the certificate,with Hon. WilliamM. King, page 3 (WW-504)
the first year'spaymentof interestto be made out of contributedsur- plus, and thereafterout of earned surplus. It was furtherprovided that at the end of the first full calendaryear after the date of the certificate,8nd the end of each calendaryear thereafteruntil m8turity, the companywould createan "annualbonua fund" for the benefit of the registeredcertificateholdersout of the profitsand/or earned surplus of the company,which it would divide into 3,000 equal parts; 81$ so long a8 a certificatewas in force, one such part would be paid to each owner of the certificate.The amount of the annualbonus fund was to be Z$ of the renewallife insursncepremiumspaid duringthe year to the companyon all life insurancepolicies,plus l$ of the "excessin- terest earningson all investments"of the company. The companywas requiredto continuethe paymentsinto the annual bonus fund until the maturityof the certificateor until the certificatehad been called in the m8nner providedin the contract.
In additionto the annualbonus fund provided,the company also agreedto set up on its books 8 "specialsurplusfund account"and agreedto creditto that accountat the end of each calendaryear after the date of the certificatea sum equal to 33-l/3$ of its net surplus earningsfor each year. It w8s providedth8t the certificateshould mature and the face value thereofpaid to the registeredowner within 60 days after the amount accumulatedin said "specialsurplusfund BC- count" shouldbe equal to the aggregateof the total face value of all outstandingadvisoryboard investmentcertificatesand the accumulated interest,if any.
At such maturitythe companyagreedto pay to the registered owner the face value of $600.00'plusinterestand further"withinthe limits of its presentlyexistinglegal contractualpowers,to permit the owner of this certificate,if he so elects,in lieu of acceptance of paymentof the face value in cash, to convertthe face value of this certificateinto the compaay'scommon stock at the stipulatedprice of $100 per.sh8re.w
Under the terms in the certificateunder the heading"Guaran- teed SurrenderValue,"the certificateholder could discontinuepayment and could receive8 "modifiedcertificate" which in effectwas a pro rata advisoryboard certificate,less certainliquidatedd8mage charges givingthe certificateholderthe right to participateon a pro rat8 basis in 811 the benefitsexceptthe 8Mual bonus fund.
Under the heading "Miecellaneoun," it was ProVidd that any moneys paid for the investmentcertificateshouldbe treated8s paid- in surplusand th8t the companycouldmake use of such funds in any way that surplusfunds of the companymight be lawfullyused. It was fur- ther providedthat all interestwas payableonly 88 therein set forth, and that the investmentcertificate,togetherwith the interestthereon, shouldnot be a liabilityof the companyor a claim againstany of its I. 4 .
Eon. WilliamM. King, page 4 (WW-504)
assets except8s above specifiedin the paragraph. And in seemingly conflictingterms, it was furtherprovidedthat in the event of liquida- tion of the companythe investmentcertificateshould immediatelymature and become 8 presentliabilityof the companysubjectto the rights of the policyholder. ~...,". These certificateshave not yet matured. It is the purpose of the CitizensStandardLife InsuranceCompanyto offer to each holder of an advisoryboard investmentcertificate60 sharesof its common stock in exchangefor a surrenderof qych certificateplus 8 bonus of 6 shares to each certificateholder c&&l&ing h& paymentsby a date specified which would be in advanceof the &&es specifiedin the certificate. It shouldbe noted