-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ECjM2J0OereXo1epuXt9gRL7SE12nXiPEPavvKZ0WuneQDsV+8jrUkNOj9kzjSwD 7CqwpNjpC+/NwFCtHE7utg== 0000945094-99-000045.txt : 19990302 0000945094-99-000045.hdr.sgml : 19990302 ACCESSION NUMBER: 0000945094-99-000045 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLENBROOK LIFE & ANNUITY CO CENTRAL INDEX KEY: 0000945094 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 351113325 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: SEC FILE NUMBER: 033-91916 FILM NUMBER: 99552943 BUSINESS ADDRESS: STREET 1: 3100 SANDERS ROAD CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 8474022400 MAIL ADDRESS: STREET 1: 3100 SANDERS RD CITY: NORTHBROOK STATE: IL ZIP: 60062 S-1/A 1 GLENBROOK LIFE SUNTRUST As filed with the Securities and Exchange Commission on February 26, 1999. - --------------------------------------------------------------------------- File No. 33-91916 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 5 TO FORM S-1 ON FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GLENBROOK LIFE AND ANNUITY COMPANY (Exact Name of Registrant) ILLINOIS 35-1113325 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Identification Organization) Number) 3100 SANDERS ROAD, NORTHBROOK, ILLINOIS 60062 847/402-2400 (Address and Phone Number of Principal Executive Office) MICHAEL J. VELOTTA VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL GLENBROOK LIFE AND ANNUITY COMPANY 3100 SANDERS ROAD NORTHBROOK, ILLINOIS 60062 847/402-2400 (Name, Complete Address and Telephone Number of Agent for Service) COPIES TO: RICHARD T. CHOI, ESQUIRE TERRY R. YOUNG, ESQUIRE FREEDMAN, LEVY, KROLL & SIMONDS ALLSTATE LIFE FINANCIAL 1050 CONNECTICUT AVENUE, N. W., SERVICES, INC. SUITE 825 3100 SANDERS ROAD WASHINGTON, D.C. 20036-5366 NORTHBROOK, IL 60062 Approximate date of commencement of proposed sale to the public: The annuity contract covered by this registration statement is to be issued promptly and from time to time after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: /X/ THE STI CLASSIC VARIABLE ANNUITY Glenbrook Life And Annuity Company Prospectus dated May 1, 1999 3100 Sanders Road, Northbrook, IL 60062 Telephone Number: 1-800/453-6038 Glenbrook Life and Annuity Company ("Glenbrook") is offering the STI Classic Variable Annuity, an individual flexible premium deferred variable annuity contract ("Contract"). This prospectus contains information about the Contract that you should know before investing. Please keep it for future reference. The Contract currently offers 16 investment alternatives ("investment alternatives"). The investment alternatives include 3 fixed account options ("Fixed Account Options") and 13 variable sub-accounts ("Variable Sub-Accounts") of the Glenbrook Life and Annuity Company Variable Annuity Account ("Variable Account"). Each Variable Sub-Account invests exclusively in shares of one of the following mutual fund portfolios ("Portfolios"): STI Classic Variable Trust: Templeton Variable Products: --------------------------- ---------------------------- STI Capital Growth Fund Series Fund: STI International Equity Fund Templeton Bond Fund - Class 2 STI Investment Grade Bond Fund Templeton Stock Fund - Class 2 STI Mid-Cap Equity Fund (previously known as the Aggressive Growth portfolio) Oppenheimer Variable Account Funds: STI Small Cap Equity Fund ----------------------------------- STI Value Income Stock Fund Oppenheimer Multiple Strategies Oppenheimer Strategic Bond Fund AIM Variable Insurance Funds, Inc.: ----------------------------------- Federated Insurance Series: AIM V.I. Capital Appreciation Fund --------------------------- AIM V.I. High Yield Fund Federated Prime Money Fund II (previously known as the Prime Money Fund) We (Glenbrook) have filed a Statement of Additional Information, dated May 1, 1999, with the Securities and Exchange Commission ("SEC"). It contains more information about the Contract and is legally a part of this prospectus. Its table of contents appears on page __ of this prospectus. For a free copy, please write or call us at the address or telephone number above, or go to the SEC's Web site (http://www.sec.gov). You can find other information and documents about us, including documents that are legally part of this prospectus, at the SEC's Web site. The Securities and Exchange Commission has not approved or disapproved the securities described in this prospectus, nor has it passed on the accuracy or the adequacy of this prospectus. Any one who tells you otherwise is committing a federal crime. IMPORTANT NOTICES The Contracts may be distributed through broker-dealers that have relationships with banks or other financial institutions or by employees of such banks. However, the Contracts are not deposits, or obligations of, or guaranteed by such institutions or any federal regulatory agency. Investment in the Contracts involves investment risks, including possible loss of principal. The Contracts are not FDIC insured. TABLE OF CONTENTS - -------------------------------------------------------------------------------- Page Important Terms............................................. Overview Questions and Answers....................................... Expense Table............................................... Financial Information....................................... The Contract................................................ Purchases................................................... Contract Value.............................................. Investment Alternatives..................................... The Variable Sub-Accounts.............................. The Fixed Account Options.............................. Market Value Adjustment................................ Contract Transfers................................................... Features Telephone Transfers.................................... Dollar Cost Averaging Program.......................... Automatic Portfolio Rebalancing Program................ Expenses.................................................... Access To Your Money........................................ Postponement of Payments............................... Systematic Withdrawal Programs......................... Income Payments............................................. Death Benefits.............................................. More Information About: Glenbrook.............................................. The Variable Account................................... The Portfolios......................................... Other The Contract........................................... Information Legal Matters.......................................... Year 2000.............................................. Taxes....................................................... Annual Reports and Other Documents.......................... Performance Information..................................... Appendix A--Accumulation Unit Values........................ Appendix B - Illustration of a Market Value Adjustment .... Table of Contents of the Statement of Additional Information............................................... IMPORTANT TERMS - -------------------------------------------------------------------------------- This prospectus uses a number of important terms that you may not be familiar with. The index below identifies the page that describes each term. The first use of each term in this prospectus appears in highlights. Page Accumulation Phase................................................ Accumulation Unit ................................................ Accumulation Unit Value .......................................... Anniversary Values................................................ Annuitant......................................................... Automatic Payment Plan............................................ Automatic Portfolio Rebalancing Program........................... Beneficiary....................................................... Contract ......................................................... Contract Anniversary.............................................. Contract Owner ("You") ........................................... Contract Value ................................................... Contract Year.................................................... Death Benefit Anniversary ........................................ Dollar Cost Averaging Program..................................... Enhanced Death Benefit ......................................... Fixed Account Options ............................................ Glenbrook ("We").................................................. Guarantee Periods................................................ Income Plan ...................................................... Investment Alternatives .......................................... Issue Date ....................................................... Market Value Adjustment .......................................... Payout Phase...................................................... Payout Start Date ............................................... Portfolios........................................................ SEC............................................................... Settlement Value ................................................ Valuation Date.................................................... Variable Account ................................................. Variable Sub-Account ............................................. THE CONTRACT AT A GLANCE - -------------------------------------------------------------------------------- The following is a snapshot of the Contract. Please read the remainder of this prospectus for more information. Flexible Payments You can purchase a Contract with as little as $3000 ($2000 for Contracts held in IRAs and other tax-qualified plans). You can add to your Contract as often and as much as you like, but each payment must be at least $50. You must maintain a minimum account size of $2000. ------------------------------------------------------------------------------- Free Look You may cancel your Contract within 20 days of receipt or any longer period as your state may require. ------------------------------------------------------------------------------- Expenses You will bear the following expenses: o Total Variable Account annual fees equal to 1.25% of average daily net assets (1.35% if you select the enhanced death benefit option) o Annual contract maintenance charge of $30 (with certain exceptions) o Withdrawal charges ranging from 0% to 7% of payment withdrawn (with certain exceptions) o Transfer fee of $10 after 12th transfer in any year (fee currently waived) o State premium tax (if your state imposes one) In addition, each Portfolio pays expenses that you will bear indirectly if you invest in a Variable Sub-Account. ------------------------------------------------------------------------------ Investment Alternatives The Contract offers 16 investment alternatives including: o 3 Fixed Account Options (which credit interest at rates we guarantee) o 13 Variable Sub-Accounts investing in Portfolios offering professional money management by these investment advisers: o STI Capital Management, N.A. o A I M Advisors, Inc. o Templeton Investment Counsel, Inc. o OppenheimerFunds, Inc. o Federated Advisers To find out current rates being paid on the Fixed Account Options, call us at 1/800-755-5275. To find out how the Variable Sub-Accounts have performed, check out "Performance Information" beginning on page __, or call us for more current information. ------------------------------------------------------------------------------ Special Services For your convenience, we offer these special services: o Automatic Payment Plan o Dollar Cost Averaging Program o Systematic Withdrawal Program o Automatic Portfolio Rebalancing - ------------------------------------------------------------------------------- Income Payments You can choose fixed income payments, variable income payments, or a combination of the two. You can receive your income payments in one of the following ways: o life income with guaranteed payments o a joint and survivor life income with guaranteed payments o guaranteed payments for a specified period (5 to 30 years) - ------------------------------------------------------------------------------- Death Benefits If you die before income payments begin, we will pay the death benefit described in the Contract. We offer an enhanced death benefit option to owners of Contracts issued on or after May 1, 1997. ------------------------------------------------------------------------------ Transfers Before income payments begin, you may transfer your Contract value ("Contract Value") among the investment alternatives, with certain restrictions. No minimum applies to the amount you transfer. We do not currently impose a fee upon transfers. However, we reserve the right to charge $10 per transfer after the 12th transfer in each Contract year ("Contract Year"), which we measure from the date we issue your contract or a Contract anniversary("Contract Anniversary Anniversary"). ------------------------------------------------------------------------------- Withdrawals You may withdraw some or all of your Contract Value at anytime prior to the earlier of: (1) the death of the Contract owner (the annuitant if the Contract owner is not a natural person) or (2) when income payments begin. In general, you must withdraw at least $50 at a tim time. A 10% federal tax penalty may apply if you withdraw before you are 59 1/2 years old. A withdrawal charge also may apply. ------------------------------------------------------------------------------- HOW THE CONTRACT WORKS - -------------------------------------------------------------------------------- The Contract basically works in two ways. First, the Contract can help you (we assume you are the "Contract owner") save for retirement because you can invest in up to 16 investment alternatives and pay no federal income taxes on any earnings until you withdraw them. You do this during what we call the "Accumulation Phase" of the Contract. The Accumulation Phase begins on the date we issue your Contract (we call that date the "Issue Date") and continues until the date income payments begin (we call that date the "Payout Start Date"). During the Accumulation Phase, you may allocate your purchase payments to any combination of the Variable Sub-Accounts and/or Fixed Account Options. If you invest in any of the three Fixed Account Options, you will earn a fixed rate of interest that we declare periodically. If you invest in any of the Variable Sub-Accounts, your investment return will vary up or down depending on the performance of the corresponding Portfolios. Second, the Contract can help you plan for retirement because you can use it to receive retirement income for life and/or for a pre-set number of years, by selecting one of the income payment options (we call these "Income Plans") described on page __. You receive income payments during what we call the "Payout Phase" of the Contract, which begins on the Payout Start Date and continues for as long as the Income Plan you select. During the Payout Phase, if you select a fixed income payment option, we guarantee the amount of your payments, which will remain fixed. If you select a variable income payment option, based on one or more of the Variable Sub-Accounts, the amount of your payments will vary up or down depending on the performance of the corresponding Portfolios. The amount of money you accumulate under your Contract during the Accumulation Phase and apply to an Income Plan will determine the amount of your income payments during the Payout Phase. You can use the Contract with a "nonqualified plan" or a "qualified plan." A nonqualified plan is a retirement plan that permits deferral of federal income tax on earnings. A qualified plan is a personal retirement savings plan, such as an IRA or tax-sheltered annuity that meets the requirements of the Internal Revenue Code. The timeline below illustrates how you might use your Contract. TIMELINE Issue Payout Start Date Accumulation Phase Date Payout Phase - ---- ------------------ ------------ ------------ You save for retirement ? You buy You start You can Or you can A Contract receiving receive receive income payments income income or receive a payments payments lump sum payment for a set for life period As the Contract owner, you exercise all of the rights and privileges provided by the Contract. If you die, any surviving owner, Annuitant or Beneficiary will exercise the rights and privileges provided by the Contract. See "The Contract." In addition, if you die before the Payout Start Date, we will pay a death benefit to any surviving owner or to your Beneficiary. See "Death Benefits." Please call us at ________________ if you have any question about how the Contract works. EXPENSE TABLE - -------------------------------------------------------------------------------- The table below lists the expenses that you will bear directly or indirectly when you buy a Contract. The table and the examples that follow do not reflect premium taxes that may be imposed by the state where you reside. For more information about Variable Account expenses, see "Expenses," below. For more information about Portfolio expenses, please refer to the accompanying prospectuses for the Portfolios. --------------------------------------------------------------------- CONTRACT OWNER TRANSACTION EXPENSES Withdrawal Charge (as a percentage of purchase payments)* # of Years Since Payment Made: 1 2 3 4 5 6 7 8+ Applicable Charge: 7% 6% 5% 4% 3% 2% 1% 0% Annual Contract Maintenance Charge.........................$30.00** Transfer Fee...............................................$10.00*** ------------------- * Each Contract Year, you may withdraw up to 10% of the Contract Value [on the date of the first withdrawal] that year without incurring a withdrawal charge. However, any applicable Market Value Adjustment determined as of the date of withdrawal will apply. ** The annual Contract fee will be waived if total purchase payments as of a Contract Anniversary or upon full withdrawal equal $25,000 or more, or if all purchase payments are allocated to the Fixed Account Options. ***Applies solely to the thirteenth and subsequent transfers within a Contract Year. We are currently waiving the transfer fee. --------------------------------------------------------------------- VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of daily net asset value deducted from each Variable Sub-Accounts) Mortality and Expense Risk Charge..........................1.25%* Administrative Expense Charge..............................0.10% Total Variable Account Annual Expenses.......1.35% ------------------- * If you select the enhanced death benefit option (available to purchasers after May 1, 1997), the Mortality and Expense Risk Charge will be equal to 1.35% of your Contract's average daily net assets in the Variable Account. PORTFOLIO ANNUAL EXPENSES (Net of Voluntary Reductions and Reimbursements) (as a percentage of portfolio average net assets)(1)
Total Advisory Rule 12B-1 Other Annual Portfolio Fee Fees Expenses Expenses --------- --- ---- -------- -------- STI Capital Growth Fund STI International Equity Fund STI Investment Grade Bond Fund STI Mid Cap Equity Fund STI Small Cap Equity Fund (2) STI Value Income Stock Fund AIM V.I. Capital Appreciation Fund AIM V.I. High Yield Fund (4) Templeton Bond Fund Class 2 (3) Templeton Stock Fund Class 2 Oppenheimer Multiple Strategies Fund Oppenheimer Strategic Bond Fund Federated Prime Money Fund II
------------------- (1) Figures shown in the table are for the Portfolio's most recently completed fiscal year. Absent voluntary reductions and reimbursements for certain Portfolios, advisory fees, other expenses and total annual fund expenses expressed as a percentage of average net assets of the portfolios would have been as follows: STI Capital Growth Fund -- ___, ___, and ___ STI International Equity Fund -- ___, ___, and ___ STI Investment Grade Bond Fund -- ___, ___, and ___ STI Mid-Cap Equity Fund -- ___, ___, and ___ STI Small Cap Equity Fund-- ___, ___, and ___ STI Value Income Stock Fund - ____, ____, and ____ Federated Prime Money Fund II -- ___, ___, and ___ (2) The fees and/or expenses are based on estimated expenses for the current fiscal year. (3) Class 2 of the Templeton Bond Fund has a distribution plan or "Rule 12b-1 plan" as described in the Fund prospectus. Because Class 2 shares were not offered until May 1, 1998, figures (other than "12b-1 Fees") are estimates for 1999 based on the historical expenses of the Fund's Class 1 shares for the fiscal year ended December 31, 1998. EXAMPLE 1 - --------- The example below shows the dollar amount of expenses that you would bear directly or indirectly if you: o invested $1,000 in a Variable Sub-Account, o earned a 5% annual return on your investment, and o surrendered your Contract at the end of each time period. The example does not include any taxes or tax penalties you may be required to pay if you surrender your Contract. SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS ----------- ------ ------- ------- -------- STI Capital Growth STI International Equity STI Investment Grade Bond STI Mid-Cap Equity STI Small Cap Equity STI Value Income Stock AIM V.I. Capital Appreciation AIM V.I. High Yield Templeton Bond Templeton Stock Oppenheimer Multiple Strategies Oppenheimer Strategic Bond Federated Prime Money Fund II EXAMPLE 2 - --------- Same assumptions as Example 1 above, except that you decide not to surrender your Contract or you elect to receive income payments at the end of each period. SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS ----------- ------ ------- ------- -------- STI Capital Growth STI International Equity STI Investment Grade Bond STI Mid-Cap Equity STI Small Cap Equity STI Value Income Stock AIM V.I. Capital Appreciation AIM V.I. High Yield Templeton Bond Templeton Stock Oppenheimer Multiple Strategies Oppenheimer Strategic Bond Federated Prime Money Fund II Please remember that you are looking at examples. Your actual expenses may be lower or greater than those shown above. Similarly, your rate of return may be lower or greater than 5%, which is not guaranteed. The above examples assume the election of the enhanced death benefit option with a mortality and expense risk charge of 1.35% rather than 1.25%. If that option were not elected, the expense figures shown above would be slightly lower. To reflect the contract maintenance charge in the examples, we estimated an equivalent percentage charge, based on an assumed average Contract size of $___________. FINANCIAL INFORMATION - -------------------------------------------------------------------------------- To measure the value of your investment in the Variable Sub-Accounts during the Accumulation Phase, we use a unit of measure we call the "Accumulation Unit." Each Variable Sub-Account has a separate value for its Accumulation Units we call "Accumulation Unit Value." Accumulation Unit Value is analogous to, but not the same as, the share price of a mutual fund. Attached as Appendix A to this prospectus are tables showing the Accumulation Unit Values of each Variable Sub-Account since its inception. To obtain a fuller picture of each Variable Sub-Account's finances, please refer to the Variable Account's financial statements contained in the Statement of Additional Information. The financial statements of Glenbrook also appear in the Statement of Additional Information. The financial statements of the Variable Account and Glenbrook have been audited by (Name __________ Address ___________) independent auditors, as stated in their reports thereon. We have included such financial statements and reports in the Statement of Additional Information, which is legally a part of this prospectus, in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. THE CONTRACT - -------------------------------------------------------------------------------- CONTRACT OWNER The STI Classic Variable Annuity is a contract between you, the Contract owner, and Glenbrook, a life insurance company. As the Contract owner, you may exercise all of the rights and privileges provided to you by the Contract. That means it is up to you to select or change (to the extent permitted): o the investment alternatives during the Accumulation and Payout Phases, o the amount and timing of your purchase payments and withdrawals, o the programs you want to use to invest or withdraw money, o the income payment plan you want to use to receive retirement income, o the Annuitant (either yourself or someone else) on whose life the income payments will be based, o the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when you or the Annuitant dies, and o any other rights that the Contract provides. If you die, the Annuitant or Beneficiary will exercise the rights and privileges provided to them by the Contract. In addition, if you die before the Payout Start Date, we will pay a death benefit to the Annuitant or Beneficiary according to the Contract. The Contract cannot be jointly owned by both a non-natural person and a natural person. You can use the Contract with a "non-qualified plan" or a "qualified plan." A non-qualified plan is a retirement plan that permits deferral of federal income tax on earnings. A qualified plan is a personal retirement savings plan, such as an IRA or tax-sheltered annuity, that meets the requirements of the Internal Revenue Code. Qualified plans may limit or modify your rights and privileges under the Contract. ANNUITANT The Annuitant is the individual whose life span we use to determine income payments. You initially designate an Annuitant in your application. You may change the Annuitant up to 30 days before income payments begin. You may designate a joint Annuitant, who is a second person on whose life income payments depend. Additional restrictions may apply in the case of qualified plans. If the Annuitant dies prior to the Payout Start Date, the new Annuitant will be: (i) the youngest Contract owner, or (ii) the youngest Beneficiary. You must attest that the Annuitant is alive in order to begin receiving income payments from the Contract. If you select an Income Plan that depends on the Annuitant or a joint Annuitant's life, we will require proof of age before income payments begin. BENEFICIARY You may name one or more Beneficiaries when you apply for a Contract. You may change or add Beneficiaries at any time by writing to us before income payments begin, unless you have designated an irrevocable Beneficiary. We will provide a change of Beneficiary form to be signed and filed with us. Any change will be effective at the time you sign the written notice, whether or not the Annuitant is living when we receive the notice. Until we receive your written notice to change a Beneficiary, we are entitled to rely on the most recent Beneficiary information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change your Beneficiary, you should deliver your written notice to us promptly. If you did not name a Beneficiary or if the named Beneficiary dies before you do, the Beneficiary will be: o your spouse or, if he or she is no longer alive, o your surviving children equally, or if you have no surviving children, o your estate. If more than one Beneficiary survives you, we will divide the death benefit among your Beneficiaries according to your most recent written instructions. If you have not given us written instructions, we will pay the death benefit in equal amounts to the surviving Beneficiaries. MODIFICATION OF THE CONTRACT Only a Glenbrook officer may approve a change in or waive any provision of the Contract. Any change or waiver must be in writing. None of our agents has the authority to change or waive the provisions of the Contract. We may change the terms of the Contract to conform the Contract to applicable law or changes in the law. If a provision of the Contract is inconsistent with state law, we will follow state law. ASSIGNMENT The Company will not honor an assignment of an interest in a Contract as collateral or security for a loan. However, you may assign periodic income payments under the Contract prior to the Payout Start Date. No Beneficiary may assign benefits under the Contract until they are due. We will not be bound by any assignment until you sign it and file it with us. We are not responsible for the validity of any assignment. Federal law prohibits or restricts the assignment of benefits under many types of retirement plans and the terms of such plans may themselves contain restrictions on assignments. An assignment may also result in taxes or tax penalties. You should consult with an attorney before trying to assign your contract. PURCHASES - -------------------------------------------------------------------------------- MINIMUM PURCHASE PAYMENTS Your initial purchase payment must be at least $3,000 ($2,000 for a qualified Contract). All subsequent purchase payments must be $50 or more. You may make purchase payments at any time prior to the earlier of the Payout Start Date or your 86th birthday. We reserve the right to limit the amount of purchase payments we will accept. AUTOMATIC PAYMENT PLAN You may make subsequent purchase payments from your bank account by automatic transfer. Call or write us for an enrollment form. ALLOCATION OF PURCHASE PAYMENTS At the time you apply for a Contract, you must decide how to allocate your purchase payments among the investment alternatives. The allocation you specify on your application will be effective immediately. All allocations must be in whole percents that total 100% or in whole dollars. You can change your allocations by notifying us in writing. We will allocate your purchase payments to the investment alternatives according to your most recent instructions on file with us. Unless you notify us in writing otherwise, we will allocate subsequent purchase payments according to the allocation for the previous purchase payment. We will effect any change in allocation instructions at the time we receive written notice of the change in good order. We will credit the initial purchase payment that accompanies your completed application to your Contract within two business days after we receive the payment at our home office. If your application is incomplete, we will ask you to complete your application within five business days. If you do so, we will credit your initial purchase payment to your Contract within that five business day period. If you do not, we will return your purchase payment at the end of the five business day period unless you expressly allow us to hold it until you complete the application. We will credit subsequent purchase payments to the Contract at the close of the business day on which we receive the purchase payment at our home office. We are open for business Monday through Friday on each day that the New York Stock Exchange is open for business. We call these days "Valuation Dates." CONTRACT VALUE - -------------------------------------------------------------------------------- Your Contract Value at any time during the Accumulation Phase is equal to the sum of the value of your Accumulation Units in the Variable Sub-Accounts you have selected, plus the value of your interest in the Fixed Account Options. ACCUMULATION UNITS To determine the number of Accumulation Units of each Variable Sub-Account to allocate to your Contract, we divide (i) the amount of the purchase payment you have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of that Variable Sub-Account as of the close of the Valuation Date on which we receive your payment. For example, if we receive a $10,000 purchase payment allocated to a Variable Sub-Account when the Accumulation Unit Value for the Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable Sub-Account to your Contract. ACCUMULATION UNIT VALUE The Accumulation Units in each Variable Sub-Account are valued separately. As a general matter, the Accumulation Unit Value for each Variable Sub-Account will rise or fall to reflect: o changes in the share price of the Portfolio in which the Variable Sub-Account invests, and o the deduction of amounts reflecting the mortality and expense risk charge, administrative expense charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value. We determine contract maintenance charges, withdrawal charges, and transfer fees (currently waived) separately for each Contract. They do not affect Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. We determine a separate Accumulation Unit Value for each Variable Sub-Account on each Valuation Date. We also determine a separate set of Accumulation Unit Values reflecting the cost of the enhanced death benefit option described on page __ below. You should refer to the prospectuses for the Portfolios that accompany this prospectus for a description of how the assets of each Portfolio are valued, since that determination directly bears on the Accumulation Unit Value of the corresponding Variable Sub-Account and, therefore, your Contract Value. INVESTMENT ALTERNATIVES: The Variable Sub-Accounts - -------------------------------------------------------------------------------- You may allocate your purchase payments to up to 13 Variable Sub-Accounts of the Variable Account. Each Variable Sub-Account invests in the shares of a corresponding Portfolio. Each Portfolio has its own investment objective(s) and policies. We briefly describe the Portfolios below. For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the accompanying prospectus for the Portfolio. You should carefully review the Portfolio prospectuses before allocating amounts to the Variable Sub-Accounts of the Variable Account. - -------------------------------------------------------------------------------- Investment Portfolio: Each Portfolio Seeks: Adviser: - -------------------------------------------------------------------------------- STI Capital Growth Fund Capital appreciation STI Capital Management, N.A. - -------------------------------------------------------------------------------- STI International Equity Fund Long-term capital appreciation - -------------------------------------------------------------------------------- STI Investment Grade Bond Fund As high a level of total return through current income and capital appreciation as is consistent with the preservation of capital - -------------------------------------------------------------------------------- STI Mid-Cap Equity Fund Capital appreciation - -------------------------------------------------------------------------------- STI Small Cap Equity Fund Capital appreciation - -------------------------------------------------------------------------------- STI Value Income Stock Fund Current income with the secondary goal of achieving capital appreciation - -------------------------------------------------------------------------------- AIM V.I. Capital Capital appreciation A I M Appreciation Fund Advisors, Inc. - -------------------------------------------------------------------------------- AIM V.I. High Yield Fund A high level of current income - -------------------------------------------------------------------------------- Templeton Bond Fund High current income. It may Templeton also consider the potential for Investment capital appreciation due to Counsel, changes in interest rates, Inc. currency exchange rates and credit quality when purchasing securities. - -------------------------------------------------------------------------------- Templeton Stock Fund Capital growth - -------------------------------------------------------------------------------- Oppenheimer Strategic Bond Fund A high level of current income Oppenheimer Funds, Inc. - -------------------------------------------------------------------------------- Oppenheimer Multiple Strategies A total investment return (which Fund includes current income and capital appreciation in the value of its shares) - -------------------------------------------------------------------------------- Federated Prime Money Fund II Current income consistent with STI Capital the stability of principal and Management, liquidity N.A. - -------------------------------------------------------------------------------- Amounts you allocate to Variable Sub-Accounts may grow in value, decline in value, or grow less than you expect, depending on the investment performance of the Portfolios in which those Variable Sub-Accounts invest. You bear the investment risk that the Portfolios might not meet their investment objectives. Shares of the Portfolios are not deposits, or obligations of, or guaranteed or endorsed by any bank and are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other agency. INVESTMENT ALTERNATIVES : The Fixed Account Options - -------------------------------------------------------------------------------- You may allocate your purchase payments to up to 3 Fixed Account Options (not available in all states). Amounts allocated to the Fixed Account Options become part of Glenbrook's general account, which supports its insurance and annuity obligations. The general account consists of Glenbrook's general assets other than those in segregated asset accounts. STANDARD FIXED ACCOUNT OPTION AND DOLLAR COST AVERAGING FIXED ACCOUNT OPTION Standard Fixed Account Option. Purchase payments and transfers that you allocate to the Standard Fixed Account Option will earn interest for a one year period at the current rate in effect at the time of allocation. We will credit interest daily at a rate that will compound over the year to the effective annual interest rate we guaranteed at the time of allocation. After the one year period, we will declare a renewal rate which we guarantee for a full year. Subsequent renewal dates will be every twelve months for each payment or transfer. Dollar Cost Averaging Fixed Account Option. You may establish a dollar cost averaging program by allocating purchase payments to the Dollar Cost Averaging Fixed Account Option ("DCA Fixed Account Option"). We will credit interest to purchase payments you allocate to this Option for up to one year at the current rate in effect at the time of allocation. Each purchase payment you allocate to the DCA Fixed Account Option must be at least $5,000. We reserve the right to reduce the minimum allocation amount. We will follow your instructions in transferring amounts monthly from the DCA Fixed Account Option. However, you may not choose monthly installments of less than 3 or more than 12. Further, you must transfer each purchase payment and all its earnings out of this Option by means of dollar cost averaging within the selected program period. If you discontinue the dollar cost averaging program before the end of the transfer period, we will transfer the remaining balance in this Option to the Standard Fixed Account Option. We bear the investment risk for all amounts allocated to the Standard Fixed Account Option and the DCA Fixed Account Option. That is because we guarantee the current and renewal interest rates we credit to the amounts you allocate to either of these Options, which will never be less than the minimum guaranteed rate in the Contract. Currently, we determine, in our sole discretion, the amount of interest credited in excess of the guaranteed rate. We have sole discretion to invest the assets of the Standard Fixed Account Option and DCA Fixed Account Option, subject to applicable law. Any interest held in these Options does not entitle you to share in the investment experience of the general account. We may declare more than one interest rate for different monies based upon the date of allocation to the Standard Fixed Account Option and the DCA Fixed Account Option. For current interest rate information, please contact your sales representative or our customer support unit at 1-800/453-6038. GUARANTEED MATURITY FIXED ACCOUNT OPTION You may allocate purchase payments or transfers to one or more Guarantee Periods of the Guaranteed Maturity Fixed Account Option ("Guarantee Periods"). Each payment or transfer allocated to a Guarantee Period must be at least $50. We reserve the right to limit the number of additional purchase payments that you may allocate to this Option. Each payment or transfer allocated to a Guarantee Period earns interest at a specified rate that we guarantee for a period of years. Guarantee Periods may range from 1 to 10 years. We are currently offering Guarantee Periods of three, five, seven, and ten years in length. In the future we may offer Guarantee Periods of different lengths or stop offering some Guarantee Periods. You select the Guarantee Period for each payment or transfer that you allocate to this Option. We will tell you what interest rates and Guarantee Periods we are offering at a particular time. We will not change the interest rate that we credit to a particular allocation until the end of the relevant Guarantee Period. We may declare different interest rates for Guarantee Periods of the same length that begin at different times. We will credit interest daily to each amount allocated to a Guarantee Period at a rate that compounds to the effective annual interest rate that we declared at the beginning of the applicable Guarantee Period. The effective annual interest rate will never be less than the minimum guaranteed rate stated in the Contract. The following example illustrates how a purchase payment allocated to this Option would grow, given an assumed Guarantee Period and effective annual interest rate: EXAMPLE Purchase Payment.............$10,000 Guarantee Period...............5 years Effective Annual Rate......... 4.50% END OF CONTRACT YEAR
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ------ ------ ------ ------ ------ Beginning Contract Value $10,000.00 X (1 + Effective Annual Rate) X1.045 $10,450.00 Contract Value at end of Contract Year $10,450.00 X (1 + Effective Annual Rate) X1.045 $10,920.25 Contract Value at end of Contract Year $10,920.25 X (1 + Effective Annual Rate) X1.045 $11,411.66 Contract Value at end of Contract Year $11,411.66 X (1 + Effective Annual Rate) X1.045 $11,925.19 Contract Value at end of Contract Year $11,925.19 X (1 + Effective Annual Rate) X1.045 $12,461.82 Total Interest Credited During Guarantee Period = $2,461.82 ($12,461.82-$10,000)
This example assumes no withdrawals during the entire five year Guarantee Period. If you were to make a partial withdrawal, you might be required to pay a withdrawal charge. In addition, the amount withdrawn might be increased or decreased by an adjustment that reflects changes in interest rates since the time you invested the amount withdrawn. We call this adjustment a Market Value Adjustment, and we describe it further below. The hypothetical interest rate is for illustrative purposes only and is not intended to predict future interest rates to be declared under the Contract. Actual interest rates declared for any given Guarantee Period may be more or less than shown above but will never be less than the guaranteed minimum rate as found in the Contract. We have no specific formula for determining the rate of interest that we will declare initially or in the future. We will set those interest rates based on investment returns available at the time of the determination. In addition, we may consider various other factors in determining interest rates including regulatory and tax requirements, our sales commission and administrative expenses, general economic trends, and competitive factors. We determine the interest rates to be declared in our sole discretion. We can neither predict nor guarantee what those rates will be in the future. For current interest rate information, please contact your sales representative or Glenbrook at 1-800-453-6038. At the end of each Guarantee Period, we will mail you a notice asking you what to do with the relevant amount, including the accrued interest. During the 30-day period after the end of the Guarantee Period, you may: 1) take no action. We will automatically apply the relevant amount to a new Guarantee Period of the same length as the expiring Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. The new interest rate will be our then current declared rate for a Guarantee Period of that length; or 2) instruct us to apply the relevant amount to one or more new Guarantee Periods of your choice. The new Guarantee Period(s) will begin on the day the previous Guarantee Period ends. The new interest rate will be our then current declared rate for those Guarantee Periods; or 3) instruct us to transfer the relevant amount to the Standard Fixed Account Option. Your allocation will be effective on the day the previous Guarantee Period ends; or 4) instruct us to transfer all or a portion of the relevant amount to one or more Variable Sub-Accounts of the Variable Account. We will effect the transfer on the day we receive your instructions. We will not adjust the amount transferred to include a Market Value Adjustment; or 5) withdraw all or a portion of the relevant amount. You may be required to pay a Withdrawal Charge, but we will not adjust the amount withdrawn to include a Market Value Adjustment. The amount withdrawn will be deemed to have been withdrawn on the day the Guarantee Period ends. Amounts not withdrawn will be applied to a new Guarantee Period of the same length as the previous Guarantee Period. The new Guarantee Period will begin on the day the previous Guarantee Period ends. Under our Automatic Laddering Program, you may choose, in advance, to use Guarantee Periods of the same length for all renewals in the Guaranteed Maturity Fixed Account Option. You can select this program at any time during the Accumulation Phase, including on the Issue Date. We will apply renewals to Guarantee Periods of the selected length until you direct us in writing to stop. We may stop offering this program at any time. For additional information on the Automatic Laddering Program, please call our Customer Service unit at 1-800/453-6038. Market Value Adjustment. All withdrawals and transfers from the Guaranteed Maturity Amount Fixed Account Option, other than those taken during the 30 day period after a Guarantee Period expires, are subject to a Market Value Adjustment. A Market Value Adjustment also applies upon payment of a death benefit under Contracts issued before May 1, 1997 and when you apply amounts currently invested in this Option to an Income Plan. We apply the Market Value Adjustment to reflect changes in interest rates from the time the amount being withdrawn or transferred was allocated to a Guarantee Period to the time of its withdrawal, transfer, or application to an Income Plan. Since current interest rates are based, in part, upon investment yields available at the time, the effect of the Market Value Adjustment will be closely related to the levels of such yields. As such, you bear some investment risk on amounts you allocate to the Guaranteed Maturity Fixed Account Option. If investment yields increase significantly from the time you make a purchase payment, the Market Value Adjustment, withdrawal charge, premium taxes, and withholding (if applicable) could reduce the amount you receive upon full withdrawal of your Contract Value to an amount that is less than the purchase payment plus interest at the minimum guaranteed interest rate under the Contract. The Market Value Adjustment may be positive or negative. Generally, if the effective annual interest rate for the Guarantee Period is lower than the applicable current effective annual interest rate for a period equal to the time remaining in the Guarantee Period, then the Market Value Adjustment will result in a lower amount payable to you or transferred. Similarly, if the effective annual interest rate for the Guarantee Period is higher than the applicable current effective annual interest rate, then the Market Value Adjustment will result in a higher amount payable to you or transferred. For example, assume that you purchase a Contract and select an initial Guarantee Period of five years that has an effective annual rate of 4.50%. Assume that at the end of 3 years, you make a partial withdrawal. If, at that later time, the current interest rate for a 2 year Guarantee Period is 4.00%, then the Market Value Adjustment will be positive, which will result in an increase in the amount payable to you. Conversely, if the current interest rate for the 2 year Guarantee Period is 5.00%, then the Market Value Adjustment will be negative, which will result in a decrease in the amount payable to you. The formula for calculating Market Value Adjustments is set forth in Appendix B to this prospectus, which also contains additional examples of the application of the Market Value Adjustment. INVESTMENT ALTERNATIVES: Transfers - -------------------------------------------------------------------------------- TRANSFERS DURING THE ACCUMULATION PERIOD During the Accumulation Phase, you may transfer Contract Value among the investment alternatives. You may request transfers in writing on a form that we provided or by telephone according to the procedure described below. There is no minimum transfer amount. We currently do not assess, but reserve the right to assess, a $10 charge on each transfer in excess of 12 per Contract Year. We treat transfers to or from more than one Portfolio on the same day as one transfer. We will process transfer requests that we receive before 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for that Date. We will process requests completed after 3:00 p.m. on any Valuation Date using the Accumulation Unit Values for the next Valuation Date. The Contract permits us to defer transfers from the Fixed Account Options for up to six months from the date we receive your request. If we decide to postpone transfers from any Fixed Account Option for 30 days or more, we will pay interest as required by applicable law. Any interest would be payable from the date we receive the transfer request to the date we make the transfer. We limit the amount you may transfer from the Standard Fixed Account Option to any other investment alternative in any Contract Year to the greater of: 1) 25% of the value in the Standard Fixed Account Option as of the most recent Contract Anniversary (if this amount is less than $1,000, then up to $1,000 may be transferred); or 2) 25% of the sum of all purchase payments and transfers to the Standard Fixed Account Option as of the most recent Contract Anniversary. If you transfer an amount from the Guaranteed Maturity Fixed Account Option other than during the 30 day period after a Guarantee Period expires, we will increase or decrease the amount by a Market Value Adjustment. You may not transfer Contract Value into the DCA Fixed Account Option. We reserve the right to waive any transfer restrictions. TRANSFERS DURING THE PAYOUT PERIOD During the Payout Phase, you may make transfers among the Variable Sub-Accounts so as to change the relative weighting of the Variable Sub-Accounts on which your variable income payments will be based. In addition, you will have a limited ability to make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. You may not, however, convert any portion of your right to receive fixed income payments into variable income payments. You may not make any transfers for the first six months after the Payout Start Date. Thereafter, you may make transfers among the Variable Sub-Accounts or make transfers from the Variable Sub-Accounts to increase your fixed income payments. Your transfers must be at least six months apart. TELEPHONE TRANSFERS You may make transfers by telephone by calling 1-800-453-6038, if you first send us a completed authorization form. The cut off time for telephone transfer requests is 3:00 p.m. Central time. In the event that the New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that the Exchange closes early for a period of time but then reopens for trading on the same day, we will process telephone transfer requests as of the close of the Exchange on that particular day. We will not accept telephone requests received at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange. We may suspend, modify or terminate the telephone transfer privilege at any time without notice. We use procedures that we believe provide reasonable assurance that the telephone transfers are genuine. For example, we tape telephone conversations with persons purporting to authorize transfers and request identifying information. Accordingly, we disclaim any liability for losses resulting from allegedly unauthorized telephone transfers. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses. DOLLAR COST AVERAGING PROGRAM Under the dollar cost averaging program, you may authorize us to transfer a fixed dollar amount every month during the Accumulation Phase from any Variable Sub-Account, the Standard Fixed Account Option or the Dollar Cost Averaging Fixed Account Option, to any other Variable Sub-Account. You may not use the dollar cost averaging program to transfer amounts to a Fixed Account Option. We will not charge a transfer fee for transfers made under this program, nor will such transfers count against the 12 free transfers per Contract Year. The theory of dollar cost averaging is that if purchases of equal dollar amounts are made at fluctuating prices, the aggregate average cost per unit will be less than the average of the unit prices on the same purchase dates. However, participation in this program does not assure you of a greater profit from your purchases under the program nor will it prevent or necessarily reduce losses in a declining market. Call or write us for instructions on how to enroll. AUTOMATIC PORTFOLIO REBALANCING Once you have allocated your money among the Variable Sub-Accounts, the performance of each Sub-Account may cause a shift in the percentage you allocated to each Sub-Account. If you select our automatic rebalancing program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. We will rebalance your account each quarter according to your instructions. We will transfer amounts among the Variable Sub-Accounts to achieve the percentage allocations you specify. You can change your allocations at any time by contacting us in writing or by telephone. The new allocation will be effective with the first rebalancing that occurs after we receive the written request. We are not responsible for rebalancing that occurs prior to receipt of the written request. Example: Assume that you want your initial purchase payment split among 2 Variable Sub-Accounts. You want 40% to be in the STI Investment Grade Bond Variable Sub-Account and 60% to be in the STI Capital Growth Variable Sub-Account. Over the next 2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the STI Investment Grade Bond Variable Sub-Account now represents 50% of your holdings because of its increase in value. If you choose to have your holdings rebalanced quarterly, on the first day of the next quarter, we would sell some of your units in the STI Investment Grade Bond Variable Sub-Account and use the money to buy more units in the STI Capital Growth Variable Sub-Account so that the percentage allocations would again be 40% and 60% respectively. The automatic rebalancing program is available only during the Accumulation Phase. The transfers made under the program do not count towards the 12 transfers you can make without paying a transfer fee, and are not subject to a transfer fee. Portfolio rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the better performing segments. EXPENSES - -------------------------------------------------------------------------------- As a Contract owner, you will bear, directly or indirectly, the charges and expenses described below. CONTRACT MAINTENANCE CHARGE During the Accumulation Phase, on each Contract Anniversary, we will deduct a $30 contract maintenance charge from your Contract Value invested in each Variable Sub-Account in proportion to the amount invested. We also will deduct this charge if you withdraw your entire Contract Value. During the Payout Phase, we will deduct the charge proportionately from each income payment. The charge is to compensate us for the cost of administering the Contracts and the Variable Account. Maintenance costs include expenses we incur in billing and collecting purchase payments; keeping records; processing death claims, cash withdrawals, and policy changes; proxy statements; calculating Accumulation Unit Values and income payments; and issuing reports to Contract owners and regulatory agencies. We cannot increase the charge. We will waive this charge if: o total purchase payments equal $25,000 or more as of a Contract Anniversary or upon full withdrawal, or o all money is allocated to the Fixed Account Options on a Contract Anniversary. If you surrender your Contract, we will deduct the contract maintenance charge pro rated for the part of the Contract Year elapsed, unless your Contract qualifies for a waiver. MORTALITY AND EXPENSE RISK CHARGE We deduct a mortality and expense risk charge at an annual rate of 1.25% of the daily net assets you have invested in the Variable Sub-Accounts (1.35% if you select the enhanced death benefit option, available to purchasers after May 1, 1997). The mortality and expense risk charge is for all the insurance benefits available with your Contract (including our guarantee of annuity rates and the death benefits), for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will be sufficient in the future to cover the cost of administering the Contract. If the charges under the Contract are not sufficient, then we will bear the loss. We charge an additional .10% for the enhanced death benefit option to compensate us for the additional risk that we accept by providing the rider. We guarantee the mortality and expense risk charge and we cannot increase it. We assess the mortality and expense risk charge during both during the Accumulation Phase and the Payout Phase. ADMINISTRATIVE EXPENSE CHARGE. We deduct an administrative expense charge equal on an annual basis to 0.10% of the average daily net assets you have invested in the Variable Sub-Accounts. We intend this charge to cover actual administrative expenses that exceed the revenues from the contract maintenance charge. We assess this charge each day during the Accumulation Phase and the Payout Phase. We guarantee that we will not raise this charge. TRANSFER FEE We do not currently impose a fee upon transfers among the Investment Options. However, we reserve the right to charge $10 per transfer after the 12th transfer in each Contract Year. We will not charge a transfer fee on transfers that are part of a dollar cost averaging or automatic portfolio rebalancing program. WITHDRAWAL CHARGE We may assess a withdrawal charge of up to 7% of the purchase payment(s) you withdraw. The charge declines annually to 0% over a 7 year period that begins on the day we received your purchase payment. Glenbrook keeps track of each purchase payment. During each Contract Year, you can withdraw up to 10% of the Contract Value on the date of the first withdrawal in a Contract Year without paying the charge. Unused portions of this 10% free withdrawal amount are not carried forward to future Contract Years. We will deduct withdrawal charges, if applicable, from the amount paid. For purposes of the withdrawal charge, we will treat withdrawals as coming from the oldest purchase payments first. However, for federal income tax purposes, please note that withdrawals are considered to have come from the latest purchase payments in the Contract. Thus, for tax purposes, earnings are considered to come out first. We do not apply a withdrawal charge in the following situations: o on the Payout Start Date; o the death of the Contract owner (Annuitant if Contract owner is not a natural person); and o withdrawals taken to satisfy IRS minimum distribution rules or withdrawals that qualify for one of the waivers as described below. We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts. To the extent that the Withdrawal Charge does not cover all sales commissions and other promotional or distribution expenses, we may use any of our corporate assets, including potential profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference. Withdrawals may be subject to tax penalties or income tax and a Market Value Adjustment. You should consult your own tax counsel or other tax advisers regarding any withdrawals. Confinement Waiver. We will waive the Withdrawal Charge on all withdrawals under your Contract if the following conditions are satisfied: 1) Any Contract owner or the Annuitant, if the Contract is owned by a company or other legal entity, is confined to a long term care facility or a hospital for at least 90 consecutive days. The insured must enter the long term care facility or hospital at least 30 days after the Issue Date; 2) You request the withdrawal and provide written proof of the stay no later than 90 days following the end of the insured's stay at the long term care facility or hospital; and 3) A physician must have prescribed the stay and the stay must be medically necessary. You may not claim this benefit if the physician prescribing the insured's stay in a long term care facility is the insured or a member of the insured's immediate family, as defined in your Contract. Terminal Illness Waiver. We will waive the withdrawal charge on all withdrawals under your Contract if: 1) you (Annuitant if Contract owner is not a natural person) are diagnosed with a terminal illness at least 30 days after the Issue Date; and 2) you claim this benefit and deliver adequate proof of diagnosis to us. Unemployment Waiver. We will waive the withdrawal charge on one partial or a full withdrawal from your Contract, if you meet the following requirements: 1) you become unemployed at least one year after the Issue Date; 2) you receive unemployment compensation for at least 30 days as a result of that unemployment; and 3) you claim this benefit within 180 days of your initial receipt of unemployment compensation. You may exercise this benefit once before the Annuity Date. The laws of your state may limit the availability of these waivers and may also change certain terms and/or benefits available under the waivers. You should consult your Contract for further details on these variations. We also will waive the withdrawal charge on withdrawals taken to satisfy IRS Required Minimum Distribution Rules for this Contract. Also, even if you do not need to pay our withdrawal charge because of these waivers, you still may be required to pay taxes or tax penalties on the amount withdrawn. You should consult your tax adviser to determine the effect of a withdrawal on your taxes. PREMIUM TAXES Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for paying these taxes and will deduct them from your Contract Value [including Contract Value that results from amounts transferred from existing policies (Section 1035 exchange) issued by us or other insurance companies.] Some of these taxes are due when the Contract is issued, others are due when income payments begin or upon surrender. Our current practice is not to charge anyone for these taxes until income payments begin or when a total withdrawal occurs. Glenbrook may some time in the future discontinue this practice and deduct premium taxes from the purchase payments. Premium taxes generally range from 0% to 4%, depending on the state. At the Payout Start Date, the charge for premium taxes will be deducted from each investment alternative in the proportion that the Contract owner's value in the investment alternative bears to the total Contract Value. DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES We are not currently maintaining a provision for taxes. In the future, however, we may establish a provision for taxes if we determine, in our sole discretion, that we will incur a tax as a result of the operation of the Variable Account. We will deduct for any taxes we incur as a result of the operation of the Variable Account, whether or not we previously made a provision for taxes and whether or not it was sufficient. Our status under the Internal Revenue Code is briefly described in the Statement of Additional Information. OTHER EXPENSES Each Portfolio deducts advisory fees and other expenses from its assets. You indirectly bear the charges and expenses of the Portfolios whose shares are held by the Variable Sub-Accounts. These fees and expenses are described in the accompanying prospectuses for the Portfolios. For a summary of current estimates of those charges and expenses, see pages ___ above. We may receive compensation from the investment advisers or administrators of the Portfolios in connection with administrative service and cost savings experienced by the investment advisers or administrators. ACCESS TO YOUR MONEY - -------------------------------------------------------------------------------- You can withdraw some or all of your Contract Value at any time prior to the earlier of the death of the Contract owner (the Annuitant if the Contract owner is not a natural person) or the Payout Start Date. The amount payable upon withdrawal is the Contract Value next computed after we receive the request for a withdrawal at our home office, adjusted by any Market Value Adjustment, less any withdrawal charges, contract maintenance charges, income tax withholding, penalty tax, and any premium taxes. We will pay withdrawals from the Variable Account within seven days of receipt of the request, subject to postponement in certain circumstances. We may delay withdrawals from the Fixed Account Options for up to six months. You can withdraw money from the Variable Account or the Fixed Account Options. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable withdrawal charge and premium taxes. You must name the investment alternative from which you are taking the withdrawal. If none is named, then the withdrawal request is incomplete and cannot be honored. In general, you must withdraw at least $50 at a time. You also may withdraw a lesser amount if you are withdrawing your entire interest in a Variable Sub-Account. If your request for a partial withdrawal would reduce the Contract Value to less than $2,000, we may treat it as a request for a withdrawal of your entire Contract Value. Your Contract will terminate if you withdraw all of your Contract Value. We will, however, ask you to confirm you withdrawal request before terminating your Contract. Withdrawals also may be subject to income tax and a 10% penalty tax, as described. If you request a total withdrawal, you must return your Contract to us. POSTPONEMENT OF PAYMENTS We will make payment of any amounts due from the Variable Account under the Contract within seven days, unless: 1) The New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted; 2) An emergency exists as defined by the SEC; or 3) The SEC permits delay for your protection. In addition, we may delay payments or transfers from the Fixed Account Options for up to 6 months [or shorter period if required by law.] If we delay payment or transfer for 30 days or more, we will pay interest as required by law. SYSTEMATIC WITHDRAWAL PROGRAM If your Contract was issued in connection with a Non-Qualified Plan or IRA, you may participate in our Systematic Withdrawal Program. You may choose to receive systematic withdrawal payments on a monthly, quarterly, semi-annual, or annual basis at any time prior to the Payout Start Date. The minimum amount of each systematic withdrawal is $50. At our discretion, systematic withdrawals may not be offered in conjunction with Dollar Cost Averaging or Automatic Portfolio Rebalancing. Depending on fluctuations in the net asset value of the Variable Sub-Accounts and the value of the Fixed Account Options, systematic withdrawals may reduce or even exhaust the Contract Value. We will make systematic withdrawal payments to you or your designated payee. We may modify or suspend the Systematic Withdrawal Program and charge a processing fee for the service. If we modify or suspend the Systematic Withdrawal Program, existing systematic withdrawal payments will not be affected. MINIMUM CONTRACT VALUE If as a result of withdrawals your Contract Value would be less than $2,000, we may terminate your Contract and distribute to you its Contract Value, less any applicable Market Value Adjustment, withdrawal and other charges, premium taxes. INCOME PAYMENTS - -------------------------------------------------------------------------------- PAYOUT START DATE You select the Payout Start Date in your application. The Payout Start Date is the day that money is applied to an Income Plan. The Payout Start Date must be: o at least one month after the Issue Date; and o no later than the day the Annuitant reaches age 90, or the 10th Contract Anniversary, if later. You may change the Payout Start Date at any time by notifying us in writing of the change at least 30 days before the scheduled Payout Start Date. If you do not select Payout Start Date, the latest Payout Start Date will automatically become the Payout Start Date. INCOME PLANS You may choose and change your choice of Income Plan until 30 days before the Payout Start Date. If you do not select an Income Plan, we will make income payments in accordance with Income Plan 1 with guaranteed payments for 10 years. Three Income Plans are available under the Contract. Each is available to provide: o fixed income payments; o variable income payments; or o a combination of the two. The three Income Plans are: Income Plan 1 -- Life Income With Guaranteed Payments. Under this plan, we make periodic income payments for at least as long as the Annuitant lives. If the Annuitant dies before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract. Income Plan 2 -- Joint and Survivor Life Income with Guaranteed Payments. Under this plan, we make periodic income payments for at least as long as either the Annuitant or the Joint Annuitant is alive. If both the Annuitant and the Joint Annuitant die before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract. Income Plan 3 -- Guaranteed Payments for a Specified Period (5 Years to 30 Years). Under this plan, we make periodic income payments for the period you have chosen. If the Annuitant dies before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract. We will deduct the mortality and expense risk charge from the Variable Account assets supporting these payments even though we may not bear any mortality risk. If you choose Income Plan 1 or 2, or, if available, another income plan with payments that continue for the life of the Annuitant, we will require proof of age of the Annuitant or Joint Annuitant before starting income payments. If you choose Income Plan 3 and the proceeds are derived from the Variable Account, you may terminate the Variable Account portion of the income payments at any time and receive a lump sum equal to the commuted balance of the remaining variable payments due. Upon termination, you will receive the commuted balance within seven days. A withdrawal charge may apply. Otherwise, we permit withdrawals only when payments from the Variable Account are being made that do not involve life-contingent Income Plans. We also assess applicable premium taxes against all income payments. We may make other Income Plans available. You may obtain information about them by writing or calling us. You must apply at least the Contract Value in the Fixed Account Options on the Payout Start Date to fixed income payments. If you wish to apply any portion of your Fixed Account Option balance to provide variable income payments, you should plan ahead and transfer that amount to the Variable Sub-Accounts prior to the Payout Start Date.] [If you do not tell us how to allocate your Contract Value among fixed and variable income payments, we will apply your Contract Value in the Variable Account to variable income payments and your Contract Value in the Fixed Account Options to fixed income payments. We begin income payments on the Payout Start Date. If the amount available to apply under an Income Plan is less than $2,000, however, and state law permits, we may pay you the Contract Value, adjusted by any Market Value Adjustment and less any applicable taxes, in a lump sum instead of the periodic payments you have chosen. In addition, if your monthly payments would be less than $20, and state law permits, we may reduce the frequency of your payments so that each payment will be at least $20. VARIABLE INCOME PAYMENTS The amount of your variable income payments depends upon the investment results of the Variable Sub-Accounts you select, the premium taxes you pay, the age and sex of the Annuitant, and the Income Plan you choose. We guarantee that the payments will not be affected by (a) actual mortality experience and (b) the amount of our administration expenses. We cannot predict the total amount of your variable income payments. Your variable income payments may be more or less than your total purchase payments because (a) variable income payments vary with the investment results of the underlying Portfolios; and (b) the Annuitant could live longer or shorter than we expect based on the tables we use. The length of any guaranteed payment period under your selected Income Plan will affect the dollar amounts of each variable income payment. As a general rule, longer guarantee periods result in lower periodic payments, all other things being equal. For example, if you chose a life-contingent Income Plan with no minimum specified period for guaranteed payments, the variable income payments will be greater than the variable income payments made under the same Income Plan with a minimum specified period for guaranteed payments. The investment results of the Variable Sub-Accounts you choose also affect the amount of your variable income payments. In calculating the amount of the periodic payments in the annuity tables in the Contract, we assumed an annual investment rate of 3%. If actual net investment return of the Variable Sub-Accounts you choose is less than this assumed investment rate, then the dollar amount of your variable income payments will decrease. The dollar amount of your variable income payments will increase, however, if the actual net investment return exceeds the assumed investment rate. The dollar amount of the variable income payments stays level if the net investment return equals the assumed investment rate. You should consult the Statement of Additional Information for more detailed information as to how we determine variable income payments. FIXED INCOME PAYMENTS We guarantee income payment amounts derived from any Fixed Account Option for the duration of the Income Plan. We calculate the fixed income payments by: 1) adjusting the portion of the Contract Value in any Fixed Account Option on the Payout Start Date by any applicable Market Value Adjustment; 2) deducting any applicable premium tax; and 3) applying the resulting amount to the greater of (a) the appropriate value from the income payment table selected or (b) such other value as we are offering at that time. We may defer making fixed income payments for a period of up to six months or whatever shorter time state law may require. If we defer payments for 30 days or more, we will pay interest as required by law from the date we receive the withdrawal request to the date we make payment. CERTAIN EMPLOYEE BENEFIT PLANS The Contracts offered by this prospectus contain income payment tables that provide for different payments to men and women of the same age, except in states that require unisex tables. We reserve the right to use income payment tables that do not distinguish on the basis of sex. In certain employment-related situations, employers are required by law to use the same income payment tables for men and women. Accordingly, if the Contract is to be used in connection with an employment-related retirement or benefit plan and we do not offer unisex annuity tables in your state, you should consult with legal counsel as to whether the purchase of a Contract is appropriate. DEATH BENEFITS - -------------------------------------------------------------------------------- We will pay a death benefit prior to the Payout Start Date on: 1) the death of any Contract owner or, 2) if the Contract is owned by a company or other legal entity, the death of the Annuitant. We will pay the death benefit to the Contract owner as determined immediately after the death. This would be a surviving joint Contract owner or, if none, the Beneficiary. If the Annuitant and any Joint Annuitant die after the Payout Start Date, we will continue to pay the remainder of any guaranteed payments to the Contract owner. CONTRACTS ISSUED BEFORE MAY 1, 1997 Death Benefit Amount. Prior to the Payout Start Date, the death benefit before any Market Value Adjustment is equal to the greater of: 1) the Contract Value as of the date we receive a complete request for payment of the death benefit, or 2) for each previous Death Benefit Anniversary, the Contract Value at that anniversary; plus any purchase payments made since that anniversary; minus any amounts we paid the Contract owner (including income tax we withheld from you) since that anniversary. A "Death Benefit Anniversary" is every seventh Contract Anniversary beginning with the Issue Date. For example, the Issue Date, 7th and 14th Contract Anniversaries are the first three Death Benefit Anniversaries. We will adjust the death benefit by any applicable Market Value Adjustment as of the date we determine the death benefit. The death benefit will never be less than the sum of all purchase payments less any amounts previously paid to the Contract owner (including income tax withholding). Death Benefit Payments. The Contract owner eligible to receive death benefits has the following options: 1) If the Contract owner is not a natural person, then the Contract owner must receive the death benefit in a lump sum within five years of the date of death. 2) Otherwise, within 60 days of the date when the death benefit is calculated, the Contract owner may elect to receive the death benefit under an Income Plan or in a lump sum. Payments from the Income Plan must begin within one-year of the Date of Death and must be payable throughout: o the life of the Contract owner; or o a period not to exceed the life expectancy of the Contract owner; or o the life of the Contract owner with payments guaranteed for a period not to exceed the life expectancy of the Contract owner. Any death benefit payable in a lump sum must be paid within five years of the date of death. If no election is made, funds will be distributed at the end of the five year period. 3) If the surviving spouse of the deceased Contract owner is the new Contract owner, then the spouse may elect one of the options listed above or may continue the Contract in the Accumulation Phase as if the death had not occurred. If the Contract is continued in the Accumulation Phase, the surviving spouse may make a single withdrawal of any amount within one year of the date of death without incurring a withdrawal charge. However, any applicable Market Value Adjustment, determined as of the date of the withdrawal, will apply. CONTRACTS ISSUED ON OR AFTER MAY 1, 1997 Death Benefit Amount. Prior to the Payout Start Date, the death benefit is equal to the greatest of: 1) the Contract Value as of the date we receive a complete request for payment of the death benefit, or 2) the Settlement Value (that is, the amount payable on a full withdrawal of Contract Value) on the date we receive a complete request for payment of the death benefit, or 3) the Contract Value on each Death Benefit Anniversary prior to the date we receive a complete request for payment of the death benefit, increased by purchase payments made since that Death Benefit Anniversary and reduced by an adjustment for any partial withdrawals since that Death Benefit Anniversary. The adjustment is equal to (a) divided by (b) and the result multiplied by (c) where: (a) is the withdrawal amount, (b) is the Contract Value immediately prior to the withdrawal, and (c) is the Contract Value on the Death Benefit Anniversary adjusted by any prior purchase payments or withdrawals made since that Anniversary. We will calculate the Death Benefit Anniversary values until the oldest Contract owner, or the Annuitant if the Contract owner is not a natural person, attains age 80. Enhanced Death Benefit Option. For Contracts with the enhanced death benefit option, the death benefit will be the greatest of (1) through (3) above, or (4) the enhanced death benefit, which is the greatest of the "Anniversary Values" as of the date we determine the death benefit. The Anniversary Value is equal to the Contract Value on a Contract Anniversary, increased by purchase payments made since that Anniversary and reduced by an adjustment for any partial withdrawals since that Anniversary. The adjustment is equal to (a) divided by (b), and the result is multiplied by (c) where: (a) is the withdrawal amount, (b) is the Contract Value immediately prior to the withdrawal, and (c) is the Contract Value on that Contract Anniversary adjusted by any prior purchase payments and withdrawals since that Contract Anniversary. We will calculate Anniversary Values for each Contract Anniversary prior to the oldest Contract owner's or the Annuitant's, if the Contract owner is not a natural person, 80th birthday. The enhanced death benefit option will never be greater than the maximum death benefit allowed by any non-forfeiture laws which govern the Contract. A claim for a distribution on death must be submitted before the Payout Start Date. As part of the claim, the Contract owner, or, as applicable, the Beneficiary must provide "Due Proof of Death." We will accept the following documentation as Due Proof of Death: o a certified original copy of the Death Certificate; or o other documentation as we may accept in our sole discretion. Death Benefit Payments. A death benefit will be paid: 1) if the Contract owner elects to receive the death benefit distributed in a single payment within 180 days of the date of death, and 2) if the death benefit is paid as of the day the value of the death benefit is determined. Otherwise, the Settlement Value will be paid. We are currently waiving the 180 day limit, but we reserve the right to enforce the limitation in the future. In any event, the entire value of the Contract must be distributed within five (5) years after the date of death unless an Income Plan is elected or a surviving spouse continues the Contract in accordance with the provisions described below. If the Contract owner eligible to receive the distribution upon death is not a natural person, the Contract owner may elect to receive the distribution upon death in one or more distributions. If the Contract owner is a natural person, the Contract owner may elect to receive the distribution upon death either in one or more distributions or by periodic payments through an Income Plan. Payments from the Income Plan must begin within one year of the date of death and must be payable throughout: o the life of the Contract owner; or o a period not to exceed the life expectancy of the Contract owner; or o the life of the Contract owner with payments guaranteed to a period not to exceed the life expectancy of the Contract owner. If the surviving spouse of the deceased Contract owner is the new Contract owner, then the spouse may elect one of the options listed above or may continue the Contract in the Accumulation Phase as if the death had not occurred. If the Contract is continued in the Accumulation Phase, the surviving spouse may make a single withdrawal of any amount within one year of the date of death without incurring a withdrawal charge. However, any applicable Market Value Adjustment, determined as of the date of the withdrawal, will apply. MORE INFORMATION - -------------------------------------------------------------------------------- GLENBROOK LIFE AND ANNUITY COMPANY Glenbrook is the issuer of the Contract. Glenbrook is a stock life insurance company organized under the laws of the State of Arizona in 1998. Previously, Glenbrook was organized under the laws of the State of Illinois in 1992. Glenbrook was originally organized under the laws of the State of Indiana in 1965. From 1965 to 1983 Glenbrook was known as "United Standard Life Assurance Company" and from 1983 to 1992 as "William Penn Life Assurance Company of America." Glenbrook is currently licensed to operate in the District of Columbia and all states except New York. We intend to offer the Contract in those jurisdictions in which it is licensed and in which SunTrust Bank, Inc., through its banking subsidiaries, conducts business. Our home office is located at 3100 Sanders Road, Northbrook, Illinois, 60062. Glenbrook is a wholly owned subsidiary of Allstate Life Insurance Company ("Allstate Life"), a stock life insurance company incorporated under the laws of the State of Illinois. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, a stock property-liability insurance company incorporated under the laws of Illinois. All of the outstanding capital stock of Allstate Insurance Company is owned by The Allstate Corporation. Glenbrook and Allstate Life entered into a reinsurance agreement effective June 5, 1992. Under the reinsurance agreement, Allstate Life reinsures substantially all of Glenbrook's liabilities under its variable insurance contracts. The reinsurance agreement provides us with financial backing from Allstate Life. However, it does not create a direct contractual relationship between Allstate Life and you. In other words, the obligations of Allstate Life under the reinsurance agreement are to Glenbrook; Glenbrook remains the sole obligor under the Contract to you. Several independent rating agencies regularly evaluate life insurers' claims-paying ability, quality of investments, and overall stability. A.M. Best Company assigns A+ (Superior) to Allstate Life which automatically reinsures all net business of Glenbrook. A.M. Best Company also assigns Glenbrook the rating of A+(r) because Glenbrook automatically reinsures all net business with Allstate Life. Standard & Poor's Insurance Rating Services assigns AA+ (Excellent) to Glenbrook's claims-paying ability and Moody's assigns an Aa2 (Excellent) financial strength rating to Glenbrook. Glenbrook shares the same ratings of its parent, Allstate Life. These ratings do not reflect the investment performance of the Variable Account. We may from time to time advertise these ratings in our sales literature. VARIABLE ACCOUNT Glenbrook established the Glenbrook Life and Annuity Company Variable Annuity Account on December 15, 1992. We have registered the Variable Account with the SEC as a unit investment trust. The SEC does not supervise the management of the Variable Account or Glenbrook. We own the assets of the Variable Account. The Variable Account is a segregated asset account under Arizona law. That means we account for the Variable Account's income, gains and losses separately from the results of our other operations. It also means that only the assets of the Variable Account that are in excess of the reserves and other Contract liabilities with respect to the Variable Account are subject to liabilities relating to our other operations. Our obligations arising under the Contracts are general corporate obligations of Glenbrook. The Variable Account consists of 13 Variable Sub-Accounts, each of which invests in a corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or investment conditions so warrant. We do not guarantee the investment performance of the Variable Account, its Sub-Accounts or the Portfolios. We may use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account. THE PORTFOLIOS Dividends and Capital Gain Distributions. We automatically reinvest all dividends and capital gains distributions from the Portfolios in shares of the distributing Portfolio at their net asset value. Voting Privileges. As a general matter, you do not have a direct right to vote the shares of the Portfolios held by the Variable Sub-Accounts to which you have allocated your Contract Value. Under current law, however, you are entitled to give us instructions on how to vote those shares on certain matters. Based on our present view of the law, we will vote the shares of the Portfolios that we hold directly or indirectly through the Variable Account in accordance with instructions that we receive from Contract owners entitled to give such instructions. The number of shares that a person has a right to instruct will be determined based on net asset value per share of the corresponding Portfolio as of the record date of the meeting. As a general rule, before the Payout Start Date, the Contract owner or anyone with a voting interest is the person entitled to give voting instructions. After the Payout Start Date, the payee is that person. We will vote shares attributable to Contracts for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine that we may vote such shares in our own discretion. We reserve the right to vote Portfolio shares as we see fit without regard to voting instructions to the extent permitted by law. If we disregard voting instructions, we will include a summary of that action and our reasons for that action in the next semi-annual financial report to you. Substitution of Portfolios. If the shares of any of the Portfolios are no longer available for investment by the Variable Account or if, in our judgment, further investment in such shares is no longer desirable in view of the purposes of the Contract, we may eliminate that Portfolio and substitute shares of another eligible investment fund. Any substitution of securities will comply with the requirements of the 1940 Act. We also may add new Variable Sub-Accounts that invest in additional mutual funds. Conflicts of Interest. Certain of the Portfolios sell their shares to separate accounts underlying both variable life insurance and variable annuity contracts. It is conceivable that in the future it may be unfavorable for variable life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolio. The boards of directors or trustees of these Portfolios monitor for possible conflicts among separate accounts buying shares of the Portfolios. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, a Portfolio's board of directors or trustees may require a separate account to withdraw its participation in a Portfolio. A Portfolio's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict. THE CONTRACT Distribution. Allstate Life Financial Services ("ALFS"), located at 3100 Sanders Road, Northbrook, IL 60062-7154, serves as distributor of the Contracts. ALFS is a wholly owned subsidiary of Allstate Life Insurance Company. ALFS is a registered broker dealer under the Securities and Exchange Act of 1934, as amended, and is a member of the National Association of Securities Dealers, Inc. ALFS also is registered as an investment advisor under the Investment Advisers Act, as amended. Commissions will be paid to broker-dealers who sell the contracts. Commissions paid may vary, but we estimate that the total commissions paid on all Contract sales will not exceed 6% of all purchase payments (on a present value basis). These commissions are intended to cover distribution expenses. Sometimes, we also pay the broker-dealer a persistency bonus in addition to the standard commissions. In some states, Contracts may be sold by representatives or employees of banks which may be acting as broker-dealers without separate registration under the Securities Exchange Act of 1934, pursuant to legal and regulatory exceptions. Glenbrook does not pay ALFS a commission for distribution of the Contracts. The underwriting agreement with ALFS provides that we will reimburse ALFS for liability to Contract owners arising out of services rendered or Contracts issued. Administration. We have primary responsibility for all administration of the Contracts and the Variable Account. We provide the following administrative services, among others: o issuance of the Contracts; o maintenance of Contract owner records; o Contract owner services; o calculation of unit values; o maintenance of the Variable Account; and o preparation of Contract owner reports. We will send you Contract statements and transaction confirmations at least quarterly. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we will make the adjustment as of the date that we receive notice of the potential error. We will also provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws. LEGAL MATTERS Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised Glenbrook on certain federal securities law matters. All matters of Illinois law pertaining to the Contracts, including the validity of the Contracts and Glenbrook's right to issue such Contracts under Illinois insurance law, have been passed upon by Michael J. Velotta, General Counsel of Glenbrook. YEAR 2000 Glenbrook is heavily dependent upon complex computer systems for all phases of its operations, including customer service, and policy and contract administration. Since many of Glenbrook's older computer software programs recognize only the last two digits of the year in any date, some software may fail to operate properly in or after the year 1999, if the software is not reprogrammed or replaced, ("Year 2000 Issue"). Glenbrook believes that many of its counterparties and suppliers also have Year 2000 Issues which could affect Glenbrook. In 1995, Allstate Insurance Company commenced a plan intended to mitigate and/or prevent the adverse effects of Year 2000 Issues. These strategies include normal development and enhancement of new and existing systems, upgrades to operating systems already covered by maintenance agreements and modifications to existing systems to make them Year 2000 compliant. The plan also includes Glenbrook actively working with its major external counterparties and suppliers to assess their compliance efforts and Glenbrook's exposure to them. Glenbrook presently believes that it will resolve the Year 2000 Issue in a timely manner, and the financial impact will not materially affect its results of operations, liquidity or financial position. Year 2000 costs are and will be expensed as incurred. TAXES - -------------------------------------------------------------------------------- The following discussion is general and is not intended as tax advice. Glenbrook makes no guarantee regarding the tax treatment of any contract or transaction involving a contract. Federal, state, local and other tax consequences of ownership or receipt of distributions under an annuity contract depend on your individual circumstances. If you are concerned about any tax consequences with regard to your individual circumstances, you should consult a competent tax adviser. Taxation of Annuities in General Tax Deferral. Generally, you are not taxed on increases in the contract value until a distribution occurs. This rule applies only where: 1) the owner is a natural person, 2) the investments of the separate account are "adequately diversified" according to Treasury Department regulations, and 3) Glenbrook is considered the owner of the separate account assets for federal income tax purposes. Non-natural Owners. As a general rule, annuity contracts owned by non-natural persons such as corporations, trusts, or other entities are not treated as annuity contracts for federal income tax purposes. The income on such contracts is taxed as ordinary income received or accrued by the owner during the taxable year. Please see the Statement of Additional Information for a discussion of several exceptions to the general rule for contracts owned by non-natural persons. Diversification Requirements. For a contract to be treated as an annuity for federal income tax purposes, the investments in the separate account must be "adequately diversified" consistent with standards under Treasury Department regulations. If the investments in the separate account are not adequately diversified, the contract will not be treated as an annuity contract for federal income tax purposes. As a result, the income on the contract will be taxed as ordinary income received or accrued by the owner during the taxable year. Although Glenbrook does not have control over the Portfolios or their investments, we expect the Portfolios to meet the diversification requirements. Ownership Treatment. The IRS has stated that you will be considered the owner of separate account assets if you possess incidents of ownership in those assets, such as the ability to exercise investment control over the assets. At the time the diversification regulations were issued, the Treasury Department announced that the regulations do not provide guidance concerning circumstances in which investor control of the separate account investments may cause an investor to be treated as the owner of the separate account. The Treasury Department also stated that future guidance would be issued regarding the extent that owners could direct sub-account investments without being treated as owners of the underlying assets of the separate account. Your rights under this contract are different than those described by the IRS in rulings in which it found that contract owners were not owners of separate account assets. For example, you have the choice to allocate premiums and contract values among more investment options. Also, you may be able to transfer among investment options more frequently than in such rulings. These differences could result in you being treated as the owner of the separate account. If this occurs, income and gain from the separate account assets would be includible in your gross income. Glenbrook does not know what standards will be set forth in any regulations or rulings which the Treasury Department may issue. It is possible that future standards announced by the Treasury Department could adversely affect the tax treatment of your contract. We reserve the right to modify the contract as necessary to attempt to prevent you from being considered the federal tax owner of the assets of the separate account. However, we make no guarantee that such modification to the contract will be successful. Taxation of Partial and Full Withdrawals. If you make a partial withdrawal under a non-qualified contract, amounts received are taxable to the extent the contract value, without regard to surrender charges, exceeds the investment in the contract. The investment in the contract is the gross premium paid for the contract minus any amounts previously received from the contract if such amounts were properly excluded from your gross income. If you make a partial withdrawal under a qualified contract, the portion of the payment that bears the same ratio to the total payment that the investment in the contract (i.e., nondeductible IRA contributions, after tax contributions to qualified plans) bears to the contract value, is excluded from your income. If you make a full withdrawal under a non-qualified contract or a qualified contract, the amount received will be taxable only to the extent it exceeds the investment in the contract. "Nonqualified distributions" from Roth IRAs are treated as made from contributions first and are included in gross income only to the extent that distributions exceed contributions. "Qualified distributions" from Roth IRAs are not included in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to any Roth IRA and which are: o made on or after the date the individual attains age 59 1/2, o made to a beneficiary after the owner's death, o attributable to the owner being disabled, or o for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000). If you transfer a nonqualified contract without full and adequate consideration to a person other than your spouse (or to a former spouse incident to a divorce), you will be taxed on the difference between the contract value and the investment in the contract at the time of transfer. Except for certain qualified contracts, any amount you receive as a loan under a contract, and any assignment or pledge (or agreement to assign or pledge) of the contract value is treated as a withdrawal of such amount or portion. Taxation of Annuity Payments. Generally, the rule for income taxation of annuity payments received from a nonqualified contract provides for the return of your investment in the contract in equal tax-free amounts over the payment period. The balance of each payment received is taxable. For fixed annuity payments, the amount excluded from income is determined by multiplying the payment by the ratio of the investment in the contract (adjusted for any refund feature or period certain) to the total expected value of annuity payments for the term of the contract. If you elect variable annuity payments, the amount excluded from taxable income is determined by dividing the investment in the contract by the total number of expected payments. The annuity payments will be fully taxable after the total amount of the investment in the contract is excluded using these ratios. If you die, and annuity payments cease before the total amount of the investment in the contract is recovered, the unrecovered amount will be allowed as a deduction for your last taxable year. Taxation of Annuity Death Benefits. Death of an owner, or death of the annuitant if the contract is owned by a non-natural person, will cause a distribution of death benefits from a contract. Generally, such amounts are included in income as follows: 1) if distributed in a lump sum, the amounts are taxed in the same manner as a full withdrawal, or 2) if distributed under an annuity option, the amounts are taxed in the same manner as an annuity payment. Please see the Statement of Additional Information for more detail on distribution at death requirements. Penalty Tax on Premature Distributions. A 10% penalty tax applies to the taxable amount of any premature distribution from a nonqualified contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions: 1) made on or after the date the owner attains age 59 1/2; 2) made as a result of the owner's death or disability; 3) made in substantially equal periodic payments over the owner's life or life expectancy, 4) made under an immediate annuity; or 5) attributable to investment in the contract before August 14, 1982. You should consult a competent tax advisor to determine if any other exceptions to the penalty apply to your situation. Similar exceptions may apply to distributions from qualified contracts. Aggregation of Annuity Contracts. All non-qualified deferred annuity contracts issued by Glenbrook (or its affiliates) to the same owner during any calendar year will be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution. TAX QUALIFIED CONTRACTS Contracts may be used as investments with certain Qualified Plans such as: o Individual Retirement Annuities or Accounts (IRAs) under Section 408 of the Code; o Roth IRAs under Section 408A of the Code; o Simplified Employee Pension Plans under Section 408(k) of the Code; o Savings Incentive Match Plans for Employees (SIMPLE) Plans under Section 408(p) of the Code; o Tax Sheltered Annuities under Section 403(b) of the Code; o Corporate and Self Employed Pension and Profit Sharing Plans; and o State and Local Government and Tax-Exempt Organization Deferred Compensation Plans. In the case of certain Qualified Plans, the terms of the plans may govern the right to benefits, regardless of the terms of the contract. Restrictions Under Section 403(b) Plans. Section 403(b) of the Tax Code provides tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. Under Section 403(b), any contract used for a 403(b) plan must provide that distributions attributable to salary reduction contributions made after 12/31/88, and all earnings on salary reduction contributions, may be made only on or after the date the employee: o attains age 59 1/2, o separates from service, o dies, o becomes disabled, or o on account of hardship (earnings on salary reduction contributions may not be distributed on the account of hardship). These limitations do not apply to withdrawals where Glenbrook is directed to transfer some or all of the contract value to another 403(b) plan. INCOME TAX WITHHOLDING Glenbrook is required to withhold federal income tax at a rate of 20% on all "eligible rollover distributions" unless you elect to make a "direct rollover" of such amounts to an IRA or eligible retirement plan. Eligible rollover distributions generally include all distributions from qualified contracts, excluding IRAs, with the exception of: (1) required minimum distributions, or (2) a series of substantially equal periodic payments made over a period of at least 10 years, or, (3) over the life (joint lives) of the participant (and beneficiary). Glenbrook may be required to withhold federal and state income taxes on any distributions from non-qualified contracts or qualified contracts that are not eligible rollover distributions, unless you notify us of your election to not have taxes withheld. ANNUAL REPORTS AND OTHER DOCUMENTS - -------------------------------------------------------------------------------- Glenbrook's annual report on Form 10-K for the year ended December 31, 1998 is incorporated herein by reference, which means that it is legally a part of this prospectus. After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Securities Exchange Act of 1934 ("Exchange Act") are also incorporated herein by reference, which means that they also legally become a part of this prospectus. Statements in this prospectus, or in documents that we file later with the SEC and that legally become a part of this prospectus, may change or supersede statements in other documents that are legally part of this prospectus. Accordingly, only the statement that is changed or replaced will legally be a part of this prospectus. We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR" system using the identifying number CIK No. 0000945094. The SEC maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. If you have received a copy of this prospectus, and would like a free copy of any document incorporated herein by reference (other than exhibits not specifically incorporated by reference into the text of such documents) , please write or call us at 3100 Sanders Road, Northbrook, Illinois 60062 (telephone : 1-800/453-6038). PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- We may advertise the performance of the Variable Sub-Accounts, including yield and total return information. All performance advertisements will include, as applicable, standardized yield and total return figures that reflect the deduction of insurance charges, the contract maintenance charge, and withdrawal charge. Performance advertisements also may include total return figures that reflect the deduction of insurance charges, but not the contract maintenance or withdrawal charges. The deduction of such charges would reduce the performance shown. Total return represents the change, over a specified period of time, in the value of an investment in a Variable Sub-Account after reinvesting all income distributions. Yield refers to the income generated by an investment in a Variable Sub-Account over a specified period. The income is then annualized (i.e., the amount of income generated by the investment during that period is assumed to be generated over a 52-week period and is shown as a percentage of the investment). Effective yield is calculated similarly but when annualized, the income earned is assumed to be reinvested at the end of each specified period. The effective yield will be slightly higher than the yield because of the compounding effect of this assumed reinvestment during a 52-week period. Performance information for periods prior to the inception date of the Variable Sub-Accounts will be based on the historical performance of the corresponding Portfolios for the periods beginning with the inception dates of the Portfolios and adjusted to reflect current Contract expenses. You should not interpret these figures to reflect actual historical performance of the variable account. We may include in advertising and sales materials tax deferred compounding charts and other hypothetical illustrations that compare currently taxable and tax deferred investment programs based on selected tax brackets. Our advertisements also may compare the performance of our Variable Sub-Accounts with: (a) certain unmanaged market indices, including but the Dow Jones Industrial Average, the Standard & Poor's 500, and the Shearson Lehman Bond Index; and/or (b) other management investment companies with investment objectives similar to the underlying funds being compared. In addition, our advertisements may include the performance ranking assigned by various publications, including the Wall Street Journal, Forbes, Fortune, Money, Barron's, Business Week, USA Today, and statistical services, including Lipper Analytical Services Mutual Fund Survey, Lipper Annuity and Closed End Survey, the Variable Annuity Research Data Survey, and SEI.
APPENDIX A Accumulation Unit Value and Number of Accumulation Units Outstanding for Each Variable Sub-Account Since Inception Basic Policy ------------ For the Years Beginning January 1* and Ending 1995 1996 1997 1998 ---- ---- ---- ---- December 31 STI CAPITAL GROWTH SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $10.000 $10.661 $13.105 Accumulation Unit Value, End of Period $10.661 $13.015 $17.533 Number of Units Outstanding, End of Period 103,697 1,680,419 2,788,987 STI INVESTMENT GRADE BOND SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $10.000 $10.336 $10.429 Accumulation Unit Value, End of Period $10.336 $10.429 $11.201 Number of Units Outstanding, End of Period 40,503 506,887 686,193 STI INTERNATIONAL EQUITY SUB-ACCOUNT Accumulation Unit Value, Beginning of Period -- $10.000 $10.150 Accumulation Unit Value, End of Period -- $10.150 $11.699 Number of Units Outstanding, End of Period -- 97,975 734,936 STI MID-CAP EQUITY SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $10.000 $10.285 $11.775 Accumulation Unit Value, End of Period $10.285 $11.775 $14.200 Number of Units Outstanding, End of Period 80,549 959,682 1,354,516 STI SMALL CAP EQUITY SUB-ACCOUNT Accumulation Unit Value, Beginning of Period -- -- $10.000 Accumulation Unit Value, End of Period -- -- $9.769 Number of Units Outstanding, End of Period -- -- 111,722 STI VALUE INCOME STOCK SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $10.000 $10.696 $12.518 Accumulation Unit Value, End of Period $10.696 $12.518 $15.663 Number of Units Outstanding, End of Period 124,596 2,238,993 3,720,163 FEDERATED PRIME MONEY FUND II SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $10.000 $10.052 $10.429 Accumulation Unit Value, End of Period $10.052 $10.429 $10.796 Number of Units Outstanding, End of Period 132,650 488,506 343,302
* The following Variable Sub-Accounts commenced operations on October 6, 1995: STI Mid-Cap Equity, STI Capital Growth, STI Value Income Stock, STI Investment Grade Bond, and Federated Prime Money Fund II. The STI International Equity Sub-Account commenced operations on November 7, 1996. The STI Small Cap Equity Sub-Account commenced operations on October 20, 1997. No Accumulation unit data is shown for the AIM V.I. Capital Appreciation, AIM V.I. High Yield, Oppenheimer Strategic Bond, Oppenheimer Multiple Strategies, Templeton Bond, and Templeton Stock Sub-Accounts (collectively the "New Sub-Accounts"), which commenced operations as of January 10, 1999. The Accumulation Unit Values in this table reflect a Mortality and Expense Risk Charge of 1.25% and an Administrative Expense Charge of 0.10%. Accumulation Unit Values and Number of Accumulation Units Outstanding for Each Variable Sub-Account Since Inception Basic Policy plus Enhanced Death Benefit Option For the Years Beginning January 1* and Ending December 1997 1998 ---- ---- 31 STI CAPITAL GROWTH SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $13.019 Accumulation Unit Value, End of Period $17.521 Number of Units Outstanding, End of Period 740,401 STI INTERNATIONAL EQUITY SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $10.153 Accumulation Unit Value, End of Period $11.692 Number of Units Outstanding, End of Period 449,359 STI INVESTMENT GRADE BOND SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $10.432 Accumulation Unit Value, End of Period $11.193 Number of Units Outstanding, End of Period 187,787 STI MID-CAP EQUITY SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $11.779 Accumulation Unit Value, End of Period $14.190 Number of Units Outstanding, End of Period 329,187 STI SMALL CAP EQUITY SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $9.768 Number of Units Outstanding, End of Period 161,316 STI VALUE INCOME STOCK SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $12.522 Accumulation Unit Value, End of Period $15.652 Number of Units Outstanding, End of Period 924,002 FEDERATED PRIME MONEY FUND II SUB-ACCOUNT Accumulation Unit Value, Beginning of Period $10.432 Accumulation Unit Value, End of Period $10.789 Number of Units Outstanding, End of Period 240,439 * The enhanced death benefit option was made available for the Federated Prime Money Fund II, STI Capital Growth, STI International Equity, STI Investment Grade Bond, STI Mid-Cap Equity, and STI Value Income Stock Sub-Accounts on May 1, 1997, and for the STI Small Cap Equity Sub-Account on October 20, 1997. The Accumulation Unit Values in this table reflect a Mortality and Expense Risk Charge of 1.35% and an Administrative Expense Charge of 0.10%. No Accumulation unit data is shown for the New Sub-Accounts for which the enhanced death benefit option was made available as of January 10, 1999. APPENDIX B MARKET VALUE ADJUSTMENT The Market Value Adjustment is based on the following: I = the interest crediting rate for a Guarantee Period N = the number of whole and partial years from the date we receive the transfer, withdrawal, or death benefit request, or from the Payout Start Date to the end of the Guarantee Period; and J = the current interest crediting rate offered for a Guarantee Period of length N on the date we determine the Market Value Adjustment. J will be determined by a linear interpolation between the current interest rates for the next higher and lower integral years. For purposes of interpolation, current interest rates for Guarantee Periods not available under this Contract will be calculated in a manner consistent with those which are available. The Market Value Adjustment factor is determined from the following formula: .9 X (I - J) X N Any transfer, withdrawal, or death benefit (depending on your Contract) paid or amount applied to an Income Plan from a Guarantee Period (except during the 30 day period after the Guarantee Period expires) will be multiplied by the Market Value Adjustment factor to determine the Market Value Adjustment. EXAMPLES OF MARKET VALUE ADJUSTMENT Purchase Payment: $10,000 Guarantee Period: 5 years Interest Rate: 4.50% Full Surrender: End of Contract Year 3 NOTE: This illustration assumes that premium taxes are not applicable.
EXAMPLE 1: (Assumes declining interest rates) Step 1. Calculate Account Value at End Contract Year 3: 10,000.00 X (1.0450)(3) = $11,411.66 Step 2. Calculate the Free Withdrawal Amount: .10 X 11,411.66 = $1,141.17 Step 3. Calculate the Withdrawal Charge .05 X (10,000.00 - 1,141.17) = $442.94 Step 4. Calculate the Market Value Adjustment: I = 4.5% Adjustment: J = 4.2% 730 Days -------- N = 365 days = 2 Market Value Adjustment Factor: .9 X (I-J) X N = .9 X (.045 - .042) X (730/365) = .0054 Market Value Adjustment = Market Value Value Adjustment Factor X Amount Subject to Market Value Adjustment: = .0054 X 11,411.66 = $61.62 Step 5. Calculate the amount received by Customer as a result of full withdrawal at the end of Contract Year 3: 11,411.66 - 442.94 + 61.62 = $11,030.34
EXAMPLE 2: (Assumes rising interest rates) Step 1. Calculate Account Value at End of Contract Year 3: 10,000.00 X (1.045)(3) = $11,411.66 Step 2. Calculate the Free Withdrawal Amount: .10 X (11,411.66) = $1,141.17 Step 3. Calculate the Withdrawal Charge: .05 X (10,000.00 - 1,141.17) = $442.94 Step 4. Calculate the Market Value Adjustment: I = 4.5% J = 4.8% 730 days -------- N = 365 days = 2 Market Value Adjustment Factor: .9 X (I-J) X N = .9 X (.045 - .048) X (730/365) = -.0054 Market Value Adjustment = Market Value Adjustment Factor X Amount Subject to Market Value Adjustment = -.0054 X 11,411.66 = - $61.62 Step 5. Calculate the amount received by Customer as a result of full withdrawal at the end of Contract Year 3: 11,411.66 - 442.94 - 61.62 = $10,907.10
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS Page Additions, Deletions or Substitutions of Investments.......... The Contract.................................................. Purchase of Contracts....................................... Performance Data............................................ Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers) Premium Taxes............................................... Tax Reserves................................................ Income Payments............................................... Calculation of Variable Annuity Unit Values................. General Matters............................................... Incontestability............................................ Settlements................................................. Safekeeping of the Variable Account's Assets................ Federal Tax Matters........................................... Introduction................................................ Taxation of Glenbrook Life and Annuity Company.............. Exceptions to the Non-Natural Owner Rule.................... IRS Required Distribution at Death Rules.................... Qualified Plans............................................. Types of Qualified Plans.................................... Variable Account Financial Statements......................... Depositor Financials.......................................... ----------------------------------------------- This prospectus does not constitute an offering in any jurisdiction in which such offering may not lawfully be made. We do not authorize anyone to provide any information or representations regarding the offering described in this prospectus other than as contained in this prospectus. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The by-laws of Glenbrook Life and Annuity Company ("Registrant") provide that Registrant will indemnify its officers and directors for certain damages and expenses that may be incurred in the performance of their duty to Registrant. No indemnification is provided, however, when such person is adjudged to be liable for negligence or misconduct in the performance of his or her duty, unless indemnification is deemed appropriate by the court upon application. ITEM 16. EXHIBITS. Exhibit No. Description (1) Form of Underwriting Agreement* (2) None (4) Glenbrook Life and Annuity Company Flexible Premium Deferred Variable Annuity Contract** (5) Opinion of General Counsel re: Legality* (8) None (11) None (12) None (15) None (23)(a) Consent of Independent Public Accountants (to be filed by amendment) (23)(b) Consent of Attorneys (24) Powers of Attorney** (25) None (26) None (27) Not applicable because no financial statements are being filed herewith. (99) Form of Resolution of Board of Directors*** - --------------------- * Previously filed and incorporated by reference to Form S-1 Registration Statement No. 333-07275, dated June 28, 1996. ** Previously filed in this Registration Statement (File No. 33-91916) on February 25, 1997. *** Previously filed in this Registration Statement (File No. 33-91916) on April 10, 1996. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. Insofar as indemnification for liabilities 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 action, suit ore 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 Securities Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Registrant certifies that it has reasonable grounds to believe that it will meet all of the requirements for filing on Form S-3 and has duly caused this amended registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the Township of Northfield, State of Illinois, on the 26th day of February, 1999. GLENBROOK LIFE AND ANNUITY COMPANY (SEAL) ATTEST: /S/BRENDA D. SNEED BY: /S/MICHAEL J. VELOTTA - ------------------- ---------------------- Brenda D. Sneed Michael J. Velotta Assistant Secretary Vice President, Secretary and Assistant General Counsel and General Counsel Pursuant to the requirements of the Securities Act of 1933, this amended registration statement has been duly signed below by the following Directors and Officers of Glenbrook Life and Annuity Company on the 26th day of February, 1999. */LOUIS G. LOWER, II Chairman of the Board of Directors and - -------------------- Chief Executive Officer Louis G. Lower, II (Principal Executive Officer) /s/MICHAEL J. VELOTTA Vice President, Secretary, - --------------------- General Counsel and Director Michael J. Velotta */PETER H. HECKMAN President, Chief Operating Officer - ------------------ and Director Peter H. Heckman */JOHN R. HUNTER Director - ---------------- John R. Hunter */KEVIN R. SLAWIN Vice President - ----------------- (Principal Financial Officer) Kevin R. Slawin */G. CRAIG WHITEHEAD Senior Vice President and Director - -------------------- G. Craig Whitehead */JAMES P. ZILS Treasurer - --------------- James P. Zils */KEITH A. HAUSCHILDT Assistant Vice President and Controller - --------------------- (Principal Accounting Officer) Keith A. Hauschildt */ By Michael J. Velotta, pursuant to Power of Attorney, previously filed. EXHIBIT LIST The following exhibit is filed herewith: EXHIBIT NO. DESCRIPTION (23)(b) Consent of Attorneys EX-23 2 CONSENT OF ATTORNEYS Freedman, Levy, Kroll & Simonds CONSENT OF FREEDMAN, LEVY, KROLL & SIMONDS We hereby consent to the reference to our firm under the caption "Legal Matters" in the prospectus contained in Post-Effective Amendment No. 5 to Form S-1 on the Form S-3 Registration Statement of Glenbrook Life and Annuity Company (File No. 33-91916). FREEDMAN, LEVY, KROLL & SIMONDS Washington, D.C. February 26, 1999 EX-24 3 POWER OF ATTORNEY POWER OF ATTORNEY WITH RESPECT TO GLENBROOK LIFE AND ANNUITY COMPANY Know all men by these presents that Thomas J. Wilson, II, whose signature appears below, constitutes and appoints Louis G. Lower, II and Michael J. Velotta, each acting individually, his attorney-in-fact, with power of substitution and in any and all capacities, to sign any registration statements and amendments thereto for the Glenbrook Life and Annuity Company and related Contracts and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Date February 26, 1999 /s/Thomas J. Wilson, II ------------------------ Thomas J. Wilson, II Vice Chairman and Director -----END PRIVACY-ENHANCED MESSAGE-----