
Net investment income $10,684,469 4,628,190 1,220,880
- -----------------------------------------------------------------------
Investments in bonds and short-term investments at December 31, 1995 and
1994 are summarized below. Estimated fair values are based on market prices
obtained from a pricing service which approximates fair value.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1995
- -------------------------------------------------------------------------------------------------------------------
Gross Gross
unrea- unrea- Estimated
Carrying lized lized fair
value gains losses value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bonds:
U.S. Treasury securities $ 3,713,745 37,975 (3,712) 3,748,008
U.S. government agencies 83,704,048 1,659,365 (120,454) 85,242,959
Industrial and miscellaneous 87,551,828 2,933,395 (272,099) 90,213,124
Total bonds 174,969,621 4,630,735 (396,265) 179,204,091
- -------------------------------------------------------------------------------------------------------------------
Short-term investments - U.S.
Treasury bills and agency discount rates 10,005,937 -- (9,925) 9,996,012
- -------------------------------------------------------------------------------------------------------------------
Total bonds and short-term investments $184,975,558 4,630,735 (406,190) 189,200,103
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1995
- -------------------------------------------------------------------------------------------------------------------
Gross Gross
unrea- unrea- Estimated
Carrying lized lized fair
value gains losses value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bonds:
U.S. Treasury securities $ 7,483,495 -- (368,313) 7,115,182
U.S. government agencies 27,913,341 -- (1,461,343) 26,451,998
Industrial and miscellaneous 57,390,567 5,160 (4,322,618) 53,073,109
- -------------------------------------------------------------------------------------------------------------------
Total bonds 92,787,403 5,160 (6,152,274) 86,640,289
Short-term investments - U.S.
Treasury bills 12,450,294 -- (13,614) 12,436,680
- -------------------------------------------------------------------------------------------------------------------
Total bonds and short-term investments $105,237,697 5,160 (6,165,888) 99,076,969
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The carrying and estimated fair values of bonds and short-term investments
at DecemberE31, 1995, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
Carrying Estimated
value fair value
- ------------------------------------------------------------------
Within 1 year $ 10,576,775 10,575,102
After 1 year through 5 years 15,010,262 15,418,409
After 5 years through 10 years 48,475,371 49,807,919
After 10 years 110,913,150 113,398,673
- ------------------------------------------------------------------
$184,975,558 189,200,103
Proceeds from sale of bonds during 1995, 1994, and 1993 were $27,874,228,
$514,820, and $31,151,267, respectively. Gross gains of $1,172,141, $2,312,
and $828,810, and gross losses of $112,634, $-0-, $348,660, were realized
on those sales in 1995, 1994, and 1993, respectively.
Investments in mortgage loans were purchased from Citicorp Mortgage, Inc.
(CMI), an affiliate of the Company, pursuant to a Mortgage Loan Purchase
and Sale Agreement. In the event of default by the borrower, CMI has agreed
to take back the related loans at current book value.
(4) INVESTMENTS ON DEPOSIT
At December 31, 1995 and 1994, investments with a carrying value of
$570,838 and $572,169, respectively, were on deposit with the Department of
Insurance of the State of New York, as required by law, and $2,897,445 and
$2,895,226, respectively, were on deposit in escrow accounts under the
terms of certain of the Company's reinsurance agreements.
10
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
- --------------------------------------------------------------------------------
(5) FEDERAL INCOME TAXES
The Company files a consolidated federal income tax return with its
ultimate parent, Citicorp, and its other subsidiaries. The Company
participates in a tax-sharing agreement with the Parent whereby it is
liable for federal income taxes on a stand-alone basis.
Federal income tax expense on income from operations varies from amounts
computed by applying the current federal corporate income tax rate to
income before federal income tax expense and net realized capital gains.
The reasons for these differences, and the tax effects thereof, are as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax at
U.S. corporate tax rate $ 735,856 35.00% $723,557 35.00% $382,241 35.00%
Difference between changes
in statutory reserves as
compared to tax reserves 475,767 22.63 -- -- -- --
Policy acquisition expenses
capitalized, net of
amortization 599,608 28.52 385,690 18.66 149,522 13.69
Prior year taxes -- -- -- -- (100,427) (9.20)
Other, net 312,297 14.85 (407,487) (19.71) (51,796) (4.74)
- ----------------------------------------------------------------------------------------------------------------
$2,123,528 101.00% $701,760 33.95% $379,540 34.75%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(6) RELATED PARTY TRANSACTIONS
The Company has entered into various service agreements with the Parent and
other affiliates which cover management, investment, and information
processing services. Expenses incurred under such agreements were $250,000,
$108,000, and $162,000 in 1995, 1994, and 1993, respectively.
The Company occupies certain facilities which are leased by an affiliate.
The Company is allocated a portion of the lease expense by the affiliate.
Allocated rent expense totaled $2,787, $25,184, and $20,000 in 1995, 1994,
and 1993, respectively.
The Company utilizes the services of Citicorp Insurance Services, Inc. and
CMI. Employees of these companies are eligible to participate in defined
benefit plans provided by Citicorp. Charges for these services are based on
the actual salary and benefit costs of employees providing service to the
Company. Included in these charges are costs associated with Citicorp's
benefit plans.
(7) DIVIDEND RESTRICTIONS
A New York domestic life insurance company shall not distribute a dividend
to its stockholders unless a notice of its intention and the amount thereof
has been filed with the Superintendent of Insurance not less than 30 days
in advance of such declaration. The Company did not pay a dividend in 1995,
1994, and 1993.
11
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
- --------------------------------------------------------------------------------
(8) RISK-BASED CAPITAL
The insurance departments of various states, including the Company's
domiciliary state of New York, impose risk-based capital (RBC) requirements
on insurance enterprises. The RBC calculation serves as a benchmark for the
regulation of life insurance companies by state insurance regulators. The
requirements apply various weighted factors to financial balances or
activity levels based on their perceived degree of risk.
The RBC guidelines define specific capital levels where action by the
Company or regulatory intervention is required based on the ratio of a
Company's actual total adjusted capital (sum of capital and surplus and
asset valuation reserve) to control levels determined by the RBC formula.
At DecemberE31, 1995, the Company's total adjusted capital exceeded all
regulatory requirements, thus no action by the Company or its regulators is
required.
(9) CONTINGENCIES
The Company is involved in various litigation arising in the ordinary
course of operations. Management is of the opinion, after reviewing these
matters with legal counsel, that the ultimate liability, if any, resulting
from any or all of the above matters would not have a material adverse
effect on the Company's financial position.
(10) DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES AND STATUTORY ACCOUNTING PRACTICES
Statutory accounting practices differ in some respects from generally
accepted accounting principles. Under generally accepted accounting
principles (GAAP), the following applies:
(a) The liability for future policy benefits is computed using the
rule-of-78s and pro rata methods.
(b) Life premiums are reflected as earned when due. Annuity considerations
and other fund deposits are reflected as deposits rather than revenue.
(c) Acquisition costs are capitalized and amortized generally over the
premium paying period for individual life contracts in relation to the
estimated present value of gross profits of the underlying business for
interest-sensitive life and investment contracts.
(d) Deferred income taxes are provided on all significant temporary
differences between values of assets and liabilities for book and tax
reporting purposes.
(e) Nonadmitted assets, less applicable allowance accounts, are restored to
the financial statements.
(f) Asset valuation and interest maintenance reserves are not provided.
(g) Realized investment gains (losses) resulting from changes in interest
rates are recognized when the related security is sold.
12
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Notes to Statutory Financial Statements
- --------------------------------------------------------------------------------
(i) Debt securities are classified into one of three categories:
held-to-maturity, trading, or available-for-sale. Held-to-maturity
securities are carried at amortized cost. Trading securities are
reported at fair value with unrealized gains and losses included in
earnings. Available-for-sale securities are reported at fair value with
unrealized gains and losses excluded from earnings and reported as a
separate component of stockholders' equity, net of tax.
(j) Reinsurance premiums, commissions, expense reimbursements, and reserves
would be presented on a gross basis consistent with terms of the
reinsurance contracts.
The statutory financial statements do not include any adjustments that
might result from differences between statutory accounting practices and
GAAP.
13
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B.
(b) Exhibits
(1) Certified resolution of the board of directors of First Citicorp Life
Insurance Company (the "Company") establishing First Citicorp Life
Variable Annuity Separate Account (the "Separate Account").
(2) Not Applicable.
(3) Form of underwriting agreement among the Company, the Separate Account
and The Landmark Funds Broker-Dealer Services, Inc.
(4) (a) Contract Form.
(b) Contract Endorsements.
(5) Contract Application.
(6) (a) Certificate of Incorporation of the Company.
(b) By-Laws of the Company.
(7) None.
(8) (a) Participation Agreement Among Variable Insurance Products Fund,
Fidelity Distributors Corporation and First Citicorp Life Insurance
Company; Participation Agreement Among MFS Variable Insurance Trust,
First Citicorp Life Insurance Company and Massachusetts Financial
Services Company.
(b) Administrative Services Agreement between Citicorp Insurance
Services, Inc. and First Citicorp Life Insurance Company.
(9) Opinion and Consent of Richard M. Zuckerman, Esq.
(10) (a) Consent of Sutherland, Asbill & Brennan.
(b) Consent of Certified Public Accountant.
(11) Not Applicable.
<PAGE>
(12) None.
(13) Not Applicable.
(14) Not Applicable
Item 25. Directors and Officers of the Company.
Directors**
Steven J. Freiburg Charles R. Haskins
Jack S. Berger Alan F. Liebowitz
Frederick W. Bradley, Jr.* Larry D. Williams
Carl W. Desch* Frederic W. Thomas*
John M. Walbridge*
* Outside Director
Officers**
Alan F. Liebowitz President and Chief Executive Officer
Larry D. Williams Senior Vice President
Elizabeth C. Craig Vice President
Richard P. Elder Vice President
Daniel F. Forcade Vice President and Treasurer
Charles R. Haskins Vice President
Eric S. Miller Vice President
Frederick K. Molen Vice President and
Chief Valuation Actuary
Jeffrey T. Sorin Vice President
Richard M. Zuckerman Vice President/Associate General
Counsel/Secretary
** One Court Square, 24th Floor, Long Island City, New York 11120.
<PAGE>
Item 26. Persons Controlled by or Under Common Control With the Depositor or
Registrant
ORGANIZATION CHART
--------------------------------------
CITICORP
(Delaware Corporation)
--------------------------------------
|
100%
--------------------------------------
CITICORP HOLDINGS, INC.
(Delaware Corporation)
--------------------------------------
|
100%
--------------------------------------
CITIBANK DELAWARE
(Delaware Corporation)
--------------------------------------
|
-------------------------
100% 100%
-------------------------- ----------------------------
CITICORP LIFE CITICORP ASSURANCE
INSURANCE COMPANY CO
(Arizona Corporation) (Delaware Corporation)
-------------------------- ----------------------------
|
100%
- ------------------------------
FIRST CITICORP LIFE
INSURANCE
COMPANY
(New York Corporation)
- ------------------------------
<PAGE>
Item 27. Number of Contract owners
As of December 31, 1995, there were 267 contract owners.
Item 28. Indemnification
The Bylaws of First Citicorp Life Insurance Company provide in Article VIII
as follows:
(a) The Corporation shall indemnify any person made a party to an action or
proceeding by or in the right of the Corporation to procure a judgment in
its favor, by reason of the fact that he, his testator or intestate, is or
was a director or officer or employee of the Corporation against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense of such action or
proceeding, or in connection with an appeal therein, except in relation to
matters as to which such person is adjudged to have breached his duty to
the Corporation; and
(b) The Corporation shall indemnify any person made, or threatened to be
made a party to an action or proceeding other than one by or in the right
of the Corporation to procure a judgement in its favor, whether civil or
criminal, including an action by or in the right of any other corporation
of any type or kind domestic or foreign, which any director or officer or
employee of the Corporation served in any capacity at the request of the
Corporation, by reason of the fact that he, his testator or intestate, was
a director or officer or employee of the Corporation, or served such other
corporation in any capacity, against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees, actually and
necessarily incurred as a result of such action or proceeding, or any
appeal therein, if such person acted in good faith, for a purpose which he
reasonably believed to be in the best interests of the Corporation and, in
criminal actions, or proceedings, in addition, had no reasonable cause to
believe that his conduct was unlawful.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
<PAGE>
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriter
(a) The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS"), the
Registrant's Distributor, is also the distributor for Landmark Cash
Reserves, Premium Liquid Reserves, Landmark Tax Free Reserves,
Landmark New York Tax Free Reserves, Landmark California Tax Free
Reserves, Landmark Connecticut Tax Free Reserves, Landmark New York
Tax Free Income Fund, Landmark Balanced Fund, Landmark Equity Fund,
Landmark U.S. Government Income Fund, Landmark Intermediate Income
Fund, Landmark U.S. Treasury Reserves, Premium U.S. Treasury Reserves,
Landmark Institutional Liquid Reserves and Landmark Institutional U.S.
Treasury Reserves. LFBDS is also the placement agent for Balanced
Portfolio, Cash Reserves Portfolio, U.S. Treasury Reserves Portfolio,
Tax Free Reserves Portfolio, International Equity Portfolio, Equity
Portfolio and Government Income Portfolio.
(b) The information required by this item 29 with respect to each director
and officer of LFBDS is incorporated by reference to Schedule A or
Form BD filed by LFBDS pursuant to the Securities and Exchange Act of
1934 (File No. 8-32417).
(c) Not applicable.
Item 30. Location Books and Records
All of the accounts, books, records or other documents required to be kept
by Section 31(a) of the Investment Company Act of 1940 and rules
thereunder, are maintained by the Company at One Court Square, Long Island
City, New York.
Item 31. Management Services
Not applicable.
<PAGE>
Item 32. Undertakings and Representations
(a) The registrant undertakes that it will file a post-effective
amendment to this registration statement as frequently as is necessary
to ensure that the audited financial statements in the registration
statement are never more than 16 months old for as long as purchase
payments under the contracts offered herein are being accepted.
(b) The registrant undertakes that it will include either (1) as part of
any application to purchase a contract offered by the prospectus, a
space that an applicant can check to request a statement of additional
information, or (2) a post card or similar written communication
affixed to or included in the prospectus that the applicant can remove
and send to the Company for a statement of additional information.
(c) The registrant undertakes to deliver any statement of additional
information and any financial statements required to be made available
under this Form N-4 promptly upon written or oral request to the
Company at the address or phone number listed in the prospectus.
(d) The Company represents that in connection with its offering of the
contracts as funding vehicles for retirement plans meeting the
requirements of Section 403(b) of the Internal Revenue Code of 1986,
it is relying on a no-action letter dated November 28, 1988, to the
American Council of Life Insurance (Ref. No. IP-6-88) regarding
Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of
1940, and that paragraphs numbered (1) through (4) of that letter will
be complied with.
<PAGE>
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant certifies that this Amendment to the Registration Statement
meets the requirements for effectiveness pursuant to paragraph (b) of Rule 485
and has caused this Amendment to the Registration Statement to be signed on its
behalf, in the City of New York, and the State of New York, on this 19th day of
April, 1996.
FIRST CITICORP LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
Attest: /s/Larry D. Williams By: /s/Richard M. Zuckerman
---------------------- ---------------------------
Vice President, Associate General
Counsel & Secretary of First
Citicorp Life Insurance Company
BY: FIRST CITICORP LIFE INSURANCE
COMPANY (Depositor)
Attest: /s/Larry D. Williams By: /s/Richard M. Zuckerman
---------------------- ---------------------------
Vice President, Associate General
Counsel & Secretary
As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/Larry D. Williams Director, SVP April 19, 1996
- -------------------- ---------------------- --------------
/s/Daniel F. Forcade Treasurer, V.P. April 19, 1996
- -------------------- ---------------------- --------------
<PAGE>
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant certifies that this Amendment to the Registration Statement
meets the requirements for effectiveness pursuant to paragraph (b) of Rule 485
and has caused this Amendment to the Registration Statement to be signed on its
behalf, in the City of New York, and the State of New York, on this 19th day of
April, 1996.
FIRST CITICORP LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
Attest: /s/Larry D. Williams By: /s/Richard M. Zuckerman
---------------------- ---------------------------
Vice President, Associate General
Counsel & Secretary of First
Citicorp Life Insurance Company
BY: FIRST CITICORP LIFE INSURANCE
COMPANY (Depositor)
Attest: /s/Larry D. Williams By: /s/Richard M. Zuckerman
---------------------- ---------------------------
Vice President, Associate General
Counsel & Secretary
As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/Alan F. Liebowitz Director, President, CEO April 19, 1996
- --------------------- ------------------------ --------------
/s/Steven J. Freiberg Director April 19, 1996
- --------------------- ------------------------ --------------
/s/Jack S. Berger Director April 19, 1996
- --------------------- ------------------------ --------------
Director April 19, 1996
- --------------------- ------------------------ --------------
<PAGE>
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant certifies that this Amendment to the Registration Statement
meets the requirements for effectiveness pursuant to paragraph (b) of Rule 485
and has caused this Amendment to the Registration Statement to be signed on its
behalf, in the City of New York, and the State of New York, on this 19th day of
April, 1996.
FIRST CITICORP LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
Attest: /s/Larry D. Williams By: /s/Richard M. Zuckerman
---------------------- ---------------------------
Vice President, Associate General
Counsel & Secretary of First
Citicorp Life Insurance Company
BY: FIRST CITICORP LIFE INSURANCE
COMPANY (Depositor)
Attest: /s/Larry D. Williams By: /s/Richard M. Zuckerman
---------------------- ---------------------------
Vice President, Associate General
Counsel & Secretary
As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
Director, President, CEO April 19, 1996
- --------------------- ------------------------ --------------
Director April 19, 1996
- --------------------- ------------------------ --------------
Director April 19, 1996
- --------------------- ------------------------ --------------
/s/Frederic W. Thomas Director April 19, 1996
- --------------------- ------------------------ --------------
<PAGE>
EXHIBIT INDEX
1. Certified resolution of the Board of Directors of First Citicorp Life
Insurance Company
3. Form of Underwriting Agreement
4(a). Contract Form
4(b). Contract Endorsements
5. Contract Application
6(a). Certificate of Incorporation of First Citicorp Life Insurance Company
6(b). By-laws of First Citicorp Life Insurance Company
8(a). Participation Agreement Among Variable Insurance Products Fund, Fidelity
Distributors Corporation and First Citicorp Life Insurance Company with
Amendment; Participation Agreement Among MFS Variable Insurance Trust,
First Citicorp Life Insurance Company and Massachusetts Financial
Services Company.
8(b). Administrative Services Agreement between Citicorp Insurance Services,
Inc. and First Citicorp Life Insurance Company with Addendums.
9. Opinion and Consent of Richard M. Zuckerman, Esq.
10(a). Consent of Sutherland, Asbill & Brennan.
10(b). Consent of KPMG Peat Marwick LLP.
EXHIBIT 1
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
WRITTEN CONSENT OF THE BOARD OF DIRECTORS
JULY 6, 1994
Pursuant to the provisions of the by-laws and the New York General
Corporation Law, the Board of Directors of First Citicorp Life Insurance
Company, a New York corporation, hereby consent to the actions set forth herein
and adopt the following resolutions, all in lieu of a special meeting of the
Board of Directors:
RESOLVED, That the Board of Directors of First Citicorp Life Insurance
Company (the "Company"), hereby establishes a separate account, pursuant to the
provisions of New York Insurance Law Section 4240, designated First Citicorp
Life Variable Annuity Separate Account (hereinafter the "Separate Account") for
the following use and purposes, and subject to such conditions as hereinafter
set forth; and
FURTHER RESOLVED, That the Separate Account is established for the
purpose of providing for the issuance by the Company of certain variable annuity
contracts ("Contracts"), and shall constitute a funding medium to support
reserves under such Contracts issued by the Company; and
FURTHER RESOLVED, That the income, gains and losses, whether or not
realized, from assets allocated to the Separate 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; and
FURTHER RESOLVED, That pursuant to the provisions of the Contracts, the
portion of the assets of the Separate Account not
2497l(1)
<PAGE>
exceeding the reserves and other contract liabilities with respect to such
Separate Account shall not be chargeable with liabilities arising out of any
other business of the Company; and
FURTHER RESOLVED, That the Separate Account shall be divided into
investment subaccounts, each investment subaccount in the Separate Account shall
invest in the shares of a mutual fund portfolio designated on the schedule page
of the Contract and net premiums under the Contracts shall be allocated to the
eligible portfolios in accordance with instructions received from owners of the
Contracts; and
FURTHER RESOLVED, That the Board of Directors expressly reserves the
right to add or remove any investment subaccount of the Separate Account or
substitute one designated mutual fund for another as it may hereafter deem
necessary or appropriate; and
FURTHER RESOLVED, That the income, gains and losses, whether or not
realized, from assets allocated to each investment subaccount of the Separate
Account shall, in accordance with the Contracts, be credited to or charged
against such investment subaccount of the Separate Account without regard to
other income, gains or losses of any other investment subaccount of the Separate
Account; and
FURTHER RESOLVED; That the President, the Senior Vice President & Chief
Financial Officer, the Vice President-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 the Separate Account
or in any investment subaccount thereof as may be deemed necessary or
appropriate to facilitate the commencement of the Account's operations and/or to
meet any minimum capital requirements under the Investment Company Act of 1940
(the "1940 Act"); and
2497l(2)
<PAGE>
FURTHER RESOLVED, That the President, the Senior Vice President & Chief
Financial Officer, the Vice President-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 the
Separate Account as deemed necessary or appropriate and consistent with the
terms of the Contracts; and
FURTHER RESOLVED, That the Board of Directors of the Company reserves
the right to change the designation of the Separate Account hereafter to such
other designation as it may deem necessary or appropriate; and
FURTHER RESOLVED, That the President, the Senior Vice President &
General Counsel, the Senior Vice President & Chief Financial Officer, the Vice
President-Treasurer and each of them, with fill power to act without the others,
with such assistance from 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 the Separate Account as a unit investment
trust under the 1940 Act; (b) register the Contracts in such amounts, which may
be an indefinite amount, as such officers of the Company shall from time to time
deem appropriate under the Securities Act of 1933 (the "1933 Act"); and (c) take
all other actions which are necessary in connection with the offering of the
Contracts for sale and the operation of the Separate Account in order to comply
with the 1940 Act, the Securities Exchange Act of 1934, the 1933 Act, and other
applicable federal laws, including the filing of any amendments to registration
statements, any undertakings, and any applications for exemptions from the 1940
Act or other applicable federal laws as the officers of the Company shall deem
necessary or appropriate; and
2497l(3)
<PAGE>
FURTHER RESOLVED, That the President, the Senior Vice President &
General Counsel, the Senior Vice President & Chief Financial Officer, the Vice
President-Treasurer and each of them, with full power to act without the others,
hereby are severally authorized and empowered to prepare, execute and cause to
be filed with the Securities and Exchange Commission on behalf of the Separate
Account, and by the Company as sponsor and depositor, a Notification of
Registration on Form N-8A, a registration statement registering the Account as
an investment company under the 1940 Act and the Contracts under the 1933 Act,
and any and all amendments to the foregoing on behalf of the Separate Account
and the Company and on behalf of and as attorneys-in-fact for the principal
executive officer and/or the principal financial officer and/or the principal
accounting officer and/or any other officer of the Company; and
FURTHER RESOLVED, That Alan F. Liebowitz is duly appointed as agent for
service under any such registration statement, duly authorized to receive
communications and notices from the Securities and Exchange Commission with
respect thereto; and
FURTHER RESOLVED, That the President, the Senior Vice President &
General Counsel, the Senior Vice President & Chief Financial Officer, the Vice
President-Treasurer and each of them, with full power to act without the others,
hereby are severally authorized on behalf of the Separate 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 or other
jurisdictions, and in connection therewith, to prepare, execute, deliver and
file all such applications, reports, covenants, resolutions, applications for
2497l(4)
<PAGE>
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
such 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
officers or legal counsel deem it to be in the best interests of the Separate
Account and the Company; and
FURTHER RESOLVED, That the President, the Senior Vice President &
General Counsel, the Senior Vice President & Chief Financial Officer, the Vice
President-Treasurer 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 the
Separate Account and the Company to execute and file irrevocable written
consents on the part of the Separate 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 the registration or
qualification of the Contracts and to appoint the appropriate state official, or
such other person as may be allowed by insurance or securities laws, agent of
the Separate Account and of the Company for the purpose of receiving and
accepting process; and
FURTHER RESOLVED, That the President, the Senior Vice President &
General Counsel, the Senior Vice President & Chief Financial Officer, the Vice
President-Treasurer and each of them, with full power to act without the others,
be, and hereby are, severally authorized in the names and on behalf of the
Separate Account and the Company to execute and file irrevocable written
consents on the part of the Separate 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 the registration or
qualification of the Contracts and to appoint the appropriate state official, or
such other person
2497l(5)
<PAGE>
as may be allowed by insurance or securities laws, agent of the Separate Account
and of the Company for the purpose of receiving and accepting process; and
FURTHER RESOLVED, That the President, the Senior Vice President &
General Counsel, the Senior Vice President & Chief Financial Officer, the Vice
President-Treasurer and each of them, with full power to act without the others,
be, and hereby are, severally authorized to establish procedures under which the
Company will provide voting rights for owners of the Contracts with respect to
securities owned by the Separate Account; and
FURTHER RESOLVED, That the President, the Senior Vice President &
General Counsel, the Senior Vice President & Chief Financial Officer, the Vice
President-Treasurer and each of them, with full power to act without the others,
are hereby severally authorized to execute such agreement or agreements as
deemed necessary and appropriate (i) with a qualified entity under which such
entity will be appointed principal underwriter and distributor for the
contracts, (ii) with one or more qualified banks or other qualified entities to
provide administrative and/or custody services in connection with the
establishment and maintenance of the Separate Account and the design, issuance,
and administration of the Contracts, and (iii) with the designated mutual funds
and/or the principal underwriter and distributor of those funds for the purchase
and redemption of fund shares; and
FURTHER RESOLVED, That the President, the Senior Vice President &
General Counsel, the Senior Vice President & Chief Financial Officer, the Vice
President-Treasurer and each of them, with full power to act without the others,
are hereby severally authorized to execute and deliver such agreements and other
documents and do such acts and things as each of them may deem necessary or
desirable to carry out the foregoing resolutions and the intent and purposes
thereof; and
2497l(6)
<PAGE>
The undersigned, being all of the Directors of First Citicorp Life
Insurance Company, do hereby consent in writing to the above actions and hereby
approve the same
/s/Arnold E. Amstutz /s/Charles R. Haskins
- ------------------------- --------------------------
Arnold E. Amstutz Charles R. Haskins
/s/Alan F. Liebowitz
- ------------------------- --------------------------
Jack S. Berger Alan F. Liebowitz
/s/John T. Oates
- ------------------------- --------------------------
Frederick W. Bradley, Jr. John T. Oates
- ------------------------- --------------------------
Carl W. Desch Frederic W. Thomas
/s/Charles B. Erickson
- ------------------------- --------------------------
Charles B. Erickson John M. Walbridge
/s/Larry D. Williams
- ------------------------- --------------------------
Warren G. Flynn Larry D. Williams
/s/Mary Jane Gillin
- -------------------------
Mary Jane Gillin
2497l(7)
<PAGE>
The undersigned, being all of the Directors of First Citicorp Life
Insurance Company, do hereby consent in writing to the above actions and hereby
approve the same
/s/Arnold E. Amstutz /s/Charles R. Haskins
- ------------------------- --------------------------
Arnold E. Amstutz Charles R. Haskins
/s/Jack S. Berger /s/Alan F. Liebowitz
- ------------------------- --------------------------
Jack S. Berger Alan F. Liebowitz
/s/John T. Oates
- ------------------------- --------------------------
Frederick W. Bradley, Jr. John T. Oates
- ------------------------- --------------------------
Carl W. Desch Frederic W. Thomas
/s/Charles B. Erickson
- ------------------------- --------------------------
Charles B. Erickson John M. Walbridge
/s/Larry D. Williams
- ------------------------- --------------------------
Warren G. Flynn Larry D. Williams
/s/Mary Jane Gillin
- -------------------------
Mary Jane Gillin
2497l(7)
<PAGE>
The undersigned, being all of the Directors of First Citicorp Life
Insurance Company, do hereby consent in writing to the above actions and hereby
approve the same
/s/Arnold E. Amstutz /s/Charles R. Haskins
- ------------------------- --------------------------
Arnold E. Amstutz Charles R. Haskins
/s/Alan F. Liebowitz
- ------------------------- --------------------------
Jack S. Berger Alan F. Liebowitz
/s/Frederick W. Bradley, Jr. /s/John T. Oates
- ------------------------- --------------------------
Frederick W. Bradley, Jr. John T. Oates
- ------------------------- --------------------------
Carl W. Desch Frederic W. Thomas
/s/Charles B. Erickson
- ------------------------- --------------------------
Charles B. Erickson John M. Walbridge
/s/Larry D. Williams
- ------------------------- --------------------------
Warren G. Flynn Larry D. Williams
/s/Mary Jane Gillin
- -------------------------
Mary Jane Gillin
2497l(7)
<PAGE>
The undersigned, being all of the Directors of First Citicorp Life
Insurance Company, do hereby consent in writing to the above actions and hereby
approve the same
/s/Arnold E. Amstutz /s/Charles R. Haskins
- ------------------------- --------------------------
Arnold E. Amstutz Charles R. Haskins
/s/Alan F. Liebowitz
- ------------------------- --------------------------
Jack S. Berger Alan F. Liebowitz
/s/John T. Oates
- ------------------------- --------------------------
Frederick W. Bradley, Jr. John T. Oates
/s/Carl W. Desch
- ------------------------- --------------------------
Carl W. Desch Frederic W. Thomas
/s/Charles B. Erickson
- ------------------------- --------------------------
Charles B. Erickson John M. Walbridge
/s/Larry D. Williams
- ------------------------- --------------------------
Warren G. Flynn Larry D. Williams
/s/Mary Jane Gillin
- -------------------------
Mary Jane Gillin
2497l(7)
<PAGE>
The undersigned, being all of the Directors of First Citicorp Life
Insurance Company, do hereby consent in writing to the above actions and hereby
approve the same
/s/Arnold E. Amstutz /s/Charles R. Haskins
- ------------------------- --------------------------
Arnold E. Amstutz Charles R. Haskins
/s/Alan F. Liebowitz
- ------------------------- --------------------------
Jack S. Berger Alan F. Liebowitz
/s/John T. Oates
- ------------------------- --------------------------
Frederick W. Bradley, Jr. John T. Oates
- ------------------------- --------------------------
Carl W. Desch Frederic W. Thomas
/s/Charles B. Erickson
- ------------------------- --------------------------
Charles B. Erickson John M. Walbridge
/s/Warren G. Flynn /s/Larry D. Williams
- ------------------------- --------------------------
Warren G. Flynn Larry D. Williams
/s/Mary Jane Gillin
- -------------------------
Mary Jane Gillin
2497l(7)
<PAGE>
The undersigned, being all of the Directors of First Citicorp Life
Insurance Company, do hereby consent in writing to the above actions and hereby
approve the same
/s/Arnold E. Amstutz /s/Charles R. Haskins
- ------------------------- --------------------------
Arnold E. Amstutz Charles R. Haskins
/s/Alan F. Liebowitz
- ------------------------- --------------------------
Jack S. Berger Alan F. Liebowitz
/s/John T. Oates
- ------------------------- --------------------------
Frederick W. Bradley, Jr. John T. Oates
/s/Frederic W. Thomas
- ------------------------- --------------------------
Carl W. Desch Frederic W. Thomas
/s/Charles B. Erickson
- ------------------------- --------------------------
Charles B. Erickson John M. Walbridge
/s/Larry D. Williams
- ------------------------- --------------------------
Warren G. Flynn Larry D. Williams
/s/Mary Jane Gillin
- -------------------------
Mary Jane Gillin
2497l(7)
<PAGE>
The undersigned, being all of the Directors of First Citicorp Life
Insurance Company, do hereby consent in writing to the above actions and hereby
approve the same
/s/Arnold E. Amstutz /s/Charles R. Haskins
- ------------------------- --------------------------
Arnold E. Amstutz Charles R. Haskins
/s/Alan F. Liebowitz
- ------------------------- --------------------------
Jack S. Berger Alan F. Liebowitz
/s/John T. Oates
- ------------------------- --------------------------
Frederick W. Bradley, Jr. John T. Oates
- ------------------------- --------------------------
Carl W. Desch Frederic W. Thomas
/s/Charles B. Erickson /s/John M. Walbridge
- ------------------------- --------------------------
Charles B. Erickson John M. Walbridge
/s/Larry D. Williams
- ------------------------- --------------------------
Warren G. Flynn Larry D. Williams
/s/Mary Jane Gillin
- -------------------------
Mary Jane Gillin
2497l(7)
EXHIBIT 3
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT dated as of by and between FIRST CITICORP LIFE INSURANCE COMPANY
("Insurer"), a New York insurance company, on its behalf and on behalf of each
separate account identified in Schedule 1 hereto, and THE LANDMARK FUNDS
BROKER-DEALER SERVICES, INC. ("Distributor"), a New York corporation.
WITNESSETH:
WHEREAS, Distributor is a broker-dealer that engages in the distribution of
investment products;
WHEREAS, Insurer proposes to issue variable insurance products to the
public; and
WHEREAS, Insurer desires to authorize Distributor, and Distributor desires,
to serve as principal underwriter for certain variable insurance products
described more fully below;
NOW THEREFORE, in consideration of their mutual promises, Insurer and
Distributor hereby agree as follows:
1. Definitions
a. Contracts -- The class or classes of variable insurance products set
forth on Schedule 1 to this Agreement as in effect at the time this
Agreement is executed, and such other classes of variable insurance
products that may be added to Schedule 1 from time to time in
accordance with Section 12.b of this Agreement, including any riders
or endorsements to such contracts. For this purpose and under this
Agreement generally, a "class of Contracts" shall mean those Contracts
issued by Insurer on the same policy form or forms and covered by the
same Registration Statement.
b. Registration Statement -- At any time that this Agreement is in
effect, the currently effective registration statement filed with the
SEC under the 1933 Act on a prescribed form, or currently effective
post-effective amendment thereto, as the case may be, relating to a
class of Contracts, including financial statements included in, and
all exhibits to, such registration statement or post-effective
amendment. For purposes of Section 9 of this Agreement, the term
"Registration Statement" means any document which
1
<PAGE>
is or at any time was a Registration Statement within the meaning of
this Section 1.b.
c. Prospectus -- The prospectus included within a Registration Statement,
except that, if the most recently filed version of the prospectus
(including any supplements thereto) filed pursuant to Rule 497 under
the 1933 Act subsequent to the date on which a Registration Statement
became effective differs from the prospectus included within such
Registration Statement at the time it became effective, the term
"Prospectus" shall refer to the most recently filed prospectus filed
under Rule 497 under the 1933 Act, from and after the date on which it
shall have been filed. For purposes of Section 9 of this Agreement,
the term "any Prospectus" means any document which is or at any time
was a Prospectus within the meaning of this Section 1.c.
d. (omitted)
e. Separate Account -- A separate account supporting a class or classes
of Contracts are specified on Schedule 1 as in effect at the time this
Agreement is executed, or as it may be amended from time to time in
accordance with Section 12.b of this Agreement.
f. 1933 Act -- The Securities Act of 1933, as amended.
g. 1934 Act -- The Securities Exchange Act of 1934, as amended.
h. 1940 Act -- The Investment Company Act of 1940, as amended.
i. SEC -- The Securities and Exchange Commission.
j. NASD -- The National Association of Securities Dealers, Inc.
k. State Insurance Department -- A department, commission, agency or
other governmental body charged by the legislature of a state or
commonwealth of the United States or the District of Columbia with the
regulation of insurance.
l. State Securities Commission -- A commission, agency or other
governmental body charged by the legislature of a state or
commonwealth of the United States or the District of Columbia with the
regulation of securities.
m. Regulations -- The rules and regulations promulgated by the SEC under
the 1933 Act, the 1934 Act and the 1940 Act as in effect at the time
this Agreement is executed or thereafter promulgated.
2
<PAGE>
n. Selling Agreement -- An agreement among Insurer, Distributor and
Selling Broker-Dealer pursuant to which Selling Broker-Dealer is
authorized to engage in insurance solicitation activities with respect
to the Contracts.
o. Selling Broker-Dealer -- A person registered as a broker-dealer and
licensed as a life insurance agent or associated with a person so
licensed, and authorized to distribute the Contracts pursuant to a
Selling Agreement as provided for in Section 2 of this Agreement.
p. Representative -- When used with reference to Distributor or a Selling
Broker-Dealer, an individual who is an associated person, as that term
is defined in the 1934 Act, thereof.
q. Customer Service Center -- the service center identified in the
Prospectus as the location at which premiums and applications for the
Contracts are accepted
2. Authorization and Appointment
a. Scope of Authority. Insurer hereby authorizes Distributor to serve as
principal underwriter on an agency basis for the Contracts, and
Distributor hereby agrees to act as such. Distributor shall actively
engage in its duties under this Agreement on a continuous basis while
the Registration Statement for the Contracts is effective, consistent
with its business and subject to applicable market and regulatory
conditions and any other restrictions that may become applicable to
its activities. Insurer reserves the right at any time to suspend or
limit the public offering of the Contracts, upon written notice to
Distributor. It is understood that Distributor has no present
intention of engaging in solicitation activities for the Contracts on
a retail basis, and intends to restrict its distribution activities to
wholesaling efforts consisting of authorizing broker-dealers to engage
in retail sales of the Contracts. Insurer shall provide support for
Distributor's wholesaling efforts appropriate for the Contracts,
including wholesaler training, marketing support, sales ideas,
competitive information and other market research, and illustrative
software.
b. Authorization of Selling Broker-Dealers. Distributor will authorize
Selling Broker-Dealers to solicit applications and premiums for the
Contracts on a retail basis directly from purchasers, subject to the
provisions of this Agreement. Such authority shall be granted pursuant
to Selling Agreements in the form attached hereto, with such
modifications as Insurer and Distributor may agree upon from time to
time. Distributor shall provide information and marketing assistance
to Selling Broker-Dealers. Insurer alone shall be responsible for
appointing Selling Broker-Dealers
3
<PAGE>
and all persons selling the Contracts on their behalf as agents of
Insurer in accordance with applicable state insurance law and for
communicating to all Selling Broker-Dealers and their personnel, all
policies and procedures applicable to them as such appointed agents of
Insurer.
c. Limits on Authority. Distributor shall act as an independent
contractor and nothing herein contained shall constitute Distributor
or its agents, officers or employees as agents, officers or employees
of Insurer by virtue of their activities in connection with the sale
of the Contracts hereunder. Distributor and its Representatives shall
not have authority, on behalf of Insurer: to make, alter or discharge
any Contract or other insurance policy or annuity contract entered
into pursuant to a Contract; to waive any Contract forfeiture
provision; to extend the time of paying any premium; or to receive any
monies or premiums (except for the sole purpose of forwarding monies
or premiums to Insurer). Distributor shall not expend, nor contract
for the expenditure of, the funds of Insurer. Distributor shall not
possess or exercise any authority on behalf of Insurer other than that
expressly conferred on Distributor by this Agreement. Neither
Distributor nor any Distributor Representative shall give any
information or make any representation in regard to the Contracts in
connection with the offer or sale of such Contracts that is not in
accordance with the Prospectus or statement of additional information
for such Contracts, or in the then-currently effective prospectus or
statement of additional information for an investment vehicle for the
Contracts, or in current advertising materials for such class of
Contracts authorized by Insurer.
d. Collection of premiums. Given the scope of Distributor's activities
hereunder, it is not anticipated that Distributor would collect or
receive premiums for the Contracts, and shall not be required to do
so. However, to the extent that Distributor or a Distributor
Representative receives a premium, such premium shall be remitted
promptly, and in any event not later than two business days, in full,
together with any applications, forms and any other required
documentation, to the Customer Service Center. Checks or money orders
in payment of premiums shall be drawn to the order of "First Citicorp
Life Insurance Company." If any premium is held at any time by
Distributor, Distributor shall hold such premium in a fiduciary
capacity until remitted. Distributor acknowledges that all such
premiums, whether by check, money order or wire, shall be the property
of Insurer. Distributor acknowledges that Insurer shall have the
unconditional right to reject, in whole or in part, any application or
premium.
3. Distributor's Representations, Warranties and Undertakings. Distributor
represents and warrants to Insurer that Distributor is registered as a
broker-dealer under the 1934 Act, is a member of the NASD, and is duly
registered under
4
<PAGE>
applicable state securities laws, and that Distributor is in compliance in
all material respects with the requirements of the 1934 Act, application
requirements of the 1940 Act, the NASD Rules of Fair Practice and state
securities laws applicable to Distributor as a registered broker-dealer.
Distributor further represents and warrants that any Distributor
Representatives required to be registered with the NASD and any state
securities commission as representatives or principals of Distributor are
so registered. Distributor shall continue to comply and shall undertake to
cause its Representatives to comply, in all material respects, during the
term of this Agreement, with applicable requirements of the 1934 Act, the
1940 Act (including, without limitation, Section 9(a) of the 1940 Act and
Rule 17j-1 thereunder), the NASD Rules of Fair Practice and any state
securities laws.
4. Insurer's Representations and Warranties. Insurer represents and warrants
to Distributor that:
a. Insurer has filed with the SEC all statements, notices, and other
documents required for registration of the Contracts and the Separate
Account under the provisions of the 1933 Act and the 1940 Act and
Regulations thereunder, and has obtained all necessary or customary
orders of exemption or approval from the SEC to permit the
distribution of the Contracts pursuant to this Agreement and to permit
the establishment and operation of the Separate Account as
contemplated in the Registration Statement and in conformity with the
1940 Act and Regulations thereunder, and, to the extent required, all
such orders apply to Distributor, as principal underwriter for the
Contracts and for the Separate Account.
b. The Registration Statement has been declared effective by the SEC or
has become effective in accordance with applicable Regulations.
Insurer has not received any notice from the SEC with respect to the
Registration Statement pursuant to Section 8(e) of the 1940 Act, and
no stop order under the 1933 Act has been issued, and no proceeding
therefor has been instituted or threatened by the SEC.
c. The Registration Statement and related Prospectus complies in all
material respects with applicable provisions of the 1933 Act and the
1940 Act and Regulations thereunder, and neither the Registration
Statement nor the Prospectus contains an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
light of the circumstances in which they were made; provided, however,
that none of the representations and warranties in this Section 4
shall apply to statements or omissions from a Registration Statement
or Prospectus made in reliance upon and in
5
<PAGE>
conformity with information furnished to Insurer in writing by
Distributor expressly for use therein.
d. The Contracts have been duly authorized by Insurer and conform to the
descriptions thereof in the Registration Statement and the related
Prospectus and, when issued as contemplated by the Registration
Statement and related Prospectus, shall constitute legal, validly
issued and binding obligations of Insurer in accordance with their
terms.
e. The Separate Account has been duly established by Insurer and conforms
to the description thereof in the Registration Statement and related
Prospectus.
f. The form of the Contracts and the Separate Account each have been duly
approved to the extent required by the New York Insurance Department
and by the state insurance departments in every state listed in
Schedule 2.
g. The Contacts qualify as annuity contracts under applicable federal tax
laws.
5. Insurer's Compliance with Applicable Law
a. Securities Law Compliance. Insurer shall be responsible for preparing
the Prospectuses and Registration Statements and filing them with the
SEC and State Securities Commissions, to the extent required. Insurer
shall use its best efforts to maintain the registration of the
Contracts and the Separate Account with the SEC and any applicable
state securities commission, such efforts to include, without
limitation, best efforts to prevent a stop order from being issued by
the SEC or any such state securities commission or, if a stop order
has been issued, to cause such stop order to be withdrawn. Insurer
shall take all action required to cause the Separate Account to
continue to comply, in all material respects, with the provisions of
the 1940 Act and regulations and exceptions thereunder applicable to
the Separate Account as a registered investment company under the 1940
Act. Insurer shall not deduct any amounts from the assets of the
Separate Account or enter into a transaction or arrangement involving
the Contracts or the Separate Account or cause the Separate Account to
enter into any such transaction or arrangement without obtaining any
necessary or customary approvals or exemptions from the SEC or
no-action assurance from the SEC staff, and without ensuring that such
approval, exemption or assurance applies to the Distributor as the
principal underwriter for the Separate Account and the Contracts.
Insurer shall timely file each post-effective amendment to a
Registration Statement, Prospectus, statement of additional
information, Rule 24f-2
6
<PAGE>
notice, annual report on Form N-SAR, and all other reports, notices,
statements, and amendments required to be filed by or for Insurer
and/or the Separate Account with the SEC under the 1933 Act, the 1934
Act and/or the 1940 Act or any applicable regulations, and shall pay
all filing or registration fees payable in connection therewith. To
the extent there occurs an event or development (including, without
limitation, a change of applicable law, regulation or administrative
interpretation) warranting an amendment to either the Registration
Statement or supplement to the Prospectus, Insurer shall endeavor to
prepare, subject to the Distributor's right to review such material
provided in Section 6(b), and file such amendment or supplement with
the SEC with all deliberate speed.
b. State Insurance Law Compliance. Insurer shall be responsible for
preparing the Contract forms and filing them with applicable state
insurance departments and shall obtain and maintain approvals of the
Contacts and the Separate Account from state insurance departments, to
the extent required. Insurer shall take all action required to cause
the Contracts to continue to comply, in all material respects under
applicable state insurance laws. Insurer shall file promotional, sales
and advertising material for the Contracts and Separate Account, to
the extent required, with state insurance departments. Attached hereto
as Schedule 2 is a list of all states in which approvals of the
Contracts have been obtained and/or in which the Contracts are cleared
for sale as of the date of this Agreement. Insurer shall update this
list from time to time to reflect changes therein, and shall inform
Selling Broker-Dealers of such changes, as appropriate.
c. Federal Tax Law Compliance. Insurer shall take all action required to
cause the Contracts to continue to comply, in all material respects,
as annuity contracts or life insurance contracts, as applicable, under
applicable federal tax laws.
6. Additional Obligations of Insurer
a. Issuance and Administration of Contracts. Insurer shall be responsible
for issuing the Contracts and administering the Contracts and the
Separate Account, provided, however, that Citicorp Investments
Services, Inc. shall have full responsibility for the securities
activities of all persons employed by the Insurer, engaged directly or
indirectly in the Contract operations, and for the training,
supervision and control of such persons to the extent of such
activities.
b. Provision of Copies. If so requested by Distributor, Insurer shall
provide Distributor with a preliminary draft of any amendment to a
Registration
7
<PAGE>
Statement, supplement to the Prospectus, exemptive application or
no-action request to be filed with the SEC in connection with the
Contracts and/or the Separate Account. Insurer shall furnish
Distributor with copies of any such material or amendment thereto, as
filed with the SEC, promptly after the filing thereof, and any SEC
communication or order with respect thereto, promptly after receipt
thereof. Insurer shall maintain and keep on file in its principal
executive office any file memoranda or any supplemental materials
referred to in any such Registration Statement, Prospectus, exemptive
application and no-action request and shall, as necessary, amend such
memoranda or materials and shall provide or otherwise make available
copies of such memoranda and materials to the Distributor.
c. Solicitation Materials. Insurer shall be responsible for furnishing
Distributor and Selling Broker-Dealer with such applications,
Prospectuses and other materials for use by Distributor and any
Selling Broker-Dealers in their activities with respect to the
Contracts. Insurer shall notify Distributor and any Selling
Broker-Dealers of those states or jurisdictions which require delivery
of a statement of additional information with a prospectus to a
prospective purchaser.
d. Due Diligence. Insurer shall provide the Distributor access to such
records, officers and employees of Insurer at reasonable time as is
necessary to enable the Distributor to fulfill its obligation, as the
underwriter under the 1933 Act of the Contracts and as principal
underwriter for the Separate Account under the 1940 Act, to perform
due diligence and to use reasonable care.
e. Confirmations and 1934 Act Compliance. Insurer shall be responsible
for producing and sending confirmations to each applicant for and
purchaser of a Contract, in accordance with Rule 10b-10 under the 1934
Act, that confirm acceptance of premiums and such other transactions
as are required to be confirmed by Rule 10b-10 or administrative
interpretations thereunder. Insurer shall maintain and preserve books
and records with respect to the Contracts (including, without
limitation, the confirmations referred to in the preceding sentence)
required by Rules 17a-3 and 17a-4 under the 1934 Act to the extent
applicable to Distributor. Insurer shall maintain and hold all such
books and records on behalf of and as agent for Distributor whose
property they are and shall remain, and acknowledges that such books
and records are at all times subject to inspection by the SEC in
accordance with Section 17(a) of the 1934 Act.
8
<PAGE>
7. Notification of Developments and Customer Complaints
a. Insurer and Distributor shall notify the other in writing upon being
apprised of the institution of any proceeding, investigation or
hearing involving the offer or sale of the Contracts. Distributor and
Insurer shall cooperate fully in any securities or insurance
regulatory investigation or proceeding or judicial proceeding arising
in connection with the offering, sale or distribution of the Contracts
distributed under this Agreement.
b. Insurer and Distributor shall notify the other upon the happening of
any material event, if known by such notifying party, which makes
untrue any material statement made in the Registration Statement or
Prospectus or which requires the making of a change therein in order
to make any statement made therein not materially misleading. In
addition, Insurer shall notify the Distributor immediately or in any
event as soon as possible under the circumstances of the following:
(1) If Insurer becomes aware that any Prospectus, sales literature or
other printed matter or material used in marketing and
distributing any Contract contains an untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
(2) Of any request by the SEC for any amendment to a Registration
Statement, for any supplement to the Prospectus, or for
additional information;
(3) Of the issuance by the SEC of any stop order with respect to a
Registration Statement or any amendment thereto, or the
initiation of any proceedings for that purpose or for any other
purpose relating to the registration and/or offering of the
Contracts;
(4) Of any event of the Contracts' or the Separate Account's
noncompliance with the applicable requirements of federal tax law
or regulations, rulings, or interpretations thereunder that could
jeopardize the Contracts' status as an annuity.
(5) Of any change in applicable insurance laws or regulations of any
state materially adversely affecting the insurance status of the
Contracts or Distributor's obligations with respect to the
distribution of the Contracts.
9
<PAGE>
(6) Of any loss or suspension of the approval of the Contracts or
distribution thereof by a State Securities Commission or State
Insurance Department, any loss or suspension of Insurer's
certificate of authority to do business or to issue variable
insurance products in any state, or of the lapse or termination
of the Contracts' or the Separate Account's registration,
approval or clearance in any state.
c. Customer Complaints. Insurer and Distributor shall notify each other
promptly of any substantive customer complaint received by either
party with respect to Insurer, Distributor, any Distributor
Representative or employee or with respect to any Contract. The
parties hereto shall cooperate in investigating such complaint and any
response by either party to such complaint shall be sent to the other
party for written approval not less than five business days prior to
its being sent to the customer or any regulatory authority, except
that if a more prompt response is required, the proposed response
shall be communicated by telephone or facsimile. In any event, neither
party shall release any such response without the other party's prior
written approval.
8. Compensation and Expenses
a. Insurer shall pay Distributor for its services in accordance with
Schedule 3 hereto. Insurer shall pay compensation payable under the
Selling Agreements directly to Selling Broker-Dealers or their
designees. Distributor shall not be entitled to any compensation based
on sales of the Contracts pursuant to Selling Agreements.
b. Insurer shall be responsible for all expenses in connection with:
(1) the preparation and filing of each Registration Statement
(including each pre-effective and post-effective amendment
thereto) and the preparation and filing of each Prospectus
(including any preliminary and each definitive Prospectus);
(2) the preparation, underwriting, issuance and administration of the
Contracts;
(3) any registration, qualification or approval or other filing of
the Contracts or Contract forms required under the securities or
insurance laws of the states in which the Contracts will be
offered.
(4) all registration fees for the Contracts payable to the SEC; and
10
<PAGE>
(5) the printing of all promotional materials, definitive
Prospectuses for the Contracts and any supplements thereto for
distribution to existing Contractowners.
c. Distributor shall be responsible for any expenses incurred by
Distributor or its Representatives or employees in carrying out the
obligations of Distributor hereunder.
9. Indemnification
a. By Insurer. Insurer shall indemnify and hold harmless Distributor and
each person who controls or is associated with Distributor within the
meaning of such terms under the federal securities laws, and any
officer, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of,
any action, suit or proceeding or any claim asserted), to which
Distributor and/or any such person may become subject, under any
statute or regulation, any NASD rule or interpretation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities:
(1) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein
or necessary in order to make the statements therein not
misleading, in light of the circumstances in which they were
made, contained in any (i) Registration Statement or in any
Prospectus or (ii) blue-sky application or other document
executed by Insurer specifically for the purpose of qualifying
any or all of the Contracts for sale under the securities laws of
any jurisdiction; provided that Insurer shall not be liable in
any such case to the extent that 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
reliance upon information furnished in writing to Insurer by
Distributor specifically for use in the preparation of any such
Registration Statement or any such blue-sky application or any
amendment thereof or supplement thereto;
(2) result from any material breach by Insurer of any provision of
this Agreement.
This indemnification shall be in addition to any liability that
Insurer may otherwise have; provided, however, that no person
shall be entitled to
11
<PAGE>
indemnification pursuant to this provision if such loss, claim,
damage or liability is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard of duty by the person
seeking indemnification.
b. By Distributor. Distributor shall indemnify and hold harmless Insurer
and each person who controls or is associated with Insurer within the
meaning of such terms under the federal securities laws, and any
officer, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of,
any action, suit or proceeding or any claim asserted), to which
Insurer and/or any such person may become subject under any statute or
regulation, any NASD rule or interpretation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(1) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact
required to be stated therein or necessary in order
to make the statements therein not misleading, in
light of the circumstances in which they were made,
contained in any (i) Registration Statement or in any
Prospectus or (ii) blue-sky application or other
document executed by Insurer specifically for the
purpose of qualifying any or all of the Contracts for
sale under the securities laws of any jurisdiction;
in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue
statement or omission or alleged omission was made in
reliance upon information furnished in writing by
Distributor to Insurer specifically for use in the
preparation of any such Registration Statement or any
such blue-sky application or any amendment thereof or
supplement thereto;
(2) result because of any use by Distributor or any
Distributor Representative of promotional, sales or
advertising material not authorized by Insurer or any
verbal or written misrepresentations by Distributor
or any Distributor Representative or any unlawful
sales practices concerning the Contracts by
Distributor or any Distributor Representative under
federal securities laws or NASD regulations; or
(3) result from any material breach by Distributor of any
provision of this Agreement.
This indemnification shall be in addition to any liability
that Distributor may otherwise have; provided, however, that
no person shall be entitled to
12
<PAGE>
indemnification pursuant to this provision if such loss, claim, damage
or liability is due to the willful misfeasance, bad faith, gross
negligence or reckless disregard of duty by the person seeking
indemnification.
c. General. Promptly after receipt by a party entitled to indemnification
("indemnified person") under this Section 9 of notice of the
commencement of any action as to which a claim will be made against
any person obligated to provide indemnification under this Section 9
("indemnifying party"), such indemnified person shall notify the
indemnifying party in writing of the commencement thereof as soon as
practicable thereafter, but failure to so notify the indemnifying
party shall not relieve the indemnifying party from any liability
which it may have to the indemnified person otherwise than on account
of this Section 9. The indemnifying party will be entitled to
participate in the defense of the indemnified person but such
participation will not relieve such indemnifying party of the
obligation to reimburse the indemnified person for reasonable legal
and other expenses incurred by such indemnified person in defending
himself or itself.
The indemnification provisions contained in this Section 9 shall
remain operative in full force and effect, regardless of any
termination of this Agreement. A successor by law of Distributor or
Insurer, as the case may be, shall be entitled to the benefits of the
indemnification provisions contained in this Section 9.
10. Term and Termination. This Agreement shall remain in effect until it is
terminated. This Agreement shall terminate automatically if it is assigned
by a party without the prior written consent of the other party. This
Agreement may be terminated at any time for any reason by either party upon
six months' prior written notice to the other party, without payment of any
penalty. (The term "assigned" shall not include any transaction not
involving an actual change in management or control.) This Agreement may be
terminated at the option of either party to this Agreement upon the other
party's material breach of any provision of this Agreement or of any
representation or warranty made in this Agreement, unless such breach has
been cured within 10 days after receipt by the breaching party of notice of
breach from the non-breaching party. Upon termination of this Agreement all
authorizations, rights and obligations shall cease except the obligation to
settle accounts hereunder.
13
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11. Notices. All notices hereunder are to be made in writing and shall be
given:
if to Insurer, to:
Alan F. Liebowitz, Esquire
First Citicorp Life Insurance Company
One Court Square - 25th Floor
Long Island City, New York 11120
if to Distributor, to:
James B. Craver, Esq.
The Landmark Funds Broker-Dealer Services, Inc.
St. James Avenue, Suite 900
Boston, Massachusetts 02116
or such other address as such party may hereafter specify in writing. Each
such notice to a party shall be either hand delivered or transmitted by
registered or certified United States mail with return receipt requested,
or by overnight mail by a nationally recognized courier, and shall be
effective upon delivery.
12. General
a. Binding Effect. This Agreement shall be binding on and shall inure to
the benefit of the respective successors and assigns of the parties
hereto provided that neither party shall assign this Agreement or any
rights or obligations herunder without the prior written consent of
the other party in accordance with Section 10 of this Agreement.
b. Amendments. The parties to this Agreement may amend Schedule 1 to this
Agreement from time to time to reflect additions of any class of
Contracts and Separate Accounts. The provisions of this Agreement
shall be equally applicable to each such class of Contracts and each
Separate Account that may be added to the Schedule and the related
Registration Statement and Prospectus, unless the context otherwise
requires. Insurer may amend Schedule 2 unilaterally, with prompt
notice to Distributor, from time to time. Any other change in the
terms or provisions of this Agreement shall be by written agreement
between Insurer and Distributor.
c. Rights, Remedies, etc. are Cumulative. The rights, remedies and
obligations contained in this Agreement are cumulative and are in
addition to any and all rights, remedies and obligations, at law or in
equity, which the parties hereto are entitled to under state and
federal laws. Failure of either party to insist upon strict compliance
with any of the conditions of
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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, or
shall constitute, a waiver of any other provisions, whether or not
similar, nor shall any waiver constitute a continuing waiver.
d. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach hereof, shall be settled by arbitration
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
e. Interpretation; Jurisdiction. This Agreement constitutes the whole
agreement between the parties hereto with respect tot he subject
matter hereof, and supersedes all prior oral or written
understandings, agreements or negotiations between the parties with
respect to such subject matter. No prior writings by or between the
parties with respect to the subject matter hereof shall be used by
either party in connection with the interpretation of any provision of
this Agreement. This Agreement shall be construed and its provisions
interpreted under and in accordance with the internal laws of the
state of New York without giving effect to principles of conflict of
laws.
f. Severability. This is a severable Agreement. In the event that any
provision of this Agreement would require a party to take action
prohibited by applicable federal or state law or prohibit a party from
taking action required by applicable federal or state law, then it is
the intention of the parties hereto that such provision shall be
enforced to the extent permitted under the law, and, in any event,
that all other provisions of this Agreement shall remain valid and
duly enforceable as if the provision at issue had never been a part
hereof.
g. Section and Other Headings. The headings 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.
h. Counterparts. This Agreement may be executed in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
i. Regulation. This Agreement shall be subject to the provisions of the
1933 Act, 1934 Act and 1940 Act and the Regulations and the rules and
regulations of the NASD, from time to time in effect, including such
15
<PAGE>
exemptions from the 1940 Act as the SEC may grant, and the terms
hereof shall be interpreted and construed in accordance therewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by such authorized officers on the date specified
below.
FIRST CITICORP LIFE INSURANCE COMPANY
By:
Name:
Title:
THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC.
By:
Name:
Title:
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SCHEDULE 1
CONTRACT FORMS AND SEPARATE ACCOUNTS
======================================= ====================================
CONTRACT FORM SEPARATE ACCOUNT
======================================= ====================================
17
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SCHEDULE 2
======================================================================
STATE APPROVALS
======================================================================
18
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SCHEDULE 3
======================================================================
COMPENSATION
======================================================================
19
EXHIBIT 4(a)
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
================================================================================
Home Office: One Court Square, 25th Floor
Long Island City, NY 11120
If this contract is in force and the Annuitant is living, we will begin payment
of the annuity benefit on the Annuity Income Date, subject to the terms and
conditions on the following pages. We will pay the Death Benefit upon receipt of
proof of your death prior to the Annuity Income Date.
This contract is issued in consideration of the application and payment of the
initial premium.
RIGHT TO EXAMINE CONTRACT. You may cancel this contract by delivering or mailing
a written notice or sending a telegram to us at One Court Square, 25th Floor,
Long Island City, NY 11120 and returning the contract before midnight of the
tenth day after the date you receive it. Notice and return of the contract by
mail are effective on being postmarked, properly addressed and postage prepaid.
If you exercise this right, we will promptly return to you the Contract Value as
of the date the contract is returned or delivered to us at our Home Office. You
bear the investment risk prior to the date of cancellation. No Surrender Charges
or Annual Contract Fees will be assessed if you exercise this right but the
daily Administrative and Mortality and Expense Risk Charges will be deducted.
At any time, we will also provide information regarding contract benefits and
provisions within a reasonable time after receiving your written request.
/s/Alan F. Liebowitz /s/Steven J. Freiburg
Secretary President
This is a legal contract between you and us. PLEASE READ YOUR CONTRACT
CAREFULLY.
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY CONTRACT
NON-PARTICIPATING
ALL VALUES AND PAYMENTS PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF A SUB-ACCOUNT, ARE VARIABLE, MAY INCREASE OR DECREASE IN
ACCORDANCE WITH FLUCTUATIONS IN THE NET INVESTMENT FACTOR, AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT. THERE IS NO MINIMUM GUARANTEED CONTRACT
VALUE EXCEPT FOR AMOUNTS IN THE FIXED ACCOUNT. VARIABLE PROVISIONS ARE DETAILED
IN THE CONTRACT.
The smallest annual rate of investment return which must be earned on the assets
of the Separate Account so that the value of variable annuity payments will not
decrease is 3%. There is a 1.40% annual charge made against the assets of the
Separate Account plus an Annual Contract Fee of $30.
<PAGE>
TABLE OF CONTENTS
PAGE
DEFINITIONS 4
PREMIUM PROVISIONS
Premium Payment 5
Allocation of Premium 5
Transfers 5
Dollar Cost Averaging (Automatic Transfers) 6
CONTRACT VALUE
Account Valuation 6
Interest 7
Accumulation Unit Value 7
Net Investment Factor 7
Mortality and Expense Risk Charge 7
Annuity Unit Value 7
Annual Contract Fee 7
Administration Charge 8
Annual Report 8
SURRENDER AND WITHDRAWALS
Surrender 8
Surrender Value 8
Surrender Charges 8
Withdrawals 8
Systematic Withdrawals 9
Deferral of Surrenders and Withdrawals 9
DEATH BENEFIT
If You Die Prior to the Annuity Income Date 9
Death Benefit Amount 9
Beneficiary 10
Annuitant Death Prior to the Annuity Income Date 10
GENERAL PROVISIONS
Entire Contract 10
Modifications 10
Incontestability 11
Owner 11
Misstatement of Age or Sex 11
Evidence of Survival 11
Claims of Creditors 11
Assignment 11
Minimum Values 11
Non Participating 11
ANNUITY BENEFIT
Annuity Income Date 11
Annuity Payment Amount 12
Variable Annuity 12
Fixed Dollar Annuity 12
Annuity Income Options 12
Table 1 13
Table 2 14
Table 3 14
Page 2
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
================================================================================
Home Office: One Court Square, 25th Floor
Long Island City, NY 11120
Contract Schedule
TABLE OF SURRENDER CHARGES
YEARS SINCE PERCENTAGE OF
PREMIUM PAID PREMIUM WITHDRAWN
-----------------------------------------------
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5+ 0
(ATTACH COPY OF APPLICATION HERE)
CONTRACT DATE: CONTRACT NUMBER:
GUARANTEED MINIMUM FIXED INITIAL FIXED ACCOUNT
ACCOUNT INTEREST RATE: 3.00% ANNUALLY INTEREST RATE: % ANNUALLY
ANNUITY INCOME DATE: ANNUAL CONTRACT FEE: $30.00
SEPARATE ACCOUNT: FIRST CITICORP LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
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DEFINITIONS
In this contract:
"Account" means any of the Sub-Accounts or the Fixed Account.
An "Accumulation Unit" is an accounting device used to calculate the value of a
Sub-Account before annuity payments begin.
"Age" means age last birthday.
The "Annuitant" is the person upon whose life annuity benefits are based and to
whom payments are made under this contract, commencing on the Annuity Income
Date. The Annuitant is named by you. The Annuitant must be a natural person.
"Annuity Income Date" means the date on which annuity payments are to begin. The
first annuity payment will be calculated and paid as of this date.
An "Annuity Unit" is an accounting device used to calculate the value of
variable annuity payments.
"Attained age" means age on the prior Contract Anniversary.
"Beneficiary" means the person who becomes the Owner of this contract upon any
Owner's death prior to the Annuity Income Date and who may receive the Death
Benefit. The Contingent Beneficiary is the person who will become the
Beneficiary if the named Beneficiary is not living. An Irrevocable Beneficiary
is one whose consent is necessary to change Beneficiaries and exercise certain
other rights under this contract.
"Contract Anniversary" means the same date each year after the Contract Date.
"Contract Date" means the date shown in the Contract Schedule. Contract Years
and Contract Months are measured from the Contract Date. The Contract Date is
the date the first Account is established under this contract.
"Contract Value" means the sum of all Sub-Account values plus the value of the
Fixed Account.
"Dollar Cost Averaging" is a series of systematic transfers from the Fixed
Account or the Money Market Sub-Account to any available Account(s).
The "Fixed Account" is a part of our General Account. Any or all of the Contract
Value may be allocated to the Fixed Account.
"Fund(s)" means any of the Funds specified in the Application attached to this
contract at issue of as may be later offered under this contract.
"General Account" means assets other than those allocated to a Separate Account.
"In writing" and "written request" means in a written form satisfactory to us
and received by us at our Home Office. We have the right to require a signature
guarantee from an institution qualified to give such a guarantee before acting
on any written request.
The "Net Asset Value per Share" is the share value of any Fund as of any
Valuation Day allowing for investment performance and decreased by any expenses
and fees assessed against that Fund.
The "Net Investment Factor" is an index used to measure the investment
performance of a Sub-Account from one Valuation Period to the next.
"Premium Tax(es)" means taxes charged by a state or municipality against premium
payments received by us. We may deduct the amount of such tax from the Contract
Value on: 1) the date the contract is surrendered; 2) on the Annuity Income
Date; or 3) at such earlier date as they become due and payable.
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"Separate Account" means the account established by us to hold assets funding
the variable benefits for this and other contracts of the same type. The
Separate Account for this contract is identified in the Contract Schedule.
Assets of the Separate Account equal to the reserves and other contract
liabilities with respect to such Account are separate from our other assets and
are not chargeable with liabilities arising out of any other business we may
conduct.
A "Sub-Account" is a subdivision of the Separate Account. Sub-Accounts are used
to determine the allocation of the Contract Value between the Funds.
The "Surrender Value" is the value received if the contract is surrendered, as
described in the "Surrender and Withdrawal" provisions.
A "Valuation Day" is any day both we and the New York Stock Exchange are open
for business. Valuation Periods are measured from the close of regular trading
on the New York Stock Exchange on any Valuation Day and ending at the close of
regular trading on the next succeeding Valuation Day.
"We," "Our" and "Us" mean First Citicorp Life Insurance Company.
"You" and "Your" mean the Owner named in the Contract Schedule. In the event of
joint ownership, you and your apply equally to either Joint Owner unless the
context clearly indicates otherwise.
PREMIUM PROVISIONS
PREMIUM PAYMENT: The initial premium for this contract is due on the date this
contract is issued. The initial premium is shown in the Contract Schedule.
Subsequent premium payments may be made at such time and in such amounts as you
determine. However, we reserve the right to refuse premium payments of less than
$500 ($100 for "Qualified Plans" as defined under the I.R.S. Code). In addition,
our approval is required for any subsequent premium payment(s) that exceed
$1,000,000 per contract year. All premium payments are payable to us in U.S.
Funds. This contract will not be in default if no subsequent premium payments
are made.
ALLOCATION OF PREMIUM: You must specify the portion of each premium payment to
be allocated to each Account. Your initial specifications are shown in the
application.
You may change the premium allocation at any time by notifying us in writing. We
may require allocations to any Account to be at least the greater of $100 or 10%
of any premium payment.
TRANSFERS: Prior to the Annuity Income Date and upon written notice to us, you
may transfer the value (or any portion thereof) held in any Account(s) into any
other Account(s) subject to the following limitations:
1. We reserve the right to charge a $25 Transfer Fee for each transfer in
excess of 12 in any Contract Year. Any Transfer Fees will be deducted
from the Account from which the transfer is made. The transfer of
value from an Account is deemed to be one transfer, regardless of the
number of Accounts into which the value is transferred;
2. The maximum amount transferable from the Fixed Account during any
Contract Year is the greater of:
A. 25% of the Fixed Account value as of the later of the Contract
Date or last Contract Anniversary;
B. The Fixed Account value attributable to interest; or
C. The greatest of any transfer from the Fixed Account during the
prior Contract Year; and
3. We reserve the right to defer transfers from the Fixed Account for up
to 6 months following the date of request.
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If the value remaining in any Account after a transfer is made is less than
$100, we have the right to transfer the entire amount instead of the requested
amount. In the absence of any other directions, such transfer will be allocated
in the same proportion as the transfer request resulting in this action.
DOLLAR COST AVERAGING (AUTOMATIC TRANSFERS): If you elect in writing, we will
automatically transfer values from the Fixed Account or Money Market Sub-Account
(but not both at any one time) as specified by you, to any of the Sub-Accounts
on a monthly basis, subject to the following conditions:
1. The amount of each transfer to a Sub-Account must be at least $100;
2. The amount of such transfers from the Money Market Sub-Account must be
equal to or less than 1/6 of the Account value when this option is
elected; and
3. The amount of such transfers from the Fixed Account must be equal to
or less than 1/48 of the Account value when this option is elected.
Automatic Transfers are not subject to any Transfer Fee. However, they will be
treated as any other transfer for purposes of determining the number of
transfers in any Contract Year. You may discontinue or modify the option at any
time upon at least 6 days written notice to us. We may discontinue the Automatic
Transfer privilege upon at least 30 days notice to you but such action will not
impact this contract while this option is in effect. However, we will
immediately discontinue the Automatic Transfer process if the balances of the
Account(s) from which the transfers are being made are inadequate to execute the
requested transfers.
CONTRACT VALUE
ACCOUNT VALUATION: Net premium payments are applied to increase the value of the
Fixed Account and acquire Accumulation Units of each Sub-Account. On any date,
the value of the Fixed Account shall be equal to:
1. The dollar value of each net premium payment or transfer
allocated to the Fixed Account; plus
2. Any interest earned; minus
3. The dollar value of any transfers, withdrawals, charges and any
applicable Premium Taxes deducted from the Fixed Account.
On any date, the value of the Separate Account shall be equal to the sum of the
values of each Sub-Account. The value of each Sub-Account on any date is equal
to:
1. The number of Accumulation Units in the Sub-Account; multiplied
by
2. The applicable Sub Account's Accumulation Unit value as of that
date.
The number of Accumulation Units in each Sub-Account is increased by net premium
payments and transfers to that Sub-Account and decreased by withdrawals and
transfers from that Sub-Account as well as any applicable charges.
The number of Accumulation Units credited or subtracted is determined by
dividing the dollar value of each transaction applicable to each Sub-Account by
the dollar value of one Accumulation Unit in that Sub-Account. For premium
payments, Accumulation Unit values will be determined as of the end of the
Valuation Day on or first following our receipt of the premium payment. For all
other transactions, the Accumulation Unit value will be determined as of the
date of the transaction.
The Accumulation Unit value in any Sub-Account may increase or decrease from day
to day as described below. The number of Accumulation Units will not be affected
by a subsequent change in the Accumulation Unit value.
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<PAGE>
INTEREST: Beginning on the date this contract was issued, the initial net
premium allocated to the Fixed Account will earn interest for a period of one
year at the Initial Fixed Account Interest Rate shown in the Contract Schedule.
We may declare different initial interest rates for each subsequent premium
payment or transfer into the Fixed Account. Any such rate applicable to any
specific premium payment or transfer is guaranteed for one year. Thereafter, the
interest rate earned will be the applicable Current Fixed Account Interest Rate.
The Current Fixed Account Interest Rate is applied to the Fixed Account Value as
well as premium payments or transfers into the Fixed Account after the initial
one year period. We may change the Current Fixed Account Interest Rate from time
to time but not more often than once every 12 months. The Initial Fixed Account
Interest Rate and the Current Fixed Account Interest Rate will never be less
than the Guaranteed Minimum Fixed Account Interest Rate shown in the Contract
Schedule. All interest rates are annual rates. Interest is credited daily.
ACCUMULATION UNIT VALUE: The value of an Accumulation Unit in each Sub-Account
reflects the investment experience of the Fund underlying that Sub-Account. At
the end of each Valuation Day, Accumulation Unit values for each Sub-Account are
determined by multiplying that Sub-Account's Accumulation Unit value on the
preceding Valuation Day by the Net Investment Factor for that Sub-Account for
the Valuation Day then ended. The value of each Sub-Account is then determined
by multiplying the number of Accumulation Units in that Sub-Account by the
Accumulation Unit value.
NET INVESTMENT FACTOR: The Net Investment Factor for each Sub-Account for any
Valuation Period is equal to "a" divided by "b" minus "c" where:
"a" is the net asset value per share of the corresponding Fund at the
end of the Valuation Period plus the per share amount of any declared
and unpaid dividends or capital gains accruing to that Fund plus (or
minus) a per share credit (or charge) for any taxes resulting from the
investment operations of the Sub-Account;
"b" is the Fund's net asset value per share at the beginning of the
Valuation Period; and
"c" is a factor representing the daily Mortality and Expense Risk
Charge and the Administration Charge deducted from the Sub-Account.
Such factor is equal to 1.40% per annum of the average daily net asset
value of the Sub-Account.
MORTALITY AND EXPENSE RISK CHARGE: The Mortality and Expense Risk Charge is a
daily charge made to compensate us for assuming the mortality and expense risks
under this contract. It is equivalent to 1.25% per annum of the average daily
net asset value held in each Sub-Account.
ANNUITY UNIT VALUE: The value of an Annuity Unit in each Sub-Account was
arbitrarily fixed at $1.00 on the date Fund shares were originally purchased. On
any Valuation Day thereafter, that Sub-Account's Annuity Unit value is equal to
the Annuity Unit value on the preceding Valuation Day multiplied by the product
of "a" times "b" where:
"a" is the Sub-Account's Net Investment Factor on the Valuation Day
the Annuity Unit value is being calculated; and
"b" is 0.999919 (which is the daily factor that will produce the 3.0%
annual investment rate assumed in the Annuity Tables), adjusted for
the number of days since the previous Valuation Day.
ANNUAL CONTRACT FEE: On the last day of each Contract Year prior to the Annuity
Income Date, or the date this contract is surrendered, if earlier, an Annual
Contract Fee will be deducted from the Contract Value. The fee will be charged
by reducing the value of all active Accounts on a pro-rata basis. The Annual
Contract Fee is shown in the Contract Schedule.
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With respect to each Sub Account, the fee will be charged in the form of
Accumulation Units. The number of Accumulation Units deducted from each
Sub-Account will be determined by dividing the pro-rata portion of the fee
applicable to that Sub-Account by the Accumulation Unit value of that
Sub-Account on the date the fee is assessed.
The Annual Contract Fee will be waived in its entirety if, on the date it would
otherwise be due, the Contract Value is at least $25,000.
ADMINISTRATION CHARGE: Our charge for administering this contract is equivalent
to 0.15% per annum of the average daily net asset value held in each
Sub-Account. This charge is calculated and deducted on a daily basis.
ANNUAL REPORT: We will send you a report at least once each year stating the
Contract Value, Sub-Account values and Fixed Account value, as well as your
current premium allocation directions. We will also provide you with shareholder
reports of each Fund as well as any other notices, reports or documents as
required by law.
SURRENDER AND WITHDRAWALS
SURRENDER: You may surrender this contract while it is in force for its
Surrender Value at any time during your lifetime before the Annuity Income Date.
Any surrender request must be in writing. When the Surrender Value is paid, this
contract terminates.
SURRENDER VALUE: The Surrender Value equals the Contract Value less:
1. Any Surrender Charges payable;
2. Any applicable Premium Taxes not previously deducted; and
3. The Annual Contract Fee for that year.
The Surrender Value will not be less than the minimum values required by the
insurance laws of the state where this contract was delivered.
SURRENDER CHARGES: Premiums withdrawn or surrendered are subject to Surrender
Charges. No Surrender Charges are applied to earnings surrendered or withdrawn.
Surrender Charges are calculated by multiplying the Surrender Charge Percentage
shown in the Contract Schedule by the premium amount surrendered or withdrawn.
All surrenders and withdrawals are considered to come first from earnings and
then from the oldest premium payment, then from the next oldest, etc.
WITHDRAWALS: You may withdraw a portion of the Contract Value at any time during
your lifetime before the Annuity Income Date. Any withdrawal request must be in
writing and must specify from which Account(s) the withdrawal is to be made. The
amount withdrawn must be at least $500, subject to the "Systematic Withdrawals"
provision. If a withdrawal reduces the Contract Value below $2,000, we have the
right to pay the full Contract Value and terminate the contract.
When a withdrawal is made, you will receive the amount withdrawn less any
applicable Surrender Charge.
During each Contract Year, up to 10% of all premium payments, less any prior
withdrawals of premium , may be surrendered or withdrawn without a Surrender
Charge. Amounts not subject to a Surrender Charge under this provision are not
cumulative. That is, such amounts not withdrawn during any Contract Year cannot
be taken in later Contract Years without incurring the applicable Surrender
Charge.
We reserve the right to assess a processing charge for each withdrawal (to
include final surrender) in excess of 12 in any Contract Year. This processing
charge is equal to the lesser of $25.00 or 2% of the amount withdrawn. The
processing charge will be in addition to any applicable Surrender Charge.
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On the Annuity Income Date, applicable Surrender Charges are assessed against
amounts applied as an Annuity Income Option. However, Surrender Charges are not
assessed against amounts paid under an Annuity Income Option providing a life
annuity or a life annuity with a period certain of at least five years.
Surrender Charges are not applied to earnings or amounts paid as a Death
Benefit.
SYSTEMATIC WITHDRAWALS: You may arrange to make systematic (recurring) monthly,
quarterly, semi-annual or annual withdrawals under the contract prior to the
Annuity Income Date, provided:
1. Written request for such systematic withdrawals is made after the
first Contract Anniversary or received with the contract application,
specifying the Account(s) from which the withdrawals are to be made;
and
2. The amount to be withdrawn from each Account is at least $50.00.
If the amount to be withdrawn from an Account is or becomes less than $50.00, we
have the right to reduce the frequency of payments to an interval that would
result in withdrawals of at least $50.00. We may discontinue this Systematic
Withdrawal privilege upon at least 30 days written notice to you. However, such
discontinuance will not impact this contract while this option is in effect.
DEFERRAL OF SURRENDERS AND WITHDRAWALS: Payments made as a result of a request
for surrender or withdrawal will be made not later than 7 days after we receive
the written request. However, with respect to the values in any Sub-Account,
payment may be postponed:
1. For any period during which the New York Stock Exchange is closed or
trading is restricted;
2. For any period during which an emergency exists as a result of which:
A. Disposal of the securities held in the Sub-Account is not
reasonably practicable; or
B. It is not reasonably practicable for the value of the net assets
of the Sub-Account to be fairly determined;
3. For such other periods as the Securities and Exchange Commission may,
by order and according to its rules and regulations, permit for the
protection of the Contract Owners.
We may defer payment of any amount representing premium payments until the check
for that premium payment has cleared. We may also defer payment of any amounts
from the Fixed Account for up to 6 months. However, if payment is deferred for
more than 10 working days, we will pay interest on the amount deferred at the
minimum rate required by law or the Current Fixed Account Interest Rate, if
greater.
DEATH BENEFIT
IF YOU DIE PRIOR TO THE ANNUITY INCOME DATE: Upon receipt of due proof of your
death (or in the case of Joint Owners, the death of the first Joint Owner to
die) while this contract is in force and before the Annuity Income Date, we will
pay the Beneficiary the Death Benefit. You may specify the manner in which this
Death Benefit is to be paid. In the absence of such direction, the Beneficiary
may elect the manner in which the Death Benefit is to be distributed.
In either case, this benefit must be distributed in full within 5 years after
your death unless:
1. The benefit is to be paid as a life annuity or an annuity with a
period certain not exceeding the Beneficiary's life expectancy with
payments beginning within one year of your death; or
2. The Beneficiary is your surviving spouse, in which case he or she may
continue this contract as the Owner.
If the Beneficiary is not a natural person, the benefit must be distributed
within 5 years of your death.
DEATH BENEFIT AMOUNT: If you die prior to the date you attain age 75, the Death
Benefit will be the greater of:
1. The Contract Value on the date we receive due proof of your death;
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2. The Contract Value on the most recent 5th Contract Anniversary
immediately preceding the date of death, increased by the dollar
amount of any premium payments and reduced by the dollar amount of any
withdrawals made since that Contract Anniversary; or
3. 100% of all premium payments made, less the dollar amount of any
withdrawals of premium since the date this contract was issued.
If you die after the date you attain age 75, the Death Benefit will equal the
greater of:
1. The Contract Value on the date we receive due proof of your death;
2. The Death Benefit on the date you attained age 75, less the dollar
amount of any subsequent withdrawals; or
3. 100% of all premium payments made, less the dollar amount of any
withdrawals of premium since the date this contract was issued.
If the Death Benefit is paid immediately in one lump sum, this contract will end
on the date of payment. If the Death Benefit is not taken immediately in one
lump sum, the amount of the Death Benefit will become the new Contract Value.
Any increase in the Contract Value will be allocated to each Account in
proportion to the distribution of the Contract Value on the date we receive
proof of your death.
BENEFICIARY: The Beneficiary is named in the application unless changed at a
later date. However, in the event of joint ownership, the surviving Joint Owner
will be considered to be the Beneficiary; any other Beneficiary named in the
application or later designated will be deemed to be the Contingent Beneficiary
unless specifically directed otherwise in writing.
If you die while this contract is in force and prior to the Annuity Income Date,
benefits will be paid to the Beneficiary as stated above. If there are two or
more Beneficiaries, they will receive equal shares unless you have directed
otherwise in writing. The interest of any Beneficiary who dies before you will
end at his or her death. If no Beneficiary is named or none survive you, the
Death Benefit will be paid to your estate in one lump sum.
ANNUITANT DEATH PRIOR TO THE ANNUITY INCOME DATE: If the Annuitant dies prior to
the Annuity Income Date, you may designate a new Annuitant. If no new Annuitant
is named within 30 days, you will become the Annuitant. If you are the
Annuitant, the "If You Die Prior To The Annuity Income Date" provisions apply.
GENERAL PROVISIONS
ENTIRE CONTRACT: This contract, including the attached application and any
riders or endorsements attached at issue, constitute the entire contract between
you and us. All statements in the application are representations and not
warranties. No statement shall be used to void this contract or in defense of a
claim unless it is contained in the application.
MODIFICATIONS: Only our President or Secretary may amend this contract or waive
any of its provisions. Any such change or waiver must be in writing. No agent
has the right to amend, alter, waive or change this contract in any way.
We reserve the right to modify this contract, to the extent allowed by law, in
order to:
1. Comply with any law or regulation issued by a governmental agency to
which we or this contract is subject;
2. Reflect a change in the operation of the Separate Account or a
Sub-Account;
3. Add, delete or modify an Account option; or
4. Add, modify or delete Sub-Accounts or Funds.
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<PAGE>
In the event of any such modification, we will notify you, or the payee if the
modification is made while annuity payments are being made. As necessary, we
will also provide an endorsement for attachment to the contract to reflect such
changes.
INCONTESTABILITY: This contract is incontestable.
OWNER: You are the Owner of this contract. You are also the Annuitant unless a
different Annuitant is named. Any Joint Owner must be your spouse unless we
agree otherwise. Before the Annuity Income Date, you have all the rights under
this contract, subject to the rights of any assignee of record. This includes
the right to:
1. Transfer values between Accounts and designate or change the
allocation of net premium payments to each Account;
2. Name and/or change the Beneficiaries, Owner or Annuitant;
3. Surrender the contract in whole or in part for cash;
4. Assign the Contract Value, in whole or in part;
5. Designate and change the Annuity Income Date; and
6. Elect or change the Annuity Income Option.
All elections, authorizations and change requests must be made to us in writing.
Upon receipt by us, any change will be effective as of the date it was signed by
you, except that any values or amounts payable under the contract will be
determined as of the Valuation Day on or next following the date of receipt.
Payment made or action taken by us prior to the time written notice is received
will discharge our liability under this contract to the extent of such action or
payment. If the Owner is not a natural person, the primary Annuitant will be
deemed to be the Owner for any Contract Values distributed prior to the Annuity
Income Date. Further, the death of, or change of the primary Annuitant will be
deemed to be the death of the Owner for purposes of administering this contract.
The consent of any irrevocable Beneficiary is required to exercise any right. If
Joint Owners are named, both must consent to any change.
MISSTATEMENT OF AGE OR SEX: We may require proof of the age or sex of any payee
before beginning any payments under this contract. If the age or sex has been
misstated, we will adjust the amount payable when we discover the misstatement.
The adjusted payments will be based on the payee's correct age or sex. Any
underpayments, plus interest of 3.0% a year, will be included with the next
benefit payment. Any overpayments, plus interest of 3.0% a year, will be
deducted from future benefit payments until the overpayment is repaid in full.
EVIDENCE OF SURVIVAL: If a contract provision requires that a person be alive,
we have the right to require proof that the person is alive before taking any
action under that provision.
CLAIMS OF CREDITORS: To the extent permitted by law, no payment made by us under
the terms of this contract will be subject to the claims of any creditor.
ASSIGNMENT: Upon notice in writing to us, you may assign your rights under this
contract. We assume no responsibility for the validity of any such assignment.
An assignment will not apply to any payment made or action taken prior to the
time it is recorded by us.
MINIMUM VALUES: The minimum Surrender Values, death benefits or Annuity Benefits
provided by this contract are at least equal to those required by the state in
which the contract is delivered.
NON PARTICIPATING: This contract does not share in our divisible surplus.
ANNUITY BENEFIT
ANNUITY INCOME DATE: The Annuity Income Date may be elected by you at the time
of application or anytime thereafter. You may change the Annuity Income Date
upon 30 days prior written notice.
Page 11
<PAGE>
If no Annuity Income Date is elected, it will be the first day of the calendar
month following the Annuitant's 65th birthday or ten years after the Contract
Date, if later. In any circumstance, however, the Annuity Income Date can be no
later than the first day of the month following the Annuitant's 85th birthday.
ANNUITY PAYMENT AMOUNT: On the Annuity Income Date, the Contract Value, less any
applicable Surrender Charges and any applicable premium tax previously unpaid,
will be applied to the Annuity Income Option then in effect. The Contract Value
will be determined on the basis of the Accumulation Unit value of each
Sub-Account and the value of the Fixed Account no later than the fifth Valuation
Day preceding the date annuity payments are to begin. The amount of the annuity
payments will depend on the amount thus applied. The amount to be applied to any
Annuity Income Option must be at least $2,000. If less, we reserve the right to
pay it in one lump sum in lieu of paying it under the Annuity Income Option. If
the amount of any annuity payment for each affected Account would be or becomes
less than $50.00 we have the right to reduce the frequency of payments to an
interval that would result in payments of at least $50.00.
VARIABLE ANNUITY: A variable annuity is an annuity with payments increasing or
decreasing in amount according to the net investment results of the
Sub-Account(s) used to provide the annuity as described in the Contract Value
provisions. After the first annuity payment has been determined according to the
terms of this contract, the number of Sub-Account Annuity Units is calculated by
dividing the first payment by the appropriate Sub-Account Annuity Unit value on
the date the Contract Value is established for purposes of applying it to an
Annuity Income Option as set forth under the "Annuity Payment Amount" provision
above. Thereafter, the number of Annuity Units remains fixed with respect to
that particular Sub-Account.
However, the actual dollar amount of the second and subsequent variable annuity
payments may vary and is determined by multiplying the number of Sub-Account
Annuity Units by the Sub-Account Annuity Unit value as of a date no earlier than
the fifth Valuation Day preceding the date the annuity payment is due.
Once every 3 months after annuity payments have commenced, the Annuitant may
elect, in writing, to transfer among any Sub-Account(s) on which variable
annuity payments are based. If such a transfer is elected, the number of Annuity
Units will change and be determined by "a" times "b," less any applicable fees,
divided by "c" where:
"a" is the number of Annuity Units being transferred;
"b" is the Sub-Account Annuity Unit value from which the transfer is
made; and
"c" is the Annuity Unit value of the Sub-Account to which the transfer
is made.
Thereafter, the number of Annuity Units will remain fixed until transferred.
After the Annuity Income Date, no transfers may be made between the Sub-Accounts
and the Fixed Account.
The dollar amount of variable annuity payments will not be adversely affected by
changes in expenses or actual mortality experience of the payees, including age
adjustments, from the assumptions used in determining the first annuity payment.
FIXED DOLLAR ANNUITY: A fixed dollar annuity is one in which payments do not
depend on the investment experience of any Sub-Account.
ANNUITY INCOME OPTIONS: The Annuity Income Option is elected by you at the time
of application or thereafter. You may further elect to have annuity payments
paid as a variable annuity, a fixed dollar annuity or a combination of both.
You may change the option prior to the Annuity Income Date upon 30 days prior
written notice. Available Annuity Income Options are described below. In
addition, you may elect any other method of payment that is mutually acceptable
to both you and us. However, any method must provide for the payment of any
benefits remaining due at the Annuitant's death (or your death after the Annuity
Income Date) to be paid at least as rapidly as the method in effect at the date
of death.
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<PAGE>
If no election is made to the contrary, the value of each Sub-Account will be
applied to provide a variable annuity and the value of the Fixed Account shall
be applied to provide a fixed dollar annuity. In either case, the annuity option
used will be a Life Annuity with 10 years certain.
OPTION 1: Income for a Fixed Period. We will make annuity payments to the
Annuitant each month for a fixed number of years as shown in Table 1. The number
of years must be at least 5 and no more than 30. If the Annuitant dies before
the end of the designated period, payments will continue to be made to the
person(s) named by the Annuitant to receive such guaranteed payments for the
remainder of the fixed period. If no such person is named or none survive the
Annuitant, the remainder of the guaranteed payments will be paid to the
Annuitant's estate. This option is available only as a Fixed Annuity and if the
contract has been in force for 5 years, unless we agree otherwise.
Option 2: Life Annuity. We will make annuity payments to the Annuitant each
month as shown in Table 2 as long as he or she is alive. When the Annuitant
dies, all payments will cease.
Option 3: Life Annuity with Period Certain. We will make annuity payments to the
Annuitant each month as shown in Table 2 as long as he or she is alive. If the
Annuitant dies prior to the end of the guaranteed period, payments will continue
to be made to the person(s) named by the Annuitant to receive such guaranteed
payments for the remainder of the fixed period. If no such person is named or
none survive the Annuitant, the remainder of the guaranteed payments will be
paid to the Annuitant's estate.
Option 4: Joint and Survivor Annuity. We will make annuity payments to the
Annuitant each month as shown in Table 3 for the joint lifetime of the Annuitant
and another person. At the death of either, payments will continue to be made to
the survivor. When the survivor dies, all payments will cease.
ANNUITY INCOME OPTION TABLES: The following tables show the monthly payments for
each $1,000 applied under the option, assuming a net investment return of 3.0%,
using the 1983 IAM Tables. In Tables 2 and 3, the amount of each payment will
depend on the age of the Annuitant(s) at the time the first payment is due, and
the Annuitant(s) sex. Payments other than monthly for ages or durations not
shown will be calculated on the same basis as those shown and may be obtained
from us.
These are the guaranteed minimum payment amounts for values applied as a fixed
annuity. Actual fixed annuity payments will not be less than those that would be
provided under similar contracts offered by us on the Annuity Income Date to the
same class of Annuitants. These are also the amounts used to determine the first
variable annuity payment. However, when applied as a variable annuity, second
and subsequent payments are based on the investment experience of a Separate
Account, are variable and are not guaranteed as to dollar amount.
Table 1: Income for a Fixed Period
<TABLE>
<CAPTION>
Fixed Period (Years) Monthly Payment Fixed Period (Years) Monthly Payment
- ------------------- --------------- -------------------- ---------------
<S> <C> <C> <C>
5 $17.91 18 $5.96
6 15.14 19 5.73
7 13.61 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
</TABLE>
Page 13
<PAGE>
Table 2: Life Annuity/Life Annuity with Period Certain.
<TABLE>
<CAPTION>
Age Life Annuity 10 Years 20 Years
- --------- -------------------- -------------------- --------------------
Male Female Male Female Male Female
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
40 3.43 3.24 3.42 3.24 3.40 3.23
41 3.47 3.27 3.46 3.27 3.44 3.26
42 3.51 3.31 3.50 3.30 3.47 3.29
43 3.55 3.34 3.54 3.34 3.51 3.32
44 3.60 3.37 3.59 3.37 3.55 3.36
45 3.64 3.41 3.63 3.41 3.59 3.39
46 3.69 3.45 3.68 3.44 3.63 3.42
47 3.74 3.49 3.73 3.48 3.68 3.46
48 3.80 3.53 3.78 3.52 3.72 3.50
49 3.85 3.57 3.83 3.57 3.77 3.54
50 3.91 3.62 3.89 3.61 3.82 3.58
51 3.97 3.67 3.95 3.66 3.87 3.63
52 4.04 3.72 4.01 3.71 3..92 3.67
53 4.10 3.77 4.07 3.76 3.98 3.72
54 4.18 3.83 4.14 3.82 4.03 3.77
55 4.25 3.89 4.21 3.87 4.09 3.82
56 4.33 3.95 4.29 3.94 4.15 3.87
57 4.42 4.02 4.37 4.00 4.21 3.93
58 4.50 4.09 4.45 4.07 4.27 3.99
59 4.60 4.16 4.54 4.14 4.33 4.05
60 4.70 4.24 4.63 4.21 4.40 4.11
61 4.81 4.33 4.73 4.29 4.46 4.17
62 4.92 4.41 4.84 4.38 4.53 4.24
63 5.05 4.51 4.94 4.47 4.59 4.31
64 5.18 4.61 5.06 4.56 4.66 4.38
65 5.32 4.72 5.18 4.66 4.73 4.45
66 5.46 4.83 5.30 4.76 4.79 4.52
67 5.62 4.95 5.43 4.88 4.86 4.59
68 5.79 5.08 5.57 4.99 4.92 4.66
69 5.97 5.22 5.71 5.12 4.98 4.73
70 6.17 5.37 5.86 5.25 5.04 4.80
71 6.37 5.53 6.01 5.39 5.09 4.87
72 6.58 5.70 6.16 5.53 5.14 4.94
73 6.81 5.89 6.32 5.68 5.19 5.01
74 7.05 6.09 6.49 5.84 5.23 5.07
75 7.31 6.31 6.65 6.01 5.27 5.12
</TABLE>
Table 3: Joint and Survivor Annuity
Age Of Male Age Of Female Annuitant
Annuitant --------------------------------------------
- ----------- 45 55 65 75 85
45 3.23 3.40 3.52 3.59 3.62
55 3.32 3.61 3.88 4.08 4.19
56 3.37 3.76 4.25 4.74 5.09
75 3.39 3.84 4.51 5.44 6.38
85 3.40 3.87 4.64 5.95 7.80
Page 14
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
================================================================================
Home Office: One Court Square, 25th Floor
Long Island City, NY 11120
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY CONTRACT
NON-PARTICIPATING
EXHIBIT 4(b)
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
================================================================================
ANNUITY CONTRACT ENDORSEMENT
AMENDMENT OF ANNUITY INCOME OPTION TABLES
The contract to which this endorsement is attached is amended as follows:
The provision entitled "Misstatement of Age or Sex" is deleted in its entirety
and replaced by the following:
MISSTATEMENT OF AGE: We may require proof of the age of any payee before
beginning any annuity payments. If the age has been misstated, we will
adjust the amount payable. The adjusted payments will be based on the
payee's correct age. Any underpayments, plus interest of 3% a year, will be
included with the next annuity payment. Any overpayments, plus interest of
3% a year, will be deducted from future annuity payments until the
overpayment is repaid in full.
The Annuity Income Option Table displaying minimum monthly payments for a Life
Annuity/Life Annuity with a Period Certain is deleted in its entirety and
replaced by the following:
<TABLE>
<CAPTION>
Age Life Annuity 10 Years 20 Years Age Life Annuity 10 Years 20 Years
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
40 3.34 3.33 3.32 58 4.29 4.25 4.13
41 3.37 3.37 3.35 59 4.37 4.33 4.19
42 3.41 3.40 3.38 60 4.46 4.42 4.25
43 3.44 3.44 3.42 61 4.56 4.51 4.32
44 3.48 3.48 3.45 62 4.66 4.60 4.39
45 3.52 3.52 3.49 63 4.77 4.70 4.45
46 3.57 3.56 3.53 64 4.88 4.80 4.52
47 3.61 3.60 3.57 65 5.00 4.91 4.59
48 3.66 3.65 3.61 66 5.13 5.03 4.66
49 3.71 3.70 3.65 67 5.27 5.15 4.73
50 3.76 3.75 3.70 68 5.42 5.27 4.79
51 3.82 3.80 3.75 69 5.58 5.41 4.86
52 3.87 3.86 3.80 70 5.75 5.54 4.93
53 3.93 3.91 3.85 71 5.93 5.69 4.99
54 4.00 3.98 3.90 72 6.12 5.84 5.05
55 4.06 4.04 3.95 73 6.33 6.00 5.10
56 4.14 4.11 4.01 74 6.55 6.16 5.16
57 4.21 4.18 4.07 75 6.78 6.33 5.20
</TABLE>
The Annuity Income Option Table displaying minimum monthly payments for a Joint
and Survivor Annuity is deleted in its entirety and replaced by the following:
Age Of Age Of Joint Annuitant
Annuitant -----------------------------------------
- ---------- 45 55 65 75 85
45 3.24 3.37 3.45 3.49 3.51
55 3.37 3.62 3.83 3.97 4.03
65 3.45 3.83 4.27 4.64 4.87
75 3.49 3.97 4.64 5.47 6.18
85 3.51 4.03 4.87 6.18 7.83
The values shown are the minimum monthly payments for each $1,000 applied.
Installments other than monthly for ages or durations not shown will be
calculated on the same basis as those shown and may be obtained from us.
In all other respects, the contract is unchanged.
/s/Alan F. Liebowitz
Secretary
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
================================================================================
LONG ISLAND CITY, NEW YORK
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
The contract to which this endorsement is attached has been issued as an
Individual Retirement Annuity. It is amended as follows:
1. This contract is established for the exclusive benefit of the Annuitant and
his or her Beneficiaries. It may not be assigned, pledged, or otherwise
transferred by the Annuitant. It may not be used as security for a loan.
Only the Annuitant may be the Owner of this contract
2. None of the Annuitant's rights in this contract may be forfeited. Benefits
will be distributed to the Annuitant under the Annuity Income Option
selected, provided, distribution of all benefits must be made during:
A. The life of the Annuitant or the lives of the Annuitant and his or her
Beneficiary; or
B. A period not extending beyond the life expectancy of the Annuitant or
the life expectancy of the Annuitant and his or her Beneficiary.
In any case, all distributions under the contract shall be made in
accordance with the requirements of Section 401(a)(9) of the Internal
Revenue Code (the Code), including the Incidental Death Benefit
Requirements of Section 401(a)(9)G of the Code and the Regulations
thereunder, including the Minimum Distribution Incidental Benefit
requirement of Section 1.401(a)(9)-2 of the proposed Income Tax
Regulations.
3. The distribution of benefits under the contract must begin not later than
the first day of April following the calendar year in which the Annuitant
attains age 70 1/2 (required beginning date). The amount to be distributed
each year (commencing with the required beginning date and each year
thereafter) must be at least equal to the value obtained by dividing "a" by
"b" or "c" (as applicable) where:
"a" is the entire value of the contract as of December 31 of the
preceding year;
"b" is the Annuitant's life expectancy; and
"c" is the joint and last survivor expectancy of the Annuitant
and the Beneficiary.
Annual distributions, including that made during the year in which the
required beginning date occurs, shall be made by December 31 of that year.
In addition, payments must be non-increasing or they may increase only as
provided in Q&A F-3 of Section 1.401(a)(9)-1 of the proposed Income Tax
Regulations.
Life expectancy and joint and last survivor expectancy are computed by the
use of the Expectancy Return Multiples in Tables V and VI in Section 1.72-9
of the Income Tax Regulations. For purposes of this computation, the
Annuitant's life expectancy (or the life expectancy of the Annuitant and
his or her spouse Beneficiary) shall be recalculated annually unless the
Annuitant elects prior to the required beginning date not to recalculate
life expectancy. Such election shall be irrevocable by the Annuitant and
shall apply to all subsequent years. However, the life expectancy of a
non-spouse Beneficiary may not be recalculated. If the Annuitant's
Beneficiary is other than his or her spouse, the recalculated joint life
expectancy will use the Annuitant's recalculated life expectancy and the
life expectancy of the Beneficiary as of the date of the first payment
minus the number of whole years elapsed since distribution first commenced.
Page 1
<PAGE>
If the Annuitant's Beneficiary is other than his or her spouse, the
distribution must not be less than the amount obtained by dividing the
contract value by the divisor determined by the table set forth in Q&A-4 of
Section 1.401(a)(9)-2 of the Income Tax Regulations.
4. If the Annuitant dies before all contract values have been distributed, the
following rules apply:
A. If the Annuitant dies after distribution of benefits has started, any
remaining benefits will continue to be distributed at least as rapidly
as under the method of distribution being used at his or her death.
B. If the Annuitant dies before distribution of benefits begins, all
contract values will be distributed:
(1) By December 31 of the year containing the fifth anniversary of
the Annuitant's death; or
(2) If the remaining value is payable to an individual Beneficiary,
in substantially equal installments over a period not to exceed
the life or life expectancy of the Beneficiary commencing no
later than one year after the date of the Annuitant's death.
However, if the Beneficiary is the Annuitant's surviving spouse, the
spouse may elect either to treat the contract as his or her own
Individual Retirement Annuity or receive equal or substantially equal
payments over a period not exceeding his or her life or life
expectancy starting on any date prior to December 31 of the year in
which the Annuitant would have attained age 70 1/2. Such election must
be made not later than five years after the date of the Annuitant's
death. An election to treat the contract as his or her own will be
assumed if the surviving spouse fails to elect to begin distributions.
If distribution is to be made over the Beneficiary's life or life
expectancy, the amount to be distributed each year must be at least
equal to the value obtained by dividing the contract value as of the
December 31 preceding distribution by the life expectancy of the
Beneficiary.
Life expectancy is calculated using the Expectancy Return Multiples in
Tables V and VI in Section 1.72-9 of the Income Tax Regulations. For
purposes of this computation, the life expectancy of a surviving
spouse Beneficiary shall be recalculated annually unless the spouse
elects not to recalculate life expectancy by the time distributions
are required to begin. Such election shall be irrevocable by the
surviving spouse and shall apply to all subsequent years. However, the
life expectancy of any non-spouse Beneficiary may not be recalculated.
The life expectancy of such non-spouse Beneficiary is calculated at
the time of the first payment and thereafter his or her life
expectancy will be his or her life expectancy as of the date of the
first payment minus the number of whole years elapsed since
distribution first commenced.
C. Any amount paid to a child of the Annuitant will be considered to have
been paid to the surviving spouse if the remainder of the contract
values become payable to the surviving spouse when the child reaches
the age of majority.
D. Distributions under this provision are considered to have begun if
distributions are made on account of the Annuitant reaching his or her
required beginning date or if, prior to the required beginning date,
distributions irrevocably commence to an individual Annuitant over a
period permitted and in an annuity form acceptable under Section
1.401(a)(9) of the Income Tax Regulations.
Page 2
<PAGE>
5. Annual contributions (premium) paid under this contract are not fixed but
cannot exceed the lesser of 100 % of the Annuitant's earned income for the
tax year or $2,000.00. This limitation does not apply to premiums which
represent:
A. Any portion of a transfer or qualifying rollover as defined in
Sections 402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the Internal
Revenue Code; or
B. Contributions made under a Simplified Employee Pension (SEP-IRA) as
described in Section 408(k) of the Internal Revenue Code.
All contributions must be in cash.
6. We will provide the Annuitant with a statement at least once each calendar
year, stating the values held under the contract, interest earned and any
withdrawals during the period covered.
7. Both we and the Annuitant agree to amend this contract to comply with
changes in the Internal Revenue Code and any Department of Labor and
Internal Revenue Regulations. Any other changes to this contract will be
made only with the mutual agreement of us and the Annuitant and will be
subject to the conditions stated in the contract. A copy of each amendment
will be furnished to the Annuitant for attachment to the contract.
Refer to the contract to which this endorsement is attached for the definition
of terms and additional contract provisions not otherwise amended hereby.
/s/Alan F. Liebowitz
Secretary
Page 3
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
================================================================================
LONG ISLAND CITY, NEW YORK
403(b) TAX SHELTERED ANNUITY ENDORSEMENT
The contract to which this endorsement is attached has been issued as a Tax
Sheltered Annuity under a plan established by an employer for the benefit of the
Annuitant/employee as provided under Section 403(b) of the Internal Revenue
Code. It is amended as follows:
1. This contract is established for the exclusive benefit of the Annuitant. It
may not be assigned, pledged as collateral for a loan or as security for
the performance of an obligation. It may not be transferred to any person
for any reason except to us upon surrender. Only the Annuitant may be the
Owner of this contract unless the employer's plan contains a vesting
schedule. In such a case, the Annuitant is the Owner of the contract at the
time of full vesting.
2. None of the Owner's rights in this contract may be forfeited.
3. The distribution of benefits attributable to contributions made pursuant to
a salary reduction agreement shall be paid pursuant to the terms of the
plan, but no earlier than when the Annuitant attains age 59 1/2 unless he
or she separates from service, dies or becomes disabled or in the case of
hardship. However, distributions made on account of hardship may not
include any earnings on amounts contributed. The definition of disability
and hardship are governed by the Internal Revenue Code and regulations
promulgated thereunder. We are not responsible for determining whether
hardship or disability exists.
4. Contributions made pursuant to a salary reduction agreement may not exceed
the amount of the limitation in effect under Section 402(g) for each
calendar year.
5. Except as allowed otherwise under Regulation 1.403(b)-2, the distribution
of benefits under the contract must begin not later than the first day of
April following the calendar year in which the Annuitant attains age 70 1/2
(required beginning date). The amount to be distributed each year
(commencing with the required beginning date and each year thereafter) must
be at least equal to the value obtained by dividing "a" by "b" or "c" (as
applicable) where:
"a" is the entire value of the contract as of December 31 of the
preceding year;
"b" is the Annuitant's life expectancy; and
"c" is the joint and last survivor life expectancy of the Annuitant
and his or her Beneficiary.
Annual distributions, including that made during the year in which the
required beginning date occurs, shall be made by December 31 of that year.
Life expectancy and joint and last survivor expectancy are computed by the
use of the tables contained in Section 1.72-9 of the Income Tax
Regulations. For purposes of this computation, the Annuitant's life
expectancy (or the life expectancy of the Annuitant and his or her spouse
Beneficiary) shall be recalculated annually unless the Annuitant elects
prior to the required begdate not to recalculate life expectancy. However,
the life expectancy of a non-spouse Beneficiary may not be recalculated. If
the Annuitant's Beneficiary is other than his or her spouse, the
recalculated joint life expectancy will use the Annuitant's recalculated
life expectancy and the life expectancy of the Beneficiary as of the date
of the first payment minus the number of whole years elapsed since
distribution first commenced.
Page 1
<PAGE>
If the Annuitant's Beneficiary is other than his or her spouse, the
distribution must not be less than the amount obtained by dividing the
contract value by the divisor determined by the tables set forth in Q & A 4
of Section 1.401(a)(9)-2 of the Income Tax Regulations.
After the Annuity Income Date, distributions under an Annuity Income Option
shall be made in accordance with the requirements of Section 403(b)(10) of
the Code and the Regulations thereunder.
6. If the Annuitant dies before all contract values have been distributed, the
following rules apply:
A. If the Annuitant dies after distribution of benefits has started, any
remaining benefits will continue to be distributed at least as rapidly
as under the method of distribution being used at his or her death.
B. If the Annuitant dies before distribution of benefits begins, all
contract values will be distributed:
(1) By December 31 of the year containing the fifth anniversary of
the Annuitant's death; or
(2) If the remaining value is payable to an individual Beneficiary,
in substantially equal installments over a period not to exceed
the life or life expectancy of the Beneficiary commencing no
later than one year after the date of the Annuitant's death.
However, if the Beneficiary is the Annuitant's spouse, the spouse may
elect to receive equal or substantially equal payments over a period
not exceeding his or her life expectancy starting on any date prior to
December 31 of the year in which the Annuitant would have attained age
70 1/2. Such election must be made not later than five years after the
date of the Annuitant's death.
If distribution is to be made over the Beneficiary's life or life
expectancy, the amount to be distributed each year must be at least
equal to the value obtained by dividing the contract value as of the
December 31 preceding distribution by the life expectancy of the
Beneficiary. Life expectancy is calculated using the tables contained
in Section 1.72-9 of the Income Tax Regulations. Life expectancy of a
surviving spouse shall be recalculated annually unless the spouse
elects not to recalculate. The life expectancy of any non-spouse
Beneficiary is calculated at the time of the first payment and
payments for later years will be based on such life expectancy minus
the number of whole years elapsed since distribution first commenced.
C. Any amount paid to a child of the Annuitant will be considered to have
been paid to the surviving spouse if the remainder of the contract
values become payable to the surviving spouse when the child reaches
the age of majority.
7. The availability of and payments pursuant to the various Annuity Income
Options under the contract shall be restricted and altered to the extent
necessary to comply with Code Section 401(a)(11) and 417 and the
regulations thereunder, if applicable.
8. For distributions made on or after January 1, 1993, the Annuitant may elect
to have any portion of an eligible rollover distribution paid directly to
an eligible retirement plan specified by the Annuitant in a direct
rollover. An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the Annuitant, except that an
eligible rollover distribution does not include:
A. Any distribution that is one of a series of substantially equal
periodic payments (not less
Page 2
<PAGE>
frequent than annually) made for:
(1) The life (or life expectancy) of the Annuitant or the joint lives
(or joint life expectancies) of the Annuitant and the Annuitant's
designated Beneficiary; or
(2) A specified period of ten years or more;
B. Any distribution to the extent that such distribution is required
under Section 401(a)(9) of the Code; or
C. The portion of any distribution that is not includible in gross
income.
An eligible retirement plan is:
A. An individual retirement account described in Section 408(a) of the
Code;
B. An individual retirement annuity described in Section 408(b) of the
Code; or
C. Another contract pursuant to Section 403(b) of the Code that accepts
the Annuitant's eligible rollover distribution.
However, in the case of an eligible rollover distribution to a surviving
spouse, only an individual retirement account or individual retirement
annuity is an eligible retirement plan.
In addition, the Annuitant's surviving spouse and the Annuitant's spouse or
former spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are distributees
with regard to the values payable to the surviving spouse, spouse or former
spouse. A direct rollover is a payment by the plan to the eligible
retirement plan specified by the Annuitant (or spouse).
9. Both we and the Annuitant agree to amend this contract to comply with
changes in the Internal Revenue Code and any Department of Labor and
Internal Revenue Regulations. Any other changes to this contract will be
made only with the mutual agreement of us and the Annuitant and will be
subject to the conditions stated in the contract. A copy of each Amendment
will be furnished to the Annuitant for attachment to the contract.
Refer to the contract to which this endorsement is attached for the definition
of terms and additional contract provisions not otherwise amended hereby.
/s/Alan F. Liebowitz
Secretary
Page 3
EXHIBIT 5
<PAGE>
FIRST CITICORP LIFE INSURANCE COMPANY
Home Office: One Court Square, 24th Floor
Long Island City, NY 11120
<TABLE>
<CAPTION>
Variable Annuity Application
(Make all checks payable to First Citicorp Life Insurance Company)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Contract Name (First) (Middle) (Last) [ ] Male Tax ID/Social Security No.
Owner [ ] Female
----------------------------------------------------------------------------- ----------------------------
Street Address Date of Birth Telephone Number
----------------------------------------------------------------------------- ----------------------------
City State Zip Code
----------------------------------------------------------------------------- ----------------------------
2. Joint Contract Name (First) (Middle) (Last) [ ] Male Tax ID/Social Security No.
Owner [ ] Female
----------------------------------------------------------------------------- ----------------------------
(If any) Relation to Contract Owner Date of Birth Telephone Number
- ------------------------------------------------------------------------------------------------------- ----------------------------
3. Annuitant Name (First) (Middle) (Last) [ ] Male Tax ID/Social Security No.
(If other than Owner) [ ] Female
----------------------------------------------------------------------------- ----------------------------
Street Address Date of Birth Telephone Number
----------------------------------------------------------------------------- ----------------------------
City State Zip Code
- ------------------------------------------------------------------------------------------------------- ----------------------------
4. Joint Annuitant Name (First) (Middle) (Last) [ ] Male Tax ID/Social Security No.
(If any) [ ] Female
- ------------------------------------------------------------------------------------------------------- ----------------------------
5. Beneficiaries Name (First) (Middle) (Last) Percentage Relation to Contract Owner
(Of Owner) Primary
----------------------------------------------------------------------------- ----------------------------
Name (First) (Middle) (Last) Percentage Relation to Contract Owner
Contingent
- ------------------------------------------------------------------------------------------------------- ----------------------------
6. Plan Type [ ] Non-Qualified [ ] Contributory IRA [ ] IRA Rollover [ ] IRA Transfer [ ] SEP [ ] 403(b)
[ ] Other ______________
[ ] 1035 Exchange (Complete 1035 Exchange Form) If IRA, indicate year for which payment is to be applied:
- ------------------------------------------------------------------------------------------------------------------------------------
7. Other Options Dollar Cost Averaging: [ ] Yes [ ] No Systematic Withdrawal: [ ] Yes [ ] No
Automatic Purchase: [ ] Yes [ ] No
If any of these options is elected, complete and submit appropriate election form with this application
- ------------------------------------------------------------------------------------------------------------------------------------
8. Premium Paid
Indicate in whole % the
allocation of the initial Total Premium Received with Application $____________
premium. Subsequent 1. ______% Fixed Account 6. ______% Fidelity VIP Products Fund Growth Portfolio
payments will be
allocated in the same 2. ______% Landmark VIP U.S. Government Fund 7. ______% AIM VI Capital Appreciation Fund
manner until changed.
3. ______% Landmark VIP Equity Fund 8. ______% MFS World Governments Series
4. ______% Landmark VIP Balanced Fund 9. ______% MFS Money Market Series
5. ______% Landmark VIP International 100 % Total (Allocation to each fund elected must
Equity Fund equal 10% or more)
- --------------------------- --------------------------------------------------------------------------------------------------------
9. Remarks
- --------------------------- --------------------------------------------------------------------------------------------------------
Have you purchased any other First Citicorp Life annuity during the prior 12 months? [ ] Yes [ ] No
Will this annuity change or replace any existing annuity or life insurance policy? [ ] Yes [ ] No (If yes, give Co. name and
policy no. in "remarks)"
I (We) declare to the best of my (our) knowledge and belief that all of the answers herein are complete and true. I (We) agree that
this Application shall be part of the Contract issued by First Citicorp Life Insurance Company. I (We) understand that annuity
payments, when based upon the investment experience of a separate account, are variable and are not guaranteed as to fixed dollar
amount. I (We) also acknowledge receipt of a current prospectus.
Signed At:________________________________________ Date ________________ Signature of Owner: ___________________________
Signature of Annuitant: ___________________________________________________ Signature of Joint Owner: _____________________
(If other than Owner)
- ------------------------------------------------------------------------------------------------------------------------------------
AGENT REPORT
To the best of my knowledge and belief, the annuity being applied for [ ] does, [ ] does not change or replace any other annuity or
life insurance policy.
Agent's Signature: ___________________________________ Print Agent's Name: _________________________________
Broker/Dealer Name: __________________________________ Agent Number: _______________________________________
Branch: ______________________________________________ Agent License No. (if applicable): __________________
Client Account No: ___________________________________ Agent's Phone No: ___________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
63-1803(08-95)
</TABLE>
EXHIBIT 6(a)
<PAGE>
STATE OF NEW YORK
INSURANCE DEPARTMENT
AGENCY BUILDING ONE
THE GOVERNOR NELSON A. ROCKEFELLER
EMPIRE STATE PLAZA
ALBANY, NEW YORK 12257
SALVATORE R. CURIALE
Superintendent of Insurance
May 20, 1994
Ms. Rosemary Lombardi
Citicorp Insurance Services
One Court Square
25th Floor
Long Island City, NY 11120
Re: First Citicorp Life Insurance Company
Amendment to Charter
Dear Ms. Lombardi:
The amendment to the charter of First Citicorp Life Insurance Company has
been approved and placed on file with this Department as of May 10, 1994.
We enclose an amended license for this company, which indicates the
transfer of its principal office from the County of New York to the County of
Queens and two certified copies of the amendment. One certified copy of the
amendment should be placed on file in the office of the County Clerk for New
York County and the other in the office of the county clerk for Queens County.
Both proofs of filing should be returned to this office.
This will acknowledge receipt of your check for $10.00 in payment of the
filing fee for this amendment. As we had to prepare an extra certified copy of
this amendment due to the fact that it must be filed in two counties, it will be
necessary for you to remit a check for $5.00 in payment of the extra
certification fee. This may be submitted with the proofs of filing.
Very truly yours,
/s/Patrick M. Harrigan
Patrick M. Harrigan
Senior Attorney
Office of General Counsel
Albany Office
td
Enclosure
<PAGE>
SHORT CERTIFICATE
STATE OF NEW YORK
INSURANCE DEPARTMENT
SALVATORE R. CURIALE
SUPERINTENDENT OF INSURANCE
It is hereby certified that the annexed copy of Certificate of Amendment of
Declaration of Intention and Charter of FIRST CITICORP LIFE INSURANCE COMPANY,
of New York, New York, to amend Article II changing location to County of Queens
State of New York and Article V, Sections 1, 5 and 6 regarding directors, as
approved by this Department as approved by this Department May 10, 1994,
pursuant to Section 1206 of the New York Insurance Law.
has been compared with the original on file in this Department and that it is a
correct transcript therefrom and of the whole of said original.
In Witness Whereof, I have here-
[Seal of the New York unto set my hand and affixed
Department of Insurance] the official seal of this Department
at the City of Albany, this 10th
day of May, 1994.
/s/Robert A. Grinnelly
Special Deputy Superintendent of
Insurance
<PAGE>
CERTIFICATE OF AMENDMENT
OF
DECLARATION OF INTENTION AND CHARTER
OF
FIRST CITICORP LIFE INSURANCE COMPANY
(Pursuant to Section 805 of the Business Corporation Law)
The undersigned, Peter R. Wilde and Alan F. Liebowitz, being respectively
the President and Secretary of First Citicorp Life Insurace Company, do hereby
certify:
1. The Declaration of Intention and Charter of Family Guardian Life Insurance
Company of New York was filed on April 17, 1978 in the Office of the
Superintendent of Insurance of the State of New York. The Charter was
subsequently amended by two Certificates of Amendment, one dated January 9,
1979 which increased the Corporation's capital stock from $1,000,000 to
$2,000,000 and the other dated November 17, 1992 which changed the
corporate name to First Citicorp Life Insurance Company.
2. The Charter is hereby further amended by deleting Article II and Article V,
Sections 1, 5 and 6, and replacing each as follows:
ARTICLE II: "The principal office of the Corporation shall be located in
the County of Queens in the State of New York."
ARTICLE V, SECTION 1: "The number of directors of the Corporation shall not
be less than nine (9) nor more than 23, of which at least one-third but not
less than four must not be officers or employees of the Corporation or any
entity controlling, controlled by, or under common control with the
Corporation and who are not beneficial owners of a controlling interest in
the voting stock of the Corporation or any such entity. In the event the
Corporation's admitted assets exceed $500,000,000, the number of the
directors shall be increased to not less than thirteen (13) within one year
following the end of the calendar year in which the Corporation's admitted
assets exceed $500,000,000 and provided further that at least one-third of
the directors shall be persons who are not officers of the Corporation or
any entity controlling, controlled by, or under common control with the
Corporation and who are not beneficial owners of a controlling interest in
the voting stock of the Corporation or any such entity. Subject to this
Article V, the number of directors shall be determined by the provisions of
the By-Laws. In no event shall a decrease in the number of directors
shorten the term of any incumbent director."
<PAGE>
ARTICLE V, SECTION 5: "If the directors shall not be elected in any year at
the annual meeting of the stockholders as hereinabove provided, or if,
because of a vacancy or vacancies on the Board of Directors, the number of
the Board shall not be less than required under Article V, Section 1., the
Corporation shall not for that reason be dissolved , but every director
shall continue to hold office and discharge his duties until his successor
shall have been elected."
ARTICLE V, SECTION 6: "At all times a majority of the directors shall be
citizens and residents of the United States, not less than three (3)
thereof shall be residents of the State of New York, and each director
shall be at least eighteen (18) years of age."
3. The manner in which this amendment to the Charter of First Citicorp Life
Insurance Company was authorized was by the unanimous written consent of
the sole stockholder, pursuant to the provisions of Section 615 of the
Business Corporation Law."
IN WITNESS WHEREOF, we have made, executed and signed this Certificate the
15th day of APRIL , 1994 and affirm that the statements made herein are true
under the penalties of perjury. This Certificate becomes effective immediately,
subject to the approval of the New York Insurance Department.
/s/Peter R. Wilde
-------------------------------
Peter R. Wilde, President
/s/Alan F. Liebowitz
-------------------------------
Alan F. Liebowitz, Secretary
<PAGE>
STATE OF NEW YORK
INSURANCE DEPARTMENT
AGENCY BUILDING ONE
THE GOVERNOR NELSON A. ROCKEFELLER
EMPIRE STATE PLAZA
ALBANY, NEW YORK 12257
SALVATORE R. CURIALE
Superintendent of Insurance
January 6, 1993
Nealle B. Seavey, Esq.
Assistant Counsel
Citibank, N.A.
Citicorp at Court Square
One Court Square
25th Floor
Long Island City, NY 11120
Re: Family Guardian Life Insurance Company of New York
Name Change to
First Citicorp Life Insurance Company
Dear Ms. Seavey:
The amendment to the charter of Family Guardian Life Insurance Company of
New York changing its name to First Citicorp Life Insurance Company has been
approved and placed on file in this Department as of December 31. 1992.
Enclosed please find an amended license for First Citicorp Life Insurance
Company. We are also enclosing a certified copy of the Certificate of Amendment
of the Charter of Family Guardian Life Insurance Company of New York to be
placed on file in the office of the County Clerk for the county in which the
company has its principal office. Proof of the filing should be returned to this
office.
Very truly yours,
/s/Nancy E. Schoep
Nancy E. Schoep
Senior Attorney
Office of General Counsel
Albany Office
td
Enclosure
<PAGE>
FAMILY GUARDIAN LIFE INSURANCE COMPANY OF NEW YORK
UNANIMOUS CONSENT OF THE SOLE STOCKHOLDER
NOVEMBER 17, 1992
Pursuant to Section 615 of the New York General Corporation Law, the
undersigned, being the sole stockholder of the Company, hereby consents to the
adoption of the following resolutions:
RESOLVED, that the resolutions contained in the Unanimous Consent of
Sole Stockholder dated October 1, 1992 and in the Unanimous Consent of
Sole Stockholder dated November 6, 1992 be and hereby are rescinded;
and further
RESOLVED, that the attached Certificate of Amendment of Declaration of
Intention and Charter of the Company, whereby the corporate name of
the Company is changed, effective January 1, 1993, to FIRST CITICORP
LIFE INSURANCE COMPANY, is hereby approved; and further
RESOLVED, that the officers of the Company are instructed to file all
documents necessary to effectuate such name change.
IN WITNESS WHEREOF, the undersigned has executed this consent as of the
above date.
FAMILY GUARDIAN LIFE
INSURANCE COMPANY
By:/s/ Alan F. Liebowitz
------------------------
<PAGE>
SHORT CERTIFICATE
STATE OF NEW YORK
INSURANCE DEPARTMENT
SALVATORE R. CURIALE
SUPERINTENDENT OF INSURANCE
It is hereby certified that the annexed copy of Certificate of Amendment of
Declaration of Intention and Charter of FAMILY GUARDIAN LIFE INSURANCE COMPANY
OF NEW YORK, of New York, New York, to change the name to FIRST CITICORP LIFE
INSURANCE COMPANY, as approved by this Department December 31, 1992, pursuant to
Section 1208 of the New York Insurance Law, effective January 1, 1993.
has been compared with the original on file in this Department and that it is a
correct transcript therefrom and of the whole of said original.
In Witness Whereof, I have here-
[Seal of the New York unto set my hand and affixed
Department of Insurance] the official seal of this Department at
the City of Albany, this 31st day of
December, 1992.
/s/Robert A. Grinnelly
Special Deputy Superintendent of
Insurance
<PAGE>
CERTIFICATE OF AMENDMENT
OF
DECLARATION OF INTENTION AND CHARTER
OF
FAMILY GUARDIAN LIFE INSURANCE
COMPANY OF NEW YORK (the "Company")
(Pursuant to Section 805 of the Business Corporation Law)
The undersigned, Peter R. Wilde and Alan F. Liebowitz, being respectively
the President and Secretary of Family Guardian Life Insurance Company of New
York, do hereby certify:
1. The Declaration of Intention and Charter of Family Guardian Life
Insurance Company of New York was filed on April 17, 1978 in the
office of Superintendent of Insurance of the State of New York. The
Charter was subsequently amended by a Certificate of Amendment dated
on January 9, 1979.
2. The Certificate of Amendment of Declaration of Intention and Charter
dated October 5, 1992 and the Certificate of Amendment of Declaration
of Intention and Charter dated November 6, 1992, both of which amended
Article I of the Company's Charter, are hereby rescinded in their
entirety.
3. Article I of the Company's Charter is hereby amended to read:
The name of this Corporation shall be:
FIRST CITICORP LIFE INSURANCE COMPANY
This name change shall become effective January 1, 1993.
4. The manner in which this amendment to the Charter of Family Guardian
Life Insurance Company of New York was authorized was by the unanimous
written consent of the sole stockholder, pursuant to the provisions of
Section 615 of the Business Corporation Law.
IN WITNESS WHEREOF, we have made, executed and signed the Certificate the
17th day of November, 1992 and affirm that the statements made therein are true
under the penalties of perjury.
/s/Peter R. Wilde
----------------------------
Peter R. Wilde, President
/s/Alan F. Liebowitz
----------------------------
Alan F. Liebowitz, Secretary
2046L
<PAGE>
Short
Certificate
STATE OF NEW YORK
Insurance Department
ALBERT B. LEWIS
SUPERINTENDENT OF INSURANCE
It is hereby certified that the annexed copy of Certificate of Amendment of
Certificate of Incorporation of FAMILY GUARDIAN LIFE INSURANCE COMPANY OF NEW
YORK, of New York, New York, to increase the capital stock from $1,000,000.
comprised of 200,000 shares at par value $5.00 per share to $2,000,000.
comprised of 400,000 shares at par value of $5.00 per share, as approved by this
Department pursuant to Section 805 of the Business Corporation Law and Section
53 of the New York Insurance Law.
has been compared with the original on file in this department and that it is a
correct transcript therefrom and of the whole of said original.
[Seal of the State In Witness Whereof, I have hereunto set my hand
of New York Insurance and affixed the official seal of this
Department] Department at the City of Albany, this
11th day of January 1979.
/s/James W. Clyne
James W. Cline
Deputy Superintendent of Insurance
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
FAMILY GUARDIAN LIFE INSURANCE COMPANY OF NEW YORK
(Pursuant to Section 805 of the Business
Corporation Law)
The undersigned, Jack Webb and Christopher C. York, being respectively the
President and Secretary of FAMILY GUARDIAN LIFE INSURANCE COMPANY OF NEW YORK,
do hereby certify:
1. The name of the corporation is FAMILY GUARDIAN LIFE INSURANCE COMPANY OF
NEW YORK.
2. The certificate of incorporation of the said corporation was filed on
April 17, 1978 in the office of the Superintendent of Insurance of the State of
New York.
3. The certificate of incorporation is amended to effect a change in the
number of shares of capital stock so that the same shall consist of Four Hundred
Thousand (400,000) Shares instead of Two Hundred Thousand (200,000) Shares, and
to change the provision governing it capital by providing that its capital shall
be Two Million Dollars ($2,000,000)instead of One Million Dollars ($1,000,000).
4. Article XI of the corporation's certificate of incorporation is amended
to read:
<PAGE>
The amount of the authorized capital of the Corporation shall be
Two Million ($2,000,000) Dollars, to consist of Four Hundred
Thousand (400,000) shares of stock of the par value of Five
($5.00) Dollars per share.
5. The manner in which this amendment to the certificate of incorporation
of FAMILY GUARDIAN LIFE INSURANCE COMPANY OF NEW YORK was authorized was by the
unanimous written consent of the holders of record of all of the outstanding
shares of said corporation entitled to vote thereon, pursuant to the provisions
of Section 615 of the Business Corporation Law.
IN WITNESS WHEREOF, we have made, executed and signed this certificate this
9th day of January, 1979 and affirm that the statements made therein are true
under the penalties of perjury.
/s/Jack Webb
------------------------------
Jack Webb
President
(SEAL)
/s/Christopher C. York
------------------------------
Christopher C. York
Secretary
-2-
<PAGE>
Short
Certificate
STATE OF NEW YORK
Insurance Department
ALBERT B. LEWIS
SUPERINTENDENT OF INSURANCE
It is hereby certified that the annexed copy of Declaration of Intention and
Charter of FAMILY GUARDIAN LIFE INSURANCE COMPANY OF NEW YORK, of New York, New
York, as filed in this Department April 17, 1978,
has been compared with the original on file in this department and that it is a
correct transcript therefrom and of the whole of said original.
[Seal of the State In Witness Whereof, I have hereunto set my hand
of New York Insurance and affixed the official seal of this
Department] Department at the City of Albany, this
17th day of April 1978.
/s/Robert A. Grinelly
Special
Deputy Superintendent of Insurance
<PAGE>
DECLARATION OF INTENTION AND CHARTER
OF
FAMILY GUARDIAN LIFE INSURANCE COMPANY OF NEW YORK
WE, the undersigned, all being natural persons of full age, and at least
two-thirds of us citizens of the United States, and at least three (3) of us
being residents of the State of New York, do hereby declare our intention to
form a stock corporation for the purpose of doing the kinds of insurance
business authorized by Paragraphs "1", "2", and "3", respectively, of Section 46
of the Insurance Law of the State of New York, and for that purpose do hereby
adopt the following charter:
CHARTER
ARTICLE I
The name of this Corporation shall be:
FAMILY GUARDIAN LIFE INSURANCE COMPANY OF NEW YORK
ARTICLE II
The principal office of this Corporation shall be located in the County of
New York in the State of New York.
<PAGE>
ARTICLE III
SECTION 1. The kind or kinds of insurance to be transacted by the
Corporation are those kinds specified in Paragraphs "1", "2" and "3", Section
46, of Article IV of the Insurance Law of the State of New York, as follows:
1. "Life insurance," meaning every insurance upon the lives of human
beings and every insurance appertaining thereto. The business of life
insurance shall be deemed to include the granting of endowment
benefits; additional benefits in the event of death by accident or
accidental means; additional benefits operating to safeguard the
contract from lapse, or to provide a special surrender value, in the
event of total and permanent disability of the insured; and optional
modes of settlement of proceeds. Amounts paid to the Corporation for
life insurance and proceeds applied under optional modes of settlement
or under dividend options may be allocated by the Corporation to one
or more separate accounts pursuant to section two hundred
twenty-seven.
2. "Annuities," meaning all agreements to make periodical payments
where the making or continuance of all or some of a series of such
payments, or the amount of any such payment, is dependent upon the
continuance of human life, except payments made under the authority of
paragraph one. Amounts paid to the Corporation to provide annuities
and proceeds applied under optional modes of settlement or under
dividend options may be allocated by the Corporation to one or more
separate accounts pursuant to section two hundred twenty-seven.
3. "Accident and health insurance," meaning (a) Insurance against
death or personal injury by accident or by any specified kind or kinds
of accident and insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits pursuant to article
nine of the workmen's compensation law, except as specified in
subparagraph (b) following; and
(b) Non-cancellable disability insurance, meaning insurance
against disability resulting from sickness, ailment or bodily
injury (but not including insurance solely against accidental
injury) under any contract
-2-
<PAGE>
which does not give the insurer the option to cancel or
otherwise terminate the contract at or after one year from its
effective date or renewal date.
SECTION 2. The Corporation may also engage in the reinsurance of the kinds
of insurance business it is authorized to do.
SECTION 3. The foregoing enumeration of specific kinds of insurance shall
not be held to limit or restrict the powers of the Corporation to carry on any
other business to the extent necessarily or properly incidental to such kinds of
insurance.
SECTION 4. The Corporation shall have full power and authority to cede
reinsurance of any risks taken by it subject to the Insurance Law and the rules
and regulations of the Insurance Department of the State of New York.
ARTICLE IV
The mode and manner in which the corporate powers of the Corporation
shall be exercised is through a Board of Directors and through such Committees
of the Board of Directors, officers and agents as such Board and the By-Laws of
the Corporation shall empower.
ARTICLE V
SECTION 1. The number of the directors of the Corporation shall be not
less than thirteen (13) nor more than twenty-three (23) shall be determined
by the provisions of the By-Laws.
-3-
<PAGE>
In no case shall the number of directors be less than thirteen (13). In no case
shall a decrease in the number of directors shorten the term of any incumbent
director.
SECTION 2. The directors shall be elected at each annual meeting of the
stockholders of the Corporation, and the directors so elected shall hold office
for one year and until their respective successors shall have been elected and
shall have qualified. The directors shall be chosen and elected by a plurality
of the whole number of shares voted.
SECTION 3. Any director may be removed with or without cause by the
majority vote of the stockholders present in person or by proxy at any meeting
of stockholders. Not less than one-third of the directors may call a Special
Meeting for the purpose of removing any director for cause and at such Special
Meeting so called, such director may be removed by the affirmative vote of
two-thirds of the remaining directors.
SECTION 4. Whenever any vacancy in the Board of Directors shall occur by
death, resignation, removal or otherwise, and whenever the number of directors
is increased, such vacancy may be filled and such additional directors may be
elected, for the remainder of the term in which such event shall happen, by a
majority vote of the directors then in office in such manner as may be
prescribed by the By-Laws.
-4-
<PAGE>
SECTION 5. If the directors shall not be elected in any year at the
annual meeting of stockholders as hereinabove provided, or if, because of a
vacancy or vacancies on the Board of Directors, the number of the Board shall be
less than thirteen (13), the Corporation shall not for that reason be dissolved,
but every director shall continue to hold office and discharge his duties until
his successor shall have been elected.
SECTION 6. At all time a majority of the directors shall be citizens and
residents of the State of New York or of adjoining states, not less than three
(3) thereof shall be residents of the State of New York, and each director shall
be at least eighteen (18) years of age.
ARTICLE VI
The Board of Directors of the Corporation shall, immediately after the
organization of the Corporation, and thereafter at its first meeting after each
election of directors by the stockholders, elect from their number a President
and shall also elect a Treasurer and a Secretary who need not be members of the
Board of Directors, each of whom shall hold office at the pleasure of the Board
and until his successor shall be elected by the Board of Directors. The Board of
Directors of the Corporation shall have power at any time to appoint one or more
Vice Presidents and such other officers, agents or clerks as said Board of
Directors
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<PAGE>
shall deem expedient or proper for carrying on the business of the Corporation
and any person so appointed shall hold office at the pleasure of the Board of
Directors. Vacancies in any elective office may be filled for the remainder of
the term in which the same shall occur by a majority vote of the directors then
in office.
ARTICLE VII
Except as otherwise provided by law, the presence in person or by proxy at
any meeting of stockholders of the holders of a majority of shares of the
capital stock of the Corporation issued and outstanding and entitled to vote
thereat shall constitute a quorum. If, however, such majority shall not be
represented at any meeting of the stockholders, the holders of a majority of the
shares present or represented and entitled to vote thereat shall have the power
to adjourn the meeting from time to time without notice until the requisite
amount of shares entitled to vote at such meeting shall be represented. At such
adjourned meeting at which the requisite number of shares entitled to vote
thereat shall be represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
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<PAGE>
ARTICLE VIII
The names and post office residence addresses of the directors, who shall
serve until the first annual meeting of the Corporation, are as follows:
POST OFFICE RESIDENCE ADDRESSES
--------------------------------
GERALD J. ARMAO 241-22 148th Drive
Rosedale, New York 11422
GERALD E. BOCIAN 222 Martling Avenue
Tarrytown, New York 10591
CARL FELSENFELD 50 Riverside Drive
New York, New York 10024
GORDON E. INSLEY 113 Highmount Avenue
Upper Nyack, New York 10960
CALVERT A. JARED 15593 Bedford Forge #21
Chesterfield, Missouri 63107
RICHARD KOVACEVICH 226 Canoe Hill Road
New Canaan, Connecticut 06840
GEORGE J. MARTIN 58 Rotary Drive
Summit, New Jersey 07901
BETTY SUE PEABODY 220 East 63rd Street
New York, New York 10021
FENTON R. TALBOTT 425 Steeplechase Lane
Frontenac, Missouri 63131
FREDERIC W. THOMAS 257 Mansfield Avenue
Darien, Connecticut 06820
JACK WEBB 37 Brookwood Lane
New Canaan, Connecticut 06840
MICHAEL T. WITTE Hidden Brook Farm
Redding, Connecticut 06875
CHRISTOPHER C. YORK 11 Glenview Avenue
Darien, Connecticut 06820
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<PAGE>
ARTICLE IX
The duration of the corporate existence of this Corporation shall be
perpetual.
ARTICLE X
The holders of stock of the Corporation shall not have any pre-emptive,
preferential or other right to subscribe for or purchase or acquire any shares
of any class of stock or any other securities of the Corporation, whether now or
hereafter authorized, and whether or not convertible into, or evidencing or
carrying the right to purchase, shares of stock of any class or any other
securities now or hereafter authorized and whether the same shall be issued for
cash, services, or property, or by way of dividend, or otherwise, other than
such right, if any, as the Board of Directors in its discretion from time to
time may determine; but all such shares of stock or other securities may be
issued and disposed of by the Board of Directors, to the extent permitted by
law, in such manner to such person or persons, on such terms, for such
consideration and for such corporate purposes as the Board of Directors may deem
advisable.
ARTICLE XI
The amount of the authorized capital of this Corporation shall be ONE
MILLION ($1,000,000) DOLLARS, to consist of TWO HUNDRED
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THOUSAND (200,000) shares of stock of the par value of FIVE ($5.00) DOLLARS per
share.
ARTICLE XII
The Corporation may establish, maintain and operate offices and agencies
and conduct business outside the State of New York and in other states,
countries, territories, dependencies, protectorates and in the District of
Columbia, in such form and manner as the Board of Directors may determine.
ARTICLE XIII
The Board of Directors shall adopt By-Laws for its own regulation and that
of the conduct of the business of the Corporation, which By-Laws shall not be
inconsistent with this Charter or with the laws of the State of New York, and
which By-Laws may be modified, rescinded or amended from time to time by
majority vote of the Board of Directors at any special meeting called for that
purpose, or at any regular meeting.
IN WITNESS WHEREOF, we have signed this Declaration
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<PAGE>
and Charter this 31st day of March, 1978, and affirm that the statements made
therein are true under penalties of perjury.
/s/Gerald J. Armao /s/Gerald E. Bocian
------------------- ---------------------
Gerald J. Armao Gerald E. Bocian
/s/Carl Felsenfeld /s/Gordon E. Insley
------------------- ---------------------
Carl Felsenfeld Gordon E. Insley
/s/Calvert A. Jared /s/Richard Kovacevich
------------------- ---------------------
Calvert A. Jared Richard Kovacevich
/s/George J. Martin /s/Betty Sue Peabody
------------------- ---------------------
George J. Martin Betty Sue Peabody
/s/Fenton R. Talbot /s/Frederic W. Thomas
------------------- ---------------------
Fenton R. Talbot Frederic W. Thomas
/s/Jack Webb /s/Michael T. Witte
------------------- ---------------------
Jack Webb Michael T. Witte
/s/Christopher C. York
----------------------
Christopher C. York
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AMENDED BY-LAWS
OF
FIRST CITICORP LIFE INSURANCE COMPANY
(amended January 8, 1990)
ARTICLE I
LOCATION
Section 1. The principal office of the Corporation shall be in the County
of New York and State of New York. The Corporation may, in addition to the
principal office, establish and maintain such other office or offices, whether
in the State of New York or otherwise, as the Board of Directors may from time
to time designate or the business of the Corporation may require.
ARTICLE II
CORPORATE SEAL
Section 1. The Corporation shall have a seal. The corporate seal shall have
inscribed thereon the name of the Corporation. The corporate seal shall be in
seal form and have inscribed thereon such additional words and symbols as the
Board of Directors may from time to time prescribe. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or otherwise
reproduced.
<PAGE>
ARTICLE III
MEETINGS OF SHAREHOLDERS
Section 1. Time and Place. All meetings of the shareholders for the
election of directors and all meetings of shareholders for that or any other
purpose may be held at such place within or without the State of New York, and
at such time as may be designated in the notice of meeting.
Section 2. Annual Meetings. The annual meeting of shareholders shall be
held on the last day in April of each year, if not a legal holiday, and if a
legal holiday, then on the next succeeding business day, at such hour as shall
be specified in a notice given as provided in Section 4 of this Article III or
in a waiver of notice thereof.
Section 3. Special Meetings. Except as otherwise provided by statute,
special meetings of shareholders may be called for any purpose or purposes at
any time by the Chairman of the Board of Directors, the President, the Board of
Directors, or by the President or Secretary upon the written request of one or
more shareholders holding a majority in interest of the stock of the Corporation
issued and outstanding and entitled to vote at such meeting. Any such request
shall state the purpose or purposes of the proposed meeting.
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Section 4. Notice of Meeting. Notice of the time and place of holding each
annual and special meeting of the shareholders shall be in writing and signed by
the President or a Vice President or the Secretary or an Assistant Secretary and
a copy thereof shall be served, either personally or by mail, upon each
share-holder entitled to vote at such meeting, not less than ten or more than
fifty days before the meeting, and if mailed, it shall be directed to such
shareholder at such shareholder's address as it appears on the books of the
Corporation unless a written request be given that notices intended for such
shareholder be mailed to some other address, in which case it shall be mailed to
the address designated in such request.
The notice of every special meeting, besides stating the time and place of
such meeting, shall state the purpose or purposes thereof, and no business other
than that specified in such notice or germane thereto shall be transacted at the
meeting.
Section 5. Waiver of Notice. Notice of meeting need not be given (1) to any
shareholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting, or (2) to any shareholder who is in
attendance at any meeting, in person or by proxy, without protesting prior to
the conclusion of the meeting the lack of notice of such meeting.
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<PAGE>
Section 6. Quorum. At every meeting of the shareholders of the Corporation,
except as otherwise provided by law, the holders of a majority of the issued and
outstanding shares of capital stock of the Corporation, present in person or by
proxy and entitled to vote thereat, shall constitute a quorum for the
transaction of business. In the absence of a quorum a majority in interest of
the shareholders so present or represented and entitled to vote thereat may
adjourn the meeting from time to time and place to place until a quorum is
obtained, and the meeting may be held as adjourned without further notice. At
any such adjourned meeting at which a quorum is present any business may be
transacted which might have been transacted at the meeting as originally called.
The shareholders present at a duly called or held meeting at which a quorum is
present may continue to transact business until a final adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 7. Voting. At all meetings of shareholders every shareholder
entitled to vote thereat shall be entitled to one vote, in person or by proxy,
for each share of stock outstanding in such shareholder's name on the books of
the Corporation on the date for the determination of shareholders entitled to
vote at such meeting. Every proxy must be executed in writing by the shareholder
or by his duly authorized attorney and must be delivered to the secretary
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<PAGE>
of the meeting. No proxy shall be valid after the expiration of eleven months
from the date of its execution unless the shareholder executing it shall have
specified therein a longer duration. At all meetings of the shareholders, a
quorum being present, all matters except as otherwise provided by law, or the
Charter of the Corporation, or these By-Laws shall be decided by a majority in
interest of the shareholders of the Corporation present in person or by proxy
and entitled to vote. All elections of directors may, but need not be, held by
ballot.
Section 8. Organization. Meetings of the shareholders shall be presided
over by the Chairman of the Board of Directors or, if he is not present, by a
Vice President in the order determined by the President or, if none of the
foregoing is present, by a chairman to be chosen by a majority of the
shareholders entitled to vote who are present in person or by proxy at the
meeting. The Secretary of the Corporation, or in his absence an Assistant
Secretary, shall act as secretary of every meeting, but if neither the Secretary
nor an Assistant Secretary is present, the meeting shall choose any person
present to act as secretary of the meeting.
Section 9. Consents. Whenever by any provision of law or of the Charter of
this Corporation, the vote of shareholders at a meeting thereof is required or
permitted to be taken in connection
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<PAGE>
with any corporate action, the meeting and vote of shareholders may be dispensed
with, if all the shareholders who would have been entitled to vote upon the
action if such meeting were held, shall consent in writing to such action being
taken. However, this section shall not be construed to alter or modify any
provision of law or of the Charter under which the written consent of the
holders of less than all outstanding shares is sufficient for corporate action.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Election and Qualification of Directors. Directors shall be
elected at the annual meeting of shareholders by a plurality of the votes cast
and shall hold office for one year and until their respective successors shall
have been elected and shall have qualified. All directors shall be at least
eighteen (18) years of age and at least a majority shall be citizens and
residents of the United States and not less than three (3) shall be residents of
the State of New York. Directors need not be shareholders. A copy of the notice
of any meeting at which directors are to be elected, which is sent to the
shareholders, shall be filed in the office of the Superintendent of Insurance of
the State of New York at least ten (10) days before the day on which such
meeting is to be held.
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<PAGE>
Section 2. Number of Directors. The number of directors shall not be less
than thirteen (13) nor more than twenty-three (23), subject to change by action
of the shareholders or by resolution of the Board of Directors. Any change in
the number of directors made by resolution of the Board of Directors shall
require the affirmative vote of a majority of all directors then in office but
no decrease in the number of directors so made shall shorten the term of any
incumbent director.
Section 3. Vacancies. A vacancy or vacancies in the Board resulting from
death, resignation or removal of any director or from the increase in the number
of directors, or for any other cause, may be filled for the remainder of the
term by majority vote of the remaining directors at any regular meeting of the
Board or at any special meeting called for that purpose. A director so elected
shall not take office or exercise the duties thereof until ten (10) days after
written notice of his election shall have been filed in the office of the
Superintendent of Insurance of the State of New York.
Section 4. Duties and Powers. The Board of Directors shall have control and
management of the affairs and property of the
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<PAGE>
Corporation and may adopt such rules and regulations for the conduct of their
meetings and the management of the Corporation as they deem proper not
inconsistent with law or with the Charter of the Corporation or with these
By-Laws.
Section 5. Meetings. Meetings of the Board of Directors shall be held at
such place within or without the State of New York as may from time to time be
fixed by resolution of the Board of Directors, or as may be specified in the
notice of the meeting. Regular meetings of the Board of Directors shall be held
at such times as may from time to time be fixed by resolution of the Board of
Directors and special meetings may be held at any time upon the call of the
Chairman of the Board of Directors, the President or any Vice President or the
Secretary or an Assistant Secretary or any two directors by oral, telegraphic or
written notice duly served on or sent or mailed to each director not less than
two (2) days before such meeting. A meeting of the Board of Directors may be
held without notice immediately after the annual meeting of shareholders. Notice
need not be given of regular meetings of the Board of Directors. Meetings may be
held at any time without notice if all the directors are present, or if at any
time before or after the meeting those not present waive notice of the meeting
in writing
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<PAGE>
Any one or more members of the Board of Directors or any committee thereof
may participate in a meeting of such Board of Directors or committee by means of
a conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
Section 6. Quorum. A majority of the Board of Directors then in office at a
meeting duly assembled shall be necessary to constitute a quorum for the
transaction of business. Except as otherwise provided by law or by the Charter
of the Corporation, the act of a majority of directors present at such meeting
shall be the act of the Board.
Section 7. Resignations. Any director of the Corporation may resign at any
time by giving written notice to the Board or to the President or to the
Secretary of the Corporation. Such resignation shall take effect at the time
specified therein; and unless otherwise specified therein the acceptance of
such resignation shall not be necessary to make it effective.
Section 8. Removal Any one or more of the directors may be removed either
with or without cause at any time by vote of a majority of the shares issued and
outstanding and entitled to vote. Not less than one-third of the directors may
call a special meeting for the purpose of removing for cause any other director
and at
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<PAGE>
such special meeting so called, such director may be removed by the affirmative
vote of a majority of the remaining directors present at such meeting.
Immediately following each vote by which a director is removed the Board of
Directors shall declare the office of the removed director to be vacant.
Section 9. Compensation of Directors. Directors may, by resolution of the
Board of Directors, be allowed a fixed sum for serving as directors and expenses
for attendance at regular or special meetings of the Board of Directors;
provided that nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees, and others
who attend pursuant to direction, may, by vote of the Board of Directors, be
allowed a fixed sum and expenses for attending committee meetings.
ARTICLE V
COMMITTEES
Section 1. Executive Committee. The Board of Directors may, by resolution
adopted by a majority of the entire Board, designate an Executive Committee from
among its members consisting of five (5) or more directors as it may, in its
discretion, think proper and shall so designate by resolution.
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<PAGE>
The Executive Committee shall have and may exercise, when the Board is not
in session, so far as may be permitted by law, all of the rights and powers of
the Board of Directors in the management of the business and affairs of the
Corporation except to the extent such powers of the Board are by resolution of
the Board or by these By-Laws are reserved to the Board or to other committees
of the Board, and shall have power to authorize the seal of the Corporation to
be affixed to all papers which may require it; but the Executive Committee shall
not have power to fill vacancies in the Board, or to change the membership of,
or to fill vacancies in any committee of the Board, or to make or amend the
By-Laws of the Corporation.
The Board shall have the power at any time to fill vacancies in, to change
the membership of, to change the number of members of, designate one or more
alternate members of, or to dissolve, the Executive Committee. The Executive
Committee may make rules for the conduct of its business and may appoint such
committees and assistants as it shall from time to time deem necessary.
The Committee shall keep a record of its proceedings and shall adopt its
own rules of procedure except that a quorum shall consist of at least three (3)
members, not more than two (2) of whom may be officers or salaried employees of
the Corporation. The Committee shall submit copies of its minutes to the Board
of Directors.
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<PAGE>
Section 2. Investment Committee. The investments of the Corporation shall
be managed and controlled by an Investment Committee. The Investment Committee
shall consist of at least five (5) members who shall be appointed by the Board
of Directors from its own membership at the annual meeting of the Board of
Directors to serve until the next succeeding annual meeting and until their
successors on the Committee have been appointed. The Board shall have the power
at any time to fill vacancies in, to change the membership of, to change the
number of members of, to designate one or more alternate members of, or to
dissolve, the Investment Committee.
The Investment Committee shall have and may exercise, when the Board is not
in session, all rights and powers of the Board of Directors to make, supervise,
and control the investments of the Corporation, inclusive of all real and
personal property acquired by virtue or incidental to any investment, to sell,
assign, exchange, lease or otherwise dispose of such investments and property,
and to do and perform all things deemed necessary and proper in relation to such
investments and property.
The Committee shall keep a record of its proceedings and shall adopt its
own rules of procedure except that a quorum shall consist of at least three (3)
members not more than two (2) of whom may be officers or salaried employees of
the Corporation. The Committee
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<PAGE>
shall submit copies of its minutes to the Board of Directors.
Section 3. Other Committees. The Board of Directors may from time to time
by resolution create such other committee or committees of Directors, officers,
employees or other persons designated by the Board, to advise with the Board,
the Executive Committee and the officers and employees of the Corporation in all
such matters as the Board shall deem advisable, and with such functions and
duties as the Board shall by resolution prescribe. A majority of all members of
any such committee may determine its action and fix the time and place of its
meetings, unless the Board of Directors shall otherwise provide. The Board of
Directors shall have power to change the members of any such committee at any
time, and to discharge any such committee, either with or without cause at any
time.
ARTICLE VI
OFFICERS
Section 1. Officers. The Board of Directors shall, immediately after the
organization of the Corporation, and thereafter at their first meeting following
the annual election of directors, elect from their number a Chairman of the
Board, and shall also elect a President, Secretary and a Treasurer, who need not
be members of the Board of Directors. The Board may, at any time, also elect
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one or more Vice Presidents, and such Assistant Treasurers or Assistant
Secretaries, or other officers, as it may deem proper. More than one office may
be held by the same person, except that the offices of President and Secretary
may not be held by the same person.
Section 2. Term. Each officer of the Corporation elected by the Board of
Directors shall hold office until his successor is chosen and qualified, or
until he shall have died or resigned or shall have been removed as hereinafter
provided. A vacancy in any office arising from any cause may be filled by the
Board of Directors.
Section 3. Duties of the Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the share-holders and of the Board of
Directors. He shall have such other powers and perform such other duties as may
be assigned to him by the Board of Directors.
Section 4. Duties of the President. The President shall be the Chief
Executive Officer of the Corporation. He shall have general and active
supervision and direction over the business offices of the Corporation, subject
to the control of the Board of Directors whose policies he shall execute. He
shall see that all orders and resolutions of the Board of Directors are carried
into effect and shall, in the absence of the Chairman of the Board,
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preside at all meetings of shareholders and of the Board of Directors. Except
when inconsistent with the Corporation's Charter, these By-Laws, or with the
orders and resolutions of the Board of Directors, he shall have the power to
employ, fix the duties, and discharge such employees as he may deem necessary
and proper. The President shall make such reports to the Board of Directors as
it may require.
Section 5. Duties of Vice President. Each Vice President shall undertake
such of the duties of the President, or such other duties, as may be delegated
to him from time to time by the President or by the Board of Directors.
Section 6. Duties of Secretary. The Secretary shall attend all meetings of
the shareholders, of the Board of Directors, and of the Executive Committee of
the Board, and record their proceedings in a book kept for that purpose. He
shall perform other duties incident to his office and such other duties as may
be delegated to him by the Board of Directors or the President. He shall see
that proper notice is given of all meetings of the shareholders of the
Corporation and of the Board of Directors, and he shall have charge of the
corporate seal, the minute books, and such other corporate records as are not
otherwise provided for. He shall affix the seal to any instrument requiring the
same. Any Assistant Secretary may perform the duties of the Secretary in
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his absence, and such of the duties of the Secretary as may be delegated to him
by that officer or by the Board of Directors or the President.
Section 7. Duties of Treasurer. The Treasurer shall be charged with the
supervision of the keeping of the funds and books of account of the Corporation
and with their safekeeping, shall carry out such duties as are incident to his
office and shall further perform such other duties as may be delegated to him by
the Board of Directors or by the President. Any Assistant Treasurer may perform
the duties of the Treasurer in his absence, and such of the duties of the
Treasurer as may be delegated to him by that officer or by the Board of
Directors or the President.
Section 8. Removal. Any officer may be removed either with or without cause
at any time by a vote of a majority of the directors.
ARTICLE VII
SHARE CERTIFICATES
Section 1. Form of Certificates. The shares of the Corporation shall be
represented by certificates, in such form as the Board of Directors may from
time to time prescribe, signed by the Chairman of the Board of Directors, the
President or a Vice President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, and sealed with the seal of the
Corporation. Such seal may be a facsimile, engraved or printed. Where any such
certificate
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is signed by a transfer agent or transfer clerk and by a registrar, the
signatures of any such Chairman of the Board of Directors, President, Vice
President, Secretary, Assistant Secretary, Treasurer, or Assistant Treasurer
upon such certificates may be facsimiles, engraved or printed. In case any such
officer who has signed or whose facsimile signature has been placed upon such
certificates shall have ceased to be such before such certificate is issued, it
may be issued by the Corporation with the same effect as if such officer had not
ceased to be such at the date of its issue.
Every certificate representing shares issued by the Corporation shall
plainly state upon the face thereof the number, kind and class of shares which
it represents.
Section 2. Transfers. Transfers of shares shall be made only upon the books
of the Corporation by the registered holders in person or by power of attorney
duly executed and acknowledged and filed with the Secretary of the Corporation,
or with a duly appointed Transfer Agent acting for and on behalf of the
Secretary, and upon the surrender of the certificate or certificates for such
shares.
Section 3. Lost Certificates. If any certificate of shares shall be lost,
the holder thereof shall forthwith notify the Corporation of the facts and the
Board of Directors or the Executive Committee may then authorize a new
certificate to be
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issued to him. The Board of Directors or the Executive Committee may in its
discretion require, as a condition precedent, deposit of a bond in such amount
and in such form and with surety or sureties as the Board or the said Committee
may direct.
Section 4. Closing Share Bonds. The Board of Directors or the Executive
Committee may by resolution prescribe a period not less than ten (10) nor more
than fifty (50) days prior to any meeting of shareholders during which no
transfer of shares on the books of the Corporation may be made; or in lieu of
prohibiting the transfer of shares may fix a day and hour not less than ten (10)
nor more than fifty (50) days prior to the holding of any meeting of
shareholders as the time as of which shareholders entitled to notice of and to
vote at such meeting shall be determined or for the taking of a dividend list.
The share books may also be closed for the payment of dividends for such like
period, if any, as may be prescribed by resolution of the Board of Directors or
of the Executive Committee.
Section 5 Transfer Agent and Registrar. The Board of Directors may appoint
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for shares to bear the signature or
signatures of any of them.
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ARTICLE VIII
INDEMNIFICATION OF OFFICERS AND
DIRECTORS
Section 1. To the extent permitted by law:
(a) The Corporation shall indemnify any person made a party to an action or
proceeding by or in the right of the Corporation to procure a judgment in its
favor, by reason of the fact that he, his testator or intestate, is or was a
director or officer or employee of the Corporation against the reasonable
expenses, including attorney's fees, actually and necessarily incurred by him in
connection with the defense of such action or proceeding, or in connection with
an appeal therein, except in relation to matters as to which such person is
adjudged to have breached his duty to the Corporation; and
(b) The Corporation shall indemnify any person made, or threatened to be
made a party to an action or proceeding other than one by or in the right of the
Corporation to procure a judgment in its favor, whether civil or criminal,
including an action by or in the right of any other corporation of any type or
kind domestic or foreign, which any director or officer or employee of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he, his testator or intestate, was a director or officer or
employee of the Corporation, or served
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such other corporation in any capacity, against judgments, fines, amounts paid
in settlement and reasonable expenses, including attorneys' fees, actually and
necessarily incurred as a result of such action or proceeding, or any appeal
therein, if such person acted in good faith, for a purpose which he reasonably
believed to be in the best interests of the Corporation and, in criminal actions
or proceedings, in addition, had no reasonable cause to believe that his conduct
was unlawful.
ARTICLE IX
CONFLICT OF INTERESTS
No director or officer of the corporation shall receive, in addition to his
fixed salary or compensation, any money or valuable thing, either directly or
indirectly, or through any substantial interest in any other corporation or
business unit, for negotiating, procuring, recommending or aiding in any
purchase or sale of property, or loan, made by the Corporation or any affiliate
or subsidiary thereof; nor shall he be pecuniarily interested, either as
principal, co-principal, agent or beneficiary, either directly or indirectly, or
through any substantial interest in any other corporation or business unit, in
any such purchase, sale or loan.
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ARTICLE X
DIVIDENDS
Section 1. Dividends. Dividends on the issued and outstanding stock from
the profits made by the Corporation, not including the surplus arising from the
sale of stock, may be declared by the Board of Directors, from time to time. The
Board of Directors shall fix the date of payment of dividends and the record
date of stock entitled thereto.
ARTICLE XI
MISCELLANEOUS
Section 1. Execution of Contracts and other Instruments. The President, any
Vice President, the Secretary, and the Treasurer shall each have general
authority to execute contracts, bonds, deeds and powers of attorney in the name
and on behalf of the Corporation. Any contract, bond, deed or power of attorney
may also be executed in the name of and on behalf of the Corporation by such
other officer or such other agent as the Board of Directors may from time to
time direct. The provisions of this Section 1 are supplementary any other
provision of these By-Laws.
Section 2. Shares of Other Corporations. The President and any Vice
President, is authorized to vote, represent and exercise on behalf of the
Corporation, all rights incident to any and all shares of any other corporation
or corporations standing in the
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name of the Corporation. The authority herein granted to said officer to vote or
represent on behalf of the Corporation any and all shares held by the
Corporation in any other corporation or corporations may be exercised either by
said officer in person or by any person authorized so to do by proxy or power of
attorney duly executed by said officer. Notwithstanding the above, however, the
Board of Directors, in its discretion, may designate by resolution the person to
vote or represent said shares of other corporations.
ARTICLE XII
AMENDMENTS
Section 1. Power to Amend. These By-Laws may be altered, repealed, or
amended in whole or in part by the Board of Directors at any regular meeting of
the Board of Directors, or at a special meeting called for that purpose,
provided that notice of the proposed change is incorporated in the notice of
such special meeting.
Section 2. Notice to Shareholders. If any By-Law regulating an impeding
election of directors is adopted, amended or repealed by the Board of Directors,
there shall be set forth in the notice of the next meeting of shareholders for
the election of directors the By-Law so adopted, amended or repealed, together
with a concise statement of the changes made.
-22-
<PAGE>
EMERGENCY BY-LAWS
1. Definitions. For the purpose of these Emergency By-Laws, the term
"Emergency Act" means the New York State Defense Emergency Act as now or
hereafter amended; the term "Regular By-Laws" means the By-Laws of the Company
as now or hereafter amended and the terms defined in the Emergency Act shall,
unless the context otherwise requires, have the meanings, specified therein.
2. Effectiveness and Scope of Emergency By-Laws. Pursuant to the Emergency
Act, the Emergency By-Laws shall be operative only during an acute emergency
(and as determined pursuant to declaration of the Superintendent under
subdivision 3(a) of section 99 of the Emergency Act), and shall be so operative
notwithstanding any inconsistent requirements or provisions of the Regular
By-Laws, the Company's Charter, the Business Corporation Law or the Insurance
Law. The Regular By-Laws shall continue to be operative during an acute
emergency (and during any period when the Emergency By-Laws shall be operative
as aforesaid) except with respect to matters specifically provided for by the
Emergency By-Laws to the extent provided for therein. The provisions of the
Emergency Act, including but not limited to Section 98, shall apply to the
Company except with respect to matters therein provided for by the Emergency
By-Laws to the extent provided for therein.
3. Powers of Board. In addition to the other powers possessed by it, the
Board of Directors shall (subject to the last sentence of Emergency By-Law 2)
have all the powers of an emergency board of directors specified in the
Emergency Act.
4. Meetings of Board; Quorum; Votes Necessary for Action. If at any time no
person authorized by the Regular By-Laws or otherwise to call meetings of the
Board of Directors is available and capable of acting, a
-23-
<PAGE>
meeting of the Board of Directors may be called by any director or acting
director or, if no director or acting director is available and capable of
acting, by any officer or acting officer. Meetings of the Board may be held at
such time and at such places, within or without the State of New York, as shall
be specified in the call for such meetings. Notice of each meeting shall, if
practicable, be given at least one day prior to the date of such meeting. If it
shall be impracticable or impossible to give notice of a meeting in the manner
otherwise prescribed, the person calling such meeting may give notice thereof by
making such reasonable efforts as circumstances may permit to notify each
director and acting director of the time and place of such meeting, but need not
specify the purpose thereof. Failure to give notice at least one day in advance
of the date of a meeting, or failure of any directors or acting directors to
receive notice of a meeting, shall not affect the power of the directors or
acting directors present at such meeting or the validity of any action taken at
such meeting. Any three or more directors, or acting directors, or directors and
acting directors, shall constitute a quorum for the transaction of business at a
meeting. Whether or not a quorum is present, a majority of the total number of
directors and acting directors present, or if only one director or acting
director is present that one, may adjourn any meeting from time to time and from
place to place. An affirmative vote of a majority of the total number of
directors and acting directors present at a meeting shall be necessary for
action by the Board of Directors at such meeting.
5. Manner of Filling Vacancies on Board: Acting Directors. If a quorum is
not present at a meeting which shall have been called pursuant to the Regular
By-Laws or the Emergency By-Laws, the member or members of the Board present
shall forthwith appoint, to act at such meeting or any
-24-
<PAGE>
adjournment thereof, the acting directors required to have a quorum present at
such meeting. Officers or acting officers may be appointed or elected acting
directors. If for any reason there is no director or acting director present at
a meeting, the senior officers or acting officers present at such meeting shall
be acting directors at such meeting to the extent necessary to constitute a
quorum for such meeting. Seniority of officers and acting officers shall be
determined by and follow the line of succession specified in paragraph 6. At any
meeting the Board of Directors may elect such acting directors as it may deem
necessary, without regard to the number of directors which would otherwise be
required, to serve in any positions on the Board which are vacant or in place of
any directors or acting directors who are absent from such meeting. No acting
director shall take part in the deliberations or vote at any meeting of the
Board which is duly convened in accordance with the applicable provisions of the
Regular By-Laws and at which the quorum of directors required by the Regular
By-Laws is present. Each acting director shall serve until the director or
acting director in whose place he was elected shall attend a meeting of the
Board or until a director is duly elected on a permanent basis, in accordance
with the applicable provisions of the Regular By-Laws, the Company's Charter and
the Insurance Law, to fill the vacancy in which such acting director has been
serving, whichever event shall first occur.
6. Line of Succession of Officers. If at any time an officer is not
availably capable of acting, his duties and responsibilities of that office
shall be assumed by the officer next in rank in accordance with the following
table of succession:
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Chairman of the Board
President
Vice President (If more than one, in the order elected)
Secretary
Treasurer
These officers shall serve in such capacity until the next meeting of the Board
of Directors or the Emergency Board of Directors at which time acting or
permanent officers may be elected in accordance with these By-Laws. However,
until such election, the performance of the duties of an officer by one acting
pursuant to this By-Law shall be conclusive evidence of his authority so to do.
7. Amendment. The Emergency By-Laws may, at any time before or after they
become operative, be altered or amended in the same manner as is provided for
the adoption thereof.
3/1/89
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AMENDMENT NO. 1 TO PARTICIPATION AGREEMENT AMONG
VARIABLE INSURANCE PRODUCTS FUND
FIDELITY DISTRIBUTORS CORPORATION
and
FIRST CITICORP LIFE INSURANCE COMPANY
WHEREAS, FIRST CITICORP LIFE INSURANCE COMPANY (the "Company"), VARIABLE
INSURANCE PRODUCTS FUND (the "Fund") and FIDELITY DISTRIBUTORS CORPORATION have
previously entered into a Participation Agreement (the "Agreement") containing
certain arrangements concerning prospectus costs; and
WHEREAS, the Trustees of the Fund have approved certain changes to the
expense structure of the Fund; and
NOW, THEREFORE, the parties do hereby agree to amend the Agreement by
substituting the following arrangement in place of any inconsistent language in
the Participation Agreement, wherever found:
1. The Fund will provide to the Company each year, at the Fund's cost, such
number of prospectuses and Statements of Additional Information as are actually
distributed to the Company's then existing variable life and/or variable annuity
contract owners.
2. If the Company takes camera-ready film or computer diskettes containing
the Fund's prospectus and/or Statement of Additional Information in lieu of
receiving hard copies of these documents, the Fund will reimburse the Company in
an amount computed as follows. The number of prospectuses and Statements of
Additional Information actually distributed to existing contract owners by the
Company will be multiplied by the Fund's actual per-unit cost of printing the
documents.
3. The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund in order to verify that
the prospectuses and Statements of Additional Information provided to the
Company, or the reimbursement made to the Company, are or have been used only
for the purposes set forth hereinabove.
IN WITNESS WHEREOF we have set our hand as of the 15th day of December,
1994.
FIRST CITICORP LIFE INSURANCE COMPANY
By: /s/Charles R. Haskins
Name: Charles R. Haskins
Tittle: V.P.
VARIABLE INSURANCE PRODUCT FUND FIDELITY DISTRIBUTORS CORPORATION
By: /J. Gary Burkhead By: /s/Kurt A. Lange
Name: J. Gary Burkhead Name: Kurt A. Lange
Tittle: Senior Vice President Title: President
LG943260.022
<PAGE>
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
FIRST CITICORP LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 17th day of October, 1994
by and among FIRST CITICORP LIFE INSURANCE COMPANY, (hereinafter the "Company"),
a New York corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter the "Fund") and
FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and the
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
under this Agreement, as may be amended from time to time by mutual agreement of
the parties hereto (each such series hereinafter referred to as "Portfolio");
and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated October 15, 1985 (File No. 812-6102), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); and
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WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
insurance or variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Fund
which each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1, the Company shall
be the designee of the Fund for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives notice of such order by 10:00 a.m. Eastern time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
2
<PAGE>
1.2 The Fund agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the Securities and Exchange Commission and the Fund shall use reasonable efforts
to calculate such net asset value on each day which the New York Stock Exchange
is open for trading. Notwithstanding the foregoing, the Board of Trustees of the
Fund (hereinafter the "Board") 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 Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests on
a daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.5,
the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption on the next following Business Day.
1.6 The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable annuity contracts with the form number(s) which are
listed on Schedule A attached hereto and incorporated herein by this reference,
as such Schedule A may be amended from time to time hereafter by mutual written
agreement of all the parties hereto, (the "Contracts") shall be invested in the
Fund, in such other Funds advised by the Adviser as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund; or (b) the Company
gives the Fund and the Underwriter 45 days written notice of its intention to
make such other investment company available as a funding vehicle for the
Contracts; or (c) such other investment company was available as a funding
vehicle for the Contracts prior to the date of this Agreement and the Company so
informs the Fund and Underwriter prior to their signing this Agreement (a
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<PAGE>
list of such funds appearing on Schedule C to this Agreement); or (d) the Fund
or Underwriter consents to the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to receive
all such income dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The fund shall notify the Company of the
number of shares so issued as payment of such dividends and distributions.
1.10 The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Eastern time)
and shall use its best efforts to make such net asset value per share available
by 7 p.m. Eastern time.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Section 4240 of the New York Insurance Code and has registered or, prior
to any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with the laws of the State of Arizona and all applicable
federal and state securities laws and that the Fund is and shall remain
registered under the 1940 Act. The Fund shall amend
4
<PAGE>
the Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4 The Company represents that the Contracts are currently treated as
endowment or annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and the
it will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. The Fund has adopted a "no
fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for
distribution expenses. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of
trustees, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of New York and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of New York to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of New York and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
5
<PAGE>
2.9 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of New
York and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, in an amount not less $5
million. The aforesaid includes coverage for larceny and embezzlement is issued
by a reputable bonding company. The Company agrees to make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, and agrees to notify the Fund and the Underwriter in the event
that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements: Voting
3.1. The Underwriter shall provide the Company (at the Company's expense)
with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
for the Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense.)
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter (or in the Fund's
discretion, the Prospectus shall state that such Statement is available from the
Fund), and the Underwriter (or the Fund), at its expense, shall print and
provide such Statement free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement.
3.3. The Fund, at its expense, shall provide the Company with copies of its
proxy statements, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
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<PAGE>
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio for which instructions have been received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund or its investment adviser or the Underwriter is named, at least
fifteen Business Days prior to its use. No such material shall be used if the
Fund or its designee reasonably objects to such use within fifteen Business Days
after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statement on behalf of the Fund or concerning the Fund in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Fund shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports or proxy statements for the Fund, or in sales literature
or other promotional material approved by the Fund or its designee or by the
Underwriter, except with the permission of the Fund or the Underwriter or the
designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company and/or its separate
accounts(s), is named at least fifteen Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within fifteen Business Days after receipt of such material.
7
<PAGE>
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the fling of such document with the SEC or
other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Fund or any affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media), sales literature (i.e., any
written communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, Statements of
Additional Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
5.1. The fund and Underwriter shall pay no fee or other compensation to the
Company under this agreement, except that if the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
the Underwriter may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Underwriter in writing and such
payments will be made out of existing fees otherwise payable to the Underwriter,
past profits of the Underwriter or other resources available to the
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<PAGE>
Underwriter. No such payments shall be made directly by the Fund. Currently, no
such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares, preparation and
filing of the Fund's prospectus and registration statement, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or sate law, and all taxes on the issuance
or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of printing and distributing the
Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify Company of such breach and (b) to adequately diversify the
Fund so as to achieve compliance with the grace period afforded by Regulation
817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall
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promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
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 (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
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<PAGE>
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
the (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2- and
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and each
trustee of the Board and officers and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material
11
<PAGE>
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in conformity
with information furnished to the Company by or on behalf of the Fund for
use in the Registration Statement or prospectus for the Contracts or in the
Contracts or sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the Registration
Statement, prospectus or sales literature of the Fund not supplied by the
Company, or persons under its control) or wrongful conduct of the Company
or persons under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) Arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement, prospectus, or sales
literature of the Fund 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 or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company 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
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to
12
<PAGE>
notify the Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified party against whom such
action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Company shall be entitled to participate, at its own expense,
in the defense of such action. The Company also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the Contracts or
the operation of the Fund.
8.2 Indemnification by the Underwriter
8.2(a). The Underwriter 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 1933 Act (collectively, the
"Indemnified Parties" for the purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter) or litigation (including legal and other
expenses ) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or prospectus or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the Registration
Statement or prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration
Statement,
13
<PAGE>
prospectus or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful conduct of the
Fund, Adviser or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Fund shares;
or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or
sales literature covering the Contracts, 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 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; or
(iv) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements specified in Article VI
of this Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the provisions of
Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, which ever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter 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 such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses
14
<PAGE>
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter 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 the Contracts or the
operation of each Account.
8.3. Indemnification By the Fund
8.3(a). 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 1933 Act (collectively, the
"Indemnified Parties" for the purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure to comply with the diversification requirements specified in
Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund 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 such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve the Fund from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
15
<PAGE>
Indemnified Parties, the Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the Fund
of the commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by 90 days advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
16
<PAGE>
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar provision,
or if the Company reasonably believes that the Fund may fail to so
qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio the event that such
Portfolio fails to meet the diversification requirements specified in
Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written notice to
the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice
was given there was no notice of termination outstanding under any
other provision of this Agreement; provided, however any termination
under this Section 10.1(h) shall be effective 60 days after the notice
specified in Section 1.6(b) was given.
10.2 Effect of Termination. Not withstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the Contracts
(as opposed to Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of
17
<PAGE>
the 1940 Act. Upon request, the Company will promptly furnish to the Fund and
the Underwriter the opinion of counsel of the Company (which counsel shall be
reasonably satisfactory to the Fund and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption,.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Contract Owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund or the Underwriter 90 days notice of its intention to do so.
ARTICLE IX. 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.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
First Citicorp Life Insurance Company
One Court Square, 25th Floor
Long Island City, NY 11120
Attention: Alan F. Liebowitz
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 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
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
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<PAGE>
12.3 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.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, stature, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Underwriter, if such assignee is duly licensed and registered
to perform the obligations of the Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles), as soon as practical and in any event within 90 days
after the end of each fiscal year;
(b) the Company's quarterly statements (statutory), as soon as practical
and in any event within 45 days after the end of each quarterly
period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
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<PAGE>
(d) any registration statement (without exhibits) and financial reports of
the Company filed with the Securities and Exchange Commission or any
state insurance regulator, as soon as practical after the filing
thereof;
(e) any other report submitted to the Company by independent accountants
in connection with any annual , interim or special audit made by them
of the books of the Company, a soon as practical after the receipt
thereof, but only if such report contains material adverse financial
information concerning the Company.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
FIRST CITICORP LIFE INSURANCE COMPANY
By: /s/Charles R. Haskins
Name: Charles R. Haskins
Title: V. P.
VARIABLE INSURANCE PRODUCTS FUND
By: /s/J. Gary Burkhead
Name: J. Gary Burkhead
Title: Senior V. P.
FIDELITY DISTRIBUTORS CORPORATION
By: /s/Kurt A. Lange
Name: Kurt A. Lange
Title: President
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Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
First Citicorp Life Variable Annuity 63-1103(05-94)
Separate Account
(July 6, 1994)
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SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement.
Underwriter will provide the last Annual Report to the Company pursuant to
the terms of Section 3.3 of the Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
22
<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion
into envelopes (envelopes and return envelopes are provided and paid for by
the Insurance Company). Contents of envelope sent to Customers by Company
will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but not including) the meeting,
counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
23
<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, than an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Eastern time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
24
<PAGE>
SCHEDULE C
Non-Fidelity investment companies currently available under variable annuities
or variable life insurance issued by the Company:
AIM Variable Insurance Funds, Inc.
MFS Variable Insurance Trust
Landmark Variable Insurance Products Fund
25
<PAGE>
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
FIRST CITICORP LIFE INSURANCE COMPANY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this day of November, 1994 by and
among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), FIRST CITICORP LIFE INSURANCE COMPANY, a New York corporation (the
"Company"), on its own behalf and on behalf of the First Citicorp Life Variable
Annuity Separate Account (the "Account") and other segregated asset accounts of
the Company (the "Accounts"), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a
Delaware corporation ("MFS").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and its shares are registered or will be registered under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, the series of shares of the Trust offered by the Trust to the
Company and the Accounts are set forth on Schedule A attached hereto (each, a
"Portfolio," and, collectively, the "Portfolios");
WHEREAS, MFS is dully registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law, and is the Trust's investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or variable
life insurance contracts (individually, the "Policy" or, collectively, the
"Policies") which, if required by applicable law, will be registered under the
1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolution of the Board of Directors of the Company, to
set aside and invest assets attributable to the aforesaid variable annuity
and/or variable life insurance contracts that are allocated to the Accounts (the
Policies and the Accounts covered by this Agreement, and each corresponding
Portfolio covered by this Agreement in which the Accounts invest, is specified
in Schedule A attached hereto as may be modified from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS; MFS Investor Services, Inc. (the "Underwriter") is registered as a
broker-dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), and is
a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD");
<PAGE>
WHEREAS, Landmark Funds Broker-Dealer Services, Inc., the underwriter for
the individual variable annuity and the variable life policies, is registered as
a broker-dealer with SEC under the 1934 Act and is a member in good standing of
the NASD; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Share") on behalf of
the Accounts to fund the Policies, and the Trust intends to sell such Shares to
the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, MFS,
and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Company those Shares which the
Accounts order (based on orders placed by Policy holders on that Business
Day, as defined below) and which are available for purchase by such
Accounts, executing such orders on a daily basis at the net asset value
next computed after receipt by the Trust or its designee of the order for
the Shares. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders from Policy owners and
receipt by such designee shall constitute receipt by the Trust; provided
that the Trust receives notice of such orders by 9:30 a.m. New York time on
the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange, Inc. (the "NYSE") is open for trading and on
which the Trust calculates its net asset value pursuant to the rules of the
SEC.
1.2. The Trust agrees to make the Shares available indefinitely for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the SEC and the Trust shall calculate such net asset
value on each day which the NYSE is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Trust (the "Board") may refuse to
sell any Shares to the Company and the Accounts, or suspend or terminate
the offering of the Shares if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of
the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interest of
the Shareholders of such Portfolio.
1.3 The Trust and MFS agree that the Shares will be sold only to insurance
companies which have entered into participation agreements with the Trust
and MFS (the "Participating Insurance Companies") and their separate
accounts, qualified pension and retirement plans and MFS or its affiliates.
The Trust and MFS will not sell Trust shares to any insurance company or
separate account unless and agreement containing provisions substantially
the same as Articles III and VII of this Agreement is in effect to govern
such sales. The Company will not resell the Shares except to the Trust or
its agents.
1.4. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional Shares held by the Accounts (based on orders placed by
Policy holders on that Business Day), executing such requests on a daily
basis at the net asset value next computed after receipt by the Trust or
its designee of the request for redemption. For purposes of this Section
1.4, the Company shall be the designee of the Trust for receipt of requests
for redemption from Policy owners and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of
such request for redemption by 9:30 a.m. New York time on the next
following Business Day.
1.5. Purchase, redemption and exchange orders placed by the Company shall
be placed separately for each Portfolio and shall not be netted. However,
with respect to payment of the purchase price by the Company and of
redemption proceeds by the Trust, the Company and the Trust shall net
purchase and
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<PAGE>
redemption orders with respect to each Portfolio and shall transmit one net
payment per Portfolio in accordance with Section 1.6.
1.6. In the event of net purchases, the Company shall pay for the Shares by
2:00 p.m. New York time on the next Business Day after an order to purchase
the Shares is made in accordance with the provisions of Section 1.1.
hereof. In the event of net redemptions, the Trust shall pay the redemption
proceeds by 2:00 p.m. New York time on the next Business Day after an order
to redeem the shares is made in accordance with the provisions of Section
1.4. hereof. All such payments shall be in federal funds transmitted by
wire.
1.7. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from the Trust will be recorded in an appropriate title for the
Accounts or the appropriate subaccounts of the Accounts.
1.8. The Trust shall furnish same day notice (by wire or telephone followed
by written confirmation) to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to receive
all such dividends and distributions as are payable on a Portfolio's Shares
in additional Shares of that Portfolio. The Trust shall notify the Company
of the number of Shares so issued as payment of such dividends and
distributions.
1.9. The Trust or its custodian shall make the net asset value per
share for each Portfolio available to the Company on each Business Day
as soon as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make such net asset value
per share available by 6:30 p.m. New York Time. In the event that the
Trust is unable to meet the 6:30 p.m. time stated herein, it shall
provide additional time for the Company to place orders for the
purchase and redemption of Shares. Such additional time shall be equal
to the additional time which the Trust takes to make the net asset
value available to the Company. If the Trust provides materially
incorrect share net asset value information, the Company shall be
entitled to an adjustment to the number of shares purchased or redeemed
to reflect the correct net asset value per share. Any material error in
the calculation or reporting of net asset value per share, dividend or
capital gains information shall be reported promptly upon discovery to
the Company.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND CONVENANTS
2.1. The Company represents and warrants that the Policies are or will
be registered under the 1933 Act or are exempt from or not subject to
registration thereunder, and that the Policies will be issued, sold,
and distributed in compliance in all material respects with all
applicable state and federal laws, including without limitation the
1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the 1940 Act. The Company further represents and warrants
that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established
the Account as a segregated asset account under the applicable law and
has registered or, prior to any issuance or sale of the Policies, will
register the Accounts as unit investment trusts in accordance with the
provisions of the 1940 Act (unless exempt therefrom) to serve as
segregated investment accounts for the Policies, and that it will
maintain such registration for so long as any Policies are outstanding.
The Company shall amend the registration statements under the 1933 Act
for the Policies and the registration statements under the 1940 Act for
the Accounts from time to time as required in order to effect the
continuous offering of the Policies or as may otherwise be required by
applicable law. The Company shall register and qualify the Policies for
sales accordance with the securities laws of the various states only if
and to the extent deemed necessary by the Company.
2.2 Subject to Article VI, the Company represents and warrants that the
Policies are currently and at the time of issuance will be treated as
life insurance, endowment or annuity contract under applicable
provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), that it will make every effort to maintain
-3-
<PAGE>
such treatment and that it will notify the Trust or MFS immediately
upon having a reasonable basis for believing that the policies have
ceased to be so treated or that they might not be so treated in the
future.
2.3. The Company represents and warrants that Landmark Funds
Broker-Dealer Services, Inc., the underwriter for the individual
variable annuity and the variable life policies, is a member in good
standing of the NASD and is a registered broker-dealer with the SEC.
The Company represents and warrants that the Company and Landmark Funds
Broker-Dealer Services, Inc. will sell and distribute such policies in
accordance in all material respects with all applicable state and
federal securities laws, including without limitation the 1933 Act, the
1934 Act, and the 1940 Act.
2.4. The Trust and MFS represent and warrant that the Shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of The
Commonwealth of Massachusetts and all applicable federal and state
securities laws and that the Trust is and shall remain registered under
the 1940 Act. The Trust shall amend the registration statement for its
Shares under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of its Shares. The
Trust shall register and qualify the Shares for sale in accordance with
the laws of the various states only if and to the extent deemed
necessary by the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in
good standing of the NASD and is registered as a broker-dealer with the
SEC. The Trust and MFS represent that the Trust and the Underwriter
will sell and distribute the Shares in accordance in all material
respects with all applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 1940
Act.
2.6. The Trust represents that it is lawfully organized and validly
existing under the laws of The Commonwealth of Massachusetts and that
it does and will comply in all material respects with the 1940 Act and
any applicable regulations thereunder.
2.7 MFS represents and warrants that it is and shall remain duly
registered under all applicable federal securities laws and that it
shall perform its obligations for the Trust in compliance in all
material respects with any applicable federal securities laws and with
the securities laws of The Commonwealth of Massachusetts. MFS
represents and warrants that it is not subject to state securities laws
other than the securities laws of The Commonwealth of Massachusetts and
that it is exempt from registration as an investment adviser under the
securities laws of The Commonwealth of Massachusetts.
2.8. No less frequently than annually, the Company shall submit to the
Board such reports, material or data as the Board may reasonably
request so that it may carry out fully the obligations imposed upon it
by the conditions contained in the exemptive application pursuant to
which the SEC has granted exemptive relief to permit mixed and shared
funding (the "Mixed and Shared Funding Exemptive Order").
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS: VOTING
3.1. At least annually, the Trust or its designee shall provide the
Company, free of charge, with as many copies of the current prospectus
(describing only the Portfolios listed in Schedule A hereto) for the
Shares as the Company may reasonably request for distribution to
existing Policy owners whose Policies are funded by such Shares. The
Trust or its designee shall provide the Company, at the Company's
expense, with as many copies of the current prospectus for the Shares
as the Company may reasonably request for distribution to prospective
purchasers of Policies. If requested by the Company in lieu thereof,
the Trust or its designee shall provide such documentation (including a
"camera ready" copy of the new prospectus as set in type or, at the
request of the Company, as a diskette in the form sent to the financial
printer) and other assistance as is reasonably necessary in order for
the parties hereto once each year (or more frequently if the prospectus
for
-4-
<PAGE>
the Shares is supplemented or amended) to have the prospectus for the
Policies and the prospectus for the Shares printed together in one
document; the expenses of such printing to be apportioned between (a)
the Company and (b) the Trust or its designee in proportion to the
number of pages of the Policy and Shares' prospectuses, taking account
of other relevant factors affecting the expense of printing, such as
covers, columns, graphs and charts; the Trust or its designee to bear
the cost of printing the Shares' prospectus portion of such document
for distribution to owners of existing Policies funded by the Shares
and the Company to bear the expenses of printing the portion of such
document relating to the Accounts; provided, however, that the Company
shall bear all printing expenses of such combined documents where used
for distribution to prospective purchasers or to owners of existing
Policies not funded by the Shares. In the event that the Company
requests that the Trust or its designee provides the Trust's prospectus
in a "camera ready" or diskette format, the Trust shall be responsible
for providing the prospectus in the format in which it or MFS is
accustomed to formatting prospectuses and shall bear the expense of
providing the prospectus in such format (e.g., typesetting expenses),
and the Company shall bear the expense of adjusting or changing the
format to conform with any of its prospectuses.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Trust or
its designee. The Trust or its designee, at its expense, shall print
and provide such statement of additional information to the Company (or
a master of such statement suitable for duplication by the Company) for
distribution to any owner of a Policy funded by the Shares. The Trust
or its designee, at the Company's expense, shall print and provide such
statement to the Company (or master of such statement suitable for
duplication by the Company) for distribution to a prospective purchaser
who requests such statement or to an owner of a Policy not funded by
the Shares.
3.3. The Trust or its designee shall provide the Company free of charge
copies, if and to the extent applicable to the Shares, of the Trust's
proxy materials, reports to Shareholders and other communications to
Shareholders in such quantity as the Company shall reasonably require
for distribution to Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3
above, or of Article V below, the Company shall pay the expense of
printing or providing documents to the extent such cost is considered a
distribution expense. Distribution expenses would include by way of
illustration, but are not limited to, the printing of the Shares'
prospectus or prospectuses for distribution to prospective purchasers
or to owners of existing Policies not funded by such Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate
to include in the prospectus pursuant to which a Policy is offered
disclosure regarding the potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a). solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received
form Policy owners; and
(c) vote the Shares for which no instructions have been received
in the same proportion as the Shares of such Portfolio for
which instructions have been received from Policy owners;
so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass through voting privileges for variable
contract owners. The Company will in no way recommend action in
connection with or oppose or interfere with the solicitation of proxies
for the Shares held for such Policy owners. The Company reserves the
right to vote shares held in any segregated asset account in its own
right, to the extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each of their separate
accounts holding Shares calculates voting privileges in the manner
required by the Mixed and
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<PAGE>
Shared Funding Exemptive Order. The Trust and MFS will notify the
Company of any changes of interpretations or amendments to the Mixed
and Shared Funding Exemptive Order.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other
promotional material in which the Trust, MFS, any other investment
adviser to the Trust, or any affiliate of MFS are named, at least three
(3) Business Days prior to its use. No such material shall be used if
the Trust, MFS, or their respective designees reasonably objects to
such use within three (3) Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statement on behalf of the Trust, MFS, any other
investment adviser to the Trust, or any affiliate of MFS or concerning
the Trust or any other such entity in connection with the sale of the
Policies other than the information or representations contained in the
registration statement, prospectus or statement of additional
information for the Shares, as such registration statement, prospectus
and statement of additional information may be amended or supplemented
from time to time, or in reports or proxy statements for the Trust or
in sales literature or other promotional material approved by the
Trust, MFS or their respective designees, except with the permission of
the Trust, MFS or their respective designees. The Trust, MFS or their
respective designees each agrees to respond to any request for approval
on a prompt and timely basis. The Company shall adopt and implement
procedures reasonably designed to ensure that information concerning
the Trust, MFS or any of their affiliates which is intended for use
only by brokers or agents selling the Policies (i.e., information that
is not intended for distribution to Policy holders or prospective
Policy holders) is so used, and neither the Trust, MFS nor any of their
affiliates shall be liable for any losses, damages or expenses relating
to the improper use of such broker only materials.
4.3. The Trust or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or
the Accounts is named, at least three (3) Business Days prior to its
use. No such material shall be used if the company or its designee
reasonably objects to such use within three (3) Business Days after
receipt of such material.
4.4. The Trust and MFS shall not give, and agree that the Underwriter
shall not give, any information or make any representations on behalf
of the Company or concerning the Company, the Accounts, or the Policies
in connection with the sale of the Policies other than the information
or representations contained in a registration statement, prospectus,
or statement of additional information for the Policies, as such
registration statement, prospectus and statement of additional
information may be amended or supplemented from time to time, or in
reports for the Accounts, or in sales literature or other promotional
material approved by the Company or its designee, except with the
permission of the Company. The Company or its designee agrees to
respond to any request for approval on a prompt and timely basis. The
parties hereto agree that this Section 4.4. is neither intended to
designate nor otherwise imply that MFS is an underwriter or distributor
of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company
or the Trust, as appropriate) will each provided to the other at least
one complete copy of all registration statements, prospectuses,
statements of additional information, reports, proxy statements, sales
literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Policies, or to the Trust or its
Shares, prior to or contemporaneously with the filing of such document
with the SEC or other regulatory authorities. The Company and the Trust
shall also each promptly inform the other of the results of any
examination by the SEC (or other regulatory authorities) that relates
to the Policies,
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<PAGE>
the Trust or its Shares, and the party that was the subject of the
examination shall provide the other party with a copy of relevant
portions of any "deficiency letter" or other correspondence or written
report regarding any such examinations.
4.6. The Trust and MFS will provide the Company with as much notice as
is reasonably practicable of any proxy solicitation for any Portfolio,
and of any material change in the Trust's registration statement,
particularly any change resulting in change to the registration
statement or prospectus or statement of additional information for any
Account. The Trust and MFS will cooperate with the Company so as to
enable the Company to solicit proxies from Policy owners or to make
changes to its prospectus, statement of additional information or
registration statement, in an orderly manner. The Trust and MFS will
make reasonable efforts to attempt to have changes affecting Policy
prospectuses become effective simultaneously with the annual updates
for such prospectuses.
4.7. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited
to advertisements (such as material published, or designed for use in,
a newspaper, magazine, or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures, or other public media), and sales literature (such as
brochures, circulars, reprints or excerpts or any other advertisement,
sales literature, or published articles), distributed or made generally
available to customers or the public, educational or training materials
or communications distributed or made generally available to some or
all agents or employees.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no fee or other compensation to the Company
under this Agreement, and the Company shall pay no fee or other
compensation to the Trust, except that if the Trust or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 of the 1940 Act to
finance distribution and Shareholder servicing expenses, then, subject
to obtaining any required exemptive orders or regulatory approvals, the
Trust may make payments to the Company or to the underwriter for the
Policies if and in amounts agreed to by the Trust in writing. Each
party, however, shall, in accordance with the allocation of expenses
specified in Articles III and V hereof, reimburse other parties for
expense initially paid by one party but allocated to another party. In
addition, nothing herein shall prevent the parties hereto from
otherwise agreeing to perform, and arranging for appropriate
compensation for, other services relating to the Trust and/or the
Accounts.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable
federal and state laws, including preparation and filing of the Trust's
registration statement and payment of filing fees and registration
fees; preparation and filing of the Trust's proxy materials and reports
to Shareholders; setting in type and printing its prospectus and
statement of additional information (to the extent provided by and as
determined in accordance with Article III above); setting in type and
printing the proxy materials and reports to Shareholders (to the extent
provided by and as determined in accordance with Article III above);
the preparation of all statements and notices required of the Trust by
any federal or state law with respect to its Shares; all taxes on the
issuance or transfer of the Shares; and the costs of distributing the
Trust's prospectuses and proxy materials to owners of Policies funded
by the Shares and any expenses permitted to be paid or assumed by the
Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act.
The Trust shall not bear any expenses of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses in connection with new sales of the Policies
and of distributing the Trust's Shareholder reports and proxy materials
to Policy owners. The Company shall bear all expenses associated with
the registration, qualification, and filing of the Policies under
applicable federal securities and state insurance laws; the cost of
preparing, printing and distributing the Policy prospectus and
statement of additional information; and the
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cost of preparing, printing and distributing annual individual account
statements for Policy owners as required by state insurance laws.
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and MFS represent and warrant that they will use every
effort to ensure that each Portfolio of the Trust will meet the
diversification requirements of Section ss.17(h)(1) of the Code and
Treas. Reg. 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, as they may
be amended from time to time (and any revenue rulings, revenue
procedures, notices, and other published announcements of the Internal
Revenue Service interpreting these sections) as if those requirements
applied directly to each such Portfolio. In the event that any
Portfolio is not so diversified at the end of any applicable quarter,
the Trust and MFS will make every effort to (a) adequately diversify
the Portfolio so as to achieve compliance within the grace period
afforded by Treas. Reg. 1.817.5 and (b) notify the Company.
6.2. The Trust and MFS represent that each Portfolio of the Trust will
elect to be qualified as a Regulated Investment Company under
Subchapter M of the Code and that every effort will be made to maintain
such qualification (under Subchapter M or any successor or similar
provision) and that the Trust or its designee will notify the Company
promptly upon having a reasonable basis for believing that any
Portfolio of the Trust has ceased to so qualify or that any Portfolio
might not so qualify in the future.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for
the existence of any material irreconcilable conflict between the
interests of the variable annuity contract owners and the variable life
insurance policy owners of the Company and/or affiliated companies
("contract owners") investing in the Trust. The Board shall have the
sole authority to determine if a material irreconcilable conflict
exists, and such determination shall be binding on the Company only if
approved in the form of a resolution by a majority of the Board, or a
majority of the disinterested trustees of the Board. The Board will
give prompt notice of any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the
Board in carrying out its responsibilities under the conditions set
forth in the Trust's exemptive application pursuant to which the SEC
has granted the Mixed and Shared Funding Exemptive Order by providing
the Board, as it may reasonably request with all information necessary
for the Board to consider any issues raised and agrees that it will be
responsible for promptly reporting any potential or existing conflicts
of which it is aware to the Board including, but not limited to, an
obligation by the Company to inform the Board whenever contract owner
voting instructions are disregard. The Company also agrees that, if a
material irreconcilable conflict arises, it will at is own cost remedy
such conflict up to an including (a) withdrawing the assets allocable
to some or all of the Accounts from the Trust or any Portfolio and
reinvesting such assets in a different investment medium, including
(but not limited to) another Portfolio of the Trust, or submitting to a
vote of all affected contract owners whether to withdraw assets from
the Trust or any Portfolio and reinvesting such assets in a different
investment medium and, as appropriate, segregating the assets
attributable to any appropriate group of contract owners that votes in
favor of such segregation, or offering to any of the affected contract
owners the option of segregating the assets attributable to their
contracts or policies, and (b) establishing a new registered management
investment company and segregating the assets underlying the Policies,
unless a majority of Policy owners materially adversely affected by the
conflict have voted to decline the offer to establish a new registered
management investment company.
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<PAGE>
7.3. A majority of the disinterested trustees of the Board shall
determine whether any proposed action by the Company adequately
remedies any material irreconcilable conflict. In the event that the
Board determines that any proposed action does not adequately remedy
any material irreconcilable conflict, the Company will withdraw from
investment in the Trust each of the Accounts designated by the
disinterested trustees and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination
shall be limited to the extent required to remedy any such material
irreconcilable conflict as determined by a majority of the
disinterested trustees of the Board.
7.4. If and to the extent that rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to
mixed or shares funding (as defined in the Mixed and Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Mixed Shared Funding Exemptive Order, then (a)
the Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and
7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1 Indemnification by the Company
The Company agrees to indemnify and hold harmless the Trust,
MFS, any affiliates of MFS, and each of their respective
directors/trustees, officers and each person, if any, who controls the
Trust or MFS within the meaning of Section 15 of the 1933 Act, and any
agents or employees of the foregoing (each an "Indemnified Party," or
collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company) or expenses (including reasonable counsel fees) to which an
Indemnified Party may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale of acquisition of the Shares or the Policies
and:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus or statement of
additional information for the Policies or contained in the
Policies or sales literature or other promotional material
for the Policies (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the
commission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading provided that
this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reasonable
reliance upon and in conformity with information furnished
to the Company or its designee by or on behalf of the Trust
or MFS for use in the registration statement, prospectus or
statement of additional information for the Policies or in
the Policies or sales literature or other promotional
material (or any amendment or supplement) or otherwise for
use in connection with the sale of the Policies or Shares;
or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional
material of the Trust not supplied by the
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<PAGE>
Company or this designee, or persons under its control and
on which the Company has reasonably relied) or wrongful
conduct of the Company or persons under its control, with
respect to the sale or distribution of Policies or Shares;
or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the registration
statement, prospectus, statement of additional information,
or sales literature or other promotional literature of the
Trust, 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
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Trust by or on behalf of the Company; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result form any other material
breach of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.2. Indemnification by the Trust
The Trust 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 1933 Act, and any agents or employees of the
foregoing (each an "Indemnified Party," or collectively, the "Indemnified
Parties" for purposes of this Section 8.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Trust) or expenses (including reasonable counsel fees) to which
any Indemnified Party may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Shares or the Policies and:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement, prospectus, statement of
additional information or sales literature or other
promotional material of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statement therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reasonable reliance upon and in
conformity with information furnished to the Trust,
MFS, the Underwriter or their respective designees by
or on behalf of the Company for use in the registration
statement, prospectus or statement of additional
information for the Trust or in sales literature or
other promotional material for the Trust (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or
representations (other than statement or
representations contained in the registration
statement, prospectus, statement of additional
information or sales literature or other promotional
material for the Policies not supplied by the Trust,
MFS the Underwriter or any of their respective
designees or persons under their
-10-
<PAGE>
respective control and on which any such entity has reasonably
relied) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or distribution of the Policies
or Shares; or
c) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement) or arise
out of or result from any other material breach of this Agreement
by the Trust; or
(d) arise out of or result from the materially incorrect or untimely
calculation or reporting of the daily net asset value per share
or dividend or capital gain distribution rate; or
(e) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of the
Agreement.
as limited by and in accordance with the provisions of this Article VIII.
8.3. In no event shall the Trust be liable under the indemnification provisions
contained in this Agreement to any individual or entity , including without
limitation, the Company, or any Participating Insurance Company or any Policy
holder, with respect to any losses, claims, damages, liabilities or expenses
that arise out of or result from (i) a breach of any representation, warranty,
and/or covenant made by the Company hereunder or by any Participating Insurance
Company under an agreement containing substantially similar representations,
warranties and covenants; (ii) the failure by the Company or any Participating
Insurance Company to maintain its segregated asset account (which invests in any
Portfolio) as a legally and validly established segregated asset account under
applicable state law and as a duly registered unit investment trust under the
provisions of the 1940 Act (unless exempt therefrom); or (iii) the failure by
the Company or any Participating Insurance Company to maintain its variable
annuity and/or variable life insurance contracts (with respect to which any
Portfolio serves as an underlying funding vehicle) as life insurance, endowment
or annuity contracts under applicable provisions of the Code.
8.4 Neither the Company nor the Trust shall be liable under the indemnification
provisions contained in this Agreement with respect to any losses, claims,
damages, liabilities or expenses to which an Indemnified Party would otherwise
be subject by reason of such Indemnified Party's willful misfeasance, willful
misconduct, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section 8.5. of
commencement of action, such Indemnified Party will, if a claim in respect
thereof is to be made against the indemnifying party under this section, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any Indemnified Party otherwise than under this section. In case any
such action is brought against any Indemnified Party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such Indemnified Party. After
notice from the indemnifying party of its intention to assume the defense of an
action, the Indemnified Party shall bear the expenses of any additional counsel
obtained by it, and the indemnifying party shall not be liable to such
Indemnified Party under this section for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation.
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<PAGE>
8.6. Each of the parties agrees promptly to notify the other parties of the
commencement of any litigation or proceeding against it or any of its
respective officers, directors, trustees, employees or 1933 Act control
persons in connection with the Agreement, the issuance or sale of the
Policies, the operation of the Accounts, or the sale or acquisition of
Shares.
8.7. A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
The Trust, MFS, and the Company agree that each such party shall promptly
notify the other parties to this Agreement, in writing, of the institution of
any formal proceedings brought against such party or its designees by the NASD,
the SEC, or any insurance department or any other regulatory body regarding such
party's duties under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares.
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts, or one,
some, or all Portfolios:
(a) at the option of any party upon six (6) months' advance written notice
to the other parties; or
(b) at the option of the Company to the extent that the Shares of
Portfolios are not reasonably available to meet the requirements of
the Policies or are not "appropriate funding vehicles" for the
Policies, as reasonably determined by the Company. Without limiting
the generality of the foregoing, the Shares of a Portfolio would not
be "appropriate funding vehicles" if, for example, such Shares did not
meet the diversification or other requirements referred to in Article
VI hereof; or if the Company would be permitted to disregard Policy
owner voting instructions pursuant to Rule 6e-2 or 6e-3(T) under the
1940 Act. Prompt notice of the election to terminate for such cause
and an explanation of such cause shall be furnished to the Trust by
the Company; or
(c) at the option of the Trust or MFS upon institution of formal
proceedings against the Company by the NASD, the SEC, or any insurance
department or any other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares; or
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<PAGE>
(d) at the option of the Company upon institution of formal proceedings
against the Trust by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body regarding the
Trust's or MFS' duties under this Agreement or related to the sale of
the shares; or
(e) at the option of the Company, the Trust or MFS upon receipt of any
necessary regulatory approvals and/or the vote of the Policy owners
having an interest in the Accounts (or any subaccounts) to substitute
the shares of another investment company for the corresponding
Portfolio Shares in accordance with the terms of the Policies for
which those Portfolio Shares had been selected to serve as the
underlying investment media. The Company will give thirty (30) day's
prior written notice to the Trust of the Date of any proposed vote or
other action taken to replace the Shares; or
(f) termination by either the Trust or MFS by written notice to the
Company, if either one or both of the Trust or MFS respectively, shall
determine, in their sole judgment exercised in good faith, that the
Company has suffered a material adverse change in its business,
operations, financial condition, or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Trust and MFS, if
the Company shall determine, in its sole judgment exercised in good
faith, that the Trust or MFS has suffered a material adverse change in
this business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(h) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the written
consent of the parties hereto.
11.2. The notice shall specify the Portfolio or Portfolios, Policies and, if
applicable, the Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1(a) may be exercised for cause
or for no cause.
11.4 Except as necessary to implement Policy owner initiated transactions, or as
required by state insurance laws or regulations, the Company shall not redeem
the Shares attributable to the Policies (as opposed to the Shares attributable
to the Company's assets held in the Accounts), and the Company shall not prevent
Policy owners from allocating payments to a Portfolio that was otherwise
available under the Policies, until thirty (30) days after the Company shall
have notified the Trust of its intention to do so.
11.5. Notwithstanding any termination of this Agreement, the Trust and MFS
shall, at the option of the Company, continue to make available additional
shares of the Portfolios pursuant to the terms and conditions of this Agreement,
for all Policies in effect on the effective date of termination of this
Agreement (the "Existing Policies"), except as otherwise provided under Article
VII of this Agreement. Specifically, without limitation, the owners of the
Existing Policies shall be permitted to transfer or reallocate investment under
the Policies, redeem investments in any Portfolio and/or invest in the Trust
upon the making of additional purchase payments under the Existing Policies.
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<PAGE>
ARTICLE XII. 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.
If to the Trust:
MFS Variable Insurance Trust
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, Secretary
If to the Company:
Citicorp Insurance Group
Citibank, N.A.
One Court Square
Long Island City, NY 11120
Attn: Alan F. Liebowitz, Senior Vice President
General Counsel and Secretary
If to MFS:
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, General Counsel
ARTICLE XIII. MISCELLANEOUS
13.1. Subject to the requirement of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Policies and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement or as otherwise required by
applicable law or regulation, shall not disclose, disseminate or
utilize such names and addresses and other confidential information
without the express written consent of the affected party until such
time as it may come into the public domain.
13.2. 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.
13.3. The Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
13.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
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<PAGE>
13.6. Each party hereto shall cooperate with each other party in
connection with inquiries by appropriate governmental authorities
(including without limitation the SEC, the NASD, and state insurance
regulators) relating to this Agreement or the transactions contemplated
hereby.
13.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal laws.
13.8. A copy of the Trust's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The Company
acknowledges that the obligations of or arising out of this instrument
are not binding upon any of the Trust's trustees, officers, employees,
agents or shareholders individually, but are binding solely upon the
assets and property of the Trust in accordance with its proportionate
interest hereunder. The Company further acknowledges that the assets
and liabilities of each Portfolio are separate and distinct and that
the obligations of or arising out of this instrument are binding solely
upon the assets or property of the Portfolio on whose behalf the Trust
has executed this instrument. The Company also agrees that the
obligations of each Portfolio hereunder shall be several and not joint,
in accordance with its proportionate interest hereunder, and the
Company agrees not to proceed against any Portfolio for the obligations
of another Portfolio.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified above.
FIRST CITICORP LIFE INSURANCE COMPANY
By its authorized officer,
By: /s/Charles R. Haskins
Title: V. P.
MFS VARIABLE INSURANCE TRUST, on behalf of the Portfolios
By its authorized officer and not individually,
By: /s/Steven E. Cavan
Title: Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: /s/Arnold D. Scott
Title: Sr. Executive Vice President
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<PAGE>
As of November , 1994
SCHEDULE A
ACCOUNTS, POLICIES AND PORTFOLIOS
SUBJECT TO THE PARTICIPATION AGREEMENT
<TABLE>
<CAPTION>
<S> <C> <C>
Name of Separate
Account and Date Policies Funded Portfolios
Established by Board of Directors by Separate Account Applicable to Policies
First Citicorp Life Variable Annuity Separate 63-1103(05-94) MFS World Governments Series
Account (July 6, 1994) MFS Money Market Series
</TABLE>
-17-
SERVICE AGREEMENT
This Service Agreement is made as of the 1st day of November, 1991, by and
between CITICORP INSURANCE SERVICES, INC., having its principal office at 800
Silver Lake Boulevard, Dover, Delaware 19901 (hereinafter referred to as "CISI")
and FIRST CITICORP LIFE INSURANCE COMPANY, a New York life insurance
corporation, having its principal office at One Court Square, Long Island City,
New York 11120 (hereinafter referred to as "the Company").
WHEREAS, the Company is desirous of utilizing certain services of CISI upon
the terms and conditions herein provided.
NOW, THEREFORE, IT IS AGREED THAT:
1. CISI may perform some or all of the following: (a) Accounting services,
the preparation of budgets, financial reporting, financial statements and annual
statements, tax related services, data processing services, legal advisory
services, product development services, actuarial advisory services, personnel
services, marketing services, medical evaluations, and claims and underwriting
functions, as may be requested by the Company.
(b) Arrange for premium collection through credit card or demand deposit or
prepare and mail premium notices to Insureds at the then effective premium rates
as detailed in Appendix A. Premiums shall be received through use of a lock box
and same shall be deposited in a bank account, which will be maintained in a
fiduciary capacity solely for the Company, not later than the final day of each
month. CISI agrees that premium funds will not be commingled with any other
funds.
(c) Receive and process incoming general correspondence and telephone
inquiries of a routine nature in accordance with the procedures set forth by the
Company. Inquiries of a non-routine nature shall be forwarded immediately to the
Company. All correspondence with the Company's policyholders shall be on the
Company's letterhead. CISI will maintain a dedicated customer service "800"
number which will be answered "First Citicorp Life."
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<PAGE>
(d) The Company shall maintain oversight with respect to any underwriting
and claims activities performed by CISI.; provided, however, that if the claims
received by the Company exceed 600 in any calendar year commencing January 1,
1995, the Company commits to hiring its own claims manager.
2. All services shall be provided at cost to the Company and shall be
apportioned on a fair and equitable basis utilizing estimates based on time,
number of employees, company assets or, in the case of rent, square footage, or
any other mutually agreeable method providing for a fair and reasonable
allocation of cost may be used, and any marketing or other administrative costs
which are acceptable to the Company and which CISI agrees to pay on the
Company's behalf provided such method/costs are in conformity with generally
accepted accounting principles and within the requirements of Section 1505(a) of
the New York Insurance Law and New York State Insurance Department Regulation
No. 33. Service fees as herein determined shall be retained by CISI out of
premiums collected.
3. No later than thirty (30) days after the end of each quarterly period of
the fiscal year, CISI shall submit to the Company a statement of the estimated
amount of the apportioned expenses for such quarterly period showing the basis
for the estimated apportionment for each item. Payment of the estimated amount
of the apportioned expenses shall be made by the Company within fifteen (15)
days of the receipt of the foregoing statement.
Within sixty (60) days after the end of each fiscal year, CISI shall submit
to the Company a statement of actual apportioned expenses for such prior fiscal
year showing the basis for the apportionment of each item. The Company may
request a written statement from the department or unit making such charge
setting forth in reasonable detail the nature of the services rendered or
expense incurred and other relevant information to support the charge. Any
difference between the amount of the estimated apportioned expenses paid by the
Company and the amount of the actual apportioned expenses shall be paid to
either CISI or the Company, as the case may be, within fifteen (15) days of the
receipt of the statement of actual apportioned expenses.
4. All books, records and files established and maintained by CISI by
reason of its performance under this Agreement, which absent this
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<PAGE>
Agreement would have been held by the Company, shall be delivered to the Company
at least on a quarterly basis. With respect to any accounting or statistical
records prepared by CISI under this Agreement, summaries of such records shall
be delivered to the Company within thirty (30) days from the end of the month
for which such records are prepared.
5. With respect to any original documentation which would otherwise be held
by the Company and which may be obtained by CISI in performing its duties under
this Agreement, CISI shall deliver to the Company such original documentation
within 30 days of receipt, except where continued custody of such original
documentation by CISI is necessary to the performance of services hereunder.
6. It is understood that the Company has certain obligations under the
Commitment Agreement dated July 23, 1980, and it is agreed that no services will
be provided under this Agreement inconsistent with the aforementioned Commitment
Agreement except as may be approved by the New York Insurance Department.
7. A dispute or difference with respect to the operation or interpretation
of this Agreement on which an amicable understanding cannot be reached shall be
decided by arbitration.
The arbitrators are empowered to decide all questions or issues and shall
be free to reach their decision from the standpoint of equity and customary
practices of the insurance industry rather than from that of strict legal
principles.
The court of arbitration shall be held in New York, New York and shall
consist of three (3) arbitrators who must be officers of life insurance
companies other than the parties to this Agreement, their affiliates or
subsidiaries. CISI shall appoint one arbitrator and the Company the second. Such
arbitrators shall then select the third arbitrator before arbitration commences.
Should one of the parties decline to appoint an arbitrator or should the two
arbitrators be unable to agree upon the choice of a third, such appointment
shall be left to the President of the American Council of Life Insurance.
Decisions of the arbitrators shall be by majority vote, and from their
written decision there shall be no appeal. The cost of arbitration,
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<PAGE>
including the fees of the arbitrators, shall be borne by the losing party unless
the arbitrators shall otherwise decide.
8. The Company shall have the right, at its expense, to conduct an audit of
the relevant books, records and accounts of CISI upon giving reasonable notice
of its intent to conduct such an audit.
9. Each party shall be and remain the sole owner of its records, including
but not limited to business and corporate records, regardless of the use or
possession by either party of the other party's records. The Company and CISI
shall each individually maintain separate books, accounts and records in respect
to services provided under this Agreement.
10. CISI and the Company each shall maintain its own books, accounts and
records in such a way as to disclose clearly and accurately the nature and
detail of the transactions between them, including such accounting information
as is necessary to support the reasonableness of charges under this Agreement.
11. All books of account, documents, vouchers, letter and all other paper
and records connected with the insurance business of the Company shall be and
remain the property of the Company and shall be open at all times to inspection
by the Company or by its designee. In the event of termination of this
Agreement, all such documents or records shall, with reasonable promptness, be
returned to the Company.
12. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York.
13. This Agreement constitutes the entire agreement between CISI and the
Company and no other agreement, statement or promise not contained in this
Agreement shall be valid or binding, except a subsequent modification in
writing.
14. DISASTER RECOVERY PLAN. CISI agrees that it shall maintain a disaster
recovery plan covering all of its administration systems which would insure
service even in the event of a disaster at CISI's primary operations location.
15. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be
assignable by either party hereto, except as set forth herein or
4
<PAGE>
by operation of law. Except as and to the extent specifically provided in this
Agreement, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto, or their respective legal
successors, any rights, remedies, obligations or liabilities, or to relieve any
person other than the parties hereto, or their respective legal successors, from
any obligations or liabilities that would otherwise be applicable. The covenants
and agreements contained in this Agreement shall be binding upon, extend to and
inure to the benefit of the parties hereto, their, and each of their, successors
and assigns respectively.
16. TERMINATION. This Agreement shall remain in effect until the earlier
of: (a) expiration of any period granted by the Department relieving the Company
of any restrictions contained in the Commitment Agreement relating to services
provided under this Agreement; or (b) until terminated by either CISI or the
Company upon giving ninety (90) days or more advance written notice, provided
that electronic data processing services shall not be terminated by either party
until one hundred and eighty (180) days or more advance written notice of
termination. Subject to the terms (including any limitations and restrictions)
of any applicable software or hardware licensing agreement then in effect
between CISI and any licensor, CISI shall, upon termination of this Agreement,
grant to the Company a perpetual license, without payment of any fee, in any
electronic data processing software developed or used by CISI in connection with
the services provided to the Company hereunder if such software is not
commercially available and is necessary, in the Company's reasonable judgment,
for the Company to perform subsequent to termination the functions provided by
CISI hereunder. Upon termination, CISI shall promptly deliver to the Company all
books and records that are, or are deemed by this Agreement, the property of the
Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
CITICORP INSURANCE SERVICES, INC.
By: /s/Larry D. Williams
FIRST CITICORP LIFE INSURANCE COMPANY
By: /s/Alan F. Liebowitz
5
<PAGE>
APPENDIX A
Billing and Collection
The following is the billing and collection process described for each of
the Company's current product lines.
FIXED AND VARIABLE ANNUITIES
These products are sold by agents located in Citibank branches throughout
the metropolitan area. When an application and premium is taken by an agent, it
is forwarded to a central processing center located in mid-town Manhattan. The
processing center deposits the premium to a FCLIC account maintained in New York
and forwards the application to CISI for processing. CISI performs the basic
data processing and mails the annuity contract to the customer. The premiums
never leave New York and are collected by Citibank, N.A. on behalf of FCLIC
pursuant to the Service Agreement entered into between the Company and Citibank,
N.A., effective July 23, 1980.
TERM LIFE AND HOSPITAL INDEMNITY INSURANCE
Some Term Life insurance is sold within Citibank branches by FCLIC agents
and those sales are processed as described in the prior paragraph. However, most
Term Life and Hospital Indemnity coverages are sold by mail to Citibank
customers. In connection with those sales, approximately 98.5% of the premiums
are collected against the customer's credit card, using an automated billing
process. Each month CISI prepares a computer tape and forwards the tape to the
various credit card billing centers which then charge customer accounts with the
monthly premium. Premiums collected by the credit card centers are credited to a
FCLIC fiduciary account maintained in New York. CISI prepares monthly collection
reports permitting FCLIC to reconcile payments received from the credit card
facilities against the appropriate accounts.
MORTGAGE INSURANCE
Mortgage insurance is sold to Citicorp Mortgage, Inc. customers which is
the entity which makes mortgages throughout the country on behalf of
Citicorp/Citibank. Premiums in this instance are collected via the customer's
monthly mortgage payment. CISI prepares the monthly billing to Citicorp
Mortgage, Inc. and, upon receipt, Citicorp Mortgage, Inc. wire transfers the
collected premium directly to a FCLIC account maintained in New York. Recording
and reconciliations of the collection transactions are performed by FCLIC's
financial staff located in New York.
APPENDIX A (cont'd.)
REINSURANCE
FCLIC has assumed the various blocks of insurance. All funds and accounting
functions are performed in New York.
6
(Citicorp Letterhead]
With reference to Form N-4 Registration Statement filed on behalf of First
Citicorp Life Insurance Company and the First Citicorp Life Variable Annuity
Separate Account with the Securities and Exchange Commission covering flexible
premium variable deferred annuity policies, I have examined such documents and
such law and have made due inquiries as I considered necessary and appropriate,
and on the basis of such examination and inquiries, it is my opinion that:
1. The First Citicorp Life Insurance Company is duly organized and
validly existing under the laws of the State of New York and has been
duly authorized to issue flexible premium variable deferred annuity
policies by the Department of Insurance of the State of New York.
2. The First Citicorp Life Variable Annuity Separate Account is a duly
authorized and existing separate account established pursuant to the
provisions of the Revised Statutes of the state of New York;
3. The flexible premium variable deferred annuity policies, when issued
as contemplated by said Form N-4 Registration Statement, will
constitute legal, validly issued and binding obligations of First
Citicorp Life Insurance Company.
I hereby consent to the filing of this opinion as an exhibit to Post-Effective
Amendment No. 2 to the Form N-4 Registration Statement.
First Citicorp Life Insurance Company
/s/Richard M. Zuckerman
Richard M. Zuckerman
Vice President, Associate General Counsel
April 19, 1996
(Date)
<PAGE>
(Citicorp Letterhead]
I hereby consent to the use of my name under the caption "Legal Matters" in the
Statement of Additional Information contained in this Post-Effective Amendment
to the Form N-4 Registration Statement, filed on behalf of First Citicorp Life
Insurance Company and the First Citicorp Life Variable Annuity Separate Account
with the Securities and Exchange Commission
First Citicorp Life Insurance Company
/s/Richard M. Zuckerman
Richard M. Zuckerman
Vice President, Associate General Counsel
April 19, 1996
(Date)
[TRANSMITTED ON SUTHERLAND, ASBILL: & BRENNAN LETTERHEAD]
April 15, 1996
Board of Directors
First Citicorp Life Insurance Company
One Court Square - 24th Floor
Long Island City, New York 11120
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Statement of Additional Information filed as part of
Post-Effective Amendment No. 2 to the registration statement on Form N-4 for
First Citicorp Life Variable Annuity Separate Account (File No. 33-83354). In
giving this consent, we do not admit that we are in the capacity of persons
whose comment is required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND,ASBILL & BRENNAN
By: /s/Stephen E. Roth
------------------
Stephen E. Roth
Independent Auditors' Consent
The Board of Directors
First Citicorp Life Insurance Company:
We consent to the use of our report included herein and to the reference of our
firm under the heading "Financial Statements" in the Prospectus and under the
heading "Experts" in the Registration Statement for First Citicorp Life Variable
Annuity Separate Account.
Our report dated April 19, 1996, covering the financial statements of First
Citicorp Life Insurance Company, contains an explanatory paragraph which states
that the financial statements are presented in conformity with accounting
practices prescribed or permitted by the State of New York Department of
Insurance. These practices differ in some respects from generally accepted
accounting principles. The financial statements do not include any adjustments
that might result from the differences.
/s/KPMG Peat Marwick LLP
Chicago, Illinois
April 24, 1996
