File Nos. 33-
811-05618
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. ( )
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ( )
Amendment No. 24 (X)
(Check appropriate box or boxes.)
ALLIANZ LIFE VARIABLE ACCOUNT B
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(Exact Name of Registrant)
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
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(Name of Depositor)
1750 Hennepin Avenue, Minneapolis, MN 55403
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 347-6596
Name and Address of Agent for Service
-------------------------------------
Michael T. Westermeyer
Allianz Life Insurance Company of North America
1750 Hennepin Avenue
Minneapolis, MN 55403
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Calculation of Registration Fee under the Securities Act of 1933: $500 -
Registrant is registering an indefinite number of securities under the
Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2.
=============================================================================
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CROSS REFERENCE SHEET
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C>
Item No. Location
PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . . . . Definitions
Item 3. Synopsis or Highlights. . . . . . . . . . . Highlights
Item 4. Condensed Financial Information. . . . . . . Not Applicable
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies. . . . . . . . . . . The Insurance Company;
The Variable Account;
Franklin Valuemark
Funds
Item 6. Deductions. . . . . . . . .. . . . . . . . . Charges and
Deductions
Item 7. General Description of Variable
Annuity Contracts . . . . . . . . . . . . . . The Contracts
Item 8. Annuity Period. . .. . . . . . . . . . . . . Annuity Provisions
Item 9. Death Benefit. . . . . . . . . . . . . . . . The Contracts;
Annuity Provisions
Item 10. Purchases and Contract Value. . . . . . . . Purchase Payments
and Contract Value
Item 11. Redemptions. . . . . . . . . . . . . . . . . Surrenders
Item 12. Taxes. . . . . . . . . . . . . . . . . . . . Tax Status
Item 13. Legal Proceedings. . . . . . . . . . . . . . Legal Proceedings
Item 14. Table of Contents of the Statement of Table of Contents
Additional Information. . . . . . . . . . . of the Statement of
Additional Informa-
tion
</TABLE>
CROSS REFERENCE SHEET (cont'd)
(Required by Rule 495)
<TABLE>
<CAPTION>
<S> <C>
Item No. Location
PART B
Item 15. Cover Page. . . . . . . . .. . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . . . The Company
Item 18. Services. . . . . . . . . . . . .. . . . . Not Applicable
Item 19. Purchase of Securities Being Offered. . . . Not Applicable
Item 20. Underwriters. . . . . . . . . . . . . . . . Distributor
Item 21. Calculation of Performance Data. . . . . . Calculation of
Performance Data
Item 22. Annuity Payments. . . . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements. . . . . . . . . . . Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item so numbered, in Part C to this Registration Statement.
PART A
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
Home Office: Valuemark Service Center:
1750 Hennepin Avenue 300 Berwyn Park
Minneapolis, MN 55403-2195 P.O. Box 3031
(800) 542-5427 Berwyn, PA 19312-0031
(800) 624-0197
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
______________, 1996
The Individual Flexible Payment Variable Annuity Contracts (the "Contracts")
described in this Prospectus provide for accumulation of Contract Values and
eventual payment of monthly annuity payments. The Contracts are designed to aid
individuals in long-term planning for retirement or other long-term purposes.
This is not appropriate as a trading vehicle.
The Contracts are available for retirement plans which do not qualify for the
special federal tax advantages available under the Internal Revenue Code
("Non-Qualified Plans") and for retirement plans which do qualify for the
federal tax advantages available under the Internal Revenue Code ("Qualified
Plans"). (See "Tax Status - Qualified Plans.") However, because of the minimum
purchase payment requirements, these Contracts may not be appropriate for some
periodic payment retirement plans.
Purchase payments for the Contracts will be allocated to a segregated investment
account of Allianz Life Insurance Company of North America (the "Insurance
Company") which account has been designated Allianz Life Variable Account B (the
"Variable Account") or to the Insurance Company's Fixed Account. THE FIXED
ACCOUNT MAY NOT BE AVAILABLE IN ALL STATES. IN CALIFORNIA, THE TEMPLETON
INTERNATIONAL SMALLER COMPANIES FUND AND THE CAPITAL GROWTH FUND ARE NOT
AVAILABLE UNTIL APPROVED BY THE CALIFORNIA INSURANCE DEPARTMENT.
(CHECK WITH YOUR AGENT REGARDING AVAILABILITY.)
The Variable Account invests in shares of Franklin Valuemark Funds (the
"Trust"). The Trust is a series fund with twenty-three Funds, twenty-one of
which are available under the Contracts: the Money Market Fund, the High Income
Fund, the Templeton Global Income Securities Fund, The U.S. Government
Securities Fund, the Zero Coupon Funds - 2000, 2005 and 2010, the Growth and
Income Fund, the Income Securities Fund, the Real Estate Securities Fund, the
Rising Dividends Fund, the Templeton Global Asset Allocation Fund, the Utility
Equity Fund, the Capital Growth Fund, the Precious Metals Fund, the Small Cap
Fund, the Templeton Developing Markets Equity Fund, the Templeton Global Growth
Fund, the Templeton International Equity Fund, the Templeton International
Smaller Companies Fund and the Templeton Pacific Growth Fund. Prior to May 1,
1996, the Templeton Global Income Securities Fund was known as the Global Income
Fund. See "Highlights" and "Tax Status" for a discussion of owner control of the
underlying investments in a variable annuity contract.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENT IN THE CONTRACTS IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF THE
CONTRACT OWNER'S INVESTMENT TO FLUCTUATE, AND WHEN THE CONTRACTS ARE
SURRENDERED, THE VALUE MAY BE HIGHER OR LOWER THAN THE PURCHASE PAYMENTS.
This Prospectus concisely sets forth the information a prospective investor
should know before investing. Additional information about the Contracts is
contained in the "Statement of Additional Information," which is available at no
charge. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. The
Table of Contents of the Statement of Additional Information can be found on the
last page of this Prospectus. For the Statement of Additional Information, call
or write the Home Office address shown above.
INQUIRIES: Any inquiries can be made by telephone or in writing to the
Insurance Company at the Home Office phone number or address listed above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS MUST BE ACCOMPANIED BY OR PRECEDED BY A CURRENT PROSPECTUS FOR
FRANKLIN VALUEMARK FUNDS.
This Prospectus and the Statement of Additional Information are dated
__________, 1996, and as may be amended from time to time.
This Prospectus should be kept for future reference.
In the State of Oregon, all references to Franklin Valuemark IV refer to
Valuemark IV.
CONTENTS
Page
DEFINITIONS
HIGHLIGHTS
FEE TABLE
THE INSURANCE COMPANY
THE VARIABLE ACCOUNT
FRANKLIN VALUEMARK FUNDS
DESCRIPTION OF THE FUNDS
General
Substitution of Securities
Voting Privileges
CHARGES AND DEDUCTIONS
Deduction for Contingent Deferred Sales Charge (Sales Load)
Reduction or Elimination of Contingent Deferred Sales Charge
Deduction for Mortality and Expense Risk Charge
Deduction for Administrative Charge
Deduction for Contract Maintenance Charge
Deduction for Transfer Fee
Deduction for Premium Taxes
Deduction for Income Taxes
Deduction for Trust Expenses
THE CONTRACTS
Ownership
Assignment
Beneficiary
Change of Beneficiary
Annuitant
Death of the Contract Owner During the Accumulation Period
Death Benefit Amount During the Accumulation Period
Death of the Annuitant Prior to the Income Date
Death of the Annuitant During the Annuity Period
ANNUITY PROVISIONS
Income Date
Change in Income Date and Annuity Option
Annuity Options
PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments
Allocation of Purchase Payments
Transfers of Contract Values
Dollar Cost Averaging
Asset Rebalancing Program
Automatic Investment Plan
Contract Value
Accumulation Unit
DISTRIBUTOR
SURRENDERS
Systematic Withdrawal Plan
Minimum Distribution Program
Suspension or Deferral of Payments Provision
ADMINISTRATION OF THE CONTRACTS
PERFORMANCE DATA
Money Market Sub-Account
Other Sub-Accounts
Hypothetical Performance
Performance Ranking
TAX STATUS
General
Diversification
Multiple Contracts
Contracts Owned by Other than Natural Persons
Tax Treatment of Assignments
Income Tax Withholding
Tax Treatment of Withdrawals - Non-Qualified Contracts
Qualified Plans
Tax Treatment of Withdrawals - Qualified Contracts
Limitations
FINANCIAL STATEMENTS
LEGAL PROCEEDINGS
TABLE OF CONTENTS OF
THE STATEMENT OF ADDITIONAL INFORMATION
DEFINITIONS
Account - The Fixed Account and/or one or more Sub-Accounts of the Variable
Account.
Accumulation Unit - An accounting unit of measure used to calculate the Contract
Value prior to the Income Date.
Accumulation Period - The period prior to the Income Date during which the
Contract Owner can make Purchase Payments.
Adjusted Contract Value - The Contract Value less any applicable Premium Tax.
This amount is applied to the applicable Annuity Table to determine the initial
Annuity Payment.
Age - Age last birthday unless otherwise specified.
Annuitant - The natural person upon whose continuation of life any Annuity
Payment involving life contingencies depends. The Annuitant may be changed at
any time prior to the Income Date unless the Contract Owner is not a natural
person. On or after the Income Date, any reference to Annuitant shall also
include any Joint Annuitant.
Annuity Option - An arrangement under which annuity payments are made under the
Contract.
Annuity Payments - The series of payments made to the Contract Owner or any
named payee after the Income Date under the Annuity Option selected.
Annuity Period - The period of time beginning on the Income Date during which
Annuity Payments are made.
Annuity Reserve - The assets which support the Annuity Option the Contract Owner
has selected during the Annuity Period.
Annuity Unit - An accounting unit of measure used to calculate Annuity Payments
after the Income Date.
Authorized Request - A request, in a form satisfactory to the Insurance Company,
which is received by the Valuemark Service Center.
Beneficiary - The person(s) or entity(ies) who will receive any death benefit
payable under the Contract.
Contract Anniversary - An anniversary of the Issue Date of the Contract.
Contract Owner - The person(s) or entity(ies) entitled to ownership rights
stated in the Contract. If Joint Owners are named, all references to Contract
Owner shall mean the Joint Owners.
Contract Surrender Value - The Contract Value less any applicable Premium Tax,
less any Contingent Deferred Sales Charge and less any applicable Contract
Maintenance Charge.
Contract Value - The dollar value as of any Valuation Date of all amounts
accumulated under the Contract.
Contract Year - A period of twelve (12) months commencing with the Issue Date
and each Contract Anniversary thereafter.
Eligible Investment(s) - An investment entity which can be selected by the
Contract Owner to be the underlying investment of the Contract.
Fixed Account - An investment option within the General Account which may be
selected during the Accumulation Period.
Fund - A segment of an Eligible Investment which constitutes a separate and
distinct class of interests under an Eligible Investment.
General Account - The Insurance Company's general investment account which
contains all the assets of the Insurance Company with the exception of the
Variable Account and other segregated asset accounts.
Income Date - The date on which Annuity Payments are to begin.
Insurance Company - Allianz Life Insurance Company of North America at its
Valuemark Service Center shown on the cover page of this Prospectus.
Issue Date - The date on which the first Contract Year begins.
Joint Owner - If there is more than one Contract Owner, each Contract Owner
shall be a Joint Owner of the Contract. Joint Owners have equal ownership rights
and must both authorize any exercising of those ownership rights unless
otherwise allowed by the Insurance Company. Any Joint Owner must be the spouse
of the other Joint Owner (except in Pennsylvania).
Non-Qualified Contracts - Contracts issued under Non-Qualified Plans which do
not receive favorable tax treatment under Sections 401, 403(b) or 408 of the
Internal Revenue Code of 1986, as amended (the "Code").
Premium Tax - Any premium taxes owed to any governmental entity and assessed
against Purchase Payments or Contract Value.
Purchase Payment - A payment made by a Contract Owner toward the Contract.
Qualified Contracts - Contracts issued under Qualified Plans which receive
favorable tax treatment under Sections 401, 403(b) or 408 of the Code.
Sub-Account - Variable Account assets are divided into Sub-Accounts. Assets of
each Sub-Account are invested in shares of an Eligible Investment or Fund.
Valuation Date - The Variable Account will be valued each day that the New York
Stock Exchange is open for trading, which is Monday through Friday, except for
normal business holidays.
Valuation Period - The period commencing at the close of business of the New
York Stock Exchange on each Valuation Date and ending at the close of business
for the next succeeding Valuation Date.
Valuemark Service Center - The office indicated on the cover page of this
Prospectus to which notices and requests must be sent. All sums payable to the
Insurance Company under the Contract are payable only at the Valuemark Service
Center.
Variable Account - A separate investment account maintained by the Insurance
Company, designated as Allianz Life Variable Account B, in which Purchase
Payments may be allocated.
HIGHLIGHTS
Purchase payments for the Contracts will be allocated to a segregated investment
account of Allianz Life Insurance Company of North America (the "Insurance
Company") which has been designated Allianz Life Variable Account B (the
"Variable Account") or to the Insurance Company's Fixed Account. THE FIXED
ACCOUNT MAY NOT BE AVAILABLE IN ALL STATES. IN CALIFORNIA, THE TEMPLETON
INTERNATIONAL SMALLER COMPANIES FUND AND THE CAPITAL GROWTH FUND ARE NOT
AVAILABLE UNTIL APPROVED BY THE CALIFORNIA INSURANCE DEPARTMENT. (CHECK WITH
YOUR AGENT REGARDING AVAILABILITY.) The Variable Account invests in shares of
Franklin Valuemark Funds (the "Trust"). (See "Franklin Valuemark Funds.")
CONTRACT OWNERS BEAR THE INVESTMENT RISK FOR ALL AMOUNTS ALLOCATED TO THE
VARIABLE ACCOUNT.
The Contract may be returned within 10 days (or for a longer period in states
where required) after it is received ("Free Look Period"). It can be mailed or
delivered to either the Insurance Company or the agent who sold it. Return of
the Contract by mail is effective on being postmarked, properly addressed and
postage prepaid. The returned Contract will be treated as if the Insurance
Company had never issued it. The Insurance Company will promptly refund the
Contract Value in states where permitted. This may be more or less than the
Purchase Payments. In states where required and where the Contract is purchased
pursuant to an Individual Retirement Annuity, the Insurance Company will
promptly refund the Purchase Payments, less any withdrawals. The Insurance
Company has reserved the right to allocate initial Purchase Payments to the
Money Market Sub-Account (except those allocated to the Fixed Account) until the
expiration of the Free Look Period. If the Insurance Company does so allocate
the initial Purchase Payments to the Money Market Sub-Account, it will refund
the greater of the Purchase Payments, less any withdrawals, or the Contract
Value. It is the Insurance Company's current practice to directly allocate the
initial Purchase Payments to the Sub-Accounts and/or to the Fixed Account as
selected by the Contract Owner.
A Contingent Deferred Sales Charge (sales load) may be deducted in the event of
a surrender. The Contingent Deferred Sales Charge is imposed on surrenders of
Purchase Payments within seven (7) years after their being made. Each Contract
Year after the first Contract Year, Contract Owners may, on a non-cumulative
basis, surrender amounts from the Contract Value without incurring a Contingent
Deferred Sales Charge of an amount up to 15% of the Contract Value, less any
previous Free Surrender amount withdrawn during that Contract Year. The
Contingent Deferred Sales Charge will vary in amount, depending upon the
Contract Year in which the Purchase Payment being surrendered was made. The
Insurance Company currently makes available a Systematic Withdrawal Plan and a
Minimum Distribution Program which allow for additional options in some
instances. (See "Surrenders - Systematic Withdrawal Plan" and "Surrenders
Minimum Distribution Program.") The Contingent Deferred Sales Charge is found in
the Fee Table. See also "Charges and Deductions - Deduction for Contingent
Deferred Sales Charge (Sales Load)." The maximum Contingent Deferred Sales
Charge is 6% of Purchase Payments. For purposes of determining the applicability
of the Contingent Deferred Sales Charge, surrenders are deemed to be on a
first-in, first-out basis.
There is a Mortality and Expense Risk Charge which is equal, on an annual basis,
to 1.34% of the average daily net assets of the Variable Account during
the Accumulation Period and 1.25% of the average daily net assets of the
Variable Account during the Annuity Period. This charge compensates the
Insurance Company for assuming the mortality and expense risks under the
Contracts. (See "Charges and Deductions - Deduction for Mortality and Expense
Risk Charge.")
There is an Administrative Charge which is equal, on an annual basis, to 0.15%
of the average daily net assets of the Variable Account. This charge
compensates the Insurance Company for costs associated with the administration
of the Contracts and the Variable Account. (See "Charges and Deductions -
Deduction for Administrative Expense Charge.")
There is an annual Contract Maintenance Charge of $30 each Contract Year. (See
"Charges and Deductions - Deduction for Contract Maintenance Charge.")
Premium Taxes or other taxes payable to a state or other governmental entity
will be charged against Contract Values. (See "Charges and Deductions -
Deduction for Premium Taxes.")
Under certain circumstances, there may be assessed a Transfer Fee when a
Contract Owner transfers Contract Values. The Transfer Fee is the lesser of
$25 or 2% of the amount transferred. (See "Charges and Deductions - Deduction
for Transfer Fee.")
There is a ten percent (10%) federal income tax penalty that may be applied to
the income portion of any distribution from the Contracts. However, the penalty
is not imposed under certain circumstances. See "Tax Status - Tax Treatment of
Withdrawals - Non-Qualified Contracts" and "Tax Treatment of Withdrawals -
Qualified Contracts." For a further discussion of the taxation of the Contracts,
see "Tax Status."
Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (as defined in Section 403(b)(11) of the Code) are limited
to circumstances only when the Contract Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value which represents contributions made by the Contract Owner and
does not include any investment results. The limitations on withdrawals became
effective on January 1, 1989 and only apply to (i) salary reduction
contributions made after December 31, 1988; (ii) to income attributable to such
contributions; and (iii) to amounts held as of December 31, 1988. The
limitations on withdrawals do not affect rollovers or transfers between certain
Qualified Plans. Contract Owners should consult their own tax counsel or other
tax adviser regarding distributions. (See "Tax Status - Tax Sheltered Annuities
- - Withdrawal Limitations".)
The Treasury Department has indicated that guidelines may be forthcoming under
which a variable annuity contract will not be treated as an annuity contract for
tax purposes if the owner of the contract has excessive control over the
investment underlying the contract. The issuance of such guidelines may require
the Insurance Company to impose limitations on a Contract Owner's right to
control the investment. It is not known whether any such guidelines would have a
retroactive effect (see "Tax Status - Diversification").
Because of certain exemptive and exclusionary provisions, interests in the Fixed
Account are not registered under the Securities Act of 1933 and the Fixed
Account is not registered as an investment Insurance Company under the
Investment Insurance Company Act of 1940, as amended. Accordingly, neither the
Fixed Account nor any interests therein are subject to the provisions of these
Acts, and the Insurance Company has been advised that the staff of the
Securities and Exchange Commission has not reviewed the disclosures in the
Prospectus relating to the Fixed Account. Disclosures regarding the Fixed
Account may, however, be subject to certain generally applicable provisions of
the federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.
ALLIANZ LIFE VARIABLE ACCOUNT B FEE TABLE*
--------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Contract Owner Transaction Fees
Contingent Deferred Sales Charge** Number of Years
(as a percentage of purchase payments) From Receipt Charge
0 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 years or more 0%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Current Transfer Fee First 12 transfers in a
Contract Year are free.
Thereafter, the fee is $25
(or 2% of the amount
transferred, if less).
Prescheduled automatic
Dollar Cost Averaging
transfers and Rebalancing
transfers are not counted.
Contract Maintenance Charge (During the $30 per Contract
Accumulation Period the charge is waived for
a Contract having a Contract Value of $50,000
or more at the time the charge would normally
be deducted.)
Variable Account Annual Expenses
(as a percentage of average account value)
Mortality and Expense Risk Charge (during
Accumulation Period and 1.25% during
Annuity Period) 1.34%
Administrative Charge .15%
Total Variable Account Annual Expenses 1.49%
<FN>
* Applies to all Sub-Accounts of the Variable Account.
** Each Contract Year after the first Contract Year, a Contract Owner may
make multiple partial withdrawals without incurring a Contingent Deferred Sales
Charge up to an amount which is 15% of the Contract Value, less any previous
Free Surrender amount withdrawn during that Contract Year. See also "Surrenders
- - Systematic Withdrawal Plan" and "Minimum Distribution Program" for additional
options.
</TABLE>
FRANKLIN VALUEMARK FUNDS' ANNUAL EXPENSES
(as a percentage of Franklin Valuemark Funds' average net assets).
The Management Fees for each Fund are based on a percentage of that Fund's
assets under management. See "Franklin Valuemark Funds" in this Prospectus
and "Management" in the Trust prospectus.
The "Management and Business Management Fees" below include investment advisory,
other management, and administrative fees not included as "Other Expenses" that
were paid to the Managers and Business Managers to the Trust for the 1995
calendar year (except for the Money Market Fund, the Zero Coupon Fund-2000,
the Zero Coupon Fund-2005, the Zero Coupon Fund 2010, the Small Cap Fund, the
Templeton Global Asset Allocation Fund, the Templeton International Smaller
Companies Fund and the Capital Growth Fund). The purpose of the Table is to
assist the Contract Owner in understanding the various costs and expenses that a
Contract Owner will incur, directly or indirectly, on amounts allocated to the
Variable Account.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management
and Business Total
Management Other Annual
Fees(1/) Expenses Expenses
Money Market Fund (2/) .51% .02% .53%
Growth and Income Fund .49% .03% .52%
Precious Metals Fund .61% .05% .66%
Real Estate Securities Fund .56% .03% .59%
Utility Equity Fund .47% .03% .50%
High Income Fund .53% .03% .56%
Templeton Global Income Securities Fund (3/) .55% .09% .64%
Income Securities Fund .47% .04% .51%
The U.S. Government Securities Fund .49% .03% .52%
Zero Coupon Fund-2000 (4/) .37% .03% .40%
Zero Coupon Fund-2005 (4/) .37% .03% .40%
Zero Coupon Fund-2010 (4/) .37% .03% .40%
Rising Dividends Fund .75% .03% .78%
Templeton International Equity Fund .83% .09% .92%
Templeton Pacific Growth Fund .90% .11% 1.01%
Templeton Global Growth Fund .93% .04% .97%
Templeton Developing Markets Equity Fund 1.25% .16% 1.41%
Templeton Global Asset Allocation Fund (5/) .80% .10% .90%
Small Cap Fund (6/) .75% .15% .90%
Templeton International Smaller Companies
Fund (7/) 1.00% .10% 1.10%
Capital Growth Fund (7/) .75% .04% .79%
<FN>
1/ The Business Management Fee is a direct expense for the Templeton Global
Asset Allocation Fund and the Templeton International Smaller Companies Fund;
other Funds pay for similar services indirectly through the Management Fee. See
"Management" in the Trust Prospectus for further information regarding
Management and Business Management Fees.
2/ Franklin Advisers, Inc. agreed in advance to waive a portion of its
Management Fee and to make certain payments to reduce expenses of the Money
Market Fund during 1995 and is currently continuing this arrangement in 1996.
This arrangement may be terminated at any time. With this reduction, Management
fees and Total Annual Expenses of the Money Market Fund represented 0.38% and
0.40%, respectively of the average daily net assets of the Fund.
3/ Prior to May 1, 1996, the Templeton Global Income Securities Fund was
known as the Global Income Fund.
4/ Net of management fees waived and/or expense reimbursements. Although
not obligated to, Franklin Advisers, Inc. has agreed in advance to waive a
portion of its management fees and to make certain payments to reduce expenses
of the three Zero Coupon Funds through at least December 31, 1996 such that the
aggregate expenses of the Zero Coupon Fund-2000, the Zero Coupon Fund-2005 and
the Zero Coupon Fund-2010 will not exceed 0.40% of each Fund's net assets.
Absent the management fee waivers and expense payments, for the year ended
December 31, 1995, the Total Annual Expenses and Management and Business
Management Fees would have been as follows: Zero Coupon Fund-2000, .63% and
.60%; Zero Coupon Fund-2005, .66% and .63%; and Zero Coupon Fund- 2010, .66% and
.63%.
5/ The Templeton Global Asset Allocation Fund commenced operations May 1,
1995. The expenses shown are estimated expenses for the Fund for 1996.
6/ The Small Cap Fund commenced operations November 1, 1995. The expenses
shown are estimated expenses for the Fund for 1996.
7/ The Templeton International Smaller Companies Fund and the Capital
Growth Fund commenced operations May 1, 1996. The expenses shown are
estimated expenses for the Funds for 1996.
</TABLE>
The following Tables reflect expenses of the Variable Account as well as of
the Trust. The dollar figures should not be considered a representation of
past or future expenses. Actual expenses may be greater or less than those
shown. The $30 Contract Maintenance Charge is included in the Examples as a
prorated charge of $1. Since the average Contract account size for the Contracts
described in this Prospectus is greater than $1,000, the expense effect of the
Contract Maintenance Charge is reduced accordingly. For additional information,
see "Charges and Deductions" in this Prospectus and "Management" in the Trust
Prospectus.
Premium Taxes are not reflected in the Tables. Premium Taxes may apply.
EXAMPLES
If the Contract is fully surrendered at the end of the applicable time period
and no prior surrenders have occurred, the Contract Owner would have incurred
the following expenses on a $1,000 investment, assuming a 5% annual return on
assets compounded semi-annually:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 3 5 10
Year Years Years Years
Money Market Fund $82 $121 $160 $304
Growth and Income Fund $82 $121 $159 $303
Precious Metals Fund $83 $125 $167 $322
Real Estate Securities Fund $82 $123 $163 $312
Utility Equity Fund $81 $120 $158 $300
High Income Fund $82 $122 $161 $308
Templeton Global Income Securities Fund $83 $124 $166 $319
Income Securities Fund $81 $120 $159 $302
The U.S. Government Securities Fund $82 $121 $159 $303
Zero Coupon Fund-2000# $80 $117 $152 $287
Zero Coupon Fund-2005# $80 $117 $152 $287
Zero Coupon Fund-2010# $80 $117 $152 $287
Rising Dividends Fund $84 $129 $174 $337
Templeton International Equity Fund $86 $133 $182 $355
Templeton Pacific Growth Fund $86 $136 $187 $367
Templeton Global Growth Fund $86 $135 $185 $362
Templeton Developing Markets Equity Fund $91 $149 $209 $416
Templeton Global Asset Allocation Fund* $85 $133 $181 $353
Small Cap Fund* $85 $133 $181 $353
Templeton International Smaller Companies
Fund** $87 $139 $192 $378
Capital Growth Fund** $84 $129 $174 $338
<FN>
* Annualized
** Estimated
# Calculated with waiver of fees and reimbursement of expenses
</TABLE>
If the Contract is not surrendered at the end of the applicable time period and
no prior surrenders have occurred, the Contract Owner would have incurred the
following expenses on a $1,000 investment, assuming a 5% annual return on assets
compounded semi-annually:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 3 5 10
Year Years Years Years
Money Market Fund $22 $70 $126 $304
Growth and Income Fund $22 $70 $125 $303
Precious Metals Fund $23 $74 $133 $322
Real Estate Securities Fund $22 $72 $129 $312
Utility Equity Fund $21 $69 $124 $300
High Income Fund $22 $71 $127 $308
Templeton Global Income Securities Fund $23 $73 $132 $319
Income Securities Fund $21 $69 $125 $302
The U.S. Government Securities Fund $22 $70 $125 $303
Zero Coupon Fund-2000# $20 $66 $118 $287
Zero Coupon Fund-2005# $20 $66 $118 $287
Zero Coupon Fund-2010# $20 $66 $118 $287
Rising Dividends Fund $24 $78 $140 $337
Templeton International Equity Fund $26 $82 $148 $355
Templeton Pacific Growth Fund $26 $85 $153 $367
Templeton Global Growth Fund $26 $84 $151 $362
Templeton Developing Markets Equity Fund $31 $98 $175 $416
Templeton Global Asset Allocation Fund* $25 $82 $147 $353
Small Cap Fund* $25 $82 $147 $353
Templeton International Smaller Companies
Fund** $27 $88 $158 $378
Capital Growth Fund** $24 $78 $140 $338
<FN>
* Annualized
** Estimated
# Calculated with waiver of fees and reimbursement of other expenses
</TABLE>
THE INSURANCE COMPANY
Allianz Life Insurance Company of North America (the "Insurance Company") is a
stock life insurance company organized under the laws of the state of Minnesota
in 1896. The Insurance Company is a wholly-owned subsidiary of Allianz
Versicherungs-AG Holding ("Allianz"). Allianz is headquartered in Munich,
Germany, and has sales outlets throughout the world. Both NALAC and Fidelity
Union Life Insurance Company of Dallas, Texas had been owned by Allianz since
1979. Over the last decade there has been a gradual consolidation of operations.
On May 31, 1993, Fidelity Union was consolidated into the Insurance Company. The
Insurance Company offers fixed and variable life insurance and annuities, and
group life, accident and health insurance.
NALAC Financial Plans, Inc. is a wholly-owned subsidiary of the Insurance
Company. It provides marketing services for the Insurance Company and is the
principal underwriter of the Contracts. NALAC Financial Plans, Inc. is
reimbursed for expenses incurred in the distribution of the Contracts.
Administration for the Contracts is provided at the Insurance Company's
Valuemark Service Center: 300 Berwyn Park, P.O. Box 3031, Berwyn, Pennsylvania
19312-0031, (800) 624-0197.
THE VARIABLE ACCOUNT
The Variable Account was established pursuant to a resolution of the Board of
Directors on May 31, 1985. The Variable Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940, as amended (the "1940 Act").
The assets of the Variable Account are the property of the Insurance Company.
However, the assets of the Variable Account equal to the reserves, and other
contract liabilities with respect to the Variable Account, are not chargeable
with liabilities arising out of any other business the Insurance Company may
conduct. Income, gains and losses, whether or not realized, are, in accordance
with the Contracts, credited to or charged against the Variable Account without
regard to other income, gains or losses of the Insurance Company. The Insurance
Company's obligations arising under the Contracts are general corporate
obligations.
The Variable Account meets the definition of a "separate account" under the
federal securities laws.
The Variable Account is divided into Sub-Accounts with the assets of each Sub-
Account invested in one of the Funds of the Franklin Valuemark Funds. There are
twenty-three Funds available under the Franklin Valuemark Funds, twenty-one of
which are available under the Contracts.
FRANKLIN VALUEMARK FUNDS
Each of the Sub-Accounts of the Variable Account is invested solely in the
shares of one of the corresponding Funds of Franklin Valuemark Funds ("Trust").
The Trust is an open-end management investment company registered under the 1940
Act. While a brief summary of the investment objectives is set forth below, more
comprehensive information, including a discussion of potential risks, is found
in the accompanying prospectus for the Trust, which is included with this
Prospectus. PURCHASERS SHOULD READ THIS PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS FOR THE TRUST CAREFULLY BEFORE INVESTING.
Franklin Advisers, Inc. ("Advisers"), 777 Mariners Island Blvd., San Mateo,
California 94404, serves as each Fund's (except the Templeton Global Growth
Fund, the Templeton Developing Markets Equity Fund, the Templeton Global Asset
Allocation Fund and Templeton International Smaller Companies Fund) investment
manager. The investment manager for the Templeton Global Growth Fund and the
Templeton Global Asset Allocation Fund is Templeton Global Advisors Limited,
formerly known as Templeton, Galbraith & Hansberger, Ltd., Lyford Cay Nassau,
N.P. Bahamas. As of October 1, 1995, the investment manager for the Templeton
Developing Markets Equity Fund is Templeton Asset Management Ltd., formerly
known as Templeton Investment Management (Singapore) Pte Ltd., 20 Raffles Place,
Ocean Towers, Singapore. The investment manager for the Templeton International
Smaller Companies Fund is Templeton Investment Counsel, Inc., Broward Financial
Centre, Fort Lauderdale, Florida. Effective July 1, 1996, the investment manager
for the Rising Dividends Fund will be Franklin Advisory Services, Inc., One
Parker Plaza, Sixteenth Floor, Fort Lee, New Jersey. All investment managers or
subadvisers are referred to collectively as "Managers." The Managers are direct
or indirect wholly-owned subsidiaries of Franklin Resources, Inc., a
publicly-owned holding company. The Managers, subject to the overall policies,
control and direction and review of the Board of Trustees of the Trust, are
responsible for recommending and providing advice with respect to each Fund's
investments, and for determining which securities will be purchased, retained or
sold as well as for execution of portfolio transactions. Certain Managers have
retained one or more subadvisers. Advisers act as investment manager or
administrator to 36 U.S. registered investment companies (119 separate series)
with aggregate assets of over $81 billion.
Templeton Global Investors, Inc. ("Business Manager"), Broward Financial
Centre, Suite 2100, Ft. Lauderdale, Florida, provides certain administrative
facilities and services for certain of the Funds.
Franklin Templeton Investor Services, Inc., 777 Mariners Island Blvd., San
Mateo, California 94404, also a wholly-owned subsidiary of Franklin Resources,
Inc., maintains the records of the Trust's shareholder accounts, processes
purchases and redemptions of shares, and serves as each Fund's dividend-paying
agent.
DESCRIPTION OF THE FUNDS
FUND SEEKING STABILITY
OF PRINCIPAL AND INCOME
Money Market Fund
The Money Market Fund seeks high current income, consistent with capital
preservation and liquidity. The Fund will pursue its objective by investing
exclusively in high quality money market instruments. An investment in the Fund
is neither insured nor guaranteed by the U.S. Government. The Money Market Fund
attempts to maintain a stable net asset value of $1.00 per share, although no
assurances can be given that the Fund will be able to do so.
FUNDS SEEKING CURRENT INCOME
High Income Fund
The High Income Fund seeks a high level of current income, with capital
appreciation as a secondary objective, by investing in debt obligations and
dividend-paying common and preferred stocks. Debt obligations include high
yield, high risk, lower rated obligations (commonly referred to as "junk bonds")
which involve increased risks related to the creditworthiness of their issuers.
Templeton Global Income Securities Fund
The Templeton Global Income Securities Fund (formerly the Global Income Fund)
seeks a high level of current income, consistent with preservation of capital,
with capital appreciation as a secondary consideration, through investing in
foreign and domestic debt obligations, including up to 25% in high yield, high
risk, lower rated debt obligations (commonly referred to as "junk bonds"), and
related currency transactions. Investing in a non-diversified fund of global
securities including those of developing markets issuers, involves increased
susceptibility to the special risks associated with foreign investing.
The U.S. Government Securities Fund
The U.S. Government Securities Fund seeks current income and safety of capital
by investing exclusively in obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities.
Zero Coupon Funds
There are three Zero Coupon Funds. Each of the Funds mature in the specified
target year as follows:
Zero Coupon Fund - 2000
Zero Coupon Fund - 2005
Zero Coupon Fund - 2010
The three Zero Coupon Funds seek a high investment return consistent with the
preservation of capital, by investing primarily in zero coupon securities. In
response to interest rate changes, these securities may experience greater
fluctuations in market value than interest-paying securities of similar
maturities. The Zero Coupon Funds may not be appropriate for Contract Owners who
do not plan to have their Purchase Payments invested in the Zero Coupon
Sub-Accounts for the long-term or until maturity of the portfolio.
Additional Zero Coupon Funds may be added to the Trust in the future. Should any
such Funds be available for investment at the maturity date of any existing Zero
Coupon Fund, such Funds will be available as an investment option for Contract
Owners who select such option. If no selection has been made by a Contract Owner
prior to the maturity date of a Zero Coupon Fund, the Account Value held in the
Sub-Account underlying the Owner's Contract will be automatically transferred to
the Money Market Sub-Account. The Insurance Company will notify the Owner of a
maturing Zero Coupon Fund in writing at least 30 days prior to the maturity.
Included with the notification will be investment options available at that time
as well as the automatic Money Market option.
FUNDS SEEKING GROWTH AND INCOME
Growth and Income Fund
The Growth and Income Fund seeks capital appreciation, with current income
return as a secondary objective, by investing primarily in U.S. common stocks,
securities convertible into common stocks and preferred stocks.
Income Securities Fund
The Income Securities Fund seeks to maximize income while maintaining prospects
for capital appreciation by investing in a diversified portfolio of domestic and
foreign, including developing markets, debt obligations and/or equity
securities. Debt obligations include high yield, high risk, lower rated
obligations (commonly referred to as "junk bonds") which involve increased risks
related to the creditworthiness of their issuers.
Real Estate Securities Fund
The Real Estate Securities Fund seeks capital appreciation, with current income
return as a secondary objective, by concentrating its investments in publicly
traded securities of U.S. companies in the real estate industry.
Rising Dividends Fund
The Rising Dividends Fund seeks capital appreciation, primarily through
investment in the equity securities of companies that have paid consistently
rising dividends over the past ten years. Preservation of capital is also an
important consideration. The Fund seeks current income incidental to capital
appreciation.
Templeton Global Asset Allocation Fund
The Templeton Global Asset Allocation Fund seeks a high level of total return
through a flexible policy of investing in equity securities, debt obligations,
including up to 25% in high yield, high risk, lower-rated debt obligations
(commonly referred to as "junk bonds"), and money market instruments of issuers
in any nation, including developing markets nations. The mix of investments
among the three market segments will be adjusted in an attempt to capitalize on
total return potential produced by changing economic conditions throughout the
world. Foreign investing involves special risks.
Utility Equity Fund
The Utility Equity Fund seeks both capital appreciation and current income by
investing in securities of domestic and foreign, including developing markets,
issuers engaged in the public utilities industry.
FUNDS SEEKING CAPITAL GROWTH
Capital Growth Fund
The Capital Growth Fund seeks capital appreciation, with current income as a
secondary consideration. The Fund invests primarily in equity securities,
including common stocks and securities convertible into common stocks.
Precious Metals Fund
The Precious Metals Fund seeks capital appreciation, with current income return
as a secondary objective, by concentrating its investments in securities of U.S.
and foreign companies, including those in developing markets, engaged in mining,
processing or dealing in gold and other precious metals.
Small Cap Fund
The Small Cap Fund seeks long-term capital growth. The Fund seeks to accomplish
its objective by investing primarily in equity securities of small
capitalization growth companies. The Fund may also invest in foreign securities,
including those of developing markets issuers. Because of the Fund's investments
in small capitalization companies, an investment in the Fund may involve greater
risks and higher volatility and should not be considered a complete investment
program.
Templeton Developing Markets Equity Fund
The Templeton Developing Markets Equity Fund seeks long-term capital
appreciation. The Fund seeks to achieve this objective by investing primarily in
equities of issuers in countries having developing markets. The Fund is subject
to the heightened foreign securities investment risks that accompany foreign
developing markets and an investment in the Fund may be considered speculative.
Templeton Global Growth Fund
The Templeton Global Growth Fund seeks long-term capital growth. The Fund hopes
to achieve its objective through a flexible policy of investing in stocks and
debt obligations of companies and governments of any nation, including
developing markets. The realization of income, if any, is only incidental to
accomplishment of the Fund's objective of long-term capital growth. Foreign
investing involves special risks.
Templeton International Equity Fund
The Templeton International Equity Fund seeks long-term growth of capital. Under
normal conditions, the Templeton International Equity Fund will invest at least
65% of its total assets in an internationally mixed portfolio of foreign equity
securities which trade on markets in countries other than the U.S., including
developing markets, and are (i) issued by companies domiciled in countries other
than the U.S., or (ii) issued by companies that derive at least 50% of either
their revenues or pre-tax income from activities outside of the U.S. Foreign
investing involves special risks.
Templeton International Smaller Companies Fund
The Templeton International Smaller Companies Fund seeks long-term capital
appreciation. The Fund seeks to achieve this objective by investing primarily in
equity securities of smaller companies outside the U.S., including developing
markets. Foreign investing involves special risks and smaller company
investments may involve higher volatility. An investment in the Fund may not be
considered a complete investment program.
Templeton Pacific Growth Fund
The Templeton Pacific Growth Fund seeks long-term growth of capital primarily
through investing at least 65% of its total assets in equity securities which
trade on markets in the Pacific Rim, including developing markets, and are (i)
issued by companies domiciled in the Pacific Rim or (ii) issued by companies
that derive at least 50% of either their revenues or pre-tax income from
activities in the Pacific Rim. Investing in a portfolio of geographically
concentrated foreign securities, including developing markets, involves
increased susceptibility to the special risks of foreign investing and an
investment in the Fund may be considered speculative.
The Templeton Global Asset Allocation Fund, Templeton Developing Markets Equity
Fund, Templeton Global Growth Fund, Templeton Global Income Securities Fund,
Growth and Income Fund, Income Securities Fund, Templeton International Equity
Fund, Templeton International Smaller Companies Fund, Money Market Fund,
Templeton Pacific Growth Fund, Precious Metals Fund, Small Cap Fund and Utility
Equity Fund may invest more than 10% of their total net assets in foreign
securities which are subject to special and additional risks related to currency
fluctuations, market volatility and economic, social and political uncertainty;
investing in developing markets involves similar but heightened risks related to
the relatively small size and lesser liquidity of these markets. See
"Highlighted Risk Considerations, Foreign Transactions" in the Trust Prospectus.
The High Income Fund and the Income Securities Fund may invest up to 100% of
their respective net assets in debt obligations rated below investment grade,
commonly known as "junk bonds," or in obligations which have not been rated by
any rating agency. Investments rated below investment grade involve greater
risks, including price volatility and risk of default than investments in higher
rated obligations. Investors should carefully consider the risks associated with
an investment in these Funds in light of the securities in which they invest.
See "Highlighted Risk Considerations, Lower Rated Debt Obligations" in the Trust
Prospectus.
General
There is no assurance that the investment objectives of any of the Funds will be
met. Contract Owners bear the complete investment risk for Contract Values
allocated to a Sub-Account.
Additional Funds and/or additional Eligible Investments may, from time to time,
be made available as investments to underlie the Contract. However, the right to
make such selections will be limited by the terms and conditions imposed on such
transactions by the Insurance Company. (See "Purchase Payments and Contract
Value - Allocation of Purchase Payments.")
Substitution of Securities
If the shares of any Fund of the Trust should no longer be available for
investment by the Variable Account or if, in the judgment of the Insurance
Company, further investment in such shares should become inappropriate in view
of the purpose of the Contract, the Insurance Company may limit further purchase
of such shares or substitute shares of another Eligible Investment (or Fund
within the Trust) for shares already purchased. No substitution of securities in
any Sub-Account may take place without prior approval of the Securities and
Exchange Commission and under such requirements as it may impose.
Voting Privileges
In accordance with its view of present applicable law, the Insurance Company
will vote the shares of the Trust held in the Variable Account at special
meetings of the shareholders of the Trust in accordance with instructions
received from persons having the voting interest in the Variable Account. The
Insurance Company will vote shares for which it has not received instructions,
as well as shares attributable to it, in the same proportion as it votes shares
for which it has received instructions. The Trust does not hold regular meetings
of shareholders.
The number of shares which a person may vote will be determined as of a date to
be chosen by the Insurance Company not more than sixty (60) days prior to the
meeting of the Trust. Voting instructions will be solicited by written
communication at least fourteen (14) days prior to the meeting.
Trust shares are issued and redeemed only in connection with variable annuity
contracts and variable life insurance policies issued through separate accounts
of the Insurance Company and its affiliates. The Trust does not foresee any
disadvantage to Contract Owners arising out of the fact that the Trust may be
made available to separate accounts which are used in connection with both
variable annuity and variable life insurance products. Nevertheless, the Trust's
Board of Trustees intends to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to determine what action,
if any, should be taken in response thereto. If such a conflict were to occur,
one of the separate accounts might withdraw its investment in the Trust. This
might force the Trust to sell portfolio securities at disadvantageous prices.
CHARGES AND DEDUCTIONS
Various charges and deductions are made from Contract Values, the Variable
Account and the Fixed Account. These charges and deductions are:
Deduction for Contingent Deferred Sales Charge (Sales Load)
Upon a surrender of Contract Value, a Contingent Deferred Sales Charge may be
assessed. This charge reimburses the Insurance Company for expenses incurred in
connection with the promotion, sale and distribution of the Contracts. A
Contingent Deferred Sales Charge is assessed against Purchase Payments
surrendered. The charge is calculated at the time of each surrender. For partial
surrenders, the charge is deducted from the remaining Contract Value and is
deducted from the Sub-Accounts and the Fixed Account in the same proportion that
the amount of the surrender from the Sub-Account or Fixed Account bears to the
total of the partial surrender. The Contingent Deferred Sales Charge is based
upon the length of time from receipt of the Purchase Payment. Surrenders are
deemed to have come from the oldest Purchase Payments first. Each Purchase
Payment is tracked as to its date of receipt and the Contingent Deferred Sales
Charges are determined in accordance with the following:
CONTINGENT DEFERRED SALES CHARGE
<TABLE>
<CAPTION>
<S> <C>
Number of Years from Receipt Charge
0 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 years of more 0%
</TABLE>
To the extent that the Contingent Deferred Sales Charge is insufficient to cover
the actual costs of distribution, the Insurance Company may use any of its
corporate assets, including potential profit which may arise from the Mortality
and Expense Risk Charge, to make up any difference.
Free Surrender Amount - Each Contract Year after the first Contract Year, a
Contract Owner may, on a non-cumulative basis, make partial withdrawals of the
Contract Value without incurring a Contingent Deferred Sales Charge of an amount
up to 15% of the Contract Value, less any previous Free Surrender Amount
withdrawn during that Contract Year. See also "Surrenders - Systematic
Withdrawal Plan" and "Minimum Distribution Program."
Waiver of Contingent Deferred Sales Charge Benefits:
In certain states, the following benefits are available under the Contract:
A. The Contingent Deferred Sales Charge will not apply to surrenders made
after the first Contract Anniversary under the following conditions:
1. Nursing Home Benefit: If the Contract Owner or Joint Owner is confined
to a skilled nursing facility or hospital; such confinement is for a period of
at least 90 consecutive days; and a licensed physician certifies in writing that
such continued confinement is necessary. This benefit will not apply if the
Contract Owner or Joint Owner was confined in a skilled nursing facility or
hospital on the Issue Date. Proof of confinement must be provided in a form
satisfactory to the Insurance Company.
2. Terminal Illness Benefit: If the Contract Owner or Joint Owner is
diagnosed as having a terminal illness (an illness or physical condition which
results in the prognosis by a licensed physician that life expectancy is 12
months or less); and a licensed physician certifies in writing to such
diagnosis. To utilize this benefit, the Contract Owner must make a total
surrender of the Contract. The Contract must be returned to the Insurance
Company before any proceeds will be paid. This benefit will not apply if the
Contract Owner or Joint Owner is first diagnosed as having a terminal illness on
or prior to the Issue Date. Proof of diagnosis must be provided in a form
satisfactory to the Insurance Company.
3. Disability Benefit: If the Contract Owner or Joint Owner is disabled
(which means the inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can
be expected to result in death or to be of long-continued and indefinite
duration); such disability lasts for a period of at least 90 consecutive days;
and a licensed physician certifies to such disability. This benefit will not
apply if the Contract Owner or Joint Owner was disabled on or prior to the Issue
Date. Proof of disability will be required in a form satisfactory to the
Insurance Company.
B. Unemployment Benefit: The amount of Contract Value which can be surrendered
after the first Contract Anniversary without incurring a Contingent Deferred
Sales Charge will be increased for one time only to 50% of the Contract Value if
the Contract Owner or Joint Owner is unemployed for a continuous period of at
least 90 days. Proof of unemployment must be provided to the Insurance Company.
Surrenders of amounts under the Contract may be subject to a 10% tax penalty in
addition to any income taxes due. Contract Owners should consult their tax
adviser prior to making a withdrawal.
Reduction or Elimination of Contingent Deferred Sales Charge
The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or to
a group of individuals in a manner that results in savings of sales expenses.
The entitlement to a reduction of the Contingent Deferred Sales Charge will be
determined by the Insurance Company after examination of the following factors:
(1) the size of the group; (2) the total amount of purchase payments expected to
be received from the group; (3) the nature of the group for which the Contracts
are purchased, and the persistency expected in that group; (4) the purpose for
which the Contracts are purchased and whether that purpose makes it likely that
expenses will be reduced; and (5) any other circumstances which the Insurance
Company believes to be relevant to determining whether reduced sales or
administrative expenses may be expected. None of the reductions in charges for
sales is contractually guaranteed.
The Contingent Deferred Sales Charge may be eliminated when the Contracts are
issued to an officer, director or employee of the Insurance Company or any of
its affiliates. The Contingent Deferred Sales Charge may also be eliminated when
the Contract is sold by an agent of the Insurance Company to any members of his
or her immediate family and the commission is reduced. In no event will
reductions or elimination of the Contingent Deferred Sales Charge be permitted
where reductions or elimination will unfairly discriminate against any person.
Deduction for Mortality and Expense Risk Charge
During the Accumulation Period, the Insurance Company deducts on each Valuation
Date a Mortality and Expense Risk Charge which is equal, on an annual basis, to
1.34% of the average daily net asset value of the Variable Account (consisting
of approximately .99% for mortality risks and approximately .35% for expense
risks). Approximately 1.25% of such Mortality and Expense Risk Charge is for the
standard death benefit and approximately .09% is for the enhanced death benefit.
See "The Contracts - Death Benefit Amount during the Accumulation Period." The
portion of the Mortality and Expense Risk Charge attributable to the enhanced
death benefit (.09%) will be assessed against Separate Account allocations
pursuant to all Contracts issued, whether or not applicable state law permits
the Contract to offer the enhanced death benefit. Therefore, purchasers of
Contracts in states where the enhanced death benefit is not permitted and who
allocate Contract Value to the Separate Account will be paying for a benefit
during the Accumulation Period that they will not receive. The standard
death benefit is available in all states where the Contract is approved.
During the Annuity Period, the Insurance Company deducts on each Valuation Date
a Mortality Expense Risk Charge which is equal, on an annual basis, to 1.25%
of the average daily net asset value of the Variable Account (consisting of
approximately .90% for mortality risks and .35% for expense risks).
The mortality risk borne by the Insurance Company arises from its contractual
obligation to make annuity payments (determined in accordance with the Annuity
Options and other provisions contained in the Contracts)regardless of how long
all Annuitants may live. This undertaking assures that neither an Annuitant's
own longevity, nor an improvement in life expectancy greater than expected, will
have any adverse effect on the annuity payments the Annuitant will receive under
the Contract. Furthermore, the Insurance Company bears a mortality risk,
regardless of the Annuity Option selected, in that it guarantees the purchase
rates for the annuity income options available under the Contract whether for
fixed payment options or variable payment options. In addition, the Insurance
Company assumes an additional mortality risk during the Accumulation Period for
the death benefit provided under the Contract. The expense risk assumed by the
Insurance Company is that all actual expenses involved in administering the
Contracts, including Contract maintenance costs, administrative costs, mailing
costs, data processing costs, legal fees, accounting fees, filing fees, and the
costs of other services may exceed the amount recovered from the Contract
Maintenance Charge and the Administrative Charge.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by the Insurance Company. Conversely, if the
amount deducted proves more than sufficient, the excess will be a profit to the
Insurance Company. The Insurance Company expects to profit from this charge. The
Mortality and Expense Risk Charge is guaranteed by the Insurance Company and
cannot be increased.
Deduction for Administrative Charge
The Insurance Company deducts on each Valuation Date an Administrative Charge
which is equal, on an annual basis, to 0.15% of the average daily net asset
value of the Variable Account. This charge, together with the Contract
Maintenance Charge (see below), is to reimburse the Insurance Company for the
expenses it incurs in the establishment and maintenance of the Contracts and the
Variable Account. These expenses include, but are not limited to: preparation of
the Contracts, confirmations, annual reports and statements, maintenance of
Contract Owner records, maintenance of Variable Account records, administrative
personnel costs, mailing costs, data processing costs, legal fees, accounting
fees, filing fees, the costs of other services necessary for Contract Owner
servicing, and all accounting, valuation, regulatory and reporting requirements.
The Insurance Company does not intend to profit from this charge. This charge
will be reduced to the extent that the amount of this charge is in excess of
that necessary to reimburse the Insurance Company for its administrative
expenses. Should this charge prove to be insufficient, the Insurance Company
will not increase this charge and will incur the loss.
Deduction for Contract Maintenance Charge
The Insurance Company deducts an annual Contract Maintenance Charge of $30 from
the Contract Value on each Contract Anniversary. This charge is to reimburse the
Insurance Company for its administrative expenses (see above). However, during
the Accumulation Period, if the Contract Owner's Contract Value on a Contract
Anniversary is at least $50,000, then no Contract Maintenance Charge is
deducted. If a total surrender is made on other than a Contract Anniversary and
the Contract Value for the Valuation Period during which the total withdrawal is
made is less than $50,000, the full Contract Maintenance Charge will be deducted
at the time of the total surrender. The Contract Maintenance Charge will be
deducted from the Sub-Accounts and the Fixed Account in the same proportion that
the amount of the Contract Value in each Sub-Account and/or Fixed Account bears
to the total Contract Value. During the Annuity Period, the Contract Maintenance
Charge will be collected pro rata from each Annuity Payment. In the event the
Contract Owner owns more than one Contract, the Insurance Company will determine
the total Contract Value for all of the Contracts. If the total Contract Value
is at least $50,000, the Insurance Company will not assess the Contract
Maintenance Charge. If the Contract Owner is a non-natural person, the Insurance
Company will look to the Annuitant in determining the foregoing.
Deduction for Transfer Fee
A Contract Owner may transfer all or a part of the Contract Owner's interest in
an Account to another Account without the imposition of any fee or charge if
there have been no more than the number of free transfers. Currently, a Contract
Owner is permitted twelve (12) free transfers each Contract Year. The Contract
guarantees at least three free transfers per Contract Year. This applies to
transfers prior to and after the Income Date. For each transfer in excess of the
free transfers permitted, the Transfer Fee is the lesser of $25 or 2% of the
amount transferred. The Transfer Fee will be deducted from the Account from
which the transfer is made. If the entire amount in the Account is transferred,
then the Transfer Fee will be deducted from the amount transferred. If there are
multiple source Accounts, it will be treated as a single transfer. Any Transfer
Fee will be deducted proportionally from the source Accounts if less than the
entire amount in the Account is transferred. For purposes of counting transfers
for the Transfer Fee, all reallocations made on a given date count as one
transfer. Transfers made at the end of the Right to Examine period by the
Insurance Company and any transfers made pursuant to a regularly scheduled
transfer will not be counted in determining the application of the Transfer Fee.
The Transfer Fee at any given time will not be set at a level greater than its
cost and will contain no element of profit.
Deduction for Premium Taxes
Premium Taxes or other taxes payable to a state, municipality or other
governmental entity will be charged against the Contract Values. Premium Taxes
currently imposed by certain states on the Contracts offered hereby range from
0% to 3.5% of premiums paid. Some states assess premium taxes at the time
Purchase Payments are made; others assess Premium Taxes at the time annuity
payments begin. The Insurance Company will, in its sole discretion, determine
when Premium Taxes have resulted from: the investment experience of the Variable
Account; receipt by the Insurance Company of the Purchase Payment(s); or
commencement of Annuity Payments. The Insurance Company may, at its sole
discretion, pay taxes when due and deduct that amount from the Contract Value
at a later date. Payment at an earlier date does not waive any right the
Insurance Company may have to deduct amounts at a later date. The Insurance
Company's current practice is to defer the charge for Premium Taxes until full
surrender, death or annuitization. The Insurance Company may change this
practice for new and in force Contracts.
Deduction for Income Taxes
While the Insurance Company is not currently maintaining a provision for federal
income taxes, the Insurance Company has reserved the right to establish a
provision for income taxes if it determines, in its sole discretion, that it
will incur a tax as a result of the operation of the Variable Account. The
Insurance Company will deduct for any income taxes incurred by it as a result of
the operation of the Variable Account whether or not there was a provision for
taxes and whether or not it was sufficient. Currently, no federal income taxes
are assessed against the Variable Account. However, if the tax laws should
change, the Insurance Company reserves the right to deduct the amount of such
taxes from the Variable Account.
The Insurance Company will deduct any withholding taxes required by applicable
law. (See "Tax Status - Income Tax Withholding.")
Deduction for Trust Expenses
There are other deductions from, and expenses paid out of, the assets of
Franklin Valuemark Funds which are described in the accompanying Trust
prospectus.
THE CONTRACTS
Ownership
The maximum Age of any Owner on the Issue Date is 85 years old. The Contract
Owner and any Joint Owner have all interest and rights under the Contract. The
Contract Owner is the person designated as such on the Issue Date, unless
changed. The Contract may be owned by Joint Owners. If there is more than one
Contract Owner, each Contract Owner will be a Joint Owner of the Contract. Joint
Owners have equal ownership rights and must both authorize any exercising of
those ownership rights unless otherwise allowed by the Insurance Company. If
Joint Owners are named, any Joint Owner must be the spouse of the other Joint
Owner (except in Pennsylvania). Upon the death of either Contract Owner, the
surviving Joint Owner will be the primary Beneficiary. Any other Beneficiary
designation will be treated as a contingent Beneficiary unless otherwise
indicated by Authorized Request.
The Contract Owner may change the Contract Owner at any time by Authorized
Request. A change of Contract Owner will automatically revoke any prior
designation of Contract Owner. The change will become effective as of the date
the Authorized Request is signed. The Insurance Company will not be liable for
any payment made or action taken before the change is recorded. Change of
ownership may result in a taxable event. Tax advice should be sought before
changing a Contract Owner.
For Non-Qualified Contracts, in accordance with Code Section 72(u), a deferred
annuity contract held by a corporation or other entity that is not an individual
is not treated as an annuity contract for tax purposes. Income on the Contract
is treated as ordinary income received by the Owner during the taxable year.
However, for purposes of Code Section 72(u), an annuity contract held by a trust
or other entity as agent for a natural person is considered held by a natural
person and treated as an annuity contract for tax purposes. Tax advice should
be sought prior to purchasing a Contract which is to be owned by a trust or
other non-natural person.
Assignment
The Contract Owner may assign the Contract at any time during his or her
lifetime. An Authorized Request specifying the terms of the assignment must be
provided to the Valuemark Service Center. The Insurance Company will not be
liable for any payment made or action taken before it records the assignment.
The Insurance Company is not responsible for the validity or tax consequences of
any assignment. The Contract Owner's rights and those of any revocably- named
person will be subject to the assignment. An assignment will not affect any
payments the Insurance Company may make or actions the Insurance Company may
take before such assignment has been recorded at its Valuemark Service Center.
Any assignment made after the death benefit has become payable will be valid
only with the Insurance Company's consent.
If the Contract is issued pursuant to a Qualified Plan, it may not be assigned,
pledged or otherwise transferred except as may be allowed under applicable law.
Beneficiary
The Beneficiary designation in effect on the Issue Date will remain in effect
until changed. The primary Beneficiary is entitled to receive the death benefit
upon the Contract Owner's death. Upon the death of either Contract Owner, the
surviving Joint Owner will be the primary Beneficiary. Any other Beneficiary
named will be treated as a contingent Beneficiary, unless otherwise indicated by
Authorized Request.
Unless the Contract Owner provides otherwise, the death benefit will be paid in
equal shares to the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive the Contract Owner's
and/or the Annuitant's death, as applicable; or if there are none
2, to the contingent Beneficiary(ies) who survive the Contract Owner's
and/or the Annuitant's death, as applicable; or if there are none
3. to the Contract Owner's estate.
Change of Beneficiary
Subject to the rights of any irrevocable Beneficiaries, the Contract Owner may
change the primary Beneficiary or contingent Beneficiary by Authorized Request.
The change will take effect as of the date the Authorized Request is signed. The
Insurance Company will not be liable for any payment made or action taken before
it records the change.
Annuitant
The Annuitant is the natural person upon whose continuation of life Annuity
Payments involving life contingencies are based. The Annuitant is the person
designated by the Contract Owner at the Issue Date, unless changed prior to the
Annuity Date. The Annuitant must be a natural person. The maximum age of the
Annuitant on the Issue Date is 85 years old. The Annuitant may be changed
at any time prior to the Income Date unless the Contract is owned by a non-
individual. (See "Death of the Annuitant Prior to the Income Date".) Any change
of Annuitant is subject to the Insurance Company's underwriting rules then in
effect. Joint Annuitants are allowed at the time of annuitization only. On or
after the Income Date, any reference to Annuitant shall also include any Joint
Annuitant.
Death of the Contract Owner During the Accumulation Period
Upon the death of the Contract Owner, or any Joint Owner, during the
Accumulation Period, the death benefit will be paid to the Beneficiary(ies)
designated by the Contract Owner. Upon the death of a Joint Owner, the surviving
Joint Owner, if any, will be treated as the primary Beneficiary. Any other
Beneficiary designation on record at the time of death will be treated as a
contingent Beneficiary.
Death Benefit Amount During the Accumulation Period
During the Accumulation Period, the death benefit will be the greater of:
1. The Contract Value, less any applicable Premium Tax, determined as of
the end of the Valuation Period during which the Insurance Company received at
the Valuemark Service Center both due proof of death and an election of the
payment method; or
2. The Guaranteed Minimum Death Benefit as of the date of death as defined
below, less any applicable Premium Tax.
The Guaranteed Minimum Death Benefit as of the date of death is calculated as
follows:
i. Prior to the first Contract Anniversary it is equal to the Purchase
Payments less any surrenders and any Contingent Deferred Sales Charge paid on
such surrenders.
ii. From the first Contract Anniversary to the Contract Owner's 76th
birthday and before the date of death of the Contract Owner, the Guaranteed
Death Benefit is the greater of (A) or (B).
A. The Guaranteed Death Benefit on each Contract Anniversary is
determined by multiplying the sum of (a plus b minus c) by 1.05% (5%
annually), where:
a. is the Guaranteed Minimum Death Benefit as of the previous
Contract Anniversary;
b. is any Purchase Payments made since the last Contract
Anniversary; and
c. is any surrenders, and any Contingent Deferred Sales Charges
paid on such surrenders, made since the last Contract
Anniversary;
On any Valuation Date other than a Contract Anniversary, the Guaranteed
Minimum Death Benefit determined as of the last Contract Anniversary will be
increased by any Purchase Payments made since the last Contract Anniversary and
decreased by any surrenders, and any Contingent Deferred Sales Charges paid on
such surrenders, made since the last Contract Anniversary.
B. The Guaranteed Minimum Death Benefit will never be less than the
highest Contract Value on any six year Contract Anniversary preceding the date
of death of the Contract Owner; plus Purchase Payments less surrenders and any
Contingent Deferred Sales Charge paid on such surrenders made since such
Contract Anniversary.
iii. After the Contract Owner's 76th birthday, the Guaranteed Minimum Death
Benefit determined as of the last Contract Anniversary prior to the Contract
Owner's 76th birthday will be increased by any Purchase Payments made since such
Contract Anniversary and decreased by any surrenders, and any Contingent
Deferred Sale Charges paid on such surrenders, made since the last Contract
Anniversary.
If Joint Owners are named, the Age of the oldest Owner will be used to determine
the Guaranteed Minimum Death Benefit. If the Contract is owned by a non-natural
person, then Contract Owner shall mean Annuitant.
In certain states, the death benefit will be the Contract Value, less any
Premium Tax, determined as of the end of the Valuation Period during which the
Insurance Company receives both due proof of death and an election for the
payment method.
The portion of the Mortality and Expense Risk Charge attributable to the
enhanced death benefit (.09%) will be assessed against Separate Account
allocations pursuant to all Contracts issued, whether or not applicable state
law permits the Contract to offer the enhanced death benefit. Therefore,
purchasers of Contracts in states where the enhanced death benefit is not
permitted and who allocate Contract Value to the Separate Account will be paying
for a benefit during the Accumulation Period that they will not receive. The
standard death benefit is available in all states where the Contract is
approved.
Contract Owners should check their Contract for the applicable death benefit
provision.
Death of the Annuitant Prior to the Income Date
Upon the death of an Annuitant, who is not the Contract Owner, during the
Accumulation Period, the Contract Owner may designate a new Annuitant, subject
to the Insurance Company's underwriting rules then in effect. If no designation
is made within 30 days of the death of the Annuitant, the Contract Owner will
then become the Annuitant. If the Contract is owned by a non- individual, the
death of the Annuitant will be treated as the death of the Contract Owner and a
new Annuitant may not be designated.
Death of the Annuitant During the Annuity Period
Upon the death of the Annuitant during the Annuity Period, the death benefit, if
any, will be as specified in the Annuity Option elected. Death benefits will be
paid at least as rapidly as under the method of distribution in effect at the
Annuitant's death.
ANNUITY PROVISIONS
Income Date
The Contract Owner selects an Income Date at the time of issue. The Income Date
must always be the first day of a calendar month. The earliest Income Date that
can be chosen is two years after the Issue Date. The latest Income Date the
Contract Owner can select is the later of the first day of the first calendar
month following the Annuitant's 85th birthday or 10 years from the Issue Date,
or the maximum date permitted under state law.
Change in Income Date and Annuity Option
The Contract Owner may, at any time prior to the Income Date, change the Income
Date by Authorized Request 30 days in advance. The Income Date must always be
the first day of a calendar month. The Contract Owner may, at any time prior to
the Income Date, by Authorized Request 30 days in advance, select and/or change
the Annuity Option.
Annuity Options
Instead of having the proceeds paid in one sum, the Contract Owner may select
one of the Annuity Options. The Contract Owner may select an Annuity Option by
Authorized Request. If no Annuity Option is selected, Option 2, with 120 monthly
payments guaranteed, will automatically be applied.
On the Income Date, the Adjusted Contract Value will be applied under the
Annuity Option selected. The Contract Owner may elect to have the Adjusted
Contract Value applied to provide a Fixed Annuity, a Variable Annuity or a
combination Fixed and Variable Annuity. If a combination is elected, the
Contract Owner must specify what part of the Adjusted Contract Value is to be
applied to the Fixed and Variable Annuity Options.
The following Annuity Options are available or any other Annuity Option
acceptable to the Insurance Company:
OPTION 1 - LIFE ANNUITY. The Insurance Company will make monthly Annuity
Payments during the life of the Annuitant and ceasing with the last Annuity
Payment due prior to the Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180 OR 240 MONTHLY ANNUITY PAYMENTS
GUARANTEED. The Insurance Company will make monthly Annuity Payments during the
life of the Annuitant with a guarantee that if at the Annuitant's death there
have been less than 60, 120, 180 or 240 monthly Annuity Payments made as
selected, monthly Annuity Payments will continue for the remainder of the
guaranteed period. The Contract Owner or his/her designated payee may elect to
have the present value of the guaranteed monthly Annuity Payments remaining, as
of the date notice of the Annuitant's death is received at the Valuemark Service
Center, commuted at the Assumed Investment Return selected for a Variable
Annuity or for a Fixed Annuity the Statutory Calendar Year Interest Rate based
on the NAIC Standard Valuation Law for Single Premium Immediate Annuities
corresponding to the Income Date. The Insurance Company will require the return
of the Contract and proof of death prior to the payment of any commuted values.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. The Insurance Company will make
monthly Annuity Payments during the joint lifetime of the Annuitant and the
Joint Annuitant. Upon the death of the Annuitant, if the Joint Annuitant is then
living, Annuity Payments will continue to be paid during the remaining lifetime
of the Joint Annuitant at a level of 100%, 75% or 50% of the previous level, as
selected. Monthly Annuity Payments cease with the final Annuity Payment due
prior to the last survivor's death.
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 120 OR 240 MONTHLY ANNUITY
PAYMENTS GUARANTEED. The Insurance Company will make monthly Annuity Payments
during the joint lifetime of the Annuitant and the Joint Annuitant. Monthly
Annuity Payments will continue to be paid during the remaining lifetime of the
Joint Annuitant at 100% of the previous level, as selected. If at the last death
of the Annuitant and the Joint Annuitant, there have been less than 120 or 240
monthly Annuity Payments made as selected, monthly Annuity Payments will
continue to be made for the remainder of the guaranteed period. The Contract
Owner or his/her designated payee may elect to have the present value of the
guaranteed monthly Annuity Payments remaining, as of the date notice of the
Annuitant's death is received by the Insurance Company, commuted at the Assumed
Investment Return selected for a Variable Annuity or for a Fixed Annuity the
Statutory Calendar Year Interest Rate based on the NAIC Standard Valuation Law
for Single Premium Immediate Annuities corresponding to the Income Date. The
Insurance Company will require the return of the Contract and proof of death
prior to the payment of any commuted values.
OPTION 5 - REFUND LIFE ANNUITY. The Insurance Company will make monthly Annuity
Payments during the lifetime of the Annuitant ceasing with the last Annuity
Payment due prior to the Annuitant's death with a guarantee that at the
Annuitant's death, the Contract Owner will receive a refund. For a Fixed Annuity
the amount of the refund will be any excess of the amount of the Adjusted
Contract Value applied under this Option over the total of all Annuity Payments
made under this Option. For a Variable Annuity the amount of the refund will be
the then dollar value of the number of Annuity Units equal to (1) the Adjusted
Contract Value applied to this Option divided by the Annuity Unit value used to
determine the first Annuity Payment, minus (2) the product of the number of the
Annuity Units represented by each monthly Annuity Payment and the number of
payments made. This calculation will be based upon the assumption that the
allocation of Annuity Units actually in-force at the time of the Annuitant's
death had been the allocation of Annuity Units at issue and at all times
thereafter. If the refund calculated above is not greater than zero there will
be no refund paid.
ANNUITY: If the Contract Owner selects a Fixed Annuity, the Adjusted Contract
Value is allocated to the General Account and the Annuity is paid as a Fixed
Annuity. If the Contract Owner selects a Variable Annuity, the Adjusted Contract
Value will be allocated to the Sub-Accounts of the Variable Account in
accordance with the selection, and the Annuity will be paid as a Variable
Annuity. Unless the Contract Owner designates another payee, the Contract Owner
will be the payee of the Annuity Payments. The Adjusted Contract Value will be
applied to the applicable Annuity Table contained in the Contract based upon the
Annuity Option selected. The amount of the first payment for each $1,000 of
Adjusted Contract Value is shown in the Annuity Tables in the Contract. If when
Annuity Payments begin the Insurance Company is using tables of annuity rates
for these types of Contracts which result in larger Annuity Payments, the
Insurance Company will use those tables instead. Where permitted, Annuity
Payments will depend on the Age and sex of the Annuitant.
FIXED ANNUITY: The Contract Owner may elect to have the Adjusted Contract
Value applied to provide a Fixed Annuity. The dollar amount of each Fixed
Annuity Payment shall be determined in accordance with Annuity Tables
contained in the Contract which are based on the minimum guaranteed interest
rate of 2 1/2% per year.
VARIABLE ANNUITY: The Contract Owner may elect to have the Adjusted Contract
Value applied to provide a Variable Annuity. Variable Annuity Payments reflect
the investment performance of the Variable Account in accordance with the
allocation of the Adjusted Contract Value to the Sub-Accounts during the Annuity
Period. Variable Annuity Payments are not guaranteed as to dollar amount.
See the Statement of Additional Information for further information regarding
the calculation of Annuity Payments.
PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments
The Contracts may be purchased under a flexible purchase payment plan. Purchase
Payments are payable in the frequency and in the amount selected by the Contract
Owner. The initial Purchase Payment is due on the Issue Date. The initial
Purchase Payment must be at least $5,000 for Non-Qualified Contracts (or $2,000
if the Contract Owner has selected the automatic investment plan) and $2,000 for
Qualified Contracts. Subsequent Purchase Payments must be at least $250 (or $100
if the Contract Owner has selected the automatic investment plan). The Insurance
Company reserves the right to decline any application or Purchase Payment.
Amounts in excess of $1 million require preapproval by the Insurance Company.
The Insurance Company may, at its sole discretion, waive the minimum payment
requirements. The Contract Owner may elect to increase, decrease or change the
frequency of Purchase Payments. Unless surrendered, the Contract remains in
force and will not be in default if no additional Purchase Payments are made.
Allocation of Purchase Payments
Purchase Payments are allocated to one or more of the Sub-Accounts within the
Variable Account or to the Fixed Account as selected by the Contract Owner. THE
FIXED ACCOUNT MAY NOT BE AVAILABLE IN ALL STATES. IN CALIFORNIA, THE
INTERNATIONAL SMALLER COMPANIES FUND AND THE CAPITAL GROWTH FUND ARE NOT
AVAILABLE UNTIL APPROVED BY THE CALIFORNIA INSURANCE DEPARTMENT. (CHECK WITH
YOUR AGENT REGARDING AVAILABILITY.) For each Sub-Account, Purchase Payments are
converted into Accumulation Units. The number of Accumulation Units credited to
the Contract is determined by dividing the Purchase Payment allocated to the
Sub-Account by the value of the Accumulation Unit for the Sub-Account. Purchase
Payments allocated to the Fixed Account are credited in dollars.
The Insurance Company has reserved the right to allocate initial Purchase
Payments to the Money Market Sub-Account (except those allocated to the Fixed
Account) until the expiration of the Free Look Period. In the event that the
Insurance Company does so allocate initial Purchase Payments to the Money Market
Sub-Account, at the end of the Free Look Period the Contract Value will be
allocated to the Sub-Account(s) selected by the Contract Owner. Currently,
however, the Insurance Company will allocate the initial Purchase Payment
directly to the Sub-Account(s) and/or the Fixed Account as selected by the
Contract Owner.
Transfers do not change the allocation instructions for payments. Subsequent
Purchase Payments will be allocated as directed by the Contract Owner in
instructions accompanying a payment; if no direction is given, the allocation
will be that which has been most recently directed for payments by the Contract
Owner. The Contract Owner may change the allocation of future payments without
fee, penalty or other charge upon written notice or telephone instructions to
the Valuemark Service Center. A change will be effective for payments received
on or after receipt of the written notice or telephone instructions.
The Insurance Company reserves the right to limit the number of Sub-Accounts
that a Contract Owner may have at any one time. Currently, the Contract Owner
may initially select all of the Sub-Accounts and the Fixed Account. The
Insurance Company reserves the right to change the maximum number of Accounts in
the future. However, the Contract provides that a Contract Owner will always be
allowed to select at least five Sub-Accounts for allocation of Purchase
Payments. If allocations are made in percentages, whole numbers must be used. If
dollars are selected, round dollars must be used.
For initial Purchase Payments, if the forms required to issue a Contract are
received in good order, the Insurance Company will apply the Purchase Payment to
the Variable Account and credit the Contract with Accumulation Units and/or to
the Fixed Account and credit the Contract with dollars within two business days
of receipt at the Valuemark Service Center.
In addition to the underwriting requirements of the Insurance Company, good
order means that the Insurance Company has received federal funds (monies
credited to a bank's account with its regional Federal Reserve Bank). If the
forms required to issue a Contract are not in good order, the Insurance Company
will attempt to get them in good order or the Insurance Company will return the
forms and the Purchase Payment within five business days. The Insurance Company
will not retain Purchase Payments for more than five business days while
processing incomplete forms unless it has been so authorized by the purchaser.
For subsequent Purchase Payments, the Insurance Company will apply Purchase
Payments to the Variable Account and credit the Contract with Accumulation Units
and/or to Fixed Account and credit the Contract with dollars as of the Valuation
Period when they are received in good order.
Transfers of Contract Values
The Contract Owner may transfer all or part of the Contract Owner's interest in
an Account to another Account. Currently, there are no limits on the number of
transfers that can be made. The Insurance Company reserves the right to change
this, but in no event will the Contract Owner be allowed less than three (3)
free transfers in any Contract Year. Currently, a Contract Owner is permitted
twelve (12) free transfers each Contract Year. This applies to transfer prior to
and after the Income Date. For each transfer in excess of the free transfers
permitted, the Transfer Fee is the lesser of $25 or 2% of the amount
transferred. (See "Charges and Deductions - Deduction for Transfer Fee.")
Neither the Variable Account nor the Trust are designed for professional market
timing organizations, other entities or individuals using programmed, large or
frequent transfers. A pattern of exchanges that coincides with a "market timing"
strategy may be disruptive to a Fund and may be refused. Accounts under common
ownership or control may be aggregated for purposes of transfer limits. In
coordination with the Trust, the Insurance Company reserves the right to
restrict the transfer privilege or reject any specific purchase payment
allocation request for any person whose transactions seem to follow a timing
pattern.
All transfers are subject to the following:
1. The deduction of any Transfer Fee that may be imposed. The Transfer Fee
will be deducted from the Account from which the transfer is made. If the entire
amount in the Account is transferred, then the Transfer Fee will be deducted
from the amount transferred. If there are multiple source Sub- Accounts, it will
be treated as a single transfer. Any Transfer Fee will be deducted
proportionally from the source Accounts if less than the entire amount in the
Account is transferred.
2. The Insurance Company reserves the right to limit transfers until the
expiration of the Right to Examine period.
3. The minimum amount which can be transferred is $1,000 (from any Sub-
Account or the Fixed Account) or the Contract Owner's entire interest in the
Sub-Account or the Fixed Account, if less. This requirement is waived if the
transfer is pursuant to a pre-scheduled transfer.
4. No transfer will be effective within seven calendar days prior to the
date on which the first Annuity Payment is due.
5. Any transfer direction must clearly specify:
a. the amount which is to be transferred; and
b. the Accounts which are to be affected.
6. After the Income Date, transfers may not be made from a fixed annuity
option to a variable annuity option.
7. After the Income Date, the Contract Owner can make at least one transfer
from a variable Annuity Option to a fixed Annuity Option. The number of Annuity
Units canceled from the variable Annuity Option will be equal in value to the
amount of the annuity reserve transferred out of the Variable Account. The
amount transferred will purchase fixed Annuity Payments under the Annuity Option
in effect and will be based on the Age and sex of the Annuitant at the time of
the transfer where allowed.
8. The Insurance Company reserves the right to establish policies that
limit or discourage excessive trading that may be disruptive to a Fund, which
may result in limitations being placed on the Contract Owner's right to make
transfers.
9. The Insurance Company reserves the right at any time and without prior
notice to modify the transfer provisions described above, subject to applicable
state law and regulation. However, if the Insurance Company does modify these
provisions, it guarantees that they will not be more restrictive than the above.
A Contract Owner may elect to make transfers by telephone. To elect this option
the Contract Owner must do so in writing to the Insurance Company. If there are
Joint Owners, unless the Insurance Company is informed to the contrary,
instructions will be accepted from either one of the Joint Owners. The Insurance
Company will use reasonable procedures to confirm that instructions communicated
by telephone are genuine. If it does not, the Insurance Company may be liable
for any losses due to unauthorized or fraudulent instructions. The Insurance
Company tape records all telephone instructions.
Transfers do not change the allocation instructions for future payments. (See
"Purchase Payments and Contract Value - Allocation of Purchase Payments.")
Dollar Cost Averaging
Dollar Cost Averaging is a program which, if elected, enables a Contract Owner
to systematically allocate specified dollar amounts from selected source
Accounts ("Source Accounts") to the Contract's other Accounts ("Target
Accounts") at regular intervals. By allocating amounts on a regularly scheduled
basis as opposed to allocating the total amount at one particular time, a
Contract Owner may be less susceptible to the impact of market fluctuations.
Dollar Cost Averaging may be selected for a 6 month minimum. The minimum amount
per period to allocate is $500. Allocations must be in whole percentages and the
Source Account may not be used as the Target Account. All Dollar Cost Averaging
transfers will be made effective the tenth of the month (or the next Valuation
Date if the tenth of the month is not a Valuation Date). Election into this
program may occur at any time by properly completing the Dollar Cost Averaging
election form, returning it to the Insurance Company by the first of the month,
to be effective that month, and ensuring that sufficient value is the Source
Account. If the Contract Owner is participating in the Dollar Cost Averaging
Program, the Source Accounts may not be included in the Rebalancing allocations
(see "Asset Rebalancing Program").
Dollar Cost Averaging will terminate when any of the following occurs: (1) the
number of designated transfers has been completed; (2) the value of the Source
Account(s) is insufficient to complete the next transfer; (3) the Contract Owner
requests termination in writing and such writing is received by the first of the
month in order to cancel the transfer scheduled to take effect that month; or
(4) the Contract is terminated. The Dollar Cost Averaging program may not be
active following the Income Date. There is no current charge for Dollar Cost
Averaging but the Insurance Company reserves the right to charge for this
program. Transfers made in connection with the Dollar Cost Averaging Program are
not counted in determining the number of transfers subject to the Transfer Fee.
In the event there are additional transfers, the Transfer Fee may be charged.
The Insurance Company does not intend to profit from any such charge. Transfers
made pursuant to the Dollar Cost Averaging Program are not counted in
determining the applicability of the Transfer Fee.
Asset Rebalancing Program
The Asset Rebalancing Program is a program, which if elected, provides for
periodic pre-authorized automatic transfers during the Accumulation Period among
the Accounts pursuant to written instructions from the Contract Owner. Such
transfers are made to maintain a particular percentage allocation among the
Sub-Accounts and/or the Fixed Account as selected by the Contract Owner.
Currently, all Sub-Accounts and the Fixed Account are available for Rebalancing.
However, if the Contract Owner is participating in the Dollar Cost Averaging
Program, the Source Accounts may not be included in the Rebalancing allocations
(see "Dollar Cost Averaging"). A Contract Owner may select that rebalancing
occur on a quarterly, semi-annual or annual basis. Rebalancing will occur on the
date requested by the Contract Owner. Any transfers made pursuant to the
Asset Rebalancing Program are not counted in determining the number of
transfers subject to the Transfer Fee. In the event there are additional
transfers, the Transfer Fee may be charged. The Insurance Company reserves the
right to terminate, modify or suspend its Asset Rebalancing Program at any time.
There is no current charge for Asset Rebalancing but the Insurance Company
reserves the right to charge for this program.
Automatic Investment Plan
The Automatic Investment Plan (AIP) is a program by which a Contract Owner may
make monthly or quarterly investments by electronic funds transfer from their
checking or savings account if their bank is a member of an Automatic Clearing
House. Election of this program may occur at the time a Contract is issued, or
at any time thereafter by completing and signing the appropriate form and
returning it to the Insurance Company. The form must be received in good order
by the first of the month in order for AIP to begin that same month. Investments
take place on the 20th of the month, or the next business day. AIP may not be
used for the initial Purchase Payment. The minimum investment that may be made
by AIP is $100.
AIP is subject to any regulations that may govern the bank account, the
Automatic Clearing House, or the Contract. The Insurance Company may correct any
error by a debit or credit to the Contract Owner's bank account and/or Contract.
Participation in AIP may be stopped at any time at the request of the Contract
Owner. When the Insurance Company is advised to stop AIP, no automatic
investments will be processed until signed authorization is received to initiate
the plan again. The Insurance Company will need to be notified by the first of
the month in order to stop or change AIP within that month. If a transaction is
rejected or returned to the Insurance Company for any reason, including stop
payment, insufficient funds, or account closed, the respective number of units
will be removed from the Contract Owner's account, and AIP will be discounted.
If AIP is used for a Qualified Contract, the Contract Owner should contact his
or her tax adviser for advice regarding maximum contributions.
Contract Value
The Contract Value for any Valuation Period is equal to the total dollar value
accumulated under the Contract. The Contract Value in a Sub-Account is
determined by multiplying the number of Accumulation Units allocated to the
Contract Value for the Sub-Account by the Accumulation Unit Value. Purchase
Payments, withdrawals and transfers from or to a Sub-Account will result in the
addition of or the cancellation of Accumulation Units in a Sub-Account.
Accumulation Unit
For each Sub-Account, Accumulation Units are used to account for all amounts
allocated to or withdrawn from the Sub-Accounts as a result of Purchase
Payments, withdrawals, transfers, fees or charges. This is done by dividing the
amount allocated to (or withdrawn from) the Sub-Account by the dollar value of
one Accumulation Unit of the Sub-Account as of the end of the Valuation Period
during which the request for the transaction is received at the Valuemark
Service Center. The Accumulation Unit value for each Sub-Account was arbitrarily
set initially. The Accumulation Unit value for any later Valuation Period is
determined by multiplying the Accumulation Unit Value for the immediately
preceding Valuation Period by the Net Investment Factor (see below) for the
Sub-Account for the current period.
The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.
Net Investment Factor: The Net Investment Factor for each Sub-Account is
determined by dividing A by B and multiplying by (1-C) where:
<TABLE>
<CAPTION>
<S> <C>
A is (i) the net asset value per share of the Eligible
Investment or the Fund of an Eligible Investment held by
the Sub-Account at the end of the current Valuation Period;
plus
(ii) any dividend or capital gains per share declared on
behalf of such Eligible Investment or Fund that has an
ex-dividend date within the current Valuation Period.
B is the net asset value per share of the Eligible Investment
or Fund held by the Sub-Account for the immediately
preceding Valuation Period.
C is (i) the Valuation Period equivalent of the daily
Mortality and Expense Risk Charge, and for the
Administrative Charge; plus
(ii) a charge factor, if any, for any taxes or any tax
reserve the Insurance Company has established as a result
of the operation or maintenance of the Sub-Account.
</TABLE>
DISTRIBUTOR
NALAC Financial Plans, Inc. ("NFP"), 1750 Hennepin Avenue, Minneapolis,
Minnesota, acts as the distributor of the Contracts. NFP is a wholly-owned
subsidiary of the Insurance Company. The Contracts are offered on a continuous
basis. NFP has subcontracted with Franklin Advisers, Inc. ("Advisers") for it
and/or certain of its affiliates to provide certain marketing support services
and NFP compensates these entities for their services.
Commissions will be paid to broker-dealers who sell the Contracts. Broker-
dealers will be paid commissions, up to an amount currently equal to 6.0% of
Purchase Payments, for promotional or distribution expenses associated with the
marketing of the Contracts. The Insurance Company may, by agreement with the
broker/dealer, pay commissions as a combination of a certain percentage amount
at the time of sale and a trail commission (which when combined could exceed
6.0% of Purchase Payments). In addition, under certain circumstances, the
Insurance Company and/or Advisers, or certain of its affiliates, under a
marketing support agreement with NFP may pay certain sellers for other services
not directly related to the sale of the Contracts such as special marketing
support allowances. Commissions may be recovered from broker-dealers if a full
or partial surrender occurs within 12 months of a Purchase Payment.
SURRENDERS
During the Accumulation Period, the Contract Owner may, upon Authorized Request,
make a total or partial surrender of the Contract Surrender Value. Surrenders
will result in the cancellation of Accumulation Units from each Sub-Account or a
reduction in the Fixed Account Contract Value in the ratio that the value of
each Sub-Account or Fixed Account bears to the total Contract Value. The
Contract Owner must specify, by Authorized Request, which Accumulation Units are
to be canceled or Fixed Account Contract Value is to be reduced if other than
the above mentioned method of cancellation or reduction is desired. The
Insurance Company will pay the amount of any withdrawal from the Variable
Account within seven (7) days of receipt of a request in good order, unless the
"Suspension or Deferral of Payments" provision is in effect. (See "Surrenders -
Suspension or Deferral of Payments.")
The minimum Contract Value that must remain in the Contract after a partial
surrender is $2,000. Each partial surrender must be for at least $500.
Certain tax withdrawal penalties and restrictions may apply to surrenders from
Contracts. (See "Tax Status.") For Contracts purchased in connection with 403(b)
plans, the Code limits the withdrawal of amounts attributable to contributions
made pursuant to a salary reduction agreement (as defined in Section 403(b)(11)
of the Code) to circumstances only when the Contract Owner: (1) attains age 59
1/2; (2) separates from service; (3) dies; (4) becomes disabled (within the
meaning of Section 72(m)(7) of the Code); or (5) in the case of hardship.
However, withdrawals for hardship are restricted to the portion of the Contract
Owner's Contract Value which represents contributions made by the Contract Owner
and does not include any investment results. The limitations on withdrawals
became effective on January 1, 1989 and apply only to salary reduction
contributions made after December 31, 1988, to income attributable to such
contributions and to income attributable to amounts held as of December 31,
1988. The limitations on withdrawals do not affect rollovers or transfers
between certain Qualified Plans. Contract Owners should consult their own tax
counsel or other tax adviser regarding any distributions.
Systematic Withdrawal Plan
The Insurance Company permits a Systematic Withdrawal Plan which enables a
Contract Owner to pre-authorize a periodic exercise of the contractual surrender
rights described above. If the Contract Owner's Contract Value is $25,000 or
more, he or she can select the Systematic Withdrawal Plan in lieu of the Free
Surrender Amount (see "Charges and Deductions - Contingent Deferred Sales Charge
- - Free Surrender Amount"). Systematic withdrawal is not available for
Non-Qualified Contracts where the Contract Owner is under age 59 1/2. Certain
tax penalties and restrictions may apply to systematic withdrawals from the
Contracts. (See "Tax Status - Tax Treatment of Withdrawals - Qualified
Contracts.") Contract Owners entering into such a plan instruct the Insurance
Company to withdraw a level dollar amount from the Contract on a monthly or
quarterly basis if the Contract Owner's Contract Value is $25,000 or more. The
amount deducted will result in the cancellation of Accumulation Units from each
applicable Sub-Account and/or reducing values in the Fixed Account in the ratio
that the value of each Sub-Account and/or the Fixed Account bears to the total
Contract Value. The Contract Owner must specify in writing in advance which
units are to be canceled or values are to be reduced if other than the above
mentioned method of cancellation is desired. The total systematic withdrawals in
a Contract Year which can be made without incurring a Contingent Deferred Sales
Charge is limited to not more than 15% of the Contract Value determined on the
date the request is processed. There is no limit to the amount or percentage of
the systematic withdrawals if the Purchase Payments are no longer subject
to a Contingent Deferred Sales Charge. If the Contract Owner selects the
Systematic Withdrawal Plan, any additional surrenders will be subject to the
applicable Contingent Deferred Sales Charge. The Insurance Company reserves
the right to modify the eligibility rules at any time, without notice. The
Systematic Withdrawal Plan will be terminated at the death of the Contract
Owner or upon receipt of written instructions.
Minimum Distribution Program
If the Contract Owner owns a Qualified Contract and the Contract Value is
$25,000 or more, he or she can elect the Minimum Distribution Program.
Distributions will be made on a monthly or quarterly basis and will not be
subject to a Contingent Deferred Sales Charge. Such distributions will be
designed to meet the applicable minimum distribution requirements imposed by the
Internal Revenue Code on Qualified Contracts. Distributions from a Contract
Owner's Qualified Contract pursuant to the Minimum Distribution Program are in
lieu of the Free Surrender Amount (see "Charges and Deductions - Deduction for
Contingent Deferred Sales Charge - Free Surrender Amount"). If the Contract
Owner has elected the Minimum Distribution Program, any additional surrenders
will be subject to any applicable Contingent Deferred Sales Charge.
Suspension or Deferral of Payments Provision
The Insurance Company reserves the right to suspend or postpone payments from
the Variable Account for a withdrawal or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held in
the Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners. The applicable rules
and regulations of the Securities and Exchange Commission will govern as to
whether the conditions described in 2. and 3. exist.
The Insurance Company reserves the right to defer payment for a withdrawal or
transfer from the Fixed Account for the period permitted by law but not for more
than six months after written election is received by the Insurance Company.
ADMINISTRATION OF THE CONTRACTS
While the Insurance Company has primary responsibility for all administration of
the Contracts, it has retained the services of Delaware Valley Financial
Services, Inc. ("DVFS" or "Valuemark Service Center") pursuant to an
Administration Agreement. Such administrative services include issuance of the
Contracts and maintenance of Contract Owners' records. The Insurance Company
pays all fees and charges of DVFS. DVFS serves as the administrator to various
insurance companies offering variable and fixed annuity and variable life
insurance contracts. The Insurance Company's ability to administer the
Contracts could be adversely affected should DVFS elect to terminate the
Agreement.
PERFORMANCE DATA
Money Market Sub-Account
From time to time, the Insurance Company or NFP may advertise the "yield" and
"effective yield" of the Money Market Sub-Account. Both yield figures will be
based on historical earnings and are not intended to indicate future
performance. The "yield" of the Money Market Sub-Account refers to the income
generated by Contract Values in the Money Market Sub-Account over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the Contract Values in the Money Market Sub- Account.
The "effective yield" is calculated similarly but, when annualized, the income
earned by Contract Values in the Money Market Sub-Account is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The computation
of the yield calculation includes a deduction for the Mortality and Expense Risk
Charge, Administrative Charge and the Contract Maintenance Charge.
Other Sub-Accounts
From time to time, the Insurance Company or NFP may publish the current yields
and total returns of the other Sub-Accounts in advertisements and communications
to Contract Owners. The current yield for each Sub-Account will be calculated by
dividing the annualization of the interest income earned by the underlying Fund
during a recent 30-day period by the maximum Accumulation Unit value at the end
of such period. Total return information will include the underlying Fund's
average annual compounded rate of return over the most recent four calendar
quarters, for a five year period (if available) and the period from the
underlying Fund's inception of operations, based upon the value of the
Accumulation Units acquired through a hypothetical $1,000 investment at the
Accumulation Unit value at the beginning of the specified period and the value
of the Accumulation Unit at the end of such period, assuming reinvestment of all
distributions and the deduction of the Mortality and Expense Risk Charge, the
Administrative Charge and the prorated Contract Maintenance Charge. Each
Sub-Account may also advertise aggregate and average total return information
over different periods of time.
In each case, the yield and total return figures will reflect all recurring
charges against the Sub-Account's income, including the deduction for the
Mortality and Expense Risk Charge, the Administrative Charge and the Contract
Maintenance Charge for the applicable time period. The Insurance Company or NFP
may, in addition, advertise or present yield or total return performance
information computed on different basis, or for the Funds. Contract Owners
should note that the investment results of each Sub-Account will fluctuate over
time, and any presentation of a Sub-Account's current yield or total return for
any prior period should not be considered as a representation of what an
investment may earn or what a Contract Owner's yield or total return may be in
any future period. Hypothetical performance illustrations, for a hypothetical
contract, may be prepared for sales literature or advertisements. See
"Calculation of Performance Data" in the Statement of Additional Information.
Hypothetical Performance
The Funds have been in existence for some time and have investment performance
history. However, the Contracts and the Accumulation Units attributable to them
are new. In order to demonstrate how the actual investment experience of the
various Funds affects Accumulation Unit values for the Contracts, the Insurance
Company may present hypothetical performance information. The information will
be based upon the historical experience of the Funds and will be for the periods
shown.
The performance of the Accumulation Units will vary and the hypothetical results
shown are not necessarily representative of future results. Performance for
periods ending after those shown may vary substantially. The performance is
calculated for a specified period of time by assuming an initial Purchase
Payment of $1,000 allocated to each of the Sub-Accounts and a deduction of the
Mortality and Expense Risk Charge, the Administrative Charge, the Contract
Maintenance Charge and the Contingent Deferred Sales Charge. The hypothetical
performance figures will also reflect the actual fees and expenses paid by the
Funds. The percentage increases are determined by subtracting the initial
Purchase Payment from the ending value and dividing the remainder by the
beginning value. The Insurance Company may also present hypothetical performance
computed on a different basis which may not include certain charges. If such
charges had been deducted, the performance would be lower.
Performance Ranking
The performance of each or all of the Sub-Accounts of the Variable Account may
be compared in its advertisements and sales literature to the performance of
other variable annuity issuers in general or to the performance of particular
types of variable annuities investing in mutual funds, or series of mutual funds
with investment objectives similar to each of the Sub-Accounts of the Variable
Account or indices. Lipper Analytical Services, Inc. ("Lipper") and the Variable
Annuity Research and Data Service ("VARDS") are independent services which
monitor and rank the performance of variable annuity issuers in each of the
major categories of investment objectives on an industry-wide basis.
Lipper's rankings include variable life issuers as well as variable annuity
issuers. VARDS rankings compare only variable annuity issuers. The performance
analyses prepared by Lipper and VARDS rank such issuers on the basis of total
return, assuming reinvestment of distributions, but do not take sales charges,
redemption fees or certain expense deductions at the separate account level into
consideration. In addition, VARDS prepares risk adjusted rankings, which
consider the effects of market risk on total return performance. This type of
ranking may address the question as to which funds provide the highest total
return with the least amount of risk. Other ranking services may be used as
sources of performance comparison, such as CDA/Weisenberger and Morningstar.
TAX STATUS
NOTE: The following description is based upon the Insurance Company's
understanding of current federal income tax law applicable to annuities in
general. The Insurance Company cannot predict the probability that any
changes in such laws will be made. Purchasers are cautioned to seek
competent tax advice regarding the possibility of such changes. The Insurance
Company does not guarantee the tax status of the Contracts. Purchasers bear the
complete risk that the Contracts may not be treated as "annuity contracts" under
federal income tax laws. It should be further understood that the following
discussion is not exhaustive and that special rules not described in this
Prospectus may be applicable in certain situations. Moreover, no attempt has
been made to consider any applicable state or other tax laws.
General
Section 72 of the Code governs taxation of annuities in general. A Contract
Owner is not taxed on increases in the value of a Contract until distribution
occurs, either in the form of a lump sum payment or as annuity payments under
the Annuity Option elected. For a lump sum payment received as a total surrender
(total redemption) or death benefit, the recipient is taxed on the portion of
the payment that exceeds the cost basis of the Contract. For Non- Qualified
Contracts, this cost basis is generally the purchase payments, while for
Qualified Contracts there may be no cost basis. The taxable portion of the lump
sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includable in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the Contract (adjusted for any period certain or refund
feature) bears to the expected return under the Contract. The exclusion amount
for payments based on a variable annuity option is determined by dividing the
cost basis of the Contract (adjusted for any period certain or refund guarantee)
by the number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e. when the
total of the excludable amounts equal the investment in the Contract) are fully
taxable. The taxable portion is taxed at ordinary income rates. For certain
types of Qualified Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Contract Owners, Annuitants and Beneficiaries
under the Contracts should seek competent financial advice about the tax
consequences of any distributions.
The Insurance Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the Variable Account is not a separate entity from
the Insurance Company, and its operations form a part of the Insurance Company.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Insurance Company intends that all Funds of the Trust underlying the
Contracts will be managed by the Managers for the Trust in such a manner as to
comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investments of the Variable Account will cause the Contract Owner to be
treated as the owner of the assets of the Variable Account, thereby resulting in
the loss of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Contract Owner's ability to transfer
among investment choices or the number and type of investment choices available,
would cause the Contract Owner to be considered as the owner of the assets of
the Variable Account resulting in the imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to
receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Contract Owner being
retroactively determined to be the owner of the assets of the Variable Account.
Due to the uncertainty in this area, the Insurance Company reserves the right to
modify the Contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year period to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences, including more rapid taxation of the distributed amounts
from such combination of contracts. Contract Owners should consult a tax
adviser prior to purchasing more than one non-qualified annuity contract in
any calendar year period.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on Purchase Payments
for the Contracts will be taxed currently to the Contract Owner if the Owner is
a non-natural person, e.g., a corporation or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust or
other entity as an agent for a natural person nor to Contracts held by Qualified
Plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a Contract may be a taxable event. Contract Owners
should therefore consult competent tax advisers should they wish to assign or
pledge their Contracts.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the Contract Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Contract Owner, in most
cases, may elect not to have taxes withheld or to have withholding done at a
different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement generally does not apply to:
a) a series of substantially equal payments made at least annually for the life
or life expectancy of the participant or joint and last survivor expectancy of
the participant and a designated beneficiary, or for a specified period of 10
years or more; or b) distributions which are required minimum distributions; or
(c) the portion of the distributions not includible in gross income (i.e.
returns of after-tax contributions). Participants should consult their own tax
counsel or other tax adviser regarding withholding requirements.
Tax Treatment of Withdrawals - Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any distribution. However, the penalty is not imposed on amounts received: (a)
after the taxpayer reaches age 59 1/2; (b) after the death of the Contract
Owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his Beneficiary; (e) under an
immediate annuity; or (f) which are allocable to purchase payments made prior to
August 14, 1982.
The above information does not apply to Qualified Contracts. However,
separate tax withdrawal penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
Qualified Plans
The Contracts offered by this Prospectus are designed to be suitable for use
under various types of Qualified Plans. Because of the minimum purchase payment
requirements, these Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified Plan varies with
the type of plan and terms and conditions of each specific plan. Contract
Owners, Annuitants and Beneficiaries are cautioned that benefits under a
Qualified Plan may be subject to the terms and conditions of the plan regardless
of the terms and conditions of the Contracts issued pursuant to the plan. Some
retirement plans are subject to distribution and other requirements that are not
incorporated into the Insurance Company's administrative procedures. Contract
Owners, participants and Beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. Following are general descriptions of the
types of Qualified Plans with which the Contracts may be used. Such descriptions
are not exhaustive and are for general informational purposes only. The tax
rules regarding Qualified Plans are very complex and will have differing
applications, depending on individual facts and circumstances. Each purchaser
should obtain competent tax advice prior to purchasing a Contract issued under a
Qualified Plan.
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by the Insurance Company in
connection with Qualified Plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts.")
a. H.R. 10 Plans
Section 401 of the Code permits self-employed individuals to establish Qualified
Plans for themselves and their employees, commonly referred to as "H.R. 10" or
"Keogh" plans. Contributions made to the Plan for the benefit of the employees
will not be included in the gross income of the employees until distributed from
the Plan. The tax consequences to participants may vary, depending upon the
particular Plan design. However, the Code places limitations and restrictions on
all Plans, including on such items as: amounts of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting
and nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
Purchasers of Contracts for use with an H.R. 10 Plan should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
b. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the Contracts for the benefit of their employees. Such
contributions are not includable in the gross income of the employee until the
employee receives distributions from the Contract. The amount of contributions
to the tax-sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals Qualified Contracts" and "Tax-Sheltered Annuities -
Withdrawal Limitations.") Employee loans are not allowed under these Contracts.
Any employee should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
c. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which may be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts.") Under
certain conditions, distributions from other IRAs and other Qualified Plans may
be rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.
d. Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to establish
various types of retirement plans for employees. These retirement plans may
permit the purchase of the Contracts to provide benefits under the Plan.
Contributions to the Plan for the benefit of employees will not be includable in
the gross income of the employee until distributed from the Plan. The tax
consequences to participants may vary, depending upon the particular Plan
design. However, the Code places limitations and restrictions on all Plans,
including on such items as: amount of allowable contributions; form, manner and
timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Participant loans are not allowed under the Contracts purchased in
connection with these Plans. (See "Tax Treatment of Withdrawals Qualified
Contracts.") Purchasers of Contracts for use with Corporate Pension
or Profit- Sharing Plans should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
Tax Treatment of Withdrawals - Qualified Contracts
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including Contracts
issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension and
Profit-Sharing Plans), 403(b) (Tax-Sheltered Annuities) and 408(b) (Individual
Retirement Annuities). To the extent amounts are not includible in gross income
because they have been properly rolled over to an IRA or to another eligible
Qualified Plan, no tax penalty will be imposed. The tax penalty will not apply
to the following distributions: (a) if distribution is made on or after the date
on which the Contract Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Contract Owner or
Annuitant (as applicable) (for this purpose disability is as defined in Section
72(m)(7) of the Code); (c) after separation from service, distributions that are
part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Contract Owner or Annuitant
(as applicable) or the joint lives (or joint life expectancies) of such Contract
Owner or Annuitant (as applicable) and his designated beneficiary; (d)
distributions to a Contract Owner or Annuitant (as applicable) who has separated
from service after he has attained age 55; (e) distributions made to the
Contract Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; and (f) distributions made to an alternate payee pursuant
to a qualified domestic relations order.
The exceptions stated in items (d), (e) and (f) above do not apply in the case
of an Individual Retirement Annuity. The exception stated in item (c) applies to
an Individual Retirement Annuity without the requirement that there be a
separation from service.
Generally, distributions from a Qualified Plan must commence no later than April
1 of the calendar year following the year in which the employee attains age 70
1/2. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed. In addition, distributions in excess of $150,000 per year may be
subject to an additional 15% excise tax unless an exception applies.
Tax-Sheltered Annuities - Withdrawal Limitations
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Contract Owner: (1) attains age 59 1/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value which represents contributions by the Contract Owner and does not
include any investment results. The limitations on withdrawals became
effective on January 1, 1989 and apply only to salary reduction
contributions made after December 31, 1988, and to income attributable
to such contributions and to income attributable to amounts held as of December
31, 1988. The limitations on withdrawals do not affect rollovers and transfers
between certain Qualified Plans. Contract Owners should consult their own tax
counsel or other tax adviser regarding any distributions.
FINANCIAL STATEMENTS
Audited consolidated financial statements of the Insurance Company and audited
financial statements of the Variable Account as of and for the year ended
December 31, 1995 are included in the Statement of Additional Information.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the Distributor
is a party or to which the assets of the Variable Account are subject. The
Insurance Company is not involved in any litigation that is of material
importance in relation to its total assets or that relates to the Variable
Account.
TABLE OF CONTENTS OF
THE STATEMENT OF ADDITIONAL INFORMATION
Item Page
Insurance Company. . . . . . . . . . . . . . . . . . . . . . . . . .
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributor. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calculation of Performance Data. . . . . . . . . . . . . . . . . . .
Annuity Provisions . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed Annuity Payout. . . . . . . . . . . . . . . . . . . . . . .
Variable Annuity Payout . . . . . . . . . . . . . . . . . . . . .
Annuity Unit Value. . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS
issued by
ALLIANZ LIFE VARIABLE ACCOUNT B
and
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
____________________, 1996
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, CALL OR WRITE
THE INSURANCE COMPANY AT: 1750 Hennepin Avenue, Minneapolis, MN 55403-2195,
(800) 542-5427.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE DATED
____________, 1996, AND AS MAY BE AMENDED FROM TIME TO TIME.
TABLE OF CONTENTS
INSURANCE COMPANY..............................................................
EXPERTS ......................................................................
DISTRIBUTOR....................................................................
CALCULATION OF PERFORMANCE DATA................................................
ANNUITY PROVISIONS.............................................................
Fixed Annuity Payout..................................................
Variable Annuity Payout...............................................
Annuity Unit Value....................................................
FINANCIAL STATEMENTS...........................................................
INSURANCE COMPANY
Information regarding Allianz Life Insurance Company of North America (the
"Insurance Company") and its ownership is contained in the Prospectus. On April
1, 1993, the Insurance Company changed its name from North American Life and
Casualty Company to its present name. The Insurance Company is rated A+
(Superior) by A.M. BEST, an independent analyst of the insurance industry. The
financial strength of an insurance company may be relevant insofar as the
ability of a company to make fixed annuity payments from its general account.
EXPERTS
The financial statements of Allianz Life Variable Account B and the consolidated
financial statements of Allianz Life Insurance Company of North America as of
and for the year ended December 31, 1995, included in this Statement of
Additional Information have been audited by _______________________, independent
auditors, as indicated in their reports included in this Statement of Additional
Information and are included herein in reliance upon such reports and upon the
authority of said firm as experts in accounting and auditing.
LEGAL OPINIONS
Legal matters in connection with the Contracts described herein are being passed
upon by the law firm of Blazzard, Grodd & Hasenauer, P.C., Westport,
Connecticut.
DISTRIBUTOR
NALAC Financial Plans, Inc., a wholly owned subsidiary of the Insurance Company,
acts as the distributor. The offering is on a continuous basis.
CALCULATION OF PERFORMANCE DATA
The Money Market Sub-Account. The Money Market Sub-Account's current yield may
vary each day, depending upon, among other things, the average maturity of the
underlying Fund's investment securities and changes in interest rates, operating
expenses, the deduction of the Mortality and Expense Risk Charge, the
Administrative Charge and the Contract Maintenance Charge and, in certain
instances, the value of the underlying Fund's investment securities. The fact
that the Sub-Account's current yield will fluctuate and that the principal is
not guaranteed should be taken into consideration when using the Sub-Account's
current yield as a basis for comparison with savings accounts or other fixed-
yield investments. The Sub-Account's yield at any particular time is not
indicative of what the yield may be at any other time. The Insurance Company
does not currently advertise any yield information for the Money Market Sub-
Account.
The Money Market Sub-Account's current yield is computed on a base period return
of a hypothetical Contract having a beginning balance of one Accumulation Unit
for a particular period of time (generally seven days). The return is determined
by dividing the net change (exclusive of any capital changes) in such
Accumulation Unit by its beginning value, and then multiplying it by 365/7 to
get the annualized current yield. The calculation of net change reflects the
value of additional shares purchased with the dividends paid by the Fund, and
the deduction of the Mortality and Expense Risk Charge, the Administrative
Charge and Contract Maintenance Charge. The effective yield reflects the effects
of compounding and represents an annualization of the current return with all
dividends reinvested. (Effective yield = [(Base Period Return + 1)365/7]-1.)
Other Sub-Accounts. From time to time, the other Sub-Accounts may state their
total return in advertisements and Contract Owner communications. Any statements
of total return or other performance data of a Sub-Account will be accompanied
by information on that Sub-Account's average annual compounded rate of return
over the most recent four calendar quarters, for a five year period (if
available) and the period from the Sub-Account's inception of operations. Each
Sub-Account may also advertise aggregate and average total return information
over different periods of time.
Each Sub-Account's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 Contract Value, according to the following
formula:
n
P (1 + T) = ERV
<TABLE>
<CAPTION>
<S> <C>
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
purchase payment made at the beginning of the
period at the end of the period.
</TABLE>
Aggregate total return is calculated in a similar manner, except that the
results are not annualized. Each calculation assumes that no sales load is
deducted from the initial $1,000 of payment at the time it is allocated to the
Sub-Account and assumes that the income earned by the investment in the Sub-
Account is reinvested.
Each Sub-Account may also quote its current yield in advertisements and Contract
Owner communications. Each Sub-Account (other than the Money Market Sub-Account)
will publish standardized total return information with any quotation of current
yield.
The yield computation is determined by dividing the net investment income per
Accumulation Unit earned during the period (minus the deduction for the
Mortality and Expense Risk Charge, Administrative Charge and the Contract
Maintenance Charge) by the Accumulation Unit Value on the last day of the period
and annualizing the resulting figure, according to the following formula:
6
Yield = 2 [(a-b) + 1] - 1]
_____
cd
Where:
<TABLE>
<CAPTION>
<S> <C>
a = net investment income earned during the period by the Fund
attributable to shares owned by the Sub-Account
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of Accumulation Units outstanding during the
period
d = the maximum offering price per Accumulation Unit on the last day of
the period
</TABLE>
The above formula will be used in calculating quotations of yield, based on
specified 30-day periods identified in the advertisement or communication.
Yield calculations assume no sales load.
Each Sub-Account's total return may be compared to relevant indices, including
U. S. domestic and international taxable bond indices and data from Lipper
Analytical Services, Inc., Standard & Poor's Indices, or VARDS.
From time to time, evaluations of each Sub-Account's performance by independent
sources may also be used in advertisements and in information furnished to
present or prospective Contract Owners.
Hypothetical Performance Information
The Funds have been in existence for some time and have investment performance
history. However, the Contracts and the Accumulation Units attributable to them
are new. In order to demonstrate how the actual investment experience of the
Funds affects Accumulation Unit values, the following hypothetical performance
information was developed. The information is based upon the historical
experience of the Funds and is for the periods shown.
The performance of the Accumulation Units will vary and the hypothetical results
shown are not necessarily representative of future results. Performance for
periods ending after those shown may vary substantially from the examples shown
below. The chart below shows the performance calculated for a specified period
of time assuming an initial Purchase Payment of $1,000 allocated to each of the
Sub-Accounts and a deduction of the Mortality and Expense Risk Charge, the
Administrative Charge, the Contract Maintenance Charge and the Contingent
Deferred Sales Charge (see "Charges and Deductions" in the Prospectus for more
information). The hypothetical performance figures also reflect the actual fees
and expenses paid by the Fund. The percentage increases are determined by
subtracting the initial Purchase Payment from the ending value and dividing the
remainder by the beginning value.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Periods Ended 12/31/95:
Since Inception
Sub-Account 1 Year 5 Years Inception Date
- ----------- ------ ------- --------- -------
</TABLE>
The Insurance Company may also present hypothetical performance information
computed on a different basis.
Contract Owners should note that the investment results of the Sub-Account will
fluctuate over time, and any presentation of the Sub-Account's total return for
any period should not be considered as a representation of what an investment
may earn or what a Contract Owner's total return may be in any future period.
ANNUITY PROVISIONS
Fixed Annuity Payout
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Insurance Company and do not vary with the investment experience
of the Variable Account. The Fixed Account value on the day immediately
preceding the Annuity Date will be used to determine the Fixed Annuity monthly
payment. The monthly Annuity Payment will be based upon the Contract Value at
the time of annuitization, the Annuity Option selected, the age of the annuitant
and any joint annuitant and the sex of the annuitant and joint annuitant where
allowed.
Variable Annuity Payout
A variable annuity is an annuity with payments which: (1) are not predetermined
as to dollar amount; and (2) will vary in amount with the net investment results
of the applicable Sub-Account(s) of the Variable Account.
Annuity Unit Value:
On the Income Date a fixed number of Annuity Units will be purchased as follows:
The first Annuity Payment is equal to the Adjusted Contract Value, divided first
by $1,000 and then multiplied by the appropriate Annuity Payment amount for each
$1,000 of value for the Annuity Option selected. In each Sub-Account the fixed
number of Annuity Units is determined by dividing the amount of the initial
Annuity Payment determined for each Sub-Account by the Annuity Unit value on the
Income Date. Thereafter, the number of Annuity Units in each Sub- Account
remains unchanged unless the Contract Owner elects to transfer between
Sub-Accounts. All calculations will appropriately reflect the Annuity Payment
frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum of
the Annuity Payments for each Sub-Account. The Annuity Payment in each Sub-
Account is determined by multiplying the number of Annuity Units then allocated
to such Sub-Account by the Annuity Unit value for that Sub-Account.
On each subsequent Valuation Date, the value of an Annuity Unit is determined in
the following way:
First: The Net Investment Factor is determined as described in the Prospectus.
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a. the value of the Annuity Unit for the immediately preceding Valuation
Period.
b. multiplied by the Net Investment Factor for the current Valuation
Period;
c. divided by the Assumed Net Investment Factor (see below) for the
Valuation Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that the Insurance Company will use is 5%. However, the Insurance Company
may agree to use a different value.
FINANCIAL STATEMENTS
The audited consolidated financial statements of the Insurance Company as of and
for the year ended December 31, 1995, included herein should be considered only
as bearing upon the ability of the Insurance Company to meet its obligations
under the Contracts. The audited financial statements of the Variable Account as
of and for the year ended December 31, 1995 are also included herein.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
The financial statements of the Insurance Company and the Variable
Account will be filed by Pre-Effective Amendment.
b. Exhibits
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account
2. Not Applicable
3. Principal Underwriter's Agreement (to be filed by Amendment)
4. Individual Variable Annuity Contract
4.a. Waiver of Contingent Deferred Sales Charge Endorsement
4.b. Enhanced Death Benefit Endorsement
5. Application for Individual Variable Annuity Contract
6. (i) Copy of Articles of Incorporation of the Company
(ii) Copy of the Bylaws of the Company
7. Not Applicable
8. Form of Fund Participation Agreement
9. Opinion and Consent of Counsel (to be filed by Amendment)
10. Independent Auditors' Consent (to be filed by Amendment)
11. Not Applicable
12. Not Applicable
13. Not Applicable
14. Company Organizational Chart*
27. Financial Data Schedule (to be filed by Amendment)
* Incorporated by reference to Registrant's Post-Effective Amendment No. 9 to
Form N-4 (File No. 811-05618) filed on April 30, 1993.
Item 25. Directors and Officers of the Depositor
The following are the Officers and Directors of the Insurance Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Depositor
Lowell C. Anderson Chairman, President, Chief
1750 Hennepin Avenue Executive Officer and Director
Minneapolis, MN 55403
Herbert F. Hansmeyer Director
777 San Marin Drive
Novato, CA 94998
Michael P. Sullivan Director
7505 Metro Boulevard
Minneapolis, MN 55439
Dr. Jerry E. Robertson Director
220-13E-29/3M Center
St. Paul, MN 55144
Dr. Gerhard Rupprecht Director
Reinsburgstrasse 19
D-70178
Stuttgart, Germany
Edward J. Bonach Senior Vice President, Chief
1750 Hennepin Avenue Financial Officer and Treasurer
Minneapolis, MN 55403
Alan A. Grove Vice President-Law & Secretary
1750 Hennepin Avenue
Minneapolis, MN 55403
Robert S. James President - Individual
1750 Hennepin Avenue Division
Minneapolis, MN 55403
Ronald L. Wobbeking President-Mass Marketing Division
1750 Hennepin Avenue
Minneapolis, MN 55403
Rev. Dennis Dease Director
c/o University of St. Thomas
215 Summit Avenue
St. Paul, MN 55105-1096
James R. Campbell Director
c/o Norwest Corp.
Norwest Center
Sixth & Marquette
Minneapolis, MN 55479-0116
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
The Insurance Company organizational chart was included as Exhibit 14 in a
Registration Statement on Form N-4 filed on April 30, 1993 (File No. 811-05618).
Item 27. Number of Contract Owners
Not Applicable
Item 28. Indemnification
The Bylaws of the Insurance Company provide that:
Each person (and the heirs, executors, and administrators of such person) made
or threatened to be made a party to any action, civil or criminal, by reason of
being or having been a Director, officer, or employee of the corporation (or by
reason of serving any other organization at the request of the corporation)
shall be indemnified to the extent permitted by the laws of the State of
Minnesota, and in the manner prescribed therein.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted for directors and officers or controlling persons of the
Insurance Company pursuant to the foregoing, or otherwise, the Insurance Company
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,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Insurance Company of expenses
incurred or paid by a director, officer or controlling person of the Insurance
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriters
a. NALAC Financial Plans, Inc. is the principal underwriter for the
Contracts. It also is the principal underwriter for:
Allianz Life Variable Account A
Preferred Life Variable Account C
b. The following are the officers and directors of NALAC Financial Plans,
Inc.:
<TABLE>
<CAPTION>
<S> <C>
Positions and Offices
Business Address with Underwriter
James P. Kelso Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Alan A. Grove Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Thomas B. Clifford President and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael T. Westermeyer Secretary and Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Michael J. Yates Treasurer
1750 Hennepin Avenue
Minneapolis, MN 55403
Edward J. Bonach Director
1750 Hennepin Avenue
Minneapolis, MN 55403
Catherine L. Mielke Compliance Officer
1750 Hennepin Avenue
Minneapolis, MN 55403
</TABLE>
Item 30. Location of Accounts and Records
Thomas Clifford, whose address is 1750 Hennepin Avenue, Minneapolis, Minnesota,
maintains physical possession of the accounts, books or documents of the
Variable Account required to be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules promulgated thereunder.
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a. Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than sixteen
(16) months old for so long as payment under the variable annuity contracts may
be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
REPRESENTATIONS
The Insurance Company hereby represents that it is relying upon a No Action
Letter issued to the American Council of Life Insurance, dated November 28, 1988
(Commission ref. IP-6-88), and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, the Registrant has caused this Registration Statement to be
signed on its behalf in the City of Minneapolis and State of Minnesota, on this
30th day of May, 1996.
ALLIANZ LIFE
VARIABLE ACCOUNT B
(Registrant)
By: ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /S/ ALAN A. GROVE
--------------------------------
Alan A. Grove
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Depositor)
By: /S/ MICHAEL T. WESTERMEYER
---------------------------------
Michael T. Westermeyer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature and Title
<TABLE>
<CAPTION>
<S> <C> <C>
Chairman of the Board,
/S/LOWELL C. ANDERSON President 5/30/96
Lowell C. Anderson and Chief Executive Officer
Herbert F. Hansmeyer* Director 5/30/96
Herbert F. Hansmeyer
Michael P. Sullivan* Director 5/30/96
Michael P. Sullivan
Dr. Jerry E. Robertson* Director 5/30/96
Dr. Jerry E. Robertson
Dr. Gerhard Rupprecht* Director 5/30/96
Dr. Gerhard Rupprecht
Edward J. Bonach* Chief Financial Officer 5/30/96
Edward J. Bonach
Rev, Dennis Dease* Director 5/30/96
Rev. Dennis Dease
James R. Campbell* Director 5/30/96
James R. Campbell
</TABLE>
*By Power of Attorney
By: /S/ ALAN A. GROVE
--------------------------------
Alan A. Grove
Attorney-in-Fact
EXHIBITS
TO
FORM N-4
ALLIANZ LIFE VARIABLE ACCOUNT B
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
INDEX TO EXHIBITS
Exhibit Page
99.B1 Resolution of Board of Directors of the Company
99.B4 Individual Variable Annuity Contract
99.B4a Waiver of Contingent Deferred Sales Charge Endorsement
99.B4b Enhanced Death Benefit Endorsement
99.B5 Application for Individual Variable Annuity Contract
99.B6(i) Copy of Articles of Incorporation of the Company
99.B6(ii)Copy of the Bylaws of the Company
99.B8 Form of Fund Participation Agreement
The following resolution was adopted at a meeting of the Board
of Directors of North American Life and Casualty Company on
May 31, 1985:
RESOLVED: That this company is hereby authorized to establish one or
more separate accounts in accordance with state insurance laws and to
issue variable and fixed annuity contracts and variable and fixed life
insurance policies with the reserves for such contracts and policies
being segregated in such separate accounts or in the general accounts
of this company in the manner specified in the said accounts.
RESOLVED FURTHER: That the President of the Company or such other
executive officer of this company as shall be designated by the President
is hereby authorized to designate such separate accounts as may be deemed
necessary or convenient and to register such separate accounts and those
variable and fixed annuity contracts and life insurance policies authorized
hereby under such federal securities laws as are deemed appropriate.
RESOLVED FURTHER: That the President of this company or such other
executive officer of this company as shall be designated by the President
is hereby authorized to invest such sums in any separate account established
hereby as may be deemed necessary or appropriate to comply with requirements
of applicable law.
RESOLVED FURTHER: That the President of this company and such other
executive officers of this company as may be appropriate, are hereby
authorized to do any act necessary or appropriate to carry out the intention
of this resolution.
I, the undersigned, do hereby certify that I am the duly elected and
qualified Secretary and keeper of the records and corporate seal of North
American Life and Casualty Company, a corporation organized under the laws
of the State of Minnesota, and that the foregoing is a full, true and correct
copy of a resolution duly adopted at a meeting of the Board of Directors of
said Corporation, convened and held in accordance with the law and articles
and bylaws of said Corporation on the 31st day of May, 1985, and that said
resolution supersedes all resolutions previously adopted for the purpose
stated and is now in full force and effect.
Attest /s/ VICKI L. OSBAUGH /s/ ALAN A. GROVE
____________________ ____________________________
Alan A. Grove, Secretary
Allianz Life Insurance Company of North America
1750 Hennepin Avenue (Allianz Logo)
Minneapolis, MN 55403-2195
A Stock Company
This is a legal Contract between the Contract Owner (referred to in this
Contract as you and your) and Allianz Life Insurance Company of North America
(herein referred to as we, us and our). We will make Annuity Payments as set
forth in this Contract beginning on the Income Date.
This Contract is issued in consideration of the payment of the initial
Purchase Payment.
READ YOUR CONTRACT CAREFULLY
RIGHT TO EXAMINE: THIS CONTRACT MAY BE RETURNED WITHIN 10 DAYS AFTER YOU
RECEIVE IT. IT CAN BE MAILED OR DELIVERED TO EITHER US OR THE AGENT WHO
SOLD IT. RETURN OF THIS CONTRACT BY MAIL IS EFFECTIVE ON BEING
POSTMARKED, PROPERLY ADDRESSED AND POSTAGE PREPAID. THE RETURNED CONTRACT
WILL BE TREATED AS IF WE HAD NEVER ISSUED IT. WE WILL PROMPTLY REFUND
THE CONTRACT VALUE IN STATES WHERE PERMITTED. THIS MAY BE MORE OR LESS THAN
THE PURCHASE PAYMENTS. WE HAVE THE RIGHT TO ALLOCATE PAYMENTS TO THE MONEY
MARKET FUND UNTIL THE EXPIRATION OF THE RIGHT TO EXAMINE PERIOD. IF WE
SO ALLOCATE PAYMENTS, WE WILL REFUND THE GREATER OF THE PURCHASE PAYMENTS,
LESS ANY SURRENDERS, OR THE CONTRACT VALUE.
Benefits available under this Contract are not less than those required by
statute of the state in which this Contract is delivered.
This is a Variable Annuity Contract with Annuity Payments and Contract Values
increasing or decreasing depending on the experience of the Variable Account
which is set forth in the Contract Schedule.
Signed for Allianz Life Insurance Company of North America by:
/s/ Alan A Grove /s/Lowell C. Anderson
Vice President and Secretary Chairman of the Board, President, and CEO
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY
NON-PARTICIPATING
TABLE OF CONTENTS
RIGHT TO EXAMINE......................................................1
CONTRACT SCHEDULE.....................................................i
DEFINITIONS...........................................................2
PURCHASE PAYMENTS.....................................................4
PURCHASE PAYMENTS...............................................4
CHANGE IN PURCHASE PAYMENTS.....................................4
NO DEFAULT......................................................4
ALLOCATION OF PURCHASE PAYMENTS.................................4
VARIABLE ACCOUNT......................................................4
THE VARIABLE ACCOUNT............................................4
VALUATION OF ASSETS.............................................5
ACCUMULATION UNITS..............................................5
ACCUMULATION UNIT VALUE.........................................5
NET INVESTMENT FACTOR...........................................5
MORTALITY AND EXPENSE RISK CHARGE...............................5
ADMINISTRATIVE CHARGE...........................................5
DISTRIBUTION EXPENSE CHARGE.....................................6
MORTALITY AND EXPENSE GUARANTEE.................................6
CONTRACT VALUE........................................................6
CONTRACT MAINTENANCE CHARGE...........................................6
SURRENDER PROVISIONS..................................................6
SURRENDERS......................................................7
CONTINGENT DEFERRED SALES CHARGE................................7
PROCEEDS PAYABLE ON DEATH.............................................7
DEATH OF CONTRACT OWNER DURING THE ACCUMULATION PERIOD..........8
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD.............8
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD............8
DEATH OF CONTRACT OWNER DURING THE ANNUITY PERIOD...............8
DEATH OF ANNUITANT..............................................8
PAYMENT OF DEATH BENEFIT........................................8
BENEFICIARY.....................................................9
CHANGE OF BENEFICIARY...........................................9
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION..........................9
CONTRACT OWNER, ANNUITANT, ASSIGNMENT PROVISIONS.....................10
CONTRACT OWNER..................................................10
JOINT OWNER.....................................................10
ANNUITANT.......................................................10
ASSIGNMENT OF A CONTRACT........................................10
ANNUITY PROVISIONS...................................................11
GENERAL........................................................11
INCOME DATE....................................................11
SELECTION OF AN ANNUITY OPTION.................................11
ANNUITY OPTIONS................................................11
OPTION 1 - LIFE ANNUITY....................................11
OPTION 2 - LIFE ANNUITY WITH 120 OR 240 MONTHLY ANNUITY
PAYMENTS GUARANTEED........................................11
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY.................11
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH
120 OR 240 MONTHLY ANNUITY PAYMENTS GUARANTEED.............11
OPTION 5 - REFUND LIFE ANNUITY.............................12
ANNUITY........................................................12
FIXED ANNUITY..................................................12
VARIABLE ANNUITY...............................................15
GENERAL PROVISIONS...................................................18
THE CONTRACT...................................................18
NON-PARTICIPATING IN SURPLUS...................................18
INCONTESTABILITY...............................................18
MISSTATEMENT OF AGE OR SEX.....................................18
CONTRACT SETTLEMENT............................................18
REPORTS........................................................18
TAXES..........................................................18
EVIDENCE OF SURVIVAL...........................................18
PROTECTION OF PROCEEDS.........................................18
MODIFICATION OF CONTRACT.......................................18
CONTRACT SCHEDULE
CONTRACT OWNER: [John Doe] CONTRACT NUMBER: [DA687456]
JOINT OWNER: [Jane Doe] ISSUE DATE: [04/15/96]
ANNUITANT: [John Doe] INCOME DATE: [04/15/06]
PURCHASE PAYMENTS:
INITIAL PURCHASE PAYMENT: [Non-Qualified: $5,000 or
$2,000 if you have selected AIP;
Qualified: $2,000]
MINIMUM SUBSEQUENT
PURCHASE PAYMENT: [$250 or $100 if you have selected AIP]
MAXIMUM TOTAL
PURCHASE PAYMENTS: [$1 million; higher amounts may be accepted
with our prior approval]
ALLOCATION GUIDELINES:
[1. Currently, you can select all of the Funds and the Fixed Account.
2. If allocations are made in percentages, whole numbers must be used.
3. If the initial Purchase Payment and the forms required to issue a
Contract are in good order, the initial Purchase Payment will be credited
to your Contract within two (2) business days after receipt at the
Valuemark Service Center. Additional Purchase Payments will be credited
to your Contract as of the Valuation Period when they are received in
good order.]
VARIABLE ACCOUNT: [Allianz Life Variable Account B]
ELIGIBLE INVESTMENTS:
[FRANKLIN VALUEMARK FUNDS ]
[CAPITAL GROWTH FUND]
[GROWTH AND INCOME FUND]
[HIGH INCOME FUND]
[INCOME SECURITIES FUND]
[MONEY MARKET FUND]
[PRECIOUS METALS FUND]
[REAL ESTATE SECURITIES FUND]
[RISING DIVIDENDS FUND]
[SMALL CAP FUND]
[TEMPLETON DEVELOPING MARKETS EQUITY FUND]
[TEMPLETON GLOBAL ASSET ALLOCATION FUND]
[TEMPLETON GLOBAL INCOME SECURITIES FUND]
[TEMPLETON GLOBAL GROWTH FUND]
[TEMPLETON INTERNATIONAL EQUITY FUND]
[TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND]
[TEMPLETON PACIFIC GROWTH FUND]
[U.S. GOVERNMENT SECURITIES FUND]
[UTILITY EQUITY FUND]
[ZERO COUPON FUND 2000]
[ZERO COUPON FUND 2005]
[ZERO COUPON FUND 2010]
[ALLIANZ LIFE GENERAL ACCOUNT]
[ALLIANZ LIFE FIXED ACCOUNT]
MORTALITY AND EXPENSE RISK CHARGE: During the Accumulation Period, the
Mortality and Expense Risk Charge is equal on an annual basis to [1.34%] of
the average daily net asset value of the Variable Account. During the Annuity
Period, the Mortality and Expense Risk is equal on an annual basis to [1.25%]
of the average daily net asset value of the Variable Account. We may decrease
this charge, but we may not increase it.
ADMINISTRATIVE CHARGE: Equal on an annual basis to [.15%] of the average
daily net asset value of the Variable Account.
DISTRIBUTION EXPENSE CHARGE:[None]
CONTRACT MAINTENANCE CHARGE: The Contract Maintenance Charge is currently
[$30.00] each Contract Year. The Contract Maintenance Charge will be deducted
from the Contract Value on each Contract Anniversary while this Contract is in
force. However, during the Accumulation Period, if your Contract Value on a
Contract Anniversary is at least [$50,000], then no Contract Maintenance
Charge is deducted. If a total surrender is made on other than a Contract
Anniversary and your Contract Value for the Valuation Period during which the
total surrender is made is less than [$50,000], the full Contract Maintenance
Charge will be deducted at the time of the total surrender. The Contract
Maintenance Charge will be deducted from the Funds [and the Fixed Account] in
the same proportion that the amount of the Contract Value in each Fund [and/or
Fixed Account] bears to the total Contract Value. During the Annuity Period,
the Contract Maintenance Charge will be collected pro rata from each Annuity
Payment. In the event you own more than one Contract, we will determine the
total Contract Value for all of the Contracts. If the total Contract Value is
at least [$50,000], we will not assess the Contract Maintenance Charge. If
the Contract Owner is not a natural person, we will look to the Annuitant in
determining the foregoing.
TRANSFERS:
NUMBER OF FREE TRANSFERS PERMITTED: Currently, there are no limits on the
number of transfers that can be made. We reserve the right to change this,
but you will always be allowed at least 3 free transfers in any Contract Year.
Currently, you are allowed 12 free transfers each Contract Year. This
applies to transfers prior to and after the Income Date.
TRANSFER FEE: For each transfer in excess of the Free Transfers Permitted, the
Transfer Fee is the lesser of [$25] or 2% of the amount transferred.
Transfers made at the end of the Right to Examine period by us and any
transfers made pursuant to a regularly scheduled transfer will not be counted
in determining the application of the Transfer Fee.
MINIMUM AMOUNT TO BE TRANSFERRED: [$1,000 (from any Fund or the Fixed Account)
or your entire interest in the Fund or the Fixed Account, if less.] This
requirement is waived if the transfer is pursuant to a pre-scheduled transfer.
SURRENDERS:
CONTINGENT DEFERRED SALES CHARGE: A Contingent Deferred Sales Charge is
assessed against Purchase Payments withdrawn. The Charge is calculated at the
time of each surrender. For partial surrenders, the Charge is deducted from
the remaining Contract Value and is deducted from the Funds [and the Fixed
Account] in the same proportion that the amount of surrender from the Fund [or
Fixed Account] bears to the total of the partial surrender. The Contingent
Deferred Sales Charge is based upon the length of the time from receipt of the
Purchase Payment. Surrenders are deemed to have come from the oldest Purchase
Payments first. Each Purchase Payment is tracked as to its date of receipt
and the Contingent Deferred Sales Charges are determined in accordance with
the following.
[CONTINGENT DEFERRED SALES CHARGE
Number of Years
from Receipt Charge
________________ _______
0 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 2%
7 years or more 0%]
FREE SURRENDER AMOUNT: [Each Contract Year after the first Contract Year, on
a non-cumulative basis, you can withdraw amounts from the Contract Value
without incurring a Contingent Deferred Sales Charge. The amount not subject
to the Contingent Deferred Sales Charge is 15% of the Contract Value, less any
previous Free Surrender Amount withdrawn during that Contract Year.]
[If your Contract Value is $25,000 or more you can elect the Systematic
Withdrawal Option in lieu of the Free Surrender Option described above.
Systematic Withdrawals are available on a monthly or quarterly basis if your
Contract Value is $25,000 or more. The total of Systematic Withdrawals in
a Contract Year which can be made without incurring a Contingent Deferred
Sales Charge is limited to not more than 15% of the Contract Value determined
on the last Valuation Date prior to the receipt of the Systematic Withdrawal
Option request. There is no limit to the amount or percentage of the
Systematic Withdrawal if your Purchase Payments are no longer subject to a
Contingent Deferred Sales Charge. If you have elected the Systematic
Withdrawal Option, any additional surrenders will be subject to any
applicable Contingent Deferred Sales Charge. We reserve the right to modify
the eligibility rules at any time, without notice.]
[If you have a Qualified Contract and your Contract Value is $25,000 or more,
you can elect the Minimum Distribution Program with respect to your Contract.
Surrenders will be made on a monthly or quarterly basis and will not be
subject to a Contingent Deferred Sales Charge. Such payments will be designed
to meet the applicable minimum distribution requirements imposed by the
Internal Revenue Code on Qualified Contracts. Withdrawals from your Qualified
Contract pursuant to the Minimum Distribution Program are in lieu of the Free
Surrender Amount described above. If you have elected the Minimum Distribution
Program, any additional surrenders will be subject to any applicable
Contingent Deferred Sales Charge.]
MINIMUM PARTIAL SURRENDER: [$500]
MINIMUM CONTRACT VALUE WHICH MUST REMAIN IN THE CONTRACT AFTER A PARTIAL
SURRENDER: [$2,000]
FIXED ACCOUNT INITIAL RATE: [X%]
We guarantee this rate for one year from the Issue Date.
RIDERS:
[Individual Retirement Annuity Endorsement]
[403 (b) Endorsement]
[Enhanced Death Benefit Endorsement]
[Unisex Endorsement]
[Declared Interest Rate Fixed Account Endorsement]
[Group Pension Plan Death Benefit Endorsement]
[Waiver of Contingent Deferred Sales Charge Endorsement]
SERVICE OFFICE: VALUEMARK SERVICE CENTER
[300 Berwyn Park
P.O. Box 3031
Berwyn, PA 19312-0031
800-624-0197]
DEFINITIONS
ACCUMULATION UNIT: An accounting unit of measure used to calculate the
Contract Value prior to the Income Date.
ACCUMULATION PERIOD: The period prior to the Income Date during which you can
make Purchase Payments.
ADJUSTED CONTRACT VALUE: The Contract Value less any applicable Premium Tax.
This amount is applied to the applicable Annuity Table to determine the
initial Annuity Payment.
AGE: Age last birthday unless otherwise specified.
ANNUITANT: The natural person upon whose continuation of life any Annuity
Payment involving life contingencies depends. You may change the Annuitant at
any time prior to the Income Date unless the Contract Owner is a
non-individual. On or after the Income Date, any reference to Annuitant shall
also include any Joint Annuitant.
ANNUITY OPTION: An arrangement under which Annuity Payments are made under
this Contract.
ANNUITY PAYMENTS: The series of payments made to you or any named payee after
the Income Date under the Annuity Option selected.
ANNUITY PERIOD: The period of time beginning on the Income Date during which
Annuity Payments are made.
ANNUITY RESERVE: The assets which support the Annuity Option you have
selected during the Annuity Period.
ANNUITY UNIT: An accounting unit of measure used to calculate Annuity
Payments after the Income Date.
AUTHORIZED REQUEST: A request, in a form satisfactory to the Company, which
is received by the Valuemark Service Center.
BENEFICIARY: The person(s) or entity(ies) who will receive any death benefit
payable under this Contract.
COMPANY: Allianz Life Insurance Company of North America.
CONTRACT ANNIVERSARY: An anniversary of the Issue Date of this Contract.
CONTRACT OWNER: The person(s) or entity(ies) entitled to the ownership rights
stated in this Contract. If Joint Owners are named, all references to
Contract Owner shall mean the Joint Owners.
CONTRACT SURRENDER VALUE: The Contract Value less any applicable Premium Tax,
less any Contingent Deferred Sales Charge and less any applicable Contract
Maintenance Charge.
CONTRACT VALUE: The dollar value as of any Valuation Date of all amounts
accumulated under this Contract.
CONTRACT YEAR: Any period of twelve (12) months commencing with the Issue
Date and each Contract Anniversary thereafter.
ELIGIBLE INVESTMENT(S): Those investments available under the Contract.
Current Eligible Investments are shown on the Contract Schedule.
FUND: A segment of an Eligible Investment which constitutes a separate and
distinct class of interests under an Eligible Investment.
GENERAL ACCOUNT: Our general investment account which contains all the assets
of the Company with the exception of the Variable Account and other segregated
asset accounts.
INCOME DATE: The date on which Annuity Payments are to begin.
ISSUE DATE: The date shown on the Contract Schedule on which the first
Contract Year begins.
JOINT OWNER: If there is more than one Contract Owner, each Contract Owner
shall be a Joint Owner of the Contract. Joint Owners have equal ownership
rights and must both authorize any exercising of those ownership rights unless
otherwise allowed by us. Any Joint Owner must be the spouse of the other
Contract Owner.
PREMIUM TAX: Any premium taxes owed to any governmental entity and assessed
against Purchase Payments or Contract Value.
PURCHASE PAYMENT: A payment made toward this Contract.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts. Assets
of each Sub-Account will be invested in shares of an Eligible Investment or
Fund. In this Contract, "Fund" may also refer to the Sub-Accounts from which
the Fund investment is made.
VALUATION DATE: The Variable Account will be valued each day that the New
York Stock Exchange is open for trading.
VALUATION PERIOD: The period commencing at the close of business of the New
York Stock Exchange on each Valuation Date and ending at the close of business
for the next succeeding Valuation Date.
VALUEMARK SERVICE CENTER: The office indicated on the Contract Schedule of
this Contract to which notices, requests and Purchase Payments must be sent.
All sums payable to us under the Contract are payable only at the Valuemark
Service Center.
VARIABLE ACCOUNT: A separate account maintained by us in which a portion of
our assets has been allocated for this and certain other contracts. It has
been designated on the Contract Schedule.
PURCHASE PAYMENTS
PURCHASE PAYMENTS: Purchase Payments are payable according to the frequency
and in the amount selected by you. The initial Purchase Payment is due on
the Issue Date. We reserve the right to decline any Purchase Payment. The
Minimum Subsequent Purchase Payment and the Maximum Total Purchase
Payments allowed are shown on the Contract Schedule.
CHANGE IN PURCHASE PAYMENTS: You may elect to increase or decrease or to
change the frequency of Purchase Payments.
NO DEFAULT: Unless surrendered, this Contract remains in force and will
not be in default if no additional Purchase Payments are made.
ALLOCATION OF PURCHASE PAYMENTS: Purchase Payments are allocated to one or
more of the Funds of the Variable Account in accordance with your selection.
The allocation of the initial Purchase Payment is made in accordance with
your selection made at the Issue Date. Unless you inform us otherwise,
subsequent Purchase Payments are allocated in the same manner as the
initial Purchase Payment. However, the Company has reserved the right to
allocate the initial Purchase Payment to the Money Market Fund until the
expiration of the Right to Examine period. All allocations of Purchase
Payments are subject to the Allocation Guidelines shown on the Contract
Schedule. We guarantee that you will be allowed to select at least five Funds
for allocation of Purchase Payments.
VARIABLE ACCOUNT
THE VARIABLE ACCOUNT: The Variable Account is designated on the Contract
Schedule. It consists of assets we have set aside and have kept separate from
the rest of our assets and those of our other separate accounts. The assets
of the Variable Account, equal to reserves and other liabilities of your
Contract and those of other Contract Owners, will not be charged with
liabilities arising out of any other business we may conduct.
The Variable Account assets are divided into Funds. The Funds which are
available under this Contract are listed on the Contract Schedule. The assets
of the Fund are allocated to the Eligible Investments (and/or the Funds, if
any, within an Eligible Investment) shown on the Contract Schedule. We may
add additional Eligible Investments or Funds to those shown. You may be
permitted to transfer your Contract Value or allocate Purchase Payments to the
additional Fund(s). However, the right to make such transfers or allocations
will be limited by any terms and conditions we may impose.
Should the shares of any Eligible Investment(s), or any Fund(s) within an
Eligible Investment, become unavailable for investment by the Variable
Account, or our Board of Directors deems further investment in the shares
inappropriate, we may limit further purchase of such shares or substitute
shares of another Eligible Investment or Fund for shares already purchased.
VALUATION OF ASSETS: Assets of Eligible Investments within each Fund will be
valued at their net asset value on each Valuation Date.
ACCUMULATION UNITS: Accumulation Units shall be used to account for all
amounts allocated to or withdrawn from the Funds of the Variable Account as a
result of Purchase Payments, surrenders, transfers, or fees and charges. We
will determine the number of Accumulation Units of a Sub-Account purchased or
canceled. This will be done by dividing the amount allocated to (or the amount
withdrawn from) the Sub-Account by the dollar value of one Accumulation Unit of
the Sub-Account as of the end of the Valuation Period during which the
transaction is processed at the Valuemark Service Center.
ACCUMULATION UNIT VALUE: The Accumulation Unit Value for each Fund was
arbitrarily set initially at $10. Subsequent Accumulation Unit Values for
each Fund are determined by multiplying the Accumulation Unit Value for the
immediately preceding Valuation Period by the Net Investment Factor for the
Fund for the current period.
The Accumulation Unit value may increase or decrease from Valuation Period to
Valuation Period.
NET INVESTMENT FACTOR: The Net Investment Factor for each Fund is determined
by dividing A by B and multiplying by (1 - C) where:
A is (i) the net asset value per share of the Eligible Investment or
the Fund of an Eligible Investment held by the Fund at the end
of the current Valuation Period; plus
(ii) any dividend or capital gains per share declared on behalf of
such Eligible Investment or Fund that has an ex-dividend date
within the current Valuation Period.
B is the net asset value per share of the Eligible Investment or Fund
held by the Fund for the immediately preceding Valuation Period.
C is (i) the Valuation Period equivalent of the daily Mortality and
Expense Risk Charge, for the Administrative Charge and for the
Distribution Expense Charge, if any, which are shown on the
Contract Schedule; plus
(ii) a charge factor, if any, for any taxes or any tax reserve
we have established as a result of the operation or maintenance of
the Fund.
MORTALITY AND EXPENSE RISK CHARGE: Each Valuation Period, we deduct a
Mortality and Expense Risk Charge from the Variable Account which is equal,
on an annual basis, to the amount shown on the Contract Schedule. The
Mortality and Expense Risk Charge compensates us for assuming the mortality and
expense risks under this Contract.
ADMINISTRATIVE CHARGE: Each Valuation Period, we deduct an Administrative
Charge from the Variable Account which is equal, on an annual basis, to
the amount shown on the Contract Schedule. The Administrative Charge
compensates us for the costs associated with the administration of this
Contract and the Variable Account.
DISTRIBUTION EXPENSE CHARGE: Each Valuation Period, we deduct a Distribution
Expense Charge from the Separate Account which is equal, on an annual
basis, to the amount shown on the Contract Schedule. The Distribution Expense
Charge compensates the Company for costs associated with the distribution of
Contracts.
MORTALITY AND EXPENSE GUARANTEE: We guarantee that the dollar amount of
each annuity payment after the first will not be affected by variations
in mortality or expense experience.
CONTRACT VALUE
The Contract Value for any Valuation Period is equal to the total dollar value
accumulated under this Contract. The Contract Value in a Fund of the Variable
Account is determined by multiplying the number of Accumulation Units
allocated to the Contract Value for the Fund by the Accumulation Unit Value.
Purchase Payments, surrenders and transfers from or to a Fund will result in
the addition of or the cancellation of Accumulation Units in a Fund.
CONTRACT MAINTENANCE CHARGE
We deduct an annual Contract Maintenance Charge shown on the Contract
Schedule. Prior to the Income Date, this will be deducted from the Contract
Value by canceling Accumulation Units to reimburse us for expenses relating to
maintenance of this Contract. The number of Accumulation Units to be canceled
will be from each applicable Fund is the ratio that the value of each Fund
bears to the total Contract Value.
TRANSFERS
You may transfer all or a part of your interest in a Fund to another Fund. We
reserve the right to charge for transfers if there are more than the number of
free transfers shown on the Contract Schedule. All transfers are subject to
the following:
1. The deduction of any Transfer Fee that may be imposed as shown on the
Contract Schedule. The Transfer Fee will be deducted from the Fund from
which the transfer is made. If the entire amount in the Fund is
transferred, then the Transfer Fee will be deducted from the amount
transferred. If there are multiple source Funds, it will be treated as a
single transfer. Any Transfer Fee will be deducted proportionally from
the source Funds if less than the entire amount in the Fund is
transferred.
2. We reserve the right to limit transfers until the expiration of the
Right to Examine period.
3. The minimum amount which can be transferred is shown on the Contract
Schedule.
4. No transfer will be effective within seven calendar days prior to the
date on which the first Annuity Payment is due.
5. Any transfer direction must clearly specify:
a. the amount which is to be transferred; and
b. the Funds which are to be affected.
6. After the Income Date, transfers may not be made from a fixed annuity
option to a variable annuity option.
7. After the Income Date, you can make at least one transfer from a
variable annuity option to a fixed annuity option. The number of Annuity
Units canceled from the variable annuity option will be equal in value to
the amount of the Annuity Reserve transferred out of the Variable Account.
The amount transferred will purchase fixed annuity payments under the
Annuity Option in effect and based on the age and sex of the Annuitant at
the time of the transfer where allowed.
8. We reserve the right to establish policies that limit or discourage
excessive trading that may be disruptive to the Fund, which may result in
limitations being placed on the Contract Owner's right to make transfers.
9. We reserve the right at any time and without prior notice to any party
to modify the transfer provisions described above. However, if we do
modify these provisions we guarantee that they will not be any more
restrictive than the above.
If you elect to use this transfer privilege, we will not be liable for
transfers made in accordance with your instructions. All amounts and
Accumulation Units will be determined as of the end of the Valuation Period
during which the request for transfer is received at the Valuemark Service
Center.
SURRENDER PROVISIONS
SURRENDERS: During the Accumulation Period, you may, upon Authorized
Request, make a total or partial surrender of the Contract Surrender Value.
Surrenders will result in the cancellation of Accumulation Units from each
Fund in the ratio that the value of each Fund bears to the total Contract
Value. You must specify, by Authorized Request, which Accumulation Units
are to be canceled if other than the above mentioned method of cancellation is
desired.
The Company will pay the amount of any surrender from the Variable Account
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments Provision is in effect.
Each partial surrender must be for an amount which is not less than the amount
shown on the Contract Schedule. The minimum Contract Value which must remain
in the Contract after a partial surrender is shown on the Contract Schedule.
CONTINGENT DEFERRED SALES CHARGE: Upon a surrender of Contract Value a
Contingent Deferred Sales Charge as set forth on the Contract Schedule
be assessed. Under certain circumstances, we allow surrenders without the
Contingent Deferred Sales Charge as set forth on the Contract Schedule.
PROCEEDS PAYABLE ON DEATH
DEATH OF CONTRACT OWNER DURING THE ACCUMULATION PERIOD: Upon the death of the
Contract Owner, or any Joint Owner, during the Accumulation Period, the death
benefit will be paid to the Beneficiary(ies) designated by the Contract Owner.
Upon the death of a Joint Owner, the surviving Joint Owner, if any, will be
treated as the primary Beneficiary. Any other Beneficiary designation on
record at the time of death will be treated as a contingent Beneficiary.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will be
the Adjusted Contract Value determined as of the end of the Valuation Period
during which the Company receives both due proof of death and an election for
the payment method.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD: Beneficiary may request
that the death benefit be paid under one of the Death Benefit Options below.
In addition, if the Beneficiary is the spouse of the Contract Owner, he or she
may elect to continue the Contract in his or her own name and exercise all the
Contract Owner's rights under the Contract. In this event, the Contract Value
for the Valuation Period during which this election is implemented will be
adjusted to equal the death benefit.
Option A - lump sum payment of the death benefit; or
Option B - the payment of the entire death benefit within 5 years of the
date of the death of the Contract Owner or any Joint Owner; or
Option C - payment of the death benefit under an Annuity Option over the
lifetime of the Beneficiary or over a period not extending beyond the
life expectancy of the Beneficiary with distribution beginning within one
year of the date of death of the Contract Owner or any Joint Owner.
Any portion of the death benefit not applied under Option C within one year of
the date of the Contract Owners' death, must be distributed within five years
of the date of death.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
Payment to the Beneficiary, other than in a lump sum, may only be elected
during the sixty-day period beginning with the date of receipt of proof of
death.
DEATH OF CONTRACT OWNER DURING THE ANNUITY PERIOD: If you, or any Joint
Owner, dies during the Annuity Period, and you are not an Annuitant, any
remaining payments under the Annuity Option elected will continue at least
as rapidly as under the method of distribution in effect at such
Contract Owner's death. Upon your death during the Annuity Period, the
Beneficiary becomes the Contract Owner.
DEATH OF ANNUITANT: Upon the death of an Annuitant, who is not the Contract
Owner, during the Accumulation Period, you may designate a new Annuitant,
subject to our underwriting rules then in effect. If no designation is
made within 30 days of the death of the Annuitant, you will become the
Annuitant. If the Contract Owner is a non-individual, the death of the
Annuitant will be treated as the death of the Contract Owner and a new
Annuitant may not be designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit,
if any, will be as specified in the Annuity Option elected. Death benefits
will be paid at least as rapidly as under the method of distribution in effect
at the Annuitant's death.
PAYMENT OF DEATH BENEFIT: The Company will require due proof of death before
any death benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or
regulations governing death benefit payments.
BENEFICIARY: The Beneficiary designation in effect on the Issue Date will
remain in effect until changed. The Beneficiary is entitled to receive
the benefits to be paid at your death.
Unless you provide otherwise, the death benefit will be paid in equal shares
to the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive you and/or the Annuitant's
death, as applicable; or if there are none
2. to the contingent Beneficiary(ies) who survive you and/or the
Annuitant's death, as applicable; or if there are none
3. to your estate.
CHANGE OF BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies),you may change the primary Beneficiary(ies) or contingent
Beneficiary(ies). A change may be made by Authorized Request. The change
will take effect as of the date the Authorized Request is signed. The
Company will not be liable for any payment made or action taken before it
records the change.
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
The Company reserves the right to suspend or postpone payments from the
Variable Account for a surrender or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held in
the Variable Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Variable Account's
net assets; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
CONTRACT OWNER, ANNUITANT, ASSIGNMENT PROVISIONS
CONTRACT OWNER: As the Contract Owner you have all the interest and rights
under this Contract. The Contract Owner is the person designated as such
on the Issue Date, unless changed.
You may change Owners of the Contract at any time by Authorized Request. A
change of Contract Owner will automatically revoke any prior designation of
Contract Owner. The change will become effective as of the date the Authorized
Request is signed. We will not be liable for any payment made or action taken
before the change is recorded.
JOINT OWNER: A Contract may be owned by Joint Owners. If Joint Owners are
named, any Joint Owner must be the spouse of the other Contract Owner. Upon
the death of either Contract Owner, the surviving spouse will be the primary
Beneficiary. Any other Beneficiary designation will be treated as a contingent
Beneficiary unless otherwise indicated in an Authorized Request.
ANNUITANT: The Annuitant is the person on whose life Annuity Payments are
based. The Annuitant is the person designated by you subject to our
underwriting rules then in effect. The Annuitant may not be changed in a
Contract which is owned by a non-individual.
ASSINGNMENT OF A CONTRACT: An Authorized Request specifying the terms of an
assignment of a Contract must be provided to the Valuemark Service Center.
We will not be liable for any payment made or action taken before we record
the assignment.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable
will be valid only with our consent.
If the Contract is assigned, your rights may only be exercised with the
consent of the assignee of record.
ANNUITY PROVISIONS
GENERAL: On the Income Date, the Adjusted Contract Value will be applied under
the Annuity Option you have selected. You may elect to have the Adjusted
Contract Value applied to provide a Fixed Annuity, a Variable Annuity or a
combination Fixed and Variable Annuity. If a combination is elected, you
must specify what part of the Adjusted Contract Value is to be applied to
the Fixed and Variable Annuity Options.
INCOME DATE: You select an Income Date at the time of issue. The Income
Date must always be the first day of a calendar month. The earliest Income
Date you can select is two years after the Issue Date. The latest Income Date
you can select is the later of the first day of the first calendar month
following the Annuitant's 85th birthday or 10 years from the Issue Date, or
the maximum date permitted under state law. You may, at any time prior
to the Income Date, change the Income Date by Authorized Request 30 days in
advance.
SELECTION OF AN OF AN ANNUITY OPTION: You can select an Annuity Option by
Authorized Request. If no Annuity Option is selected, Option 2, with 120
Monthly Payments Guaranteed, will automatically be applied. You may, at any
time prior to the Income Date, by Authorized Request 30 days in advance,
select and/or change the Annuity Option.
ANNUITY OPTIONS: This Contract provides for Annuity Payments under one of
the Annuity Options described below. Any other Annuity Option acceptable to
us may be selected.
OPTION 1 - LIFE ANNUITY. We will make monthly Annuity Payments during the
life of the Annuitant and ceasing with the last Annuity Payment due prior to
the Annuitant's death.
OPTION 2 - LIFE ANNUITY WITH 60, 120, 180 OR 240 MONTHLY ANNUITY PAYMENTS
GUARANTEED. We will make monthly Annuity Payments during the life of the
Annuitant with a guarantee that if at the Annuitant's death there have
been less than 60, 120, 180 or 240 monthly Annuity Payments made as selected,
monthly Annuity Payments will continue for the remainder of the guaranteed
period. You may elect to have the present value of the guaranteed monthly
Annuity Payments remaining, as of the date notice of the Annuitant's death
is received at the Valuemark Service Center, commuted at the Assumed
Investment Return selected for a Variable Annuity or for a Fixed Annuity
the Statutory Calendar Year Interest Rate based on the NAIC Standard
Valuation Law for Single Premium Immediate Annuities corresponding to the
Income Date. We will require the return of this Contract and proof of
death prior to the payment of any commuted values.
OPTION 3 - JOINT AND LAST SURVIVOR ANNUITY. We will make monthly Annuity
Payments during the joint lifetime of the Annuitant and the Joint Annuitant.
Upon the death of the Annuitant, if the Joint Annuitant is then living,
Annuity Payments will continue to be paid during the remaining lifetime of
the Joint Annuitant at a level of 100%, 75% or 50% of the previous level,
selected. Monthly Annuity Payments cease with the final Annuity Payment due
prior to the last survivor's death.
OPTION 4 - JOINT AND LAST SURVIVOR ANNUITY WITH 120 OR 240 MONTHLY ANNUITY
PAYMENTS GUARANTEED. We will make monthly Annuity Payments during the
joint lifetime of the Annuitant and the Joint Annuitant. Monthly Annuity
Payments will continue to be paid during the remaining lifetime of the
Joint Annuitant at 100% of the previous level, as selected. If at the last
death of the Annuitant and the Joint Annuitant, there have been less than 120
or 240 monthly Annuity Payments made as selected, monthly Annuity Payments
will continue to be made for the remainder of the guaranteed period. You or
your designated payee may elect to have the present value of the guaranteed
monthly Annuity Payments remaining, as of the date notice of the Annuitant's
death is received by us, commuted at the Assumed Investment Return selected
for a Variable Annuity or for a Fixed Annuity the Statutory Calendar Year
Interest Rate based on the NAIC Standard Valuation Law for Single Premium
Immediate Annuities corresponding to the Income Date. We will require the
return of this Contract and proof of death prior to the payment of any
commuted values.
OPTION 5 - REFUND LIFE ANNUITY. We will make monthly Annuity Payments during
the lifetime of the Annuitant ceasing with the last Annuity Payment due prior
to the Annuitant's death with a guarantee that at the Annuitant's death, you
will receive a refund. For a Fixed Annuity the amount of the refund will be
any excess of the amount of the Adjusted Contract Value applied under this
Option over the total of all Annuity Payments made under this Option. For a
Variable Annuity the amount of the refund will be the then dollar value of
the number of Annuity Units equal to (1) the Adjusted Contract Value applied
to this Option divided by the Annuity Unit value used to determine the first
Annuity Payment, minus (2) the product of the number of the Annuity Units
represented by each monthly Annuity Payment and the number of payments made.
This calculation will be based upon the assumption that the allocation of
Annuity Units actually in-force at the time of the Annuitant's death had been
the allocation of Annuity Units at issue and at all times thereafter. If the
refund calculated above is not greater than zero there will be no refund paid.
ANNUITY: If you select a Fixed Annuity, the Adjusted Contract Value is
allocated to the General Account and the Annuity is paid as a Fixed Annuity.
If you select a Variable Annuity, the Adjusted Contract Value will be
allocated to the Funds of the Variable Account in accordance with your
selection, and the Annuity will be paid as a Variable Annuity. Unless you
designate another payee, you will be the payee of the Annuity Payments.
The Adjusted Contract Value will be applied to the applicable Annuity
Table contained in this Contract based upon the Annuity Option you have
selected. We may offer more favorable rates than those guaranteed here at
the time your first annuity payment is calculated. Where permitted,
Annuity Payments will depend on the Age and sex of the Annuitant.
FIXED ANNUITY: You may elect to have the Adjusted Contract Value applied
to provide a Fixed Annuity. The dollar amount of each Fixed Annuity
Payment shall be determined in accordance with Annuity Tables contained in
this Contract which are based on the minimum guaranteed interest rate of
2 1/2% per year.
<TABLE>
<CAPTION>
Guaranteed Monthly Payment Per $1,000 of Proceeds
Fixed Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2
5 Yr 5 Yr 10 Yr 10 Yr 15 Yr 15 Yr 20 Yr 20 Yr
Opt 1 Opt 1 Minim Minim Minim Minim Minim Minim Minim Minim Opt 5 Opt 5
Age* M F M F M F M F M F M F
______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______
30 2.84 2.71 2.84 2.71 2.84 2.71 2.84 2.71 2.83 2.71 2.82 2.71
31 2.87 2.74 2.87 2.73 2.87 2.73 2.84 2.73 2.86 2.73 2.84 2.73
32 2.90 2.76 2.90 2.76 2.89 2.76 2.86 2.75 2.88 2.75 2.87 2.75
33 2.92 2.78 2.92 2.78 2.92 2.78 2.89 2.78 2.91 2.77 2.89 2.77
34 2.95 2.80 2.95 2.80 2.95 2.80 2.92 2.80 2.94 2.80 2.92 2.79
35 2.98 2.83 2.98 2.83 2.98 2.83 2.95 2.82 2.97 2.82 2.95 2.81
36 3.02 2.85 3.02 2.85 3.01 2.85 2.98 2.85 3.00 2.85 2.98 2.84
37 3.05 2.88 3.05 2.88 3.05 2.88 3.01 2.88 3.03 2.87 3.01 2.86
38 3.09 2.91 3.09 2.91 3.08 2.91 3.04 2.91 3.06 2.90 3.04 2.89
39 3.12 2.94 3.12 2.94 3.12 2.94 3.08 2.93 3.10 2.93 3.07 2.92
40 3.16 2.97 3.16 2.97 3.16 2.97 3.11 2.96 3.13 2.96 3.10 2.95
41 3.20 3.00 3.20 3.00 3.20 3.00 3.15 3.00 3.17 2.99 3.14 2.97
42 3.25 3.04 3.24 3.04 3.24 3.03 3.19 3.03 3.21 3.02 3.17 3.01
43 3.29 3.07 3.29 3.07 3.28 3.07 3.23 3.06 3.25 3.06 3.21 3.04
44 3.34 3.11 3.33 3.11 3.33 3.10 3.27 3.10 3.29 3.09 3.25 3.07
45 3.39 3.15 3.38 3.15 3.37 3.14 3.31 3.14 3.33 3.13 3.29 3.10
46 3.44 3.19 3.43 3.19 3.42 3.18 3.36 3.18 3.38 3.16 3.33 3.14
47 3.49 3.23 3.49 3.23 3.48 3.22 3.41 3.22 3.42 3.20 3.38 3.18
48 3.55 3.27 3.54 3.27 3.53 3.27 3.45 3.26 3.47 3.24 3.42 3.22
49 3.60 3.32 3.60 3.32 3.58 3.31 3.51 3.30 3.52 3.29 3.47 3.26
50 3.66 3.37 3.66 3.37 3.64 3.36 3.56 3.35 3.57 3.33 3.52 3.30
51 3.73 3.42 3.72 3.42 3.71 3.41 3.62 3.40 3.62 3.38 3.57 3.34
52 3.80 3.47 3.79 3.47 3.77 3.46 3.67 3.45 3.68 3.42 3.62 3.39
53 3.87 3.53 3.86 3.53 3.84 3.52 3.73 3.50 3.74 3.48 3.68 3.44
54 3.94 3.59 3.93 3.59 3.91 3.58 3.80 3.56 3.79 3.53 3.74 3.49
55 4.02 3.65 4.01 3.65 3.98 3.64 3.86 3.62 3.85 3.58 3.80 3.54
56 4.10 3.72 4.09 3.71 4.06 3.70 3.93 3.68 3.91 3.64 3.86 3.60
57 4.19 3.79 4.18 3.78 4.14 3.77 4.00 3.74 3.98 3.70 3.93 3.65
58 4.28 3.86 4.27 3.86 4.23 3.84 4.16 3.81 4.04 3.76 4.00 3.71
59 4.38 3.94 4.37 3.93 4.32 3.91 4.24 3.88 4.11 3.82 4.07 3.78
60 4.49 4.02 4.47 4.02 4.42 3.99 4.32 3.95 4.17 3.88 4.14 3.84
61 4.60 4.11 4.58 4.10 4.52 4.08 4.41 4.03 4.24 3.95 4.23 3.91
62 4.72 4.20 4.69 4.19 4.63 4.16 4.50 4.11 4.31 4.02 4.31 3.99
63 4.84 4.30 4.82 4.29 4.74 4.26 4.59 4.19 4.38 4.09 4.39 4.06
64 4.98 4.41 4.95 4.39 4.86 4.36 4.69 4.28 4.44 4.16 4.49 4.14
65 5.12 4.52 5.09 4.50 4.98 4.46 4.79 4.37 4.51 4.23 4.58 4.23
66 5.28 4.64 5.24 4.62 5.11 4.57 4.89 4.47 4.58 4.31 4.68 4.31
67 5.44 4.76 5.39 4.75 5.24 4.69 4.99 4.57 4.64 4.38 4.78 4.41
68 5.61 4.90 5.56 4.88 5.38 4.81 5.09 4.67 4.70 4.45 4.89 4.50
69 5.80 5.04 5.73 5.02 5.53 4.94 5.19 4.78 4.76 4.53 5.01 4.60
70 6.00 5.20 5.92 5.17 5.68 5.07 5.30 4.88 4.82 4.60 5.13 4.72
71 6.21 5.37 6.12 5.34 5.84 5.22 5.40 4.99 4.88 4.67 5.25 4.83
72 6.43 5.55 6.32 5.51 6.00 5.37 5.50 5.11 4.93 4.74 5.38 4.95
73 6.66 5.75 6.54 5.70 6.16 5.53 5.60 5.22 4.97 4.80 5.51 5.07
74 6.91 5.96 6.77 5.90 6.33 5.69 5.70 5.34 5.02 4.86 5.66 5.20
75 7.18 6.18 7.01 6.11 6.50 5.87 5.79 5.45 5.06 4.92 5.82 5.35
76 7.49 6.43 7.28 6.34 6.69 6.05 5.89 5.56 5.09 4.97 5.97 5.49
77 7.80 6.69 7.55 6.58 6.86 6.23 5.97 5.67 5.12 5.01 6.14 5.65
78 8.13 6.97 7.83 6.84 7.04 6.42 6.05 5.78 5.15 5.06 6.31 5.81
79 8.49 7.27 8.13 7.11 7.22 6.61 6.13 5.88 5.17 5.09 6.50 5.97
80 8.87 7.60 8.44 7.40 7.39 6.81 6.20 5.97 5.20 5.13 6.69 6.15
81 9.27 7.95 8.77 7.71 7.57 7.01 6.26 6.06 5.21 5.15 6.89 6.34
82 9.70 8.33 9.10 8.03 7.73 7.21 6.32 6.14 5.23 5.18 7.10 6.53
83 10.16 8.74 9.45 8.38 7.90 7.40 6.37 6.21 5.24 5.20 7.32 6.74
84 10.65 9.18 9.81 8.74 8.05 7.59 6.42 6.28 5.25 5.22 7.55 6.95
85 11.18 9.66 10.19 9.12 8.20 7.77 6.46 6.34 5.26 5.23 7.80 7.17
<FN>
*Age equals age of annuitant nearest birthday when first payment is made
</TABLE>
Guaranteed Monthly Payment per $1,000 of Proceeds
Fixed Payout
<TABLE>
<CAPTION>
Option 3
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.15
50 2.69 2.89 3.14 3.36 3.52 3.61
60 2.70 2.94 3.26 3.65 4.03 4.30
70 2.71 2.96 3.32 3.86 4.56 5.27
80 2.71 2.97 3.35 3.96 4.94 6.32
</TABLE>
<TABLE>
<CAPTION>
Option 4
5 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.15
50 2.69 2.89 3.14 3.36 3.52 3.61
60 2.70 2.94 3.26 3.65 4.03 4.30
70 2.71 2.96 3.32 3.86 4.56 5.26
80 2.71 2.97 3.35 3.96 4.93 6.30
</TABLE>
<TABLE>
<CAPTION>
Option 4
10 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.14
50 2.69 2.89 3.14 3.36 3.52 3.60
60 2.70 2.94 3.26 3.65 4.03 4.29
70 2.71 2.96 3.32 3.86 4.55 5.22
80 2.71 2.96 3.35 3.95 4.90 6.13
</TABLE>
<TABLE>
<CAPTION>
Option 4
15 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.84
40 2.66 2.82 2.96 3.06 3.12 3.14
50 2.69 2.89 3.13 3.36 3.52 3.59
60 2.70 2.94 3.26 3.65 4.01 4.24
70 2.71 2.96 3.32 3.84 4.50 5.05
80 2.71 2.96 3.34 3.93 4.79 5.70
</TABLE>
<TABLE>
<CAPTION>
Option 4
20 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 2.61 2.70 2.77 2.81 2.83 2.83
40 2.66 2.82 2.96 3.06 3.11 3.13
50 2.69 2.89 3.13 3.35 3.50 3.56
60 2.70 2.94 3.25 3.63 3.97 4.14
70 2.71 2.95 3.31 3.81 4.38 4.74
80 2.71 2.96 3.33 3.87 4.57 5.06
</TABLE>
VARIABLE ANNUITY: You may elect to have the Adjusted Contract Value applied
to provide a Variable Annuity. Variable Annuity Payments reflect the
investment performance of the Variable Account in accordance with the
allocation of the Adjusted Contract Value to the Funds during the Annuity
Period. Variable Annuity Payments are not guaranteed as to dollar amount.
On the Income Date a fixed number of Annuity Units will be purchased as
follows:
The first Annuity Payment is equal to the Adjusted Contract Value, divided
first by $1000 and then multiplied by the appropriate Annuity Payment amount
for each $1000 of value for the Annuity Option selected. In each Fund the
fixed number of Annuity Units is determined by dividing the amount of the
initial Annuity Payment determined for each Fund by the Annuity Unit value on
the Income Date. Thereafter, the number of Annuity Units in each Fund remains
unchanged unless you elect to transfer between Funds. All calculations will
appropriately reflect the Annuity Payment frequency selected.
On each subsequent Annuity Payment date, the total Annuity Payment is the sum
of the Annuity Payments for each Fund. The Annuity Payment in each Fund is
determined by multiplying the number of Annuity Units then allocated to such
Fund by the Annuity Unit value for that Fund.
On each subsequent Valuation Date, the value of an Annuity Unit is determined
in the following way:
First: The Net Investment Factor is determined as described under "Variable
Account - Net Investment Factor" above.
Second: The value of an Annuity Unit for a Valuation Period is equal to:
a.the value of the Annuity Unit for the immediately preceding Valuation
Period;
b.multiplied by the Net Investment Factor for the current Valuation
Period;
c.divided by the Assumed Net Investment Factor (see below) for
the Valuation Period.
The Assumed Net Investment Factor is equal to one plus the Assumed Investment
Return which is used in determining the basis for the purchase of an Annuity,
adjusted to reflect the particular Valuation Period. The Assumed Investment
Return that we will use is 5%. However, we may agree with you to use a
different value.
<TABLE>
<CAPTION>
Guaranteed Initial Monthly Payment Per $1,000 of Proceeds
Variable Payouts Based on 5% AIR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2 Opt 2
5 Yr 5 Yr 10 Yr 10 Yr 15 Yr 15 Yr 20 Yr 20 Yr
Opt 1 Opt 1 Minim Minim Minim Minim Minim Minim Minim Minim Opt 5 Opt 5
Age* M F M F M F M F M F M F
______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______
30 4.46 4.36 4.46 4.36 4.46 4.35 4.45 4.35 4.44 4.35 4.46 4.36
31 4.48 4.37 4.48 4.37 4.48 4.37 4.47 4.37 4.46 4.36 4.48 4.38
32 4.50 4.39 4.50 4.39 4.50 4.38 4.49 4.38 4.48 4.38 4.50 4.39
33 4.52 4.40 4.52 4.40 4.52 4.40 4.51 4.40 4.50 4.39 4.52 4.41
34 4.55 4.42 4.55 4.42 4.54 4.42 4.53 4.41 4.52 4.41 4.54 4.43
35 4.57 4.44 4.57 4.44 4.57 4.44 4.56 4.43 4.55 4.43 4.57 4.44
36 4.60 4.46 4.60 4.46 4.59 4.45 4.58 4.45 4.57 4.45 4.59 4.46
37 4.63 4.48 4.63 4.48 4.62 4.48 4.61 4.47 4.60 4.46 4.62 4.48
38 4.66 4.50 4.66 4.50 4.65 4.50 4.64 4.49 4.62 4.49 4.64 4.50
39 4.69 4.52 4.69 4.52 4.68 4.52 4.67 4.51 4.65 4.51 4.67 4.52
40 4.72 4.55 4.72 4.55 4.71 4.54 4.70 4.54 4.68 4.53 4.70 4.55
41 4.76 4.57 4.75 4.57 4.75 4.57 4.73 4.56 4.71 4.55 4.73 4.57
42 4.79 4.60 4.79 4.60 4.78 4.60 4.76 4.59 4.74 4.58 4.76 4.60
43 4.83 4.63 4.83 4.63 4.82 4.62 4.80 4.62 4.77 4.60 4.80 4.62
44 4.88 4.66 4.87 4.66 4.86 4.65 4.84 4.64 4.80 4.63 4.83 4.65
45 4.92 4.69 4.91 4.69 4.90 4.69 4.87 4.68 4.84 4.66 4.87 4.68
46 4.97 4.73 4.96 4.73 4.94 4.72 4.91 4.71 4.88 4.69 4.91 4.71
47 5.01 4.76 5.01 4.76 4.99 4.75 4.96 4.74 4.92 4.72 4.95 4.75
48 5.06 4.80 5.06 4.80 5.04 4.79 5.00 4.78 4.96 4.76 4.99 4.78
49 5.12 4.84 5.11 4.84 5.09 4.83 5.05 4.81 5.00 4.79 5.04 4.82
50 5.17 4.88 5.16 4.88 5.14 4.87 5.10 4.85 5.04 4.83 5.08 4.85
51 5.23 4.93 5.22 4.93 5.19 4.91 5.15 4.89 5.09 4.87 5.13 4.89
52 5.30 4.98 5.28 4.97 5.25 4.96 5.20 4.94 5.13 4.91 5.19 4.94
53 5.36 5.03 5.35 5.02 5.31 5.01 5.26 4.98 5.18 4.95 5.24 4.98
54 5.43 5.08 5.42 5.08 5.38 5.06 5.32 5.03 5.23 4.99 5.30 5.03
55 5.51 5.14 5.49 5.13 5.45 5.11 5.38 5.08 5.28 5.04 5.37 5.08
56 5.58 5.20 5.57 5.19 5.52 5.17 5.44 5.14 5.33 5.09 5.43 5.13
57 5.67 5.26 5.65 5.26 5.60 5.23 5.51 5.19 5.39 5.14 5.50 5.19
58 5.76 5.33 5.74 5.32 5.68 5.30 5.58 5.25 5.44 5.19 5.57 5.25
59 5.85 5.41 5.83 5.40 5.76 5.37 5.65 5.32 5.50 5.24 5.65 5.31
60 5.95 5.48 5.93 5.47 5.85 5.44 5.73 5.38 5.56 5.30 5.73 5.38
61 6.06 5.57 6.03 5.55 5.95 5.52 5.81 5.45 5.62 5.36 5.81 5.45
62 6.18 5.65 6.15 5.64 6.05 5.60 5.89 5.52 5.67 5.42 5.90 5.52
63 6.30 5.75 6.27 5.73 6.16 5.68 5.97 5.60 5.73 5.48 6.00 5.60
64 6.44 5.85 6.40 5.83 6.27 5.78 6.06 5.68 5.79 5.54 6.10 5.69
65 6.58 5.96 6.53 5.94 6.38 5.87 6.15 5.76 5.85 5.60 6.20 5.77
66 6.74 6.07 6.68 6.05 6.51 5.98 6.24 5.85 5.91 5.67 6.31 5.87
67 6.90 6.20 6.83 6.17 6.63 6.09 6.33 5.94 5.96 5.73 6.43 5.97
68 7.08 6.33 7.00 6.30 6.77 6.20 6.42 6.03 6.02 5.80 6.55 6.07
69 7.27 6.47 7.17 6.44 6.91 6.32 6.52 6.13 6.07 5.86 6.67 6.18
70 7.46 6.63 7.35 6.59 7.05 6.45 6.61 6.23 6.12 5.92 6.81 6.30
71 7.68 6.80 7.55 6.75 7.20 6.59 6.70 6.33 6.17 5.98 6.95 6.43
72 7.90 6.98 7.75 6.92 7.35 6.74 6.79 6.43 6.21 6.04 7.10 6.56
73 8.14 7.18 7.97 7.11 7.50 6.89 6.88 6.54 6.25 6.10 7.26 6.70
74 8.39 7.39 8.19 7.30 7.66 7.05 6.97 6.64 6.29 6.15 7.42 6.85
75 8.66 7.62 8.43 7.52 7.82 7.21 7.06 6.74 6.32 6.20 7.60 7.01
76 8.99 7.87 8.70 7.74 8.00 7.38 7.14 6.85 6.35 6.24 7.78 7.18
77 9.30 8.13 8.97 7.98 8.16 7.56 7.22 6.94 6.38 6.28 7.97 7.35
78 9.64 8.42 9.25 8.24 8.33 7.74 7.29 7.04 6.40 6.32 8.18 7.54
79 9.99 8.72 9.54 8.51 8.49 7.92 7.36 7.13 6.42 6.35 8.39 7.74
80 10.38 9.06 9.84 8.80 8.65 8.11 7.42 7.21 6.44 6.38 8.61 7.95
81 10.79 9.41 10.16 9.10 8.82 8.29 7.48 7.29 6.46 6.41 8.85 8.17
82 11.23 9.80 10.49 9.43 8.97 8.48 7.53 7.36 6.47 6.43 9.09 8.40
83 11.69 10.22 10.83 9.77 9.12 8.66 7.58 7.43 6.48 6.45 9.36 8.65
84 12.19 10.68 11.19 10.13 9.27 8.83 7.62 7.49 6.49 6.46 9.63 8.91
85 12.73 11.17 11.55 10.50 9.41 9.00 7.66 7.54 6.50 6.47 9.92 9.17
<FN>
*Age equals age of annuitant nearest birthday when first payment is made
</TABLE>
Guaranteed Initial Monthly Payment per $1,000 of Proceeds
Variable Payout Based on 5% AIR
<TABLE>
<CAPTION>
Option 3
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.70
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.51 4.76 5.09 5.44 5.72
70 4.35 4.53 4.82 5.29 5.93 6.63
80 4.35 4.54 4.86 5.40 6.31 7.65
</TABLE>
<TABLE>
<CAPTION>
Option 4
5 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.70
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.51 4.76 5.09 5.44 5.72
70 4.35 4.53 4.82 5.29 5.93 6.62
80 4.35 4.54 4.86 5.40 6.31 7.63
</TABLE>
<TABLE>
<CAPTION>
Option 4
10 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.69
50 4.32 4.47 4.65 4.84 4.99 5.09
60 4.34 4.50 4.76 5.09 5.43 5.70
70 4.35 4.53 4.82 5.28 5.91 6.56
80 4.35 4.54 4.86 5.39 6.26 7.43
</TABLE>
<TABLE>
<CAPTION>
Option 4
15 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.44 4.45
40 4.30 4.40 4.51 4.60 4.66 4.69
50 4.32 4.47 4.65 4.83 4.98 5.07
60 4.34 4.50 4.75 5.08 5.42 5.64
70 4.35 4.53 4.82 5.27 5.86 6.37
80 4.35 4.54 4.84 5.36 6.13 6.96
</TABLE>
<TABLE>
<CAPTION>
Option 4
20 Years Minimum
<S> <C> <C> <C> <C> <C> <C>
FemaleAge 30 40 50 60 70 80
Male Age ________ ________ ________ ________ ________ ________
30 4.26 4.33 4.38 4.41 4.43 4.44
40 4.30 4.40 4.51 4.60 4.65 4.67
50 4.32 4.46 4.64 4.83 4.97 5.03
60 4.34 4.50 4.75 5.06 5.36 5.52
70 4.34 4.52 4.80 5.23 5.72 6.04
80 4.35 4.53 4.82 5.29 5.89 6.32
</TABLE>
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this Contract, and any
attached application endorsements or riders. This Contract may be changed
or altered only by our President or Secretary. Any change, modification or
waiver must be made in writing.
NON-PARTICIPATING IN SURPLUS. This Contract does not share in any
distribution of our profits or surplus.
INCONTESTABILITY: We will not contest this Contract from its Issue Date.
MISSTATEMENT OF AGE OR SEX: We may require proof of Age of the Annuitant
before making any life contingent Annuity Payment provided for by this
Contract. If the Age or sex of the Annuitant has been misstated the amount
payable will be the amount that the Contract Value would have provided at
the true Age or sex.
Once Annuity Payments have begun, any underpayments will be made up in one sum
with the next Annuity Payment, and overpayments will be deducted from the
future Annuity Payments until the total is repaid.
CONTRACT SETTLEMENT: This Contract must be returned to us upon any settlement.
Prior to any settlement as a death claim, due proof of death must be
submitted to us. Any paid-up annuity, cash surrender or death benefits that
may be available are not less than the minimum benefits required by statute.
REPORTS: We will furnish you with a report showing the Contract Value at least
once each calendar year. This report will be sent to your last known address.
TAXES: Any taxes paid to any governmental entity will be charged against the
Contract Value. We will, in our sole discretion, determine when taxes have
resulted from: the investment experience of the Variable Account; receipt by
us of the Purchase Payment(s); or commencement of Annuity Payments. We may,
at our discretion, pay taxes when due and deduct that amount from the Contract
Value at a later date. Payment at an earlier date does not waive any right we
may have to deduct amounts at a later date. We reserve the right to establish
a provision for federal income 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 income taxes incurred by it as a result of the
operation of the Variable Account whether or not there was a provision for
taxes and whether or not it was sufficient. The Company will deduct any
withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL: Where any benefits under this Contract are contingent
upon the recipient being alive on a given date, we may require proof
satisfactory to us that the condition has been met.
PROTECTION OF PROCEEDS: No Beneficiary may commute, encumber, alienate or
assign any payments under this Contract before they are due. To the extent
permitted by law, no payments will be subject to the debts, contracts or
engagements of any Beneficiary or to any judicial process to levy upon or
attach the same for payment thereof.
MODIFICATION OF CONTRACT: This Contract may not be modified by us without
your consent except as may be required by applicable law.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. This
Endorsement is effective on the Issue Date of the Contract to which this
Endorsement is attached. In the case of a conflict with any provisions in the
Contract, the provisions of this Endorsement will control. The following
provisions are hereby added to the Contract:
A. The Contingent Deferred Sales Charge will not apply under the following
conditions occurring after the first Contract Anniversary:
1) Nursing Home Benefit:
a) The Contract Owner or Joint Owner is confined to a Skilled Nursing
Facility or Hospital;
b) such confinement is for a period of at least 90 consecutive days;
and
c) a licensed physician certifies in writing that such continued
confinement is necessary.
A Skilled Nursing Facility is an institution which is licensed
by the state in which it is located to provide skilled nursing
care, intermediate nursing care or custodial nursing care. A
Hospital is an institution which is licensed as a hospital by
the state in which it is located, is supervised by a staff of
licensed physicians and operates primarily for the care and
treatment of sick and injured persons as inpatients for a
charge.
This waiver will not apply if the Contract Owner or Joint Owner
were confined in a Skilled Nursing Facility or Hospital on the
Issue Date. Proof of confinement must be provided in a form
satisfactory to the Company.
2) Terminal Illness Benefit:
a) The Contract Owner or Joint Owner is diagnosed as having a Terminal
Illness; and
b) a licensed physician certifies in writing to such diagnosis.
Terminal Illness means an illness or physical condition which
results in the prognosis by a licensed physician that life
expectancy is 12 months or less. To utilize this benefit, you
must make a total surrender of the Contract. The Contract must
be returned to us before any proceeds will be paid.
This waiver will not apply if the Contract Owner or Joint Owner
is first diagnosed as having a Terminal Illness prior to the
Issue Date. Proof of diagnosis must be provided in a form
satisfactory to the Company.
3) Total Disability Benefit:
a) The Contract Owner or Joint Owner is disabled;
b) such disability lasts for a period of at least 90
consecutive days; and
c) a licensed physician certifies to such disability.
Disability shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in
death or to be of long-continued and indefinite duration. This
waiver shall not apply if the Contract Owner or Joint Owner was
disabled on the Issue Date. Proof of disability will be required
in a form satisfactory to the Company.
The proof required by the Company for any of the above Benefits
shall include, but not be limited to, written certification from
a licensed physician performing within the scope of his or her
license. The licensed physician must not be the Contract Owner,
Joint Owner, the Annuitant, or the spouse, parent or child of
the Contract Owner, Joint Owner or Annuitant.
B. Unemployment Benefit:
The amount of the Contract Value which can be withdrawn after the first Contract
Anniversary without incurring a Contingent Deferred Sales Charge will be
increased for one time only to 50% of the Contract Value under the following
condition:
The Contract Owner or Joint Owner is unemployed for a continuous period
of at least 90 days.
Proof of unemployment must be provided in a form satisfactory to the Company
which proof will include but not be limited to a written statement from the
applicable state unemployment agency indicating that the Contract Owner or Joint
Owner qualifies for and is receiving unemployment benefits.
Withdrawals of amounts under the Contract may be subject to a 10% tax penalty in
addition to any income taxes due. You should consult your tax advisor before
making a withdrawal.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
VICE PRESIDENT AND SECRETARY CHAIRMAN OF THE BOARD,
PRESIDENT, AND CEO
ENHANCED DEATH BENEFIT ENDORSEMENT
This Endorsement forms a part of the Contract to which it is attached. The
Effective Date is the Issue Date shown on the Contract Schedule of the Contract
to which this Endorsement is attached. In the case of a conflict with any
provision in the Contract, the provisions of this Endorsement will control. The
following hereby amends and supersedes the section of the Contract captioned
"Proceeds Payable On Death - Death Benefit Amount During The Accumulation
Period."
PROCEEDS PAYABLE ON DEATH
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD: The death benefit will
be the greater of:
1. The Contract Value, less any applicable Premium Tax, determined as of
the end of the Valuation Period during which we received at the Valuemark
Service Center both due proof of death and an election of the payment method; or
2. The Guaranteed Minimum Death Benefit as of the date of death as defined
below, less any applicable Premium Tax.
The Guaranteed Minimum Death Benefit as of the date of death is calculated as
follows:
1. Prior to the first Contract Anniversary it is equal to the
Purchase Payments less any surrenders and any Contingent
Deferred Sales Charge paid on such surrenders.
2. From the first Contract Anniversary to the Contract Owner's
76th birthday and before the date of death, the Guaranteed
Death Benefit is the greater of (A) or (B).
(A) The Guaranteed Death Benefit on each Contract
Anniversary is determined by multiplying the sum
of (a plus b minus c) by 1.05 (5% annual), where:
a. is the Guaranteed Minimum Death Benefit
as of the previous Contract Anniversary;
b. is any Purchase Payments made since the last
Contract Anniversary; and
c. is any surrenders, and any Contingent
Deferred Sales Charges paid on such
surrenders, made since the last Contract
Anniversary;
On any Valuation Date other than a Contract
Anniversary, the Guaranteed Minimum Death Benefit
determined as of the last Contract Anniversary will
be increased by any Purchase Payments made since the
last Contract Anniversary and decreased by any
surrenders, and any Contingent Deferred Sales Charges
paid on such surrenders, made since the last Contract
Anniversary.
(B) The Guaranteed Minimum Death Benefit will never be
less than the highest Contract Value on any six year
Contract Anniversary preceding the date of death of
the Contract Owner, plus Purchase Payments less
surrenders and any Contingent Deferred Sales Charge
paid on such surrenders made since such Contract
Anniversary.
3. After the Contract Owner's 76th birthday, the Guaranteed
Minimum Death Benefit determined as of the last Contract
Anniversary prior to the Contract Owner's 76th birthday will
be increased by any Purchase Payments made since such Contract
Anniversary and decreased by any surrenders, and any
Contingent Deferred Sales Charges paid on such surrenders,
made since such Contract Anniversary.
If Joint Owners are named, the Age of the oldest Owner will be used to determine
the Guaranteed Minimum Death Benefit. If the Contract is owned by a non-natural
person, then Contract Owner shall mean Annuitant.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Vice President and Secretary Chairman of the Board, President, and CEO
FLEXIBLE PREMIUM VARIABLE ANNUITY APPLICATION
Issued by Allianz Life Insurance Company of North America DA__________
______________________________________________________________________________
1.OWNER Must be age 85 or younger
Name Last First Middle
________________________________________________________________________
(If the Owner is a trust, please include Trust Name, Trust Date, and the
Trust Beneficial Owner(s))
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
(If the owner is a trust, ____Male
Daytime Telephone ( ) list the date(s) of birth
for the beneficial owner(s))
______________________________________________________________________________
2.JOINT OWNER (Optional) Spouse Only-Must be age 85 or younger
Name Last First Middle
Social Security Number Date of Birth Sex ____Female
____Male
Daytime Telephone ( )
______________________________________________________________________________
3.ANNUITANT If different than owner. Must be age 85 or younger
Name Last First Middle
Address Street Address Apartment Number
City State Zip Code
Social Security Number Date of Birth Sex ____Female
____Male
______________________________________________________________________________
4.PURCHASE PAYMENT
____Purchase Payment Enclosed with Application
Purchase Payment Amount $_____________________
____This contract will be funded by a 1035 Exchange, Tax Qualified
Transfer/Rollover, or Mutual Fund Redemption.
______________________________________________________________________________
5.PURCHASE PAYMENT ALLOCATION
You may select up to ten funds. Use whole percentages. The allocations
you indicate below will become your allocations on all future payments
until such time as you notify us of a change.
MONEY MARKET FIXED ACCOUNTS
___Money Market Fund ___Allianz Life Fixed Account
INCOME FUNDS CAPITAL GROWTH FUNDS
___High Income Fund ___Capital Growth Fund
___Templeton Global Income Securities ___Precious Metals Fund
Fund ___Small Cap Fund
___U.S. Government Securities Fund ___Templeton Developing Markets
___Zero Coupon Fund 2000 Equity Fund
___Zero Coupon Fund 2005 ___Templeton Global Growth Fund
___Zero Coupon Fund 2010 ___Templeton International Equity
Fund
GROWTH AND INCOME FUNDS ___Templeton International Smaller
___Growth and Income Fund Companies Fund
___Income Securities Fund ___Templeton Pacific Growth Fund
___Real Estate Securities Fund
___Rising Dividends Fund
___Templeton Global Asset Allocation
Fund
___Utility Equity Fund ___TOTAL (Must Equal 100%)
F40112
______________________________________________________________________________
6.DOLLAR COST AVERAGING (Optional)
Please Dollar Cost Average $_____($500 min) ___Monthly for ____months/qtrs
___Quarterly (6 mo minimum)
___Until Sending Fund is depleted
from the following fund (Please Note: You must already have a portion of your
Investment in Section 5 in the Sending Fund):_________________________________
Indicate below how you would like to allocate your Dollar Cost Averaging
Funds. Use either dollar amounts or whole percentages. The Sending Fund may
not be chosen below:
MONEY MARKET FIXED ACCOUNTS
___Money Market Fund ___Allianz Life Fixed Account
INCOME FUNDS CAPITAL GROWTH FUNDS
___High Income Fund ___Capital Growth Fund
___Templeton Global Income Securities ___Precious Metals Fund
Fund ___Small Cap Fund
___U.S. Government Securities Fund ___Templeton Developing Markets
___Zero Coupon Fund 2000 Equity Fund
___Zero Coupon Fund 2005 ___Templeton Global Growth Fund
___Zero Coupon Fund 2010 ___Templeton International Equity
Fund
GROWTH AND INCOME FUNDS ___Templeton International Smaller
___Growth and Income Fund Companies Fund
___Income Securities Fund ___Templeton Pacific Growth Fund
___Real Estate Securities Fund
___Rising Dividends Fund
___Templeton Global Asset Allocation
Fund
___Utility Equity Fund ___TOTAL (Must Equal 100%)
______________________________________________________________________________
7.INCOME DATE
Selected Income Date ___- 01 -___The Income Date (Annuitization Date)
may be no earlier than two years after
the issue date.
______________________________________________________________________________
8.REPLACEMENT
Is this Annuity intended to replace or change existing life ___No
insurance or annuity? ___Yes
______________________________________________________________________________
9.TAX QUALIFIED PLANS
For Tax Qualified Plans, please
indicate one of the following:
Is this annuity part of a Tax IRA:
Qualified Plan? ____ Yes ____No ___Transfer/Rollover ___403(b)TSA
___Regular Contribution ___401
for Tax Year _______ (Corp Plan)
___SEP IRA ___Other
______________________________________________________________________________
10.TELEPHONE AUTHORIZATION
___ I/We authorize Allianz Life Insurance Company of North America (Allianz
Life) to accept telephone fund transfers on this contract from the Registered
Representative of record for this contract and/or the Representative's
Assistant(s).
If no authorization is given, only the Contract Owner(s) will be permitted
telephone transfer authorization. The telephone authorization is subject to
the terms and provisions in the contract and prospectus.
___ I/We authorize Allianz Life to allow the Contract Owner(s) to request
partial surrenders by telephone.
For partial surrenders, Allianz Life's sole responsibility is to send a check
payable to the Owner(s) address, or wire the proceeds to the Owner(s)
commercial bank (a savings bank may not be used) or to the Owner(s)
account at a member firm of a national securities exchange.
Allianz Life will employ reasonable procedures to confirm that telephone
instructions are genuine. If it does not, Allianz Life may be liable for any
losses due to unauthorized or fraudulent transfers.
F40112
______________________________________________________________________________
11.BENEFICIARY(IES) DESIGNATION
Primary Beneficiary(ies):
(In the event of death of Name Relationship to Owner
the Owner, the surviving
Joint Owner becomes the Name Relationship to Owner
Primary Beneficiary.)
Contingent Beneficiary(ies) Name Relationship to Owner
Name Relationship to Owner
______________________________________________________________________________
12. BY SIGNING BELOW, THE OWNER UNDERSTANDS THAT OR AGREES TO
I received a Prospectus and have determined that the variable annuity applied
for is not unsuitable for my insurance investment objectives, financial
situation, and financial needs. It is a long term commitment to meet
insurance needs and financial goals. I understand that the annuity value for
payments allocated to the variable sub-accounts may increase or decrease
depending on the contract's investment results, and that no minimum cash value
is guaranteed on the variable sub-accounts. To the best of my knowledge and
belief, all statements and answers in this application are complete and true.
It is further agreed that these statements and answers will become a part of
any contract to be issued. No representative is authorized to modify this
agreement or waive any of Allianz Life's rights or requirements.
___________________________________ ______________________________________
Owner's Signature(or Trustee, if Joint Owner's Signature (or Trustee,
applicable) if applicable)
___________________________________ ______________________________________
Signed At (City and State) Date Signed
____Please send me a Statement of Additional Information
______________________________________________________________________________
13.BY SIGNING BELOW, THE REGISTERED REPRESENTATIVE/AGENT CERTIFIES THAT
I am NASD registered and state licensed for variable annuity contracts in the
state where this application is written and delivered; and
I provided the Owner(s) with the most current Prospectus; and
To the best of my knowledge and belief, this application ___DOES___DOES NOT
involve replacement of existing life insurance or annuities. If replacement,
attach a copy of each disclosure statement and list of companies involved.
___________________________________ ______________________________________
Registered Representative Name (Print) Registered Representative Name (Print)
___________________________________ ______________________________________
Registered Representative Signature Registered Representative Signature
___________________________________ ______________________________________
Broker Dealer Branch Telephone Number
______________________________________________________________________________
Branch Address Comm: A B C (Circle One)
______________________________________________________________________________
14.MAIL APPLICATIONS TO
Allianz Life-Valuemark Service Center For Overnight Delivery:
c/o PNC Bank Allianz Life Valuemark Service Center
Box 824240 c/o PNC Bank
Philadelphia, PA 19182-4240 Attn: Box 4240
Route 38 and East Gate Drive
Moorestown, NJ 08057-4240
______________________________________________________________________________
15.HOME OFFICE USE ONLY (EXCEPT IN WV)
If Allianz Life Insurance Company of North America makes a change in this
space in order to correct any apparent errors or omissions, it will be
approved by acceptance of this contract by the Owner(s); however, any material
change must be accepted in writing by the Owner(s).
AMENDED ARTICLES OF INCORPORATION
OF
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
1750 HENNEPIN AVENUE
MINNEAPOLIS, MINNESOTA
(Amended as of March 31, 1993)
* * * * * * * *
ARTICLE I
The name of the corporation shall be Allianz Life Insurance Company of North
America. The principal office and place for the transaction of its business
shall be in the City of Minneapolis, Minnesota.
ARTICLE II
The corporation shall have the power to do any and all of the kinds of
insurance business specified in clauses (4) and (5)(a) of Section 60A.06,
Subdivision 1, of the Minnesota Statutes Annotated and any amendments to such
clauses or provisions in substitute therefore which may be hereafter adopted
together with any kind or kinds of business to the extent necessarily or
properly incidental to the kinds of insurance business which the corporation
is so authorized to do.
In furtherance of the foregoing, and not in limitation thereof, the
corporation shall have the power:
1. To make contracts of life and endowment insurance, to grant, purchase,
or dispose of annuities or endowments of any kinds; and in such contracts
or in contracts supplemental thereto to provide for additional benefits in
event of death of the insured by accidental means, total and permanent
disability of the insured, or specific dismemberment or disablement
suffered by the insured.
2. To insure against loss or damage by the sickness, bodily injury or
death by accident of the assured or his dependents.
3. To acquire and carry on all or any part of the business or property of
any corporation engaged in a business similar to that authorized to be
conducted by this corporation and to merge or consolidate with any
corporation with which this corporation shall be authorized to merge or
consolidate under the laws of the State of Minnesota.
4. To acquire, own, hold, buy, sell, lease, mortgage, and in every other
manner deal in real and personal property of every kind and description,
wherever situated, including the shares of stock, bonds, debentures, notes,
evidences of indebtedness, and other securities, contracts, or obligations
of any corporation or corporations, association or associations, domestic
or foreign, and to pay therefore other assets of the corporation, stocks,
bonds, or other evidences of indebtedness or securities of this or any
other corporation.
5. To make such investments, borrow such money, own such property, as may now
or hereafter be permitted to insurance companies under the laws of the
State of Minnesota.
The corporation shall also have the general rights, powers and privileges of a
corporation, as the same now or hereafter are declared by the laws of the
State of Minnesota and any and all other rights, powers and privileges now or
hereafter granted by the laws relating to insurance adopted by the State of
Minnesota or any law or laws of the State of Minnesota applicable to stock
life insurance companies having power to do the kinds of business hereinabove
referred to.
The business of the corporation shall be transacted on the stock plan.
ARTICLE III
The management of the corporation shall be exercised by the Board of Directors
and by such committee, officers, employees, and agents as the Board may
authorize, elect, or appoint. The Board of Directors shall consist of not
less than three (3) nor more than twenty (20) directors in number, the exact
number of directors to be fixed by a resolution to be adopted at any annual
meeting of stockholders or at any special meeting called for that purpose.
The number of directors shall remain as so fixed until changed by the
stockholders at any annual meeting or at any special meeting called for that
purpose.
At each annual meeting of the stockholders, Directors shall be elected for a
term of one year. Directors need not be residents of the State of Minnesota.
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, except for liability (i) for breach of the
director's duty of loyalty to the Company or its shareholders; or (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law; or (iii) for acts prohibited under Section 300.60
of the Minnesota Statutes; or (iv) under Subdivision 2 and 3 of Section 300.64
of the Minnesota Statutes; or (v) for any transaction from which the director
derived an improper personal benefit; or (vi) for any act or omission
occurring prior to the effective date of this amendment. This amendment to
the Articles of Incorporation shall be effective immediately but shall not
apply to or have any effect on the liability or alleged liability of any
director or the corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment.
ARTICLE IV
The total authorized capital of the corporation shall be $20,000,000 and shall
be evidenced by 20,000,000 common shares at a par value of one dollar each.
The holders of shares of this corporation shall not have any preemptive or
preferential right of subscription to any of the shares of the corporation,
and the sale of said shares and the terms and conditions of such sale shall be
as authorized and determined by the Board of Directors.
Voting by the holders of common shares in this corporation for the election of
directors shall not be cumulative.
ARTICLE V
In addition to the contingent and accrued contract liabilities of the
corporation, the maximum indebtedness to which it shall be subject at any one
time shall not exceed one-billion dollars ($1,000,000,000).
ARTICLE VI
The duration of the corporation shall be perpetual.
BYLAWS
OF
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
1750 HENNEPIN AVENUE
MINNEAPOLIS, MINNESOTA
(AMENDED AS OF MARCH 31, 1993)
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ARTICLE I. OFFICES
The principal office of the corporation in the State of Minnesota shall be
located in the City of Minneapolis, County of Hennepin. The corporation may
have such other offices, either within or without the State of Minnesota, as
the Board of Directors may designate or as the business of the corporation may
require from time to time.
ARTICLE II. STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of the stockholders shall be
held on the first Tuesday after the first Monday of the month of May in each
year, at the hour of ten o'clock a.m., or at such other time on such other day
as shall be fixed by the Board of Directors, for the purpose of electing
Directors and for the transaction of such other business as may come before
the meeting. If the election of Directors shall not be held on the day
designated herein for any annual meeting of the stockholders, or at any
adjournment thereof, the Board of Directors shall cause the election of
Directors to be held at a special meeting of the stockholders as soon
thereafter as conveniently may be.
If a majority of the shares entitled to be voted shall not be represented at
any meeting of stockholders, the stockholders entitled to vote there, present
in person or represented by proxy, shall have the power to adjourn the
meeting, from time to time, without notice other than announcement at the
meeting until the requisite amount of voting stock shall be represented. Any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders, upon the vote of majority of the
shares of stock entitled to be voted, shall have the power to recess or
adjourn the meeting from time to time, without notice other than announcement
at the meeting.
Section 2. Special Meetings. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statue, may be called by
the Chief Executive Officer or by the Board of Directors, and shall be called
by the Chief Executive Officer at the request of the holders of not less than
one-tenth of all outstanding shares of the corporation entitled to vote at the
meeting.
Section 3. Place of Meeting. The Board of Directors may designate any place,
either within or without the State of Minnesota, as the place of meeting for
any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the corporation
in the State of Minnesota.
Section 4. Notice of Meeting. Written notice stating the place, day and hour
of the meeting and, in case of a special meeting, the purpose for which the
meeting is called, shall, unless otherwise prescribed by statue, be delivered
not less than ten (10) nor more than fifty (50) days before the date of the
meeting, either personally or by mail, by or at the direction of the Chief
Executive Officer, or the Secretary, or the office or other persons calling
the meeting, to each stockholder of record entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the stockholder at his address as it appears
on the stock transfer books of the corporation, with postage thereon prepaid.
Section 5. Closing of Transfer Books or Fixing of Record Date. The Board of
Directors may fix a time not less than twenty (20) days preceding the date of
any meeting of stockholders, any dividend payment date or any date for the
allotment of rights, during which the books of the corporation will be closed
against transfer of stocks. In lieu of providing against transfer of stocks
aforesaid, the Board of Directors may fix a date not less than twenty (20)
days preceding the date of any meeting of stockholders, any dividend payment
date or any date for the allotment of rights, as a record date for the
determination of the stockholders entitled to notice of any to vote at such
meeting, or entitled to receive such dividend or rights, as the case may be.
Section 6. Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of stockholders.
Section 7. Proxies. At all meetings of stockholders, a stockholder may vote
in person or by proxy executed in writing by the stockholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the corporation before or at the time of the meeting.
Section 8. Voting of Shares. Each outstanding share shall be entitled to one
vote upon each matter submitted to a vote at a meeting of stockholders.
Section 9. Voting of Shares by Certain Holders. Shares standing in the name
of another corporation may be voted by such officer, agent or proxy as the
Bylaws of such corporation may prescribe, or, in the above of such provision,
as the Board of Directors of such other corporation may determine.
ARTICLE III. BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the corporation shall
be managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The Board of Directors shall
consist of not less than three (3) nor more than twenty (20) directors in
number, the exact number of Directors to be fixed by a resolution to be
adopted at the annual meeting of stockholders or by a special meeting called
for that purpose.
At each annual meeting, Directors shall be elected for a term of one year and
until their successors shall have been elected and qualified. Directors need
not be residents of the State of Minnesota.
Section 3. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at
the same place as, the annual meeting of stockholders. The Board of Directors
may provide, by resolution, the time and place, either within or without the
State of Minnesota, for the holding of additional regular meetings without
other notice than such resolution.
Section 4. Special Meetings. Special meetings of the Board of Directors may
be called by or at the request of the Chief Executive Officer or any two
Directors. The person or persons authorized to call special meetings of the
Board of Directors may fix and place, either within or without the State of
Minnesota, as the place for holding any special meeting of the Board of
Directors called by them.
Section 5. Notice. Notice of any special meeting shall be given personally
or by telephoning or telegraphing each Director a notice at least two days in
advance of the day when the meeting is to be held. If notice be given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Waiver of notice of any meeting shall be
in writing and may be given before or after a meeting. A Director's
attendance at a meeting without protesting prior thereto or at its
commencement the lack of notice to him shall constitute waiver of such notice.
Section 6. Quorum. A majority of the members of the entire Board of
Directors shall constitute a quorum for the transaction of business, but if
less than such majority is present at a meeting, a majority of the Directors
present may adjourn the meeting from time to time without further notice.
Section 7. Vacancies. Any vacancy occurring on the Board of Directors may be
filled by the affirmative vote of a majority of the remaining Directors though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall be a Director until his successor is elected for the unexpired
term at the next annual meeting of stockholders.
Section 8. Committees. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board, designate one or more
committees, in addition to the Executive Committee and the Finance Committee,
each committee to consist of two or more of the Directors of the corporation,
which to the extent provided in said resolutions, or in the Bylaws, shall have
and may have and may exercise, the powers of the Board of Directors in the
management of the business and affairs of the corporation, and may have the
power to authorize the seal of the corporation to be affixed to all papers
which may require it. Such committee or committees shall have such name or
names as may be stated in these Bylaws, or as may be determined from time to
time, by resolutions adopted by the Board of Directors. All committees shall
keep regular minutes of their proceedings. Vacancies in any committee shall
be filled by the Board of Directors. All such reports shall be rendered not
later than at the second meeting of the Executive Committee or the Board of
Directors, as the case may be, next succeeding the action of any such
committee. The committee shall fix its own rules of procedure, and shall meet
where and as provided by such rules, or by resolution of the Board of
Directors.
Section 9. Retirement. No person shall serve as a Director of the Company
beyond the meeting of the Board of Directors next following his seventieth
(70) birthday. At such meeting next following his seventieth birthday, such
Director shall submit his resignation from the Board of Directors, which
resignation shall be accepted by the Board of Directors.
Section 10. General Powers. In addition to the powers and authorities by
these Bylaws expressly conferred upon it, the Board may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the Articles of Incorporation, or by these Bylaws directed or
required to be exercised or done by the stockholders.
ARTICLE IV. OFFICERS
Section 1. Number. The executive officers of the corporation shall be the
Chairman of the Board of Directors, the Chief Executive Officer, the Chief
Operating Officer, a President, one or more Divisional Presidents, Chief
Financial Officer, Executive Vice Presidents, Senior Vice Presidents, Vice
President and Second Vice Presidents (the number of such Vice Presidents to be
determined by the Board of Directors), a Secretary, and a Treasurer. The
Chairman of the Board of Directors, the Chief Executive Officer and the Chief
Operating Officer shall be selected from among the members of the Board of
Directors. At their discretion, the Board of Directors may decline to
designate a Chairman of the Board of Directors. Such other executive officer
as may be deemed necessary may be elected by the Board of Directors. Any two
or more officers may be held by the same person.
Section 2. Election and Term of Office. The executive officers of the
corporation to be elected by the Board of Directors shall be elected annually
at the first meeting of the Board of Directors held after each annual meeting
of stockholders. If the election of executive officers shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently
may be. Each executive officer shall hold office until his successor shall
have been duly elected and qualified
Section 3. Appointive Officer. The Chief Executive Officer, subject to the
approval of the Board of Directors, may appoint one or more Assistant Vice
Presidents, and such additional appointive officers as may be designated by
the Chief Executive Officer and approved by the Board.
Section 4. Removal. An executive officer may be removed either for or
without cause by a majority vote of the Board of Directors present at any
meeting of the Board.
Section 5. Vacancies A vacancy in any executive office because of death,
resignation, removal, disqualification or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
Section 6. Chairman of the Board. The Chairman of the Board of Directors
shall preside at all meetings of the Board of Directors, and shall perform
such other duties as may be assigned to him by the Board. In the event the
Board of Directors has not designated a Chairman of the Board of Directors, or
in the event the Chairman of the Board of Directors is not present, the Chief
Executive Officer shall preside at any such meeting of the Board of Directors.
Section 7. Chief Executive Officer. The Chief Executive Officer shall be
elected from among the members of the Board of Directors, and subject to the
control of the Board of Directors, shall have responsibility for the overall
operations of the corporation. He shall, when present, preside at all
meetings of the stockholders and, in general, carry out such duties as may be
prescribed by the Board of Directors from time to time.
Section 8. Chief Operating Officer. The Chief Operating Officer shall be
elected from among the members of the Board of Directors and shall report to
the Chief Executive Officer. He shall have responsibility for the day-to-day
operations of the corporation and such other duties as may be prescribed by
the Chief Executive Officer or by the Board of Directors from time to time.
Section 9. President. The President shall be elected from among the members
of the Board of Directors. In general , the President shall perform such
duties as may be prescribed by the Chief Executive Officer or by the Board of
Directors from time to time.
Section 10. Divisional President. The Divisional President, or in the event
there may be more than one Divisional President, the Divisional Presidents,
shall perform such duties as may be prescribed by the President, Chief
Executive Officer, or Board of Directors, but shall generally be responsible
for the management of one of the corporation's divisions.
Section 11. Chief Financial Officer. The Chief Financial Officer shall have
supervision over the financial affairs of the corporation and shall perform
such other duties and have such other powers as may from time to time be
assigned by the President, Chief Executive Officer, or Board of Directors.
Section 12. Executive Vice President. The Executive Vice President or in the
event there be more than one Executive Vice President, the Executive Vice
Presidents, shall generally assist the President in the management of the
corporation.
Section 13. Senior Vice Presidents, Vice Presidents and Second Vice
Presidents. The Senior Presidents, Vice Presidents and Second Vice Presidents
shall perform such duties as may be assigned to them by the Chief Executive
Officer, the Chief Operating Officer, or the Board of Directors.
Section 14. Secretary. The Secretary shall keep the minute books and seal of
the corporation, record the minutes of the meetings of the stockholders and
the Board of Directors, and, in general, perform all duties and have all
powers incident to the office of Secretary, and perform such other duties and
have such other powers as from time to time may be assigned to him by these
Bylaws, or by the Board of Directors, or the Chief Executive Officer.
Section 15. Treasurer. The Treasurer shall have supervision over the funds,
securities, receipts and disbursements of the corporation, and, in general,
perform all duties and have all powers incident to the office of Treasurer,
and perform such other duties and have such other powers as from time to time
may be assigned to him by these Bylaws, or by the Board of Directors, or by
the Chief Executive Officer.
Section 16. Compensation. The executive officers and the appointive officers
shall receive such salary or compensation as may be determined by the Board of
Directors. The Board of Directors may delegate to any executive officer the
power to determine salaries or other compensation of any officer appointed in
accordance with Section 3 of ARTICLE IV.
Section 17. Surety Bonds. In case the Board of Directors shall so require,
any officer or agent or the corporation shall execute to the corporation a
bond in such sum and with such surety or sureties as the Board of Directors
may direct, conditioned upon the faithful performance of his duties to the
corporation, including responsibility for negligence and for the accounting of
all property, funds or securities of the corporation which may come into his
hands.
ARTICLE V. EXECUTIVE COMMITTEE
The Board of Directors, by resolution adopted by a majority of the full Board,
may designate three or more of its members, of which Committee the Chief
Executive Officer shall be a member, to constitute an Executive Committee.
The Board of Directors shall designate a member of the Committee to serve as
Chairman of the Committee. The designation of such Committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or members thereof, of any responsibility imposed by law. Between
meetings of the Board of Directors, it shall have, and may exercise all of the
authority of the Board with the exception of such limitations as may be
imposed by the Board or by the laws of the State of Minnesota. All actions of
the Executive Committee shall be reported to the Board of Directors. All such
reports shall be rendered no later than at the second meeting of the Board of
Directors next succeeding such action of the Executive Committee.
ARTICLE VI. FINANCE COMMITTEE
The Board of Directors, by resolution adopted by a majority of the full Board,
may designate three or more of its members, of whom the Chief Executive
Officer shall be one, to constitute a Finance Committee. The Board of
Directors may also elect from their number one or more alternate members of
the Finance Committee to serve at the meetings of the Committee in the absence
of any regular member or members, and, in case more than one alternate is
elected, shall designate at the time of election the priorities as between
them. Vacancies in the Finance Committee shall be filled by the Board of
Directors.
The Finance Committee shall exercise general control and supervision of the
financial affairs and accounts of the corporation. It shall supervise all
investments and loans of the company, including investments in real estate,
policy loans, real estate mortgage loans and investments in housing company
securities. Directly or through such regulations as it may establish, it
shall authorize or approve the making of all investments or loans and all
sales or such investments or loans.
ARTICLE VII. CERTIFICATES FOR SHARE AND THEIR TRANSFER
Section 1. Certificate for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the Board of
Directors. Such Certificates shall be signed by the Chief Executive Officer
and by the Secretary or an Assistant Secretary and sealed with the corporate
seal or facsimile thereof. The signatures of such officers upon a certificate
may be facsimiles if the certificate is manually signed on behalf of the
transfer agent and a registrar, other than the corporation itself or one of its
employees. Each certificate for share shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be canceled,
except that in case of a lost, destroyed or mutilated certificate a new one
may be issued therefore upon such terms and indemnity to the corporation as
the Board of Directors may prescribe.
In the event any officer's signature or facsimile signature shall appear on
any certificate and such officer shall have ceased to be such officer prior to
the issue of such certificate, such certificate shall be a valid certificate
and may, nevertheless, be issued and delivered.
Section 2. Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
ARTICLE VIII. EXECUTION OF INSTRUMENTS
All documents, instruments or writings of any nature shall be signed,
executed, verified, acknowledged and delivered by such officers, agents or
employees of the corporation, or any one of them, and in such manner, as from
time to time may be determined by the Board of Directors.
ARTICLE IX. DIVIDENDS
Dividends shall be declared and paid only out of funds available therefor at
such times and in such amounts as the Board of Directors may determine.
ARTICLE X. CORPORATE SEAL
The seal of the corporation shall be in the form of a circle and shall bear
the name of the corporation and the words "Corporate Seal."
ARTICLE XI. INDEMNIFICATION
Each person (and the heirs, executors, and administrators of such person) made
or threatened to be made a party to any action, civil or criminal, by reason
of being or having been a Director, officer, or employee of the corporation
(or by reason of serving any other organization at the request of the
corporation) shall be indemnified to the extent permitted by the laws of the
State of Minnesota and in the manner prescribed therein.
BYLAWS CERTIFICATION
I, the undersigned, do hereby certify that I am the duly elected and qualified
Secretary and keeper of the records and corporate seal of Allianz Life
Insurance Company of North America, a corporation organized under the laws of
the State of Minnesota, and that the foregoing is a full, true and correct
copy of the amended Bylaws, duly adopted at the Special Meeting of the
Stockholders of said corporation, convened and held in accordance with the
laws and articles and bylaws of said corporation on the 12th day of February,
1993, and that said Bylaws supersede all Bylaws previously adopted for the
purpose stated and are in full force and effect.
/s/ ALAN A. GROVE
_________________
Alan A. Grove, Secretary
Allianz Life Insurance Company of North America
(Corporate Seal)
STATE OF MINNESOTA
County of Hennepin
Subscribed and sworn to before me, a Notary Public, in Minneapolis, Minnesota,
this 16th day of March, 1993.
/s/ TINA M. ERICKSON
__________________________________________
Notary Public
County of Hennepin, State of Minnesota
PARTICIPATION AGREEMENT
Between
FRANKLIN VALUEMARK FUNDS
and
NORTH AMERICAN LIFE AND CASUALTY COMPANY
THIS AGREEMENT, effective the 1st day of January, 1990 by and between North
American Life and Casualty Company, a Minnesota corporation (hereinafter the
"Company") on its own behalf and on behalf of one or more segregated asset
accounts of the Company or its affiliates (hereinafter the "Account"), and
Franklin Valuemark Funds, a Massachusetts business trust (hereinafter the
"Trust").
WHEREAS, the Trust engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by the Company
and its affiliates (hereinafter the "Company"); and
WHEREAS, the beneficial Interest in the Trust is divided into several series of
shares, each designated a "Fund" and each representing the interests in a
particular managed pool of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission, dated September 7, 1989 (File No. 812-7303), granting the Company
and variable annuity and variable life insurance separate accounts exemptions
from certain provisions of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and certain Rules thereunder, to the extent
necessary to permit shares of the Trust to be sold to and held by variable
annuity and variable life insurance separate accounts of the Company
(hereinafter the "Mixed Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the company has registered or will register certain variable annuity
and/or life insurance contracts under the 1933 Act (hereinafter "Contracts");
and
WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company, to
set aside and invest assets attributable to the aforesaid variable contracts
(the Contract(s) and the Account(s) covered by this Agreement, and the
corresponding Funds covered by this Agreement in which the Account(s) invest,
are specified in Schedule A attached hereto as may be modified from time to
time); and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Fund on behalf of the Account to
fund the Contracts;
NOW, THEREFORE, in consideration or their mutual promises, the Trust and the
Company agree as follows:
ARTICLE 1. SALE OF TRUST SHARES
1.1 The Trust agrees to sell to the company those shares of the Trust which the
Account orders, executing such orders on a daily basis at the net value next
computed after receipt by the Trust or its designee of the order for the shares
of the Trust. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders and receipt by such designee
shall constitute receipt by the Trust; provided that the Trust received notice
of such order by 9:30 a.m. New York time on the next following business day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Trust calculates its net asset value pursuant to
the rules of the Securities and Exchange Commission.
1.2. The Trust agrees to make Trust shares available for the duration or this
Agreement for purchase at the applicable net asset value per share by the
Company and its Account on those days on which the Trust calculates its net
asset value pursuant to rules of the Securities and Exchange Commission and the
Trust shall use reasonable efforts to calculate such net asset value on each day
on which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Trust (hereinafter the "Trustees") may
refuse to sell shares of any Funds to any person, or suspend or terminate the
offering of shares of any Fund if such action is required by law or regulatory
authorities having jurisdiction or is, in the sole discretion of the Trustees
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Fund.
1.3. The Trust agrees that shares of the Trust will be sold only to the Company
and their separate accounts. No shares of any Fund will be sold to the general
public.
1.4. The Trust agrees to redeem for cash, on the Company's request, any full or
fractional shares of the Trust held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Trust or
its designee of the request for redemption. For purposes of this Section 1.4,
the Company shall be the designee of the Trust for receipt of requests for
redemption and receipt by such designee shall constitute receipt by the Trust
provided that the Trust receives notice of such request for redemption by 9:30
a.m. New York time on the next following Business Day.
1.5. The company shall pay for the Trust shares on the next Business Day after
an order to purchase shares is made in accordance with the provisions of Section
1.1 hereof. Payment shall be in federal funds transmitted by wire or by a credit
for any shares redeemed.
1.6. Issuance and transfer of the Trust's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from the Trust will be recorded in an appropriate title for the Account
or the appropriate subaccount of the Account.
1.7. The Trust shall furnish same day notice (by wire or telephone followed by
written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Trust's shares. The Company hereby elects to
receive all such dividends and distributions as are payable on the Fund shares
in additional shares of that Fund. The Company reserves the right to revoke this
election and to receive all such dividends and distributions in cash. The Trust
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.8. The Trust shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6:30 p.m. New York time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act (or exempt therefrom), that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws and that the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable law and that it has legally and validly
established the Account as a segregated asset account under Minnesota law and
has registered or, prior to any issuance or sale of the Contracts, will register
the Account as a unit investment trust in accordance with the provisions of the
1940 Act (unless exempt therefrom) to serve as a segregated investment account
for the Contracts.
2.2. The Trust represents and warrants that Trust shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with the laws or Massachusetts and all applicable federal
and state securities laws and that the Trust is and shall remain registered
under the 1940 Act. The Trust shall amend the Registration Statement for its
shares under the 1933 Act and the 1940 Act from time to time as required in
order to affect the continuous offering of its shares. The Trust shall register
and qualify the shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Trust.
2.3. The Trust represents that the Trust is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, (the
"Code") and that every effort will be made to maintain such qualifications
(under Subchapter M or any successor or similar provision) and that the Trust
will notify the Company immediately upon having a reasonable basis for believing
that the Trust has ceased to so qualify or that the Trust might not so qualify
in the future.
2.4. The Trust undertakes to have a Board of Trustees, a majority of whom are
not interested persons of the Trust, formulate and approve of any plan under
Rule 12b-1 to finance distribution expenses.
2.5. The Trust represents that it will sell and distribute the Trust shares in
accordance with all applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.6. The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Massachusetts and that it does and will comply
with the 1940 Act.
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. The Trust shall provide the Company (at the Trust's expense) with as many
copies of the Trust's current prospectus as the Company may reasonably request.
If requested by the Company in lieu thereof, the Trust shall provide such
documentation (including a final "camera ready" copy of the new prospectus as
set in type at the Trust's expense) and other assistance as is reasonably
necessary in order for the Company once a year (or more frequently if the
prospectus for the Trust is supplemented or amended) to have the prospectus for
the Contracts and the Trust's prospectus printed together in one document (such
printing to be at the Trust's expense).
3.2. The Trust's prospectus shall state that the Statement of Additional
Information for the Trust is available from the Trust. The Trust, at its
expense, shall print and provide such Statement free of charge to the Company
and to any owner of a contract or prospective owner who requests such Statement.
3.3. The Trust, at its expense, shall provide the Company with copies of its
proxy material, reports to stockholders and other communications to stockholders
in such quantity as the Company shall reasonably require for distributing to
Contract owners.
3.4. If and to the extent required by law (or the Mixed Funding Exemptive Order)
the Company shall:
1. solicit voting instructions from contract owners;
2. vote the Trust shares in accordance with instructions received from Contract
owners; and
3. vote Trust shares for which no instructions have been received in the same
proportion as Trust shares of such Fund for which instructions have been
received;
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges or
variable contract owners. The Company reserves the right to vote Trust shares
held in any segregated asset account in its own right, to the extent permitted
by law. The Company shall be responsible, with the guidance and assistance of
the Trust, assuring that each of their separate account participating in the
Trust calculates voting privileges in a manner consistent with the standards set
forth on Schedule B attached hereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or
its designee, each piece of sales literature or other promotional material in
which the Trust, its investment adviser or underwriter is named, a reasonable
time prior to its use. No such material shall be used if the Trust or its
designee object to such use within 15 Business Days after receipt of such
material.
4.2. The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus for the Trust shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports or proxy statements for the Trust, or in sales literature
or other promotional material approved by the Trust or its designee except with
the permission of the Trust.
4.3. The Trust shall furnish, or shall cause to be furnished, to the Company or
its designee, each piece of sales literature or other promotional material in
which the Company and/or its separate account(s), is named a reasonable time
prior to its use. No such material shall be used if the Company or its designee
object to such use within 15 Business Days after receipt or such material.
4.4. The Trust shall not give any information or make any representations on
behalf of the Company or concerning the Company, the Account, or the Contracts
other than information or representations contained in a registration statement
or prospectus for the Contracts, as such registration statement and prospectus
may be amended or supplemented from time to time, or in reports for the Account
approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no action letters, and all amendments
to any of the above, that relate to the Trust or its shares, prior to or
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities. The Trust shall also
promptly inform the Company of the results or any examination by the Securities
and Exchange Commission (or other regulatory authorities), and shall provide the
Company with a copy of any "deficiency letter" or other correspondence or
written report regarding any such examination.
4.6. For purposes of this Article IV, the phrase "sales literature or other
promotional material" means advertisements (such as material published, or
designed for use in, a newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or billboard),
and sales literature (such as brochures, circulars, market letters and form
letters), distributed or made generally available to customers or the public.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no Fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to the Trust.
5.2. All expenses incident to performance by the Trust under this Agreement
shall be paid by the Trust. The Trust shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Trust, in accordance with
applicable state laws prior to their sale. The Trust shall bear the expenses for
the cost of registration and qualification of the Trust's shares, preparation
and filing of the Trust's prospectus and registration statement, proxy materials
and reports, setting the prospectus in type, setting in type and printing the
proxy materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by federal or state law, and all taxes on the issuance or
transfer of the Trust's shares.
5.3. The Trust shall bear the expenses of printing and distributing the Trust's
prospectus to owners of Contracts issued by the Company and or distributing the
Trust's proxy materials and reports to such Contract owners.
5.4. In the event the Trust adds one or more additional Funds and the Company
desires to make such Funds available to its Contract owners as an underlying
investment medium, a new Schedule A or an amendment to this Agreement shall be
executed by the parties authorizing the issuance of shares or the new Funds to
the Account.
ARTICLE VI. DIVERSIFICATION
6.1. The Trust represents, and warrants that the Trust will at all times invest
its assets in such a manner as to ensure that the Contracts will be treated as
annuity, endowment, or life insurance contracts under the code and the
regulations issued thereunder. Without limiting the scope of the foregoing, the
Trust will at all times comply with Section 817(h) of the Code and the
Regulations Section 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulation.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board of Trustees of the Trust (the "Board") will monitor the Trust for
the existence of any material irreconcilable conflict between the interest of
the Contract owners of all separate accounts investing in the Trust. A material
irreconcilable conflict may arise for a variety of reasons, including: (a) an
Action by any state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no action or interpretive letter or any similar
action by insurance, tax or securities regulatory authorities (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Fund are being managed; (e) a difference in
voting instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions or Contract owners. The Board shall promptly inform the
Company to determine that a material irreconcilable conflict exists and the
implications thereof.
7.2. If it is determined by a majority of the Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at its expense, and to the extent reasonably practicable (as
determined by a majority or the disinterested Trustees) take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to and
including: (1) withdrawing the assets, allocable to some or all of the separate
accounts from the Trust or any Fund and reinvesting such assets in a different
investment medium, including (but not limited to) another Fund of the Trust, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity Contract owners or life insurance Contract
owners) that votes in favor of such Segregation, or offering to the affected
Contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.3. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the Account's
investment in the Trust and terminate this Agreement within six months after the
Board informs the Company in writing that it has determined that such decision
has created an irreconcilable material conflict, provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Trust shall continue to accept and implement orders by the Company
for the purchase and redemption of shares of the Trust.
7.4. For purposes of Section 7.2 though 7.4 of this Agreement, a majority of the
disinterested members of the Board shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Trust be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.2 to establish a new funding
medium for the Contracts, if an offer to do so has been declined by vote of a
majority or Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination, provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
ARTICLE VIII.INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Trust and each of
its Trustees and officers and each person, if any, who controls the Trust within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Trust's shares or the Contracts and:
1. arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Registration Statement or
prospectus for the Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the Company
by or on behalf of the Trust for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
2. arise out of or as a result of statements or representations (other than
statements or representations contained in the Registration Statement,
prospectus or sales literature of the Trust not supplied by the Company, or
persons under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of the
Contracts or Trust Shares; or
3. arise out of any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement, prospectus, or sales literature
of the Trust or any amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon information furnished to
the Trust by or on behalf of the company; or
4. arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Company,
except to the extent provided in Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to the Trust,
whichever is applicable.
8.1(c) The Company shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
claim shall have been served upon such indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will be not
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.l(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust Shares or the Contracts or the operation of
the Trust and the Indemnified Parties will provide the Company with all relevant
information and documents requested by the Company. For purposes of this Section
8.1(d), the "commencement" of proceedings shall include any informal or formal
communications from the Securities and Exchange Commission or its staff (or the
receipt of information from any other persons or entities) indicating that
enforcement action by said Commission or staff may be contemplated or
forthcoming.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws or Minnesota.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940
Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the Securities and
Exchange Commission may grant (including, but not limited to, the Mixed Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate with respect to one, some, or all Funds for
one, some, or all Contracts or Accounts:
1. at the option of any party upon six month's advance written notice to the
other parties;
2. at the option of the Company to the extent that shares of Funds are not
reasonably available to meet the requirements of the Contracts or are not
appropriate funding vehicles for the Contracts, as determined by the
Company reasonably and in good faith. Prompt notice of the election to
terminate for such cause and an explanation or such cause shall be
furnished by the Company; or
3. as provided in Article VII.
10.2. The notice shall specify the Fund(s) and Contract(s) or Account(s) as to
which the Agreement is to be terminated.
10.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 1O.1 (a) may be exercised for cause
or for no cause.
10.4. Effect of Termination. Notwithstanding any termination of this Agreement,
the Trust shall at the option of the Company, continue to make available
additional shares of the Trust pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the existing contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust and/or
invest in the Trust upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.4 shall not apply to
any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If to the Trust: Deborah Gatzek, Vice President
Franklin Resources, Inc.
777 Mariners Island Boulevard
San Mateo, California 94404
If to the Company: Mr. Robert S. James, President-Financial Markets
North American Life and Casualty Company 1750 Hennepin
Avenue
Minneapolis, Minnesota 55403
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as it may come into the public domain.
12.2. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.4. If any provision or this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.5. The Schedules attached hereto, as modified from time to time, are
incorporated herein by reference and are part of this Agreement.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitations the
Securities and Exchange Commission, the NASD and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
IN WITNESS WHEREOF, each of the parties has cause this Agreement to be executed
in its name and on its behalf by its duly authorized representative and its seal
to be hereunder affixed hereto as or the date specified below.
Company:
By two authorized officers,
By: /s/Robert S. James
Title: President, Financial Markets Division
Date: 5/24/92
By: /s/Michael T. Westermeyer
Title: Second Vice President and Senior Counsel
Date: 5/20/92
Trust:
By its authorized officers,
By: /s/Deborah Gatzek
Title: Secretary
Date: 3/31/92
SCHEDULE A
Franklin Valuemark Funds (Trust) is a diversified, open-end management
investment company consisting of the following separate Funds:
Adjustable U.S. Government Fund Equity Growth Fund Global Income Fund High
Income Fund Income Securities Fund Investment Grade Intermediate Bond Fund
Money Market Fund Precious Metals Funds Real Estate Securities Fund U.S.
Government Securities Fund Utility Equity Fund Zero Coupon Fund - 1995
Zero Coupon Fund - 2000 Zero Coupon Fund - 2005 Zero Coupon Fund - 2010
Effective March 1, 1992:
Rising Dividend Fund
International Equity Fund
Pacific Growth Fund
Amendment to Participation Agreement
Effective as of the dates specified below, Allianz Life Insurance Company of
North America, formerly known as North American Life and Casualty Company, a
Minnesota corporation, and Franklin Valuemark Funds, a Massachussetts business
trust, hereby amend Schedule A of their Participation Agreement effective
January 1, 1990, by adding the following language to the bottom of the list of
the Funds which make up the Franklin Valuemark Funds:
"Effective March 15, 1994:
Templeton Developing Markets Equity Fund
Templeton Global Growth Fund"
"Effective May 1, 1995:
Templeton Global Asset Allocation Fund"
IN WITNESS WHEREOF, each of the Parties has caused this Amendment to be executed
in its name and on its behalf by its duly authorized representatives as of the
date specified below.
Allianz Life Insurance Company of North America
By: /s/James P. Kelso
James P. Kelso
Title: Vice President,
Variable Products
Date: 6/30/95
Franklin Valuemark Funds
By: /s/Karen L. Skidmore
Karen L. Skidmore
Title: Assistant Vice President
& Assistant Secretary
Date: 6/16/95
Amendment to Participation Agreement
Effective as of the dates specified below, Allianz Life Insurance Company of
North America, formerly known as North American Life and Casualty Company, a
Minnesota corporation, and Franklin Valuemark Funds, a Massachussetts business
trust, hereby amend Schedule A of their Participation Agreement effective
January 1, 1990, by adding the following language to the bottom of the list of
the Funds which make up the Franklin Valuemark Funds:
"Effective November 1, 1995:
Small Cap Fund"
IN WITNESS WHEREOF, each of the Parties has caused this Amendment to be
executed in its name and on its behalf by its duly authorized representatives
as of the date specified below.
Allianz Life Insurance Company of North America
By: /s/James P. Kelso
James P. Kelso
Title: Vice President,
Variable Products
Franklin Valuemark Funds
By: /s/Karen L. Skidmore
Karen L. Skidmore
Title: Assistant Vice President
& Assistant Secretary
Amendment to Participation Agreement
Effective as of the dates specified below, Allianz Life Insurance Company of
North America, formerly known as North American Life and Casualty Company, a
Minnesota corporation, and Franklin Valuemark Funds, a Massachussetts business
trust, hereby amend Schedule A of their Participation Agreement effective
January 1, 1990, by adding the following language to the bottom of the list of
the Funds which make up the Franklin Valuemark Funds:
"Effective May 1, 1996:
Capital Growth Fund
Templeton International Smaller Companies Fund"
IN WITNESS WHEREOF, each of the Parties has caused this Amendment to be
executed in its name and on its behalf by its duly authorized representatives
as of the date specified below.
Allianz Life Insurance Company of North America
By: /s/James P. Kelso
James P. Kelso
Title: Vice President,
Variable Products
Franklin Valuemark Funds
By: /s/Karen L. Skidmore
Karen L. Skidmore
Title: Assistant Vice President
& Assistant Secretary
