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Registration Number__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
AMERICAN NATIONAL VARIABLE LIFE SEPARATE ACCOUNT
(Exact Name of Registrant)
AMERICAN NATIONAL INSURANCE COMPANY
(Exact Name of Depositor)
One Moody Plaza
Galveston, Texas 77550
(Complete Address of Depositor's Principal Executive Offices)
Rex D. Hemme Jerry L. Adams
Vice President, Actuary Greer, Herz & Adams, L.L.P.
American National With copy to: One Moody Plaza, 18th Floor
Insurance Company Galveston, Texas 77550
One Moody Plaza
Galveston, Texas 77550
(Name and Address of Agent for Service)
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
Securities being offered: Variable Universal Life Insurance Policies.
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.
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INVESTRAC ADVANTAGE SURVIVORSHIP VARIABLE UNIVERSAL LIFE
ISSUED BY AMERICAN NATIONAL INSURANCE COMPANY
HOME OFFICE ONE MOODY PLAZA GALVESTON, TEXAS 77550
PROSPECTUS __________ 1-800-306-2959
This prospectus describes a variable universal life insurance policy offered by
American National Insurance Company. The policy provides survivorship life
insurance protection on two insureds with flexibility to vary the amount and
timing of premium payments and the level of death benefit. The death benefit is
payable after the second insured's death. The death benefits available under
your policy can increase if the value of the policy increases.
The value of your policy will vary with the investment performance of investment
options you choose. You can choose to have your net premium payments (premium
payments less applicable charges) allocated to subaccounts of the American
National Variable Life Separate Account and to our general account. Each
subaccount invests in a corresponding portfolio of American National Investment
Accounts, Inc., Variable Insurance Products Fund, Variable Insurance Products
Fund II, Variable Insurance Products Fund III, T. Rowe Price International
Series, Inc. or T. Rowe Price Equity Series, Inc.
The portfolios currently available for purchase by the subaccounts are:
American National Fund
. AN Money Market
. AN Growth
. AN Balanced
. AN Managed
T. ROWE PRICE FUNDS
. T. Rowe Price Equity Income
. T. Rowe Price Mid-Cap Growth
. T. Rowe Price International Stock
FIDELITY FUNDS
. VIP Money Market
. VIP Equity-Income
. VIP High Income
. VIP Growth
. VIP Overseas
. VIP Contrafund
. VIP Asset Manager: Growth
. VIP Investment Grade Bond
. VIP Asset Manager
. VIP Index 500
. VIP Balanced
. VIP Growth and Income
. VIP Mid Cap
. VIP Growth Opportunities
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
POLICY OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE POLICY IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY
BANK, NOR IS IT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. THE POLICY INVOLVES INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
Please read this prospectus and keep it for future reference.
Form 7992
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TABLE OF CONTENTS
PAGE
Definitions......................................... 4
Summary............................................. 6
The Policy........................................ 6
Issuance of a Policy.............................. 6
Allocation of Premiums............................ 6
Policy Benefits and Rights........................ 7
Charges........................................... 8
Taxes............................................. 11
Policy Benefits..................................... 11
Purposes of the Policy............................ 11
Death Benefit Proceeds............................ 11
Death Benefit Options............................. 12
Guaranteed Coverage Benefit....................... 16
Duration of the Policy............................ 17
Accumulation Value................................ 17
Payment of Policy Benefits........................ 18
Policy Rights....................................... 19
Loan Benefits..................................... 19
Surrenders........................................ 21
Transfers......................................... 22
Refund Privilege.................................. 23
Dollar Cost Averaging............................. 23
Rebalancing....................................... 24
Payment and Allocation of Premiums.................. 24
Issuance of a Policy.............................. 24
Premiums.......................................... 24
Premium Flexibility............................... 24
Allocation of Premiums and Accumulation Value..... 25
Grace Period and Reinstatement.................... 25
Charges and Deductions.............................. 26
Premium Charges................................... 26
Charges from Accumulation Value................... 26
Monthly Deduction............................... 26
Cost of Insurance............................... 27
Surrender Charge................................ 28
Transfer Charge................................. 28
Partial Surrender Charge........................ 28
Daily Charges Against the Separate Account...... 28
Fees and Expenses Incurred by
Eligible Portfolios............................ 28
Taxes........................................... 28
Exceptions to Charges............................. 29
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American National Insurance Company, the Separate
Account, the Funds and the Fixed Account......... 29
American National Insurance Company............... 29
The Separate Account.............................. 29
The Funds......................................... 32
Fixed Account..................................... 34
Federal Income Tax Considerations................... 35
Introduction...................................... 35
Tax Status of the Policy.......................... 35
Tax Treatment of Policy Proceeds.................. 36
American National's Income Taxes.................. 39
Other Information................................... 39
Sale of the Policy................................ 39
Year 2000......................................... 40
The Contract...................................... 40
Dividends......................................... 42
Legal Matters..................................... 42
Legal Proceedings................................. 42
Registration Statement............................ 42
Experts........................................... 42
Senior Executive Officers and Directors of
American National Insurance Company................ 44
Financial Statements................................ 51
Appendix............................................ 85
Illustrations of Death Benefits,
Accumulation Values and Surrender Values........ 87
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DEFINITIONS
ACCUMULATION VALUE. The total amount that a Policy provides for investment at
any time.
AGE AT ISSUE. For each insured, the age at the Insured's last birthday before
the Date of Issue.
AMERICAN NATIONAL FUND. American National Investment Accounts, Inc.
ATTAINED AGE. For each insured, Age at Issue plus the number of complete Policy
Years.
BENEFICIARY. The Beneficiary designated in the application or the latest change,
if any, filed and recorded with us.
DAILY ASSET CHARGE. A charge equal to an annual rate of 0.90% of the average
daily Accumulation Value of each subaccount.
DATE OF ISSUE. The Date of Issue in the Policy and any riders to the Policy.
DEATH BENEFIT. The amount of insurance coverage provided under the selected
Death Benefit option.
DEATH BENEFIT PROCEEDS. The proceeds payable upon death of the last Insured to
die.
DECLARED RATE. The rate at which interest is credited in the Fixed Account.
EFFECTIVE DATE. The later of the Date of Issue or the date on which:
. the first premium, as shown on the Policy Data Page, has been paid; and
. the Policy has been delivered while both Insureds are alive and in good
health.
Any increase in Specified Amount, addition of a benefit rider, or
reinstatement of coverage will take effect on the Monthly Deduction Date
which coincides with or next follows the date we approve an application for
such change or for reinstatement of the Policy.
ELIGIBLE PORTFOLIO. A Portfolio of American National Investment Accounts, Inc.,
Variable Insurance Products Fund, Variable Insurance Products Fund II, Variable
Insurance Products Fund III, T. Rowe Price International Series, Inc., and T.
Rowe Price Equity Series, Inc., in which a subaccount can be invested.
FIDELITY FUNDS. Variable Insurance Products Fund, Variable Insurance Products
Fund II and Variable Insurance Products Fund III
FIXED ACCOUNT. A part of our General Account which accumulates interest at a
fixed rate.
GENERAL ACCOUNT. Includes all of our assets except assets segregated into
separate accounts.
GUARANTEED COVERAGE BENEFIT. Our agreement to keep the Policy in force if the
Guaranteed Coverage Premium is paid and other Policy provisions are met.
GUARANTEED COVERAGE PREMIUM. A specified premium which, if paid in advance as
required, will keep the Policy in force so long as other Policy provisions are
met.
INSUREDS. The persons upon whose lives the Policy is issued.
MONTHLY DEDUCTION. The sum of (1) cost of insurance charge, (2) charge for any
riders, and (3) monthly expense charge and monthly expense fee shown on the
Policy Data Page.
MONTHLY DEDUCTION DATE. The same date in each succeeding month as the Date of
Issue, except that whenever the Monthly Deduction Date falls on a date other
than a Valuation Date, the Monthly Deduction Date will be deemed to be the next
Valuation Date. The Date of Issue is the first Monthly Deduction Date.
NET AMOUNT AT RISK. Your Death Benefit minus your Accumulation Value.
PLANNED PERIODIC PREMIUMS. Scheduled premiums selected by you.
POLICY. The variable universal life insurance policy described in this
prospectus.
POLICY DATA PAGE. The pages of the Policy so titled.
POLICY DEBT. The sum of all unpaid Policy loans and accrued interest thereon.
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POLICYOWNER ("YOU"). The owner of the Policy, as designated in the application
or as subsequently changed. If a Policy has been absolutely assigned, the
assignee is the Policyowner. A collateral assignee is not the Policyowner.
POLICY YEAR. The period from one Policy anniversary date until the next Policy
anniversary date.
SATISFACTORY PROOF OF DEATH. Submission of the following:
. certified copy of the death certificate;
. a claimant statement;
. the Policy; and
. any other information that we may reasonably require to establish the
validity of the claim.
SECOND INSURED. The last Insured to die.
SPECIFIED AMOUNT. The minimum Death Benefit under the Policy until the younger
Insured reaches Attained Age of 100. The Specified Amount is an amount you
select in accordance with Policy requirements.
SURRENDER VALUE. The Accumulation Value less Policy Debt and surrender charges.
T. ROWE PRICE FUNDS. T. Rowe Price International Series, Inc. and T. Rowe Price
Equity Series, Inc.
VALUATION DATE. Each day the New York Stock Exchange is open for regular
trading.
VALUATION PERIOD. The close of business on one Valuation Date to the close of
business on another.
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SUMMARY
The Policy is not available in some states. You should rely only on the
information contained or incorporated by reference in this prospectus. We have
not authorized anyone to provide you with information that is different.
You should read the following summary in conjunction with the detailed
information appearing elsewhere in this prospectus. Unless otherwise indicated,
the description of the Policy assumes that the Policy is in effect and there is
no Policy Debt.
THE POLICY
The Policy is a flexible premium variable universal life insurance policy.
You do not have a fixed schedule for premium payments. You can establish a
schedule of Planned Periodic Premiums, but you are not required to follow such
schedule. (See "Premium Flexibility," page 24.)
The Death Benefit under the Policy may, and the Accumulation Value will, reflect
the investment performance of the investments you choose. (See "Death Benefits,"
page 7 and "Accumulation Value," page 17.) You benefit from any increase in
value and bear the risk that your chosen investment options may decrease in
value. The amount and duration of the life insurance coverage provided by the
Policy is not guaranteed, except under the Guaranteed Coverage Benefit
provision. Further, the Accumulation Value is not guaranteed, except in the
Fixed Account.
ISSUANCE OF A POLICY
In order to purchase a Policy, you must submit an application to us. We review
the application to determine whether the Policy can be issued in accordance with
our underwriting standards. Once the underwriting process is completed, the Date
of Issue is designated. You, however, must submit your initial premium for the
Policy to have an Effective Date. Accordingly, the Date of Issue may be before
the Effective Date. If the underwriting process is not completed within 45 days
after you submit your application and initial premium, we will refund your
premium. Your initial premium can be re-submitted if the underwriting review of
the application is later completed.
ALLOCATION OF PREMIUMS
You can allocate premiums to one or more of the subaccounts and to the Fixed
Account. (See "The Separate Account," page 29 and "Fixed Account," page 34.) The
assets of the various subaccounts are invested in Eligible Portfolios. The
prospectuses or prospectus profiles for the Eligible Portfolios accompany this
prospectus.
Premium payments received before the Date of Issue are held in our General
Account without interest. On the Date of Issue, premiums received on or before
that date are allocated to the subaccount for the AN Money Market Portfolio.
Premium payments received within 15 days after the Date of Issue are also
allocated to the AN Money Market Portfolio. After the 15 day period, premium
payments and Accumulation Value are allocated among the Eligible Portfolios in
accordance with your instructions as contained in the application. The minimum
percentage that you may allocate to any one subaccount or to the Fixed Account
is 10% of the premium, and fractional percentages may not be used.
POLICY BENEFITS AND RIGHTS
Death Benefit. The Death Benefit is available in two options. (See "Death
Benefit Options," page 12.) The Death Benefit Proceeds may be paid in a lump
sum or in accordance with an optional payment plan. (See "Payment of Policy
Benefits," page 18.)
Adjustments to Death Benefit. You can adjust the Death Benefit by changing the
Death Benefit option and by increasing or deceasing the Specified Amount.
Changes in the Specified Amount or the Death Benefit option are subject to
certain limitations. (See "Death Benefit Options," page 12 and "Change in
Specified Amount," page 15.)
Accumulation Value and Surrender Value. The Accumulation Value reflects the
investment performance of the chosen subaccounts, the rate of interest paid on
the Fixed Account, premiums paid, partial surrenders, and charges deducted from
the Policy. There is no guaranteed minimum Accumulation Value. You can withdraw
the entire Surrender Value. Subject to certain limitations, you can also
withdraw a portion of the Surrender Value. Partial surrenders reduce both the
Accumulation Value and the Death Benefit payable under the Policy. A surrender
charge will be deducted from the amount paid upon a partial withdrawal. (See
"Partial Surrender Charge," page 28. See "Surrenders," page 21.) Surrenders may
have tax consequences. (See "Federal Income Tax Considerations," page 35.)
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Policy Loans. You can borrow money from us using the Policy as security for the
loan. (See "Loan Benefits," page 19.) Policy Loans may have tax consequences.
(See "Federal Income Tax Considerations," page 35.)
Free Look Period. You have a free look period in which to examine a Policy and
return it for a refund. The length of the free look period varies among
different states, but generally runs for 10 days after you receive your Policy.
The date you receive your Policy will not necessarily be the date you submit
your premium. (See "Refund Privilege," page 23.)
Policy Lapse and Guaranteed Coverage Benefit. We will provide a Guaranteed
Coverage Benefit so long as the Guaranteed Coverage Premium is paid and other
Policy provisions are met. After the Guaranteed Coverage Benefit period, the
Policy will lapse at any time the Surrender Value is insufficient to pay the
Monthly Deductions and the grace period expires without sufficient additional
premium payment. The grace period starts when written notice of lapse is mailed
to your last known address and expires 61 days later. Unless the Guaranteed
Coverage Benefit requirements have been met, lapse can occur even if Planned
Periodic Premiums are paid. (See "Payment and Allocation of Premiums," page 24.)
CHARGES
Premium Charge. A premium charge at a maximum of 3.0% will be deducted from
each premium payment.
Charges from Accumulation Value. The Accumulation Value of the Policy will be
reduced by certain Monthly Deductions and Daily Asset Charges as follows:
[] On each Monthly Deduction Date by:
. Cost of Insurance Charge. Because the cost of insurance depends upon several
variables, the cost can vary from month to month. We will determine the
monthly cost of insurance charges by multiplying the applicable cost of
insurance rate by the Net Amount at Risk, as of the Monthly Deduction Date,
for each Policy month.
The monthly cost of insurance rate is based on the Specified Amount, the
Policy Year and each Insureds' Age at Issue, sex, and underwriting risk
class. The rate may vary if either Insured is a tobacco user or tobacco non-
user or if either Insured is in a substandard risk classification and rated
with a tabular extra rating.
. Charge for the Cost of any Riders.
. Monthly Expense Charge and Monthly Expense Fee. The monthly expense fee will
be a maximum of $5.00. The monthly expense charge, which will vary by Age at
Issue, risk class, and Policy Year, will be a maximum of $_____ plus $_____
per $1,000 of Specified Amount. The monthly expense charge and monthly
expense fee are determined when the policy is issued, but are subject to
change in subsequent years.
[] On each Valuation Date, by a Daily Asset Charge not to exceed 0.90% annually
of the average daily Accumulation Value in each subaccount. (See "Charges
and Deductions," page 26.)
Eligible Portfolio Expenses. The values of the units in each subaccount will
reflect the net asset value of shares in the corresponding Eligible Portfolios.
The net asset value of those shares is reduced by the Eligible Portfolios'
expenses.
ELIGIBLE PORTFOLIO ANNUAL EXPENSES
(as a percentage of average net assets)
[TO BE INSERTED IN PRE-EFFECTIVE AMENDMENT]
See the prospectuses for American National Investment Accounts, Inc., Variable
Insurance Products Fund, Variable Insurance Products Fund II, Variable Insurance
Products Fund III, T. Rowe Price International Series, Inc. and T. Rowe Price
Equity Series, Inc. for more detailed information about the Eligible Portfolios'
fees and expenses.
Surrender Charges. If you surrender all or a portion of your Policy, a surrender
charge will be assessed. The surrender charge for a full surrender is assessed
based on a rate per $1,000 of Specified Amount, with the charges being
calculated separately for the original Specified Amount and each increase, if
any, in Specified Amount. The surrender charge for the initial Specified Amount
is applicable until the 19th Policy anniversary. For an increase in Specified
Amount, the surrender charge is applicable for 19 years after the Effective Date
of such increase. Thereafter, there is no surrender charge.
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The surrender charge varies by each Insured's sex, Age at Issue and risk class
and by Policy Year. In the first Policy Year, the surrender charge shall not be
greater than $60.00 per $1,000 of Specified Amount. The rate reduces to zero
after nineteen years. (See "Surrender Charge," page 28.)
We will charge an additional $25 fee for partial surrenders. (See "Partial
Surrender Charge," page 28.) A surrender charge will also be assessed on
decreases in the Specified Amount of the Policy or on Death Benefit option
changes that result in decreases in Specified Amount.
Transfer Charge. The first 12 transfers of Accumulation Value in a Policy Year
are free. Thereafter, a transfer charge of $10 will be deducted from the amount
transferred. (See "Transfer Charge," page 28.)
TAXES
We intend for the Policy to satisfy the definition of life insurance under the
Internal Revenue Code. Therefore, the Death Benefit Proceeds generally should be
excludible from the gross income of the recipient. Similarly, you should not be
taxed on increases in the Accumulation Value until there is a distribution from
the Policy.
Under certain circumstances, a Policy could be a Modified Endowment Contract. If
so, all pre-death distributions, including Policy loans, will be treated first
as distributions of taxable gain and then as a return of basis or investment in
the policy. In addition, prior to age 59 1/2 any such distributions generally
will be subject to a 10% penalty tax.
If the Policy is not a Modified Endowment Contract, distributions generally will
be treated first as a return of basis or investment in the policy and then as
distributing taxable gain. Moreover, loans will not be treated as distributions
and neither distributions nor loans are subject to the 10% penalty tax.
See "Federal Tax Matters" for a discussion of when distributions, such as
surrenders and loans, could be subject to federal income tax.
POLICY BENEFITS
PURPOSES OF THE POLICY
The Policy is designed to provide you:
. survivorship life insurance protection,
. Death Benefits which may, and Accumulation Value which will, vary with
performance of your chosen investment options,
. flexibility in the amount and frequency of premium payments,
. flexibility in the level of life insurance protection, subject to certain
limitations, and
. a Guaranteed Coverage Benefit, if you pay the Guaranteed Coverage Premium and
meet the other Policy requirements.
DEATH BENEFIT PROCEEDS
We will, upon Satisfactory Proof of Death of both Insureds, pay the Death
Benefit Proceeds in accordance with the Death Benefit option in effect when the
Second Insured dies. The amount of the Death Benefit will be determined at the
end of the Valuation Period in which the Second Insured dies. Death Benefit
Proceeds equal:
. the Death Benefit; plus
. additional life insurance proceeds provided by riders; minus
. Policy Debt; minus
. unpaid Monthly Deduction.
Subject to the rights of any assignee, we will pay the Death Benefit Proceeds
to:
. the Beneficiary or Beneficiaries, or
. if no Beneficiary survives the Insureds, the Second Insured's estate will
receive the proceeds.
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The Death Benefit Proceeds may be paid to the Beneficiary in a lump sum or under
one or more of the payment options in the Policy. (See "Payment of Policy
Benefits," page 18.)
DEATH BENEFIT OPTIONS
You choose one of two Death Benefit options in the application. Until the
younger Insured's age 100, the Death Benefit under either option will equal or
exceed the current Specified Amount of the Policy.
Option A. Until the younger Insured's age 100, under Option A the Death Benefit
is the Specified Amount or, if greater, the corridor percentage of Accumulation
Value at the end of the Valuation Period that includes the date of death. The
Death Benefit at the younger Insured's age 95 and thereafter equals the
Accumulation Value. The applicable percentage declines as the age of the younger
Insured increases as shown in the following Corridor Percentage Table:
CORRIDOR PERCENTAGE TABLE
<TABLE>
<CAPTION>
YOUNGER YOUNGER YOUNGER
INSURED'S INSURED'S INSURED'S
ATTAINED CORRIDOR ATTAINED CORRIDOR ATTAINED CORRIDOR
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
40 or younger 250 54 157 68 117
41 243 55 150 69 116
42 236 56 146 70 115
43 229 57 142 71 113
44 222 58 138 72 111
45 215 59 134 73 109
46 209 60 130 74 107
47 203 61 128 75 to 90 105
48 197 62 126 91 104
49 191 63 124 92 103
50 185 64 122 93 102
51 178 65 120 94 101
52 171 66 119 95 and thereafter 100
53 164 67 118
</TABLE>
OPTION A EXAMPLE. Assume that the younger Insured's Attained Age is between 0
and 40. A Policy with a $500,000 Specified Amount will generally pay $500,000 in
Death Benefits. However, the Death Benefit will be the greater of $500,000 or
250% of Accumulation Value. Anytime the Accumulation Value exceeds $200,000, the
Death Benefit will exceed the $500,000 Specified Amount. Each additional dollar
added to Accumulation Value above $200,000 will increase the Death Benefit by
$2.50. If the Accumulation Value exceeds $200,000 and increases by $100 because
of investment performance or premium payments, the Death Benefit will increase
by $250. A Policy with an Accumulation Value of $300,000 will provide a Death
Benefit of $750,000 ($300,000 x 250%); an Accumulation Value of $400,000 will
provide a Death Benefit of $1,000,000 ($400,000 x 250%); and, an Accumulation
Value of $500,000 will provide a Death Benefit of $1,250,000 ($500,000 x 250%).
Similarly, so long as Accumulation Value exceeds $200,000, each dollar decrease
in Accumulation Value will reduce the Death Benefit by $2.50. If, for example,
the Accumulation Value is reduced from $250,000 to $200,000 because of partial
withdrawals, charges or negative investment performance, the Death Benefit will
be reduced from $625,000 to $500,000.
Option B. Until the younger Insured's age 100, the Death Benefit is the
Specified Amount plus the Accumulation Value or, if greater, the applicable
corridor percentage of the Accumulation Value at the end of the Valuation Period
that includes the Second Insured's date of death. The corridor percentage is the
same as under Option A: 250% at younger Insured's Attained Age 40 or younger on
the Policy anniversary before the date of death, and for a younger Insured's
Attained Age over 40 on that Policy anniversary the percentage declines as shown
in the Corridor Percentage Table. Accordingly, before younger Insured's age 100,
the amount of the Death Benefit will always vary as the Accumulation Value
varies but will never be less than the Specified Amount. The Death Benefit at
younger Insured's age 100 and thereafter equals the Accumulation Value.
OPTION B EXAMPLE. Assume that the younger Insured is age 40 or younger. A Policy
with a Specified Amount of $500,000 will generally provide a Death Benefit of
$500,000 plus Accumulation Value. For example, for a Policy with Accumulation
Value of $5,000, the Death Benefit will be $550,000 ($500,000 + $50,000); for an
Accumulation Value of $100,000, the Death Benefit will be $600,000 ($500,000 +
$100,000). The Death Benefit, however, must be at least 250% of Accumulation
Value. As a result, if the Accumulation Value exceeds approximately $333,334,
the Death Benefit will be greater than the Specified Amount plus Accumulation
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Value. Each additional dollar of Accumulation Value above $333,334 will increase
the Death Benefit by $2.50. If the Accumulation Value exceeds $333,334 and
increases by $100 because of investment performance or premium payments, the
Death Benefit will increase by $250. For a Policy with Accumulation Value of
$200,000, the Death Benefit will be $700,000 (Specified Amount $500,000 plus
$200,000 Accumulation Value); for an Accumulation Value of $30,000, the Death
Benefit will be $800,000 ($500,000 plus $300,000); and for an Accumulation Value
of $500,000, the Death Benefit will be $1,250,000 ($500,000 x 250% is greater
than $500,000 plus $500,000).
Similarly, any time Accumulation Value exceeds $333,334, each dollar taken out
of Accumulation Value will reduce the Death Benefit by $2.50. If, for example,
the Accumulation Value is reduced from $400,000 to $350,000 because of partial
surrenders, charges, or negative investment performance, the Death Benefit will
be reduced from $1,000,000 to $875,000. If at any time, however, the
Accumulation Value multiplied by the applicable corridor percentage is less than
the Specified Amount plus the Accumulation Value, the Death Benefit will be the
Specified Amount plus the Accumulation Value.
If you want favorable investment performance to:
[] increase your Death Benefit, you should:
. choose Option A if your Accumulation Value times corridor percentage is
greater than your Specified Amount, or
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. choose Option B if:
- your Accumulation Value times corridor percentage is less than your
Specified Amount, or
- your Accumulation Value times corridor percentage is greater than your
Specified Amount plus Accumulation Value
[] keep your cost of insurance charges to a minimum, you should:
. choose Option A if your Accumulation Value times corridor percentage is less
than your Specified Amount, or
. choose Option B if your Accumulation Value times corridor percentage is
greater than your Specified Amount.
Change in Death Benefit Option. You may change the Death Benefit option at any
time by sending us a written request. The effective date of a change will be the
Monthly Deduction Date on or following the date we receive the written request.
A change may have Federal Tax consequences. (See "Federal Income Tax
Considerations," page 35.)
If you change from Option A to Option B, the Specified Amount will equal the
Specified Amount before the change minus the Accumulation Value on the effective
date of the change. If you change from Option B to Option A, the Specified
Amount after the change will equal the Death Benefit under Option B on the
effective date of change. You cannot change your Death Benefit option if the
Specified Amount remaining in force after the change would be less than
$100,000.
An increase in Specified Amount due to a Death Benefit option change will
increase the Monthly Deduction and the Guaranteed Coverage Premium. A surrender
charge may apply to a change in Death Benefit option. (See "Surrender Charge,"
page 28.)
A change in the Death Benefit option may affect subsequent cost of insurance
charges which vary with our Net Amount at Risk. In addition, a change may affect
subsequent monthly policy charges. (See "Charges and Deductions," page 26.)
Change in Specified Amount. Subject to certain limitations, you may increase the
Specified Amount of your Policy at any time and may decrease the Specified
Amount at any time after the first three Policy Years. A change in Specified
Amount may affect the cost of insurance rate and our Net Amount at Risk, both of
which may affect your cost of insurance charge and have Federal Tax
consequences. (See "Cost of Insurance," page 27 and "Federal Income Tax
Considerations," page 35.)
The Specified Amount after a decrease may not be less than $100,000.
If following the decrease in Specified Amount, the Policy would not comply with
the maximum premium limitations required by federal tax law, the decrease may be
limited or a portion of Accumulation Value may be returned to you at your
election, to the extent necessary to meet these requirements. A decrease in the
Specified Amount will be applied first against increases in Specified Amount in
order of the more recent increase first, and finally against the initial
Specified Amount.
If your Specified Amount decreases, we will deduct a surrender charge from the
Accumulation Value. Such deduction will equal the sum of surrender charges
computed separately for each portion of Specified Amount reduced in the above
order. The surrender charge for each reduction is a pro rata portion of any
surrender charge applicable to a full surrender of the related increase or
initial Specified Amount. You cannot decrease the Specified Amount if the
younger Insured's Attained Age exceeds 99. A decrease in Specified Amount will
take effect on the Monthly Deduction Date which coincides with or next follows
the date we receive your written request.
If you want to increase the Specified Amount, you must submit a written
supplemental application and provide evidence of insurability for both Insureds.
You may have a different underwriting risk classification for the initial
Specified Amount and each increase in Specified Amount. (See "Charges from
Accumulation Value", page 26.) An additional premium may be required. (See
"Premiums Upon Increase in Specified Amount," page 25.) The minimum amount of
any increase is $5,000. You cannot increase the Specified Amount if either
Insured's Attained Age is over 80. An increase in the Specified Amount will
increase certain charges. Those charges will be deducted from the Accumulation
Value on each Monthly Deduction Date. An increase in the Specified Amount may
also increase surrender charges. An increase in the Specified Amount during the
time the Guaranteed Coverage
Benefit provision is in effect will increase the Guaranteed Coverage Premium
requirement. (See "Charges and Deductions," page 26.)
You have a "free look period" for each increase in Specified Amount. The free
look period will apply only to the increase in Specified Amount. (See "Refund
Privilege," page 23.)
Methods of Affecting Insurance Protection. Your "pure insurance protection" will
be the difference between your Death Benefit and your Accumulation Value. You
may increase or decrease the pure insurance protection provided by a Policy as
your insurance needs change. You can change the pure insurance protection by
increasing or decreasing the Specified Amount, changing the level of premium
payments, or making a partial surrender of the Policy. Some of these changes may
have federal tax consequences. Although the consequences of each change will
depend upon individual circumstances, they can be summarized as follows:
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. A decrease in Specified Amount will, subject to the applicable corridor
percentage limitations, decrease insurance protection and cost of insurance
charges.
. An increase in Specified Amount may increase pure insurance protection,
depending on the amount of Accumulation Value and the corridor percentage
limitation. If insurance protection is increased, the Policy charges
generally increase as well.
. If Option A is in effect, increased premium payments may reduce pure
insurance protection, until the corridor percentage of Accumulation Value
exceeds the Specified Amount. Increased premiums should also increase the
amount of funds available to keep the Policy in force.
. If Option A is in effect, reduced premium payments generally will increase
the amount of pure insurance protection, depending on the corridor percentage
limitations. Reducing premium payments may also result in a reduced amount of
Accumulation Value and increase the possibility that the Policy will lapse.
. A partial surrender will reduce the Death Benefit. However, a partial
surrender only affects the amount of pure insurance protection if the
percentage from the Corridor Percentage Table is applicable in determining
the Death Benefit. Otherwise, the decrease in Death Benefit is offset by the
amount of Accumulation Value withdrawn. The primary use of a partial
surrender is to withdraw Accumulation Value.
GUARANTEED COVERAGE BENEFIT
We will keep the Policy in force for the period stipulated under the Guaranteed
Coverage Benefit so long as the sum of premiums paid at any time during such
period is at least:
. the sum of Guaranteed Coverage Premium for each month from the start of the
period, including the current month, plus
. partial surrenders and Policy Debt.
The Guaranteed Coverage Benefit is based on Age at Issue according to the
following table:
AGE AT ISSUE POLICY YEARS
------------ ------------
20 - 30 First 6 Years
31 - 40 First 5 Years
41 - 50 First 4 Years
50 + First 3 Years
An increase in Specified Amount does not start a new Guaranteed Coverage Benefit
period, but does increase Guaranteed Coverage Premium.
DURATION OF THE POLICY
The Policy will remain in force so long as the Surrender Value is sufficient to
pay the Monthly Deduction. The tax consequences associated with continuing the
Policy beyond the younger Insured's age 100 are unclear and a tax advisor should
be consulted. Where, however, the Surrender Value is insufficient to pay the
Monthly Deduction and the grace period expires without an adequate payment, the
Policy will lapse and terminate without value. (See "Grace Period and
Reinstatement," page 25.)
ACCUMULATION VALUE
Determination of Accumulation Value. On each Valuation Date, Accumulation Value
is determined as follows:
. the aggregate of the value in each subaccount, determined by multiplying a
subaccount's unit value by the number of units in the subaccount; plus
. the value in the Fixed Account; plus
. premiums (less premium taxes); plus
. Accumulation Value securing Policy Debt; less
. partial surrenders, and related charges, processed on that Valuation Date;
less
. any Monthly Deduction processed on that Valuation Date; less
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. any federal or state income taxes.
The number of subaccount units allocated to the Policy is determined after any
transfers among subaccounts, or the Fixed Account (and deduction of transfer
charges), but before any other Policy transactions on the Valuation Date.
Determination of Unit Value. The unit value of each subaccount is equal to:
. the per share net asset value of the corresponding Eligible Portfolio on the
Valuation Date, multiplied by
. the number of shares held by the subaccount, after the purchase or redemption
of any shares on that date, minus
. the Daily Asset Charge, and divided by
. the total number of units held in the subaccount on the Valuation Date, after
any transfers among subaccounts, or the Fixed Account (and deduction of
transfer charges), but before any other Policy transactions.
PAYMENT OF POLICY BENEFITS
Death Benefit Proceeds will usually be paid within seven days after we receive
Satisfactory Proof of Death of both Insureds. Policy loans and surrenders will
ordinarily be paid within seven days after receipt of your written request. We
may defer payment of any surrender, refund or Policy loan until a premium
payment made by check clears the banking system. Payments may also be postponed
in certain other circumstances. (See "Postponement of Payments," page 41.) You
can decide how benefits will be paid. During either Insured's lifetime, you may
arrange for the Death Benefit Proceeds to be paid in a lump sum or under one or
more of the optional methods of payment described below. These choices are also
available if the Policy is surrendered. When Death Benefit Proceeds are payable
in a lump sum and no election of an optional payment method is in force at the
death of the Second Insured, the Beneficiary may select one or more of the
optional payment methods. If you or the Beneficiary do not elect one of these
options, we will pay the benefits in a lump sum.
An election or change of method of payment must be in writing. A change in
Beneficiary revokes any previous election. Further, if the Policy is assigned,
any amount due to the assignee will be paid first in a lump sum. The balance, if
any, may be applied under any payment option. Once payments have begun, the
payment option may not be changed.
Optional Methods of Payment. In addition to a lump sum payment of benefits under
the Policy, any proceeds to be paid under the Policy may be paid in any of the
following four methods:
. Option 1. Equal Installments for a Fixed Number of Years. Installments will
include interest at the effective rate of 2.5% per year or at a higher rate,
as our option.
. Option 2. Installments for Life with the Option to Choose a Period Certain.
The fixed period may be 10 or 20 years.
. Option 3. Equal Installments of a Fixed Amount Payable Annually, semi-
annually, quarterly, or monthly. The sum of the installments paid in one year
must be at least $50.00 for each $1,000.00 of proceeds. Installments will be
paid until the total of the following amount is exhausted: (1) the net sum
payable; plus (2) interest at the effective rate of 2.5% per year; plus (3)
any additional interest that we may elect to pay. The final installment will
be the balance of the proceeds payable plus interest.
. Option 4. Interest Only. We will hold the proceeds and pay interest at the
effective rate of 2.5% per year or at a higher rate, at our option. On
interest due dates, the payee may withdraw an amount of at least $100.00 from
the amount held.
. Option 5. Payments for Joint and Surviving Spouse Annuity. The amount applied
to this option will be used by us to pay equal monthly payments to the payee
for as long as the payee lives. Thereafter, we will pay a portion of those
monthly payments to the payee's spouse for life, if living. The payee's
spouse must be married to the payee at the time of election. The monthly
amount paid to the spouse may not be less than one-half of, nor more than,
the monthly payments paid while both spouses are alive. If you choose this
option and the payee's spouse dies before the first payment is due: (1) the
payee will be paid equal monthly payments based on Option 2; or with our
agreement, you may elect another method of payment to the payee.
. Option 6. Minimum Payout. The proceeds will be paid in a series of
substantially equal periodic payments (not less than annually) for the life
(or the life expectancy) of the payee consistent with the requirements of
Section 72(q)(2)(D) of the Internal Revenue Code of 1986, as amended.
Any amount left with us for payment under a settlement option will be
transferred to our General Account and will not be affected by the investment
performance associated with the Separate Account. We may make other options
available in the future.
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When proceeds become payable in accordance with a settlement option, the Policy
will be exchanged for a supplementary contract specifying all rights and
benefits. The effective date will be the date of the Insured's death or other
termination of the Policy.
Amounts under the supplemental contact remaining payable after the Beneficiary's
death will be paid to the estate of the Beneficiary or in any other manner
provided for in the supplementary contract or as otherwise provided under
applicable law.
General Provisions for Settlement Options. If the amount held falls below
$2,000.00, we will pay the entire amount held to the payee. The first
installment under Option 1, 2 or 3 will be paid the date the proceeds are
available. With our consent, the first installment may be postponed for up to
ten years. If payment is postponed, the proceeds will accumulate with compound
interest at the effective rate of 2.5% per year.
To avoid paying installments of less than $20.00 each, we will:
. change the installments to a quarterly, semi-annual or annual basis; and/or
. reduce the number of installments.
If you elect an option, you may restrict the Beneficiary's right to assign,
encumber, or obtain the discounted present value of any unpaid amount.
Except as permitted by law, unpaid amounts are not subject to claims of a
Beneficiary's creditors.
At our option, a Beneficiary may be permitted to receive the discounted present
value of installments, except under option 2, 5 or 6. If the payee dies, under
Option 1, 2 or 6 (if 6 is paid over life expectancy) we will pay the discounted
present value of any unpaid fixed-period installments to the payee's estate
except Option 2 lifetime. Under Option 3 or 4, we will pay any balance to the
payee's estate. The effective interest rate used to compute discounted present
value is the interest rate used in computing the settlement option plus 1%. With
our consent, the option elected may provide for payment in another manner.
Limitations. You must obtain our consent to have an option under which proceeds
are payable to:
. successive payees, or
. other than a natural person.
POLICY RIGHTS
LOAN BENEFITS
Loan Privileges. You can borrow money from us using your Policy as security for
the loan. The minimum loan amount is $100. Except as otherwise required by
applicable state law or regulation:
. during the first three Policy Years, you cannot borrow more than 75% of the
Surrender Value, as calculated at the end of the Valuation Period during
which your loan request is received
. after the first three Policy Years, you can borrow up to 90% of the Surrender
Value, as calculated at the end of the Valuation Period during which your
loan request is received
Preferred loans accrue interest at a lower rate. You cannot obtain a preferred
loan until after the seventh Policy Year. We determine whether a loan is
preferred at the time the loan is made. The amount available for a preferred
loan is equal to the lesser of:
. the above-mentioned loan limits, or
. the Accumulation Value less Policy Debt and less premiums paid (adjusted by
partial surrenders).
The loan may be repaid in whole or in part during the Insured's lifetime. Each
loan repayment must be at least $10 or the full amount of Policy Debt, if less.
Loans generally are funded within seven days after receipt of a written request.
(See "Postponement of Payments," page 41.) Loans may have tax consequences.
(See "Federal Income Tax Considerations," page 35.)
Interest. Loans will accrue interest on a daily basis at a rate of 5.0% per
year, 3.0% on preferred loans. Interest is due and payable on each Policy
anniversary date or when a loan payment is made if earlier. If unpaid, interest
will be added to the amount of the loan and bear interest at the same rate.
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Amounts held to secure Policy loans will earn interest at the annual rate of
3.0% credited on the Policy anniversary. We will allocate interest to the
subaccounts and the Fixed Account on each Policy anniversary in the same
proportion that premiums are being allocated to those subaccounts and the Fixed
Account at that time.
Effect of Policy Loans. When a loan is made, we transfer Accumulation Value
equal to the loan amount from the Separate Account and the Fixed Account to our
General Account as security for the Policy Debt. The Accumulation Value
transferred will be deducted from the subaccounts and the Fixed Account in
accordance with your instructions. The minimum amount which can remain in a
subaccount or the Fixed Account as a result of a loan is $100. If you do not
provide allocation instructions, the Accumulation Value transferred will be
allocated among the subaccounts and the Fixed Account pro-rata. If allocation
instructions conflict with the $100 minimum described above, we may allocate the
Accumulation Value transferred among the subaccounts and the Fixed Account pro-
rata. We will also transfer Accumulation Value from the subaccounts and the
Fixed Account to the General Account to secure unpaid loan interest. We will
allocate this transfer among the subaccounts and the Fixed Account as described
above. We will not impose a charge for these transfers. A Policy loan may have
tax consequences. (See "Federal Income Tax Considerations," page 35.)
A Policy loan may permanently affect the Accumulation Value, even if repaid. The
effect could be favorable or unfavorable depending on whether the investment
performance of the subacccount(s)/Fixed Account chosen by you is greater or less
than the interest rate credited to the Accumulation Value held in the General
Account to secure the loan. In comparison to a Policy under which no loan was
made, the Accumulation Value will be lower if the General Account interest rate
is less than the investment performance of the subaccount(s)/Fixed Account, and
greater if the General Account interest rate is higher than the investment
performance of the subaccount(s)/Fixed Account. Since your Death Benefit may be
affected by Accumulation Value, a Policy loan may also affect the amount of the
Death Benefit, even if repaid.
Policy Debt. Policy Debt reduces Death Benefit Proceeds and Surrender Value. If
the Policy Debt exceeds the Accumulation Value less any surrender charge, you
must pay the excess or your Policy will lapse. We will notify you of the amount
which must be paid. (See "Grace Period and Reinstatement," page 25.)
Repayment of Policy Debt. If we receive payments while a Policy loan is
outstanding, those payments are treated as additional premiums, unless you
request otherwise. As Policy Debt is repaid, we will transfer Accumulation Value
equal to the loan amount repaid from the General Account to the subaccounts and
the Fixed Account. We will allocate the transfers among the subaccounts and the
Fixed Account in the same proportion that premiums are being allocated at the
time of repayment. We will make the allocation at the end of the Valuation
Period during which the repayment is received. If you do not repay the Policy
Debt, we will deduct the amount of the Policy Debt from any amount payable under
the Policy.
SURRENDERS
During the life of either Insured, you can surrender the Policy in whole or in
part by sending us a written request. The maximum amount available for surrender
is the Surrender Value at the end of the Valuation Period during which the
surrender request is received at our Home Office. Surrenders will generally be
paid within seven days of receipt of the written request. (See "Postponement of
Payments," page 41.) Any proceeds payable upon full surrender shall be paid in
one sum unless an optional method of payment is elected. (See "Payment of Policy
Benefits," page 18.) Surrenders may have tax consequences. (See "Federal Income
Tax Considerations," page 35.)
Full Surrenders. If the Policy is being fully surrendered, you must return the
Policy to us with your request. Coverage under the Policy will terminate as of
the date of a full surrender.
Partial Surrenders. The amount of a partial surrender may not exceed the
Surrender Value at the end of the Valuation Period during which the request is
received less an amount sufficient to cover Monthly Deductions for three months.
The minimum partial surrender is $100.
The Accumulation Value will be reduced by the amount of partial surrender and
any applicable partial surrender charge. (See "Partial Surrender Charge," page
28.) This amount will be deducted from the Accumulation Value at the end of the
Valuation Period during which the request is received. The deduction will be
allocated to the subaccounts and the Fixed Account according to your
instructions, provided that the minimum amount remaining in a subaccount as a
result of the allocation is $100. If you do not provide allocation instructions
or if your allocation instructions conflict with the $100 minimum described
above, we will allocate the partial surrender among the subaccounts and the
Fixed Account pro-rata.
Partial surrenders reduce the Death Benefit by the amount the Accumulation Value
is reduced. If Option A is in effect, the Specified Amount will be reduced by
the amount of the partial surrender. Where increases in Specified Amount
occurred, a partial surrender will
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reduce the increases in order of the more recent increase first, and finally the
initial Specified Amount. Thus, partial surrenders may affect the cost of
insurance charge and the Net Amount at Risk. (See "Cost of Insurance," page 27;
"Methods of Affecting Insurance Protection," page 16.) If Option B is in effect,
the Specified Amount will not change, but the Accumulation Value will be
reduced.
The Specified Amount remaining in force after a partial surrender may not be
less than $100,000.
The amount of any partial surrender will generally be paid within seven (7) days
after receipt of your written request. (See "Postponement of Payments," page
41.)
TRANSFERS
You can transfer Accumulation Value among the subaccounts or from the
subaccounts to the Fixed Account as often as you like. You can make transfers in
person, by mail, or, if a telephone transfer authorization form is on file, by
telephone. The minimum transfer from a subaccount is $250, or the balance of the
subaccount, if less. The minimum that may remain in a subaccount after a
transfer is $100. We will make transfers and determine all values in connection
with transfers on the later of the end of the Valuation Period which includes
the requested transfer date or during which the transfer request is received.
Accumulation Value on the date of a transfer will not be affected except to the
extent of the transfer charge, if applicable. The first twelve transfers in a
Policy Year will be free. We will charge $10 for each additional transfer. Such
charge will be deducted from the amount transferred. (See "Transfer Charge,"
page 28.) Transfers resulting from Policy loans, the dollar cost averaging
program or the rebalancing program will not be subject to a transfer charge or
be counted for purposes of determining the number of free transfers.
During the thirty day period beginning on the Policy anniversary, you may make
one transfer from the Fixed Account to the subaccounts. This transfer is free.
The amount you can transfer from the Fixed Account to the subaccounts is the
greater of:
. twenty-five percent of the amount in the Fixed Account, or
. $1,000.
If we receive a request to transfer funds out of the Fixed Account before the
Policy anniversary, the transfer will be made at the end of the Valuation Period
during which the Policy anniversary occurs. If we receive a proper transfer
request within 30 days after the Policy anniversary, the transfer will be made
as of the end of the Valuation Period in which we received the transfer request.
We will employ reasonable procedures to confirm that the transfer instructions
communicated by telephone are genuine. These procedures may include some form of
personal identification before acting, providing you written confirmation of the
transaction, and making a tape recording of the telephoned instructions.
REFUND PRIVILEGE
Under state law, you have a free look period in which to examine a Policy and
return it for a refund. The length of the free look period varies among
different states, but generally runs for 10 days after your receipt of the
Policy. If the Policy is canceled during the free look period, you will receive
a refund equal to premiums paid adjusted by investment gains during the 15-day
period such premiums have been allocated to the AN Money Market Portfolio. (See
"Allocation of Premiums," page 25.) A free look period also applies to any
increase in Specified Amount. If you cancel the increase, you will receive the
amount premiums paid attributable to such increase in Specified Amount adjusted
by investment gains or losses.
To cancel the Policy, you should mail or deliver the Policy to our Home Office
or to the office of one of our agents. We may delay paying a refund of premiums
paid by check until the check has cleared your bank. (See "Postponement of
Payments," page 41.)
DOLLAR COST AVERAGING
Under the dollar cost averaging program, you can instruct us to automatically
transfer, on a periodic basis, a predetermined amount or percentage from any one
subaccount or Fixed Account, to any subaccount(s) or Fixed Account. The
automatic transfers can occur monthly, quarterly, semi-annually or annually. The
amount transferred each time must be at least $1,000. The minimum transfer to
each subaccount must be at least $100. At the time the program begins, you must
have at least $10,000 Accumulation Value. Transfers under dollar cost averaging
will be made, and values resulting from the transfers determined, at the end of
the Valuation Period that includes the transfer date designated in your
instructions.
Using dollar cost averaging, you purchase more units when the unit value is low,
and fewer units when the unit value is high. There is no guarantee that the
dollar cost averaging program will result in higher Accumulation Value or
otherwise be successful.
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You can specify that only a certain number of transfers will be made, in which
case the program will terminate when that number of transfers has been made. In
addition, the program will terminate if Accumulation Value is less than $5,000
on a transfer date.
You can increase or decrease the amount of transfers or discontinue the program
by sending us written notice or, if a telephone transfer authorization form is
on file, notifying us by phone. There is no charge for this program and
transfers made pursuant to this program will not be counted in determining the
number of free transfers.
REBALANCING
Because the subaccounts and the Fixed Account may have different investment
results, your Accumulation Value may not stay in the same percentages as your
initial allocation instructions. At your request, we will rebalance your
Accumulation Value by allocating premiums and transferring Accumulation Value to
ensure conformity with your allocation instructions. We will rebalance your
allocation on a calendar quarter, semi-annual or annual basis according to your
instructions. We will rebalance, and determine any values resulting from the
rebalancing, at the end of the Valuation Period that includes the rebalancing
date in your request. There is no charge for this program and transfers made
pursuant to this program will not be counted in determining the number of free
transfers. At the time the program begins, you must have at least $10,000 of
Accumulation Value. If the Accumulation Value is less than $5,000 on a
rebalancing date, the program will be discontinued.
You can request participation in the rebalancing program at any time. You can
discontinue the program by sending us written notice or, if a telephone transfer
authorization form is on file, by calling by telephone.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
If you want to purchase a Policy, you must complete an application and submit it
to our Home Office. We will only issue a Policy to two individuals between the
ages of 20 and 80 on their last birthdays who supply satisfactory evidence of
insurability. Acceptance is subject to our underwriting rules.
The Date of Issue is used to determine Policy anniversary dates, Policy Years
and Policy months.
PREMIUMS
You must pay the initial premium for the Policy to be in force. The initial
premium must be at least 1/12 of the first year Guaranteed Coverage Premium.
The initial premium and all other premiums are payable at our Home Office.
Subject to certain limitations, you have flexibility in determining the
frequency and amount of premiums since the Planned Periodic Premium schedule is
not binding on you.
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PREMIUM FLEXIBILITY
You may make unscheduled premium payments at any time in any amount, subject to
the premium limitations described herein.
Planned Periodic Premiums. At the time the Policy is issued, you can determine a
Planned Periodic Premium schedule. The amounts and frequency of the Planned
Periodic Premiums will be shown on the Policy Data Page. During the Guaranteed
Coverage Benefit period, the Planned Periodic Premium must be at least the
Guaranteed Coverage Premium. You are not required to pay premiums in accordance
with this schedule.
You can change the frequency and amount of Planned Periodic Premiums by sending
a written request to our Home Office. We may limit any increase in premium to
comply with applicable federal tax law. We will send premium payment notices
annually, semi-annually, quarterly or monthly depending upon the frequency of
the Planned Periodic Premiums. Payment of the Planned Periodic Premiums does not
guarantee that the Policy will remain in force unless the Guaranteed Coverage
Benefit provision is in effect.
Premium Limitations. Total premiums paid cannot exceed the current maximum
premium limitations established by federal tax laws. If a premium is paid which
would cause total premiums to exceed such maximum premium limitations, we will
only accept that portion of the premium equal to the maximum. We will return any
part of the premium in excess of that amount or apply it as otherwise agreed. No
further premiums will be accepted until permitted under the laws prescribing
maximum premium limitations. We may refuse to accept a premium or require
additional evidence of insurability if the premium would increase Net Amount at
Risk. Additional premiums are not accepted after the younger Insured's 100th
birthday. We may also establish a minimum acceptable premium amount.
Premiums Upon Increase in Specified Amount. If you request an increase in the
Specified Amount, we will notify you if any additional premium is required.
Whether additional premium will be required will depend upon
. the Accumulation Value of the Policy at the time of the increase, and
. the amount of the increase you request.
ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE
Allocation of Premiums. Premiums are allocated according to your instructions.
You can change the allocation without charge by providing proper notification to
our Home Office. Your notice must include the policy number to which the
instructions apply. Your revised allocation instructions will apply to premiums
received by us on or after the date proper notification is received.
Accumulation Value. The value of subaccounts will vary with the investment
performance of these subaccounts and the you bear the risk that those
investments might actually lose money. The performance of these investments
affects the Policy's Accumulation Value, and may affect the Death Benefit as
well.
GRACE PERIOD AND REINSTATEMENT
Grace Period. If the Surrender Value is insufficient to pay the Monthly
Deduction, you have a grace period of sixty-one days to pay an additional
premium. The grace period begins on the date Surrender Value is insufficient to
cover the Monthly Deduction. At the beginning of the grace period, we will mail
you notice to your last known address we have on file advising you of the
necessary additional premium. If you do not pay the additional premium during
the grace period, the Policy will terminate. If the Insured dies during the
grace period, any overdue Monthly Deductions and Policy Debt will be deducted
from the Death Benefit Proceeds.
Reinstatement. A Policy may be reinstated any time within five years after
termination. A Policy cannot be reinstated if it was surrendered. Reinstatement
will be effected based on each Insured's underwriting classification at the time
of the reinstatement.
Reinstatement is subject to the following:
. evidence of insurability of each Insured satisfactory to us;
. reinstatement or repayment of Policy Debt;
. payment of Monthly Deductions not collected during the grace period;
. payment of the premium sufficient to pay the Monthly Deduction for three
months after the date of reinstatement.
Reinstatement will be effected based on each Insured's underwriting
classification at the time of the reinstatement. Both Insured's must be living
at the time of reinstatement.
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The original Date of Issue, and the Effective Dates of increases in Specified
Amount (if applicable), will be used for purposes of calculating Monthly
Deductions and the surrender charge. If any Policy Debt was reinstated, the
amount of the debt will be held in our General Account. During the lapse period,
Policy Debt will accrue interest at a rate of 6%. Accumulation Value will then
be calculated as described under "Accumulation Value" on page 17. The Effective
Date of reinstatement will be the first Monthly Deduction Date on or next
following the date we approve the application for reinstatement.
CHARGES AND DEDUCTIONS
PREMIUM CHARGES
The premium charge will be deducted from each premium payment before allocating
such premiums among the subaccounts and the Fixed Account. We are currently not
charging the premium charge after Policy Year ten. We may, however, assess the
premium charge after Policy Year ten. We will notify you in writing if a
premium charge is to be assessed after Policy Year ten.
CHARGES FROM ACCUMULATION VALUE
We will deduct the following charges from the Accumulation Value:
Monthly Deduction. The Monthly Deduction is the sum of the cost of insurance
charge, applicable charges for any riders, and the monthly expense fee and
monthly expense charge. The Monthly Deduction compensates us for providing the
insurance benefits and administering the Policy. We deduct the Monthly Deduction
as of the Date of Issue and on each Monthly Deduction Date thereafter. We will
allocate the deduction among the subaccounts and the Fixed Account pro-rata. The
cost of insurance, the monthly expense charge and monthly expense fee are
described in more detail below. Because portions of the Monthly Deduction, such
as the cost of insurance, can vary from month to month, the Monthly Deduction
itself may vary in amount from month to month.
We are currently not charging the monthly expense charge after Policy Year five.
We are currently charging the maximum monthly expense fee. We may reduce the
monthly expense charge or the monthly expense fee. Any change will be on a
uniform basis for all insureds with this Policy, for the same Specified Amount,
and that have been in force the same time. A change in health or other risk
factors after the Date of Issue will not affect these charges. We will not
reduce or increase any of these charges more than once each Policy Year. We will
notify you in writing before a new monthly expense charge is effective.
Cost of Insurance. For the initial Specified Amount, the cost of insurance rate
will not exceed those in the Schedule of Monthly Guaranteed Maximum Cost of
Insurance Rates shown on the Policy Data Page. These guaranteed rates are based
on each Insured's age last birthday. The current rates range between ___% and
___% of the guaranteed rates. Any change in the current cost of insurance rates
will apply to all combinations of Insureds of the same ages, sexes, risk
classes, Policy Years and Specified Amounts.
Guaranteed maximum cost of insurance rates are calculated based on the 1980
Commissioners Standard Ordinary (CSO) Smoker or Nonsmoker Mortality Tables (Age
Last Birthday).
The underwriting risk classes for the initial Specified Amount and the Specified
Amount for any increase may be different. The issue date and Ages at Issue will
be different for each increase. As a result the cost of insurance rate for the
initial Specified Amount and each increase in Specified Amount will be
different. Decreases will also be reflected in the cost of insurance rate. (See
"Change in Specified Amount," page 27.)
The actual charges made during the Policy Year will be shown in the annual
report delivered to you.
The rate class of each Insured will affect the cost of insurance rate. We
currently place insureds into the standard rate class, a substandard rate class,
or an uninsurable rate class, the latter two categories involving a higher
mortality risk. In an otherwise identical Policy, Insureds in the standard rate
class will typically have a lower cost of insurance than Insureds in a
substandard rate class. If a Policy is rated at issue with a tabular extra
rating, the guaranteed rate is generally a multiple of the guaranteed rate for a
standard issue.
One or both Insureds may also be assigned a flat extra rating to reflect certain
additional risks. The flat extra rating will not impact the cost of insurance
rate but 1/12 of any annualized flat extra cost will be deducted as part of the
Monthly Deduction.
Surrender Charge. If a Policy is surrendered, we may assess a surrender charge.
Surrender charges are intended to compensate us for the costs of distributing
the Policy.
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We may also assess a surrender charge upon decreases in Specified Amount or upon
Death Benefit option changes that result in a decrease in Specified Amount. (See
"Change in Specified Amount," page 15.)
The surrender charge is more substantial in early Policy Years. (See "Surrender
Charges," page 10.) Accordingly, the Policy is more suitable for long-term
purposes.
Transfer Charge. We will make the first 12 transfers of Accumulation Value in
any Policy Year without a transfer charge. A charge of $10 will be deducted from
the amount transferred for each additional transfer among the subaccounts or
from the subaccounts to the Fixed Account. This charge compensates us for the
costs of effecting the transfer. The transfer charge cannot be increased.
Partial Surrender Charge. We will impose a $25 fee for each partial surrender.
In addition, if Death Benefit Option A is in effect, a partial surrender charge
will be charged for a decrease in Specified Amount. (See "Change in Specified
Amount," page 15.)
Daily Charges Against the Separate Account. On each Valuation Date, we will
deduct a Daily Asset Charge from the Separate Account. This charge is to
compensate us for mortality and expense risks. The mortality risk is that
Insureds may live for a shorter time than we assumed. If so, we will have to pay
Death Benefits greater than we estimated. The expense risk is that expenses
incurred in issuing and administering the Policies will exceed our estimates.
Such charge shall not exceed 0.90% annually of the average daily Accumulation
Value of each subaccount, but not the Fixed Account. We will deduct the daily
charge from the Accumulation Value of the Separate Account on each Valuation
Date. The deduction will equal the 0.90% annual rate divided by 365 and
multiplying the result by the number of days since the last Valuation Date. We
are currently charging only 0.60% for the Daily Asset Charge in Policy Year
twenty-one and thereafter. We will notify you in writing if the Daily Asset
Charge changes. We will not deduct a Daily Asset Charge from the Fixed Account.
Fees and Expenses Incurred by Eligible Portfolios. In addition, the managers of
the Eligible Portfolios will charge certain fees and expenses against the
Eligible Portfolios. (See "Eligible Portfolio Annual Expenses," page 9. Also,
see the funds' prospectuses.) No portfolio fees or expenses will be charged
from the Fixed Account.
Taxes. Currently, we will not make a charge against the Separate Account for
federal, state or local income taxes. We may, however, make such a charge in the
future if income or gains within the Separate Account will incur any Federal
tax, or any significant state or local tax treatment of our Company changes. We
would deduct such charges, if any, from the Separate Account and/or the Fixed
Account. We would not realize a profit on such tax charges with respect to the
Policies.
EXCEPTIONS TO CHARGES
We may reduce the premium charge, surrender charge, monthly expense charge, the
monthly expense fee, cost of insurance and daily asset charge for, or credit
additional amounts on, sales of the Policy to a trustee, employer, or similar
entity where we determine that such sales result in savings of sales or
administrative expenses. In addition, directors, officers and bona fide full-
time employees (and their spouses and minor children) of the Company or
Securities Management and Research, Inc. may be permitted to purchase the Policy
with substantial reductions of surrender charge, monthly expense charge, monthly
expense fee, premium charge, cost of insurance or daily asset charge.
The Policy may be sold directly, without compensation, to: (1) a registered
representative, (2) employees, officers, directors, and trustees of our Company
and its affiliated companies, and spouses and immediate family members (i.e.,
children, siblings, parents, and grandparents) of the foregoing, and (3)
employees, officers, directors, trustees and registered representatives of any
broker-dealer authorized to sell the Policy, and spouses and immediate family
member of the foregoing. If sold under these circumstances, a Policy may be
credited in part or in whole with any cost savings resulting from the sale being
direct, rather than through an agent with an associated commission, but only if
such credit will not be unfairly discriminatory to any person.
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AMERICAN NATIONAL INSURANCE COMPANY
THE SEPARATE ACCOUNT, THE FUNDS AND
THE FIXED ACCOUNT
AMERICAN NATIONAL INSURANCE COMPANY
We are a stock life insurance company chartered under Texas law in 1905. We
write life, health and accident insurance and annuities and are licensed to do
life insurance business in 49 states, the District of Columbia, Puerto Rico,
Guam and American Samoa. Our home office is located at the American National
Insurance Building, One Moody Plaza, Galveston, Texas 77550. The Moody
Foundation, a charitable foundation established for charitable and educational
purposes, owns approximately 23.7% of our stock and the Libbie S. Moody Trust, a
private trust, owns approximately 37.6%.
We are subject to regulation by the Texas Department of Insurance. In addition,
we are subject to the insurance laws and regulations of other states within
which we are licensed to operate. On or before March 1 of each year we must
submit to the Texas Department of Insurance a filing describing our operations
and reporting on our financial condition and that of the Separate Account as of
December 31 of the preceding year. Periodically, the Department examines our
liabilities and reserves and those of the Separate Account and certifies their
adequacy. A full examination of our operations is also conducted periodically by
the National Association of Insurance Commissioners.
THE SEPARATE ACCOUNT
We established the Separate Account under Texas law on July 30, 1987. The
assets of the Separate Account are held exclusively for your benefit and the
benefit of other people entitled to payments under variable life policies we
issue. We are the legal holder of the Separate Account's assets. The assets are
held separate and apart from the General Account assets. We maintain records of
all purchases and redemptions of shares of Eligible Portfolios by each of the
subaccounts. We will at all times maintain assets in the Separate Account with a
total market value at least equal to the reserve and other contract liabilities
of the Separate Account. Liabilities arising out of other aspects of our
business cannot be charged against the assets of the Separate Account. Income,
as well as both realized and unrealized gains or losses from the Separate
Account's assets, are credited to or charged against the Separate Account
without regard to income, gains or losses arising out of other aspects of our
business. If, however, the Separate Account's assets exceed its liabilities, the
excess shall be available to cover the liabilities of our General Account.
The Separate Account is registered with the Securities and Exchange Commission
("SEC") as a unit investment trust, which is a type of investment company. Such
registration does not involve any SEC supervision of the management or
investment policies or practices of the Separate Account.
The Separate Account will purchase and redeem shares of the Eligible Portfolios
at net asset value. The net asset value of a share is equal to the total assets
of the portfolio less the total liabilities of the portfolio divided by the
number of shares outstanding.
We will redeem shares in the Eligible Portfolios as needed to:
. collect charges,
. pay the Surrender Value,
. secure Policy loans,
. provide benefits, or
. transfer assets from one subaccount to another, or to the Fixed Account.
Any dividend or capital gain distribution received from an Eligible Portfolio
will be reinvested immediately at net asset value in shares of that Eligible
Portfolio and retained as assets of the corresponding subaccount.
The Separate Account may include other subaccounts that are not available under
the Policy. We may from time to time discontinue the availability of some of the
subaccounts. If the availability of a subaccount is discontinued, we may redeem
any shares in the corresponding Eligible Portfolio and substitute shares of
another registered, open-end management company.
We may also establish additional subaccounts. Each new subaccount would
correspond to a portfolio of a registered, open-end management company. We would
establish the terms upon which existing Policyowners could purchase shares in
such portfolios.
If any of these substitutions or changes are made, we may change the Policy by
sending an endorsement. We may:
. operate the Separate Account as a management company,
. de-register the Separate Account if registration is no longer required,
. combine the Separate Account with other separate accounts,
. restrict or eliminate any voting rights associated with the Separate Account,
or
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. transfer the assets of the Separate Account relating to the Policies to
another separate account.
We would, of course, not make any changes to the menu of Eligible Portfolios or
to the Separate Account without complying with applicable laws and regulations.
Such laws and regulations may require notice to and approval from the
Policyholders, the SEC and state insurance regulatory authorities.
Since we are the legal holder of the Eligible Portfolio shares held by the
Separate Account, we can vote on any matter that may be voted upon at a
shareholders' meeting. To the extent required by law, we will vote all shares of
the Eligible Portfolios held in the Separate Account at shareholders' meetings
in accordance with instructions we receive from you and other policyowners. The
number of votes for which each policyowner has the right to provide instructions
will be determined as of the record date selected by the Board of Directors of
the American National Fund, the Fidelity Funds or the T. Rowe Price Funds, as
the case may be. We will furnish Policyowners with the proper forms, materials
and reports to enable them to give us these instructions. We will vote Eligible
Portfolio shares held in each subaccount for which no timely instructions from
policyowners are received and shares held in each subaccount which do not
support Policyowner interests in the same proportion as those shares in that
subaccount for which timely instructions are received. Voting instructions to
abstain on any item to be voted will be applied on a pro rata basis to reduce
the votes eligible to be cast. Should applicable federal securities laws or
regulations permit, we may vote shares of the American National Fund, the
Fidelity Funds or the T. Rowe Price Funds in our own right. We may, if required
by state insurance officials, disregard voting instructions if those
instructions would require shares to be voted to cause a change in the
subclassification or investment objectives or policies of one or more of the
Eligible Portfolios, or to approve or disapprove an investment adviser or
principal underwriter for the Eligible Portfolios. In addition, we may disregard
voting instructions that would require changes in the investment objectives or
policies of any Eligible Portfolio or in an investment adviser or principal
underwriter for the Eligible Portfolios, if we reasonably disapprove those
changes in accordance with applicable federal regulations. If we do disregard
voting instructions, we will advise Policyowners of that action and our reasons
for the action in the next annual report or proxy statement to Policyowners.
The Separate Account is not the only separate account that invests in the
Eligible Portfolios. Other separate accounts, including those funding other
variable life policies, variable annuity contracts, other insurance contracts
and retirement plans, invest in certain of the Eligible Portfolios. We do not
currently see any disadvantages to you resulting from the Eligible Portfolios
selling shares to fund products other than the Policy. However, there is a
possibility that a material conflict of interest may arise between the
Policyowners and the owners of variable life insurance policies and the owners
of variable annuity contracts whose values are allocated to another separate
account investing in the Eligible Portfolios. In addition, there is a
possibility that a material conflict may arise between the interests of
Policyowners or owners of other contracts and the retirement plans which invest
in the Eligible Portfolios or those plans participants. If a material conflict
arises, we will take any necessary steps, including removing the Eligible
Portfolio from the Separate Account, to resolve the matter. The Board of
Directors of each Eligible Portfolio will monitor events in order to identify
any material conflicts that may arise and determine what action, if any, should
be taken in response to those events or conflicts. See the accompanying
prospectuses for the Eligible Portfolios for more information.
THE FUNDS
Each of the twenty-one subaccounts of the Separate Account will invest in shares
of a corresponding Eligible Portfolio.
The investment objectives and policies of each Eligible Portfolio are summarized
below. The Eligible Portfolios may not achieve their stated objectives. You will
be notified of any material change in the investment policy of any portfolio in
which you have an interest.
Each Eligible Portfolio's total operating expenses will include fees for
management, shareholder services and other expenses, such as custodial, legal,
and other miscellaneous fees. The prospectuses for the American National Fund,
the Fidelity Funds and the T. Rowe Price Funds contain more detailed information
about the Eligible Portfolios, including a description of investment objectives,
restrictions, expenses and risks. You should carefully read those prospectuses
and retain them for future reference.
You should periodically review your allocation to make sure that your investment
choices are still appropriate in light of any market developments or changes in
your personal financial situation.
[] The American National Fund's current Eligible Portfolios and respective
investment objectives are as follows:
. The AN MONEY MARKET PORTFOLIO seeks the highest current income consistent
with the preservation of capital and maintenance of liquidity.
. The AN GROWTH PORTFOLIO seeks to achieve capital appreciation.
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. The AN BALANCED PORTFOLIO seeks to conserve principal, produce reasonable
current income, and achieve long-term capital appreciation.
. The AN MANAGED PORTFOLIO seeks to achieve growth of capital and/or current
income.
Securities Management and Research, Inc. ("SM&R") is the investment adviser and
manager of the American National Fund. SM&R also provides investment advisory
and portfolio management services to our Company and other clients. SM&R
maintains a staff of experienced investment personnel and related support
facilities.
[] The Fidelity Funds' current Eligible Portfolios and respective investment
objectives are as follows:
. VIP MONEY MARKET PORTFOLIO ... seeks as high a level of current income as is
consistent with the preservation of capital and liquidity.
. VIP INVESTMENT GRADE BOND PORTFOLIO ... seeks as high a level of current
income as is consistent with the preservation of capital.
. VIP HIGH INCOME PORTFOLIO ... seeks a high level of current income while
also considering growth of capital.
. VIP ASSET MANAGER PORTFOLIO ... seeks high total return with reduced risk
over the long-term by allocating its assets among stocks, bonds and short-
term instruments.
. VIP ASSET MANAGER: GROWTH PORTFOLIO ... seeks to maximize total return by
allocating its assets among stocks, bonds, short-term instruments, and other
investments.
. VIP BALANCED PORTFOLIO ... seeks both income and growth of capital.
. VIP EQUITY-INCOME PORTFOLIO ... seeks reasonable income. The fund will also
consider the potential for capital appreciation. The fund seeks a yield
which exceeds the composite yield on the securities comprising the S&P 500.
. VIP INDEX 500 PORTFOLIO ... seeks investment results that correspond to the
total return of common stocks publicly traded in the United States, as
represented by the S&P 500.
. VIP GROWTH AND INCOME PORTFOLIO ... seeks high total return through a
combination of current income and capital appreciation.
. VIP MID CAP PORTFOLIO ... seeks long-term growth of capital.
. VIP GROWTH OPPORTUNITIES PORTFOLIO ... seeks to provide capital growth.
. VIP CONTRAFUND PORTFOLIO ... seeks long-term capital appreciation.
. VIP GROWTH PORTFOLIO ... seeks capital appreciation.
. VIP OVERSEAS PORTFOLIO ... seeks long-term growth of capital.
Fidelity Management and Research Company ("FMR"), the Fidelity Funds' investment
adviser, was founded in 1946. FMR provides a number of mutual funds and other
clients with investment research and portfolio management services. It maintains
a large staff of experienced investment personal and a full compliment of
related support facilities. Fidelity Management & Research (U.K.) Inc. ("FMR
U.K.") and Fidelity Management and Research (Far East) Inc. ("FMR Far East") are
wholly owned subsidiaries of FMR that provide research with respect to foreign
securities. FMR U.K. and FMR Far East maintain their principal business offices
in London and Tokyo, respectively. As of December 31, 1998, FMR advised funds
having more than 39 million shareholder accounts with a total value of more than
$694 billion. Fidelity Distributors Corporation distributes shares for the
Fidelity Funds. FMR Corp. is the holding company for the Fidelity companies.
Through ownership of voting common stock, Edward C.
Johnson 3d, President and a Trustee of the Fidelity Funds, and various trusts
for the benefit of Johnson family members form a controlling group with respect
to FMR Corp.
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[] The T. Rowe Price Funds' current Eligible Portfolios and respective
investment objectives are as follows:
T. ROWE PRICE INTERNATIONAL SERIES, INC.
. T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO ... seeks to provide long-term
growth of capital through investments primarily in common stocks of
established non-U.S. companies.
T. ROWE PRICE EQUITY SERIES, INC.
. T. ROWE PRICE MID-CAP GROWTH PORTFOLIO ... seeks to provide long-term
capital appreciation by investing in mid-cap stocks with potential for
above-average earnings growth.
. T. ROWE PRICE EQUITY INCOME PORTFOLIO ... seeks to provide substantial
dividend income as well as long-term growth of capital through investments
in common stocks of established companies.
T. Rowe Price Associates, Inc. is responsible for selection and management of
the portfolio investments of T. Rowe Price Equity Series, Inc. Rowe Price-
Fleming International, Inc., incorporated in 1979 as a joint venture between T.
Rowe Price Associates, Inc. and Robert Fleming Holdings Limited, is responsible
for selection and management of the portfolio investments of T. Rowe Price
International Series, Inc.
We have entered into or may enter into agreements with the investment advisor or
distributor for certain of the Eligible Portfolios. These agreements require us
to provide administrative and other services. In return, we receive a fee based
upon an annual percentage of the average net assets amount we invested on behalf
of the Separate Account and our other separate accounts. Some advisors or
distributors may pay us a greater percentage than others.
FIXED ACCOUNT
You can allocate some or all of your premium payments to the Fixed Account. You
can also, subject to certain limitations, transfer amounts from the Separate
Account to the Fixed Account or from the Fixed Account to the Separate Account.
(See "Transfers," page 22.)
We establish the Declared Rate and may adjust the rate each month; however, we
guarantee an effective annual rate of at least 3.0% compounded daily.
Payments allocated to the Fixed Account and transfers from the Separate Account
to the Fixed Account are placed in our General Account which supports insurance
and annuity obligations. The General Account includes all of our assets, except
those assets segregated in our separate accounts. We have discretion over the
investment of assets of the General Account, subject to applicable law. We bear
the risk that the investments in the General Account will lose money. You bear
the risk that the Declared Rate will fall to a lower rate.
Interests in the General Account have not been registered with the SEC as
securities and the General Account has not been registered as an investment
company. Accordingly, neither the General Account nor any interest in the
General Account is generally subject to the provisions of federal securities
laws. The SEC has not reviewed the disclosures in this prospectus relating to
the Fixed Account portion of the Contract; however, disclosures regarding the
Fixed Account portion of the Contract may be subject to generally applicable
provisions of the federal securities laws regarding the accuracy and
completeness of statements made in prospectuses.
FEDERAL INCOME TAX CONSIDERATIONS
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT TAX ADVICE.
INTRODUCTION
The following summary provides a general description of the federal income tax
considerations relating to the Policy. This summary is based upon our
understanding of the present federal income tax laws as they are currently
interpreted by the Internal Revenue Service ("IRS"). Because of the complexity
of such laws and the fact that tax results will vary according to the factual
status of the specific Policy involved, tax advice from a qualified tax advisor
may be needed by a person contemplating the purchase of a Policy or the exercise
of certain elections under the Policy. These comments concerning federal income
tax consequences are not an exhaustive discussion of all tax questions that
might arise under the Policy. Further, these comments do not take into account
any federal estate tax and gift, state, or local tax considerations which may be
involved in the purchase of a Policy or the exercise of certain elections under
the Policy. For
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complete information on such federal and state tax considerations, a qualified
tax advisor should be consulted. We do not make any guarantee regarding the tax
status of any Policy, and the following summary is not tax advice.
TAX STATUS OF THE POLICY
In order to qualify as a life insurance contract for federal income tax purposes
and to receive the tax treatment normally accorded life insurance contracts
under federal tax law, a Policy must satisfy certain requirements which are set
forth in the Internal Revenue Code (the "Code"). Guidance as to how these
requirements apply is limited. Nevertheless, we believe that Policies issued on
a standard basis should satisfy the applicable requirements. There is less
guidance, however, with respect to Policies issued on a sub-standard basis and
it is not clear whether such Policies will in all cases satisfy the applicable
requirements. We reserve the right to restrict Policy transactions and to make
other modifications in order to bring the Policy into compliance with such
requirements.
In certain circumstances, owners of variable life insurance contracts may be
considered for federal income tax purposes to be the owners of the assets of the
separate account supporting their contracts due to their ability to exercise
investment control over those assets. Where this is the case, the contract
owners would be taxed on income and gains attributable to separate account
assets. There is little guidance in this area, and some features of the
Policies, such as the flexibility of a Policyowner to allocate premium payments
and transfer Accumulation Value, have not been explicitly addressed in published
rulings. While we believe that the Policies do not give Policyowners investment
control over Separate Account assets, we reserve the right to modify the
Policies as necessary to prevent a Policyowner from being treated as the owner
of the Separate Account assets.
In addition, the Code requires that the investments of the Separate Account be
"adequately diversified" in order for the Policies to be treated as life
insurance contracts for federal income tax purposes. It is intended that the
Separate Account, through the Eligible Portfolios, will satisfy these
diversification requirements.
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes.
TAX TREATMENT OF POLICY PROCEEDS
In General. We believe that the Death Benefit Proceeds under a Policy will be
excludable from the gross income of the Beneficiary.
Generally, the Policyowner will not be deemed to be in constructive receipt of
the Accumulation Value until there is a distribution. When distributions from a
Policy occur, or when loans are taken out from or secured by a Policy, the tax
consequences depend on whether the Policy is classified as a "Modified Endowment
Contract."
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's Death Benefit option, a Policy loan, a partial or full surrender, the
addition of the Accelerated Death Benefit, the continuation of the Policy beyond
the younger Insured's 100th birthday, a change in ownership, or an assignment of
the Policy may have federal income tax consequences.
Modified Endowment Contracts. Whether a Policy is treated as a Modified
Endowment Contract depends upon the amount of premiums paid in relation to the
Death Benefit provided under the Policy. The rules for determining whether a
Policy is a Modified Endowment Contract are extremely complex. In general,
however, a Policy will be considered to be a Modified Endowment Contract if the
accumulated premium payments made at any time during the first seven Policy
Years exceed the sum of the net level premiums which would have been paid on or
before such time if the Policy provided for paid-up future benefits after the
payment of seven level annual premium payments.
In addition, if a Policy is "materially changed," it may cause such Policy to be
treated as a Modified Endowment Contract. The material change rules for
determining whether a Policy is a Modified Endowment Contract are also extremely
complex. In general, however, the determination of whether a Policy will be a
Modified Endowment Contract after a material change depends upon (i) the
relationship of the Death Benefit at the time of change to the Accumulation
Value at the time of such change, and (ii) the additional premiums paid in the
seven Policy Years following the date on which the material change occurs.
The manner in which the premium limitation and material change rules should be
applied to certain features of the Policy and its riders is unclear. If we
determine that a Policyowner has made excessive premium payments which will
cause a Policy to be considered a Modified Endowment Contract, we will notify
the Policyowner of the tax consequences and give the Policyowner the option of
having the excessive premiums refunded. If the Policyowner requests a refund
within 30 days after receipt of such notice, we will refund the excessive
premium payments to prevent the Policy from becoming a Modified Endowment
Contract.
Due to the Policy's flexibility, classification of a Policy as a Modified
Endowment Contract will depend upon the individual circumstances of each Policy.
Accordingly, a prospective Policyowner should contact a qualified tax advisor
before purchasing a Policy
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to determine the circumstances under which the Policy would be a Modified
Endowment Contract. In addition, a Policyowner should contact a tax advisor
before making any change to a Policy, exchanging a Policy, or reducing Policy
benefits, to determine whether such change would cause the Policy (or the new
Policy in the case of an exchange) to be treated as a Modified Endowment
Contract.
If a Policy becomes a Modified Endowment Contract, distributions such as partial
surrenders and Policy loans that occur during the Policy Year it becomes a
Modified Endowment Contract and any subsequent Policy Year will be taxed as
distributions from a Modified Endowment Contract. In addition, distributions
from a Policy within two years before it becomes a Modified Endowment Contract
will be taxed in this manner. This means that a distribution made from a Policy
that is not a Modified Endowment Contract could later become taxable as a
distribution from a Modified Endowment Contract.
Whether a Policy is or is not a Modified Endowment Contract, upon a complete
surrender or a lapse or termination of a Policy, if the amount received plus the
amount of any indebtedness exceeds the total investment in the policy (described
below), the excess will generally be treated as ordinary income subject to tax.
Distributions Other Than Death Benefit Proceeds from Modified Endowment
Contracts. Policies classified as Modified Endowment Contracts will be subject
to the following tax rules:
(1) All distributions from such a Policy (including distributions upon partial
or full surrender and benefits paid at maturity) are treated as ordinary
income subject to tax up to the amount equal to the excess (if any) of the
Accumulation Value immediately before the distribution over the investment
in the policy at such time.
(2) Loans taken from (or secured by) such a Policy are treated as distributions
from such a Policy and taxed accordingly. This includes unpaid loan interest
that is added to the principal of a loan.
(3) A 10 percent penalty tax is imposed on the portion of any distribution from
such a Policy that is included in income. This includes any loan taken from
or secured by such a Policy. This penalty tax does not apply if the
distribution or loan:
(a) is made on or after the Policyowner reaches actual age 59 1/2;
(b) is attributable to the Policyowner's becoming disabled; or
(c) is part of a series of substantially equal periodic payments for (i) the
life (or life expectancy) of the Policyowner, or (ii) the joint lives (or
joint life expectancies) of the Policyowner and the Beneficiary.
Distributions Other Than Death Benefit Proceeds from Policies that are not
Modified Endowment Contracts. Distributions other than Death Benefit Proceeds
from a Policy that is not classified as a Modified Endowment Contract generally
are treated first as a recovery of the Policyowner's investment in the policy.
After the recovery of all investment in the policy, additional amounts
distributed are taxable income. However, certain distributions which must be
made in order to enable the Policy to continue to qualify as a life insurance
contract for federal income tax purposes if Policy benefits are reduced during
the first 15 Policy Years may be treated in whole or in part as ordinary income
subject to tax.
Policy Loans. Loans from a Policy (or secured by a Policy) that is not a
Modified Endowment Contract are generally not treated as distributions. Instead,
such loans are treated as indebtedness of the Policyowner. However, the tax
consequences associated with Policy loans that are outstanding after the first
15 Policy Years are less clear and a tax adviser should be consulted about such
loans. Interest paid on a Policy loan generally is not be tax-deductible. The
Policyowner should consult a tax advisor regarding the deductibility of interest
paid on a Policy loan.
Finally, neither distributions from nor loans from (or secured by) a Policy that
is not a Modified Endowment Contract are subject to the 10 percent additional
income tax.
Investment in the Policy. "Investment in the policy" means:
(a) the aggregate amount of any premium payments or other consideration paid
for a Policy; minus
(b) the aggregate amount of distributions received under the Policy which is
excluded from the gross income of the Policyowner (except that the amount
of any loan from, or secured by, a Policy that is a Modified Endowment
Contract, to the extent such amount is excluded from gross income, will be
disregarded); plus
(c) the amount of any loan from, or secured by, a Policy that is a Modified
Endowment Contract to the extent that such amount is included in the gross
income of the Policyowner.
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Multiple Policies. All Modified Endowment Contracts that are issued by us (or
our affiliates) to the same Policyowner during any calendar year are treated as
one Modified Endowment Contract. This applies to determining the amount
includible in the Policyowner's income when a taxable distribution occurs.
Other Policyowner Tax Matters. The tax consequences of continuing the Policy
beyond the younger Insured's 100th year are unclear. You should consult a tax
advisor if you intend to keep the Policy in force beyond the younger Insured's
100th year.
Businesses can use the Policies in various arrangements, including nonqualified
deferred compensation or salary continuance plans, split dollar insurance plans,
executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree
medical benefit plans and others. The tax consequences of such plans may vary
depending on the particular facts and circumstances. If you are purchasing the
Policy for any arrangement the value of which depends in part on its tax
consequences, you should consult a qualified tax adviser. In recent years,
moreover, Congress has adopted new rules relating to life insurance owned by
businesses. Any business contemplating the purchase of a new Policy or a change
in an existing Policy should consult a tax adviser.
Federal, state and local estate, inheritance, transfer, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each Policyowner or Beneficiary. A tax advisor should be
consulted on these consequences.
Possible Tax Law Changes. Although the likelihood of legislative changes is
uncertain, there is always the possibility that the tax treatment of the Policy
could change by legislation or otherwise. Moreover, it is possible that any
change could be retroactive (that is, effective prior to the date of change).
Consult a tax adviser with respect to legislative developments and their effect
on the Policy.
AMERICAN NATIONAL'S INCOME TAXES
American National is taxed as a life insurance company under the Code. Under
current federal income tax law, American National is not taxed on the Separate
Account's operations. Thus, we currently do not deduct a charge from the
Separate Account for federal income taxes. Nevertheless, we reserve the right in
the future to make a charge for any such tax that we determine to be properly
attributable to the Separate Account or to the Policies.
Under current laws in some states, we may incur state and local taxes (in
addition to premium taxes for which a deduction from premium payments is
currently made). At present, these taxes are not significant and we are not
currently charging for them. However, we may deduct charges for such taxes in
the future.
OTHER INFORMATION
SALE OF THE POLICY
SM&R, one of our wholly-owned subsidiaries, is the principal underwriter of the
Policy. SM&R was organized December 15, 1964 under the laws of the State of
Florida. SM&R is a registered broker-dealer and a member of the National
Association of Securities Dealers. (See the American National Fund's
prospectus.)
SM&R will pay commissions to its registered representatives who sell the
Policies based upon a commission schedule. In Policy Years one through five, the
commissions to the registered representatives will not exceed 13% of the total
premium contribution. In later years, the registered representatives will
receive renewal commissions which will not exceed 0.25% of the Accumulation
Value. We may pay registered representatives who meet certain production
standards additional compensation. SM&R will pay overriding commissions to
managers and we may pay bonuses to the managers for the sale of the Policy. SM&R
and the Company may also authorize other registered broker-dealers and their
registered representatives to sell the Policy.
YEAR 2000
Many of the services provided to the Separate Account and Policyowners depend on
the smooth functioning of computer systems. Many computer software systems in
use today cannot distinguish the year 2000 from the year 1900 because of the way
dates are encoded and calculated, referred to as the "Year 2000 Problem." The
Year 2000 Problem could have a negative impact on handling securities trades,
payment of interest and dividends, pricing and account services. Like all
financial services providers, we utilize systems that may be affected by Year
2000 Problems and we rely on service providers, including the Eligible
Portfolios, that may also be affected. We have developed, and are continuing to
implement, a Year 2000 transition plan, and we are confirming that our service
providers are doing the same. It is difficult to predict with precision whether
the outcome of these efforts will have any negative impact on our Company. As of
the date of this prospectus, we do not anticipate that you will experience any
negative effects on your
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Accumulation Value, or on the services provided in connection with your Policy,
as a result of Year 2000 Problems. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact on the
Separate Account or the Policyowners.
THE CONTRACT
The Policy, the application, any supplemental applications, and any riders,
amendments or endorsements make up the entire contract. Only statements in the
application attached to the Policy and any supplemental applications made a part
of the Policy can be used to contest a claim or the validity of the Policy. Any
changes must be approved in writing by the President, Vice President or
Secretary of American National. No agent has the authority to alter or modify
any of the terms, conditions or agreements of the Policy or to waive any of its
provisions. Differences in state laws may require us to offer a Policy in a
state which has suicide, incontestability, refund provisions, surrender charges
or other provisions more favorable than provisions in other states.
Control of Policy. Subject to the rights of any irrevocable Beneficiary and
assignee of record, all rights, options, and privileges belong to the
Policyowner or owners, if living; otherwise to any contingent owner or owners,
if living; otherwise to the estate of the last Policyowner to die.
Beneficiary. You can name primary and contingent beneficiaries. Initial
Beneficiary(ies) are specified in the application. Payments will be shared
equally among Beneficiaries of the same class unless otherwise stated. If a
Beneficiary dies before the Second Insured dies, payments will be made to any
surviving Beneficiaries of the same class; otherwise to any Beneficiary(ies) of
the next class; otherwise to the estate of the Second Insured.
Change of Beneficiary. Unless the Beneficiary designation is irrevocable, you
can change the Beneficiary by written request on a Change of Beneficiary form at
any time during either Insured's lifetime. We may require that the Policy be
returned to the Home Office for endorsement of any change, or that other forms
be completed. The change will take effect as of the date the change is recorded
at the Home Office. We will not be liable for any payment made or action taken
before the change is recorded. There is no limit on the number of changes that
may be made.
Change in Policyowner or Assignment. In order to change any Policyowner or
assign Policy rights, an assignment of the Policy must be made in writing and
filed at our Home Office. The change will take effect as of the date the change
is recorded at our Home Office, and we will not be liable for any payment made
or action taken before the change is recorded. Payment of proceeds is subject to
the rights of any assignee of record. No partial or contingent assignment of the
Policy will be permitted. A collateral assignment is not a change of ownership.
Incontestability. The Policy is incontestable after it has been in force for two
years from the Date of Issue during the lifetime of both Insureds. An increase
in the Specified Amount or addition of a rider after the Date of Issue shall be
incontestable after such increase or addition has been in force for two years
from its Policy Date during the lifetime of both Insureds. However, this two
year provision shall not apply to riders that provide disability or accidental
death benefits. Any reinstatement of a Policy shall be incontestable during the
lifetime of both Insureds only after having been in force for two years after
the Policy Date of the reinstatement.
Misstatement of Age or Sex. If the age or sex of either Insured has been
misstated, the amount of the Death Benefit will be adjusted as provided for in
the Policy.
Suicide. Suicide within two years after Date of Issue is not covered by the
Policy unless otherwise provided by a state's insurance law. If either Insured,
while sane or insane, commits suicide within two years after the Date of Issue,
we will pay only the premiums received less any partial surrenders and Policy
Debt. If either Insured, while sane or insane, commits suicide within two years
after the Policy Date of any increase in the Specified Amount, our liability
with respect to such increase will only be the total cost of insurance applied
to the increase. If either Insured, while sane or insane, commits suicide within
two years from the Policy Date of reinstatement, our liability with respect to
such reinstatement will only be for the return of cost of insurance and
expenses, if any, paid on or after the reinstatement.
Postponement of Payments. Payment of any amount upon refund, full surrender,
partial surrender, Policy loans, benefits payable at death, and transfers, which
require valuation of a subaccount, may be postponed whenever: (1) the New York
Stock Exchange is closed other than customary week-end and holiday closings, or
trading on the New York Stock Exchange is restricted as determined by the SEC;
(2) the SEC by order permits postponement for the protection of Policyowners; or
(3) an emergency exists, as determined by the SEC, as a result of which disposal
of securities is not reasonably practicable or it is not reasonably practicable
to determine the value of the Separate Account's Accumulation Value. Surrenders,
loans or partial surrenders from the Fixed Account may be deferred for up to 6
months from the date of written request.
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Additional Insurance Benefits (Riders). Subject to certain requirements, certain
additional optional benefits may be obtained. The cost of any such additional
insurance benefits, which will be provided by "riders" to the Policy, will be
deducted as part of the Monthly Deduction. Riders in force during the time the
Guaranteed Coverage Benefit is in effect will increase the Guaranteed Coverage
Premium requirement.
POLICY SPLIT OPTION
Subject to evidence of insurability satisfactory to us at the time of split
request, we will issue separate Policies to each of the Insureds upon your
request and upon surrender of the Policy within 180 days after the Insureds'
(who were married to one another at the effective date) legal divorce or upon a
tax law change which disallows the estate tax marital deduction. We may require
proof of the legal divorce.
At the time of request for the split is made you must specify the manner in
which the Surrender Value and Death Benefit are to be allocated between the two
Policies to be issued; provided that no more than 50% of Death Benefit may be
allocated to one Policy. The Policies issued in replacement of this Policy will
be on substantially the same terms as the exchanged Policy, with the Surrender
Value and the amount of any Policy Debt under the exchanged Policy allocated
between the new Policies in the same percentages as the Surrender Value.
Premiums for the new Policies will reflect the sex and class of the Insured at
the time of the original issue.
This option will terminate when the eldest of the two Insureds reaches age 80 or
if the Policy terminates.
DIVIDENDS
The Policy is non-participating and therefore is not eligible for dividends and
does not participate in any distribution of our surplus.
LEGAL MATTERS
Greer, Herz and Adams, L.L.P., our general counsel, has reviewed various matters
of Texas law pertaining to the Policy, including the validity of the Policy and
our right to issue the Policy.
LEGAL PROCEEDINGS
The Company and its affiliates, like other life insurance companies, are
involved in lawsuits, including class action lawsuits. In some class action and
other lawsuits involving insurers, substantial damages have been sought and/or
material settlement payments have been made. Although the outcome of any
litigation cannot be predicted with certainty, we believe that at the present
time no lawsuits are pending or threatened that reasonably likely to have a
material adverse impact on the Separate Account or us.
REGISTRATION STATEMENT
We filed a registration statement covering information about the Policy with the
SEC. The registration statement, and its subsequent amendments, included this
prospectus, but it also contained additional information. This prospectus is
simply a summary of the contents of the Policy and related legal instruments. If
you want more complete information regarding any of the matters described in
this prospectus, you should consult the registration statement.
EXPERTS
The consolidated financial statements of American National Insurance Company and
subsidiaries as of December 31, 1998 and 1997, and for the years then ended, and
the statements of net assets of American National Variable Life Separate Account
as of December 31, 1998, and the related statements of operations and statements
of changes in net assets for each of the three years in the period then ended,
included in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
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indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
As stated in his opinion which was filed as an exhibit to the registration
statement, Rex D. Hemme has examined the actuarial matters included in this
prospectus.
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SENIOR EXECUTIVE OFFICERS AND
DIRECTORS OF
AMERICAN NATIONAL INSURANCE COMPANY
NAME
POSITION(S) WITH AMERICAN NATIONAL INSURANCE COMPANY
Principal Occupations Last Five Years and Other Positions Held
ROBERT L. MOODY
CHAIRMAN OF THE BOARD, DIRECTOR, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
American National: President, January 1996 to present; Chairman of the Board,
April 1982 to present; Chief Executive Officer, July 1991 to present; and
Director, March 1960 to present.
ANREM Corporation: Director, September 1985 to present. Moody Bancshares, Inc.:
Director and President, 1982 to present. Moody Bank Holding Company, Inc.:
Director and President, 1988 to present. Moody National Bank of Galveston:
President, 1980 to 1993; Chairman of the Board, Director and Chief Executive
Officer, 1980 to present. National Western Insurance Company: Chairman of the
Board, Director and Chief Executive Officer, 1971 to present. The Moody
Foundation: Trustee, 1955 to present. Gal-Tex Hotel Corporation: Chairman of the
Board and Director, 1954 to present. Gal-Tenn Hotel Corporation: Director. GTG
Corporation: Director. Gal-Tex Management Co.: Director. Gal-Tex Woodstock,
Inc.: Director. New Paxton Hotel Corporation: Director. Transitional Learning
Community at Galveston: Chairman of the Board and Director. The Moody Endowment:
Chairman of the Board and Director.
G. RICHARD FERDINANDTSEN
DIRECTOR, SENIOR EXECUTIVE VICE PRESIDENT AND
CHIEF OPERATING OFFICER
American National: Director, 1998 to present; Senior Executive Vice President
and Chief Operating Officer, April 1997 to present; Senior Executive Vice
President and Chief Administrative Officer, April 1996 to April 1997; Senior
Vice President, Health Insurance Operations, April 1993 to April 1996; Senior
Vice President, Director of Group Insurance, July 1990 to April 1993. American
National Life Insurance Company of Texas: Chairman of the Board, President and
Director, 1998 to present; and Vice President, Health Insurance Operations,
April 1993 to 1998. American National Property and Casualty Company: Director,
November 1992 to present; and Vice Chairman of the Board, 1998 to present.
American National General Insurance Company: Director, November 1992 to present;
and Vice Chairman of the Board, 1998 to present. McMarr Properties (formerly
American Securities Company): Director, April 1978 to present. McCreless
Foundation: Director, April 1992 to present. United Land: Director, January 1985
to present. Commonwealth Life and Accident Insurance Company: Director, June
1993 until company was merged in December 1994. American National Lloyds
Insurance Company: Underwriter, March 1994 to present. Pacific P & C, Inc.:
Director, 1995 to present; and Vice Chairman of the Board. Standard Life and
Accident Insurance Company: Director, January 1996 to present; Chairman of the
Board, President and Chief Executive Officer, 1998 to present. Garden State Life
Insurance Company: Director. Securities Management & Research, Inc.: Director.
Comprehensive Investment Services, Inc.: Director. Alternative Benefit
Management, Inc.: Director, President and Chief Executive Officer. ANMEX
International Services, Inc.: Director and President. ANMEX International, Inc.:
Director and President.
IRWIN M. HERZ, JR.
DIRECTOR
American National: Director: 1984 to present. Greer, Herz & Adams, L.L.P.:
Partner, March 1980 to present, General Counsel to American National. Three R
Trust: Trustee, April 1971 to present. Commonwealth Life and Accident Insurance
Company: Director, April 1983 until company was merged in December 1994. Garden
State Life Insurance Company: Director, June 1992 to present. American National
Property and Casualty Company: Director. American National General Insurance
Company: Director. Pacific P & C, Inc.: Director.
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R. EUGENE LUCAS
DIRECTOR
American National: Director, April 1981 to present. Gal-Tex Hotel Corporation:
President and Director, March 1971 to present. Gal-Tenn Hotel Corporation:
President and Director, March 1971 to present. Gal-Tex Management Company:
President and Director, May 1985 to present. Gal-Tex Woodstock, Inc.: President
and Director, November 1995 to present. New Paxton Hotel Corporation: President
and Director. Securities Management and Research, Inc.: Director, November 1982
to present. ANREM Corporation: Director, September 1982 to present. Colonel
Museum, Inc.: Director, March 1985 to present.
E. DOUGLAS MCLEOD
DIRECTOR
American National: Director, April 1984 to present. ANREM Corporation: Director,
October 1979 to present. National Western Life Insurance Company: Director, 1986
to present. Independent County Mutual Fire Insurance Company of Texas: Director,
June 1984 to present. Attorney. The Moody Foundation: Director of Development,
May 1982 to present. McLeod Properties: Owner. Texas State House of
Representatives: Past Member. Moody Gardens, Inc.: Chairman and Director, 1988
to present. Colonel Museum, Inc.: Vice President and Director, 1985 to present.
Center for Transportation and Commerce: Director, 1983 to present.
FRANCES ANNE MOODY
DIRECTOR
American National: Director, April 1987 to present. The Moody Foundation:
Executive Director, January 1998 to present and Regional Grants Advisor,
September 1996 to present. National Western Life Insurance Company: Director,
1990 to present. The Moody Endowment: Director, 1991 to present. Investments,
Dallas, Texas.
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RUSSELL S. MOODY
DIRECTOR
American National: Director, April 1986 to present. National Western Life
Insurance Company: Director, 1988 to March 1996. Gal-Tex Hotel Corporation:
Director, 1981 to 1997. Seal Fleet, Inc.: Director, 1982 to 1996.
WILLIAM L. MOODY IV
DIRECTOR
American National: Director, March 1951 to present. Moody National Bank of
Galveston: Director, January 1969 to March 1996, and Advisory Director, March
1996 to present. Moody Ranches, Inc.: President and Director, May 1959 to
present. American National Life Insurance Company of Texas: Director, November
1969 to present. Rosenberg Library: Board of Trustees, 1970 to present.
University of Texas Medical Branch Development Board: Director, 1970 to present.
JOE MAX TAYLOR
DIRECTOR
American National: Director, April 1992 to present. County of Galveston, Texas:
Sheriff, 1980 to present. Moody Gardens, Inc.: Director and President, 1988 to
present. Transitional Learning Community at Galveston: Director, 1985 to
present. Galveston County Bail-Bond Board: President, 1981 to present. Fifty
Club Board of Galveston: Director, 1981 to present. Landry's Seafood
Restaurants, Inc.: Director, 1992 to present. Pre-Trial Release Board of
Galveston County: 1982 to present. Juvenile Crime Prevention-Intervention Task
Force: Chairman, 1993 to present. University of Texas Medical Branch:
President's Cabinet, 1994 to present.
ROBERT A. FRUEND
EXECUTIVE VICE PRESIDENT
American National: Executive Vice President, Director of Multiple Line
Marketing, April 1989 to present. American National Life Insurance Company of
Texas: Director and Vice President, April 1989 to present. American National
Property and Casualty Insurance Company: Chairman of the Board; and Director,
November 1979 to present. American National General Insurance Company: Chairman
of the Board; and Director, November 1981 to present. Securities Management and
Research, Inc.: Director, November 1988 to present: Pacific P & C, Inc.:
Director, 1995 to present; and Chairman of the Board. American National
Insurance Service Company: Director, November 1988 to present. ANPAC Lloyds
Insurance Management, Inc.: Director, December 1995 to present. American
National Lloyds Insurance Company: Director, December 1995 to present.
BILL J. GARRISON
EXECUTIVE VICE PRESIDENT
American National: Executive Vice President, Director of Home Service Division,
April 1991 to present. ANMEX International Services, Inc.: Vice President. ANMEX
International, Inc.: Vice President. Commonwealth Life and Accident Insurance
Company: Director, February 1993 until company was merged in December 1994.
MICHAEL W. M/c/CROSKEY
EXECUTIVE VICE PRESIDENT
American National: Executive Vice President- Investments, 1995 to present; and
Senior Vice President-Real Estate and Mortgage Loans, 1986 to 1995. ANREM
Corporation: Director, June 1977 to present; and President, October 1986 to
present. American National Life Insurance Company of Texas: Assistant Secretary,
December 1986 to present. Standard Life and Accident Insurance Company: Vice
President, May 1988 to present. ANTAC, Inc.: President and Director, 1995 to
present. Securities Management and Research, Inc.: President, Chief Executive
Officer and Director, 1994 to present. American National Funds Group: President
and Director, 1994 to present. SM&R Investments, Inc. (formerly SM&R Capital
Funds, Inc.): Chief Executive Officer; President and Director, 1994 to present.
American National Investment Accounts, Inc.: President and Director, 1994 to
present. Pacific P & C, Inc.: Vice President, 1995 to present. Garden State Life
Insurance Company: Vice President, May 1994 to present. American National
Property and Casualty
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Company Vice President: June 1994 to present. American National General
Insurance Company: Vice President, June 1994 to present. SM&R Growth Fund, Inc.:
Director and President. SM&R Equity Income Fund, Inc.: Director and President.
SM&R Balanced Fund, Inc.: Director and President. ANDV `97: Director and
President. Comprehensive Investment Services, Inc.: Director.
JAMES E. POZZI
EXECUTIVE VICE PRESIDENT
American National: Executive Vice President, Independent Markets, April 1996 to
present; and Senior Vice President, Corporate Planning and Development, June
1992 to April 1996. American National Life Insurance Company of Texas: Vice
President, April 1993 to present.
RONALD J. WELCH
EXECUTIVE VICE PRESIDENT
American National: Executive Vice President and Chief Actuary, April 1996 to
present; and Senior Vice President and Chief Actuary, April 1986 to April 1996.
Standard Life and Accident Insurance Company: Director, December 1987 to
present. American National Property and Casualty Company: Director, November
1987 to present. American National General Insurance Company: Director, November
1987 to present. American National Life Insurance Company of Texas: Director,
November 1986 to present, Actuary, April 1980 to present, and Senior Vice
President, April 1990 to present. Commonwealth Life and Accident Insurance
Company: Vice President, until company was merged in December 1994. Garden State
Life Insurance Company: Chairman of the Board and Director, June 1992 to
present: Pacific P & C, Inc.: Director, 1995 to present. American National
Insurance Service Company: Director, December 1995 to present. Securities,
Research & Management, Inc.: Director. ANMEX International Services, Inc.:
Director and Vice President. ANMEX International, Inc.: Director and Vice
President. Alternative Benefit Management, Inc.: Director.
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CHARLES H. ADDISON
SENIOR VICE PRESIDENT
American National: Senior Vice President, Systems Planning and Computing, April
1978 to present. American National Property and Casualty Company: Director,
November 1981 to present. American National General Insurance Company: Director,
November 1981 to present. Pacific P & C, Inc.: Director, 1995 to present.
Standard Life and Accident Insurance Company: Director, January 1996 to present.
ALBERT L. AMATO
SENIOR VICE PRESIDENT
American National: Senior Vice President, Life Policy Administration, April 1994
to present; and Vice President, Life Policy Administration, April 1984 to April
1994. American National Life Insurance Company of Texas: Vice President, May
1984 to present. Garden State Life Insurance Company: Vice President, August
1992 to present, Director, August 1992 to December 1993, and Advisory Director,
December 1993 to present. Standard Life and Accident Insurance Company: Vice
President, Life Policy Administration. Alternative Benefit Management, Inc.:
Director and Senior Vice President. Commonwealth Life and Accident Insurance
Company: Director, August 1992 until company was merged in December 1994.
GLENN C. LANGLEY
SENIOR VICE PRESIDENT
American National: Senior Vice President, Human Resources, November 1995 to
present; Vice President, Assistant Personnel Director, April 1983 to November
1995; Assistant Vice President, Equal Employment Opportunity/Affirmative Action
Program Coordinator, April 1976 to April 1983; and Assistant Vice President,
Personnel Placement Director, April 1969 to April 1976. Standard Life and
Accident Insurance Company: Vice President, Director of Human Resources.
STEPHEN E. PAVLICEK
SENIOR VICE PRESIDENT AND CONTROLLER
American National: Senior Vice President and Controller, April 1996 to present;
Vice President and Controller, 1994 to April 1996; and Assistant Vice
President - Financial Reports, 1983 to 1994. ANTAC, Inc.: Assistant Treasurer,
1995 to present. Garden State Life Insurance Company: Controller, June 1992 to
present. American National Life Insurance Company of Texas: Controller, August
1994 to present. ANREM Corporation: Director. American National Property and
Casualty Company: Director. American National General Insurance Company:
Director. Pacific P & C, Inc.: Director. Standard Life and Accident Insurance
Company: Vice President, Controller and Director. ANDV `97: Assistant Treasurer.
ANMEX International Services, Inc.: Controller. ANMEX International, Inc.:
Controller. Alternative Benefit Management, Inc.: Senior Vice President,
Controller and Director.
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<PAGE>
STEVEN H. SCHOUWEILER
SENIOR VICE PRESIDENT
American National: Senior Vice President, Health Insurance Operations, May 1998
to present. Standard Life and Accident Insurance Company: Vice President,
Claims, May 1998 to present. American National Life Insurance Company of Texas:
Director and Senior Vice President, May 1998 to present. Alternative Benefit
Management, Inc.: Chief Administrative Officer, Senior Vice President and
Director. Galveston Health Network, Inc.: President. Conseco Group Risk
Management: President and Chief Executive Officer, December 1989 to April 1998.
JAMES R. THOMASON
SENIOR VICE PRESIDENT
American National: Senior Vice President, Credit Insurance Services, April 1987
to present.
GARETH W. TOLMAN
SENIOR VICE PRESIDENT
American National: Senior Vice President, Corporate Affairs, April 1996 to
present; and Vice President, Corporate Affairs, April 1976 to April 1996.
VINCENT E. SOLER, JR.
VICE PRESIDENT, SECRETARY AND TREASURER
American National: Vice President, Secretary and Treasurer, 1994 to present; and
Vice President and Controller, March, 1984 to 1994. ANREM Corporation:
Treasurer, October 1984 to present. American National Life Insurance Company of
Texas: Treasurer, April 1984 to present; Controller, April 1984 to August 1994;
and Secretary, August 1994 to present. Standard Life and Accident Insurance
Company: Secretary and Treasurer, 1998 to present; Assistant Secretary, January
1996 to 1998. ANTAC, Inc.: Secretary, 1995 to present. Garden State Life
Insurance Company: Secretary and Treasurer, August 1994 to present. American
National Property and Casualty Company: Assistant Secretary, August 1994 to
present. American National General Insurance Company: Assistant Secretary.
Pacific P & C, Inc.: Assistant Secretary. Galveston Health Network, Inc.:
Secretary. ANDV `97: Secretary. ANMEX International Services, Inc.: Secretary
and Treasurer. ANMEX International, Inc.: Secretary and Treasurer. Comprehensive
Investment Services, Inc.: Secretary. Alternative Benefit Management, Inc.:
Secretary and Treasurer.
The principal business address of each person listed above is American National
Insurance Company, One Moody Plaza, Galveston, Texas 77550-7999.
FINANCIAL STATEMENTS
Our financial statements which are included in this prospectus should be
considered only as bearing on our ability to meet our obligations under the
Policy. Our financial statements should not be considered as bearing on the
investment performance of the assets held in the Separate Account.
[to be inserted in pre-effective amendment]
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APPENDIX
ILLUSTRATIONS OF DEATH BENEFITS, ACCUMULATION VALUES AND SURRENDER VALUES
The tables on pages 89 through 92 illustrate how Accumulation Value, Surrender
Value and Death Benefit of a Policy may change with the investment performance
of the Eligible Portfolios. These illustrations are hypothetical and may not be
used to project or predict investment results. The illustrations assume:
. a gross annual investment rate of return (i.e. investment income and capital
gains and losses) of 0%, 6% or 12%,
. a $100,000 Specified Amount,
. the Insureds are a male, age 45, and a female, age 45,
. the Policy is issued under the tobacco non-user underwriting risk
classification for each Insured,
. the premium is paid at the beginning of each Policy Year,
. all Accumulation Value is allocated to the Separate Account,
. no Policy Loans are made,
. no changes in the Specified Amount,
. no partial surrenders
. no riders
. no transfers to the Fixed Account,
. no more than twelve transfers among Subaccounts, and
. fees and expenses for the Eligible Portfolios at a hypothetical annual rate
of 0.72% of net assets (the rate is a simple average, for all Eligible
Portfolios, of the "Management Fees" and "Other Expenses", indicated for each
Eligible Portfolio in the Eligible Portfolio Annual Expenses table. Certain
fee waiver and expense reimbursement arrangements exist and are reflected in
this average. Excluding the effect of these arrangements, the simple average
of the "Management Fees" and "Other Expenses" would be 0.83%).
The Accumulation Value, Surrender Value and Death Benefit shown in the
illustrations may be different if any of the above assumptions changed.
The second column of the tables shows the value of the premiums paid accumulated
at a 5% annual interest rate.
The tables on pages 87 and 89 are based on the current schedule of Monthly
Deductions. We may, however, change the current schedule of Monthly Deductions
at any time and for any reason. Accordingly, you should not construe the tables
as guarantees or estimates of amounts to be paid in the future.
The tables on pages 88 and 90 are based on the assumption that the maximum
allowable Monthly Deductions are made throughout the life of the Policy.
The tables show that the net investment return of each subaccount is lower than
the gross return of the assets held in its corresponding Eligible Portfolio
because of the charges against the subaccounts.
Illustrations also reflect the Daily Asset Charge, which is levied against each
Subaccount at an annual rate of 0.90% of average daily Accumulation Value in the
first 20 Policy Years and 0.60% thereafter. After adjustment to reflect the
Daily Asset Charge and the average Eligible Portfolio Annual Expenses, the
illustrated hypothetical gross annual investment rates of return of 0%, 6% and
12% correspond to approximate hypothetical net annual rates of -1.97%, 4.03% and
10.03%.
The illustrations do not reflect any charges for federal income tax burden
attributable to the Separate Account, since we are not currently making such
charges. However, such charges may be made in the future, and, in that event,
the gross annual investment rate of return would have to exceed 0%, 6% or 12% by
an amount sufficient to cover the tax charges in order to produce the values
illustrated. (See "Federal Income Tax Considerations," page 35.)
If a Policy Loan is made, both Surrender Value and Death Benefit Proceeds will
be reduced by the amount of outstanding Policy Debt. Even if repaid, Policy Debt
may permanently affect the Policy's values. The effect could be favorable or
unfavorable depending on
38
<PAGE>
whether the investment performance of the subaccount(s)/Fixed Account you
selected is less than or greater than the interest rate credited to the
Accumulation Value held to secure the loan.
If a partial surrender is made, the surrender will immediately reduce the values
by the amount of the partial surrender, a $25 fee for each partial surrender and
any applicable surrender charge. If the Policy is surrendered, a surrender
charge may be imposed and the Policyowner may receive less than the total
premium paid. In the illustrations, the difference between the Accumulation
Value and the Surrender Value in any year is the surrender charge.
Upon request, we will provide a comparable illustration based upon the
proposed Insured's age, sex and underwriting classification, the Specified
Amount, the Death Benefit option, and Planned Periodic Premium schedule and any
available riders requested.
[to be inserted by pre-effective amendment]
39
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A)
American National Insurance Company hereby represents that the fees and
charges deducted under the contracts described in this pre-effective amendment
are, in the aggregate, reasonable in relationship to the services rendered, the
expenses expected to be incurred, and the risks assumed by American National
Insurance Company.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of ___ pages.
Undertaking to file reports.
Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
Signatures.
Written Consents
The following exhibits, corresponding to those required by the instructions
as to exhibits in Form N-8B-2:
II-1
<PAGE>
Exhibit 99.1 .... Resolution of the Board of Directors of American National
Insurance Company authorizing establishment of American
National Variable Life Separate Account
Exhibit 99.2 .... Not Applicable
Exhibit 99.3(a) .... Distribution and Administrative Services Agreement
Exhibit 3(b) .... Not Applicable
Exhibit 99.3(c) .... Schedule of Sales Commissions (to be filed by pre-
effective amendment)
Exhibit 99.4 .... Not Applicable
Exhibit 99.5 .... Survivorship Variable Universal Life Insurance Policy with
Riders
Exhibit 99.6(a) .... Articles of Incorporation of American National Insurance
Company
Exhibit 99.6(b) .... By-laws of American National Insurance Company
Exhibit 99.7 .... Not Applicable
Exhibit 99.8(a) .... Form of American National Investment Accounts, Inc. Fund
Participation Agreement
Exhibit 99.8(b) .... Form of Variable Insurance Products Fund Fund
Participation Agreement
Exhibit 99.8(c) .... Form of Variable Insurance Products Fund II Fund
Participation Agreement
Exhibit 99.8(d) .... Form of Variable Insurance Products Fund III Fund
Participation Agreement
Exhibit 99.8(e) .... Form of T. Rowe Price Fund Participation Agreement
Exhibit 99.9 .... Not Applicable
Exhibit 99.10 .... Application Form
Exhibit 99.11 .... Independent Auditors' Consent (to be filed by pre-
effective amendment)
Exhibit 99.12 .... Opinion of Counsel (to be filed by pre-effective
amendment)
Exhibit 99.13 .... Consent of Counsel (to be filed by pre-effective
amendment)
II-2
<PAGE>
Exhibit 99.14 .... Actuarial Opinion (to be filed by pre-effective amendment)
Exhibit 99.15 .... Actuarial Basis of Payment and Cash Value Adjustment
Pursuant to Rule 6e-3(T)(b)(V)(B) (to be filed by pre-
effective amendment)
Exhibit 99.16 .... Procedures Memorandum Pursuant to Rule 6e-3(T)(b)(12)(iii)
(to be filed by pre-effective amendment)
Exhibit 99.27 .... Financial Data Schedule (to be filed by pre-effective
amendment)
II-3
<PAGE>
As required by the Securities Act of 1933, the Registrant has caused this
amended registration statement to be signed on its behalf, in the City of
Galveston, and the State of Texas on the 24th day of May, 1999.
American National Variable Life Separate Account
(Registrant)
By: American National Insurance Company
By: /s/ Robert L. Moody
----------------------------------------
Robert L. Moody, Chairman of the Board,
President and Chief Executive Officer
American National Insurance Company
(Depositor)
By: /s/ Robert L. Moody
-----------------------------------------------
Robert L. Moody, Chairman of the Board,
President and Chief Executive Officer
attest:
/s/ Vincent E. Soler, Jr.
- --------------------------------------
Vincent E. Soler, Jr.,
Vice President, Secretary and Treasurer
As required by the Securities Act of 1933, this amended registration
statement has been signed by the following persons in their capacities and on
the dates indicated:
Signature Title Date
- --------- ----- ----
/s/ Michael W. McCroskey Executive Vice President May 24, 1999
- -------------------------- Investments (Principal Financial
Michael W. McCroskey Officer)
/s/ Stephen E. Pavlicek Senior Vice President and May 24, 1999
- -------------------------- Controller
Stephen E. Pavlicek (Principal Accounting Officer)
II-4
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Robert L. Moody Chairman of the Board, May 24, 1999
- ------------------------------ Director, President and Chief
Robert L. Moody Executive Officer
/s/ G. Richard Ferdinandtsen Director May 24, 1999
- ------------------------------
G. Richard Ferdinandtsen
/s/ Irwin M. Herz, Jr. Director May 24, 1999
- ------------------------------
Irwin M. Herz, Jr.
/s/ R. Eugene Lucas Director May 24, 1999
- ------------------------------
R. Eugene Lucas
/s/ E. Douglas McLeod Director May 24, 1999
- ------------------------------
E. Douglas McLeod
Director
- ------------------------------
Frances Anne Moody
Director
- ------------------------------
Russell S. Moody
Director
- ------------------------------
W. L. Moody, IV
Director
- ------------------------------
Joe Max Taylor
II-5
<PAGE>
Exhibit 99.1
STATE OF TEXAS (S)
(S)
COUNTY OF GALVESTON (S)
I, the undersigned, Secretary of the AMERICAN NATIONAL INSURANCE COMPANY,
Galveston, Texas, do hereby certify that the following is a true and correct
copy from the corporate records of said Corporation, of a resolution duly
adopted by the Board of Directors thereof, at a regular meeting of said Board, a
quorum thereof present and acting, on the 30th day of July, 1987, to wit:
Resolution on Variable Universal Life
Insurance Establishing Separate Accounts
RESOLVED, That the officers of the Company be, and they hereby are,
authorized to establish one or more separate accounts of this Company, in
accordance with the insurance laws of the State of Texas, to provide an
investment medium for variable life insurance policies issued by this
company as may be designated as participating therein. Any such separate
account shall receive, hold, invest and reinvest only the monies arising
from: (1) premiums, contributions or payments made pursuant to variable
life insurance policies participating therein; (2) such assets of the
company as may be necessary for the establishment of such separate account
or accounts; and (3) the dividends, interest and gains produced by the
foregoing; and
FURTHER RESOLVED, That the separate account may be divided into various
sub-accounts as determined necessary by the officers of the Company to fund
such variable policies. Purchase payments (net of any applicable
deductions) remitted to the Company under the policies and allocated to the
separate account shall be allocated to the appropriate sub-account in
accordance with the terms of the policies. Each sub-account, in turn,
shall invest in the shares of one or more registered management investment
companies, or designated investment series thereof, as specified for
investment by it, at net asset value per share next to be determined
following receipt of an order for purchase by such sub-account. To the
extent that such registered management investment company, or companies,
establishes additional investment series, the officers of the Company are
empowered and authorized to establish such additional sub-accounts as there
are additional investment series, with each such sub-account to invest
solely in the shares of a specified additional investment series; and
FURTHER RESOLVED, That the separate account shall be administered and
accounted for as part of the general business of the Company, but the
income, gains and losses of the separate account shall be credited to or
charged solely against the assets held in the separate account, without
regard to any other income arising out of
1
<PAGE>
other business that this Company may conduct. The assets of the separate
account shall not be chargeable with the liabilities arising out of any
other business that this Company may conduct; and
FURTHER RESOLVED, Each sub-account shall be administered and accounted for
as part of the general business of the Company, but the income (including
capital gains, or losses, if any) of each sub-account shall be credited to
or charged against the assets held in that sub-account in accordance with
the terms of the policies funded therein, without regard to other income of
the remaining sub-accounts or arising out of any other business that this
Company may conduct. The assets of each sub-account shall not be
chargeable with liabilities arising out of the business conducted by
another sub-account, nor shall a sub-account be chargeable with liabilities
arising out of any other business that this Company may conduct; and
FURTHER RESOLVED, That the officers of the Company be, and they hereby are,
authorized:
(i) to register the variable life insurance policies issued or to be
issued by the Company under the provisions of the Securities Act of
1933 to the extent that they shall determine that such registration is
necessary;
(ii) to register any such separate account or accounts with the
Securities and Exchange Commission under the provisions of the
Investment Company Act of 1940 to the extent that they shall determine
that such registration is necessary;
(iii) to prepare, execute and file such amendments to any registration
statements filed under the aforementioned Acts (including such pre-
effective and post-effective 4 amendments);
(iv) to apply for exemption from those provisions of the
aforementioned Acts and the rules promulgated thereunder as they may
deem necessary or desirable and to take any and all other actions
which they may deem necessary, desirable or appropriate in connection
with such Acts;
(v) to file the variable policies participating in any such separate
accounts with the appropriate state insurance departments and to
prepare and execute all necessary documents to obtain approval of the
insurance departments; and
(vi) to prepare or have prepared and execute all necessary documents
to obtain approval of, or clearance with, or other appropriate actions
2
<PAGE>
required, or any other regulatory authority that may be necessary in
connection with the foregoing matters; and
(vii) to enter into agreements with appropriate entities for the
provisions of administrative and other required services on behalf of
the Separate Account(s) and for the safekeeping of assets of such
Separate Account(s); and
FURTHER RESOLVED, That the form of any resolutions required by any state
authority to be filed in connection with any of the documents or
instruments referred to in any of the preceding resolutions be, and the
same hereby are, adopted as fully set forth herein if (i) in the opinion of
the officers of the Company the adoption of the resolutions is advisable;
and (ii) the Corporate Secretary or Assistant Secretary of the Company
evidences such adoption by inserting into these minutes copies of such
resolutions; and
FURTHER RESOLVED, That the officers of the Company, and each of them, are
hereby authorized to prepare and to execute the necessary documents and to
take such further actions as may be deemed necessary or appropriate, in
their discretion, to implement the purpose of the foregoing resolutions.
And I do further certify that said resolution has never been rescinded or
reconsidered and still remains in force.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of
the said Corporation, this ___ day of ________________, 19____.
VINCENT E. SOLER, JR.
------------------------------------
Secretary
SUBSCRIBED AND SWORN TO BEFORE ME, this______ day of______________, 19____.
----------------------------------
Notary Public
State of Texas
3
<PAGE>
Exhibit 99.3a
DISTRIBUTION AND ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT, made and entered into on this _____ day of _____________,
by and between AMERICAN NATIONAL INSURANCE COMPANY ("American National"), a life
insurance company organized under the laws of the State of Texas, American
National Variable Life Separate Account ("Separate Account"), a separate account
established by American National pursuant to the Texas Insurance Code and
SECURITIES MANAGEMENT AND RESEARCH, INC. ("SM&R"), a corporation organized under
the laws of the State of Florida.
W I T N E S S E T H:
WHEREAS, American National proposes to issue to the public certain variable
contracts ("Contracts") and has authorized the creation of one or more separate
investment accounts in connection therewith; and
WHEREAS, American National has established the Separate Account for the
purpose of issuing the Contracts and is registering the Separate Account with
the Securities and Exchange Commission ("Commission") as a unit investment trust
under the Investment Company Act of 1940; and
WHEREAS, the Contracts to be issued by the Separate Account are to be
registered with the Commission under the Securities Act of 1933 for offer and
sale to the public, and otherwise in compliance with all applicable laws; and
WHEREAS, SM&R, a broker-dealer registered under the Securities Exchange Act
of 1934 and a member of the National Association of Securities Dealers, Inc.,
proposes to act as the distributor in the offering and sale of said Contracts;
WHEREAS, SM&R also proposes to perform certain administrative, processing
and clerical services for American National in connection with the offering and
sale of said Contracts; and
WHEREAS, American National desires to obtain such distribution and other
services from SM&R;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, American National, the Separate Account and SM&R hereby agree as
follows:
1. SM&R will serve as distributor for the Contracts which will be issued
by American National through the Separate Account and will be
registered with the Commission for offer and sale to the public. As
Distributor, SM&R will use its best efforts to
1
<PAGE>
effect offers and sales of the Contracts to the public on a continuing
basis. SM&R shall be responsible for compliance with the requirements
of any applicable state broker-dealer regulations and the Securities
Exchange Act of 1934 as each applies to SM&R in connection with its
duties as Distributor of said Contracts. Moreover, SM&R shall conduct
its affairs in accordance with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. (NASD).
2. SM&R will assist American National in identifying, training and
qualifying (under appropriate NASD and/or state requirements)
insurance agents desiring to sell the Contracts. SM&R will register
such agents as its registered representatives before they engage in
the sale of the Contracts and will supervise and control such agents
in the sale of the Contracts in the manner and to the extent required
by the applicable rules of the NASD and the Commission. If any such
agent of American National should fail or refuse to submit to the
supervision of SM&R in accordance with the terms of this Agreement or
otherwise fail to meet the rules and standards imposed by SM&R on its
registered representatives, SM&R shall take whatever steps may be
necessary to terminate the sales activities of such agent relating to
the Contracts.
3. As distributor, SM&R will be responsible for the preparation of
marketing materials (and where appropriate obtaining regulatory
approval), for actively recruiting additional sales agents and sales
organizations and for providing sales training (including continuing
education required for license maintenance).
4. SM&R may contract with other broker-dealers registered under the
Securities Exchange Act of 1934 and authorized by applicable law to
sell variable contracts issued by the Separate Account. Any such
contractual arrangement is expressly made subject to this Agreement,
and SM&R will at all times be responsible to American National for the
distribution of all Contracts issued by the Separate Account.
5. The amount of any commissions payable in connection with the sale of
Contracts will be made by American National to the sales personnel of
SM&R and this function is being performed as a purely ministerial
service and the Records in respect thereof are properly reflected on
the Books and Records maintained by or for SM&R. The gross amounts
paid or advances made by American National on behalf of SM&R will be
transmitted to SM&R for proper reporting.
6. Warranties.
(a) American National represents and warrants to SM&R that:
(i) Any and all Registration Statements required for the
Contracts or the Separate Account have been filed with the
Commission in the form previously delivered to SM&R and
that copies of any and all
2
<PAGE>
amendments thereto will be forwarded to SM&R at the time
that they were filed with the Commission;
(ii) The Registration Statements and any further amendments or
supplements thereto will, when they become effective,
conform in all material respects to the requirements of the
Securities Act of 1933, the Investment Company Act of 1940
and the rules and regulations of the Commission thereunder,
and will not contain untrue statements of material facts or
omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this representation and warranty
shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished
in writing to American National by SM&R expressly for use
herein;
(iii) American National is validly existing as a stock life
insurance company in good standing under the laws of the
State of Texas with corporate power to own its properties
and conduct its business as described in the Prospectus, and
has been duly qualified for the transaction of business and
is in good standing under the laws of each other
jurisdiction in which its owns or leases properties, or
conducts any business, so as to require such qualification;
(iv) The Contracts to be issued by the Separate Account through
SM&R hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and will
conform to the description of such Contracts contained in
the Prospectuses relating thereto;
(v) Those persons who offer and sell the Contracts are
appropriately licensed in a manner as to comply with the
state insurance laws;
(vi) The performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any statutes, any indenture,
mortgage, deed of trust, note agreement or other agreement
or instrument to which American National is a party or by
which American National is bound, American National's
Charter as a stock life insurance company or By-Laws, or any
order, rule or regulation of any court or governmental
agency or body having jurisdiction over American National or
any of its properties; and no consent, approval,
authorization or order of any court or governmental agency
or body is required for the
3
<PAGE>
consummation by American National of the transactions
contemplated by this Agreement, except such as may be
required under the Securities Exchange Act of 1934 or state
insurance or securities laws in connection with the purchase
and distribution of the Contracts by SM&R; and
(vii) There are no material legal or governmental proceedings
pending to which American National or the Separate Account
is a party or of which any property of American National or
the Separate Account is the subject, other than as set forth
in the Prospectus relating to the Contracts, and other than
litigation incident to the kind of business conducted by
American National which, if determined adversely to American
National, would individually or in the aggregate have a
material adverse effect on the financial position, surplus
or operations of American National.
(b) SM&R represents and warrants to American National that:
(i) It is a broker-dealer duly registered with the Commission
pursuant to the Securities Exchange Act of 1934 and a member
in good standing of the National Association of Securities
Dealers and is in compliance with the securities laws in
those states in which it conducts business as a broker-
dealer;
(ii) It shall permit the offer and sale of Contracts only by and
through persons who are appropriately licensed under both
the securities laws and state insurance laws;
(iii) The performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of or
constitute a default under, any statute, any indenture,
mortgage, deed of trust, note agreement or other agreement
or instrument to which SM&R is a party or by which SM&R is
bound, the Certificate of Incorporation and By-Laws of SM&R,
or any other rule or regulation of any court or governmental
agency or body having jurisdiction over SM&R or its
property;
(iv) No offering, sale or other disposition of any Contracts will
be made until SM&R is notified by American National that the
subject Registration Statement has been declared effective
and that the Contracts have been released for sale by
American National; and such offering, sale or other
disposition shall be limited to those
4
<PAGE>
jurisdictions that have approved or otherwise permit the
offer and sale of the Contracts by American National.
(v) To the extent that any statements or omissions made in the
Registration Statements with respect to the Contracts, or
any amendment or supplement thereto are made in reliance
upon and in conformity with written information furnished to
American National by SM&R expressly for use therein, such
Registration Statements and any amendments or supplements
thereto will, when they become effective or are filed with
the Commission, as the case may be, conform in all material
respects to the requirements of the Securities Act of 1933
and the rules and regulations of the Commission thereunder
and will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading.
7. SM&R shall keep, in manner and form prescribed or approved by American
National and in accordance with Rules 17a-3 and 17a-4 under the
Securities Exchange Act of 1934 correct records and books of account
as required to be maintained by a registered broker-dealer acting as
distributor of all transactions entered into on behalf of American
National and with respect to variable contract business it conducts of
American National. SM&R shall make such records and books of account
available for inspection by the Commission, and American National
shall have the right to inspect, make copies of or take possession of
such records and books of accounts at any time on demand.
SM&R, however, may request that some or all of the books and records
relating to the sales of the Contracts which are required to be
maintained by it as a registered broker-dealer pursuant to Rule 17a-3
and 17a-4 under the 1934 Act be prepared and maintained in accordance
with such rules by American National on behalf of and as agent for
SM&R. American National agrees that for the purposes of this
Agreement, such books and records shall be deemed to be the property
of SM&R and shall be subject at all times to examination by the
Securities and Exchange Commission in accordance with Section 17(a) of
the 1934 Act and SM&R shall have the right to inspect and make copies
of such books and records of accounts at any time on demand.
8. Upon the request of SM&R, American National agrees to prepare and send
all confirmations required to be sent by SM&R in connection with
crediting purchase payments under the Contracts. Any such
confirmation shall be sent upon or before the completion of each
"transaction", as that term is used in Rule 15c1-4 of the 1934 Act,
and shall reflect the facts of the transaction and indicate that the
confirmation is forwarded on behalf of SM&R in its capacity of
Distributor of Contracts.
5
<PAGE>
9. Subsequent to having been authorized to commence with the offering
contemplated herein, SM&R will utilize the currently effective
Prospectus relating to the subject Contracts in connection with its
selling efforts. As to the other types of sales material, SM&R agrees
that it will use only sales materials which conform to the
requirements of federal and state laws and regulations, and which have
been filed where necessary with the appropriate regulatory
authorities, including the National Association of Securities Dealers.
10. SM&R will not use any Prospectus, sales literature, or any other
printed matter or material in the offer or sale of any Contract if, to
the knowledge of SM&R, any of the foregoing misstates the duties,
obligations or liabilities of American National, the Separate Account
or SM&R.
11. SM&R shall not be entitled to any remuneration for its services as
distributor. However, in payment for the administrative, processing
and clerical services provided by SM&R, American National shall pay
SM&R a processing fee of $50 for each Contract application submitted
by SM&R and accepted by American National. In addition, upon
presentation of proper evidence of expenditures, American National
will reimburse SM&R for all of SM&R's reasonable charges and expenses
directly incurred in connection with the performance of its duties and
obligations contained in this Agreement.
12. SM&R makes no representation or warranties regarding the number of
Contracts to be sold or the amount to be paid thereunder. SM&R does,
however, represent that it will actively market such Contracts on a
continuous basis while there is an effective registration thereof with
the Commission.
13. SM&R may render similar services or act as a distributor or dealer for
issuers other than the Separate Account or sponsors other than
American National in the offering of their Contracts.
14. The Contracts shall be offered for sale on the terms described in the
currently effective Prospectus describing such Contracts.
15. American National will use its best efforts to register for sale, from
time to time if necessary, additional dollar amounts of the Contracts
under the Securities Act of 1933 and should it ever be required, under
state Blue Sky Laws and to file for approval under state insurance
laws when necessary. American National may require SM&R to assist it
in obtaining any necessary clearance or approval of prospectuses,
sales literature and proxy materials in accordance with the
requirements of the Commission, the NASD or other regulatory bodies.
16. American National reserves the right at any time to suspend or limit
the public
6
<PAGE>
offering of the subject Contracts upon one day's written notice to
SM&R.
17. American National agrees to advise SM&R immediately:
(a) of any request by the Commission (i) for amendment of the
Securities Act Registration Statement relating to the Contracts,
or (ii) for additional information;
(b) of issuance by the Commission of any stop order suspending the
effectiveness of its Registration Statement or the initiation of
any proceedings for that purpose; and
(c) of the happening of any material event, if known, which makes
untrue any statement made in its Registration Statement or which
requires the making of a change therein in order to make any
statement made therein not misleading.
18. American National will furnish to SM&R such information with respect
to the Separate Account and the Contracts in such form and signed by
such of its officers as SM&R may reasonably request; and will warrant
that the statements therein contained when so signed will be true and
correct.
19. Each of the undersigned parties agrees to notify the other in writing
upon being apprised of the institution of any proceeding investigation
or hearing involving the offer or sale of the subject Contracts.
20. Absent the prior written consent of American National, this Agreement
will terminate automatically upon its assignment.
21. This Agreement shall terminate without payment of any penalty by
either party:
(a) at the option of American National or of SM&R upon sixty (60)
days' advance written notice to the other; or
(b) at the option of American National upon institution of formal
proceedings against SM&R by the National Association of
Securities Dealers or by the Commission; or
(c) at the option of American National, if SM&R or any representative
thereof at any time (i) employs any device, scheme, or artifice
to defraud; makes any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading; or engages in any act, practice, or
7
<PAGE>
course of business which operates or would operate as a fraud or
deceit upon any person; (ii) fails to promptly account and pay
over the American National money due it according to its records;
or (iii) violates the conditions of this Agreement.
22. Each notice required by this Agreement may be given by wire or
facsimile transmission and confirmed in writing to :
Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
Attn: President
[Name of Separate Account]
One Moody Plaza
Galveston, Texas 77550
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550
Attn: President
23. American National agrees to indemnify SM&R for any liability that SM&R
may incur to a Contract Owner or party-in-interest under a Contract
(i) arising out of any act or omission in the course of, or in
connection with, rendering services under this Agreement, or (ii)
arising out of the purchase, retention or surrender of a Contract;
PROVIDED, HOWEVER, that American National will not indemnify SM&R for
any such liability that results from the willful misfeasance, bad
faith or gross negligence of SM&R, or from the reckless disregard, by
SM&R, of its duties and obligations arising under this Agreement.
24. This Agreement shall be subject to the laws of the State of Texas and
construed so as to interpret the Contracts as insurance products
written within the business operation of American National.
25. This Agreement covers and includes all agreements, verbal and written,
between SM&R and American National with regard to the offer and sale
of the Contracts, and supersedes and annuls any and all agreements
between the parties with regards to the distribution of the Contracts;
except that this Agreement shall not effect the operation of previous
agreements entered into between SM&R and American National unrelated
to the sale of the Contracts. This Agreement may be amended from time
to time by the mutual fund agreement and consent of the undersigned
parties; PROVIDED, that such amendment shall not affect the rights of
existing
8
<PAGE>
Contract Owners, and that such amendment be in writing and duly
executed.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested on the date first stated above.
AMERICAN NATIONAL INSURANCE COMPANY
By:
---------------------------------------------------
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL VARIABLE LIFE SEPARATE ACCOUNT
By: AMERICAN NATIONAL INSURANCE COMPANY
By:
---------------------------------------------------
Carl R. Robertson, Senior Executive Vice President
SECURITIES MANAGEMENT AND RESEARCH, INC.
By:
---------------------------------------------------
Michael W. McCroskey, President
9
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EXHIBIT 5
[AMERICAN NATIONAL LOGO APPEARS HERE]
AMERICAN NATIONAL INSURANCE COMPANY
A STOCK LIFE INSURANCE COMPANY
Insureds Specified Amount
Policy Number Date of Issue
Home Office: One Moody Plaza
Galveston, Texas 77550
AMERICAN NATIONAL INSURANCE COMPANY will pay the death benefit to the
Beneficiary subject to the provisions of the Policy. The death benefit is
payable upon receipt at Our Home Office in Galveston, Texas, of due proof of
the deaths of both Insureds while this Policy is in force. This Policy is
issued in consideration of the Application and payment of the premiums as
described within the Policy. This Policy is a legal contract between the
Owner and American National Insurance Company. READ YOUR POLICY CAREFULLY.
RIGHT TO CANCEL POLICY. You may cancel the Policy by returning it to Our
agent or Us within ten days after You receive the Policy. We will refund the
premiums paid. The refund will be adjusted by investment gains during the
fifteen-day period after such premiums have been allocated to the money market
subaccount. Investment gains and losses will adjust the refund after the
fifteen-day period.
THE ACCUMULATION VALUE IN THE AMERICAN NATIONAL VARIABLE LIFE SEPARATE ACCOUNT
IS BASED ON THE INVESTMENT EXPERIENCE OF THAT SEPARATE ACCOUNT AND MAY
INCREASE OR DECREASE DAILY. THE ACCUMULATION VALUE IS NOT GUARANTEED.
THE AMOUNT OF THE DEATH BENEFIT OR THE DURATION OF THE DEATH BENEFIT, OR BOTH,
MAY VARY UNDER THE PROVISIONS OF THE POLICY.
Signed for Us at Galveston, Texas, on the Date of Issue.
SECRETARY PRESIDENT
SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICY. INVESTMENT
EXPERIENCE REFLECTED IN SOME VALUES AND BENEFITS. NONPARTICIPATING.
DEATH BENEFIT PAYABLE AT SECOND DEATH. NO DIVIDENDS.
FLEXIBLE PREMIUM PAYABLE WHILE EITHER INSURED IS LIVING.
Form SVUL
1
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POLICY PROVISIONS
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PAGE
POLICY DATA PAGES
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DEFINITION OF POLICY TERMS............................ 2
NONPARTICIPATING POLICY .............................. 4
POLICY OWNERSHIP ..................................... 4
PREMIUMS ............................................ 4
DEATH BENEFIT ....................................... 5
PROCEEDS TO BE PAID ................................. 6
POLICY ACCOUNTS ..................................... 6
ACCUMULATION VALUE .................................. 8
POLICY LOANS ........................................ 10
TERMINATION OF COVERAGE .............................. 11
GENERAL PROVISIONS .................................. 12
BENEFICIARY INFORMATION ............................. 13
SETTLEMENT OPTIONS .................................. 14
</TABLE>
Additional benefits, riders, if any, and a copy of the Application follows the
Policy Data Page.
DEFINITION OF POLICY TERMS
ACCUMULATION VALUE - the total amount that the Policy provides for investment at
any time. The value of the Policy as defined in the Accumulation Value
provision on page 8.
APPLICANTS - the persons whose signatures are shown as the proposed insured and
the additional proposed insured in the Application.
APPLICATION - the Application for this Policy and any Application for an
increase in the Specified Amount.
BENEFICIARY - the person or persons named to receive the death benefit of this
Policy in the event of both Insureds' deaths.
COST OF INSURANCE - that portion of the Monthly Deduction required to pay for
the Policy's insurance coverage, other than that provided by any riders.
DATE OF ISSUE - the Date of Issue set forth in the Policy is the effective date
of coverage and determines policy anniversary dates.
GUARANTEED COVERAGE PREMIUM - a specified premium which, if paid in advance as
required, will cause Us to keep the Policy in force so long as other Policy
provisions are met, even if the Surrender Value is zero or less. The
guaranteed coverage benefit period is stated on the Policy Data Page.
HOME OFFICE - means headquarters of American National Insurance Company, located
at One Moody Plaza, Galveston, Texas.
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INSUREDS - the persons named as such on the Policy Data Page.
LAPSE - the Policy will lapse if the Surrender Value is not sufficient to cover
a Monthly Deduction and if Guaranteed Coverage Premiums have not been paid.
Coverage will terminate in accordance with the grace period provision of this
Policy.
MONTHLY DEDUCTION - the sum of the Cost of Insurance for the Policy, cost of any
riders, monthly expense fee and monthly expense charge.
MONTHLY DEDUCTION DATE - the same date in each succeeding month as the Date of
Issue except that whenever the Monthly Deduction falls on a date other than a
Valuation Date, the Monthly Deduction Date will be deemed the next Valuation
Date. This is the date the Monthly Deduction is taken from the Accumulation
Value. The Date of Issue is the first Monthly Deduction Date.
NET AMOUNT AT RISK - is the proceeds payable at death at the beginning of the
policy month minus the Accumulation Value on the Monthly Deduction Date minus
(1), (2) and (3) as defined in the Monthly Deduction provision of this Policy.
NET PREMIUM - the premium paid less the percentage premium charge.
OWNER - the person, persons or legal entity to whom this Policy belongs and
whose name(s) is (are) listed in the Policy Data Page, unless subsequently
changed.
PAYEE - the person to whom any of the proceeds of this Policy and any riders are
payable.
PLANNED PERIODIC PREMIUM - the amount of Periodic Premium that the Premium Payer
intends to pay. The initial Planned Periodic Premium is the amount shown on
the Policy Data Page. This amount may be changed in accordance with Policy
provisions.
POLICY - this life insurance contract.
POLICY DATA PAGE - the pages of this Policy so entitled.
POLICY DEBT - the total of all unpaid cash loans plus unpaid interest on the
loans.
PREMIUM PAYER - the person responsible for the payment of premiums for this
Policy.
SPECIFIED AMOUNT - the amount of coverage stipulated on the Application and
shown on the Policy Data Page as the Specified Amount. This amount may be
increased or decreased in accordance with the provisions of this Policy, and
any attached riders providing for such increase or decrease.
SURRENDER VALUE - the Accumulation Value less Policy Debt, if any, and surrender
charges, if any.
YOU, YOUR - means the Owner of this Policy.
WE, US, OUR - means American National Insurance Company.
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NONPARTICIPATING POLICY
This policy is nonparticipating. It does not share in Our profits or surplus.
<TABLE>
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POLICY OWNERSHIP
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OWNER - While either Insured is alive, You may exercise the passes to Your estate. All rights of the owner and the
rights of ownership. If the Insureds are joint owners of the Beneficiary are subject to the rights of:
Policy, after the first death, the surviving Insured, will be
the sole owner. If You die while an Insured is living, (1) any assignee of record; and
ownership will pass to the contingent owner if named. If
there is no contingent owner, ownership (2) any irrevocable Beneficiary.
PREMIUMS
PLANNED PERIODIC PREMIUM - The initial Planned Periodic GUARANTEED COVERAGE BENEFIT - The Policy can not terminate for
Premium is shown on the Policy Data Page. We will send the period after the Date of Issue as stated on the Policy Data
Periodic Premium reminders to the Premium Payer for the Page if on each Monthly Deduction Date within that period the
amount of the Planned Periodic Premium. You may request a sum of Premiums paid from the Date of Issue to the Monthly
change in the method or frequency of payment or the amount of Deduction Date equals or exceeds:
Planned Periodic Premium:
(1) the sum of the Guaranteed Coverage Premium for each month
(1) while either Insured is alive; and from the start of the period to the Monthly Deduction Date,
including the current month, plus;
(2) before the younger Insured's 100th birthday.
(2) any partial surrenders and any Policy Debt incurred since
No request for a change in the Planned Periodic Premium will the start of the period.
be effective without Our consent. The actual amount, timing
and frequency of premium payments will affect the The Guaranteed Coverage Premium will be increased if a benefit
Accumulation Value, and the amount and duration of the rider is added or increased during the period. If the Specified
insurance coverage. Amount is increased during the period, a new Guaranteed Coverage
Premium will be calculated. Increases in Specified Amount or
If the total premiums paid on this Policy should exceed the rider changes made after the period will not have a guaranteed
limitations of the Internal Revenue Code, We will return the coverage benefit.
excess premiums to You within the time permitted by law.
Premium payments that result in an increase in the net amount ALLOCATION OF PREMIUMS - We will initially allocate any premium
at risk under the Policy may, at Our discretion, require received on or before the Date of Issue or within fifteen days
evidence of insurability. after the Date of Issue, to the money market subaccount.
UNSCHEDULED ADDITIONAL PREMIUMS - You may pay additional Upon expiration of fifteen days from the Date of Issue the
premiums before the younger Insured's 100th birthday. Accumulation Value in the money market subaccount will be
However, We reserve the right to limit the number and amount automatically transferred to the other subaccounts in accordance
of any unscheduled additional premiums paid on this Policy. with Your Net Premium allocation percentages for the subaccounts
If the total premiums paid exceed the limitations of the of the fixed account as the case may be.
Internal Revenue Code, We will return the excess premiums to
You within the time permitted by law. Unscheduled additional Net Premium payments will be allocated upon receipt by Us among
premiums are subject to surrender penalties. the subsequent subaccounts and fixed account as shown on the
Policy Data Page. You may change the allocation for Net Premium
PREMIUMS PAYABLE - Premiums are payable at the Home Office, or payments by sending Us a written request to do so.
to Our authorized agent in exchange for an official receipt.
The president or secretary will sign the receipt. The agent
will countersign it.
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DEATH BENEFIT
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DEATH BENEFIT - Subject to the provisions of this Policy, the OPTION B. The Death Benefit at any time before the youngest
proceeds at death of both Insureds will depend on whether Insured's 100th birthday shall equal the greater of (1) or (2)
Death Benefit Option A or B is in effect. Death Benefit where:
Options A and B are as follows:
(1) is the Specified Amount plus the Accumulation Value; and
OPTION A. The Death Benefit at any time before the youngest
Insured's 100th birthday shall equal the greater of (1) or (2) is the Accumulation Value at the end of the valuation
(2) where: period that includes the date of death multiplied by a corridor
percentage that varies with the attained age of the younger
(1) is the Specified Amount; and Insured. If the younger Insured's attained age is 40 or under,
the percentage is 250% of the Accumulation Value. As the
(2) is the Accumulation Value at the end of the valuation younger Insured's attained age increases the percentage
period that includes the date of death multiplied by a decreases in accordance with the Table of Accumulation Value
corridor percentage that varies with the attained age of the Corridor Percentages below.
younger Insured. If the younger Insured's attained age is 40
or under, the percentage is 250% of the Accumulation Value. After the youngest Insured's 100th birthday, the Death Benefit
As the younger Insured's attained age increases the under Option A or B will be the Surrender Value. The Policy may
percentage decreases, in accordance with the Table of not qualify as life insurance after the youngest Insured's
Accumulation Value Corridor Percentages below. attained age 100. The Policy may be subject to tax consequences
and a tax advisor should be consulted.
TABLE OF ACCUMULATION VALUE CORRIDOR PERCENTAGES
IF THE YOUNGER INSURED'S AGE LAST THEN, THE APPLICABLE PERCENTAGE SHALL DECREASE BY AN INTERPOLATED
BIRTHDAY AT THE BEGINNING OF THE AMOUNT FOR EACH FULL YEAR:
POLICY YEAR IS:
MORE THAN: BUT NOT FROM: TO:
MORE THAN:
0..........................................................40 250.........................................................250
40.........................................................45 250.........................................................215
45.........................................................50 215.........................................................185
50.........................................................55 185.........................................................150
55.........................................................60 150.........................................................130
60.........................................................65 130.........................................................120
65.........................................................70 120.........................................................115
70.........................................................75 115.........................................................105
75.........................................................90 105.........................................................105
90.........................................................95 105.........................................................100
CHANGE IN DEATH BENEFIT OPTION - You may request a change from request, by Us, subject to the following:
Death Benefit Option A to B or vice versa. This change
request must be in writing, accompanied by this Policy, and (1) if the change is from Option A to Option B, the Specified
will require Our consent. This change will be effective on Amount after the change shall be the Specified Amount prior
the Monthly Deduction Date that coincides with or next to the change minus the Accumulation Value on the date of
follows receipt of such change; or
</TABLE>
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<TABLE>
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2) if the change is from Option B to Option A, the Specified (c) finally, against the Specified Amount provided under the
Amount after the change shall be the Specified Amount prior Application at time of Issue;
to the change plus the Accumulation Value on the date of
change. We will not allow a decrease that causes the Policy to violate
premium limitations required by federal tax law or which results
No change in Death Benefit Option shall be effective unless We in a Specified Amount after the reduction which is less than the
have endorsed the change on this Policy. A change in Death minimum Specified Amount stated on the Policy Data Page.
Benefit Option may result in a change in the amount of the
Monthly Deduction beginning on the Monthly Deduction Date If there is a decrease in Specified Amount, We will deduct a pro
when the change is made. The application of a change in rated surrender charge from the Accumulation Value. Such
Death Benefit Option may also result in a surrender charge deduction will be the sum of surrender charges computed
when the Specified Amount is decreased, and may also result separately for each increase in Specified Amount beginning with
in a new surrender charge and Guaranteed Coverage Premium the most recent increase.
when the Specified Amount is increased.
CHANGE IN SPECIFIED AMOUNT - At any time that this Policy is 2) any increase will become effective on the Monthly Deduction
in effect, You may request an increase or decrease of the Date that coincides with or next follows the date of Our
Specified Amount of the Policy. This request must be in approval of the increase. You must provide Us with
writing, accompanied by this Policy, and will require Our satisfactory proof that both of the Insureds are then alive
consent. This change will be subject to the following and insurable for the increased amount requested.
conditions:
No change in the Specified Amount shall be effective unless We
(1) any decrease will become effective on the Monthly have endorsed the change on this Policy. A change in the
Deduction Date that falls on or next follows the date the specified Amount may result in a change in the amount of the
request is received. Any decrease shall reduce the Monthly Deduction beginning on the Monthly Deduction Date when
Specified Amount in the following order: the change is made. Each increase in the Specified Amount will
result in an additional surrender charge schedule. A reduction
(a) first, against the Specified Amount provided by the in the Specified Amount, may result in a change in risk class of
most recent increase; either Insured, if the original risk class is not available at
the reduced Specified Amount.
(b) next, against any other increases in reverse order;
and
PROCEEDS TO BE PAID
PROCEEDS - The proceeds payable on the death of the last Policy is subject to any adjustments provided in the
Insured to die shall be provided by the Death Benefit in Misstatement of Age or Sex, Incontestability, and Suicide
effect on the date of death of the last Insured, less any provisions.
Policy Debt. The Death Benefit payable on the death of any
person insured by rider shall be as provided in the rider. PAYMENT OF PROCEEDS - Proceeds may be paid in one sum or under
The proceeds at surrender shall be the Surrender Value. Any the settlement options provision of the Policy.
proceeds payable under the terms of this
POLICY ACCOUNTS
AMERICAN NATIONAL FIXED ACCOUNT - You may elect to allocate guarantee that the part of the Accumulation Value in the fixed
all or a part of premiums paid or to transfer all or a part account will accrue interest daily at an annual interest rate
of the Accumulation Value under the Policy to the fixed that We will declare periodically. The declared rate will not
account. Such amounts allocated or transferred become part be less than 3% per year, compounded daily.
of Our General Account, which consists of all assets owned by
Us other than those in Our various separate accounts. Subject AMERICAN NATIONAL VARIABLE LIFE SEPARATE ACCOUNT - The variable
to applicable law, We have sole discretion over the benefits under this policy are provided through investments in
investment of the assets of the fixed account and You do not the American National
share in the investment experience of those assets.
Instead, We
</TABLE>
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<TABLE>
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Variable Life Separate Account. We established the American This transfer is without charge. The maximum amount that may be
National Variable Life Separate Account as a separate account transferred from the fixed account to the subaccounts is the
to support variable universal life insurance contracts. greater of: (a) 25% of the amount in the fixed account or (b)
$1,000. Such transfer requests received prior to the Policy
We own the assets of the American National Variable Life anniversary will be effected at the end of the valuation period
Separate Account. Assets of the American National Variable during which the Policy anniversary occurs. Transfer requests
Life Separate Account will not be charged with liabilities of received within the thirty-day period beginning on the Policy
Our general account or any other separate accounts. We may anniversary will be effected as of the end of the valuation
transfer to the General Account any assets that exceed the period in which a proper transfer request is received by Us.
reserves and other liabilities of the American National
Variable Life Separate Account. The American National ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENT - We have the
Variable Life Separate Account is registered with the right, subject to applicable law, to make additions to,
Securities and Exchange Commission as a unit investment trust deletions from, or substitutions for the shares that are held by
under the Investment Company Act of 1940. It is also subject the American National Variable Life Separate Account or that the
to the laws of the State of Texas. American National Variable Life Separate Account may purchase.
We reserve the right to redeem the shares of any of the series
SUBACCOUNTS - The American National Variable Life Separate of funds. We reserve the right to substitute shares of another
Account has multiple subaccounts. Each subaccount represents series of funds or of another open-end management investment
a separate investment portfolio of a fund. Each subaccount company if the shares of the series are no longer available for
will invest exclusively in shares of Our available funds. investment. We reserve the right to redeem shares of a series
Only the elected subaccounts of the American National if further investment in the series should become inappropriate
Variable Life Separate Account are shown on the Policy Data in view of the purposes of the American National Variable Life
Page. Separate Account. We will not substitute any shares
attributable to Your interest in a subaccount of the American
National Variable Life Separate Account without notice to You
You will share only in the income, gains and losses of the and prior approval of the Securities and Exchange Commission, to
particular subaccounts to which premium payments have been the extent required by the Investment Company Act of 1940. We
allocated or Accumulation Value has been transferred. We have the right to establish additional subaccounts of the
will value the assets of each subaccount of the American American National Variable Life Separate Account, each of which
National Variable Life Separate Account at the end of each would invest only in a new and corresponding series of funds or
valuation period. A valuation period is the period in shares of another open-end management investment company.
commencing at the close of regular trading on the New York
Stock Exchange on one valuation date and ending at the close We also have the right to eliminate existing subaccounts of the
of regular trading on the New York Stock Exchange on the next American National Variable Life Separate Account. In the event
succeeding valuation date. A valuation date is each day on of any substitution or change, We may, by appropriate
which the New York Stock Exchange and American National are endorsement, make such changes in the Policy as may be necessary
open for trading. or appropriate.
TRANSFERS - At any time that this Policy is in effect, You may We also have the right, where permitted by law:
transfer all or a portion of the amounts from one subaccount
to another subaccount or to the fixed account. The minimum (1) to operate the American National Variable Life Separate
amount that may be transferred is $250 or the balance in the Account as a management company under the Investment Company
subaccount, if less. You may make 12 transfers each Policy Act of 1940;
Year without charge. The charge for each additional transfer
during the Policy Year is $10. (2) to de-register the American National Variable Life Separate
Account under the Act if registration is no longer required;
Transfers from the fixed account to the subaccounts are and
permitted only once each Policy Year and only during the (3) to combine the American National Variable Life Separate
thirty day period beginning on the Policy anniversary. Account with other separate accounts.
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ACCUMULATION VALUE
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ACCUMULATION VALUE - On each valuation date, the Accumulation Premiums, Monthly Deductions and partial surrenders, on the
Value equals: valuation date. Because the Accumulation Value is dependent
upon a number or variables, including the investment performance
(1) the aggregate of the Accumulation Values attributable to of the chosen subaccounts, the frequency and amount of premium
the Policy in each of the subaccounts of the American payments, transfers, partial surrenders, loans, and charges
National Variable Life Separate Account on the valuation assessed in connection with the Policy, the Accumulation Value
date, which will reflect the investment performance of the cannot be predetermined.
chosen subaccounts; plus
THE UNIT VALUE - The unit value of each subaccount reflects the
(2) any Accumulation Value held in the general account as investment performance of that subaccount. The unit value of
security for Policy loans; plus each subaccount shall be calculated by multiplying the per share
net asset value of the corresponding portfolio on the valuation
(3) the fixed account that includes interest paid; plus date times the number of shares held by the subaccount, after
the purchase or redemption of any shares on that date; minus the
(4) any Net Premium to be processed on that valuation date; daily asset charge as stated on the Policy Data Page; and
less dividing the result by the total number of units held in the
subaccount on the valuation date, after any transfers among
(5) any partial surrenders plus applicable charges, to be subaccounts, or the fixed account (and deduction of transfer
processed on that valuation date; less charges), but before any other Policy transactions.
(6) any Monthly Deduction to be processed on that valuation FIXED ACCOUNT ACCUMULATION VALUE - The fixed account
date. Accumulation Value on any Monthly Deduction Date shall be the
sum of (1), (2), (3), and (4), less the sum of (5), (6), and (7)
The entire investment risk of the American National Variable where:
Life Separate Account is borne by You. We do not guarantee
minimum Accumulation Value. On the Date of Issue or, if (1) is the fixed account Accumulation Value on the immediately
later, the date the first premium is received, the preceding Monthly Deduction Date;
Accumulation Value is the Net Premium less the Monthly
Deduction for the first Policy month. All values equal or (2) is one month's interest on (1);
exceed those required by law. Detailed explanations of
methods of calculations are on file with appropriate (3) are all Net Premiums received and allocated to the fixed
regulatory authorities. account since the immediately preceding Monthly Deduction
Date and any value transferred into the fixed account sincet
SEPARATE ACCOUNT ACCUMULATION VALUE - The Accumulation Value the immediately preceding Monthly Deduction Date;
attributable to the Policy in the subaccounts of the American
National Variable Life Separate Account will vary daily with (4) is interest accumulated on (3) from the date of receipt of
the performance of the subaccounts in which You have an the Net Premium allocated to the fixed account or the date
Accumulation Value, any Net Premiums paid, transfers, partial any value was transferred into the fixed account to the
surrenders, and charges assessed. There is no guaranteed Monthly Deduction Date;
minimum Surrender Value on this separate account Accumulation
Value. (5) is the sum of any partial surrenders from the fixed account
since the immediately preceding Monthly Deduction Date, and
On each valuation date, the Accumulation Value in each applicable surrender charges plus accumulated interest on
subaccount is determined by multiplying the subaccount unit such surrenders and charges;
value by the number of units allocated to the Policy. In
computing the Accumulation Value, the number of subaccount (6) is any value transferred out of the fixed account since the
units allocated to the Policy is determined after any immediately preceding Monthly Deduction Date plus accumulated
transfers among subaccounts, or to the fixed account (and interest on such transfers; and
deduction of transfer charges), but before any other Policy
transactions, such as receipt of Net (7) is the fixed account's allocation of the Monthly Deduction.
</TABLE>
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The fixed account Accumulation Value on any date other than a will be allocated among the subaccounts and the fixed account in
Monthly Deduction Date, hereinafter referred to as the the same proportion as the Accumulation Value in each bears to
valuation date, shall be the sum of (1), (2), (3), and (4), the total on that date.
less (5) and (6), where:
PREMIUM CHARGE, MONTHLY FEE, MONTHLY EXPENSE CHARGE AND DAILY
(1) is the fixed account Accumulation Value on the Monthly ASSET CHARGE - We reserve the right to reduce or increase the
Deduction Date immediately preceding the valuation date; premium charge and/or the monthly fee and/or the monthly expense
charge and/or the daily asset charge after the first Policy
(2) is interest on (1) accumulated to the valuation date; Year. We will give you written notice before the new premium
charge and/or monthly fee and/or monthly expense charge and/or
(3) are all Net Premiums received and allocated into the the daily asset charge is effective. We will not reduce or
fixed account prior to the current date but since the increase the premium charge and/or monthly fee and/or monthly
immediately preceding Monthly Deduction Date and any value expense charge and/or daily asset charge more often than once
transferred to the fixed account since the immediately each Policy Year. The current and guaranteed maximum premium
preceding Monthly Deduction Date; charge, guaranteed maximum monthly fee, guaranteed maximum
expense charge and guaranteed maximum daily asset charge are
(4) is interest accumulated on (3) from the date of receipt listed on the Policy Data Page.
of the Net Premium allocated to the fixed account or the date
any value was transferred into the fixed account to the Any change in premium charge and/or monthly fee and/or monthly
valuation date; expense charge and/or daily asset charge will be on a uniform
basis for all Insureds of this plan for the same Specified
(5) is the sum of any partial surrenders from the fixed Amount and that have been in force for the same amount of time.
account, which occurred prior to the current date but since A change in health or other risk factors after the Date of Issue
the Monthly Deduction Date immediately preceding the will not affect any change in premium charges and/or monthly
valuation date, and applicable surrender charges plus fees and/or monthly expense charges and/or daily asset charges.
accumulated interest on such surrenders and charges; and COST OF INSURANCE - The Cost of Insurance is determined on a
monthly basis. The monthly Cost of Insurance is equal to the
(6) is any value transferred out of the fixed account since Net Amount At Risk multiplied by the monthly Cost of Insurance
the immediately preceding Monthly Deduction Date plus Rate. The monthly Cost of Insurance Rate is described in the
accumulated interest on such transfers. Cost of Insurance Rate provision.
The guaranteed interest rate applied in the calculation of the COST OF INSURANCE RATE - We will determine the Cost of Insurance
fixed account Accumulation Value and Accumulation Value held Rate separately for the portion of the Specified Amount
in the general account as security for Policy loans is 3% per attributable to the original issue of the Policy and for each
year, compounded daily. Fixed account Accumulation Values portion attributable to any subsequent increase in the Specified
may earn interest at a higher rate. Amount.
MONTHLY DEDUCTION - The Monthly Deduction shall be calculated The Policy Data Page shows the maximum monthly Cost of Insurance
as the sum of (1), (2), (3) and (4), where: Rates We can use for the portion of the Specified Amount
(1) the cost of additional benefits provided by rider; attributable to the original issue of the Policy. We will
provide supplements to the Policy Data Page that show the
(2) the monthly expense fee shown on the Policy Data Page; maximum monthly Cost of Insurance Rates for any portions of the
Specified Amount attributable to any subsequent increase.
(3) the monthly expense charge shown on the Policy Data Page;
and We can use Cost of Insurance Rates that are lower than the
maximum rates. We can change the rates We are using at any time
(4) the Cost of Insurance. for any reason subject to the maximum rates described above.
The monthly expense charge schedule will change whenever the
Specified Amount of the Policy is changed. The charges after
a change of Specified Amount will be shown on a new Policy
Data Page issued at the time of the change in Specified
Amount. The Monthly Deduction
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The Cost of Insurance Rate We use for each portion of the coverage provided by the Policy and any riders that terminate as
Specified Amount depends, among other things, on: of the date of surrender. We reserve the right to defer up to
six months the payment of any portion of Surrender Value
(1) both Insured's sexes; attributable to the fixed account. The surrender charge for
(2) both Insured's risk classifications which apply for that this Policy at the Date of Issue and for any increase in
portion of the Specified Amount; Specified Amount at a later date does not include charges for
(3) the Insured's ages at their last birthdays when that any riders. The surrender charge varies by Policy Year
portion of the Specified Amount took effect; according to the schedule listed on the Policy Data Page. The
(4) how many years that portion of the Specified Amount has amount of Surrender Charge can not exceed $60 per $1,000 of
been in effect; and Specified Amount.
(5) the state or territory, or other jurisdiction, where the
Policy was delivered. PARTIAL SURRENDER - You may make a written request for partial
surrenders of any amount less than the Surrender Value minus an
The guaranteed maximum rates are based on a combination of amount sufficient to cover Monthly Deductions for two months.
1980 Commissioner's Standard Ordinary Male and Female, Smoker The minimum amount of any partial surrender is $100. When a
and Nonsmoker Mortality Tables. partial surrender is made the Accumulation Value will be reduced
by the sum of:
For the portion of the Specified Amount attributable to the
original issue of the Policy, attained age means the (1) the Proceeds of the partial surrender;
Insureds' ages at the beginning of each Policy Year. For (2) a $25 partial surrender fee, and;
each portion of the Specified Amount attributable to any (3) a partial surrender charge, which is a pro rata portion of
subsequent increase, attained age means the Insureds' ages at any surrender charge that would be assessed in the event of a
the beginning of each year measured from the date the full surrender.
increase took effect.
This amount will be deducted from the Accumulation Value, and
CONTINUATION OF INSURANCE - Insurance coverage under this values in connection therewith determined, at the end of the
Policy and any benefits provided by rider will be continued valuation period during which the request is received. Unless
until the Surrender Value will not cover the Monthly You request otherwise, We will allocate partial surrenders to
Deduction or Policy Debt exceeds Accumulation Value less any the fixed account and subaccounts in proportion to the
surrender charge. Insurance coverage may also be continued Accumulation Value in the fixed account and in each subaccount
during the period specified on the Policy Data Page, under prior to the partial surrender.
the requirements of the guaranteed coverage benefit provision.
If Death Benefit Option A is in effect, the Specified Amount
FULL SURRENDER AND SURRENDER VALUE - This Policy may be will also be reduced by this same amount.
surrendered at any time during the lifetime of one or both
Insureds by written request and submission of this Policy by In most cases, We will pay the partial surrender amount to You
You to Us. The Surrender Value of the Policy will be the within seven days after We receive Your Written Request. We
Accumulation Value on the date of surrender less any Policy reserve the right to defer the payment of any Surrender Value
Debt and any surrender charges. If this Policy is fully for up to six months that does not depend on the investment
surrendered, all insurance performance of the separate account.
POLICY LOANS
POLICY LOAN - You may request a Policy loan at any time while available after the seventh Policy year. Determination of
Your Policy is in force. The maximum amount You may borrow whether a loan is preferred occurs at the time the loan is made.
is the maximum Policy loan amount set forth on the Policy Subject to the maximum Policy loan amount, the amount available
Data Page. Preferred loans are as a preferred loan is equal to the
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Accumulation Value less Policy Debt and less premiums paid, the Policy Debt, if less. Interest on Policy loans is charged at
adjusted by partial surrenders. The minimum amount You may an annual rate of 5%, 3% on preferred loans. Interest not paid
borrow is $100 if that amount is available for loan. The when due is added to the amount of the Policy loan and will bear
Policy is the sole security for the loan. Loan interest is interest at the same rate. When interest is not paid when due,
due on each Policy anniversary date or when the loan is paid Accumulation Value will be transferred from the subaccounts and
back if that occurs first. In most cases, We will pay the the fixed account to the general account to secure indebtedness.
loan amount to You within seven days after We receive Your This deduction will be allocated among the subaccounts and the
request for the loan in Our Home Office. We reserve the fixed account as described above for the funding of Policy
right to defer the payment of any loan for up to six months loans. Whenever the Policy Debt exceeds the Accumulation Value
that does not depend on the investment performance of the less any surrender charge, the grace period provision will apply.
separate account.
When a loan is made, Accumulation Value in each subaccount and DEFERMENT OF PAYMENTS AND EMERGENCY PROCEDURE - Payment of any
the fixed account equal to the portion of the loan allocated amount upon full surrender, partial surrender, Policy loans,
to the subaccount and the fixed account will be transferred benefits payable at death, and transfers, which require
into the general account. Unless You request otherwise, the valuation of a subaccount, may be postponed whenever:
Accumulation Value transferred out will be deducted from the
fixed account and subaccounts in proportion to the (1) the New York Stock Exchange is closed other than customary
Accumulation Value in the fixed account and in each week-end and holiday closings, or trading on the New York
subaccount prior the loan. The value held in the general Stock Exchange is restricted as determined by the Securities
account to secure Policy loans will earn interest at an and Exchange Commission;
annual rate of 3.0% credited on the Policy anniversary. This
interest will be allocated to the subaccounts and the fixed (2) the Securities and Exchange Commission by order permits
account in the same proportion that premiums are being postponement for Your protection; or
allocated to those subaccounts and the fixed account at that
time. When a Policy Debt repayment is made, Accumulation (3) an emergency exists, as determined by the Securities and
Value in the general account equal to the loan repayment will Exchange Commission, as a result of which disposal of
be transferred to the fixed account and subaccounts. Such securities is not reasonably practicable or it is not
transfer will be allocated among the subaccounts and the reasonably practicable to determine the value of the
fixed account using the same percentages used to allocate Accumulation Value of a subaccount.
premiums at the time of repayment. Each repayment may not be
less than $10 or the full amount of
TERMINATION OF COVERAGE
TERMINATION OF COVERAGE - The Policy coverage will terminate insureds are alive. At the time of the reinstatement request,
on the first to occur of: all these conditions must be met:
(1) the reinstatement must be within 5 years of the date
(1) the death of the last Insured to die; coverage has terminated;
(2) suicide of either Insured during the first two policy (2) You must not have surrendered the Policy for its Surrender
years; Value;
(3) expiration of the Grace Period; or (3) You must provide Us any facts needed to satisfy Us that
(4) written request for full surrender and submission, of both Insureds are then insurable for this Policy, at the same
this Policy for its Surrender Value. classification as on the Date of Issue;
(4) You must pay a premium sufficient to keep the Policy in
REINSTATEMENT - We may reinstate this Policy after coverage force for two months after the date of reinstatement;
provided by it has terminated provided that both
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(5) any Policy Debt must be restored or paid back with The interest rate for reinstatement of Policy Debt will be 6%
compound interest; per year. If the Policy Debt with interest would exceed the
(6) the surrender charge schedule will be restored as of the Surrender Value of the reinstated Policy, the excess must be
Date of Issue; and paid before reinstatement.
(7) You must pay all Monthly Deductions that were not paid
during the grace period. The reinstatement will be effective upon Home Office approval on
the next Monthly Deduction Date.
GENERAL PROVISIONS
CONTRACT AND REPRESENTATIONS - This Policy, any endorsements, assignee on record at Our Home Office. The grace period will
and the Application, if attached on the Date of Issue, or on end 61 days after the notice is mailed. Failure to pay the
the effective date of any increase, form the entire contract. required premium within the grace period will cause the Policy
All statements in the Application, in the absence of fraud, to terminate. However, a termination will not occur if the
will be deemed representations and not warranties. No Policy is being continued under the guaranteed coverage benefit
statement will be used to contest the Policy or be used in provision. If the surviving Insured dies during the grace
defense of a claim under it unless: period, any overdue Monthly Deductions and Policy Debt will be
deducted from the Death Benefit proceeds.
(1) it is contained in the written Application; and
(2) a copy of the Application is attached to the Policy at
the Date of Issue or at the time an increase occurs. INCONTESTABILITY - This Policy will be incontestable after it
has been in force during both Insureds' lifetimes for 2 years
EFFECTIVE DATE - The Policy takes effect on the Date of Issue from the Date of Issue except for nonpayment of premium and
shown on the Data Page upon: except as to any provision or condition relating to disability
benefits or additional benefits for accidental death. Any
(1) payment of the first premium as shown on the Policy Data increase in coverage, addition of a rider after the Policy's
Page; and Date of Issue, or any reinstatement shall be incontestable,
after it has been in force during both Insureds' lifetimes for 2
(2) policy delivery during both Insureds' lifetimes and while years after its effective date. The basis of contest by Us of
they are in good health. the Policy events to which this paragraph applies shall only be
the material misstatements in the Application or Reinstatement
Any increase in Specified Amount, addition of a benefit rider, Application for such Policy event.
or reinstatement of coverage will take effect on the Monthly
Deduction Date which coincides with or next follows the date
We approve an Application for such change or for SUICIDE - If either Insured, whether sane or insane, dies from
reinstatement of this Policy. Policy Years, anniversaries, suicide within 2 years from the Date of Issue, this Policy will
and months are measured from the Date of Issue. terminate. We are liable only for return of any premium
received less any Policy Debt or partial surrenders. The
GRACE PERIOD - A grace period is granted for the payment of a provisions of this paragraph shall apply to any increase in
premium sufficient to cover the Monthly Deduction if the coverage, or a reinstatement. For two years following the
Surrender Value is insufficient or the excess of Policy Debt effective date of such increase this increase will terminate on
over Accumulation Value less any surrender charge. The grace the death by suicide of either insured. We shall be liable only
period begins on the date the Surrender Value is insufficient for the return of the cost of insurance and expenses, if any,
to cover the monthly Deduction or the date Policy Debt which result from such increase. For two years following the
exceeds Accumulation Value less any surrender charge. We effective date of a reinstatement We shall be liable only for
will mail notice of the grace period and of the required the return of premiums paid less any Policy Debt and partial
premium payment to You and to any surrenders if either Insured dies by suicide.
</TABLE>
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MISSTATEMENT OF AGE OR SEX - If there is a misstatement of age If for any reason a pre-authorized check is not honored when
or sex of any Insured of this Policy, the Death Benefit shall presented for payment:
be that which could have been purchased by the most recent
Cost of Insurance deduction at the correct age or sex. (a) the premium represented by the dishonored check will not
have been paid;
ASSIGNMENT - No assignment will bind Us until recorded at Our
Home Office. We are not obliged to see that an assignment is (b) We will not present any further pre-authorized checks for
valid or sufficient. Any claim by an assignee is subject to payment; and
proof of the validity and extent of the assignee's interest
in the Policy. (c) We will discontinue this method of premium payment.
POWER TO MODIFY - Only Our President, a Vice President, or (2) Salary Deduction Method. Under the salary deduction
Secretary has the power to: method, the Premium Payer's employer deducts premiums equal to
(1) change this Policy; the Planned Periodic Premium from his salary. There must be a
salary deduction agreement in effect between the Premium
(2) extend the time for payment of premiums; or Payer's employer and Us. It is the responsibility of the
Premium Payer's employer to send the premium directly to Us.
(3) waive any Policy provisions. If the Premium Payer's employer fails to send the premium
to Us:
Any change in the Policy will be by endorsement signed by one (a) the premium will not have been paid; and
of the above-named officers.
(b) We will discontinue this method of premium payment.
ANNUAL REPORT - We will send You and any assignee of record a
report at least once a year. This report will show current The Premium Payer or we can choose to stop either the
information about the policy. pre-authorized check method or the salary deduction method by
giving the other party 30 days prior written notice.
METHODS OF PREMIUM PAYMENT - Either the pre-authorized check
method or the salary deduction method may be selected to pay If either premium method is stopped for any reason, the future
the Planned Periodic Premium. Payments of the Planned premiums will be paid:
Periodic Premium by one of the above methods of premium
payment are subject to the following: (1) by direct payment to Us; or
(1) Pre-authorized Check Method. Under this method We will
present a pre-authorized check: (2) by either premium method if the method is restored by Us.
(a) in the amount of the Planned Periodic Premium;
(b) to a bank acceptable to both the Premium Payer and Us; and
(c) with the understanding that such pre-authorized check is
accepted subject to its being honored when presented for
payment.
BENEFICIARY INFORMATION
BENEFICIARY INTEREST - Beneficiaries will be designated as (2) surviving class members will share equally that portion of
first, second, third, and so on. A Beneficiary or class of the Death Benefit to which deceased or disqualified class
Beneficiaries will receive the Death Benefit in that order. members would have been entitled; or
All relationships are in reference to either Insured. Unless
changed by endorsement or written request filed at Our Home (3) if no Beneficiary survives either Insured, or qualifies,
Office: the Death Benefit will be paid to the surviving Insured's
(1) two or more class members will share the Death Benefit estate.
equally;
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A Beneficiary will not share in the Death Benefit if: (2) written request in a form acceptable to Us is filed at Our
(1) the Beneficiary dies within 6 days after the surviving Home Office.
Insured's death; or
(2) We have not received proof of both Insureds' death.
The change will not take effect until it is recorded at Our Home
If the Beneficiary is not a natural person, the Beneficiary Office. However, once such a change is recorded, the change
must still exist at the time of the surviving Insured's will take effect as of the date the request was signed, whether
death. All beneficiaries' interests are subject to any or not the surviving Insured is living on the date the change is
assignment on record at Our Home Office. recorded, subject to any payment made or other action taken by
Us before such recording.
CHANGE OF BENEFICIARY - You may change a Beneficiary if: The change is subject to:
(1) either Insured is living; and (1) the rights of an assignee of record; and
(2) the rights of an irrevocable beneficiary.
SETTLEMENT OPTIONS
AVAILABILITY OF SETTLEMENT OPTIONS - All or part of any amount payments will be paid for as long as the payee lives with
payable in settlement of this policy may be applied to any of payments certain for a fixed period. The fixed period may be 10
the following options. We will first discharge in a single years under Table B or 20 years under Table C. (B) Equal
sum any liability under an assignment of the policy and any monthly payments under Table D will be paid for as long as the
applicable federal, state or other governmental taxes, fees payee lives with no payments certain; We have no liability upon
or assessments based or predicated on the premiums payable on the payee's death.
this policy which have not otherwise been deducted or offset.
The remaining amount is the net sum payable. Other options OPTION 3. Payments of a Fixed Amount. Equal annual,
can be used if agreed to by Us. If You have not elected an semi-annual, quarterly, or monthly payments will be paid. The
option before the second Insured's death, the beneficiary can sum of the payments paid in 1 year must be at least $50.00 for
choose one. The minimum amount that We will apply to any each $1,000.00 applied to this option. Payments will be paid
option is $2000.00. until the total of the following amounts is exhausted: (1) the
amount applied to this option, plus (2) interest at the
Any election or change must be written in a form that effective rate of 2.5% per year. The final payment will be the
satisfies Us. Our consent is required for: balance of the amount applied to this option plus interest. It
may be more or less than the other payments.
(1) any partnership to a corporation, association,
partnership, or trustee; or OPTION 4. Interest Payments. We will hold the amount applied
to this option at interest. Interest will be paid at the
(2) any change in an elected option. effective rate of 2.5% per year. On interest due dates, the
payee may make a withdrawal from the amount held. If such a
SETTLEMENT OPTIONS - The tables of settlement options referred withdrawal occurs, it must be for an amount of at least $100.
to in this provision are located on pages 15 through 17. If the amount falls below $2,000.00, We may pay the entire
These tables illustrate minimum guaranteed monthly payments amount held to the payee.
per $1,000. The options are:
OPTION 5. Payments for Joint and Surviving Spouse Annuity. The
OPTION 1. Payments for a Fixed Period. Equal payments will amount applied to this option will be used by Us to pay equal
be paid for a fixed number of years. The amount of the monthly payments to the payee for as long as the payee lives.
payments will be based on Table A. Payments will include Thereafter, We will pay a portion of those monthly payments to
interest at the effective rate of 2.5% per year. the payee's spouse for life, if living. The payee's spouse must
be married to the payee at the time of election. The monthly
OPTION 2. Payments for a Fixed Period and Life There- after. amount paid to the spouse may not be less than one-half of, nor
Either (A) or (B), as follows: (A) Equal monthly more than the monthly payments paid while both spouses are
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alive. Table E on page 17 shows sample payments based on this first payment may be postponed for up to 10 years with Our
option. If You choose this option and the payee's spouse consent. If so, the amount applied to the option will
dies before the first payment is due: (1) the payee will be accumulate with a compound interest at the effective rate of
paid equal monthly payments based on Table D on page 16; or 2.5% per year. To avoid making payments of less than $20.00
with Our agreement, You may elect another method of payment each, We can do either or both of the following:
to the payee. (1) change the payments to a quarterly, semi-annual, or annual
basis; or
OPTION 6. Minimum Payout. The proceeds will be paid in a (2) reduce the number of payments.
series of substantially equal periodic payments (not less
than annually) for the life (or life expectancy) of the payee If You elect an option, You can withhold the beneficiary's right
consistent with the requirements of Section 72(q) (2) (D) of to assign, encumber, or commute any unpaid amount.
the Internal Revenue Code of 1986, as amended.
Except to the extent permitted by law, unpaid amounts are not
subject to any claims of a beneficiary's creditor.
BASIS OF CALCULATIONS - The payment amounts illustrated in the In no case may payments under Option 2 be commuted.
Settlement Option Tables are based on the Annuity 2000
Mortality Table and 2.5% interest. The attained age at At Our option, payments under the other options may be commuted.
annuitization will be adjusted downward by one year for each When allowed, the effective interest used to compute the option
full five year period that has elapsed since January 1, 2000. plus 1% will be used. If the payee under Options 1, 2, 3, or 4
dies after payments under the option has started, We will: (1)
GENERAL PROVISIONS RELATING TO SETTLEMENT OPTIONS - You may under Options 1 and 2, pay the commuted value of any unpaid
surrender the policy at or before the commencement of any payments to the payee's estate; or (2) under Options 3 and 4,
annuity payment. The first payment under Option 1, 2, or 3, pay any balance held by us to the payee's estate. With Our
is paid on the date the amount is applied to the option. The consent, the option elected may provide for payment in another
first payment under Option 4 is paid at the end of the first manner.
interest period. The
SETTLEMENT OPTION TABLES
OPTION 1 - TABLE A
MONTHLY PAYMENTS FOR EACH $1000.00 OF THE NET SUM PAYABLE
Multiply the monthly payment by 2.993 to obtain the quarterly payment, by 5.969
to obtain the semi-annual payment and by 11.868 to obtain the annual payment.
Years Amount Years Amount Years Amount Years Amount Years Amount
- -------------------------------------------------------------------------------------
1 $84.28 7 $12.95 13 $7.49 19 $5.49 25 $4.46
2 42.66 8 11.47 14 7.03 20 5.27 26 4.34
3 28.79 9 10.32 15 6.64 21 5.08 27 4.22
4 21.86 10 9.39 16 6.30 22 4.90 28 4.12
5 17.70 11 8.64 17 6.00 23 4.74 29 4.02
6 14.93 12 8.02 18 5.73 24 4.60 30 3.93
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SETTLEMENT OPTION TABLES
OPTION 2 - TABLE B, C AND D
MONTHLY PAYMENT FOR LIFE FOR EACH $1,000.00 OF THE NET SUM PAYABLE
Age in years means age of payee on birthday prior to the due date of the first payment. For Tables B and C, multiply the monthly
payment by 2.993 to obtain the quarterly payment, by 5.969 to obtain the semi-annual payment, and by 11.868 to obtain the annual
payment. For Table D, amounts for payment other than monthly request are available on request.
AGE TABLE B TABLE C TABLE D AGE TABLE B TABLE C TABLE D
IN Guaranteed Guaranteed Life Only IN Guaranteed Guaranteed Life Only
YEARS Period in Years Period 20 Years YEARS Period in Years Period 20 Years
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MALE Amount Amount Amount FEMALE Amount Amount Amount
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<S> <C> <C> <C> <C> <C> <C> <C>
46 $3.53 $3.47 $3.54 46 $3.32 $3.29 $3.33
47 3.58 3.52 3.60 47 3.37 3.34 3.38
48 3.64 3.57 3.66 48 3.42 3.38 3.43
49 3.70 3.62 3.72 49 3.47 3.43 3.49
50 3.76 3.67 3.79 50 3.53 3.48 3.54
51 3.83 3.73 3.86 51 3.59 3.53 3.60
52 3.90 3.79 3.93 52 3.65 3.59 3.66
53 3.97 3.84 4.01 53 3.71 3.64 3.73
54 4.05 3.90 4.09 54 3.78 3.70 3.80
55 4.13 3.97 4.18 55 3.85 3.76 3.87
56 4.22 4.03 4.27 56 3.92 3.82 3.95
57 4.31 4.09 4.37 57 4.00 3.88 4.03
58 4.40 4.16 4.47 58 4.08 3.95 4.12
59 4.50 4.23 4.58 59 4.17 4.02 4.21
60 4.61 4.29 4.69 60 4.26 4.09 4.31
61 4.72 4.36 4.82 61 4.36 4.16 4.41
62 .83 4.43 4.95 62 4.46 4.23 4.52
63 4.95 4.50 5.09 63 4.57 4.31 4.64
64 5.08 4.56 5.24 64 4.68 4.38 4.77
65 5.21 4.63 5.40 65 4.80 4.45 4.90
66 5.35 4.69 5.57 66 4.93 4.53 5.04
67 5.50 4.75 5.76 67 5.07 4.60 5.20
68 5.65 4.81 5.95 68 5.21 4.67 5.36
69 5.80 4.87 6.16 69 5.36 4.74 5.54
70 5.96 4.92 6.38 70 5.51 4.80 5.73
71 6.13 4.97 6.62 71 5.68 4.87 5.94
72 6.30 5.01 6.87 72 5.85 4.92 6.16
73 6.47 5.05 7.14 73 6.03 4.98 6.40
74 6.65 5.09 7.42 74 6.22 5.02 6.66
75 6.82 5.12 7.73 75 6.41 5.07 6.94
76 7.00 5.15 8.05 76 6.61 5.10 7.24
77 7.18 5.17 8.40 77 6.81 5.14 7.57
78 7.36 5.19 8.78 78 7.01 5.16 7.93
79 7.53 5.21 9.18 79 7.21 5.19 8.31
80** 7.70 5.22 9.61 80** 7.42 5.21 8.73
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</TABLE>
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SETTLEMENT OPTION TABLES
OPTION 5 - TABLE E
JOINT AND SURVIVOR MONTHLY PAYMENT FOR EACH $1000.00 OF NET SUM PAYABLE
Age in years means age of payee on birthday prior to due date of the first payment. Monthly payment amount to the Annuitant with
payment to the surviving spouse based on the elected Specified Amount Payment.
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AGE Specified Specified Specified AGE Specified Specified Specified
IN Amount Amount Amount Full In Amount Amount Amount Full
YEARS One-Half Two-Thirds Payment YEARS One-Half Two-Thirds Payment To
Payment To Payment To To Surviving Payment To Payment To Surviving
Surviving Surviving Spouse Surviving Surviving Spouse
Spouse Spouse Spouse Spouse
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 $4.02 $3.83 $3.50 63 $4.86 $4.57 $4.09
56 4.10 3.91 3.56 64 4.99 4.69 4.18
57 4.19 3.98 3.62 65 5.14 4.82 4.28
58 4.29 4.07 3.69 66 5.30 4.95 4.39
59 4.39 4.16 3.76 67 5.46 5.10 4.50
60 4.49 4.25 3.83 68 5.64 5.26 4.62
61 4.61 4.35 3.91 69 5.83 5.42 4.76
62 4.73 4.46 4.00 70 6.04 5.60 4.89
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Amounts shown apply if both payees are the same age. Amounts for payment other than monthly and for other ages are available on
request.
POLICY SPLIT OPTION
In order to issue separate Policies to each of the Insureds Policies to be issued; provided that no more than 50% of Death
the following requirements must be met: 1) Your request and Benefit may be allocated to one Policy. The Policies issued in
surrender of the Policy must be submitted within 180 days replacement of this Policy will be on substantially the same
after the Insureds' (who were married to one another at the terms as the exchanged Policy, with the Surrender Value and the
effective date) legal divorce or 2) upon a tax law change amount of any Policy Debt under the exchanged Policy allocated
which disallows the estate tax marital deduction. Also, each between the new Policies in the same percentages as the
Insured is subject to evidence of insurability satisfactory Surrender Value. Premiums for the new Policies will reflect the
to Us at the time of the split request. We may require sex and class of the Insured at the time of original issue.
proof of the legal divorce.
At the time of request for the split is made You must specify This option will terminate when the eldest of the two Insureds
the manner in which the Surrender Value and Death Benefit reaches age 80 or if the Policy terminates.
are to be allocated between the two
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SURVIVORSHIP VARIABLE UNIVERSAL LIFE INSURANCE POLICY. INVESTMENT
EXPERIENCE REFLECTED IN SOME VALUES AND BENEFITS. NONPARTICIPATING.
DEATH BENEFIT PAYABLE AT SECOND DEATH. NO DIVIDENDS.
FLEXIBLE PREMIUM PAYABLE WHILE EITHER INSURED IS LIVING.
ALPHABETIC GUIDE
PAGE
<S> <C>
Accumulation Value 8
Addition, Deletion, or Substitution of Investment 7
Age at Issue Data Page
Allocation of Premiums 4
American National Fixed Account 6
American National Variable Life Separate Account 6
Annual Report 13
Assignment 13
Availability of Settlement Options 14
Basis of Calculations 15
Beneficiary Data Page
Beneficiary Interest 13
Change in Death Benefit Option 5
Change in Specified Amount 6
Change of Beneficiary 14
Contract and Representations 12
Continuation of Insurance 10
Cost of Insurance 9
Cost of Insurance Rate 9
Date of Issue Data Page
Death Benefit 5
Deferment of Payments and Emergency Procedure 11
Effective Date 12
Fixed Account Accumulation Value 8
Full Surrender and Surrender Value 10
General Provisions for Settlement Options 15
Grace Period 12
Guaranteed Coverage Benefit 4
Incontestability 12
Methods of Premium Payment 13
Misstatement of Age or Sex 13
Monthly Deduction 9
Owner 4
Partial Surrender 10
Payment of Proceeds 6
Premium Charge, Monthly Fee and Monthly Expense Charge 9
Planned Periodic Premium 4
Policy Data Data Page
Policy Loan 10
Policy Split Option 17
Power to Modify 13
Premiums Payable 4
Proceeds 6
Separate Account Accumulation Value 8
Reinstatement 11
Settlement Options 14
Specified Amount Data Page
Subaccounts 7
Suicide 12
Termination of Coverage 11
Transfers 7
Unit Value 8
Unscheduled Additional Premiums 4
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AMERICAN NATIONAL INSURANCE COMPANY
ONE MOODY PLAZA
GALVESTON, TEXAS
FIRST DEATH WAIVER OF PREMIUM RIDER
This Rider is a part of the Policy to which it is attached (the "Policy").
American National Insurance Company (the "Company") issues it. All terms and
provisions of the Policy that apply will be construed to be part of this Rider.
EFFECTIVE DATE. The Effective Date of this Rider will be the Date of Issue of
the Policy.
INSUREDS. The Insureds for this Rider are the Policy's Insureds.
BENEFIT. If one Insured dies while this rider is in force, during the First
Death Waiver Period, we will waive the First Death Waiver Benefit due on each
Monthly Deduction Date, while one Insured is alive, during the Waiver Period.
If the surviving Insured is disabled We will only waive one Waiver Benefit. The
First Death Waiver Benefit and Waiver Period are shown on the Data Page.
LIMITATIONS OF COVERAGE. First Death Waiver Benefits will not be granted if the
first death occurs:
(1) while the Policy is not in force;
(2) after the Policy lapses;
(3) after the First Death Waiver Period has expired.
If more than one Waiver of Premium Benefit becomes payable, only the largest
benefit amount will be waived.
TERMINATION. This Rider will terminate on the first to occur of:
(1) the date the Grace Period for the Policy expires;
(2) the date the Policy matures, expires, or is surrendered; or
(3) at the end of the First Death Waiver Period.
At Your written request, the Company will terminate this Rider. You must return
the Policy to Us for endorsement. This Rider will terminate on the Monthly
Deduction Date that coincides with or next follows the receipt, at Our Home
Office, of the request to terminate this Rider. After the date this Rider
terminates, the Cost of Insurance for this Rider's benefit will no longer be
included in the Monthly Deduction.
COST OF BENEFIT. The Cost of Insurance for the First Death Waiver Benefit is
determined on a monthly basis. The Cost of Insurance for a Policy month is
calculated as (a) multiplied by (b) where:
(a) is the Monthly Cost of Insurance Rate for the First Death Benefit shown
on the Policy Data Page; and
(b) is the First Death Waiver Benefit divided by 100.
19
Form SVULFD
<PAGE>
The Cost of Insurance Rate for this benefit is based on the sex and rate class
of each Insured and the average age of both Insureds. The cost of this benefit
will be included in the Monthly Deduction from the Accumulation Value on each
Monthly Deduction Date on which this Rider is in force.
Signed for the Company at Galveston, Texas.
SECRETARY PRESIDENT
20
<PAGE>
AMERICAN NATIONAL INSURANCE COMPANY
ONE MOODY PLAZA
GALVESTON, TEXAS
SURVIVORSHIP DISABILITY WAIVER OF PREMIUM RIDER
This Rider is a part of the Policy to which it is attached (the "Policy").
American National Insurance Company (the "Company") issues it. All terms and
provisions of the Policy that apply will be construed to be part of this Rider.
EFFECTIVE DATE. The Effective Date of this Rider will be the Date of Issue of
the Policy.
INSUREDS. The Insureds for this Rider are the Policy's Insureds.
BENEFIT. We will waive the Disability Waiver Benefit due on each Monthly
Deduction Date after Total Disability of either Insured begins and while it
continues during the Disability Waiver Period. The Company must have received
proof to satisfy it that:
(1) either Insured is totally disabled; and
(2) the Total Disability has existed for at least 6 consecutive months.
If both Insureds are disabled, We will only waive one Disability Waiver Benefit.
The Disability Waiver Benefit and Waiver Period are shown on the Data Page.
TOTAL DISABILITY. "Total Disability" means complete mental or physical
incapacity of either Insured caused by bodily injury, disease or condition. It
must prevent the Insured from engaging in any gainful employment or occupation
for which the Insured is or becomes qualified by reason of education, training,
or experience. The permanent:
(1) loss of the entire sight of both eyes;
(2) severance of both hands at or above the wrist;
(3) severance of both feet at or above the ankle; or
(4) severance of both one hand at or above the wrist and one foot at or above
the ankle
is considered Total Disability.
WRITTEN NOTICE OF CLAIMS. Our Home Office must receive Your written claim for
Waiver of Premium:
(1) while at least one Insured lives;
(2) during the Disability Waiver Period;
(3) while either Insured's Total Disability continues; and
(4) not later than 1 year after the expiry of the Policy Grace Period,
unless the Owner can show that a later claim was made as soon as was
reasonably possible.
We will not waive a past premium due more than 1 year before We receive the
written claim. If Total Disability begins during the Grace Period, a premium
sufficient to cover the Monthly Deduction for the Grace Period must be paid to
the Company before any premiums will be waived.
PROOF OF TOTAL DISABILITY AND CONTINUANCE. After receipt of a claim, We can
demand proof that the Total Disability exists and continues, but We cannot do so
more often than once a year after 1 year of continuous disability. We may
require that a doctor selected by Us make a physical examination of the Insured.
We will not waive any premium if the Insured:
(1) fails to furnish proof of Total Disability within a reasonable time; or
(2) refuses to be examined.
21
Form SVULDW
<PAGE>
LIMITATIONS OF COVERAGE. Waiver of premium will not be granted if Total
Disability begins:
(1) while the Policy is not in force;
(2) after the Policy lapses;
(3) after the Disability Waiver Period has expired.
If more than one Waiver of Premium Benefit becomes payable, only the largest
benefit amount will be waived.
RISKS NOT ASSUMED. Waiver of Premium will not be granted if Total Disability
existed on or before the Date of Issue of this Rider; or if it is a direct or
indirect result of:
(1) attempted intentional self-destruction or self-mutilation, whether the
Insured was sane or insane;
(2) any act attributed to riot or war, declared or undeclared, whether or
not the Insured is in military service;
(3) the voluntary or involuntary administration, taking, or injection of
a drug, sedative, or narcotic unless administered by and taken when
and as prescribed by a physician; or
(4) injury, disease, or infection that existed or occurred before the Date
of Issue unless disclosed in the Application for this Rider or
disclosed in the application for an increase in Specified Amount while
this Rider is in effect.
TERMINATION. This Rider will terminate on the first to occur of:
(1) the date the Grace Period for the Policy expires;
(2) the date the Policy matures, expires, or is surrendered; or
(3) at the end of the Waiver Period.
At Your written request, the Company will terminate this Rider. You must return
the Policy to Us for endorsement. This Rider will terminate on the Monthly
Deduction Date that coincides with or next follows the receipt, at Our Home
Office, of the request to terminate this Rider. After the date this Rider
terminates, the Cost of Insurance for this Rider's benefit will no longer be
included in the Monthly Deduction.
COST OF BENEFIT. The Cost of Insurance for the Disability Waiver of Premium
Benefit is determined on a monthly basis. The Cost of Insurance for a Policy
month is calculated as (a) multiplied by (b) where:
(a) is the Monthly Cost of Insurance Rate for the Waiver of Premium Benefit
shown on the Policy Data Page; and
(b) is the Disability Waiver of Premium Benefit divided by 100.
The Cost of Insurance Rate for this benefit is based on the sex and rate class
of each Insured and the average age of both Insureds. The cost of this benefit
will be included in the Monthly Deduction from the Accumulation Value on each
Monthly Deduction Date on which this Rider is in force.
Signed for the Company at Galveston, Texas.
SECRETARY PRESIDENT
22
<PAGE>
Exhibit 99.6a
AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
AMERICAN NATIONAL INSURANCE COMPANY
Pursuant to the applicable provision of the Texas Business Corporation Act
and the Texas Insurance Code, American National Insurance Company adopts the
following Articles of Amendment to its Restated Articles of Incorporation:
ARTICLE ONE
The name of the corporation is AMERICAN NATIONAL INSURANCE COMPANY.
ARTICLE TWO
A new Article, to be numbered ARTICLE X of the Restated Articles of
Incorporation, was adopted by the shareholders of the corporation on April 29,
1988. The full text of the new ARTICLE X being added to the Restated Articles
of Incorporation reads as follows:
"ARTICLE X
"A director of the Company shall not abe personally liable to the Company
or its shareholders for monetary damages for an act or omission in the
director's capacity as a director, except for liability:
"(i) for any breach of director's duty of loyalty to the Company or
its shareholders,
"(ii) for acts or omissions not in good faith or that involves
intentional misconduct or a knowing violation of the laws,
"(iii) for any transaction from which a director received an improper
benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office,
"(iv) for any act or omission for which the liability of a director
is expressly provided for by statute, or
"(v) for an act related to an unlawful stock repurchase or payment
of a dividend."
1
<PAGE>
ARTICLE THREE
The number of shares of the corporation outstanding at the time of such
adoption was 28,267,340; and the number of shares entitled to vote thereon was
28,267,340.
ARTICLE FOUR
The number of shares voted for such amendment was 21,471,433; and the
number of shares voted against such amendment was 89,944.
DATED: May 27, 1988.
AMERICAN NATIONAL INSURANCE COMPANY
By: Orson C Clay
--------------------------------
Orson C. Clay
President
By: Jean N. Bell
--------------------------------
Jean N. Bell
Assistant Secretary
THE STATE OF TEXAS (S)
(S)
COUNTY OF GALVESTON (S)
I, Cheri Brown, a Notary Public, do hereby certify that on the 27th day of
May, 1988, personally appeared before me ORSON C CLAY, known to me to be the
person whose name is subscribed to the foregoing document and, being by me first
duly sworn, declared to me that he is President of the corporation and that he
executed the foregoing document in the capacity therein stated, and he declared
that the statements therein contained are true and correct.
IN WITNESS WHEREOF I have hereunto set my hand and seal of office this 27th
day of May, 1988.
Cheri Brown
-------------------------------
Notary Public in and for
The State of Texas
2
<PAGE>
Cheri Brown
Printed or Typed Name of Notary
My commission expires: 2-21-89
3
<PAGE>
RESTATED ARTICLES OF INCORPORATION
(with Amendments)
OF
AMERICAN NATIONAL INSURANCE COMPANY
1. American National Insurance Company (the "Corporation") hereby restates
and amends its previously filed Restated Articles of Incorporation, restating
the entire text of its Restated Articles of Incorporation, and amending such
Restated Articles of Incorporation as set forth herein (such Restated and
amended Restated Articles of Incorporation, all prior amendments, and the
amendments effected hereby being called the "Restated Articles").
2. These Restated Articles accurately copy the Articles of Incorporation
and all amendments thereto that are in effect to date and as further amended by
these Restated Articles, and contain no other changes of a substantive nature in
any provision thereof, except for the following:
(a) Article VI of the previously filed Restated Articles of Incorporation
is hereby amended by these Restated Articles to decrease and
reclassify the authorized capital stock of the Corporation from
62,000,000 common shares (such 62,000,000 common shares being
previously classified into 50,000,000 shares of Class A Common Stock
with a par value of $1 per share and 12,000,000 shares of nonvoting
Class B Common Stock with a par value of $1 per share) to 50,000,000
shares of voting common stock having a par value of $1 per share (of
which at least 50% has been fully subscribed and fully paid for), and
deleting all of the previously authorized 12,000,000 shares of
nonvoting Class B Common Stock (none of which has been issued), as
more fully described in such Article VI.
(b) The amendment made by these Restated Articles has been effected in
conformity with the applicable provisions of the Texas Business
Corporation Act and the Texas Insurance Code.
3. These Restated Articles were duly adopted by the shareholders of the
Corporation at a special stockholder's meeting held on January 3, 1979.
4. The number of shares of the Corporation outstanding and entitled to
vote on these Restated Articles was 32,793,416; the number of such shares voted
FOR and the number of such shares voted AGAINST such Restated Articles was as
follows:
Percentage Percent of Total
FOR AGAINST for Adoption Outstanding Shares
- --- ------- ------------ ------------------
32,793,416 -0- 100% 100%
4
<PAGE>
5. The previously filed Restated Articles of Incorporation, are hereby
superseded in their entirety by the following Restated Articles:
RESTATED ARTICLES OF INCORPORATION
OF
AMERICAN NATIONAL INSURANCE COMPANY
ARTICLE I
The name of the Corporation is AMERICAN NATIONAL INSURANCE COMPANY.
ARTICLE II
The names of the initial incorporators, all of Galveston, Texas, are shown
below:
W.L. Moody, Jr.
I.H. Kempner
M.O. Kopperl
ARTICLE III
The location of the Home Office of the Corporation shall be Galveston,
Galveston County, Texas.
ARTICLE IV
The purpose for which the Corporation is formed is to transact the
following types of insurance business:
A. Life insurance business, involving the payment of money or other thing
of value, conditioned on the continuance or cessation of human life,
or involving an insurance, guaranty, contract or pledge for the
payment of endowments or annuities.
B. Accident insurance business, involving the payment of money or other
thing of value, conditioned upon the injury, disablement or death of
persons resulting from general accident or from traveling by land,
air, or water.
C. Health insurance business, involving the payment of any amount of
money, or other thing of value, conditioned upon loss by reason of
disability caused by sickness or ill health.
D. Legal services insurance, involving the issuance of legal services
contracts on
5
<PAGE>
individual, group, or franchise bases.
ARTICLE V
The period of duration of the Corporation is five hundred (500) years.
ARTICLE VI
The total number of shares of stock which the Corporation shall have
authority to issue is 50,000,000 shares of voting common stock with a par value
of $1 each.
ARTICLE VII
32,793,416 shares of common stock of the Corporation having full voting
rights have been fully subscribed, are fully paid for and are presently
outstanding. All of such outstanding shares are hereby designated and shall
continue to constitute shares of the voting common stock of the Corporation.
ARTICLE VIII
No holder of any of the voting common stock of the corporation, whether now
or hereafter authorized and issued, shall be entitled as a matter of right to
purchase or subscribe for (1) any unissued shares of stock of any class, or (2)
any additional shares of any class, common or preferred, authorized to be
issued, or (3) any bonds, certificates of indebtedness, debentures, or other
securities convertible into stock of the Corporation, or carrying any right to
purchase stock of any class, but any such unissued stock or such additional
authorized issue of any stock or of other securities convertible into stock, or
carrying any right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors of the Corporation to such persons, firms,
corporations or associations and upon such terms as may be deemed advisable by
such Board of Directors in the exercise of its discretion.
ARTICLE IX
At each election for Directors every holder of voting common stock entitled
to vote at such election shall have the right to vote, in person or by proxy,
the number of shares owned by him for as many persons as there are Directors to
be elected and for whose election the stockholder has a right to vote. It is
expressly prohibited for any stockholder to cumulate his votes in any election
of Directors.
DATED 1/3/79
AMERICAN NATIONAL INSURANCE COMPANY
6
<PAGE>
By: Orson C Clay
--------------------------------
Orson C Clay, President
C.D. Thompson
-----------------------------------
C. D. Thompson, Secretary
THE STATE OF TEXAS (S)
(S)
COUNTY OF GALVESTON (S)
I, Mildred Jones, a Notary Public, do hereby certify that on this 3rd day
of January, 1979, personally appeared before me ORSON C. CLAY, who declared he
is the President of the Corporation executing the foregoing document, and being
first duly sworn, acknowledged that he had signed the foregoing document in the
capacity therein set forth, and declared that the statements therein contained
are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this day and year
before written.
Mildred Jones
------------------------------------
Notary Public in and for
Galveston County, Texas
My Commission Expires:
November 30, 1980
7
<PAGE>
Exhibit 99.6b
AMERICAN NATIONAL INSURANCE COMPANY
GALVESTON, TEXAS
BYLAWS
ARTICLE I
Name and Object
Section 1. The name of this corporation shall be American National Insurance
Company (the "Company"), and its object shall be to transact a life insurance
business, making contracts upon any and all conditions appertaining to or
connected with life risks. The Company shall also transact the business of
issuing accident and health insurance and credit insurance, conditioned upon the
injury, disablement, or death of the insured resulting from accident or illness,
and the business of issuing legal services contracts on an individual, group, or
franchise basis. The Company may also reinsure any risk insured by the Company
with any other solvent life, accident and health company, and it may also
reinsure the risks insured of other life, health and accident companies or
purchase and take over all or part of the risks of such companies.
ARTICLE II
Home Office
Section 1. The general Home Office of the Company shall be in the City of
Galveston, Galveston County, Texas.
ARTICLE III
Stockholders
Section 1. The Annual Meeting of the Stockholders shall be held in the City of
Galveston, Texas, or at such other place within or without the State of Texas as
may be, from time to time determined by the Board of Directors, on April 30 of
each year (provided that if April 30 is a legal holiday, then such meeting shall
be held on Friday immediately preceding such legal holiday) or on such other day
prior to April 30 as shall be determined from time to time by the Board of
Directors.
Each Stockholder shall be entitled to one vote for each share of the subscribed
Capital Stock standing in his name on the books of the Company, which vote may
be cast in person or by proxy.
A majority of the subscribed Capital Stock represented at any meeting of the
Stockholders shall constitute a quorum.
1
<PAGE>
At said Annual Meeting the Stockholders shall elect fourteen (14) Directors, or
such other number of Directors not less than seven (7), nor more than fifteen
(15), as the Board of Director shall, from time to time, determined, who shall
hold their office for one year, and until their successors are elected. It
shall require a majority vote of the Capital Stock represented at such meeting
to elect a Director, and such Director need not be a citizen of Texas or a
Stockholder of the Company.
The Chairman of the Board or President shall call special meetings of the
Stockholders whenever, in his judgment, it is necessary and shall call a special
meeting when requested to do so by a majority of the Directors, or by
Stockholders holding or representing not less than thirty-five percent (35%) of
the outstanding stock.
Notice of special meetings shall be given by the Secretary to all Stockholders,
in person, or by mailing such notice to the last known address of the
Stockholders, at least ten (10) days in advance of the date for such meeting.
ARTICLE IV
Officers
Section 1. The officers of this corporation shall consist of a Chairman of the
Board, a President, one or more Senior Executive Vice Presidents, one or more
Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice
Presidents, one or more Assistant Vice Presidents, a Secretary, one or more
Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, a
Controller, one or more Assistant Controllers, one or more Actuaries, one or
more Assistant Actuaries, a Medical Director, and General Counsel, all of whom
shall be elected by the Board of Directors. One person may hold more than one
office, except that the offices of President and Secretary may not be held by
the same person.
Section 2. The Board of Directors may from time to time create additional
offices and elect persons to fill such posts, and the Board may appoint such
committees as it may deem appropriate or necessary. The Board may delegate to
any officer or committee such duties as it may deem appropriate.
Section 3. The employment and salary of all officers shall be from month to
month.
ARTICLE V
Directors
Section 1. The Directors shall hold an Annual Meeting for the election of
officers and such other business that may come before them immediately upon the
adjournment of the Annual Stockholders'
2
<PAGE>
Meeting, and they shall also have four (4) regular meetings, and the first three
(3) of which shall be held on the last Thursday of the months of February, July
and October and the fourth of which shall be held on the second or third Friday
of December as the Directors shall determine; provided that if any of such last
Thursdays shall fall on a holiday observed by the Company, then such meeting
shall be held on the weekday immediately preceding such holiday; and provided
further that the Board may, at any special or regular meeting, cancel one or
more subsequent regular meetings or it may reschedule the date of one or more
subsequent regular meetings, and the Chairman of the Board and the President,
acting jointly between meetings, may cancel or reschedule not more than two (2)
successive regular meetings; but in any event, the Secretary shall give notice
to all Directors that one or more specified regular meetings have been canceled
or rescheduled for stated dates; and such notice shall be given by the Secretary
to each Director, in person, by telephone or by mailing such notice to the last
address of the Director, such notice to be given as soon as practicable after
cancellation or rescheduling of one or more such regular meetings.
A special meeting of the Directors may be held at any time, upon call of the
Chairman of the Board, the President, or upon call of a majority of the members
of the Board of Directors. Notice of such special meeting shall be given by the
Secretary to each Director, in person, by telephone, or by mailing such notice
to the last address of the Director at least four (4) days in advance of the
date of such meeting.
Quorum
Section 2. A majority of the duly elected Directors shall constitute a quorum
for the transaction of business.
Place of Meeting
Section 3. All meetings of the Directors shall be held at the office of the
Company in the City of Galveston, or at such other place designated by the Board
of Directors.
Filling of Vacancies
Section 4. Should any vacancy occur in the Directorship, the same may be filled
for the unexpired term by a majority of the remaining Directors.
Finance Committee
Section 5. The Board of Directors may appoint a Finance Committee consisting of
not less than five (5) officers or directors of the Company. The members of
such Finance Committee shall serve at the pleasure of the Board of Directors.
Such Finance Committee shall have the authority to approve and authorize for and
on the Company's behalf (1) investments and loans permitted by the Texas
Insurance Code and regulations thereunder, and (2) all purchases, sales and
other transactions of any kind including or relating to real estate or interest
in real estate. Such Finance Committee shall also
3
<PAGE>
be charged with the duty of supervising all of the Company's investments and
loans.
It shall require three (3) or more members of the Finance Committee to
constitute a quorum at any meeting of the Finance Committee, and its every
decision must receive a majority vote of those present, and in no case less than
three (3) affirmative votes. Such Finance Committee shall keep minutes of all
of its meetings, fully reflecting all actions taken by it, which shall be
recorded in a permanent minute book.
In the exercise of its authority and the discharge of its duty, such Finance
Committee shall have the right to appoint one or more subcommittees and to
delegate to such subcommittees authority to make minor investments and small
loans, not to exceed a predetermined dollar amount, and to act on matters not
involving material investment decisions without prior approval of the Finance
Committee.
The Finance Committee shall determine the number and appoint the membership of
each such subcommittee, and the detailed authority of each shall be fully set
forth in the resolutions creating each and amendments thereto. There shall be
included in such resolutions requirements that:
(a) at least one member of each subcommittee shall also be a member
of the Finance Committee; (b) that the presence of at least four
(4) members of each subcommittee shall be necessary to constitute
a quorum at any meeting thereof; and (c) that no affirmative
action shall be authorized without at least three (3) affirmative
votes.
The Finance Committee shall carefully supervise all operations of its
subcommittees and shall periodically review all actions taken by them.
Executive Committee
Section 6. The Board of Directors may, by resolution adopted by a majority of
the whole Board, create an Executive Committee and designate the members
thereof. All members of such Committee shall serve at the pleasure of the
Board.
The Executive Committee shall have such powers and shall perform such duties as
the Board may delegate to it by resolution from time to time; provided, however
that such Committee shall have no authority with respect to matters where action
of the Board of Directors is required to be taken by the provisions of the Texas
Business Corporation Act or other applicable law.
The Executive Committee shall be organized and shall perform its functions as
directed by the Board of Directors, and minutes of all meetings of the Executive
Committee shall be kept in a book provided for such purpose. Any action taken
by the Executive Committee within the course and scope of its authority shall be
binding on the Company.
4
<PAGE>
The membership of the Executive Committee may, from time to time, be increased
or decreased and the powers and duties of the Committee may, from time to time,
be changed by the Board of Directors as it may deem appropriate. The Executive
Committee may be abolished at any time by the vote of a majority of the whole
Board of Directors.
Dividends
Section 7. The Board of Directors may, from time to time, declare and order
paid out of the Company's current earnings or surplus or both, dividends, either
in cash or stock, as it may determine to be in the best interest of the Company.
ARTICLE VI
Duties of Officers
Chairman of the Board
Section 1. The Chairman of the Board shall be the Chief Executive Officer of
the Company and shall preside at all meetings of the Stockholders and Board of
Directors. He shall have general and active management responsibilities for the
business and affairs of the Company, and shall see that all orders and
resolutions of the Board are carried into effect. He shall also do such other
things, perform such other duties and have such other powers as the bylaws, the
Board of Directors or Executive Committee may from time to time prescribe.
President
Section 2. The President shall be the Chief Administrative Officer of the
Company, his activities as such subject to the direction and approval of the
Chief Executive Officer, and shall be responsible for the implementation of the
details of managing the administrative affairs of the Company. He shall also do
such other things, perform such other duties and have such other powers as the
bylaws, the Board of Directors or Executive Committee may from time to time
prescribe. The President, in the absence and/or disability of the Chairman of
the Board, shall perform the duties and exercise the powers of the Chairman of
the Board.
Senior Executive Vice Presidents
Section 3. The Senior Executive Vice Presidents shall perform such duties and
have such powers as the Board of Directors may prescribe. One of such Senior
Executive Vice Presidents shall be the Chief Marketing Officer.
Executive Vice Presidents
Section 4. The Executive Vice President shall perform such duties and have such
powers as the Board of Directors may prescribe.
5
<PAGE>
Senior Vice Presidents
Section 5. Senior Vice Presidents shall perform such duties and have such
powers as the Board of Directors may prescribe.
Vice Presidents
Section 6. Vice Presidents shall perform such duties and have such powers as
the Board of Directors may prescribe.
Assistant Vice Presidents
Section 7. Assistant Vice Presidents shall perform such duties and have such
powers as the Board of Directors may prescribe.
Secretary
Section 8. The Secretary shall be custodian of all the Company's records, books
and papers and shall see that the books, reports, statements, certificates and
all other documents and reports required by law are properly executed and filed.
He shall keep such other records and reports as the Board of Directors may
prescribe, and render reports as may be called for by the Chairman of the Board
or the President. He shall have custody of the corporate seal with authority to
affix the same, attested by his signature, to all instruments requiring
execution under seal, and shall act with the Chairman of the Board and the
President in the general care and supervision of the Company's business. He
shall attend the meetings of the Stockholders, Board of Directors, and Finance
Committee, keeping a full account of their proceedings, and furnishing such
information, accounts, and papers as may be required and calling to their
attention any matter coming under his province on which their action is needed.
He shall perform such other duties and have such other powers as the Board of
Directors may prescribe.
Assistant Secretaries
Section 9. The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors, shall in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary. He, or they, as the case may be, shall perform such
other duties and have such other powers as the board of Directors may prescribe.
Treasurer
Section 10. The Treasurer shall receive, in the name of the Company, all monies
due or owing to it from any source whatever, and deposit same in the name and to
the account of the Company in
6
<PAGE>
authorized depositories, and he shall keep an accurate account of all cash
transactions of the Company. He shall perform such duties and have such powers
as the Board of Directors may prescribe.
Assistant Treasurer
Section 11. The Assistant Treasurer, or if there be more than one, the
Assistant Treasurers in the order determined by the Board of Directors, shall,
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer. He, or they, as the case may be, shall perform
such other duties and have such other powers as the Board of Directors may
prescribe.
Controller
Section 12. The Controller shall act as the principal accounting officer in
charge of the general accounting books, accounting records and forms of the
Company; have general supervision of the accounting records and forms of the
Company; have general supervision of the accounting practices of all subsidiary
corporations; obtain from agents and from departments of the Company all reports
needed for recording the general operations of the Company or for supervising or
directing its accounts. He shall cause to be enforced and maintained the
classification and other accounting rules and regulations prescribed by any
regulatory body; cause to be prepared, compiled and filed such statutory
accounting reports, statements, statistics, returns, and other data as may be
required by law, prepare the Company's financial reports, and such reports as
required and submit same to the President.
He shall approve for payment all vouchers, drafts, and other accounts payable
where authorized or approved by the President or persons authorized to do so by
the President; and countersign warrants with the Treasurer or Secretary for
deposit or withdrawal of securities from custodian banks; have charge over
preparation and supervision of budgets; and supervision over the purchasing
functions of the Company, and shall perform such other duties and have such
other powers as the Board of Directors may prescribe.
Assistant Controllers
Section 13. The Assistant Controller, or if there shall be more than one, the
Assistant Controllers, in the order determined by the Board of Directors, shall,
in the absence or disability of the Controller, perform the duties and exercise
the powers of the Controller. He, or they, as the case may be, shall perform
such other duties and have such other powers as the Board of Directors may
prescribe.
Actuary
Section 14. The Actuary, or if there shall be more than one, the Actuaries in
the order determined by the Board of Directors, shall have charge of the
Actuarial Department of the Company, and all special work connected therewith.
He shall make all calculations required in transacting the
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insurance operations of the Company, and perform such other duties as shall be
assigned him by the Chairman of the Board, President, or Board of Directors.
Assistant Actuaries
Section 15. The Assistant Actuary, or if there be more than one, the Assistant
Actuaries in the order determined by the Board of Directors shall, in the
absence or disability of the Actuary, perform the duties and exercise the powers
of the Actuary. He, or they, as the case may be, shall perform such other
duties and have such other powers as the Board of Directors may prescribe.
Medical Directors
Section 16. The Medical Director shall have general supervision of the Medical
Department of the Company. He shall make recommendations of medical standards
to be adopted by the Company in the selection of risks. He shall examine, or
cause to be examined, every application for insurance and approve or reject
same; shall examine all proofs of death submitted for his opinion, and shall
perform such other duties as the President or Board of Directors may require.
General Counsel
Section 17. General Counsel, which may be a firm of attorneys, shall, subject
to the instructions of the Board of Directors, have charge and control of the
legal business and affairs of the Company; shall give legal advice pertaining to
the Company's business submitted to Counsel by any officer of the Company, by
the Chairman of the Board of Directors, or by the Chairman of the Finance
Committee; shall prepare or cause to be prepared legal documents and papers for
the Company; shall, at the request of the Chairman of the Board or the
President, attend any meeting of the Board of Directors or the Finance
Committee; and shall perform such other services as are necessary or appropriate
in the discharge of the Counsel's responsibilities with respect to the business
and affairs of the Company.
ARTICLE VII
Designation of Banks and Withdrawal of Funds
Section 1. Jointly, any two (2) of the following officers: The Chairman of the
Board, the President, a Senior Executive Vice President, an Executive Vice
President, the Secretary, or the Treasurer are authorized and directed to
designate the banks in which funds of this corporation shall be deposited, and
the Treasurer shall deposit or cause to be deposited all of its funds in the
banks so selected. Said banks shall pay out such funds on deposit only upon
drafts or checks signed and countersigned by the persons designated for such
purposes.
Section 2. Jointly, any two (2) of the following officers: the Chairman of the
Board, the President, a Senior Executive Vice President, an Executive Vice
President, the Secretary or the Treasurer are
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authorized and directed to designate in writing the persons who are authorized
to sign and countersign the drafts or checks for withdrawal of the funds on
deposit.
ARTICLE VIII
Fidelity Bond
Section 1. The Board of Directors shall require a Fidelity Bond, in an amount
fixed by such Board of Directors and payable to the Company, on all officers and
employees, conditioned that each will well and faithfully discharge the duties
of his office and account for all the Company's monies coming into his hands.
ARTICLE IX
Directors' Fees
Section 1. All Directors who are not full-time salaried officers shall be paid
a basic fee for each year or part of a year they serve as Directors of the
Company. Such basic fee will be set from time to time by the Board, shall be
payable in a lump sum immediately after the election of a Director. In
addition, all Directors who are not full-time salaried officers shall be paid an
amount set by the Board from time to time for each Board meeting or Executive
Committee meeting attended, payable after each meeting. The Board shall also
set from time to time the amount any Director who is a member of the Audit
Committee and/or Compensation Committee of the Board of Directors and who is not
a full-time salaried officer shall be paid per committee meeting attended.
Section 2. All Directors who are full-time salaried officers shall be paid no
fee for attendance at any regular or special meeting of the Board of Directors.
Section 3. The necessary expenses incurred by the Directors in attending the
meetings of the Board of Directors, and also their necessary expenses when
absent from the place of their residence in the discharge of the official duty
of the Company's business shall be paid by the Company.
ARTICLE X
Capital Stock
Section 1. The amount, classes and par value of the stock of this Company shall
be as stated in the Company's Restated Articles of Incorporation, as such
articles may be amended and restated from time to time.
Certificate of Shares
Section 2. Each Stockholder shall be entitled to a certificate or certificates
for the number of shares
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of Capital Stock held by him and fully paid for, signed with the facsimile
signature of the Chairman of the Board or the President and the Secretary,
attested with the facsimile seal of the Company.
All transfer of stock, before effective, shall be made upon the proper books of
the Company, by the written order or request of the Stockholders, and the Board
of Directors may require that the certificate of stock be returned and canceled
before a new certificate is issued in name of the person to whom the transfer is
to be made.
ARTICLE XI
Corporate Seal
Section 1. The seal of the Company shall be as follows:
ARTICLE XII
Amendments
Section 1. The Bylaws may be amended, altered or repealed and additional Bylaws
enacted at any Annual Meeting of the stockholders or any regular meeting of the
Board of Directors, or at any special or rescheduled meeting of either, if in
the notice for such special or rescheduled meeting there is incorporated notice
of the proposed action.
ARTICLE XIII
Indemnification of Officers, Directors,
Employees and Agents
Section 1. (a) The Corporation shall indemnify any person who serves or has
served as a director or officer of the Corporation, or who at the Corporation's
request serves or has served as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary (herein
collectively called "director or officer") of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise (herein collectively called "business
enterprise"), and the respective heirs, administrators, successors and assigns
of any such director or officer against any and all expenses, including
attorneys' fees, judgments, penalties (including excise or similar taxes),
fines, costs and amounts paid in settlement (before or after suit is commenced)
actually and necessarily incurred by any such person in connection with the
defense, settlement or investigation of any actual or threatened claim, action,
suit or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, asserted against such person or at which such person is made a
party by reason of being or having been a director or officer of the Corporation
or such other business enterprise; provided that:
(1) The Corporation shall not indemnify any such person (or his heirs,
administrators,
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successors or assigns) for obligations resulting from a proceeding (i)
in which the person is found liable on the basis that personal benefit
was improperly received by him, whether or not the benefit resulted
from an action taken in the person's official capacity, or (ii) in
which the person is found liable to the Corporation, unless and only
to the extent indemnification is permitted by the Court;
(2) In the case of settlement (before or after suit is commenced) of any
actual or threatened action, suit or proceeding in which any such
person is involved by reason of his having been a director or officer,
indemnification shall be provided if the Board of Directors
determines, in a manner set forth herein that such person conducted
himself in good faith and in a manner he reasonably believed: (i) in
the case of conduct in his official capacity as a director of the
Corporation, that his conduct was in the Corporation's best interest;
and (ii) in all other cases that his conduct was at least not opposed
to the Corporation's best interests; and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe his conduct
was unlawful;
(3) A determination of indemnification under Section 1(a)(2) of this
Article shall be made (i) by a majority vote of a quorum consisting of
directors who at the time of the vote are not named defendants or
respondents in the proceeding; (ii) if a quorum cannot be obtained by
a majority vote of a committee of the Board of Directors designated to
act in the matter by a majority vote of all directors consisting
solely of two or more directors who at the time of the vote are not
named defendants or respondents in the proceeding; (iii) by special
legal counsel selected by the Board of Directors or a committee of the
Board by vote as set forth in Subparagraph (i) or (ii) of this Section
1(a)(3), or, if such quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all directors; or (iv) by
the shareholders in a vote that excludes the shares held by directors
who are named defendants or respondents in the proceeding.
(b) Reasonable expenses, including attorney's fees, incurred by a director or
officer who was, is, or is threatened to be made a named defendant or respondent
in a proceeding may be paid or reimbursed by the Corporation in advance of the
final disposition or the proceeding after:
(1) The Corporation received a written affirmation by the director or
officer of his good faith belief that he has met the standard of
conduct necessary for indemnification under this Article and a written
undertaking by or on behalf of the director or officer to repay the
amount paid or reimbursed if it is ultimately determined that he has
not met those requirements; and
(2) A determination that the facts then known to those making the
determination would not preclude indemnification under this Article.
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(c) The written undertaking required by Section 1(b)(1) of this Article must be
an unlimited general obligation of the director or officer, but need not be
secured. It may be accepted without financial ability to make payment.
Determinations and authorization of payments under Section 1(b) must be made in
the manner specified by Section 1(a)(3) of this Article for determining that
indemnification is possible.
(d) The Corporation shall indemnify a director or officer against reasonable
expenses, including costs and attorney's fees, incurred by him in connection
with an action, suit, or proceeding in which he is a party because he is a
director or officer if he has been wholly successful on the merits or otherwise,
in the defense of the action, suit, or proceeding.
(e) The indemnification provided for in this Article is not exclusive of any
other rights to which persons covered by this Article may be entitled under any
bylaw, agreement, vote of shareholders or disinterested directors or otherwise.
The right to indemnification provided under this Article shall inure to the
benefit of the heirs, executors or administrators of any person covered by this
Article.
(f) The Board of Directors shall have the power to abide by resolution for the
indemnification of individual employees or agents who face exceptional risks of
liability because of the nature of their jobs.
(g) Any indemnification of or advance of expenses to a director in accordance
with this Article shall be reported in writing to the shareholders with or
before the notice or waiver of notice of the next stockholders' meeting or with
or before the next submission to stockholders of a consent to action without a
meeting pursuant to Section A, Article 9.10, of the Texas Business Corporation
Act and in any case, within the 12-month period immediately following the date
of the indemnification or advance.
Section 2. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or who is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, other
enterprise, or employee benefit plan, against any liability asserted against him
and incurred by him in such a capacity or arising out of his status as such a
person, whether or not the Corporation would have the power to indemnify him
against that liability under this Article.
Section 3. This Article XIII is intended to provide the fullest indemnification
possible under the law in consistent with the provisions of this Article. If
any provision of this Article or the application of this Article to any person
or circumstance shall be found to be invalid or unenforceable, the remainder of
this Article or the application of this Article to any person or circumstance
which is not invalid or unenforceable shall not be affected and each provision
of this Article shall be valid and enforced to the full extent permitted by law.
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ARTICLE XIV
General Auditor
Section 1. The General Auditor shall assist members of Management in achieving
the most efficient and effective discharge of their responsibilities by
furnishing them with independent and objective analyses, appraisals, and
pertinent comments in order to provide a basis for appropriate corrective action
for the Company and its affiliates, including the recommendation of changes for
the improvement of various phases of their operations. He shall be responsible
for reviewing and appraising the soundness, adequacy, and application of
accounting, financial and operating controls; ascertaining the extent of
compliance with established policies, plans, and procedures; the extent to which
Company and affiliate assets are accounted for and safeguarded from losses of
all kinds; ascertaining the reliability of accounting, financial, and operating
data developed within the Company and its affiliates; appraising the quality of
performance in carrying out assigned responsibilities. He shall report to the
Board of Directors through the President, and shall perform such other duties as
the Board of Directors may prescribe.
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Exhibit 99.8a
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, entered into on this 1st day of August, 1994, among
AMERICAN NATIONAL INSURANCE COMPANY ("Company"), a life insurance company
organized under the laws of the State of Texas, on behalf of itself and AMERICAN
NATIONAL VARIABLE LIFE SEPARATE ACCOUNT ("Separate Account"), a separate account
established by the Company in accordance with the laws of the State of Texas,
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC. ("Fund"), an open-end management
investment company organized under the laws of the State of Maryland, and
SECURITIES MANAGEMENT AND RESEARCH, INC. ("Distributor"), a Florida corporation.
W I T N E S S E T H:
WHEREAS, the Separate Account has been established by the Company pursuant
to the Texas Insurance Code in connection with certain variable contracts
("Contracts") issued to the public by the Company; and
WHEREAS, the Separate Account is registered as a unit investment trust
under the Investment Company Act of 1940;
WHEREAS, the income, gains and losses, whether or not realized, from assets
allocated to the Separate Account are, in accordance with the applicable
Contracts, to be credited to or charged against such Separate Account without
regard to other income, gains or losses of the Company; and
WHEREAS, the Separate Account is subdivided into various Subaccounts under
which income, gains and losses, whether or not realized, form assets allocated
to each such Subaccount are, in accordance with the applicable Contracts, to be
credited to or charged against such Subaccounts without regard to other income,
gains or losses of other Subaccounts or of the Company; and
WHEREAS, the Fund is registered as an open-end diversified management
investment company under the Investment Company Act of 1940; and
WHEREAS, the Fund is divided into various series ("Portfolios"), each
Portfolio having a different investment objective and being subject to separate
investment policies and restrictions which may not be changed without the
majority vote of shareowners of such Portfolio; and
WHEREAS, the Fund agrees to make its shares available to serve as
underlying investment media for the Separate Account, with shares of each
Portfolio of the Fund to serve as the underlying investment medium for each of
the various Subaccounts in the Separate Account; and
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WHEREAS, Distributor, the principal underwriter for the Contracts to be
funded in the Separate Account, is a broker-dealer registered as such under the
Securities Exchange Act of 1934;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions set forth herein and for other good and valuable
consideration, the Company, the Separate Account, the Fund and the Distributor
hereby agree as follows:
1. The Contracts funded through the Separate Account will provide for the
allocation of net amounts among the various Subaccounts of the
Separate Account for investment in the shares of the Portfolios of the
Fund underlying each Subaccount. The selection of the particular
Subaccount is to be made by the Contract Owner and such selection may
be changed in accordance with the terms of the Contracts.
2. No representation is made as to the number or amount of such Contracts
to be sold. The Company and the Distributor will make reasonable
efforts to market such Contracts and will comply with all applicable
federal or state laws in connection therewith.
3. Fund shares to be made available to each Subaccount of the Separate
Account shall be sold by each of the respective Portfolio of the Fund
and purchased by the Company for the corresponding Subaccount at the
net asset value (without the imposition of a sales load) next computed
after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Fund. Shares of a
particular Portfolio shall be ordered in such quantities and at such
times as determined by the Company to be necessary to meet the
requirements of those Contracts issued by the Company in that
Subaccount of the Separate Account for which the Portfolio shares
serve as the underlying investment medium. Orders or payments for
shares purchases will be sent promptly to the Fund and will be made
payable in the manner established from time to time by the Fund for
the receipt of such payments. The Fund reserves the right to delay
transfer of its shares until the payment check has cleared. The Fund
has the obligation to insure that its shares are registered at all
times.
4. Transfer of the Fund's shares will be by book entry only. No stock
certificate will be issued to the Separate Account. Shares ordered
from a particular Portfolio of the Fund will be recorded in an
appropriate title for the corresponding Subaccount of the Separate
Account by the Company.
5. The Fund shall furnish notice promptly to the Company of any dividend
or distribution payable on its shares. All such dividends and
distributions as are payable on each Portfolio's shares in the title
for the corresponding Subaccount of the Separate Account shall be
automatically reinvested in additional shares of that Portfolio. The
Fund shall notify the Company of the number of shares so issued.
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6. All expenses incident to the performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall ensure that all
its shares are registered and authorized for issue in accordance with
applicable federal and state laws prior to their purchase for the
Separate Account. The Company shall bear none of the expenses for the
cost of registration of the Fund's shares, preparation of the Fund's
prospectuses, proxy materials and reports, the preparation of all
statements and notices required by any federal or state law, or taxes
on the issue or transfer of the Fund's shares subject to this
Agreement.
7. The Company and the Distributor shall make no representations
concerning the Fund's shares except those contained in the then
current prospectus of the Fund and in printed information subsequently
issued on behalf of the Fund as supplemental to such prospectus.
8. This Agreement shall terminate:
(a) at the option of the Company or of the Fund upon sixty (60) days'
advance written notice to all other parties to this Agreement;
(b) at the option of the Company if any of the Fund's shares are not
reasonably available to meet the requirements of the Contracts as
determined by the Company. Prompt notice of election to
terminate shall be furnished by the Company;
(c) at the option of the Company upon institution of formal
proceedings against the Fund by the Securities and Exchange
Commission;
(d) upon requisite vote of the Contract Owners having an interest in
a particular Subaccount of the Separate Account to substitute the
shares of another investment company for the corresponding Fund
shares in accordance with the terms of the Contracts for which
those Fund shares had been selected to serve as the underlying
investment medium. The Company will give thirty (30) days' prior
written notice to the Fund of the date of any proposed vote to
replace the Fund shares;
(e) in the event the Fund's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying investment
medium of the Contracts issued or to be issued by the Company.
Prompt notice shall be given by any party to all other parties in
the event that the conditions stated in this subsection (e) or in
any subsection of this Section 8. should occur.
9. Each notice required by this agreement may be given by wire or
facsimile transmission and confirmed in writing to:
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Securities Management and Research, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Investment Accounts, Inc.
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Variable Life Separate Account
One Moody Plaza
Galveston, Texas 77550
ATTN: President
American National Insurance Company
One Moody Plaza
Galveston, Texas 77550
ATTN: President
10. This agreement shall be construed in accordance with the laws of the
State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
duly executed and attested on the date first stated above.
AMERICAN NATIONAL INSURANCE COMPANY
By:
__________________________________________________
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL VARIABLE LIFE SEPARATE ACCOUNT
By:
__________________________________________________
Carl R. Robertson, Senior Executive Vice President
AMERICAN NATIONAL INVESTMENT ACCOUNTS, INC.
By:
__________________________________________________
Michael W. McCroskey, President
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SECURITIES MANAGEMENT AND RESEARCH, INC.
By:
-------------------------------------
Michael W. McCroskey, President
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Exhibit 99.8b
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
AMERICAN NATIONAL INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 16th day of August, 1993 by
and among AMERICAN NATIONAL INSURANCE COMPANY, (hereinafter the "Company"), a
Texas corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter the "Fund") and
FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund 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 insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company
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under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable life and annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1., the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 10:00 a.m. Boston 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 Fund calculates
its net asset value pursuant to the rules of the Securities and Exchange
Commission.
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1.2 The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
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 Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4 The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6 The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable life and variable annuity contracts with the form
number(s) which are listed on Schedule B attached hereto and incorporated herein
by this reference, as such Schedule B may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, or in the Company's general
account, provided that such amounts may also be invested in an investment
company other than the Fund if (a) such other investment company, or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of all the Portfolios of the Fund;
or (b) the Company gives the Fund and the Underwriter 45 days written notice of
its intention to make such other investment company available as a funding
vehicle for the Contracts; or (c) such other investment company was available
as a funding vehicle for the Contracts prior to the date of this Agreement and
the Company so informs the Fund and Underwriter prior to their signing this
Agreement; or (d) the Fund or Underwriter consents to the use of such other
investment company.
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1.7 The company shall pay for Fund shares on the next business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9 The Fund 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 Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund 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 (normally 6:30 p.m.
Boston time) and shall use its best efforts to make such net asset value per
share available by 7 p.m. Boston 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; 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 each Account prior to any issuance or sale thereof as a segregated
asset account under Section 3.75 of the Texas Insurance Code and has registered
or, prior to any issuance or sale of the Contracts, will register each Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Texas and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund 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 effect the continuous offering of its shares. The Fund
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 Fund or the
Underwriter.
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2.3 The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4 The Company represents that the Contracts are currently treated
as endowment, annuity or life insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5 The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Texas and the Fund and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the State of Texas to the extent required to perform this Agreement.
2.7 The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of Texas and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is
and shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the
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laws of the State of Texas and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund, in an amount not less than the minimal coverage as required currently
by entities subject to the requirements of Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
ARTICLE III. Prospectuses and Proxy Statements: Voting
3.1 The Underwriter shall provide the Company (at the Company's
expense) with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
for the Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense).
3.2 The Fund's prospectus shall state that the statement of
Additional Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is available
from the Fund), and the Underwriter (or the Fund), 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 Fund, at its expense, shall provide the Company with copies
of its proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
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(iii) vote Fund shares for which no instructions have been received in
the same proportion as Fund shares of such portfolio 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
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule C attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee object to such use within fifteen 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 Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee 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 at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee object to such use
within fifteen Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the
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Contracts other than the 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
published reports for each Account which are in the public domain or 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 Fund 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, application for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6 The company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, 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
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, 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 billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1 The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this
Agreement shall
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be paid by the Fund. The Fund 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 Fund, in accordance with applicable
state laws prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund'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 any federal or state law, all taxes on the issuance or transfer of
the Fund's shares.
5.3 The Company shall bear the expenses of printing and distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification
6.1 The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 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
Regulations.
ARTICLE VII. Potential Conflicts
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material 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 interpretative 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 Portfolio 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 of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2 The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of
its disinterested
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trustees, that a material irreconcilable conflict exists, the Company and other
Participating Insurance Companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of 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 Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund, 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, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) 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.
7.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; 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. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5 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
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account 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 Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of 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
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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.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of 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 Fund's shares or the Contracts
and:
(i) 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 Fund 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 Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales
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literature of the Fund 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
Fund Shares; or
(iii) 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 Fund 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 a statement or omission was
made in reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) 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, as limited by and in accordance with the
provisions of 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
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's 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 Fund, 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 not be 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.
8.1(d). The Indemnified Parties will promptly notify the Company of
the
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commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, 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 Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or prospectus or sales literature of the Fund (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
Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) 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 for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter or
persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus,
or sales literature covering the Contracts, 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 statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Fund; or
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(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or
otherwise, to comply with the diversification requirements specified
in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter; as limited by and in accordance
with the provisions of Section 8.2(b) and 8.2(c) hereof.
8.2(b) The Underwriter 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 such
Indemnified Party's 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 and duties under this Agreement or to
each Company or the Account whichever is applicable.
8.2(c) The Underwriter 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 Underwriter 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 Underwriter of
any such claim shall not relieve the Underwriter 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 Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter'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 Underwriter will not be 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.
8.2(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3 Indemnification By the Fund
8.3(a) The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
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the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's 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 and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c) The Fund 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 Fund 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 Fund of any
such claim shall not relieve the Fund 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 Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund'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 Fund will not be
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.
8.3(d) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
15
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ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
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
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M of
the Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial
16
<PAGE>
condition or prospects since the date of this Agreement or is the subject
of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised
in good faith, that either the Fund or the Underwriter has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to
the Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty-five (45) days after the notice
specified in Section 1.6(b) was given.
10.2 Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund 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 Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 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.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"). Upon request, the Company will promptly
furnish to the Fund and the Underwriter the opinion of counsel for the Company
(which counsel shall be reasonably satisfactory to the Fund and the Underwriter)
to the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, the Company shall not prevent Contract Owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
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.
17
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If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
One Moody Plaza
Galveston, Texas 77550
Attention: Sr. VP & Chief Actuary
with a copy to:
Jerry L. Adams
Greer, Herz & Adams, L.L.P.
One Moody Plaza, 18th Floor
Galveston, Texas 77550
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 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 until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 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.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of 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.
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<PAGE>
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.
12.7 The Fund and Underwriter agree that to the extent any advisory
or other fees received by the Fund, the Underwriter or the Adviser are
determined to be unlawful in legal or administrative proceedings under the 1973
NAIC model variable life insurance regulation in the states of California,
Colorado, Maryland or Michigan, the Underwriter shall indemnify and reimburse
the Company for any out of pocket expenses and actual damages the Company has
incurred as a result of any such proceeding; provided however that the
provisions of Section 8.2(b) of this and 8.2(c) shall apply to such
indemnification and reimbursement obligation. Such indemnification and
reimbursement obligation shall be in addition to any other indemnification and
reimbursement obligations of the Fund and/or the Underwriter under this
Agreement.
12.8 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.
12.9 This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.10 The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under generally
accepted accounting principles ("GAAP"), as soon as practical and in
any event within 105 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory and GAAP), as soon
as practical and in any event within 45 days after the end of each
quarterly period;
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
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<PAGE>
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as practical
after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special audit
made by them of the books of the Company, as soon as practical after
the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused 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 of the date
specified below.
Company:
AMERICAN NATIONAL INSURANCE
COMPANY
By its authorized officer,
By
------------------------------------
Title:Vice President and
Chief Actuary
Date:
---------------------------------
Fund:
VARIABLE INSURANCE PRODUCTS
FUND
By its authorized officer,
By:
------------------------------------
Title:Senior Vice President
Date:
---------------------------------
20
<PAGE>
Underwriter:
FIDELITY DISTRIBUTORS
CORPORATION
By its authorized officer,
By:
------------------------------------
Title: President
Date:
---------------------------------
21
<PAGE>
Schedule A
Accounts
Name of Account Date of Resolution of Company's
Board which Established the
Account
Variable Universal Life July 30, 1987
Insurance
Variable Annuity Contracts December 20, 1991
22
<PAGE>
Schedule B
Contracts
1. Contract Forms:
FL89
VA93-NQ
VA93-PQ
GUA93
SPIVA93
23
<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step#2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement.
Underwriter will provide at least one copy of the last Annual Report to the
Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
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<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent to Customers
by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (this is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareholder. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for
postmark information would be due to an insurance company's
internal procedure and has not been required by Fidelity in the
past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee", then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent
25
<PAGE>
back to Customer with an explanatory letter, a new Card and return
envelope. The mutilated or illegible Card is disregarded and considered to
be not received for purposes of vote tabulation. Any Cards that have
"kicked out" (e.g. mutilated, illegible) of the procedure are "hand
verified," i.e., examined as to why they did not complete the system. Any
questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
26
<PAGE>
Exhibit 99.8c
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
AMERICAN NATIONAL INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 16th day of August, 1993 by
and among AMERICAN NATIONAL INSURANCE COMPANY, (hereinafter the "Company"), a
Texas corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts (hereinafter the
"Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund 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 insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company
1
<PAGE>
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable life and annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1., the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 10:00 a.m. Boston 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 Fund calculates
its net asset value pursuant to the rules of the Securities and Exchange
Commission.
2
<PAGE>
1.2 The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
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 Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4 The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6 The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable life and variable annuity contracts with the form
number(s) which are listed on Schedule B attached hereto and incorporated herein
by this reference, as such Schedule B may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, or in the Company's general
account, provided that such amounts may also be invested in an investment
company other than the Fund if (a) such other investment company, or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of all the Portfolios of the Fund;
or (b) the Company gives the Fund and the Underwriter 45 days written notice of
its intention to make such other investment company available as a funding
vehicle for the Contracts; or (c) such other investment company was available
as a funding vehicle for the Contracts prior to the date of this Agreement and
the Company so informs the Fund and Underwriter prior to their signing this
Agreement; or (d) the Fund or Underwriter consents to the use of such other
investment company.
3
<PAGE>
1.7 The company shall pay for Fund shares on the next business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9 The Fund 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 Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund 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 (normally 6:30 p.m.
Boston time) and shall use its best efforts to make such net asset value per
share available by 7 p.m. Boston 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; 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 each Account prior to any issuance or sale thereof as a segregated
asset account under Section 3.75 of the Texas Insurance Code and has registered
or, prior to any issuance or sale of the Contracts, will register each Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Texas and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund 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 effect the continuous offering of its shares. The Fund
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 Fund or the
Underwriter.
4
<PAGE>
2.3 The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4 The Company represents that the Contracts are currently treated
as endowment, annuity or life insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.5 The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6 The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Texas and the Fund and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the State of Texas to the extent required to perform this Agreement.
2.7 The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of Texas and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the
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laws of the State of Texas and any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund, in an amount not less than the minimal coverage as required currently
by entities subject to the requirements of Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
ARTICLE III. Prospectuses and Proxy Statements: Voting
3.1 The Underwriter shall provide the Company (at the Company's
expense) with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
for the Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document (such printing to be at the
Company's expense).
3.2 The Fund's prospectus shall state that the statement of
Additional Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is available
from the Fund), and the Underwriter (or the Fund), 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 Fund, at its expense, shall provide the Company with copies
of its proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
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(iii) vote Fund shares for which no instructions have been received
in the same proportion as Fund shares of such portfolio 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
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule C attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
3.5 The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee object to such use within fifteen 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 Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee 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 at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee object to such use
within fifteen Business Days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or
make any
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representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the 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 published reports for each Account which are in the public domain
or 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 Fund 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, application for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6 The company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, 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
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, 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 billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1 The Fund and Underwriter shall pay no fee or other compensation
to the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund.
Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this
Agreement shall
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be paid by the Fund. The Fund 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 Fund, in accordance with applicable
state laws prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund'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 any federal or state law, all taxes on the issuance or transfer of
the Fund's shares.
5.3 The Company shall bear the expenses of printing and distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. Diversification
6.1 The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 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
Regulations.
ARTICLE VII. Potential Conflicts
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material 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 interpretative 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 Portfolio 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 of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2 The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of
its disinterested
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trustees, that a material irreconcilable conflict exists, the Company and other
Participating Insurance Companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of 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 Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund, 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, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) 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.
7.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; 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. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5 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
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account 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 Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of 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
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<PAGE>
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.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and each trustee of the Board and officers and each person, if any, who controls
the Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of 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 Fund's shares or the Contracts
and:
(i) 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 Fund 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 Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales
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<PAGE>
literature of the Fund 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
Fund Shares; or
(iii) 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 Fund 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 a statement or omission was
made in reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) 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, as limited by and in accordance with the
provisions of 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
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's 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 Fund, 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 not be 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.
8.1(d). The Indemnified Parties will promptly notify the Company of
the
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<PAGE>
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, 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 Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or prospectus or sales literature of the Fund (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
Underwriter or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) 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 for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or Underwriter or
persons under their control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus,
or sales literature covering the Contracts, 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 statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish
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the materials under the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to comply with
the diversification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter; as limited by and in accordance
with the provisions of Section 8.2(b) and 8.2(c) hereof.
8.2(b) The Underwriter 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 such
Indemnified Party's 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 and duties under this Agreement or to
each Company or the Account whichever is applicable.
8.2(c) The Underwriter 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 Underwriter 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 Underwriter of
any such claim shall not relieve the Underwriter 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 Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter'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 Underwriter will not be 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.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3 Indemnification By the Fund
8.3(a) The Fund agrees to indemnify and hold harmless the Company,
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the
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Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of the Board or any member thereof, are related to
the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement
(including a failure to comply with the diversification requirements
specified in Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's 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 and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c) The Fund 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 Fund 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 Fund of any
such claim shall not relieve the Fund 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 Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund'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 Fund will not be
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.
8.3(d) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
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<PAGE>
ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
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
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M of
the Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial
16
<PAGE>
condition or prospects since the date of this Agreement or is the subject
of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised
in good faith, that either the Fund or the Underwriter has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to
the Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty-five (45) days after the notice
specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund 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 Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 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.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally Required Redemption"). Upon request, the Company will promptly
furnish to the Fund and the Underwriter the opinion of counsel for the Company
(which counsel shall be reasonably satisfactory to the Fund and the Underwriter)
to the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, the Company shall not prevent Contract Owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
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.
17
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If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
One Moody Plaza
Galveston, Texas 77550
Attention: Sr. VP & Chief Actuary
with a copy to:
Jerry L. Adams
Greer, Herz & Adams, L.L.P.
One Moody Plaza, 18th Floor
Galveston, Texas 77550
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 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 until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 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.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
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<PAGE>
12.5 If any provision of 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.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable life
insurance operations of the Company are being conducted in a manner consistent
with the California Variable Life Insurance Regulations and any other applicable
law or regulations.
12.7 The Fund and Underwriter agree that to the extent any advisory
or other fees received by the Fund, the Underwriter or the Adviser are
determined to be unlawful in legal or administrative proceedings under the 1973
NAIC model variable life insurance regulation in the states of California,
Colorado, Maryland or Michigan, the Underwriter shall indemnify and reimburse
the Company for any out of pocket expenses and actual damages the Company has
incurred as a result of any such proceeding; provided however that the
provisions of Section 8.2(b) of this and 8.2(c) shall apply to such
indemnification and reimbursement obligation. Such indemnification and
reimbursement obligation shall be in addition to any other indemnification and
reimbursement obligations of the Fund and/or the Underwriter under this
Agreement.
12.8 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.
12.9 This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
12.10 The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under generally
accepted accounting principles ("GAAP"), as soon as practical and in
any event within 105 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory and GAAP), as soon
as practical and in any event within 45 days after the end of each
quarterly period;
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<PAGE>
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as practical
after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special audit
made by them of the books of the Company, as soon as practical after
the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused 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 of the date
specified below.
Company:
AMERICAN NATIONAL INSURANCE
COMPANY
By its authorized officer,
By
--------------------------------------
Title:Vice President and
Chief Actuary
Date:
-----------------------------------
Fund:
VARIABLE INSURANCE PRODUCTS
FUND II
By its authorized officer,
By:
--------------------------------------
Title:Senior Vice President
Date:
-----------------------------------
20
<PAGE>
Underwriter:
FIDELITY DISTRIBUTORS
CORPORATION
By its authorized officer,
By:
--------------------------------------
Title: President
Date:
-----------------------------------
21
<PAGE>
Schedule A
Accounts
Name of Account Date of Resolution of Company's
Board which Established the
Account
Variable Universal Life July 30, 1987
Insurance
Variable Annuity Contracts December 20, 1991
22
<PAGE>
Schedule B
Contracts
1. Contract Forms:
FL89
VA93-NQ
VA93-PQ
GUA93
SPIVA93
23
<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step#2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement.
Underwriter will provide at least one copy of the last Annual Report to the
Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
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<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent to Customers
by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (this is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareholder. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for
postmark information would be due to an insurance company's
internal procedure and has not been required by Fidelity in the
past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee", then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote
25
<PAGE>
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible) of
the procedure are "hand verified," i.e., examined as to why they did not
complete the system. Any questions on those Cards are usually remedied
individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
26
<PAGE>
Exhibit 99.8d
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND III,
FIDELITY DISTRIBUTORS CORPORATION
and
AMERICAN NATIONAL INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 1st day of January, 1998 by
and among AMERICAN NATIONAL INSURANCE COMPANY, (hereinafter the "Company"), a
Texas corporation, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each such account hereinafter referred to as the "Account"), and
the VARIABLE INSURANCE PRODUCTS FUND III, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts (hereinafter the
"Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund 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 insurance
companies which have entered into participation agreements with the Fund and the
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
under this Agreement, as may be amended from time to time by mutual agreement of
the parties hereto (each such series hereinafter referred to as a "Portfolio");
and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated September 17, 1986 (File No. 812-6422), granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder,
1
<PAGE>
to the extent necessary to permit shares of the Fund to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies (hereinafter the "Shared
Funding Exemptive Order"); and
WHEREAS, the Fund 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, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
insurance and variable annuity contracts and/or variable life insurance policies
under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts and
variable life insurance policies; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided that
the Fund
2
<PAGE>
receives notice of such order by 10:00 a.m. Boston 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 Fund calculates its net asset
value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
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 Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus. The Company agrees that all net amounts
available under the variable annuity contracts and variable life insurance
policies with the form number(s) which are listed on Schedule A attached hereto
and incorporated herein by this reference, as such Schedule A may be amended
from time to time hereafter by mutual written agreement of all the parties
hereto, (the "Contracts") shall be invested in the Fund, in such other Funds
advised by the Adviser as may be mutually agreed to in writing by the parties
hereto, or in the Company's general account, provided that such amounts may also
be invested in an investment company other than the Fund if (a) such other
investment company, or series thereof, has investment objectives or policies
that are substantially different from the investment objectives and policies of
all the Portfolios of the Fund; or (b) the Company gives the Fund and the
Underwriter 45 days written notice of its
3
<PAGE>
intention to make such other investment company available as a funding vehicle
for the Contracts; or (c) such other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Fund and Underwriter prior to their signing this
Agreement (a list of such funds appearing on Schedule C to this Agreement); or
(d) the Fund or Underwriter consents to the use of such other investment
company.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund 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 Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund 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 (normally by 6:30 p.m. Boston time)
and shall use its best efforts to make such net asset value per share available
by 7 p.m. Boston 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; 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 each
Account prior to any issuance or sale thereof as a segregated asset account
under Section 3.75 of the Texas Insurance Code and has registered or, prior to
any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
4
<PAGE>
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Texas and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund 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 effect the continuous offering of its shares. The Fund
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 Fund or the
Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated as
annuity or life insurance contracts, under applicable provisions of the Code and
that it will make every effort to maintain such treatment and that it will
notify the Fund and the Underwriter immediately upon having a reasonable basis
for believing that the Contracts have ceased to be so treated or that they might
not be so treated in the future.
2.5. With respect to Initial Class Shares, the Fund has adopted a "no fee"
or "defensive" Rule 12b-1 Plan under which it makes no payments for distribution
expenses. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have a board of trustees, a
majority of whom are not interested persons of the Fund, formulate and approve
any plan under Rule 12b-1 to finance distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Texas and the Fund and the Underwriter represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the State of Texas to the extent required to perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Texas and all applicable state and
federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
5
<PAGE>
2.9. The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of Texas
and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, and that said bond is
issued by a reputable bonding company, includes coverage for larceny and
embezzlement, and is in an amount not less than $5 million. The Company agrees
to make all reasonable efforts to see that this bond or another bond containing
these provisions is always in effect, and agrees to notify the Fund and the
Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many printed copies
of the Fund's current prospectus and Statement of Additional Information as the
Company may reasonably request. If requested by the Company in lieu thereof,
the Fund shall provide camera-ready film containing the Fund's prospectus and
Statement of Additional Information, and such other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
prospectus and/or Statement of Additional Information for the Fund is amended
during the year) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document, and to have the Statement of
Additional Information for the Fund and the Statement of Additional Information
for the Contracts printed together in one document. Alternatively, the Company
may print the Fund's prospectus and/or its Statement of Additional Information
in combination with other fund companies' prospectuses and statements of
additional information. Except as provided in the following three sentences,
all expenses of printing and distributing Fund prospectuses and Statements of
Additional Information shall be the expense of the Company. For prospectuses
and Statements of Additional Information provided by the Company to its existing
owners of Contracts in order to update disclosure annually as required by the
1933 Act and/or the 1940 Act, the cost of printing shall be borne by the Fund.
If the Company chooses to receive camera-ready film in lieu of receiving printed
copies of the Fund's
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prospectus, the Fund will reimburse the Company in an amount equal to the
product of A and B where A is the number of such prospectuses distributed to
owners of the Contracts, and B is the Fund's per unit cost of typesetting and
printing the Fund's prospectus. The same procedures shall be followed with
respect to the Fund's Statement of Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications (except
for prospectuses and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the same
proportion as Fund shares of such portfolio for which
instructions have been received in that separate account,
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
for variable contract owners. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with the standards set forth
on Schedule B attached hereto and incorporated herein by this reference, which
standards will also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
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ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen 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 Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee 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 at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the 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 published reports for each Account which are in the public domain
or 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 Fund 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 Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations
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for voting instructions, 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 Contracts or each Account,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: 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 billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1. To the extent that the Fund or any Portfolio has adopted and
implemented a plan pursuant to Rule 12b-1 to finance distribution expenses, the
Underwriter may make payments to the Company or to the underwriter with respect
to the Contracts if and in amounts agreed to by the Underwriter in writing and
such payments will be made out of existing fees otherwise payable to the
Underwriter, past profits of the Underwriter or other resources available to the
Underwriter. No such payments shall be made directly by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund 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 Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund'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 any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by the
Company.
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<PAGE>
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in
such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 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
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material 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 interpretative 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 Portfolio 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 of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. 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 and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of 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 Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, 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, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor
10
<PAGE>
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.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; 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. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. 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
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account 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 Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of 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.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive
11
<PAGE>
Order) on terms and conditions materially different from those contained in the
Shared Funding Exemptive Order, then (a) the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be necessary
to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls the
Fund 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 Fund's shares or the Contracts
and:
(i) 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 Fund 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 Fund shares; or
(ii) 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 Fund 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 Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material
12
<PAGE>
fact contained in a Registration Statement, prospectus, or sales
literature of the Fund 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 a statement or omission was made in
reliance upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) 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, as limited by and in accordance with the provisions of
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 incurred or assessed against an Indemnified Party as such
may arise from such Indemnified Party's 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 Fund, 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 not be
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.
8.1(d). The Indemnified Parties will promptly notify the Company of
the
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<PAGE>
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, 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 Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Fund (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 Underwriter
or Fund by or on behalf of the Company for use in the
Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) 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 for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or
Underwriter or persons under their control, with respect to the
sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, 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 statement or
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund; or
14
<PAGE>
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and
in accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b). The Underwriter 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 such
Indemnified Party's 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 and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter 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 Underwriter 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 Underwriter of
any such claim shall not relieve the Underwriter 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 Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter'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 Underwriter will not be 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.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company,
and each of
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<PAGE>
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Fund) or litigation (including legal and other expenses) to which
the Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements result from the gross negligence, bad
faith or willful misconduct of the Board or any member thereof, are related to
the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the
diversification requirements specified in Article VI of this
Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's 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 and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund 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 Fund 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 Fund of any
such claim shall not relieve the Fund 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 Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund'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 Fund will not be
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.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the
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<PAGE>
commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, with respect to the operation of either Account, or
the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
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
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the
use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may
fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified
in Article VI hereof; or
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<PAGE>
(f) termination by either the Fund or the Underwriter by written notice
to the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in
good faith, that the Company and/or its affiliated companies has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the
written notice specified in Section 1.6(b) hereof and at the time
such notice was given there was no notice of termination outstanding
under any other provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective forty five
(45) days after the notice specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund 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 Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 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.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act.
Upon request, the Company will promptly furnish to the Fund and the Underwriter
the opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
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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 Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
One Moody Plaza
Galveston, TX 77550
Attention: Sr. VP & Chief Actuary
with a copy to:
Jerry L. Adams
Greer, Herz & Adams, L.L.P.
One Moody Plaza
Galveston, TX 77550
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 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 until such time as it may come into
the public domain without the express written consent of the affected party.
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12.3 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.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of 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.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
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.
12.8. This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
The Company shall promptly notify the Fund and the Underwriter of any change in
control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any), as
soon as practical and in any event within 90 days after the end
of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP, if
any), as soon as practical and in any event within 45 days
after the end of each quarterly period:
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(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon
as practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as
practical after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused 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 of the date
specified below.
AMERICAN NATIONAL LIFE INSURANCE COMPANY
By: _________________________
Name: _________________________
Title: _________________________
VARIABLE INSURANCE PRODUCTS FUND III
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
Vice President
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<PAGE>
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
- -------------------------------------- -------------------
American National Variable Life FPVA-NQ
Separate Account established FPVA-PQ
July 30, 1987 VA95-NQ
VA95-PQ
FL89
GUA95
SPIVA94
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<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter as
early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of units
which are attributed to each contractowner/policyholder (the "Customer") as
of the Record Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers' accounts as
of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by the
Company either before or together with the Customers' receipt of a proxy
statement. Underwriter will provide the last Annual Report to the Company
pursuant to the terms of Section 3.3 of the Agreement to which this Schedule
relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the Card
before it is printed. Allow approximately 2-4 business days for printing
information on the Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
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<PAGE>
5. During this time, Fidelity Legal will develop, produce, and the Fund will
pay for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by the
Insurance Company). Contents of envelope sent to Customers by Company will
include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation
time is calculated as calendar days from (but not including) the
meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and is
the signature needed on the Card.
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<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter, a new
Card and return envelope. The mutilated or illegible Card is disregarded
and considered to be not received for purposes of vote tabulation. Any
Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure
are "hand verified," i.e., examined as to why they did not complete the
system. Any questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) Fidelity Legal must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be required
from the Company as well as an original copy of the final vote. Fidelity
Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal will
be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
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SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company.
American National Investment Accounts, Inc.
Variable Insurance Products Fund
Variable Insurance Products Fund II
MFS Variable Insurance Products Trust
T. Rowe Price International Series, Inc.
T. Rowe Price Equity Series, Inc.
T. Rowe Price Fixed Income Series, Inc.
Van Eck Worldwide Insurance Trust
Federated Insurance Series
Lazard Retirement Series, Inc.
26
<PAGE>
Exhibit 99.8e
PARTICIPATION AGREEMENT
Among
T. ROWE PRICE INTERNATIONAL SERIES, INC.,
T. ROWE PRICE EQUITY SERIES, INC.,
T. ROWE PRICE FIXED INCOME SERIES, INC.,
T. ROWE PRICE INVESTMENT SERVICES, INC.,
and
AMERICAN NATIONAL LIFE
THIS AGREEMENT, made and entered into as of this ________ day of
________________________, 1997 by and among American National Life (hereinafter,
the "Company"), a Texas insurance company, on its own behalf and on behalf of
each segregated asset account of the Company set forth on Schedule A hereto as
may be amended from time to time (each account hereinafter referred to as the
"Account"), and the undersigned funds, each, a corporation organized under the
laws of Maryland (hereinafter referred to as the "Fund") and T. Rowe Price
Investment Services, Inc. (hereinafter the "Underwriter"), a Maryland
corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is or will be available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company
Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T) (b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies
(hereinafter the "Shared Funding Exemptive Order"); and
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<PAGE>
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, T. Rowe Price Associates, Inc. and Rowe Price-Fleming
International, Inc. (each hereinafter referred to as the "Adviser") are each
duly registered as an investment adviser under the federal Investment Advisers
Act of 1940, as amended, and any applicable state securities laws; and
WHEREAS, the Company has registered or will register certain variable life
insurance or variable annuity contracts supported wholly or partially by the
Account (the "Contracts") under the 1933 Act, and said Contracts are listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid Contracts; and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Underwriter agrees to sell to the Company those shares of the
Designated Portfolios which the Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Designated Portfolios.
1.2 The Fund agrees to make shares of the Designated Portfolios available
for purchase at the applicable net asset value per share by the Company and the
Account on those days on which the Fund calculates its net asset value pursuant
to rules of the SEC, and the Fund
2
<PAGE>
shall use its best efforts to calculate such net asset value on each day which
the New York Stock Exchange is open for trading. Notwithstanding the foregoing,
the Board of Directors of the Fund (hereinafter the "Board") may refuse to sell
shares of any Designated Portfolio to any person, or suspend or terminate the
offering of shares of any Designated Portfolio if such action is required by law
or by regulatory authorities having jurisdiction, or is, in the sole discretion
of the Board 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 Designated Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Designated Portfolios will be sold to the general public. The
Fund and the Underwriter will not sell Fund shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Articles I and VII of this Agreement is in effect to govern such sales.
1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Designated Portfolios held by the Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption, except that
the Fund reserves the right to suspend the right of redemption or postpone the
date of payment or satisfaction upon redemption consistent with Section 22(e) of
the 1940 Act and any sales thereunder, and in accordance with the procedures and
policies of the Fund as described in the then current prospectus.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Account, and receipt by such designee shall constitute receipt by the Fund;
provided that the Company receives the order by 4:00 p.m. Baltimore time and the
Fund receives notice of such order by 9:30 a.m. Baltimore 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 Fund calculates its net
asset value pursuant to the rules of the SEC.
1.6 The Company agrees to purchase and redeem the shares of each
Designated Portfolio offered by the then current prospectus of the Fund and in
accordance with the provisions of such prospectus.
1.7 The Company shall pay for Fund shares on the next Business Day after
receipt of an order to purchase Fund shares. Payment shall be in federal funds
transmitted by wire by 4:00 p.m. Baltimore time. If payment in Federal Funds
for any purchase is not received or is received by the Fund after 4:00 p.m.
Baltimore time on such Business Day, the Company shall promptly, upon the Fund's
request, reimburse the Fund for any charges, costs, fees, interest or other
expenses incurred by the Fund in connection with any advances to, or borrowings
or overdrafts by, the Fund, or any similar expenses incurred by the Fund, as a
result of portfolio transactions effected by the Fund based upon such purchase
request. For purposes of Section 2.8 and 2.9 hereof, upon receipt by the Fund
of the federal funds so wired, such funds shall cease to be the responsibility
of the Company and shall become the responsibility of the Fund.
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<PAGE>
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9 The Fund 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 Designated Portfolios' shares. The Company hereby
elects to receive all such income, dividends, and capital gain distributions as
are payable on Designated Portfolio shares in additional shares of that
Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions. The Fund shall use its best efforts to
furnish advance notice of the day such dividends and distributions are expected
to be paid.
1.10 The Fund shall make the net asset value per share for each Designated
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Baltimore time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Baltimore time.
1.11 The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.3 and Article VI hereof) and the cash
value of the Contracts may be invested in other investment companies, provided,
however, that (a) such other investment company, or series thereof, has
investment objectives or policies that are different from the investment
objectives and policies of the Fund; or (b) the Company gives the Fund and the
Underwriter 45 days written notice of its intention to make such other
investment company available as a funding vehicle for the Contracts; or (c) such
other investment company was available as a funding vehicle for the Contracts
prior to the date of this Agreement and the Company so informs the Fund and
Underwriter prior to their signing this Agreement; or (d) the Fund or
Underwriter consents to the use of such other investment company, such consent
not to be unreasonably withheld.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; 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
prior to any issuance or sale thereof as a segregated asset account under the
Texas insurance laws 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 to serve as a segregated investment account
for the Contracts.
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2.2 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the state of Texas and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund 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 effect the continuous offering of its shares. The Fund
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 Fund or the
Underwriter.
2.3 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it may
make such payments in the future. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund will undertake to have a
Board, a majority of whom are not interested persons of the Fund, formulate and
approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4 The Fund makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states, except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the laws
of the state of Texas to the extent required to perform this Agreement.
2.5 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply in all
material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Texas and any applicable state and
federal securities laws.
2.7 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered under all applicable federal and state securities laws
and that the Adviser shall perform its obligations for the Fund in compliance in
all material respects with the laws of the State of Texas and any applicable
state and federal securities laws.
2.8 The Fund and the Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimum
coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
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2.9 The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Fund are covered by
a blanket fidelity bond or similar coverage in an amount not less than $5
million. The aforesaid bond includes coverage for larceny and embezzlement and
is issued by a reputable bonding company. The Company agrees that any amounts
received under such bond in connection with claims that arise from the
arrangements described in this Agreement will be held by the Company for the
benefit of the Fund. The Company agrees to make all reasonable efforts to see
that this bond or another bond containing these provisions is always in effect,
and agrees to notify the Fund and the Underwriter in the event that such
coverage no longer applies. The Company agrees to exercise its best efforts to
ensure that other individuals/entities not employed or controlled by the Company
and dealing with the money and/or securities of the Fund maintain a similar bond
or coverage in a reasonable amount.
ARTICLE III. Prospectuses, Statements of Additional Information, and Proxy
Statements; Voting
3.1 The Underwriter shall provide the Company (at the Company's expense)
with as many copies of the Fund's current prospectus (describing only the
Designated Portfolios listed on Schedule A) as the Company may reasonably
request. If requested by the Company in lieu thereof, the Fund shall provide
such documentation (including a final copy of the new prospectus as set in type
at the Fund's expense) and other assistance as is reasonably necessary in order
for the Company once each year (or more frequently if the prospectus for the
Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document.
3.2 The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available from the Company (or,
in the Fund's discretion, from the Fund), and the Underwriter (or the Fund), at
its expense, shall print, or otherwise reproduce, and provide a copy of such SAI
free of charge to the Company for itself and for any owner of a Contract who
requests such SAI.
3.3 The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4 The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii) vote Fund shares for which no instructions have been received
in the same
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<PAGE>
proportion as Fund shares of such Designated Portfolio for which instructions
have been received, so long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting privileges for variable
contract owners or to the extent otherwise required by law. The Company reserves
the right to vote Fund shares held in any segregated asset account in its own
right, to the extent permitted by law.
3.5 Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Shared Funding Exemptive Order
and consistent with any reasonable standards that the Fund may adopt.
3.6 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act
in accordance with the SEC's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors or trustees and with whatever
rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material
that the Company develops or uses and in which the Fund (or a Portfolio thereof)
or the Adviser or the Underwriter is named, at least fifteen calendar days prior
to its use. No such material shall be used if the Fund or its designee
reasonably object to such use within fifteen calendar days after receipt of such
material. The Fund or its designee reserves the right to reasonably object to
the continued use of such material, and no such material shall be used if the
Fund or its designee so object.
4.2 The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus or SAI for the Fund
shares, as such registration statement and prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company, each piece of sales literature or other
promotional material in which the Company, and/or its Account, is named at least
fifteen calendar days prior to its use. No such material shall be used if the
Company reasonably objects to such use within fifteen calendar days after
receipt of such material. The Company reserves the right to reasonably object
to the continued use of such material and no such material shall be used if the
Company so objects.
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4.4. The Fund and the Underwriter 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 the information or representations
contained in a registration statement, prospectus, or SAI for the Contracts, as
such registration statement, prospectus or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or 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 Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, 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 Fund or its shares, contemporaneously with the filing of such
document(s) with the SEC or other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, SAIs, reports, solicitations for voting
instructions, 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 Contracts or the Account, contemporaneously with the
filing of such document(s) with the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: 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 billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Funds.
ARTICLE V. Fees and Expenses
5.1 The Fund and the Underwriter shall pay no fee or other compensation to
the Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing, and such payments will be made out of existing fees otherwise payable
to the Underwriter, past profits of the Underwriter, or other resources
available to the Underwriter. No such payments shall be made directly by the
Fund. Currently, no such payments are contemplated.
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<PAGE>
5.2 All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund, except as otherwise provided herein. The Fund 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 Fund, in accordance with applicable state laws prior to their
sale. The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund'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 any
federal or state law, and all taxes on the issuance or transfer of the Fund's
shares.
5.3 The Company shall bear the expenses of printing the Fund's prospectus
(in accordance with 3.1) and of distributing the Fund's prospectus, proxy
materials, and reports to Contract owners and prospective Contract owners.
ARTICLE VI. Diversification and Qualification
6.1 Subject to the Company's maintaining the treatment of the Contracts as
life insurance, endowment, or annuity contracts under applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code") and the regulations
issued thereunder (or any successor provisions), the Fund will invest its assets
in such a manner as to ensure that the Contracts will be treated as annuity,
endowment, or life insurance contracts, whichever is appropriate, under the Code
and the regulations issued thereunder (or any successor provisions). Without
limiting the scope of the foregoing, the Fund will comply with Section 817(h) of
the Code and Treasury Regulation (S) 1.817-5, and any Treasury interpretations
thereof, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts, and any amendments or other
modifications or successor provisions to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify the Company of such breach and (b) to adequately diversify
the Fund so as to achieve compliance within the grace period afforded by
Regulation 817.5.
6.2 The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the Code, and that it will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provisions) and that it will notify the Company immediately upon having
a reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
6.3 Subject to the Fund's compliance with Section 817(h) of the Code and
Treasury Regulation '1.817-5, and any Treasury interpretations thereof, relating
to the diversification requirements for variable annuity, endowment, or life
insurance contracts, any amendments or other modifications or successor
provisions to such Sections or Regulations, the Company represents that the
Contracts are currently, and at the time of issuance shall be, treated as life
9
<PAGE>
insurance, endowment contracts, or annuity insurance contracts, under applicable
provisions of the Code, and that it will make every effort to maintain such
treatment, and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing the Contracts have ceased to be so
treated or that they might not be so treated in the future. The Company agrees
that any prospectus offering a contract that is a "modified endowment contract"
as that term is defined in Section 7702A of the Code (or any successor or
similar provision), shall identify such contract as a modified endowment
contract.
ARTICLE VII. Potential Conflicts. The following provisions apply effective
upon investment in the Fund by a separate account of a Participating Insurance
Company supporting variable life insurance contracts.
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material 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 interpretative 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 Portfolio 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 of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), 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 Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, 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, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a
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<PAGE>
change; and (2), establishing a new registered management investment company or
managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
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. Any such withdrawal
and termination must take place within six (6) months after the Fund gives
written notice that this provision is being implemented, and until the end of
that six month period the Fund shall continue to accept and implement orders by
the Company for the purchase (and redemption) of shares of the Fund.
7.5 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
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account 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 Fund shall continue to
accept and implement orders by the company for the purchase (and redemption) of
shares of the Fund.
7.6 For purposes of Section 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contract if an offer to do so has been declined by vote of a
majority of 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.
7.7 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as
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<PAGE>
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable; and (b) Sections 3.4, 3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund
and the Underwriter and each of their officers and directors and each person, if
any, who controls the Fund or the Underwriter 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 or 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 Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration Statement,
prospectus, or statement of additional information 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 Fund for use in the Registration
Statement, prospectus or statement of additional information 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 Fund shares;
or
(ii) 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 Fund not supplied by the
Company or persons under its control) or wrongful conduct of the Company or
persons under its authorization or control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) 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 Fund 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 a statement or omission was made in reliance upon information furnished to
the Fund by or on behalf of the Company; or
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<PAGE>
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise, to
comply with the qualification requirements specified in Article VI of this
Agreement); or
(v) 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,
as limited by and in accordance with the provisions of 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 such
Indemnified Party's 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 its obligations or duties under this Agreement.
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 an Indemnified Party, 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 and to settle the claim at its own expense; provided,
however, that no such settlement shall, without the Indemnified Parties' written
consent, include any factual stipulation referring to the Indemnified Parties or
their conduct. 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
not be 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.
8.1(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 Fund Shares or the Contracts or the operation
of the Fund.
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<PAGE>
8.2 Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of it directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or 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 Fund's
shares or the Contracts; and
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement or
prospectus or SAI or sales literature of the Fund (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
Underwriter or Fund by or on behalf of the Company for use in the Registration
Statement or prospectus for the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(ii) 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 for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful conduct of the Fund or
Underwriter or persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement, prospectus or sales
literature covering the Contracts, 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 statement or statements
therein not misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement (including
a failure, whether unintentional or in good faith or otherwise, to comply with
the diversification and other qualification requirements specified in Article VI
of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this Agreement or
arise out of or result from any other material breach of this Agreement by the
Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
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8.2(b). The Underwriter 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 such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
8.2(c). The Underwriter 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 Underwriter 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 Underwriter of
any such claim shall not relieve the Underwriter 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 Party, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action and to settle the claim at its own expense;
provided, however, that no such settlement shall, without the Indemnified
Parties' written consent, include any factual stipulation referring to the
Indemnified Parties or their conduct. After notice from the Underwriter to such
party of the Underwriter'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 Underwriter will not be 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.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3 Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including legal
and other expenses) to which the Indemnified Parties may be required to pay or
may become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, expenses, damages, liabilities or expenses (or
actions in respect thereof) or settlements, are related to the operations of the
Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement (including
a failure, whether
15
<PAGE>
unintentional or in good faith or otherwise, to comply with the diversification
and other qualification requirements specified in Article VI of this Agreement);
or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or arise out
of or result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund 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 such
Indemnified Party's 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 and duties under this Agreement or to
the Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c). The Fund 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 Fund 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 Fund of any
such claim shall not relieve the Fund 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 Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the expense thereof, with counsel satisfactory to the party named in the
action and to settle the claim at its own expense; provided, however, that no
such settlement shall, without the Indemnified Parties' written consent, include
any factual stipulation referring to the Indemnified Parties or their conduct.
After notice from the Fund to such party of the Fund'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 Fund will not be 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.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceeding against it or any of
its respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
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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 SEC may grant
(including, but not limited to, any Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to some or
all Designated Portfolios, by six (6) months' advance written notice delivered
to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Designated Portfolio based upon the Company's
determination that shares of the Fund are not reasonably available to meet the
requirements of the Contracts; provided that such termination shall apply only
to the Designated Portfolio not reasonably available; or
(c) termination by the Company by written notice to the Fund and the
Underwriter in the event any of the Designated Portfolio's shares are not
registered, issued or sold in accordance with applicable state and/or federal
law or such law precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company; or
(d) termination by the Fund or Underwriter in the event that formal
administrative proceedings are instituted against the Company by the NASD, the
SEC, the Insurance Commissioner or like official of any state or any other
regulatory body regarding the Company's duties under this Agreement or related
to the sale of the Contracts, the operation of any Account, or the purchase of
the Fund shares, provided, however, that the Fund or Underwriter determines in
its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the Company
to perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal administrative
proceedings are instituted against the Fund or Underwriter by the NASD, the SEC,
or any state securities or insurance department or any other regulatory body,
provided, however, that the Company determines in its sole judgment exercised in
good faith, that any such administrative proceedings will have a material
adverse effect upon the ability of the Fund or Underwriter to perform its
obligations under this Agreement; or
(f) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Designated Portfolio in the event that such
Designated Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M or fails to comply
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<PAGE>
with the Section 817(h) diversification requirements specified in Article VI
hereof, or if the Company reasonably believes that such Designated Portfolio may
fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written notice to the
Company in the event that the Contracts fail to meet the qualifications
specified in Article VI hereof; or
(h) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its business,
operations, financial condition, or prospects since the date of this Agreement
or is the subject of material adverse publicity; or
(i) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised in
good faith, that the Fund or the Underwriter has suffered a material adverse
change in its business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse publicity; or
(j) termination by the Fund or the Underwriter by written notice to
the Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.11 hereof and at the time such notice was given
there was no notice of termination outstanding under any other provision of this
Agreement; provided, however, any termination under this Section 10.1(j) shall
be effective sixty days after the notice specified in Section 1.11 was given.
10.2 Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund 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, the owners of the Existing Contracts may be
permitted to reallocate investments in the Fund, redeem investments in the Fund
and/or invest in the Fund upon the making of additional purchase payments under
the Existing Contracts. The parties agree that this Section 10.2 shall not
apply to any termination under Article VII and the effect of such Article VII
termination shall be governed by Article VII of this Agreement. The parties
further agree that this Section 10.2 shall not apply to any termination under
Section 10.1(g) of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act.
Upon request, the Company will promptly furnish to the Fund and the Underwriter
the opinion of counsel for the Company (which counsel
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shall be reasonably satisfactory to the Fund and the Underwriter) to the effect
that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts without
first giving the Fund or the Underwriter 90 days notice of its intention to do
so.
10.4 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
10.5 Any successor by law of the parties hereto shall be entitled to the
benefits of the indemnification provisions contained in Article VIII.
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<PAGE>
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 Fund:
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
If to the Company:
If to Underwriter:
T. Rowe Price Investment Services
100 East Pratt Street
Baltimore, Maryland 21202
Attention: John Cammack
Copy to: Henry H. Hopkins, Esq.
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property of
such Fund, and in the case of a series company, the respective Designated
Portfolio listed on Schedule A hereto as though such Designated Portfolio had
separately contracted with the Company and the Underwriter for the enforcement
of any claims against the Fund. The parties agree that neither the Board,
officers, agents or shareholders assume any personal liability or responsibility
for obligations entered into by or on behalf of the Fund.
12.2 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
20
<PAGE>
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain.
12.3 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.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of 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.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Texas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner consistent with Texas
variable annuity laws and regulations and any other applicable law or
regulations.
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.
12.8 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
21
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IN WITNESS WHEREOF, each of the parties hereto has caused 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 of the date specified below.
COMPANY:
AMERICAN NATIONAL LIFE
By its authorized officer
By:
------------------------------------------
Title:
Date:
FUND:
T. ROWE PRICE INTERNATIONAL SERIES, INC.
By its authorized officer
By:
------------------------------------------
Title:
Date:
FUND:
T. ROWE PRICE EQUITY SERIES, INC.
By its authorized officer
By:
------------------------------------------
Title:
Date:
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FUND:
T. ROWE PRICE FIXED INCOME SERIES, INC.
By its authorized officer
By:
------------------------------------------
Title:
Date:
UNDERWRITER:
T. ROWE PRICE INVESTMENT SERVICES, INC.
By its authorized officer
By:
------------------------------------------
Title:
Date:
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<PAGE>
SCHEDULE A
Name of Separate Account and Contracts Funded by Designated
Date Established by Board of Directors Separate Account Portfolios
T. Rowe Price International
Series, Inc.
T. Rowe Price International Stock
Portfolio
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Income
Portfolio
T. Rowe Price Mid-Cap Growth
Portfolio
T. Rowe Price Fixed Income Series,
Inc.
T. Rowe Price Limited-Term Bond
Portfolio
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EXHIBIT 10
PART 1 - APPLICATION FOR INSURANCE-AMERICAN NATIONAL INSURANCE [LOGO OF AMERICAN NATIONAL APPEARS HERE]
ONE MOODY PLAZA-GALVESTON, TEXAS 77550-7999
____________________________________________________________________________________________________________________________________
1. PROPOSED INSURED b. Birth State/Birth Place c. Age d. Sex e. Marital Status
a.__________________________________________ [ ] Mar. [ ] Sing.
Last Name First Name M.I. [ ] Sep. [ ] Wid [ ] Div.
____________________________________________________________________________________________________________________________________
f. Date of Birth Mo/Day/Yr g. Height and Weight h. Social Security Number/Tax ID No. i. Has proposed insured used
tobacco in any form during the
past twelve months?
[ ] Yes [ ] No
____________________________________________________________________________________________________________________________________
j. Residence Address Permanent Address and telephone Number
No. & Street_________________________________________________ No. & Street_______________________________________________
City, State_________________________________Zip______________ City, State___________________________Zip__________________
Home Phone (___)_____________County________________________
____________________________________________________________________________________________________________________________________
k. Occupation/Duties (Be Specific) l. Employed by and kind of business Date of employment
____________________________________________________________________________________________________________________________________
2. ADDITIONAL PERSON PROPOSED FOR INSURANCE b. Birth State/Birth Place d. Age e. Sex f. Marital Status
a.__________________________________________ ___________________________________________________ [ ] Mar. [ ] Sing.
Last Name First Name M.I. c. Relationship [ ] Sep. [ ] Wid [ ] Div.
____________________________________________________________________________________________________________________________________
g. Date of Birth Mo/Day/Yr h. Height and Weight i. Social Security Number/Tax ID No. j. Has additional insured used
tobacco in any form during the
past twelve months?
[ ] Yes [ ] No
____________________________________________________________________________________________________________________________________
k. Residence Address l. Occupation/Duties (Be Specific)
No. & Street_________________________________________________ ___________________________________________________________
City, State_________________________________Zip______________ m. Employed by and kind of business Date of employment
____________________________________________________________________________________________________________________________________
3. OWNER: [ ] Insured [ ] Plan Trustee [ ] Other_________________ Owner's Social Security Number_____________________________
Owner's Address_______________________________________________________________________________Owner's Age______________________
____________________________________________________________________________________________________________________________________
4. BENEFICIARY - First Second Beneficiary
a.______________________________________________________________ b. _____________________________________________________
Name Relationship Age Name Relationship Age
____________________________________________________________________________________________________________________________________
5. CHILDREN PROPOSED FOR INSURANCE b. Date of Birth c. Age d. Sex e. Relationship f. Height
a. Last Name First Name M.I. Mo/Day/Yr & Weight
_______________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________
g. Has the name of any child under age 18 been omitted? h. Is any child not living at the same address with the
[ ] Yes (Explain) [ ] No Proposed Insured [ ] Yes (Explain) [ ] No
____________________________________________________________________________________________________________________________________
6. COMPLETE FOR INSURANCE PLAN a. Plan___________________ b. Amount______________________
. Universal Life Death Benefit Option: [ ] A [ ] B . Benefits
. Par Dividend Option: [ ] Cash (Opt. 1) [ ] Premium Reduction (Opt. 2) [ ] Paid-Up Additions Rider $_________
[ ] Paid-Up Additions (Opt. 3) [ ] Accumulations (Opt. 4) [ ] Disability Waiver (premium)
[ ] One Year Term (Opt. 5) [ ] Disability Premium Waiver on both
Insured
. Term Riders TYPE $ AMOUNT [ ] Accidental Death $________________
_________________ __________________ [ ] Spouse Beneficial Option
_________________ __________________ [ ] Additional Increase Option
_________________ __________________ [ ] Guaranteed Increase Option
. Annuity Rider $________________ ___________________ __________________ . Automatic Premium Loan [ ] Yes [ ] No
(premium) (maturity age) (settlement option)
____________________________________________________________________________________________________________________________________
7. FOR VARIABLE LIFE ONLY
a. Select One or More Funds and Indicate Allocation
[ ] Money Market___________________________% [ ] Managed_____________________% [ ] Growth_______________________________%
[ ] Balanced_______________________________% [ ] ____________________________% Total (Must Equal 100%)__________________%
b. SUITABILITY FOR VARIABLE LIFE ONLY YES NO
Do you understand that the death benefit and cash value may increase or decrease depending on the investment
return on the contract? [ ] [ ]
Do you believe that this contract will meet your insurance needs and financial objectives? [ ] [ ]
Did you receive the appropriate Fund Prospectus? [ ] [ ]
Death Benefit May Be Variable or Fixed Under Specific Conditions.
____________________________________________________________________________________________________________________________________
8. PREMIUM DATA:
Issue Date:_____________________ Special Dating Instructions: Issue Age:____________________ Issue Date:______________________
a. Amount $________________________________
b. Direct Billing Address:____________________________________________________________________________________________________
Street City State Zip
c. Mode__________________________________________________ d. Method__________________________________________________________
e. Allotment Information
Payee Name____________________________________________________________________ Allotment Type [ ] A [ ] B [ ] C [ ] D
Rank________________________________ Branch___________________________________ Social Security Number _____/_____/______
____________________________________________________________________________________________________________________________________
f. Franchise Information Franchise Name____________________________________________________________________________________
Franchise Number_________________________________________ Individual Acct. # (ACH)_________________________________________
____________________________________________________________________________________________________________________________________
g. Amount Paid with Application $________________ [ ] Do not change premium; change face amount
[ ] Do not change face amount; change premium
Form 5663 Rev 5-9
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9. a. Total Insurance/Annuities in Force On Proposed Insured(s): If none in force indicate "NONE."
Full Name of Company POLICY NO. ISSUE Insured's Name Plan AMOUNT Acc. Dis. See "b"
DATE Death Inc. below
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
b. Will the insurance or annuity applied for replace or use cash values of any existing insurance or annuity Yes No
policy issued by any company? If "Yes," indicate which one(s). [ ] [ ]
____________________________________________________________________________________________________________________________________
10. Has the proposed insured applied for life or health insurance that was declined or modified? If, "Yes," give Yes No
details. [ ] [ ]
____________________________________________________________________________________________________________________________________
11. Has any Proposed Insured ever flown or does Proposed Insured contemplate flying as a pilot or student pilot, Yes No
or engage in, or intend to engage in any hazardous avocation or sport? If, "Yes," complete and submit Form 8313. [ ] [ ]
____________________________________________________________________________________________________________________________________
12. a. Family Physician, Specialist, or Clinic for Proposed Insured:
Name_______________________________________________________ Date Last Seen__________________ Tel. (___)__________________
Address____________________________________________________ Reason_______________________________________________________
____________________________________________________________________________________________________________________________________
b. Family Physician, Specialist, or Clinic for Additional Insured:
Name_______________________________________________________ Date Last Seen__________________ Tel. (___)__________________
Address____________________________________________________ Reason_______________________________________________________
____________________________________________________________________________________________________________________________________
13. HAS PROPOSED INSURED OR ADDITIONAL
PROPOSED INSURED: Yes No
a. Any abnormality, deformity, disease, or disorder or presently receiving treatment or
taking medicine of any kind? [ ] [ ]
b. Ever had a surgical operation or been advised to have an operation which was not
performed? [ ] [ ]
c. Ever had an X-ray, electrocardiogram, blood or urine test or other laboratory test?
If "Yes," State why, when, and where and by whom. [ ] [ ]
d. Ever made claim for or received insurance benefit, compensation or pension,
government or otherwise, on account of any injury or sickness? [ ] [ ]
e. Any impairment of sight or hearing? [ ] [ ]
f. Ever been under observation or treatment in any hospital, sanitarium, clinic or
rest home? [ ] [ ]
g. Ever received counseling or treatment regarding use of alcohol or drugs? [ ] [ ]
h. Ever used barbiturates, amphetamines, hallucinatory drugs, heroin, opiates, or
other narcotics, except as prescribed by a physician? [ ] [ ]
i. Ever had or been treated for high or low blood pressure, chest pain, sugar in the
urine; or for cancer in any form? [ ] [ ]
j. Ever been told by a physician he or she had an Immune Deficiency Disorder, AIDS,
the AIDS Related Complex (ARC) or tested positive on an AIDS related blood test? [ ] [ ]
k. Consulted or been treated or examined by any physician or practitioner for any cause
not previously mentioned in this application? [ ] [ ]
l. Is Proposed Insured now in good health? [ ] [ ]
m. If Proposed Insured is less than one year old, give birth weight________ lbs.______ oz.
Was the birth considered premature? [ ] [ ]
____________________________________________________________________________________________________________________________________
14. Give full details of all "Yes," answers to Question 13 a - m and is "No" on 13 l.
____________________________________________________________________________________________________________________________________
Question Insured's Reason, Condition Date Degree of Name and Address of Attending
Number Name Disease or Injury, etc. Recovery Physicians (Street, City, State)
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
APPLICATION DECLARATIONS & AGREEMENTS
The undersigned declares for himself/herself, and all other interested parties, that all of the answers in this application and any
supplements to it are full, complete, and true to the best of their knowledge and belief. They also agree that: (1) these answers as
written: (i) were given to induce the Company to issue a Policy; and (ii) shall form the basis for and become part of any Policy
issued on this application; (2) except as otherwise provided in the Condition Receipt with the same serial number as this
application; no Policy will be effective until it is: (i) issued; (ii) delivered to the applicant; and (iii) the full first premium
paid, all during the lifetime and good health of the Proposed Insured; (3) the Company may issue a Policy different from that
specified in this application by listing the difference(s) on the Policy Data Page, and acceptance of such different Policy will be
a ratification of the changes except that no changes in: (i) amount of insurance; (ii) classification; (iii) plan of insurance; (iv)
benefits will be effective unless agreed to by the Proposed Insured in this writing; (4) the Company is not bound by any statements
made by anyone or any other facts known to anyone concerning any Proposed Insured if not in writing this application or any
supplement to it; and (5) only the President or a Vice President or Secretary of the Company has the authority to waive any of the
Company rights or requirements or to waive or alter any of the provisions of; (i) this application; or (ii) any Policy issued on
this application.
Dated at ___________________________________________________ this __________________ day of ___________________________, 19____
City State
Witnessed by _______________________________________________ __________________________________________________________________
Signature of Licensed Agent Signature of Proposed Insured
Print Agent's Name__________________________________________ __________________________________________________________________
Signature of Additional Proposed Insured
__________________________________________________________________
Signature of Owner/Trustee if Qualified Plan
SIGNATURE REQUIRED IF CONDITIONAL RECEIPT TO BE DETACHED
I hereby certify that I have read and received the Conditional Receipt, and agree to its terms. I understand that the Company will
not permit acceptance of my payment or detachment of the Conditional Receipt unless this statement is true.
____________________________________________________________ __________________________________________________________________
Signature of Proposed Insured (if age 16 or older) Signature of Premium Payer
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AMERICAN NATIONAL INSURANCE COMPANY
SUPPLEMENTAL APPLICATION TO LIFE INSURANCE
Proposed Insured___________________________________________ Application #______________________________________________________
FOR VARIABLE LIFE ONLY
SELECT ONE OR MORE SUBACCOUNTS AND INDICATE ALLOCATION.
(The minimum percentage that may be allocated to any one Subaccount or to the Fixed Account
is 10% of the Net Premium. Fractional percentages may not be used. Total must equal 100%.)
AMERICAN NATIONAL FUNDS FIDELITY FUNDS
Growth____________________ % Money Market Portfolio___________________________________________________________ %
Balanced__________________ % High Income Portfolio____________________________________________________________ %
Money Market______________ % Equity-Income Portfolio__________________________________________________________ %
Managed___________________ % Growth Portfolio_________________________________________________________________ %
Overseas Portfolio_______________________________________________________________ %
Investment Grade Bond Portfolio__________________________________________________ %
Asset Manager Portfolio__________________________________________________________ %
Fixed Account_____________ % Index 500 Portfolio______________________________________________________________ %
Contrafund Portfolio_____________________________________________________________ %
T. ROWE PRICE FUNDS Asset Manager: Growth Portfolio__________________________________________________ %
Mid Cap Growth____________ % Growth Opportunities_____________________________________________________________ %
International Stock_______ % Growth and Income________________________________________________________________ %
Equity Income_____________ % Balanced_________________________________________________________________________ %
Mid Cap__________________________________________________________________________ %
SUITABILITY FOR VARIABLE UNIVERSAL LIFE
a. DO YOU UNDERSTAND THAT THE DEATH BENEFIT AND CASH SURRENDER VALUE MAY INCREASE OR DECREASE DEPENDING ON THE INVESTMENT RETURN
OF THE CONTRACT? YES [ ] NO [ ]
b. Do you believe that this Contract will meet your insurance needs and financial objectives? Yes [ ] No [ ]
c. Did you receive the appropriate Fund's Prospectus? Yes [ ] No [ ]
Death Benefit May Be Variable or Fixed Under Specific Conditions.
Please complete the Purchaser Suitability Form included with the Prospectus for Variable Universal Life Insurance.
Dated at____________________________________________________________________________________________________ this____________ day
City and State
of_____________________________________________________________.
Witnessed by____________________________________________________ _____________________________________________________________
Signature of Licensed Agent Signature of Owner
________________________________________________________________
Broker/Dealer (Please Print)
Form 5952 Rev 5/99
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