Document:

<PAGE>

                                 EXHIBIT (4)(u)

                           FORM OF POLICY ENDORSEMENT
                            (MANAGED ANNUITY PROGRAM)
<PAGE>

                              [LETTERHEAD OF ABC]

                     GUARANTEED MINIMUM INCOME BENEFIT RIDER

This rider provides Your variable annuity with a minimum annuitization value
called the Minimum Income Base which can only be used with the Annuity Factors
shown in Schedule I of this rider. This Minimum Income Base is guaranteed by Us,
regardless of the performance of the variable annuity's investments.

This rider is attached to and made part of Your variable deferred annuity policy
as of the Rider Date. Policy refers to the individual policy if the rider is
attached to an individual annuity or the group certificate if the rider is
attached to a group annuity. This rider may only be terminated as provided
herein. This rider is subject to all of the provisions in the policy that do not
conflict with the provisions of this rider. The Rider Payment Options provide
for variable annuity payments. Subsequent payments may fluctuate with the
investment performance of Your annuity Subaccounts, but will never be less than
the initial payment.

Policy Number:             123456         Rider Date        07-15-2000

Age on Rider Date:         35             Minimum Income
                                          Base on Rider Date*: $100,000

Annual Growth Rate:        3.00%          Guaranteed Minimum Income Benefit:
                                          Last Date to Elect Benefit: 07-15-2059

Rider Fee Percentage:      0.50%

Rider Fee Waiver
Threshold:                 250%

Guaranteed Minimum
Payment Fee:               2.25%

The Mortality and Expense Risk Fee and Administrative Charge after the Election
Date will be the sum of the Mortality and Expense Risk Fee and Administrative
Charge effective after the Annuity Commencement Date shown on the Policy
Specification Page, plus an additional Mortality and Expense Risk Fee and
Administrative Charge, called the Guaranteed Minimum Payment Fee, shown above.

Election Date         Age       Minimum Income       Guaranteed Minimum
                                   Benefit*           Monthly Payment**
-------------         ---       --------------       ------------------

07/15/2001             36         $103,000.00              $306.64
07/15/2002             37         $106,090.00              $320.17
07/15/2003             38         $109,272.70              $334.70
07/15/2004             39         $112,550.88              $350.34
07/15/2005             40         $115,927.41              $367.23
07/15/2006             41         $119,405.23              $385.52
07/15/2007             42         $122,987.39              $405.34
07/15/2008             43         $126,677.01              $426.86
07/15/2009             44         $130,477.32              $450.24
07/15/2010             45         $134,391.64              $475.67

07/15/2015             50         $155,796.74              $592.03

07/15/2020             55         $180,611.12              $745.92

*Assumes no further payments following the Rider Date, premium tax, and no
withdrawals. This amount may only be used for annuitization with the Rider
Payment Options provided in this rider.

** Assumes the Minimum Income Base shown is applied to a life with 10 year
certain Rider Payment Option with monthly payments. If Election Date is less
than 10 years after the Rider Date, assumes Age Adjustment is applied as
described on page 4 of this rider.

RGMI 15 0301

                                       1
<PAGE>

DEFINITIONS
The following definitions used in this Rider are for reference only.

Adjusted Policy Value
The Policy Value increased or decreased by an Excess Interest Adjustment, if
applicable, as defined in Your deferred annuity policy.

Annuitant
The Annuitant is designated on the Policy Specifications Page. The variable
annuity payments are paid to the Annuitant (or surviving Joint Annuitant).

Annuity Factor
A factor for the applicable Annuitant age, sex and Rider Payment Option shown in
Schedule I or Schedule II of this rider. For the Rider Payment Option chosen,
the Annuity Factor from Schedule I and the Minimum Income Base will be used to
determine the first annuity payment. Factors not shown are available from us
upon request. Schedule I and Schedule II factors are based on the Annuity 2000
(male, female, and unisex if required by law) mortality table projected for
improvement using projection scale G, assuming an annuity commencement date of
2005. See the Annuity Factor Age Adjustment to determine the appropriate age to
use with the Schedule I factor.

Election Date
The date we receive in our Home Office all information necessary for You to
elect to begin receiving Guaranteed Minimum Income Benefit payments. The
Election Date must be within 30 days following a Rider Anniversary. The last
date to elect a Rider Payment Option is shown on page one of this rider.

Minimum Income Base
The amount we will use to determine the Guaranteed Minimum Income Benefit
payments.

Rider Anniversary
The anniversary of the Rider Date for each year the rider remains in force.

Rider Date
The date that this rider is added to the policy. This is also the date that You
most recently upgraded the Minimum Income Base, as described in the Minimum
Income Base Upgrade section on page 3, if applicable.

Rider Year
The 12 month periods following the Rider Date shown on page one of this rider.
The first Rider Year starts on the Rider Date. Each subsequent Rider Year starts
on the anniversary of the Rider Date.

Supportable Payment
The Supportable Payment is equal to the number of variable annuity units in the
selected Subaccounts multiplied by the variable annuity unit values in those
Subaccounts on the date the payment is calculated.

GUARANTEED MINIMUM INCOME BENEFIT
On the Election Date, You may use the Minimum Income Base and the applicable
Schedule I Annuity Factor to provide variable payments to the Annuitant. The
first variable payment is determined by multiplying each $1,000 of Minimum
Income Base by the Annuity Factor on Schedule I. On each anniversary of Your
Initial variable annuity payment, the stabilized variable annuity payment (for
the year just about to begin) will be equal to the greater of a) the supportable
payment or b) the initial variable annuity payment, if greater.

Number of Annuity Units:
      On the Election Date, the number of annuity units in each subaccount is
      determined by dividing the first variable annuity payment allocated to the
      subaccount by the variable annuity unit value of that subaccount on the
      Election Date. The number of variable annuity units in effect at any time
      after annuity payments begin is equal to (1) plus (2) minus (3) where:
      (1) is the number of annuity units in effect on the Election Date;
      (2) is the number of any annuity units purchased after the Election Date
          (described below under "Purchase/Redemption of Annuity Units"); and
      (3) is the number of any annuity units redeemed after the Election Date
          (described below under "Purchase/Redemption of Annuity Units").

Mortality and Expense Risk Fee and
Administrative Charge:
     For all variable annuity payments after the first variable annuity payment,
     an annual Mortality and Expense Risk Fee and Administrative Charge will be
     charged. This fee may be different than the Mortality and Expense Risk Fee
     and Administrative Charge in effect for Your deferred annuity policy prior
     to the Election Date. It will be equal to the "Mortality and Expense Risk
     Fee and Administrative Charge effective after the Annuity Commencement
     Date" shown on the Policy Specification Page, plus an additional Mortality
     and Expense Risk Fee and Administrative Charge, called the Guaranteed
     Minimum Payment Fee, shown on page one of this rider. This Guaranteed
     Minimum Payment Fee is used to fund the stabilization and guaranteed
     minimum payment features described below.

Stabilized variable annuity payments, calculated on each anniversary of the
initial variable annuity payment, may fluctuate in accordance with the
investment performance of Your annuity Subaccounts. However, such payments will
never be less than the initial variable annuity payment.

RGMI 15 0301

                                       2
<PAGE>

MINIMUM INCOME BASE
The Minimum Income Base is used to determine Your Guaranteed Minimum Income
Benefit payments.

On the Rider Date, the Minimum Income Base is the Policy Value of that date.
After the Rider Date, the Minimum Income Base will be equal to (A) plus (B) less
(C) where:
(A)    is the Minimum Income Base on the Rider Date, accumulated at the
       effective Annual Growth Rate as shown on page one of this rider;
(B)    is any additional premium payments made after the Rider Date, accumulated
       from their payment date(s) at the effective Annual Growth Rate as shown
       on page one of this rider; and
(C)    is the gross policy Withdrawals since the Rider Date (adjusted as
       described below), accumulated from the withdrawal dates(s) at the
       effective Annual Growth Rate, plus any applicable premium taxes.

On the Election Date, if the Adjusted Policy Value is greater than the Minimum
Income Base, we will increase Your Minimum Income Base to be equal to Your
Adjusted Policy Value at that time. You may only use the Minimum Income Base
with the Rider Payment Options in this rider. You may not use the Minimum Income
Base with the Annuity Payment Options listed in Your policy.

Withdrawals:
In any Rider Year, the Minimum Income Base will only be reduced by the same
amount that Your Policy Value is reduced as long as the Withdrawal does not
exceed a maximum annual amount. Amounts withdrawn in excess of the maximum
annual amount will reduce the Minimum Income Base by an amount equal to (A)
divided by (B) multiplied by (C) where:

(A)    is the amount of the excess withdrawal (that is, the portion of the gross
       withdrawal which exceeds the maximum annual amount);
(B)    is the Policy Value after the current Rider Year maximum annual amount
       has been withdrawn, but immediately prior to the Withdrawal of the excess
       portion; and
(C)    is the Minimum Income Base after the current Rider Year maximum annual
       amount has been withdrawn, but prior to Withdrawal of the excess portion.

For each Rider Year, the maximum annual amount is equal to the Minimum Income
Base, as of the beginning of the Rider Year, multiplied by the effective Annual
Growth Rate as shown on page one of this rider. Withdrawals during a Rider Year
will reduce the available maximum annual amount by the same amount that Your
Policy Value is reduced.

RIDER FEE
We will deduct a fee from the Policy Value on each Rider Anniversary and on the
termination date of this rider. The Rider Fee is the Minimum Income Base at the
time the fee is deducted, multiplied by the Rider Fee Percentage shown on the
first page of this rider. The fee will be deducted from each investment option
in proportion to the amount of Policy Value in each investment option. If the
date this fee is deducted for termination of this rider is a date other than a
Rider Anniversary, then the fee will be prorated for the portion of the Rider
Year which has passed. This fee will not be deducted after the Election Date.

WAIVER OF RIDER FEE
If the Policy Value at the time a rider fee is assessed equals or exceeds an
amount equal to the Rider Fee Waiver Threshold (shown on page one of this rider)
multiplied by the Minimum Income Base on the date the fee is assessed, the rider
Fee will be waived.

MINIMUM INCOME BASE UPGRADE
The owner may elect, in writing, to upgrade the Minimum Income Base to the
Policy Value at any time after the first Rider Anniversary. This allows the
owner to increase the Minimum Income Base to equal the Policy Value on the new
Rider Date if it is greater than the Minimum Income Base. This value is then the
new Minimum Income Base, and continues to grow as described above.

If an upgrade is elected, this rider will terminate and a new rider available at
that time will be issued with a new Rider Date and its own fees and guaranteed
benefits. The features which may change include but are not limited to:
1)     a new Rider Date, which will be the date the Company receives all
       information necessary to process the upgrade;
2)     a new annual Rider Fee Percentage, which may be different than this
       rider's, but will never be greater than 0.50%;
3)     a new Rider Fee Waiver Threshold, which may also be different than this
       rider's, but will never be greater than 250%; and
4)     the Annual Growth Rate, which may be different than this rider's, but
       will never be less than 3.0%.

RIDER PAYMENT OPTIONS
The minimum Income Base and applicable Annuity Factors from Schedule I may be
applied to the following payment options:

    Life Income - An election may be made for "No Period Certain" or "10 Years
    Certain". In the event of the death of the person receiving payments prior
    to the end of the 10 year period certain, the remaining period certain
    payments will be continued to the beneficiary.

    Joint and Full Survivor - An election may be made for "No Period Certain" or
    "10 Years Certain". Payments will be made as long as either the Annuitant or
    Joint Annuitant is living. In the event of the death of both the Annuitant
    and the Joint Annuitant prior to the end of the 10 year period certain, the
    remaining period certain payments will be continued to the beneficiary.

RGMI 15 0301

                                       3

<PAGE>

ANNUITY FACTOR AGE ADJUSTMENT
The age used to determine the appropriate annuity factor from Schedule I is
referred to as the Adjusted Age nearest birthday, and is equal to (a) less (B)
as follows:
(A)    is the current age nearest birthday of the Annuitant on the Election
       Date. If the Annuitant's age nearest birthday is at least 85 on the
       Election Date, this number will equal 85;and;
(B)    is equal to the Age Adjustment in the following table corresponding to
       the number of complete Rider Years that have elapsed since the Rider
       Date.

     Number of Complete
       Years Since the        Age Adjustment
          Rider Date

           1                             9
           2                             8
           3                             7
           4                             6
           5                             5
           6                             4
           7                             3
           8                             2
           9                             1
       10 or more                        0

GUARANTEED MINIMUM PAYMENT
Following the Election Date, the owner will receive guaranteed minimum payments.
The annual Mortality and Expense Risk Fee and Administrative Charge for these
payments is equal to the "Mortality and Expense Risk Fee and Administrative
Charge effective after the Annuity Commencement Date" shown on the Policy
Specification Page, plus the Guaranteed Minimum Payment Fee shown on page one of
this rider.

The first payment is based on the Annuity Factors in Schedule I. We guarantee
that each subsequent payment will be equal to or greater than Your initial
payment.

During the first Year following the Election Date, each variable annuity payment
will be stabilized to equal the initial payment. On each anniversary of Your
initial variable annuity payment, the stabilized variable annuity payment will
be increased or decreased (but never below the initial payment) and held level
for that year. The stabilized variable annuity payment will equal the greater of
the initial variable annuity payment or the Supportable Payment at that time.

If the Supportable Payment (at any payment date) is greater that the stabilized
payment for that year, the excess will be used to purchase additional annuity
units (using the attained age factors in Schedule II) as described below. If the
Supportable Payment (at any payment date) is less than the stabilized payment
for that year, annuity units will be redeemed as described below to fund the
deficiency.

Purchase/Redemption of Annuity Units:
     The number of annuity units purchased or redeemed is equal to the annuity
     income purchased or redeemed, respectively, divided by the annuity unit
     value for each respective Subaccount. Purchases and redemptions of annuity
     income will be allocated to each Subaccount on a proportionate basis. The
     amount of annuity income purchased or redeemed is the difference between
     the Supportable Payment and the stabilized variable annuity payment, times
     the attained age nearest birthday Annuity Factors shown in Schedule II
     Annuity Factor will reflect the remaining number of years certain, if any.

The Company bears the risk that it will need to make payments if all annuity
units have been redeemed in an attempt to maintain the stabilized payment at the
initial payment level. In such an event, the Company will make all future
payments equal to the initial payment.

ASSIGNMENT
Payments made under this rider may not be pledged or assigned. Payments will
only be made to the Annuitant or Joint Annuitant named in the policy.

TERMINATION
This rider will be terminated upon the earliest of:
a.     the Election Date;
b.     30 days after the Last Date to Elect Benefit shown on the first page of
       this rider;
c.     the date the policy terminates;
d.     the date You notify Us in writing of Your intention to terminate this
       rider (may not be before the first Rider Anniversary);
e.     the date You elect to apply the Adjusted Policy Value to annuitize this
       policy using the Policy's payment options; and
e.     the date You elect to upgrade Your Minimum Income Base.

This rider cannot be terminated prior to the earliest of the above dates.

                        Signed for us at our home office.

                  ABC                        ABC

               SECRETARY                  PRESIDENT

RGMI 15 0301

                                       4
<PAGE>

                          SCHEDULE 1 - ANNUITY FACTORS

The amounts shown in these tables are the Annuity Factors for each $1,000 of the
Minimum Income Base and are based on a 3% Assumed Investment Return.

  ---------------------------------------------------------------------
            Monthly Annuity Factor For     Monthly Annuity Factor For
           Life With No Period Certain    Life With 10 Years Certain
  ---------------------------------------------------------------------
   Age*      Male    Female     Unisex     Male      Female    Unisex
  ---------------------------------------------------------------------
     50      $3.82     $3.70   $3.74       $3.80     $3.69     $3.72
     51       3.89      3.76    3.80        3.86      3.74      3.78
     52       3.95      3.81    3.86        3.92      3.80      3.84
     53       4.02      3.88    3.92        3.99      3.86      3.90
     54       4.10      3.94    3.99        4.06      3.92      3.96
     55       4.18      4.01    4.06        4.13      3.99      4.03
     56       4.26      4.08    4.14        4.21      4.06      4.10
     57       4.35      4.16    4.22        4.29      4.13      4.18
     58       4.44      4.24    4.30        4.38      4.21      4.26
     59       4.54      4.33    4.39        4.47      4.29      4.35
     60       4.64      4.42    4.49        4.57      4.38      4.44
     61       4.76      4.52    4.59        4.67      4.47      4.53
     62       4.88      4.63    4.70        4.78      4.57      4.63
     63       5.01      4.74    4.82        4.89      4.67      4.74
     64       5.15      4.86    4.94        5.01      4.78      4.85
     65       5.30      4.98    5.08        5.14      4.89      4.97
     66       5.46      5.12    5.22        5.27      5.02      5.09
     67       5.63      5.27    5.37        5.41      5.14      5.22
     68       5.81      5.42    5.54        5.55      5.28      5.36
     69       6.00      5.59    5.71        5.70      5.42      5.51
     70       6.21      5.78    5.90        5.86      5.58      5.66
     71       6.43      5.97    6.11        6.02      5.74      5.82
     72       6.66      6.19    6.33        6.18      5.90      5.99
     73       6.91      6.42    6.56        6.35      6.08      6.16
     74       7.18      6.67    6.82        6.53      6.26      6.34
     75       7.46      6.94    7.09        6.70      6.45      6.53
     76       7.77      7.23    7.39        6.88      6.65      6.72
     77       8.10      7.55    7.71        7.07      6.85      6.91
     78       8.45      7.89    8.05        7.25      7.05      7.11
     79       8.83      8.26    8.43        7.43      7.26      7.31
     80       9.23      8.66    8.83        7.61      7.46      7.51
     81       9.66      9.10    9.27        7.79      7.66      7.70
     82      10.13      9.57    9.74        7.97      7.86      7.89
     83      10.62     10.09   10.24        8.13      8.05      8.07
     84      11.15     10.64   10.79        8.29      8.23      8.25
     85      11.72     11.24   11.38        8.44      8.40      8.41
  ---------------------------------------------------------------------

<TABLE>
<CAPTION>
                                              Monthly Annuity Factor For Joint and Full Survivor
-------------------------------------------------------------------------------------------------------------------------------
                                                            Age of Female Annuitant*
     Age of
               ----------------------------------------------------------------------------------------------------------------
      Male           15 Years         12 Years        9 Years        6 Years          3 Years       Same As         3 Years
                    Less Than        Less Than       Less Than      Less Than        Less Than        Male         More Than
   Annuitant*          Male            Male            Male           Male             Male                           Male
-------------------------------------------------------------------------------------------------------------------------------
   <S>              <C>              <C>             <C>            <C>              <C>           <C>             <C>
       50              $3.06           $3.12           $3.19          $3.25            $3.31          $3.38          $3.44
       55               3.20            3.27            3.35           3.44             3.52           3.61           3.69
       60               3.37            3.47            3.57           3.68             3.79           3.91           4.02
       65               3.59            3.72            3.86           4.01             4.16           4.32           4.47
       70               3.88            4.06            4.25           4.45             4.67           4.89           5.11
-------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
               Monthly Annuity Factor For Unisex Joint and Full Survivor with 10 Year Period Certain
-------------------------------------------------------------------------------------------------------------------------------
                                               Age of Joint Annuitant*
     Age of
                 --------------------------------------------------------------------------------------------------------------
      First          15 Years        12 Years        9 Years         6 Years         3 Years        Same As        3 Years
                     Less Than       Less Than       Less Than    Less Than First    Less Than        First        More Than
   Annuitant*          First           First          First                           First                         First
-------------------------------------------------------------------------------------------------------------------------------
   <S>                <C>            <C>             <C>           <C>              <C>             <C>            <C>
       50              $3.07           $3.13           $3.19          $3.25            $3.31          $3.37          $3.43
       55               3.20            3.28            3.36           3.44             3.52           3.60           3.67
       60               3.38            3.48            3.58           3.68             3.79           3.89           4.00
       65               3.61            3.73            3.87           4.01             4.16           4.30           4.44
       70               3.90            4.07            4.26           4.46             4.66           4.86           5.05
-------------------------------------------------------------------------------------------------------------------------------
*Adjusted Age nearest birthday
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Dollar amounts of monthly, quarterly, semi-annual, and annual installments not
shown in the above tables will be calculated on the same basis as those shown
and may be obtained from the Company.

RGMI-SCH1

<PAGE>

                          SCHEDULE II - ANNUITY FACTORS

 The amounts shown in these tables are the Annuity Factors for each $1,000 and
                 are based on a 5% Assumed Investment Return.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                  Monthly Annuity Factor For Life          Monthly Annuity Factor For Life
                      With No Period Certain                    With 10 Years Certain
-----------------------------------------------------------------------------------------------
   Age*          Male          Female        Unisex         Male         Female       Unisex
   <S>           <C>           <C>           <C>            <C>          <C>          <C>
    50           $5.07         $4.93         $4.98          $5.04          $4.92        $4.95
    51            5.13          4.99          5.03           5.09           4.96         5.00
    52            5.19          5.04          5.08           5.15           5.01         5.05
    53            5.26          5.10          5.14           5.21           5.07         5.11
    54            5.33          5.16          5.21           5.27           5.12         5.17
    55            5.40          5.22          5.27           5.34           5.18         5.23
    56            5.48          5.29          5.35           5.41           5.25         5.30
    57            5.57          5.36          5.42           5.49           5.32         5.37
    58            5.66          5.44          5.50           5.57           5.39         5.44
    59            5.75          5.52          5.59           5.66           5.47         5.52
    60            5.85          5.61          5.68           5.75           5.55         5.61
    61            5.97          5.70          5.78           5.85           5.63         5.70
    62            6.09          5.81          5.89           5.95           5.72         5.79
    63            6.21          5.91          6.00           6.06           5.82         5.89
    64            6.35          6.03          6.13           6.17           5.92         6.00
    65            6.50          6.16          6.26           6.29           6.03         6.11
    66            6.66          6.29          6.40           6.42           6.15         6.23
    67            6.83          6.43          6.55           6.55           6.27         6.36
    68            7.01          6.59          6.71           6.69           6.40         6.49
    69            7.21          6.76          6.89           6.83           6.54         6.63
    70            7.41          6.94          7.08           6.98           6.69         6.77
    71            7.63          7.14          7.28           7.13           6.84         6.93
    72            7.87          7.35          7.50           7.28           7.00         7.09
    73            8.12          7.58          7.74           7.45           7.17         7.25
    74            8.39          7.83          8.00           7.61           7.34         7.42
    75            8.68          8.11          8.28           7.78           7.52         7.60
    76            8.99          8.40          8.58           7.95           7.71         7.78
    77            9.32          8.72          8.90           8.12           7.90         7.97
    78            9.68          9.07          9.25           8.29           8.09         8.16
    79           10.06          9.45          9.63           8.47           8.29         8.34
    80           10.47          9.85         10.04           8.64           8.48         8.53
    81           10.91         10.30         10.48           8.80           8.67         8.71
    82           11.38         10.78         10.96           8.97           8.86         8.89
    83           11.88         11.30         11.47           9.12           9.04         9.06
    84           12.42         11.87         12.03           9.27           9.21         9.23
    85           12.99         12.48         12.63           9.41           9.37         9.38
-----------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                     Monthly Annuity Factor For Joint and Full Survivor
----------------------------------------------------------------------------------------------------------------------------
                                                          Age of Female Annuitant*
    Age of
               -------------------------------------------------------------------------------------------------------------
     Male          15 Years        12 Years       9 Years         6 Years          3 Years        Same As      3 Years
                   Less Than      Less Than      Less Than       Less Than         Less Than       Male        More Than
  Annuitant*         Male           Male            Male            Male             Male                         Male
----------------------------------------------------------------------------------------------------------------------------
  <S>              <C>            <C>            <C>             <C>              <C>            <C>          <C>
      50             $4.37          $4.42           $4.46           $4.51           $4.56          $4.62          $4.67
      55              4.48           4.54            4.60            4.67            4.74           4.81           4.88
      60              4.62           4.70            4.79            4.88            4.98           5.08           5.18
      65              4.81           4.92            5.04            5.17            5.31           5.46           5.61
      70              5.07           5.23            5.40            5.59            5.79           6.00           6.22
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                             Monthly Annuity Factor For Unisex Joint and Full Survivor
----------------------------------------------------------------------------------------------------------------------------
                                                          Age of Joint Annuitant*
    Age of
             ---------------------------------------------------------------------------------------------------------------
     First         15 Years        12 Years        9 Years         6 Years         3 Years        Same As       3 Years
                   Less Than      Less Than       Less Than       Less Than       Less Than        First        More Than
  Annuitant*         First          First           First           First           First                         First
----------------------------------------------------------------------------------------------------------------------------
  <S>             <C>            <C>              <C>             <C>             <C>             <C>           <C>
      50             $4.38          $4.42           $4.47           $4.51           $4.56          $4.61          $4.66
      55              4.48           4.54            4.60            4.67            4.73           4.80           4.87
      60              4.63           4.70            4.79            4.88            4.97           5.07           5.16
      65              4.82           4.93            5.05            5.17            5.30           5.44           5.57
      70              5.09           5.24            5.41            5.59            5.78           5.97           6.16
----------------------------------------------------------------------------------------------------------------------------
*Age nearest birthday
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Dollar amounts of monthly, quarterly, semi-annual, and annual installments not
shown in the above tables will be calculated on the same basis as those shown
and may be obtained from the Company.

RGMI-SCH-2Exhibit 10.7 - NSC Financial Advisory and Consulting Agreement

NationalSecurities

     C O R P O R A T I O N

MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

 

FINANCIAL ADVISORY AND CONSULTING AGREEMENT

     This agreement ("Agreement") is made and entered into this 5th day of December 2000 between PERMA-FIX ENVIRONMENTAL SERVICES, INC, a Delaware corporation (the "Company"), and National Securities Corporation (the "Consultant").

     In consideration of and for the mutual promises and covenants contained herein, and for other good and valuable consideration (the receipt of which is hereby acknowledged) the parties hereto mutually agree and intend to be legally bound to the terms of this Agreement as follows:

     1.     Purpose.   The Company hereby retains the Consultant on a non-exclusive basis during the term specified to render consulting advice to the Company relating to financial, investment banking and merger/acquisition matters, upon the terms and conditions as set forth herein.

     2.     Terms and Consideration.  This Agreement shall be effective for a period of twelve months commencing on the date first written above (the "Engagement Period"), unless extended by mutual written agreement of the Company and the Consultant.  The Company shall issue to Consultant, upon execution of this Agreement, 250,000 common stock purchase warrants (the "Warrants") exercisable for a period of five (5) years, with exercise price of $1.50.  The Warrants shall be non-assessable, non-refundable and contain customary terms, including, but not limited to, piggyback registration rights, and cashless exercise provisions.  Additionally, the company shall issue 400,000 common stock purchase warrants (the "Warrants") exercisable for a period of five (5) years, with exercise
price of $1.75.  The Warrants shall be non-assessable, non-refundable and contain customary terms, including, but not limited to, piggyback registration rights, and cashless exercise provisions.

     3.     Financial Advisory Services of Consultant.  Consultant, based on its review of the Company to date, believes that it may assist the Company by performing the financial advisory services that are listed below and Consultant shall be limited to providing only those such financial advisory services to the Company.  In connection with Consultant providing such financial advisory services to the Company, the Company shall provide Consultant with any information that Consultant deems appropriate.  The Company hereby acknowledges that Consultant will be using and relying on said information without independent verification and that Consultant assumes no responsibility for the accuracy and completeness of any information provided

 

                                                                                                                              595
Shrewsbury Avenue, Shrewsbury, NJ

07702

                                                                                                                            Phone
732-741-8959  Fax 732-741-5476

NationalSecurities

     C O R P O R A T I O N

MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

 

to it by the Company.  In performance of these duties, the Consultant shall provide the Company with the benefits of its best judgment and efforts.  It is understood and acknowledged by the parties that the value of the Consultant's advice is not measurable in any quantitative manner, and that the Consultant shall not be obligated to spend any specific amount of time performing its duties hereunder.

          (a)  Providing Company exposure to the investment community at large through the 

                dissemination of
information.

          (b)  Assisting in the Company's financial public relations, by participating in discussions with 

                 the Company and the financial community.

          (c)  Advising the Company about its financial structure and that of its divisions or subsidiaries 

                or any of its projects, as such relate to the public market for the Company's equity 

                securities.

          (d)  Advising the Company with respect to acquisitions in connection with the possible
effects 

                on the public market for the Company's equity securities.

          (e)  Advising the Company on the public market for Company's securities and the timing             and 

                structure of any future public offering or private placement of its equity securities.

                Should the Company desire Consultant to provide any financial
advisory service(s) not 

                listed above, the Company and Consultant shall enter into an additional engagement letter 

                to be executed by the parties hereto at the commencement of the additional financial 

                advisory service(s) to be rendered by Consultant.

     4.   Consultant's Relationships with Others.  The Company acknowledges that the Consultant or its affiliates is in the business of providing financial, investment banking and merger/acquisition services and consulting advice (of all types contemplated by this Agreement) to others.  Nothing herein contained shall be construed to limit or restrict the Consultant in conducting such business  

with respect to others, or in rendering such advise to others.

 

 

                                                                                                                             595
Shrewsbury Avenue, Shrewsbury, NJ

07702

                                                                                                                              Phone
732-741-8959  Fax 732-741-5476

 

 

 

     5.  Confidential Information.  In connection with the rendering of services hereunder, Consultant has been or will be furnished with confidential information concerning the Company including, but not limited to, financial statements and information, cost and expense data, production data, trade secrets, marketing and customer data, and such other information not generally obtained from public or published information or trade sources.  Such information shall be deemed "Confidential Material" and, except as specifically provided herein, shall not be disclosed by Consultant without prior written consent of the Company.  In the event Consultant is required by applicable law or legal process to disclose any of the Confidential Material, it is agreed that Consultant will deliver to the Company prompt notice of such requirement prior to disclosure of same to permit the Company to seek an appropriate protective order and/or waive compliance of this provision.  If, in the absence of a protective order or receipt of written waiver, Consultant is nonetheless, in the written opinion of counsel, compelled to disclose any Confidential Material, Consultant may do so without liability hereunder provided that notice of such prospective disclosure is delivered to the Company prior to actual disclosure.  Following the termination of this Agreement and a written request by the Company, Consultant shall deliver to the Company all Confidential Material.

     6.  Consultant's Liability & Indemnification of Consultant by Company.  

  

         (a)  In the absence of gross negligence or willful misconduct on the part of Consultant or 

               Consultant's material breach of this Agreement, Consultant shall not be liable to the 

               Company or to any officer, director, employee, agent, representative, stockholder or 

               creditor of the Company for any action or omission of Consultant or any of its officers, 

               directors, employees, agents, representatives or stockholders in the course of, or in 

               connection with, rendering or performing any services hereunder.  Should Consultant be 

               found liable for any acts or omissions, the liability of Consultant pursuant to this 

              
Agreement shall be limited to the aggregate fees received by Consultant hereunder, 

               which shall not include any liability for incidental, consequential or punitive damages.  

  
         (b)  The Company agrees to indemnify Consultant in accordance with the provisions of 

               Annex A hereto, which is incorporated by reference in its entirety and made a part 

               hereof.

     7.  Termination.  This Agreement may be terminated at any time during the Engagement Period by Consultant upon five (5) days prior written notice to the Company, in the event that Consultant becomes aware of (i) any change in the business or operations of the Company which Consultant reasonably believes may adversely affect Consultant's ability to render the services contemplated hereunder, (ii) any misrepresentation by the Company with respect to the business operations, assets, condition (financial or otherwise), results of operations or prospects of the Company, or (iii) any breach by the Company of its obligations under this Agreement.

     This Agreement may be terminated by Company only in the event of a material breach by Consultant of its obligations hereunder, which breach remains uncured for a period of thirty days after written notice of the breach is provided to Consultant. 

     In the event of termination (i) this Agreement shall become void, without liability on the part of Consultant or its affiliates, directors, officers or stockholders, and (ii) Consultant shall be entitled to expenses it has incurred up to the date of such termination.

     Unless this Agreement is terminated or a new agreement is executed between Company and 

 

  
Page 3 of 7

 

 

 

 

 Consultant, at the end of the Engagement Period, this Agreement shall automatically be renewed and extended on a month-to-month basis.  At such time, either party may terminate the Agreement for any reason upon the provision of thirty days prior written notice.

      8.  Expenses.  The Company, upon receipt of appropriate supporting documentation, shall reimburse the Consultant for any and all reasonable out-of-pocket expenses incurred in connection with services provided to the Company including but not limited to legal, travel, lodging and meals, entertainment, postage, photocopying and long distance telephone expenses. The Company shall reimburse the Consultant within 15 days of receipt of supporting documentation. The Company hereby acknowledges that unless otherwise specifically stated herein, that neither Consultant, nor its directors, employees or agents is responsible for any fees or commissions payable now or in the future to any finder or to any other financial or other advisor utilized or retained by the Company.

     9.  Sales or Distributions of Securities.  If the Consultant assists the Company in the sale or distribution of securities, the Consultant shall receive fees and other forms of compensation as are customarily received by investment bankers in similar transactions.  Such public offering or private placement, undertaken by the Consultant on behalf of the Company, shall be subject to an additional agreement to be executed by the parties hereto at such time as is appropriate.

     10. Limitation Upon the Use of Advice and Services.

            (a)     No person or entity, other than the Company or any of its subsidiaries or directors or 

          officers of each of the foregoing, shall be entitled to make use of or rely upon the advice of 

            the Consultant to be given hereunder, and the Company shall not transmit such advice to, 

          or encourage or facilitate the use or reliance upon such advice by others without the prior 

          consent of the Consultant.

  
          (b)     Company hereby acknowledges that Consultant, for services rendered under this 

          Agreement, makes no commitment whatsoever to recommend or advise its clients to purchase 

          the securities of the Company.  Research reports that may be prepared by Consultant will, 

          when and if prepared, be based solely on the merits, and independent judgment of analysts 

          of the Consultant.

          (c)     Company hereby acknowledges that Consultant, for services rendered under this 

          Agreement, makes no commitment whatsoever to make a market in any of the Company's 

          securities on any stock exchange or in any electronic marketplace.  Any decision by 

          Consultant to make a market in any of the Company's securities shall be based solely on 

          the independent judgment of Consultant's traders and related supervisory personnel.

  
          (d)  Use of the Consultant's name in annual reports or any other report of the Company or 

          releases by the Company require the prior approval of the Consultant unless the Company is 

          required by law to include Consultant's name in such annual reports, other report or release 

          of the Company, in which event the Company shall furnish to Consultant copies of such annual

          reports or other reports or releases using Consultant's name in advance of publication by the

          Company, its affiliates or assigns.

     12. Discretion. Nothing contained herein shall require the Company to enter into any transaction presented to it by National, which decision shall be at the Company's sole discretion.

 

  
Page 4 of 7

 

 

     13.  Severability.  Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

     14.  Miscellaneous.

           (a)     Any notice or other communication between parties hereto shall be sufficiently given if 

           sent by certified or registered mail, postage prepaid, or faxed and confirmed if to the 

           Company, addressed to it at Perma-Fix Environmental Services Inc., 1940 N.W. 67th  

           Place, Suite A,
Gainsville, FL 32653  or if to the Consultant, addressed to it at 

           National Securities Corporation, 1001 Fourth Avenue, Suite 2200, Seattle, WA 98154. 

           Such notice or other communication shall be deemed to be given on the date of receipt.

 
          (b)     If the Consultant shall cease to do business, the provisions hereof relating to duties of the

          Consultant and compensation by the Company as it applies to the Consultant shall thereupon 

          cease to be in effect, except for the Company's obligation of payment of Warrants and 

          expenses as stated in this document.  This Agreement shall survive any merger of, acquisition 

          of, or acquisition by the Consultant and after any such merger or acquisition shall be binding 

          upon the Company and the corporation surviving such merger or acquisition.

 
          (c)     This Agreement embodies the entire agreement and understanding between the Company

          and the Consultant and supersedes any and all negotiations, prior discussions and preliminary 

          and prior agreements and understandings related to the central subject matter hereof.  

 
          (d)     This agreement has been duly authorized, executed and delivered by and on behalf of 

          the Company and the Consultant.

           (e)     This Agreement shall be construed and interpreted in accordance with the laws of the 

          State of Washington, without giving effect to its rules regarding conflicts of laws.

 
          (f)     There is no relationship of partnership, agency, employment, franchise or joint venture 

          between the parties.  Neither party has the authority to bind the other or incur any obligation 

          on its behalf.

 
          (g)    The Company hereby acknowledges that Consultant is not a fiduciary of the Company 

          and that Consultant makes no representations or warranties regarding Company's ability to 

          secure financing, whether now or in the future.
 
          (h)    This Agreement and the rights hereunder may not be assigned by Company without the 

          prior written consent of Consultant.  This Agreement may be assigned by Consultant, in whole

          of in part ,  at its discretion, without prior consent of Company.   This Agreement shall be 

          binding upon and inure to the benefit of the parties and their respective successors, 

          assigns and legal representatives.
 

 

Page 5 of 7

 

 

 

          (i)     The Company shall provide Consultant with a copy of the resolution of its Board of 

           Directors authorizing this engagement and specifically, the issuance of the Warrants and 

           underlining shares.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date hereof.

PERMA-FIX ENVIRONMENTAL                             NATIONAL SECURITIES

SERVICES INC.                                                           CORPORATION

                                                                                                                                                       

Name:  Louis Centofanti                                                   Name:  Steven A Rothstein

Title:    Chairman & CEO                                                 Title:     Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Page 6 of 7

 

ANNEX A

INDEMNIFICATION

           Recognizing that transactions of the type contemplated in this engagement sometimes result in litigation and that National Securities Corporation's ("National") role is advisory, PERMA-FIX ENVIRONMENTAL SERVICES INC. (the "Company") agrees to indemnify and hold harmless National, its affiliates (including Olympic Cascade Financial Corporation) and their respective officers, directors, employees, agents and controlling persons (collectively, the "Indemnified Parties"), from and against any losses, claims, damages and liabilities, joint or several, related to or arising in any manner out of any transaction, proposal or any other matter (collectively, the "Matters") contemplated by the engagement of National hereunder, and will promptly reimburse the Indemnified Parties for all expenses (including reasonable fees and expenses of legal counsel) as incurred in connection with the investigation of, preparation for, or defense of any pending or threatened claim related to or arising in any manner out of any Matter contemplated by the engagement of National hereunder, or any action or proceeding arising therefrom (collectively, "Proceedings"), whether or not such Indemnified Party is a formal party to any such Proceeding.  Notwithstanding the foregoing, the Company shall not be liable in respect of any losses, claims, damages, liabilities or expenses that a court of competent jurisdiction shall have determined by final judgment resulted solely from the gross negligence or willful misconduct of an Indemnified Party.  The Company further agrees that it will not, without the prior written consent of National, settle compromise or consent to the entry of any judgment in any pending or threatened Proceeding in respect of which indemnification may be sought hereunder (whether or not National or any Indemnified Party is an actual or potential party to such Proceeding), unless such settlement, compromise or consent includes an unconditional release of National and each other Indemnified Party hereunder from all liability arising out of such Proceeding.

           The Company agrees that if any indemnification or reimbursement sought pursuant to this letter were for any reason not to be available to any Indemnified Party or insufficient to hold it harmless as and to the extent contemplated by this letter, then the Company shall contribute to the amount paid or payable by such Indemnified Party in respect of losses, claims, damages and liabilities in such proportion as is appropriate to reflect the relative benefits to the Company and its stockholders on the one hand, and National on the other, in connection with the Matters to which such indemnification or reimbursement relates or, if such allocation is not permitted by applicable law, not only such relative benefits but also the relative faults of such parties as well as any other equitable considerations.  It is hereby agreed that the relative benefits to the Company and/or its stockholders and to National with respect to National's engagement shall be deemed to be in the same proportion as (i) the total value paid or received or to be paid or received by the Company and/or its stockholders pursuant to the Matters (whether or not consummated) for which National is engaged to render services bears to (ii) the fees paid to National in connection with such engagement.  In no event shall the Indemnified Parties contribute or otherwise be liable for an amount in excess of the aggregate amount of fees actually received by National pursuant to such engagement (excluding amounts received by National as reimbursement of the expenses).

 

 

 

Page 7 of 7

 

 

 

          The Company further agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with National's engagement hereunder except for losses, claims, damages, liabilities or expenses that a court of competent jurisdiction shall have determined by final judgment resulted solely from the gross negligence or willful misconduct of such Indemnified Party.  The indemnity, reimbursement and contribution obligations of the Company shall be in addition to any liability which the Company may otherwise have and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company or an Indemnified Party.

          The indemnity, reimbursement and contribution provisions set forth herein shall remain operative and in full force and effect regardless of (i) any withdrawal, termination or consummation of or failure to initiate or consummate any Matter referred to herein, (ii) any investigation made by or on behalf of any party hereto or any person controlling (within the meaning of Section 15 of the Securities Act of 1933 as amended, or Section 20 of the Securities Exchange Act of 1934, as amended) any party hereto, (iii) any termination or the completion or expiration of this letter of National's engagement and (iv) whether or not National shall, or shall not be called upon to, render any formal or informal advice in the course of such engagement.

 

 

 

 

 

 

Page 8 of 7

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