FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
PROCESSING OFFICE: INDIVIDUAL ANNUITY CENTER, P O BOX 2996, NEW YORK, NEW YORK
10116-2996
This is the entire Contract. This Contract is issued in return for the
application for coverage under this Contract and the Contributions to be made to
us under this Contract.
These agreements are subject to the provisions of this Contract. In this
Contract, "we", "our" and "us" mean The Equitable Life Assurance Society of the
United States. "You" and "your" mean the Owner. If the Owner is the Plan Trust
and by the terms of the Trust Agreement, the Employer has the rights, duties
and/or responsibilities in this Contract, "you" and "your" mean the Employer.
We will provide the benefits and other rights pursuant to the terms of the
Contract.
TEN DAYS TO EXAMINE CONTRACT-YOU MAY CANCEL THIS CONTRACT BY RETURNING IT TO US
WITHIN TEN DAYS AFTER RECEIPT OF IT. UPON SUCH CANCELLATION, WE WILL REFUND ANY
CONTRIBUTION MADE TO US ON THE ANNUITANT'S BEHALF UNDER THIS CONTRACT.
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
/s/ Xxxxxxxxxxx X. Xxxxxxx /s/ Xxxxxxx Xxxxxxx
------------------------------------ -----------------------------------
Xxxxxxxxxxx X. Xxxxxxx Xxxxxxx Xxxxxxx
Chairman and Chief Executive Officer Senior Vice President, Secretary
and Associate General Counsel
THE PORTION OF ANNUITY ACCOUNT VALUE HELD IN THE SEPARATE ACCOUNT MAY INCREASE
OR DECREASE IN VALUE AS DESCRIBED IN THIS CONTRACT.
THE AMOUNT OF THE ANNUITY BENEFIT WILL BE EQUAL TO THE SUM OF ANY FIXED ANNUITY
BENEFIT AND ANY VARIABLE ANNUITY BENEFIT. THE AMOUNT OF ANY VARIABLE ANNUITY
BENEFIT MAY INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT EXPERIENCE OF THE
SEPARATE ACCOUNT.
2002EDCA
The provisions on the following pages are part of this Contract.
TABLE OF CONTENTS
DEFINITIONS PAGE
Section 1.01 - Annuitant 4
1.02 - Annuity 4
1.03 - Annuity Account Value 4
1.03A- Applicable Tax Charges 4
1.04 - Benefit 4
1.05 - Cash Value 4
1.06 - Class of Contracts 5
1.07 - Code 5
1.08 - Contract 5
1.09 - Contract Date 5
1.10 - Contract Year 5
1.11 - Contribution 5
1.12 - Investment Option 5
1.13 - Eligible Annuity Certain . 5
1.14 - Employer 6
1.14A- Free Corridor Amount 6
1.14B- Governmental Employer Plan 6
1.15 - Guaranteed Interest Rate . 6
1.16 - Joint and Survivor Life Annuity Form 6
1.17 - Life Annuity Form 6
1.18 - Normal Form 6
1.18A- Owner 7
1.19 - Period Certain Annuity 7
1.20 - Plan 7
1.20A- Plan Trust 7
1.20B- Trust Agreement 7
1.21 - Processing Office 7
1.22 - Retirement Date 8
1.23 - Separate Account 8
1.24 - Separate Account Definitions 10
1.25 - Substituted Beneficiary 11
1.25A-Tax Exempt Employer 11
1.26 - Transaction Date 11
1.27 - Trust 11
1.28- Variable Investment Option 11
ANNUITY ACCOUNT VALUE
Section 2.01 - Contributions 11
2.02 - Separate Account Variable Investment Options 12
2.03 - Guaranteed Interest Option 13
2.04 - Allocation to Investment Options 13
2.05 - Transfers Among Investment Options 13
2.05A- Restrictions On Distributions 14
2.06 - Termination of This Contract 15
2.07 - Partial Withdrawals 16
2.08 - Charges for Partial Withdrawals 16
2.09 - Annual Administrative Charge 18
2.10 - Death Benefit 18
2.11 - Loans Under Contract Funding 19
Governmental Employer Plans
2.12 - Direct Rollovers of Eligible Rollover 21
Distributions From Governmental Employer Plans
2002EDCA Page 1
TABLE OF CONTENTS (CONTINUED)
BENEFITS PAGE
Section 3.01 - Fixed Annuity Benefit 22
3.02 - Variable Annuity Benefit 22
3.03 - Election and Commencement of Annuity 23
Benefits
3.04 - Amount of Annuity Benefits 23
3.05 - Payment of Benefits and Required 24
Minimum Distribution Rules
GENERAL PROVISIONS
Section 4.01 - Contract 28
4.02 - Statutory Compliance 28
4.03 - Nonforfeitability, Nontransferability and 28
Assignments
4.04 - Beneficiary 28
4.05 - Disqualification of Plan or Contract 29
4.06 - Future Contributions 29
4.07 - Deferment 29
4.08 - Annual Notice 29
4.09 - Age 30
4.10 - Ownership Right of Employer 30
2002EDCA Page 2
CONTRACT NUMBER: [20035678]
ISSUE DATE: [DECEMBER 2, 2002]
CONTRACT DATE: [NOVEMBER 29, 2002
RETIREMENT DATE: [FEBRUARY 22, 2029
INITIAL GUARANTEED INTEREST RATE: [6.00% TO 11/30/2002
3.00% TO 12/31/2002]
MINIMUM GUARANTEED INTEREST RATE: 3.00% AFTER 12/31/2002
BENEFICIARY: [XXXX XXX]
FORM NUMBER: 2002EDCA
--------------------------------------------------------------------------------
TABLE OF GUARANTEED VALUES
ISSUE AGE 35 MALE $1,000 FIRST YEAR CONTRIBUTION
NUMBER OF YEARS GUARANTEED GUARANTEED PAID-UP MONTHLY
SINCE FIRST CONTRIBUTION CASH VALUE ANNUITY AT AGE 65*
------------------------ ---------- ------------------
1 989 $6.86
2 1,964 $17.32
3 2,969 $28.76
4 4,004 $39.86
5 5,071 $50.64
6 6,227 $61.11
7 7,369 $71.28
6 8,545 $81.15
9 9,849 $90.73
10 11,212 $100.03
11 12,637 $109.06
12 14,126 $117.83
13 15,682 $126.49
14 17,153 $135.07
15 18,667 $143.42.
16 20,227 $151.56
17 21,834 $159.50
16 23,489 $167.04
19 25,224 $174.58
20 27,011 $181.50
25 36,781 $213.20
27 (Age 62) 41,112 $224.62
30 (Age 65) 48,108 $240.54
THE TABLES ILLUSTRATE MINIMUM GUARANTEED VALUES AND ASSUME A HYPOTHETICAL $1,000
CONTRIBUTION MADE ANNUALLY ON THE FIRST OF THE MONTH FOLLOWING THE CONTRACT
DATE. THE GUARANTEED CASH VALUE TABLE REFLECTS AN ANNUAL ADMINISTRATIVE CHARGE
(SEE SECTION 2.10) AND A WITHDRAWAL CHARGE OF UP TO 6% OF THE ANNUITY ACCOUNT
VALUE (SEE SECTION 1.05). THE TABLES ASSUME THAT 100% OF ALL CONTRIBUTIONS AND
EARNINGS ARE ALLOCATED TO AND REMAIN IN THE GUARANTEED INTEREST DIVISION. YOUR
ACTUAL GUARANTEED VALUES MAY DIFFER FROM THOSE SHOWN ABOVE, DEPENDING ON THE
LEVEL AND FREQUENCY OF YOUR CONTRIBUTIONS.
THE GUARANTEED PAID-UP MONTHLY ANNUITY SHOWN ABOVE WILL BE REDUCED BY ANY CHARGE
WE MAKE FOR ANY APPLICABLE TAXES (SEE SECTION 3.04). OTHER FORMS OF ANNUITY
BENEFITS MAY BE AVAILABLE; HOWEVER, ANY ANNUITY BENEFIT CONTRACT ELECTED AS A
SETTLEMENT WILL BE SUBJECT TO A CHARGE (SEE SECTION 3.04). *ASSUMES FIXED
BENEFIT JOINT AND SURVIVOR LIFE ANNUITY (100% CONTINUATION TO SURVIVOR) WITH
JOINT ANNUITANT THE SAME AGE AS THE ANNUITANT.
2002EDCA Page 3
Investment Options available and your allocation percentage (until changed) is
also shown:
[*Investment Options Type Allocation Percentage**
------------------ ---- ------------------------
o Alliance Equity Index Type A [0%
o Alliance Growth & Income Type A 0%
o EQ/Alliance Common Stock Type A 30%
o Alliance Global Type A 0%
o Alliance International Type A 0%
o Alliance Aggressive Stock Type A 20%
o Alliance Growth Investors Type A 0%
o EQ/Balanced Type A 0%
o Alliance Small Cap Growth Type A 0%
o EQ/Alliance Premier Growth Type A 0%
o Alliance Conservative Investors Type B 0%
o EQ/Money Market Type B 0%
o Alliance Intermediate Gov't. Securities Type B 0%
o Alliance Quality Bond Type B 0%
o Alliance High Yield Type B 0%
o Capital Guardian Research Type A 0%
o Capital Guardian US Equity Type A 0%
o EQ/Evergreen Fund Type A 0%
o EQ/Evergreen Foundation Fund Type A 0%
o X. Xxxx Price International Stock Type A 0%
o X. Xxxx Price Equity Income Type A 0%
o EQ/Xxxxxx Growth & Income Value Type A 0%
o EQ/Xxxxxx Balanced Type A 0%
o MFS Research Type A 0%
o MFS Growth With Income Type A 0%
o MFS Emerging Growth Companies Type A 0%
o Morgan Xxxxxxx Emerging Markets Equity Type A 0%
o FI Small /Mid Cap Value Type A 0%
x Xxxxxxx Xxxxx World Strategy Type A 0%
x Xxxxxxx Xxxxx Basic Value Equity Type A 0%
o Guaranteed Interest Option N/A 20%
o Guaranteed Period Account** 30%]
------------------------------
Total: 100%]
*Investment Options shown are Variable Investment Options of our Separate
Account [A]
**The Guaranteed Period Account is in our Separate Account No.[48.].
2002EDCA Page 3A
PART I - DEFINITIONS
SECTION 1.01 ANNUITANT.
The term "Annuitant" means an individual who participates in a Plan, and on
whose behalf this Contract is purchased and is maintained. The Annuitant is
shown on Page 3 of this Contract. If the Plan permits, a beneficiary under the
Plan or another individual whose interest in the Plan is derived from the plan
Participant may be made the Annuitant.
SECTION 1.02 ANNUITY.
The term "Annuity" means an annuity contract purchased in accordance with the
terms of the Plan.
SECTION 1.03 ANNUITY ACCOUNT VALUE.
The term "Annuity Account Value" means the sum of the amounts that you have in
the Guaranteed Interest Option and the Variable Investment Options of the
Separate Account pursuant to Sections 2.02 and 2.03, plus any reserve or
suspense account pursuant to loans under Section 2.11.
SECTION 1.03A APPLICABLE TAX CHARGES.
The term "Applicable Tax Charge" means a charge that we determine which is
designed to approximate certain taxes that may be imposed on us. We will deduct
any such Applicable Tax Charge from amounts applied to an Annuity Benefit in
accordance with Section 3.04. If the tax to which the Charge relates is imposed
on us at a time other than when amounts are applied to an Annuity Benefit, we
reserve the right to deduct the Charge from Contributions, Partial Withdrawals
or Terminations, as applicable in Part II.
SECTION 1.04 BENEFIT.
The term " Benefit" means a benefit payable by us pursuant to Section 3.04 of
this Contract. Various sections of this Contract (Sections 1.16, 1.17, 1.18,
1.19, 3.01, and 3.02) refer to monthly payments to be made under an "Annuity
Benefit". You may elect to have the Annuity Benefit paid at other intervals,
such as quarterly, semi-annually, or annually, instead of monthly. You may elect
this at the time you elect the Annuity Benefit form as described in Section
3.03; in that event, all references in this Contract to monthly payments will be
deemed to mean payments at the frequency you elect, subject to our rules at the
time of election.
SECTION 1.05 CASH VALUE.
The term "Cash Value" means an amount equal to the Annuity Account Value less
any charges that apply as described in Part II and any charges that may apply as
described in any applicable Endorsement(s).
2002EDCA Page 4
SECTION 1.06 CLASS OF CONTRACTS.
The term "Class of Contracts" refers to all Contracts with a Contract Date in
the same calendar year.
SECTION 1.07 CODE.
The term "Code" means the Internal Revenue Code of 1986, as amended at any time,
or any corresponding provisions of prior or subsequent United States revenue
laws. References to "the Code" in this Contract include references to applicable
Federal income tax Regulations.
SECTION 1.08 CONTRACT.
The term "Contract" means this Contract.
SECTION 1.09 CONTRACT DATE.
The term "Contract Date" means the date of receipt by us of both the application
for this Contract, properly signed and completed, and a Contribution.
SECTION 1.10 CONTRACT YEAR.
The term "Contract Year" means the twelve month period beginning on (i) the
Contract Date, and (ii) each anniversary thereafter, unless otherwise agreed to
in writing by us.
SECTION 1.11 CONTRIBUTION.
The term "Contribution" means a payment made to us for this Contract pursuant to
the terms of the Plan and subject to the limits as described in Section 2.01.
SECTION 1.12 INVESTMENT OPTION.
The term "Investment Option" means a Variable Investment Option, Guaranteed
Period Account (Fixed Maturity Option), or Guaranteed Interest Option.
SECTION 1.13 ELIGIBLE ANNUITY CERTAIN.
The term "Eligible Annuity Certain" means a Period Certain Annuity issued by us
which extends beyond the Annuitant's attainment of age 59 years and 6 months and
does not permit any prepayment of the unpaid principal (that is, no withdrawal
or single sum payment) prior to the Annuitant's attainment of age 59 years and 6
months.
2002EDCA Page 5
SECTION 1.14 EMPLOYER.
The term "Employer" means one of the following types of entity which is eligible
to adopt, has adopted, and maintains a Plan: (i) a State, a political
subdivision of a State, or an agency or instrumentality of a State or political
subdivision of a State ("Governmental Employer") or (ii) any other organization
(other than a governmental unit) exempt from tax under the Code ("Tax Exempt
Employer").
SECTION 1.14A FREE CORRIDOR AMOUNT.
The term "Free Corridor Amount" means an amount equal to the excess, if any, of
(i) [10%] of the sum of the Annuity Account Value on the Transaction Date over
(ii) cumulative prior withdrawals made pursuant to Section 2.07 in the current
Contract Year or pursuant to the repayment of interest or principal on a loan in
the current Contract Year.
SECTION 1.14B GOVERNMENTAL EMPLOYER PLAN.
The term "Governmental Employer Plan" means a Plan established and maintained by
a Governmental Employer and is described in Section 457(g) of the Code.
SECTION 1.15 GUARANTEED INTEREST RATE.
The term "Guaranteed Interest Rate" means the effective annual rate at which
interest accrues on the amount in the Guaranteed Interest Option. The initial
rate to apply is shown on Page 3 of this Contract. Section 2.03 describes the
determination of the rate to apply thereafter.
SECTION 1.16 JOINT AND SURVIVOR LIFE ANNUITY FORM.
The term "Joint and Survivor Life Annuity Form" means an annuity providing
monthly payments while either of two persons upon whose lives such payments
depend is living. The monthly amount to be continued when only one of the
persons is living will be equal to a percentage of the monthly amount that was
paid while both were living. This percentage may be 50% or any higher percentage
up to and including 100%, as elected by you. The payments commence on the date
as of which the Joint and Survivor Life Annuity Form is purchased and terminate
with the last payment due before the death of the survivor.
SECTION 1.17 LIFE ANNUITY FORM.
The term "Life Annuity Form" means an annuity issued by us providing monthly
payments during the lifetime of the person upon whose life such payments depend.
The payments commence on the date as of which the Life Annuity Form is purchased
and terminate with the last payment due before the death of such person.
SECTION 1.18 NORMAL FORM.
The term "Normal Form" of an Annuity Benefit under this Contract means (i) if
the Annuitant has a living spouse at the Retirement Date, the Fixed Annuity
Benefit payable on the Joint and Survivor Life Annuity Form with such spouse as
the contingent annuitant (with 100% of the
2002EDCA Page 6
monthly payment amount continued to the spouse), and (ii) if the Annuitant does
not have a living spouse at the Retirement Date, the Fixed Annuity Benefit
payable on the Life Annuity Form.
SECTION 1.18A OWNER.
The Owner of this Contract is the person named in our records as designated in
the application or in the transfer of ownership form, if so transferred
subsequent to the issuance of this Contract. In the case of a Governmental
Employer Plan, the Owner may be the trustee of a trust holding assets of the
plan or the Employer deemed as trustee of the Plan pursuant to Section 401(f) of
the Code. If the Owner of this Contract is the Annuitant, this contract may not
be transferred or assigned to any other person in whole or in part. Subject to
Equitable's approval, the Owner may designate another person to exercise rights
under the Contract.
SECTION 1.19 PERIOD CERTAIN ANNUITY.
The term "Period Certain Annuity" means an annuity not involving life
contingencies issued by us which does not permit any prepayment of the unpaid
principal (that is, the Annuitant cannot elect to receive part of the payments
as a single sum payment with the remainder paid in monthly annuity payments).
SECTION 1.20 PLAN.
The term "Plan" refers to an "Eligible Deferred Compensation Plan" meeting the
requirements of Section 457(b) of the Code which is established and maintained
by an Employer for the benefit of individuals performing services for the
Employer and their beneficiaries. There are two types of Plans: "Governmental
Employer Plans" and "Tax Exempt Employer Plans."
SECTION 1.20A PLAN TRUST.
The term "Plan Trust" means a trust, if any, adopted by the Employer for the
Plan, to hold this Contract for the exclusive benefit of Plan participants and
their beneficiaries in accordance with the provisions of the Plan.
SECTION 1.20B TRUST AGREEMENT.
The term "Trust Agreement" means an agreement evidencing the Plan Trust.
SECTION 1.21 PROCESSING OFFICE.
The term "Processing Office" means our Individual Annuity Center, P O Box 2996,
New York, New York 10116-2996, or such other location as we shall designate by
advance written notice to the Employer or the Plan's Trustee, as applicable.
2002EDCA Page 7
SECTION 1.22 RETIREMENT DATE.
The term "Retirement Date" means the date on which the Annuitant attains the
retirement age as shown on Page 3 of this Contract. Before the Retirement Date
the Employer, or the Plan Trust if the Plan Trust is the Owner and is so
authorized by the terms of the Trust Agreement, may elect to change the
Retirement Date to another Retirement Date, which may be any date after the
filing of the election (other than the 29th, 30th, or 31st day of any month).
Any election for such change must be made in writing and shall not take effect
until received by us at the Processing Office. A Retirement Date later than our
maximum maturity age, currently age [85], cannot be chosen unless required by
State law. If the Retirement Date is later than the age when the Annuitant must
begin taking minimum distributions required under Sections 457 and 401(a)(9) of
the Code, withdrawals must be made from this Contract as described in Section
3.05.
SECTION 1.23 SEPARATE ACCOUNT.
We have established the Separate Account(s) and maintain such Separate
Account(s) in accordance with the laws of New York State. Xxxxxx, realized and
unrealized gains and losses from the assets of a Separate Account are credited
to or charged against it without regard to our other income, gains or losses.
Assets are placed in the Separate Account(s) to support the Contract and other
annuity contracts and certificates. Assets may be placed in the Separate
Account(s) for other purposes, but not to support contracts or policies other
than variable annuities and variable life insurance.
The assets of a Separate Account are our property. The portion of such assets
equal to the reserves and other contract liabilities with respect to the
Separate Account will not be chargeable with liabilities that arise out of any
other business we conduct. We may transfer assets of a Separate Account in
excess of the reserves and other Contract liabilities with respect to such
Separate Account, to another Separate Account, or to our general account.
The Separate Account consists of "Variable Investment Options" that are
classified as "Type A" Variable Investment Options or "Type B" Variable
Investment Options or any other type that may be specified on Page 3A of the
Contract.
We will value the assets of each Variable Investment Option on each business
day. A business day is any day on which the New York Stock Exchange is open for
trading and generally ends at 4:00 p.m.Eastern Time or such other time as we
state in writing to you.
We may, at our discretion, invest the assets of any Variable Investment Option
in any investment permitted by applicable law. We may rely conclusively on the
opinion of counsel (including attorneys in our employ) as to what investments we
are permitted by law to make.
2002EDCA Page 8
We reserve the right to
(i) cause the registration or deregistration of the Separate Account
under the Investment Company Act of 1940, provided that such
registration or deregistration is in conformity with the requirements
of applicable law;
(ii) run the Separate Account under the direction of a committee, and to
discharge such committee at any time;
(iii) restrict or eliminate any voting rights as to the Separate Account;
(iv) operate the Separate Account by making direct investments, or in any
other form;
(v) add Variable Investment Options (or sub-divisions of Variable
Investment Options) to, or remove Variable Investment Options (or
sub-divisions of Variable Investment Options) from the Separate
Account (the term "Variable Investment Option" in this Contract shall
then refer to any other Variable Investment Option in which the
assets, of a class of contracts to which this Contract belongs were
placed);
(vi) combine any two or more Variable Investment Options (or sub-divisions
of Variable Investment Options) of the Separate Account; and
(vii) withdraw from any Variable Investment Option and to allocate to
another Variable Investment Option assets determined by us to be
associated with the class of contracts to which this Contract
belongs.
If the exercise of these rights results in a material change in the underlying
investments of an Variable Investment Option, you will be notified of such
exercise, as required by law.
Assets of the Variable Investment Options attributable to this Contract shall be
subject to a daily charge (after any deductions to provide for applicable tax
charges) at a rate not to exceed 1.49% per year for the EQ/Alliance Common Stock
and EQ/Money Market Variable Investment Options, and 1.34% per year for all
other Variable Investment Options, for financial accounting, death benefits,
mortality risk, expenses and expense risk. The charge shall be made in
accordance with Subsection (c) of the Net Investment Factor provision in Section
1.24. The relative proportion of these charges may be modified. This daily
charge, plus the investment advisory fee charges and direct operating expense
charges of the Trust, shall not exceed a total annual rate of 1.75% of the value
of the assets of the Variable Investment Options attributable to this Contract.
The 1.75% maximum does not apply to any Variable Investment Option other than
the EQ/Alliance Common Stock, EQ/Aggressive Stock, EQ/Money Market and the
EQ/Balanced Variable Investment Options and will not apply to any Variable
Investment Options added in the future. Such maximum rate may not be altered
without your approval.
2002EDCA Page 9
SECTION 1.24 SEPARATE ACCOUNT DEFINITIONS.
VALUATION PERIOD: Each business day together with any preceding consecutive
non-business days.
NET INVESTMENT FACTOR: For this Contract, the Net Investment Factor for each
Variable Investment Option of the Separate Account for a Valuation Period is (a)
divided by (b), minus (c), where
(a) is the value of the Variable Investment Option's shares of the
corresponding portfolio of the Trust at the end of the Valuation Period
before giving effect to any amounts allocated to or withdrawn from the
Variable Investment Option for the Valuation Period. For this purpose, we
use the share value reported to us by the Trust.
(b) is the value of the Variable Investment Option's shares of the
corresponding portfolio of the Trust at the end of the preceding Valuation
Period (after taking into account any amounts allocated or withdrawn for
that Valuation Period).
(c) is the daily Separate Account charge for the expenses of this Contract
times, the number of calendar days in the Valuation Period.
ACCUMULATION UNIT: An "Accumulation Unit" is a unit which is purchased in a
Variable Investment Option where Contributions made on the Annuitant's behalf
are invested and which is used in determining the amount in a Variable
Investment Option.
ACCUMULATION UNIT VALUE: An "Accumulation Unit Value" is the dollar value of
each Accumulation Unit in a Variable Investment Option on a given date.
The Accumulation Unit Value for a Valuation Period is the Accumulation Unit
Value for the immediately preceding Valuation Period multiplied by the Net
Investment Factor for that Variable Investment Option for such Valuation Period.
ANNUITY UNIT: The "Annuity Unit" is a unit used in determining amounts payable
from the Variable Investment Options of the Separate Account under a Variable
Annuity Benefit as defined in Section 3.02.
ANNUITY UNIT VALUE: The "Annuity Unit Value" was fixed at $1.00, the date the
first Contribution was allocated. The Annuity Unit Value for any subsequent
Valuation Period is the Annuity Unit Value for the immediately preceding
Valuation Period multiplied by the Adjusted Net Investment Factor for such
subsequent Valuation Period. The Adjusted Net Investment Factor for a Valuation
Period is the Net Investment Factor for such period reduced for each calendar
day in such subsequent Valuation Period by the Net Investment Factor times (i)
..00013366, if the Assumed Base Rate of Net Investment Return is 5%, and (ii)
..00009425, if the Assumed Base Rate of Net Investment Return is 3.5%. The
Assumed Base Rate of Net Investment Return shall be 5%, except in states where
the rate is not permitted by law.
AVERAGE ANNUITY UNIT VALUE: The "Average Annuity Unit Value" for a calendar
month is equal to the average of the Annuity Unit Values for all Valuation
Periods ending in such month.
2002EDCA Page 10
SECTION 1.25 SUBSTITUTED BENEFICIARY.
The term "Substituted Beneficiary" refers to the beneficiary designated under
the Plan by the Annuitant to receive death benefits payable under the Plan,
where the Owner has elected, pursuant to Section 4.04 to designate such person
to receive the death benefit payable under Section 2.10.
SECTION 1.25A TAX EXEMPT EMPLOYER PLAN.
The term "Tax Exempt Employer Plan" means a Plan established and maintained by a
Tax Exempt Employer which has adopted and maintains a Plan for a select group of
management or highly compensated employees within the meaning of the Employee
Retirement Income Security Act of 1974, as amended.
SECTION 1.26 TRANSACTION DATE.
The term "Transaction Date" means the business day we receive a Contribution or
a written contract transaction request providing the information we need at the
Processing Office. In the case of a transfer request initiated through the use
of a touch tone telephone, as described in Section 2.05, the Transaction Date is
the business day the telephone transaction is received.
SECTION 1.27 TRUST.
The term "Trust" means the designated trust or investment company in which
Separate Account assets are invested.
SECTION 1.28 VARIABLE INVESTMENT OPTION.
The term "Variable Investment Option" means either a sub-account of a Separate
Account, or a Separate Account that has not been divided into sub-accounts. A
Variable Investment Option may invest its assets in a separate class (or series)
of shares of a designated Trust where each class (or series) represents a
separate portfolio in such Trust.
PART II - ANNUITY ACCOUNT VALUE
SECTION 2.01 CONTRIBUTIONS.
a) Provisions applicable to Contracts funding both Governmental and Tax Exempt
Employer Plans.
The Employer makes Contributions from time to time pursuant to the terms of the
Plan. Contributions will be allocated to the Investment Options in accordance
with the instructions received on the application, unless later changed. We
reserve the right to refuse to accept any Contributions of less than $20.00.
Each Contribution received by us on the Annuitant's behalf will, before its
allocation under this Contract, be reduced by the amount of any Applicable Tax
Charge, as determined by us.
Two types of Contributions may be made to this Contract, if and as permitted by
the Plan: Contributions determined by reference to the Plan participant's
compensation and contributions of funds directly transferred from another Plan
of the same type or other funds invested under the Employer's Plan.
2002EDCA Page 11
Contributions to the Contract determined by reference to compensation are
limited to the maximum amount that may be deferred for an Annuitant for any
taxable year under Section 457 of the Code.
If we determine that any Contributions would cause this Contract not to qualify
under Section 457 of the Code, we reserve the right to refuse to accept any such
Contributions.
b) Additional provisions applicable to Contracts funding Governmental Employer
Plans
The Employer, or the Plan Trust if the Plan Trust is the Owner and is so
authorized by the terms of the Trust Agreement, makes Contributions with respect
to compensation from time to time pursuant to the terms of the Plan.
If and as permitted by the Plan we may agree to accept, subject to our rules at
the time, "rollover contributions" from another eligible retirement plan
described in Sections 457(e)(16) and 402(c) of the Code. Rollover contributions
will be separately accounted for as required under the Code.
SECTION 2.02 SEPARATE ACCOUNT VARIABLE INVESTMENT OPTIONS.
On any Transaction Date when an amount is allocated to, or withdrawn or
transferred from, a Variable Investment Option, the Annuity Account Value will
be credited or charged, as the case may be, with the number of Accumulation
Units determined by dividing said amount by the Accumulation Unit Value for the
appropriate Variable Investment Option for the Valuation Period which includes
that date. The number of units in a Variable Investment Option on any date is
equal to (i) the sum of any Accumulation Units that have been allocated pursuant
to Section 2.04 minus (ii) the sum of any Accumulation Units that have been
withdrawn pursuant to Sections 2.07 or 2.08 or transferred from the Variable
Investment Option pursuant to Section 2.05. The amount in a Variable Investment
Option on any date is equal to the product of (i) the number of Accumulation
Units in the Variable Investment Option on that date and (ii) the Accumulation
Unit Value for the Variable Investment Option for the Valuation Period which
includes that date.
Participation in the Separate Account under this Contract terminates on the
earliest of (i) Election and Commencement of Annuity Benefits pursuant to
Section 3.03, (ii) receipt of due proof of the Annuitant's death or (iii)
Termination of this Contract pursuant to Section 2.06.
2002EDCA Page 12
SECTION 2.03 GUARANTEED INTEREST OPTION.
Any amount allocated to the Guaranteed Interest Option becomes part of our
general assets that support the guarantees of this Contract and other contracts.
The amount in the Guaranteed Interest Option at any time is equal to the sum of
all amounts that have been allocated to the Guaranteed Interest Option pursuant
to Section 2.04 plus the amount of any interest accrued but not allocated, less
the sum of all amounts that have been withdrawn from the Guaranteed Interest
Option pursuant to Sections 2.07, 2.08, 2.10 or 2.11 or transferred from the
Guaranteed Interest Option pursuant to Section 2.05.
We will credit the amount in the Guaranteed Interest Option with interest at
effective annual rates that we determine. For each Class of Contracts we
determine a yearly guaranteed interest rate that will remain in effect
throughout the next year. We guarantee that this yearly guaranteed interest rate
will never be less than 3%.
Participation in the Guaranteed Interest Option under the terms of this Contract
terminates on the earliest of (i) Election and Commencement of Annuity Benefits
pursuant to Section 3.03, (ii) receipt of due proof of the Annuitant's death or
(iii) Termination of this Contract pursuant to Section 2.06.
SECTION 2.04 ALLOCATION TO INVESTMENT OPTIONS.
Each Contribution made pursuant to Section 2.01 is allocated (after deduction
for any Applicable Tax Charge) to one or more Investment Options. Allocation
percentages must be in whole numbers and the sum must equal 100. The allocation
is made as of the Transaction Date on which we have received both such
Contribution and such direction. Contributions made to a Variable Investment
Option purchase Accumulation Units in that Variable Investment Option, using the
Accumulation Unit Value next computed after the Transaction Date. If the Plan
permits, and you provide us with advance written instructions to do so, we will
accept allocation instructions directly from the Annuitant.
Interest determined at the Guaranteed Interest Rate is allocated to the
Guaranteed Interest Option on a daily basis.
SECTION 2.05 TRANSFERS AMONG INVESTMENT OPTIONS.
You may request to transfer all or part of the amount held in an Investment
Option to one or more of the other Investment Options. The request must be in a
form we accept. All transfers will be made on the Transaction Date.
Written authorization for touch tone telephone initiated transfers is only
required when authorization for telephone transfers is requested. Upon advance
written notice to you, we reserve the right to discontinue the acceptance of
transfer requests through the use of a touch tone telephone. If the Plan permits
and you provide us with advance written instructions to do so, we will accept
transfer instructions directly from the Annuitant. All transfers will be
effective on the
Transaction Date and will be subject to our rules in effect at the time of
transfer. With respect to the Variable Investment Options, the transfer will be
made at the Accumulation Unit Value next
2002EDCA Page 13
computed after the Transaction Date.
If you have elected the Guaranteed Interest Option and any Type B Variable
Investment Option listed on Page 3A of your Contract, whether or not amounts
have actually been placed in any Type B Variable Investment Option, then the
maximum amount that may be transferred from the Guaranteed Interest Option to
any other Variable Investment Option (Type A also listed on Page 3A) in any
Contract Year is:
a) 25% of the amount you have in the Guaranteed Interest Option on the last
day of the prior Contract Year or, if greater,
b) the total of all amounts transferred at your request from the Guaranteed
Interest Option to any of the other Variable Investment Options in the
prior Contract Year.
We will not accept a request for a transfer of less than [$300], unless the
Annuity Account Value is less than [$300].
Transfer requests must be in writing and delivered by U.S. mail to our
Processing Office unless we accept an alternative form of communication (such as
internet or automated telephone). The use of alternative forms of communication
is subject to our rules then in effect for each such service. We may provide
information about our rules and the use of communication services in the
contract prospectus, prospectus supplements or other notifications, as mailed to
your last known address in our records from time to time. Any alternative form
of communication that we make available may be changed or discontinued at any
time. Communication services may be restricted or denied if we determine that
you used such services for market timing or other trading strategies that may
disrupt operation of an Investment Option or have a detrimental effect on the
Accumulation Unit Value of any Variable Investment Option.
We reserve the right to:
(1) limit transfers among or to the Investment Options to no more than once
every 30 days;
(2) require a minimum time period between each transfer into or out of one or
more specified Investment Options;
(3) reject transfer requests from a person acting on behalf of multiple
contract owners pursuant to a trading authorization agreement that we have
accepted; and
(4) impose conditions or limitations on transfer rights, restrict transfers or
refuse any particular transfer if we are concerned that market timing,
excessive trading or other trading strategies may disrupt operation of an
Investment Option or may have a detrimental effect on the Accumulation Unit
Value of any Variable Investment Option or determine that you have engaged
in any such strategy.
SECTION 2.05A RESTRICTIONS ON DISTRIBUTIONS.
Notwithstanding anything in this Contract to the contrary, payments of Cash
Value pursuant to Section 2.06 Termination of this Contract, Section 2.07
Partial Withdrawals or Part III - Benefits are subject to the restrictions in
this Section. We reserve the right to require proof acceptable to us that any
transaction requested under any of Sections 2.06, 2.07 or Part III is
permissible under the Plan before processing any such transaction.
a) Tax Exempt Employer Plans. Except as otherwise permitted under Section 457
of the Code and in accordance with the terms of the Plan, amounts will not
be made available to Plan participants or their beneficiaries earlier than
(i) the calendar year in which the Plan participant attains age 70 1/2,
(ii) when the Plan participant has a severance from employment with the
2002EDCA Page 14
Employer or (iii) when the Plan participant is faced with an unforeseeable
emergency (within the meaning of applicable federal income tax
Regulations).
b) Governmental Employer Plans. Except as otherwise permitted under Section
457 of the Code and in accordance with the terms of the Plan, amounts will
not be paid to Plan participants or their beneficiaries earlier than (i)
the calendar year in which the Plan participant attains age 701/2, (ii)
when the Plan participant has a severance from employment with the Employer
or (iii) when the Plan participant is faced with an unforeseeable emergency
(within the meaning of applicable federal income tax Regulations). We
reserve the right to limit transfers of Cash Value, up to the amount of any
loan reserve account under the Contract, to another funding vehicle under
the Employer's Plan or to another Governmental Employer Plan, while there
is a loan outstanding as described in Section 2.11 Loans.
SECTION 2.06 TERMINATION OF THIS CONTRACT.
Subject to any restrictions under the terms of the Plan, the Employer or Plan
Trust if the Plan Trust is the Owner and is so authorized by the terms of the
Trust Agreement, may elect by written notice to terminate this Contract. We will
pay the Cash Value or Annuity Account Value to the Employer or as applicable,
the Plan Trust if the Plan Trust is the Owner and is so authorized by the terms
of the Trust Agreement to receive the Cash Value or Annuity Account Value. Where
the Owner is the Annuitant, the advance written approval of the Employer or the
Plan Trust may be required to make payment to the Annuitant or other payee. We
will determine the Cash Value of this Contract as of the Transaction Date.
If this Contract is terminated, surrendered or exchanged prior to the
Annuitant's Retirement Date, we reserve the right to deduct an Applicable Tax
Charge. If we previously deducted Applicable Tax Charges from Contributions
pursuant to Section 2.01, we will not again deduct charges for the same taxes on
terminations, unless a change in applicable law has occurred with respect to
this Contract.
Cash Value payments may be deferred by us in accordance with the provisions of
Section 4.07.
Subject to the terms of the Plan, we reserve the right to pay the Annuity
Account Value under this Contract and terminate this Contract if (i) you make no
Contributions on behalf of the Annuitant during the last three completed
Contract Years, or (ii) you make a partial withdrawal that would result in the
Annuitant's Annuity Account Value falling below [$500]. We also reserve the
right to terminate this Contract if no Contributions have been made within 120
days from the Contract Date shown on Page 3 of this Contract.
We will pay either the Cash Value or Annuity Account Value, as applicable,
directly to the Employer or the Plan Trust if the Plan Trust is the Owner and is
so authorized by the terms of the Trust Agreement to receive the Cash Value or
Annuity Account Value, unless such Employer or Plan Trust, as applicable, gives
us written notice at the time of termination that it requests us to make payment
to the Annuitant or other person, and that such payment is permissible under the
Plan. Where the Owner is the Annuitant, we will pay the Cash Value or Annuity
Account Value, as applicable, to the Owner upon receipt of written notice from
the Employer that the payment is permissible under the Plan.
Upon payment pursuant to this Section or the fourth paragraph of Section 2.07,
the amount in the Investment Options under this Contract and the Annuity Account
Value with respect to this Contract shall be zero. We will be released from any
and all liability for payments with respect to the Contributions from which the
Annuity Account Value arose.
2002EDCA Page 15
SECTION 2.07 PARTIAL WITHDRAWALS.
Subject to any restrictions under the terms of the Plan, you may elect by
written notice to us to make a partial withdrawal from the Investment Options.
We reserve the right to require written notice from the Employer that a request
for a partial withdrawal from an Owner who is the Annuitant is permissible under
the Plan before processing such request.
On the Transaction Date, we will pay the lesser of the Cash Value or the amount
of partial withdrawal requested to you. The amount paid plus any withdrawal
charge applicable pursuant to Section 2.08 will be withdrawn from the amounts
you have in the Investment Options. Unless instructed otherwise, the amount
withdrawn (including any withdrawal charge) will be allocated among the
Investment Options in proportion to the amounts that you have in such Investment
Options.
We will pay the Cash Value or Annuity Account Value, as applicable, directly to
you unless you give us written notice at the time of the withdrawal that you
request us to make payment to the Annuitant or another person, and that such
payment is permissible under the Plan. Where the Owner is the Annuitant, we will
pay the Cash Value or Annuity Account Value, as applicable, to the Owner upon
receipt of written notice from the Employer that the payment is permissible
under the Plan.
Upon any partial withdrawal payment, we will be released from any and all
liability for payments with respect to the Contributions from which the amounts
so withdrawn arose. We may defer partial withdrawal payments in accordance with
the provisions of Section 4.07.
We may decline to accept a request for a partial withdrawal of less than [$300].
If a withdrawal made under this Section would result in an Annuity Account Value
of less than [$500], we will so advise you and reserve the right to pay the
Annuity Account Value to you, and terminate this Contract.
2002EDCA Page 16
SECTION 2.08 CHARGES FOR PARTIAL WITHDRAWALS.
NO WITHDRAWAL CHARGE FOR PARTIAL WITHDRAWALS:
There will be no charge for a partial withdrawal if (a) the amount of partial
withdrawal requested is not greater than the Free Corridor Amount defined in
Section 1.14A or (b) the Cash Value is equal to the Annuity Account Value,
pursuant to Section 1.05.
WITHDRAWAL CHARGE: If the amount of partial withdrawal requested is greater than
the Free Corridor Amount, we will (i) first withdraw from the Investment Options
an amount equal to the Free Corridor Amount in proportion to the amount you have
in them, and (ii) then withdraw an amount equal to the excess of the amount
requested over the Free Corridor Amount, plus a partial withdrawal charge. Such
partial withdrawal charge will be equal to the lesser of (a) or (b) where:
(a) is an amount equal to
[6% during Contract Years 1 through 5
5% during Contract Years 6 through 8
4% during Contract Year 9
3% during Contract Year 10
2% during Contract Year 11
1% during Contract Year 12
0%] thereafter
of the amount withdrawn in excess of the Free Corridor Amount (including
such charge) pursuant to (ii) of the preceding sentence.
(b) is the excess, if any, of (i) 8% of the total Contributions made on the
Annuitant's behalf during the current Contract Year and the nine preceding
Contract Years over (ii) the cumulative total of any prior partial
withdrawal charges made pursuant to this Section.
If withdrawals are made from this Contract prior to the Annuitant's Retirement
Date, we reserve the right to deduct an Applicable Tax Charge. If we have
previously deducted for Applicable Tax Charges from Contributions pursuant to
Section 2.01, we will not again deduct charges for the same taxes on
withdrawals, unless a change in applicable law has occurred with respect to this
Contract.
However, notwithstanding the above, if the Annuitant is age 60 or older on the
Contract Date, the withdrawal charges in Contract Year 5 shall not exceed 5% of
the excess of the Annuity Account Value over the Free Corridor Amount.
A withdrawal charge will not apply, which means the Cash Value will equal the
Annuity Account Value upon any of the following occurrences:
[(i) the later of the completion of at least five Contract Years and the
Annuitant's attainment of age 59 years and 6 months, or
(ii) the Annuitant's completion of at least twelve Contract Years, or
(iii) a request is made for a refund of a Contribution in excess of the amount
that may be contributed under Section 457 of the Code within one month of
the date on which the Contribution is made, or
2002EDCA Page 17
(iv) the Annuitant's attainment of age 55, the completion of at least five
Contract Years and the receipt by us of a properly completed settlement
election form providing for the application of the Annuity Account Value
to purchase an Eligible Annuity Certain, defined in Section 1.13, or
(v) the Annuitant's completion of at least three Contract Years and the
receipt by us of a properly completed settlement election form providing
for the application of the Annuity Account Value to purchase a Period
Certain Annuity, defined in Section 1.19, where the certain period of
such annuity is at least ten years, or
(vi) the receipt by us of a properly completed settlement election form
providing for the application of the Annuity Account Value to purchase a
life annuity distribution, pursuant to the terms of this Contract, or
(vii) the Annuitant dies and a death benefit is payable to the beneficiary, or
(viii) the Annuitant's attainment of age 55, the completion of at least five
Contract Years, and separation from service.]
The above statements notwithstanding, we reserve the right to modify or waive
any early withdrawal charges in order to comply with any applicable state or
local legal or regulatory requirements. Any such modification or waiver will
apply equally to all Annuitants under a Plan subject to such a state or local
legal or regulatory requirement.
SECTION 2.09 ANNUAL ADMINISTRATIVE CHARGE.
As of the last day of each Contract Year, if the Annuity Account Value on that
date is less than [$25,000], we will withdraw from the Investment Options an
Annual Administrative Charge equal to the lesser of $30 or 2% of the Annuity
Account Value including the amount of any withdrawals pursuant to Section 2.07
during that Contract Year. The charge will be allocated among the Investment
Options in proportion to the amounts you have in the Investment Options.
If the Annuity Account Value is [$25,000] or greater at the end of a Contract
Year, the Annual Administrative Charge is zero.
If the Annuity Account Value is less than [$25,000] on (a) the date of the
application of the Annuity Account Value or Cash Value pursuant to Section 3.03
or (b) the date of termination of this Contract pursuant to Sections 2.06 or
2.11, we will prorate the Annual Administrative Charge applicable to the
completed portion of the current Contract Year and withdraw such amount in lieu
of the Annual Administrative Charge described in this Section for the applicable
part of that Contract Year.
SECTION 2.10 DEATH BENEFIT.
Upon receipt of due proof of the Annuitant's death any required instructions,
information and forms necessary to effect payment, we will pay to you as
beneficiary in a single sum the amount of the death benefit. You may change the
beneficiary or the payment method of the death benefit as permitted by the Plan,
pursuant to Section 4.04. The amount of the death benefit is equal to the
greater of (i) the Annuity Account Value less any outstanding loan and (ii) the
minimum death benefit. Such minimum death benefit is the sum of all
Contributions made by you pursuant to Section 2.01 (before reduction for any
Applicable Tax Charge) less any withdrawals made pursuant to Section 2.07. Any
such withdrawal will reduce the minimum death benefit (as adjusted by any
previous such withdrawal) by an amount which is in the same proportion as the
amount that was withdrawn is to the Annuity Account Value. If, in accordance
with the provisions of Section 2.01, the cash value of another annuity contract
issued by us or one of our
2002EDCA Page 18
affiliated or subsidiary life insurance companies, which provides for a death
benefit before retirement equal to the greater of the contract cash value or an
alternate amount based on contributions made under the annuity contract, is
transferred to this Contract, such cash value or alternative amount as of the
date of transfer will be included in the "sum of all Contributions" in lieu of
the amount of cash value transferred for purposes of the death benefit under
this Contract.
We will pay the death benefit to the beneficiary in the form of an Annuity
Benefit if you have made the election described in the last paragraph of Section
4.04. Also in accordance with the last paragraph of Section 4.04, if no such
election is in effect at the Annuitant's death, we will pay the death benefit to
the beneficiary in a single sum, unless the beneficiary elects, before we pay
the death benefit, to apply the death benefit to an Annuity Benefit.
Upon payment of the death benefit, the amount you have in the Investment Options
and the Annuity Account Value under this Contract shall be zero. We will be
released from any and all liability for payments with respect to the
Contributions from which the Annuity Account Value arose.
SECTION 2.11 LOANS UNDER CONTRACT FUNDING GOVERNMENTAL EMPLOYER PLAN.
Unless otherwise restricted by the Plan or the Code, and subject to your
approval, the Annuitant may effect a loan under this Contract before the
election and commencement of Annuity Benefits. Future restrictions in the Code
may require changes in the terms and availability of the loans. The Annuity
Account Value (including the loan reserve account as described below) will be
the sole security for the loan.
We reserve the right not to permit new loans if a previous loan was defaulted
and not repaid when due.
A loan is effective on the date we specify, according to our then current
procedures, after we approve the loan request form. The loan request form
together with the loan confirmation notice will be the loan agreement and will
contain all the terms of the loan which apply, including amount of the loan,
interest rate, and the payments due.
The amount of the loan may not be more than (i) 80% of the Annuity Account Value
of this Contract, if such total Annuity Account Value is greater than or equal
to $3,750 and less than $12,500, (ii) $10,000, if the Annuity Account Value is
greater than or equal to $12,500 and less than $20,000, and (iii) 50% of the
Annuity Account Value if the Annuity Account Value is greater than or equal to
$20,000, but in no event shall the loan amount exceed $50,000 less the highest
outstanding balance under this Contract during the one year period ending the
day before the effective date of the loan. The minimum loan permitted is $3,000.
For this purpose, the Annuity Account Value is taken as of the loan effective
date.
Only [one] outstanding loan is permitted at a time under this Contract.
As a condition for granting a loan, we will require the Annuitant's
representation that the loan amount requested, when aggregated with loans
(principal plus interest) from all qualified plans of the Governmental Employer,
does not exceed the greater of $10,000 or 50% of the value of the Annuitant's
nonforfeitable accrued benefits, and in no event exceeds $50,000 less the
highest outstanding balance of all loans from qualified plans of the
Governmental Employer during the one year period ending on the day before the
effective date of the loan. We reserve the right to also
2002EDCA Page 19
require that the Annuitant elect not to have income tax withholding apply with
respect to any interest and/or loan principal that would otherwise be subject to
withholding.
The loan term will be either (i) ten years, if the Annuitant represents that the
purpose of the loan is to acquire, build or substantially rehabilitate a
dwelling unit which, within a reasonable period of time, is to be used as the
Annuitant's principal residence or (ii) five years. In any event, the loan term
may not extend beyond, (that is, full repayment of the loan will be required)
upon the earlier of (i) the election and commencement of Annuity Benefits
pursuant to Section 3.03, (ii) the date we received written notice from the
Owner to terminate this Contract pursuant to Section 2.06, (iii) the date we pay
a Death Benefit pursuant to Section 2.10, and (iv) any date provided for such
loans in Federal tax rules including acceleration of the loan repayment in order
that the operation of the loan provisions does not adversely affect the tax
treatment of this Contract.
On the loan effective date, we will hold in a loan reserve account an amount
equal to the sum of (i) the loan amount, which will earn interest at the "Loan
Reserve Account Rate" during the loan term and (ii) 10% of the loan, which will
earn interest at the Guaranteed Interest Rate, as defined in this Contract; the
"Loan Reserve Account Rate" will equal the loan interest rate, reduced by 2% or
such other percentage which is determined according to our then current
procedures and which is not greater than permitted under any current applicable
state or federal law.
We will from time to time set the effective annual rate at which interest on a
loan will accrue daily (the "loan interest rate"). Such rate will not be greater
than any maximum rate required under any current applicable state or federal
law. However, if a different rate is requested by the Employer, we will
substitute the rate subject to any limitations imposed by law. The rate so
determined by us will be a reasonable rate based on prevailing rates available
at the date of determination on loans, charged by persons in the business of
lending money for loans which would be made under similar circumstances.
The Annuitant may specify from which Investment Options these amounts are to be
transferred to the loan reserve account. In the absence of direction, or if
directions cover only part of the amount required to be transferred to the loan
reserve account, we will transfer the required (or additional required) amounts
from each Investment Option in proportion to the amounts in such Investment
Options.
On the first day of the third month following the effective date of the loan and
quarterly thereafter (or first business day thereafter, if such day is not a
business day), the amount of interest earned at the Loan Reserve Account Rate
annually during the prior quarter will be transferred to the portion of the loan
reserve account that earns interest at the Guaranteed Interest Rate. You may not
make any partial withdrawals or transfers from the loan reserve account.
The loan must be repaid according to the repayment schedule, which will require
that substantially level amortization payments of principal and interest be made
no less frequently than quarterly, unless otherwise required or permitted by
law; the loan may be repaid in full at any time, including interest due. We will
first apply any payments to interest due, with the balance applied towards
repayment of the loan principal. After any repayment is made, including full
repayment of the loan, the principal amount repaid will be transferred from the
loan reserve account to the Guaranteed Interest Option and may be withdrawn (if
otherwise permitted), transferred to another Investment Option, or applied to an
annuity as described in the Contract.
By each due date (or a specified date thereafter according to our then current
procedures) if the amount of the loan payment is less than the amount due or the
loan payment is not received at our
2002EDCA Page 20
Processing Office, we will treat the amount of the unpaid balance of the loan at
that time, including interest due but not paid, as a deemed distribution for
Federal income tax purposes.
If the amount of the loan reserve account is not subject to the restrictions
described in Section 2.05A, on default we reserve the right to deduct from the
loan reserve account an amount equal to the interest and principal payments due.
We also reserve the right to deduct any Withdrawal Charges that apply and any
required tax withholding.
If the amount in the loan reserve account is subject to the restrictions
described in Section 2.05A, on default we will designate in the loan reserve
account an amount equal to the unpaid loan balance (interest and principal
payments due) at the time of the default. When the Contract is no longer subject
to the withdrawal restrictions of Section 2.05A, we will have the right to
foreclose on this amount, and deduct any Withdrawal Charges that would have
applied at the time of the default, plus any interest due, and any required tax
withholding. This will be no later than the date the Annuitant reaches age 70
1/2 or we are notified in writing that another event has occurred which would
permit amounts subject to restrictions on distribution to be paid. (Such an
event includes but is not limited to severance from employment.)
We have the right to change the loan terms, as long as any such change is made
to maintain compliance with the terms of any law that applies.
SECTION 2.12 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS FROM
GOVERNMENTAL EMPLOYER PLANS.
The Annuitant (or a beneficiary or Substituted Beneficiary under Section 4.04 of
this Contract who is the Annuitant's surviving spouse) may elect to have all or
any portion of the Cash Value or the Death Benefit described in Section 2.10 of
this Contract, as applicable, paid directly to another "eligible retirement
plan" in a "direct rollover transaction" in accordance with Sections 457, 402(c)
and 401(a)(31) of the Code.
In order to elect this option all of the following requirements must be met:
(A) The recipient of the distribution must be an eligible retirement plan
maintained for the benefit of the Annuitant (or the Annuitant's spousal
beneficiary).
(B) The distribution must not include any after-tax contributions to the
Contract except as otherwise permitted under the Code.
(C) The direct rollover option is not available to the extent that a minimum
distribution is required under Section 401(a)(9) of the Code. See Section
3.05. We reserve the right to determine the amount of the Required Minimum
Distribution. If the Annuitant elected a payment option in Part III of this
Contract which is either a life-contingent annuity or paying substantially
equal periodic payments for a period of ten years or more, the direct
rollover option does not apply to those funds.
(D) The direct rollover option is not available for a distribution due to
unforeseeable emergency, except as otherwise permitted under the Code.
PART III - BENEFITS
SECTION 3.01 FIXED ANNUITY BENEFIT.
2002EDCA Page 21
The term "Fixed Annuity Benefit" means an Annuity Benefit under which the
monthly payments with respect to a payee are payable in a specified dollar
amount.
The amount of each monthly payment under any Fixed Annuity Benefit provided
under the terms of this Contract with respect to a payee is the amount provided
with respect to the payee pursuant to Section 3.03.
SECTION 3.02 VARIABLE ANNUITY BENEFIT.
The term "Variable Annuity Benefit" means an Annuity Benefit under which the
dollar amount of the monthly payments with respect to a payee may increase or
decrease depending on the investment experience of the Variable Investment
Options of the Separate Account.
Such Variable Annuity Benefit will increase if the average daily rate of
investment return in the Variable Investment Options are equivalent to more than
6.75% or 5.25% annually and will decrease if it is equivalent to less than 6.75%
or 5.25% annually, depending on whether the applicable assumed base rate of net
investment return referred to in Section 1.24 is 5% or 3.5%, respectively. The
daily rate of investment return is before deduction of charges, as described in
Section 1.23, not to exceed any maximum rate of 1.75% after any deductions to
provide for tax charges. These charges include a daily charge for financial
accounting, death benefits, mortality risk, expenses and expense risk, plus the
investment advisory fee charges and direct operating expense charges of the
Trust.
The amount of the first, second and third payments under any Variable Annuity
Benefit provided under the terms of this Contract with respect to a payee is the
monthly amount provided with respect to the payee pursuant to the fifth
paragraph of Section 3.04. The amount of the fourth and each subsequent payment
under a Variable Annuity Benefit will be equal to the number of Annuity Units
with respect to such benefit, multiplied by the Average Annuity Unit Value for
the second calendar month immediately preceding the due date of the payment. The
number of Annuity Units with respect to a benefit is the number determined by
dividing the amount of the first monthly payment under such benefit by the
Annuity Unit Value for the Valuation Period which includes the due date of the
first monthly payment. (As described in Section 3.05, we will notify the payee
how each Variable Annuity payment is determined.)
2002EDCA Page 22
SECTION 3.03 ELECTION AND COMMENCEMENT OF ANNUITY BENEFITS.
As of the Annuitant's Retirement Date, provided the Annuitant is then living,
the Annuity Account Value shall be applied to provide the Normal Form of Annuity
Benefit, unless you elect, subject to the terms of the Plan and the provisions
of the Code, (i) to have the Cash Value paid in a single sum, (ii) to apply the
Annuity Account Value or Cash Value, whichever is applicable pursuant to the
first paragraph of Section 3.04, to provide an Annuity Benefit on any other form
offered by us or one of our affiliated or subsidiary life insurance companies,
as elected by you or (iii) to take distributions or payments in amounts and at
times as required by the distribution rules of Sections 457(d) and 401(a)(9) of
the Code and applicable Treasury Regulations, pursuant to Section 3.05, and
subject to our rules then in effect.
Notice and election forms will be provided to you not more than six months prior
to the Retirement Date. (On your prior written request we will also provide
notice and election forms directly to the Annuitant.)
If you elect prior to the Annuitant's Retirement Date to terminate this Contract
pursuant to Section 2.06, you may elect to have an Annuity Benefit paid in lieu
of the Cash Value.
If your Plan permits and you provide us written instructions to do so in advance
of payment, we will make payment of the Cash Value, Annuity Benefits or partial
withdrawals directly to the Annuitant, Substituted Beneficiary or other payee
designated by you.
We will have the right to require you to furnish pertinent information to
provide an Annuity Benefit, and will be fully protected in relying on such
information and need not inquire as to the accuracy or completeness thereof.
The applicable Annuity Benefit will be provided pursuant to Sections 3.04 and
3.05. We may offer annuity forms other than the Life Annuity Form or Joint and
Survivor Life Annuity Form issued by us or one of our affiliated or subsidiary
life insurance companies.
SECTION 3.04 AMOUNT OF ANNUITY BENEFITS.
If you elect pursuant to the first or third paragraph of Section 3.03 to have
paid an Annuity Benefit in lieu of the Cash Value, the amount applied to provide
the Annuity Benefit will be (i) the Annuity Account Value if the annuity form
elected involves life contingencies, or (ii) the Cash Value if the annuity form
elected does not involve life contingencies.
The amount applied to provide an Annuity Benefit may be reduced by any
Applicable Tax Charge, as we determine. If we have previously deducted Charges
from Contributions as provided in Section 2.01, we will not again deduct charges
for the same taxes before application to provide an Annuity Benefit, unless a
change in applicable law has occurred with respect to this Contract. The balance
shall purchase the Annuity Benefit on the basis of either (i) the Table of
Guaranteed Annuity Payments shown below or (ii) our current individual annuity
rates for payment of proceeds, whichever rates would provide a larger benefit
with respect to the payee.
Regardless of the basis used, this Contract will be governed by our
supplementary contract then in effect.
If an amount is applied to provide an Annuity Benefit, the amount to be applied
will, in addition to any reduction for an Applicable Tax Charge, be reduced by
an administrative charge. The amount
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of such charge will be determined from time to time in accordance with our
general practices applicable on a uniform basis to all contracts of the same
type as this Contract.
After the application of an amount to provide an Annuity Benefit, the amounts
you have in the Investment Options and the Annuity Account Value shall be zero.
The Tables of Guaranteed Annuity Payments set forth the minimum amount of
monthly income that $1,000 of Annuity Value will provide under the terms of this
Contract, as indicated, on either the Life Annuity Form or the Joint and
Survivor Life Annuity Form (with 100% of the amount of payment to the Annuitant
continued to the Annuitant's spouse). The amount of income provided under the
Fixed Annuity Benefit payable on the Life Annuity Form and Joint and Survivor
Life
Annuity Form, is based on 2.5% interest and the 1983 Individual Annuity
Mortality Table "a" adjusted to a unisex basis based on a 50-50 split of males
and females. The amounts of income initially provided under the Variable Annuity
Benefit payable on the Life Annuity Form and Joint and Survivor Life Annuity
Form are based on a 50-50 split of males and females at age zero and an Assumed
Base Rate of Net Investment Return of 2.5% or 5%, whichever applies pursuant to
Section 1.23.
Amounts required for ages or for annuity forms not shown in the Tables will be
calculated by us on 2.5% interest and the 1983 Individual Annuity Mortality
Table "a" adjusted to a unisex basis based on a 50-50 split of males and females
at age zero if such annuity form provides for a Fixed Annuity Benefit, and on
the 1983 Individual Annuity Mortality Table "a" adjusted to a unisex basis based
on a 50-50 split of males and females at age zero and an Assumed Base Rate of
Net Investment Income Return of 5% or 2.5%, whichever applies pursuant to
Section 1.23, if such annuity form provides for a Variable Annuity Benefit.
SECTION 3.05 PAYMENT OF BENEFITS AND REQUIRED MINIMUM DISTRIBUTION RULES.
As required under Sections 457 and 401(a)(9) of the Code and pursuant to the
terms of the Plan, the entire interest of the Annuitant in this Contract is to
be distributed or will begin to be distributed at least annually from this
Contract beginning no later than the first day of April following the later of
the calendar year in which the Annuitant attains age 70 years and 6 months, or
(b) retires from service with the Employer ("Required Beginning Date").
The amount to be distributed for a year is a "Required Minimum Distribution."
The entire interest may be distributed, as elected pursuant to the Plan and this
Contract, over (a) the life of the Annuitant, or the lives of the Annuitant and
a designated beneficiary, or (b) a period certain not extending beyond the
Annuitant's life expectancy, or the joint and last survivor life expectancy of
the Annuitant and a designated beneficiary. All distributions made hereunder
shall be made in accordance with the requirements of Sections 457 and 401(a)(9)
of the Code,
and applicable Treasury Regulations including the incidental death benefit
requirements of Section 401(a)(9)(G) of the Code.
If the Annuitant dies after distribution of the interest in this Contract
described in the first paragraph of this Section has begun, the remaining
portion of such interest will continue to be
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distributed at least as rapidly as under the method of distribution being used
prior to the Annuitant's death.
If the Annuitant dies before distribution of the interest described in the first
paragraph of this Section begins:
Notwithstanding the above paragraphs and the following paragraphs of this
Section 3.05, while any distribution shall be subject to requirements of the
Code, any distribution shall also be subject to the terms of this Contract. That
is, the forms of distribution shall be those which are made available by us at
the time of your election.
Evidence of each payee's survival must be furnished to us either by personal
endorsement of the check drawn for payment or by other means satisfactory to us.
If a benefit payment under the terms of this Contract was based on information
that is subsequently found to be incorrect, the benefit will not be invalidated,
but an adjustment on the basis of the correct information will be made in the
amount of the benefit payments, or any amount used to provide the benefit, or
any combination thereof. Overpayments by us will be charged against, and
underpayments will be added to, any payments thereafter falling due under this
Contract with respect to the payee, affecting as many such payments as are
necessary to correct the overpayment or underpayment. Our liability, with
respect to a payee, is limited to the correct information and the actual amounts
used to provide the benefits then in force with respect to the payee under this
Contract.
If we receive evidence satisfactory to us that (i) a payee entitled to receive
any payment under this Contract is physically or mentally incompetent to receive
such payment or is a minor, (ii) another person or an institution is then
maintaining or has custody of such payee, and (iii) no guardian, committee, or
other representative of the estate of such payee has been appointed, we may make
the payments (in the case of a minor, at a rate not exceeding $200 a month) to
such other person or institution, and will thereupon be fully discharged from
all liability with respect thereto.
If a variable annuity form made available by us provides for payment for a
period certain, such as 120 or 180 months, and thereafter during the remaining
lifetime of one person, or of at least one of two persons, a payee for payments
thereunder may elect, without the concurrence of any other person, to receive
the commuted value of any remaining payments, provided no person upon whose life
the income depends is surviving.
Pursuant to Section 3.03, upon the election of an annuity form providing
payments for a period certain, you (or the Annuitant, if the employer has
advised us in writing that it is permitted under the terms of the Plan) may
designate (with the right to change such designation) a payee to receive any
payments that may become due after the death of the person or persons upon whose
life or lives the income may depend.
Subject to the terms of the Plan, the payee may designate (with the right to
change such designation and without the concurrence of any other person) a
person or persons to receive any payments or installments payable after such
payee's death, if the absence of such a designation would result in a single sum
payment to such payee's estate in accordance with the following paragraph.
If at the death of any payee there is no designated person living entitled to
receive any remaining payments or installments, we will pay in a single sum to
such payee's estate the commuted value of any remaining payments or
installments.
2002EDCA Page 25
The commuted value of any such remaining payments will be determined on the
basis of compound interest at the rate utilized in the actuarial rate basis
applicable in determining the annuity amount.
If the amount to be applied hereunder is less than $2,000, or would result in an
initial payment of less than $20, we may pay the amount to the payee in a single
sum instead of applying it under the annuity form elected pursuant to Section
3.03.
Payments under annuity forms with life contingencies terminate with the last
payment due before the death of the person or persons upon whose life the income
depends or the end of the certain period, whichever is later.
We will require satisfactory evidence of the age of any person upon whose life
an annuity form depends.
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TABLES OF GUARANTEED ANNUITY PAYMENTS
(Based on Age Nearest Birthday on Due Date of First Payment)
FIXED ANNUITY BENEFIT PAYABLE ON THE
JOINT AND SURVIVOR LIFE ANNUITY FORM
100% OF PAYMENT AMOUNT TO CONTINUE TO SPOUSE
(Minimum Monthly Income per $1,000 of Annuity Account Value)
------------------------------------------------------------------------------------------------------------
Age 60 61 62 63 64 65 66 67 68 69 70
------------------------------------------------------------------------------------------------------------
60 3.97 4.02 4.06 4.10 4.14 4.17 4.21 4.25 4.28 4.31 4.34
61 4.06 4.11 4.15 4.19 4.23 4.27 4.31 4.35 4.39 4.42
62 4.15 4.20 4.25 4.29 4.34 4.38 4.42 4.46 4.50
63 4.25 4.30 4.35 4.40 4.45 4.49 4.53 4.58
64 4.36 4.41 4.46 4.51 4.56 4.61 4.66
65 4.47 4.52 4.58 4.63 4.69 4.74
66 4.59 4.65 4.71 4.76 4.82
67 4.71 4.78 4.84 4.90
68 4.85 4.92 4.98
69 4.99 5.06
70 5.14
------------------------------------------------------------------------------------------------------------
ANNUITY BENEFIT PAYABLE ON THE LIFE ANNUITY FORM (Minimum Monthly Income per
$1,000 of Annuity Account Value)
------------------------------------------------------------------------
Age VARIABLE ANNUITY BENEFIT
IF ASSUMED BASE RATE OF NET
INVESTMENT RETURN IS
3.5% 5.00%
------------------------------------------------------------------------
60 5.27 6.16
61 5.39 6.28
62 5.52 6.41
63 5.66 6.55
64 5.81 6.70
65 5.97 6.86
66 6.15 7.03
67 6.33 7.21
68 6.53 7.41
69 6.74 7.62
70 6.97 7.85
------------------------------------------------------------------------
We will, with respect to each payment of a Variable Annuity Benefit, notify the
payee of the number of Annuity Units and the Average Annuity Unit Value used in
determining the amount of each variable payment. Such notice will be mailed with
each payment.
Any election, change, revocation or designation shall be made, and will take
effect on the Transaction Date, in the same manner as a change of beneficiary,
as described in Section 4.04.
If a commutation right under an Annuity Benefit is exercised, we may defer
payment in accordance with Section 4.07.
PART IV - GENERAL PROVISIONS
SECTION 4.01 CONTRACT.
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The Contract constitutes the entire Contract between the parties and the terms
of the Contract alone will govern with respect to our rights and obligations.
The Contract may not be modified, nor may any of our rights or requirements be
waived, except in writing and by our authorized officer. The terms of the
Contract may be changed by amendment or replacement upon agreement between the
Owner and us without the consent of any other person.
SECTION 4.02 STATUTORY COMPLIANCE.
We reserve the right to amend the terms of this Contract without the consent of
any other person in order to comply with applicable laws and regulations. Such
right shall include, but not be limited to, the right to conform this Contract
to reflect changes in the Code, applicable Treasury Regulations, or in
regulations or published rulings of the Internal Revenue Service so that this
Contract will continue to be an Annuity utilized to fund a plan qualifying under
Section 457 of the Code.
SECTION 4.03 NONFORFEITABILITY, NONTRANSFERABILITY AND ASSIGNMENTS.
The entire interest under this Contract is nonforfeitable. This Contract is
nontransferable except by surrender to us.
Any interest under the terms of this Contract may not be sold, assigned,
discounted, or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose to any person other than
us.
No amount payable under the terms of this Contract may be assigned or commuted,
unless specifically provided for under the terms of this Contract, or encumbered
by the payee, and, to the extent permitted by law, no such amount will in any
way be subject to any claim against such payee.
SECTION 4.04 BENEFICIARY.
If the Plan under which this Contract is purchased is maintained by the Tax
Exempt Employer, the Employer is the Owner of and beneficiary under this
Contract. The person listed as beneficiary is entitled to receive any death
benefit payable under this Contract pursuant to Section 2.10. Upon the
Annuitant's death such beneficiary may, by written request to our Processing
Office, at any time up to and including provision of due proof of such death,
change the beneficiary designation for the Section 2.10 death benefit from the
listed beneficiary to the Substituted Beneficiary.
Subject to the terms of the Plan, the Substituted Beneficiary may elect to
receive the death benefit payable under Section 2.10 in the form of an Annuity
Benefit or any other Benefit payment we offer rather than as a single sum. Any
such election must meet the minimum distribution rules of Sections 457(d) and
401(a)(9) of the Code and applicable Treasury Regulations, as described in
Section 3.05.
SECTION 4.05 DISQUALIFICATION OF PLAN OR CONTRACT.
In the event that the Plan fails to qualify as an Eligible Deferred Compensation
Plan under Section 457 of the Code and applicable Treasury Regulations, we
reserve the right, upon receiving notice
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of such fact, to transfer the Annuity Account Value under this Contract to
another annuity contract issued by us or one of our affiliated or subsidiary
life insurance companies on the life of the Annuitant, or to terminate this
Contract and pay to you the Annuity Account Value less a deduction for
applicable taxes, solely at our option.
In the event that this Contract fails to qualify as an Xxxxxxx as described in
Section 1.02, we will have the right, upon receiving notice of such fact, to
terminate this Contract and pay to you the Annuity Account Value less a
deduction for the appropriate part attributable to you of any income tax payable
by you which would not have been payable had this Contract qualified as an
Annuity.
SECTION 4.06 FUTURE CONTRIBUTIONS.
Upon written notice to you, we reserve the right to limit Contributions under
this Contract if required by law.
SECTION 4.07 DEFERMENT.
Applications of proceeds to a variable annuity, payment of a death benefit and
payment of any portion of the Annuity Account Value (less any applicable
withdrawal charge) will be made within seven days after the Transaction Date.
Payments or applications of proceeds from the Variable Investment Options can be
deferred for any period during which (1) the New York Stock Exchange has been
closed or trading on it is restricted, (2) sales of securities or determination
of the fair value of a Variable Investment Option's assets is not reasonably
practicable because of an emergency, or (3) the Securities and Exchange
Commission, by order, permits us to defer payments in order to protect persons
with interests in the Variable Investment Options. We can defer payment of any
portion of the Annuity Account Value in the Guaranteed Interest Option for up to
six months while the Annuitant is living.
SECTION 4.08 ANNUAL NOTICE.
At the end of each Contract Year, we will furnish you with a notice showing the
following:
(1) the amount in the Guaranteed Interest Option,
(2) the total number of Accumulation Units in the Variable Investment
Options,
(3) the Accumulation Unit Value,
(4) the amount you have in the Variable Investment Options,
(5) the amount you have in the loan reserve account,
(6) the Cash Value, and
(7) the amount of death benefit payable with respect to the Annuitant.
We will also furnish annual calendar year reports concerning the status of the
annuity and any other reports required by the Code or applicable Treasury
Regulations.
After the Retirement Date, we will notify the Employer of the number of Annuity
Units and the Average Annuity Unit Value used in determining the amount of each
Variable Annuity Benefit payment, if any.
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SECTION 4.09 AGE.
If the Annuitant's age has been misstated, any benefits will be those which
would have been purchased at the correct age. Any overpayments or underpayments
made by us will be charged or credited with interest at the rate of 6% per year,
and such interest will be deducted from or added to benefits falling due
thereafter.
SECTION 4.10 OWNERSHIP RIGHT OF EMPLOYER.
Except as provided below, in accordance with Sections 457(b)(6) and 457 (g) of
the Code, until amounts under this Contract are distributed or made available to
the Annuitant or the Annuitant's beneficiary in accordance with the terms of the
Contract and the terms of the Plan, this Contract remains solely the property of
the Employer (subject only to claims of the Employer's general creditors). If
the Plan under which this Contract is purchased is maintained by Government
Employer, the following three sentences apply:
1. The owner of this contract (which may be the Plan Trust or Employer or Plan
Participant) holds it in trust for the exclusive benefit of the Plan
participant and the participant's beneficiaries under the Plan, and it is
not subject to the claims of the Employer's general creditors.
2. It is impossible, prior to the satisfaction of all liabilities with respect
to the Plan participant and the participant's beneficiaries under the Plan,
for any part of the assets and income of
this Contract to be used for, or diverted to, purposes other than for the
exclusive benefit of the Plan participant and the participant's
beneficiaries under the Plan.
3. The last two sentences do not apply to a Governmental Employer Plan in
existence on August 20, 1996 until January 1, 1999 (or any earlier Plan
amendment date).
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